HB2955 EngrossedLRB097 08285 HLH 48412 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 Sections 203, 204, 205, 207, 214, 220, 304, 502, 506,
6601, 701, 702, 703, 704A, 709.5, 804, 909, 911, 1002, 1101,
71402, 1405.4, and 1501 as follows:
 
8    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
9    Sec. 203. Base income defined.
10    (a) Individuals.
11        (1) In general. In the case of an individual, base
12    income means an amount equal to the taxpayer's adjusted
13    gross income for the taxable year as modified by paragraph
14    (2).
15        (2) Modifications. The adjusted gross income referred
16    to in paragraph (1) shall be modified by adding thereto the
17    sum of the following amounts:
18            (A) An amount equal to all amounts paid or accrued
19        to the taxpayer as interest or dividends during the
20        taxable year to the extent excluded from gross income
21        in the computation of adjusted gross income, except
22        stock dividends of qualified public utilities
23        described in Section 305(e) of the Internal Revenue

 

 

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24        withdrawn by the taxpayer in the taxable year from a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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        preceding sentence does not apply to the extent that
2        the same dividends caused a reduction to the addition
3        modification required under Section 203(a)(2)(D-17) or
4        Section 203(a)(2)(D-18) of this Act.
5            (D-20) For taxable years beginning on or after
6        January 1, 2002 and ending on or before December 31,
7        2006, in the case of a distribution from a qualified
8        tuition program under Section 529 of the Internal
9        Revenue Code, other than (i) a distribution from a
10        College Savings Pool created under Section 16.5 of the
11        State Treasurer Act or (ii) a distribution from the
12        Illinois Prepaid Tuition Trust Fund, an amount equal to
13        the amount excluded from gross income under Section
14        529(c)(3)(B). For taxable years beginning on or after
15        January 1, 2007, in the case of a distribution from a
16        qualified tuition program under Section 529 of the
17        Internal Revenue Code, other than (i) a distribution
18        from a College Savings Pool created under Section 16.5
19        of the State Treasurer Act, (ii) a distribution from
20        the Illinois Prepaid Tuition Trust Fund, or (iii) a
21        distribution from a qualified tuition program under
22        Section 529 of the Internal Revenue Code that (I)
23        adopts and determines that its offering materials
24        comply with the College Savings Plans Network's
25        disclosure principles and (II) has made reasonable
26        efforts to inform in-state residents of the existence

 

 

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

 

 

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1            (D-22) For taxable years beginning on or after
2        January 1, 2009, in the case of a nonqualified
3        withdrawal or refund of moneys from a qualified tuition
4        program under Section 529 of the Internal Revenue Code
5        administered by the State that is not used for
6        qualified expenses at an eligible education
7        institution, an amount equal to the contribution
8        component of the nonqualified withdrawal or refund
9        that was previously deducted from base income under
10        subsection (a)(2)(y) of this Section, provided that
11        the withdrawal or refund did not result from the
12        beneficiary's death or disability;
13            (D-23) An amount equal to the credit allowable to
14        the taxpayer under Section 218(a) of this Act,
15        determined without regard to Section 218(c) of this
16        Act;
17    and by deducting from the total so obtained the sum of the
18    following amounts:
19            (E) For taxable years ending before December 31,
20        2001, any amount included in such total in respect of
21        any compensation (including but not limited to any
22        compensation paid or accrued to a serviceman while a
23        prisoner of war or missing in action) paid to a
24        resident by reason of being on active duty in the Armed
25        Forces of the United States and in respect of any
26        compensation paid or accrued to a resident who as a

 

 

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1        governmental employee was a prisoner of war or missing
2        in action, and in respect of any compensation paid to a
3        resident in 1971 or thereafter for annual training
4        performed pursuant to Sections 502 and 503, Title 32,
5        United States Code as a member of the Illinois National
6        Guard or, beginning with taxable years ending on or
7        after December 31, 2007, the National Guard of any
8        other state. For taxable years ending on or after
9        December 31, 2001, any amount included in such total in
10        respect of any compensation (including but not limited
11        to any compensation paid or accrued to a serviceman
12        while a prisoner of war or missing in action) paid to a
13        resident by reason of being a member of any component
14        of the Armed Forces of the United States and in respect
15        of any compensation paid or accrued to a resident who
16        as a governmental employee was a prisoner of war or
17        missing in action, and in respect of any compensation
18        paid to a resident in 2001 or thereafter by reason of
19        being a member of the Illinois National Guard or,
20        beginning with taxable years ending on or after
21        December 31, 2007, the National Guard of any other
22        state. The provisions of this subparagraph (E)
23        amendatory Act of the 92nd General Assembly are exempt
24        from the provisions of Section 250;
25            (F) An amount equal to all amounts included in such
26        total pursuant to the provisions of Sections 402(a),

