98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB3334

 

Introduced , by Rep. Donald L. Moffitt

 

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

    Amends the Illinois Income Tax Act. Provides that, beginning with taxable years ending on or after December 31, 2013 and ending with taxable years ending on or before December 31, 2018, an amount equal to 5% of the first $1,000,000 of retail sales by the taxpayer during the taxable year of Illinois agricultural products certified by the Illinois Department of Agriculture under the "Illinois Product" label program.


LRB098 08624 HLH 38742 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3334LRB098 08624 HLH 38742 b

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

 

 

HB3334- 2 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 3 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 4 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 5 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 6 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 7 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 8 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 9 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 10 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 11 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 12 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 13 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 14 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 15 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 16 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 17 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 18 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 19 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 20 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 21 -LRB098 08624 HLH 38742 b

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 and ending on or before December 31, 2004,
13        moneys contributed in the taxable year to a College
14        Savings Pool account under Section 16.5 of the State
15        Treasurer Act, except that amounts excluded from gross
16        income under Section 529(c)(3)(C)(i) of the Internal
17        Revenue Code shall not be considered moneys
18        contributed under this subparagraph (Y). For taxable
19        years beginning on or after January 1, 2005, a maximum
20        of $10,000 contributed in the taxable year to (i) a
21        College Savings Pool account under Section 16.5 of the
22        State Treasurer Act or (ii) the Illinois Prepaid
23        Tuition Trust Fund, except that amounts excluded from
24        gross income under Section 529(c)(3)(C)(i) of the
25        Internal Revenue Code shall not be considered moneys
26        contributed under this subparagraph (Y). For purposes

 

 

HB3334- 22 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 23 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 24 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 25 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 26 -LRB098 08624 HLH 38742 b

1        outside the United States is 80% or more of that
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304, but not to exceed the
10        addition modification required to be made for the same
11        taxable year under Section 203(a)(2)(D-18) for
12        intangible expenses and costs paid, accrued, or
13        incurred, directly or indirectly, to the same foreign
14        person. This subparagraph (EE) is exempt from the
15        provisions of Section 250;
16            (FF) An amount equal to any amount awarded to the
17        taxpayer during the taxable year by the Court of Claims
18        under subsection (c) of Section 8 of the Court of
19        Claims Act for time unjustly served in a State prison.
20        This subparagraph (FF) is exempt from the provisions of
21        Section 250; and
22            (GG) For taxable years ending on or after December
23        31, 2011, in the case of a taxpayer who was required to
24        add back any insurance premiums under Section
25        203(a)(2)(D-19), such taxpayer may elect to subtract
26        that part of a reimbursement received from the

 

 

HB3334- 27 -LRB098 08624 HLH 38742 b

1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (GG),
7        the insurer to which the premiums were paid must add
8        back to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (GG). This subparagraph
10        (GG) is exempt from the provisions of Section 250; and
11        .
12            (HH) Beginning with taxable years ending on or
13        after December 31, 2013 and ending with taxable years
14        ending on or before December 31, 2018, an amount equal
15        to 5% of the first $1,000,000 of retail sales by the
16        taxpayer during the taxable year of Illinois
17        agricultural products certified by the Illinois
18        Department of Agriculture under the "Illinois Product"
19        label program.
 
20    (b) Corporations.
21        (1) In general. In the case of a corporation, base
22    income means an amount equal to the taxpayer's taxable
23    income for the taxable year as modified by paragraph (2).
24        (2) Modifications. The taxable income referred to in
25    paragraph (1) shall be modified by adding thereto the sum

 

 

HB3334- 28 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 29 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 30 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 31 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 32 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 33 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 34 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 35 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 36 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 37 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 38 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 39 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 40 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 41 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 42 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 43 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 44 -LRB098 08624 HLH 38742 b

1        through 964 of the Internal Revenue Code and including,
2        for taxable years ending on or after December 31, 2008,
3        dividends received from a captive real estate
4        investment trust, from any such corporation specified
5        in clause (i) that would but for the provisions of
6        Section 1504 (b) (3) of the Internal Revenue Code be
7        treated as a member of the affiliated group which
8        includes the dividend recipient, exceed the amount of
9        the modification provided under subparagraph (G) of
10        paragraph (2) of this subsection (b) which is related
11        to such dividends. This subparagraph (O) is exempt from
12        the provisions of Section 250 of this Act;
13            (P) An amount equal to any contribution made to a
14        job training project established pursuant to the Tax
15        Increment Allocation Redevelopment Act;
16            (Q) An amount equal to the amount of the deduction
17        used to compute the federal income tax credit for
18        restoration of substantial amounts held under claim of
19        right for the taxable year pursuant to Section 1341 of
20        the Internal Revenue Code;
21            (R) On and after July 20, 1999, in the case of an
22        attorney-in-fact with respect to whom an interinsurer
23        or a reciprocal insurer has made the election under
24        Section 835 of the Internal Revenue Code, 26 U.S.C.
25        835, an amount equal to the excess, if any, of the
26        amounts paid or incurred by that interinsurer or

 

 

HB3334- 45 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 46 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 47 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 48 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 49 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 50 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 51 -LRB098 08624 HLH 38742 b

1        without regard to any net operating loss deduction.
2        This subparagraph (Z) is exempt from the provisions of
3        Section 250; and .
4            (AA) Beginning with taxable years ending on or
5        after December 31, 2013 and ending with taxable years
6        ending on or before December 31, 2018, an amount equal
7        to 5% of the first $1,000,000 of retail sales by the
8        taxpayer during the taxable year of Illinois
9        agricultural products certified by the Illinois
10        Department of Agriculture under the "Illinois Product"
11        label program.
12        (3) Special rule. For purposes of paragraph (2) (A),
13    "gross income" in the case of a life insurance company, for
14    tax years ending on and after December 31, 1994, and prior
15    to December 31, 2011, shall mean the gross investment
16    income for the taxable year and, for tax years ending on or
17    after December 31, 2011, shall mean all amounts included in
18    life insurance gross income under Section 803(a)(3) of the
19    Internal Revenue Code.
 
20    (c) Trusts and estates.
21        (1) In general. In the case of a trust or estate, base
22    income means an amount equal to the taxpayer's taxable
23    income for the taxable year as modified by paragraph (2).
24        (2) Modifications. Subject to the provisions of
25    paragraph (3), the taxable income referred to in paragraph

 

 

HB3334- 52 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 53 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 54 -LRB098 08624 HLH 38742 b

1        or estate is claiming the same tax for purposes of the
2        Illinois foreign tax credit under Section 601 of this
3        Act;
4            (G) An amount equal to the amount of the capital
5        gain deduction allowable under the Internal Revenue
6        Code, to the extent deducted from gross income in the
7        computation of taxable income;
8            (G-5) For taxable years ending after December 31,
9        1997, an amount equal to any eligible remediation costs
10        that the trust or estate deducted in computing adjusted
11        gross income and for which the trust or estate claims a
12        credit under subsection (l) of Section 201;
13            (G-10) For taxable years 2001 and thereafter, an
14        amount equal to the bonus depreciation deduction taken
15        on the taxpayer's federal income tax return for the
16        taxable year under subsection (k) of Section 168 of the
17        Internal Revenue Code; and
18            (G-11) If the taxpayer sells, transfers, abandons,
19        or otherwise disposes of property for which the
20        taxpayer was required in any taxable year to make an
21        addition modification under subparagraph (G-10), then
22        an amount equal to the aggregate amount of the
23        deductions taken in all taxable years under
24        subparagraph (R) with respect to that property.
25            If the taxpayer continues to own property through
26        the last day of the last tax year for which the

 

 

HB3334- 55 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 56 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 57 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 58 -LRB098 08624 HLH 38742 b

1            under Section 404 of this Act;
2            (G-13) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income pursuant to Sections 951 through 964 of the
25        Internal Revenue Code and amounts included in gross
26        income under Section 78 of the Internal Revenue Code)

 

 

HB3334- 59 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 60 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 61 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 62 -LRB098 08624 HLH 38742 b

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the stock
4        of the same person to whom the premiums and costs were
5        directly or indirectly paid, incurred, or accrued. The
6        preceding sentence does not apply to the extent that
7        the same dividends caused a reduction to the addition
8        modification required under Section 203(c)(2)(G-12) or
9        Section 203(c)(2)(G-13) of this Act;
10            (G-15) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14    and by deducting from the total so obtained the sum of the
15    following amounts:
16            (H) An amount equal to all amounts included in such
17        total pursuant to the provisions of Sections 402(a),
18        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
19        Internal Revenue Code or included in such total as
20        distributions under the provisions of any retirement
21        or disability plan for employees of any governmental
22        agency or unit, or retirement payments to retired
23        partners, which payments are excluded in computing net
24        earnings from self employment by Section 1402 of the
25        Internal Revenue Code and regulations adopted pursuant
26        thereto;