 

 

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1        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
2        Internal Revenue Code, or included in such total as
3        distributions under the provisions of any retirement
4        or disability plan for employees of any governmental
5        agency or unit, or retirement payments to retired
6        partners, which payments are excluded in computing net
7        earnings from self employment by Section 1402 of the
8        Internal Revenue Code and regulations adopted pursuant
9        thereto;
10            (G) The valuation limitation amount;
11            (H) An amount equal to the amount of any tax
12        imposed by this Act which was refunded to the taxpayer
13        and included in such total for the taxable year;
14            (I) An amount equal to all amounts included in such
15        total pursuant to the provisions of Section 111 of the
16        Internal Revenue Code as a recovery of items previously
17        deducted from adjusted gross income in the computation
18        of taxable income;
19            (J) An amount equal to those dividends included in
20        such total which were paid by a corporation which
21        conducts business operations in an Enterprise Zone or
22        zones created under the Illinois Enterprise Zone Act or
23        a River Edge Redevelopment Zone or zones created under
24        the River Edge Redevelopment Zone Act, and conducts
25        substantially all of its operations in an Enterprise
26        Zone or zones or a River Edge Redevelopment Zone or

 

 

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1        zones. This subparagraph (J) is exempt from the
2        provisions of Section 250;
3            (K) An amount equal to those dividends included in
4        such total that were paid by a corporation that
5        conducts business operations in a federally designated
6        Foreign Trade Zone or Sub-Zone and that is designated a
7        High Impact Business located in Illinois; provided
8        that dividends eligible for the deduction provided in
9        subparagraph (J) of paragraph (2) of this subsection
10        shall not be eligible for the deduction provided under
11        this subparagraph (K);
12            (L) For taxable years ending after December 31,
13        1983, an amount equal to all social security benefits
14        and railroad retirement benefits included in such
15        total pursuant to Sections 72(r) and 86 of the Internal
16        Revenue Code;
17            (M) With the exception of any amounts subtracted
18        under subparagraph (N), an amount equal to the sum of
19        all amounts disallowed as deductions by (i) Sections
20        171(a) (2), and 265(2) of the Internal Revenue Code of
21        1954, as now or hereafter amended, and all amounts of
22        expenses allocable to interest and disallowed as
23        deductions by Section 265(1) of the Internal Revenue
24        Code of 1954, as now or hereafter amended; and (ii) for
25        taxable years ending on or after August 13, 1999,
26        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of

 

 

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1        the Internal Revenue Code, plus, for taxable years
2        ending on or after December 31, 2011, Section 45G(e)(3)
3        of the Internal Revenue Code and any amount included in
4        gross income under Section 87 of the Internal Revenue
5        Code; the provisions of this subparagraph are exempt
6        from the provisions of Section 250;
7            (N) An amount equal to all amounts included in such
8        total which are exempt from taxation by this State
9        either by reason of its statutes or Constitution or by
10        reason of the Constitution, treaties or statutes of the
11        United States; provided that, in the case of any
12        statute of this State that exempts income derived from
13        bonds or other obligations from the tax imposed under
14        this Act, the amount exempted shall be the interest net
15        of bond premium amortization;
16            (O) An amount equal to any contribution made to a
17        job training project established pursuant to the Tax
18        Increment Allocation Redevelopment Act;
19            (P) An amount equal to the amount of the deduction
20        used to compute the federal income tax credit for
21        restoration of substantial amounts held under claim of
22        right for the taxable year pursuant to Section 1341 of
23        the Internal Revenue Code or of any itemized deduction
24        taken from adjusted gross income in the computation of
25        taxable income for restoration of substantial amounts
26        held under claim of right for the taxable year of 1986;