 

 

HB3334- 63 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 64 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 65 -LRB098 08624 HLH 38742 b

1        used to compute the federal income tax credit for
2        restoration of substantial amounts held under claim of
3        right for the taxable year pursuant to Section 1341 of
4        the Internal Revenue Code;
5            (Q) For taxable year 1999 and thereafter, an amount
6        equal to the amount of any (i) distributions, to the
7        extent includible in gross income for federal income
8        tax purposes, made to the taxpayer because of his or
9        her status as a victim of persecution for racial or
10        religious reasons by Nazi Germany or any other Axis
11        regime or as an heir of the victim and (ii) items of
12        income, to the extent includible in gross income for
13        federal income tax purposes, attributable to, derived
14        from or in any way related to assets stolen from,
15        hidden from, or otherwise lost to a victim of
16        persecution for racial or religious reasons by Nazi
17        Germany or any other Axis regime immediately prior to,
18        during, and immediately after World War II, including,
19        but not limited to, interest on the proceeds receivable
20        as insurance under policies issued to a victim of
21        persecution for racial or religious reasons by Nazi
22        Germany or any other Axis regime by European insurance
23        companies immediately prior to and during World War II;
24        provided, however, this subtraction from federal
25        adjusted gross income does not apply to assets acquired
26        with such assets or with the proceeds from the sale of

 

 

HB3334- 66 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 67 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 68 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 69 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 70 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 71 -LRB098 08624 HLH 38742 b

1        total of any tax deducted for federal income tax
2        purposes, to the extent that deduction was added back
3        under subparagraph (F). This subparagraph (X) is
4        exempt from the provisions of Section 250; and
5            (Y) For taxable years ending on or after December
6        31, 2011, in the case of a taxpayer who was required to
7        add back any insurance premiums under Section
8        203(c)(2)(G-14), such taxpayer may elect to subtract
9        that part of a reimbursement received from the
10        insurance company equal to the amount of the expense or
11        loss (including expenses incurred by the insurance
12        company) that would have been taken into account as a
13        deduction for federal income tax purposes if the
14        expense or loss had been uninsured. If a taxpayer makes
15        the election provided for by this subparagraph (Y), the
16        insurer to which the premiums were paid must add back
17        to income the amount subtracted by the taxpayer
18        pursuant to this subparagraph (Y). This subparagraph
19        (Y) is exempt from the provisions of Section 250; and .
20            (Z) Beginning with taxable years ending on or after
21        December 31, 2013 and ending with taxable years ending
22        on or before December 31, 2018, an amount equal to 5%
23        of the first $1,000,000 of retail sales by the taxpayer
24        during the taxable year of Illinois agricultural
25        products certified by the Illinois Department of
26        Agriculture under the "Illinois Product" label

 

 

HB3334- 72 -LRB098 08624 HLH 38742 b

1        program.
2        (3) Limitation. The amount of any modification
3    otherwise required under this subsection shall, under
4    regulations prescribed by the Department, be adjusted by
5    any amounts included therein which were properly paid,
6    credited, or required to be distributed, or permanently set
7    aside for charitable purposes pursuant to Internal Revenue
8    Code Section 642(c) during the taxable year.
 
9    (d) Partnerships.
10        (1) In general. In the case of a partnership, base
11    income means an amount equal to the taxpayer's taxable
12    income for the taxable year as modified by paragraph (2).
13        (2) Modifications. The taxable income referred to in
14    paragraph (1) shall be modified by adding thereto the sum
15    of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest or dividends during the
18        taxable year to the extent excluded from gross income
19        in the computation of taxable income;
20            (B) An amount equal to the amount of tax imposed by
21        this Act to the extent deducted from gross income for
22        the taxable year;
23            (C) The amount of deductions allowed to the
24        partnership pursuant to Section 707 (c) of the Internal
25        Revenue Code in calculating its taxable income;

 

 

HB3334- 73 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 74 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 75 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 76 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 77 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 78 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 79 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 80 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 81 -LRB098 08624 HLH 38742 b

1        Section 203(d)(2)(D-8) of this Act;
2            (D-10) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6    and by deducting from the total so obtained the following
7    amounts:
8            (E) The valuation limitation amount;
9            (F) An amount equal to the amount of any tax
10        imposed by this Act which was refunded to the taxpayer
11        and included in such total for the taxable year;
12            (G) An amount equal to all amounts included in
13        taxable income as modified by subparagraphs (A), (B),
14        (C) and (D) which are exempt from taxation by this
15        State either by reason of its statutes or Constitution
16        or by reason of the Constitution, treaties or statutes
17        of the United States; provided that, in the case of any
18        statute of this State that exempts income derived from
19        bonds or other obligations from the tax imposed under
20        this Act, the amount exempted shall be the interest net
21        of bond premium amortization;
22            (H) Any income of the partnership which
23        constitutes personal service income as defined in
24        Section 1348 (b) (1) of the Internal Revenue Code (as
25        in effect December 31, 1981) or a reasonable allowance
26        for compensation paid or accrued for services rendered

 

 

HB3334- 82 -LRB098 08624 HLH 38742 b

1        by partners to the partnership, whichever is greater;
2        this subparagraph (H) is exempt from the provisions of
3        Section 250;
4            (I) An amount equal to all amounts of income
5        distributable to an entity subject to the Personal
6        Property Tax Replacement Income Tax imposed by
7        subsections (c) and (d) of Section 201 of this Act
8        including amounts distributable to organizations
9        exempt from federal income tax by reason of Section
10        501(a) of the Internal Revenue Code; this subparagraph
11        (I) is exempt from the provisions of Section 250;
12            (J) With the exception of any amounts subtracted
13        under subparagraph (G), an amount equal to the sum of
14        all amounts disallowed as deductions by (i) Sections
15        171(a) (2), and 265(2) of the Internal Revenue Code,
16        and all amounts of expenses allocable to interest and
17        disallowed as deductions by Section 265(1) of the
18        Internal Revenue Code; and (ii) for taxable years
19        ending on or after August 13, 1999, Sections 171(a)(2),
20        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
21        Code, plus, (iii) for taxable years ending on or after
22        December 31, 2011, Section 45G(e)(3) of the Internal
23        Revenue Code and, for taxable years ending on or after
24        December 31, 2008, any amount included in gross income
25        under Section 87 of the Internal Revenue Code; the
26        provisions of this subparagraph are exempt from the

 

 

HB3334- 83 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 84 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 85 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 86 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 87 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 88 -LRB098 08624 HLH 38742 b

1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(d)(2)(D-8) for
4        intangible expenses and costs paid, accrued, or
5        incurred, directly or indirectly, to the same person.
6        This subparagraph (S) is exempt from Section 250; and
7            (T) For taxable years ending on or after December
8        31, 2011, in the case of a taxpayer who was required to
9        add back any insurance premiums under Section
10        203(d)(2)(D-9), such taxpayer may elect to subtract
11        that part of a reimbursement received from the
12        insurance company equal to the amount of the expense or
13        loss (including expenses incurred by the insurance
14        company) that would have been taken into account as a
15        deduction for federal income tax purposes if the
16        expense or loss had been uninsured. If a taxpayer makes
17        the election provided for by this subparagraph (T), the
18        insurer to which the premiums were paid must add back
19        to income the amount subtracted by the taxpayer
20        pursuant to this subparagraph (T). This subparagraph
21        (T) is exempt from the provisions of Section 250; and .
22            (U) Beginning with taxable years ending on or after
23        December 31, 2013 and ending with taxable years ending
24        on or before December 31, 2018, an amount equal to 5%
25        of the first $1,000,000 of retail sales by the taxpayer
26        during the taxable year of Illinois agricultural

 

 

HB3334- 89 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 90 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 91 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 92 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 93 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 94 -LRB098 08624 HLH 38742 b

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

 

 

HB3334- 95 -LRB098 08624 HLH 38742 b

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.

 

 

HB3334- 96 -LRB098 08624 HLH 38742 b

1            (C) The Department shall prescribe such
2        regulations as may be necessary to carry out the
3        purposes of this paragraph.
 
4    (g) Double deductions. Unless specifically provided
5otherwise, nothing in this Section shall permit the same item
6to be deducted more than once.
 
7    (h) Legislative intention. Except as expressly provided by
8this Section there shall be no modifications or limitations on
9the amounts of income, gain, loss or deduction taken into
10account in determining gross income, adjusted gross income or
11taxable income for federal income tax purposes for the taxable
12year, or in the amount of such items entering into the
13computation of base income and net income under this Act for
14such taxable year, whether in respect of property values as of
15August 1, 1969 or otherwise.
16(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
17eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1896-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
196-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
20eff. 8-23-11; 97-905, eff. 8-7-12.)