 

 

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1            (Q) An amount equal to any amounts included in such
2        total, received by the taxpayer as an acceleration in
3        the payment of life, endowment or annuity benefits in
4        advance of the time they would otherwise be payable as
5        an indemnity for a terminal illness;
6            (R) An amount equal to the amount of any federal or
7        State bonus paid to veterans of the Persian Gulf War;
8            (S) An amount, to the extent included in adjusted
9        gross income, equal to the amount of a contribution
10        made in the taxable year on behalf of the taxpayer to a
11        medical care savings account established under the
12        Medical Care Savings Account Act or the Medical Care
13        Savings Account Act of 2000 to the extent the
14        contribution is accepted by the account administrator
15        as provided in that Act;
16            (T) An amount, to the extent included in adjusted
17        gross income, equal to the amount of interest earned in
18        the taxable year on a medical care savings account
19        established under the Medical Care Savings Account Act
20        or the Medical Care Savings Account Act of 2000 on
21        behalf of the taxpayer, other than interest added
22        pursuant to item (D-5) of this paragraph (2);
23            (U) For one taxable year beginning on or after
24        January 1, 1994, an amount equal to the total amount of
25        tax imposed and paid under subsections (a) and (b) of
26        Section 201 of this Act on grant amounts received by

 

 

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1        the taxpayer under the Nursing Home Grant Assistance
2        Act during the taxpayer's taxable years 1992 and 1993;
3            (V) Beginning with tax years ending on or after
4        December 31, 1995 and ending with tax years ending on
5        or before December 31, 2004, an amount equal to the
6        amount paid by a taxpayer who is a self-employed
7        taxpayer, a partner of a partnership, or a shareholder
8        in a Subchapter S corporation for health insurance or
9        long-term care insurance for that taxpayer or that
10        taxpayer's spouse or dependents, to the extent that the
11        amount paid for that health insurance or long-term care
12        insurance may be deducted under Section 213 of the
13        Internal Revenue Code of 1986, has not been deducted on
14        the federal income tax return of the taxpayer, and does
15        not exceed the taxable income attributable to that
16        taxpayer's income, self-employment income, or
17        Subchapter S corporation income; except that no
18        deduction shall be allowed under this item (V) if the
19        taxpayer is eligible to participate in any health
20        insurance or long-term care insurance plan of an
21        employer of the taxpayer or the taxpayer's spouse. The
22        amount of the health insurance and long-term care
23        insurance subtracted under this item (V) shall be
24        determined by multiplying total health insurance and
25        long-term care insurance premiums paid by the taxpayer
26        times a number that represents the fractional

 

 

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1        percentage of eligible medical expenses under Section
2        213 of the Internal Revenue Code of 1986 not actually
3        deducted on the taxpayer's federal income tax return;
4            (W) For taxable years beginning on or after January
5        1, 1998, all amounts included in the taxpayer's federal
6        gross income in the taxable year from amounts converted
7        from a regular IRA to a Roth IRA. This paragraph is
8        exempt from the provisions of Section 250;
9            (X) For taxable year 1999 and thereafter, an amount
10        equal to the amount of any (i) distributions, to the
11        extent includible in gross income for federal income
12        tax purposes, made to the taxpayer because of his or
13        her status as a victim of persecution for racial or
14        religious reasons by Nazi Germany or any other Axis
15        regime or as an heir of the victim and (ii) items of
16        income, to the extent includible in gross income for
17        federal income tax purposes, attributable to, derived
18        from or in any way related to assets stolen from,
19        hidden from, or otherwise lost to a victim of
20        persecution for racial or religious reasons by Nazi
21        Germany or any other Axis regime immediately prior to,
22        during, and immediately after World War II, including,
23        but not limited to, interest on the proceeds receivable
24        as insurance under policies issued to a victim of
25        persecution for racial or religious reasons by Nazi
26        Germany or any other Axis regime by European insurance

 

 

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

 

 

HB2955 Engrossed- 22 -LRB097 08285 HLH 48412 b

1        State Treasurer Act or (ii) the Illinois Prepaid
2        Tuition Trust Fund, except that amounts excluded from
3        gross income under Section 529(c)(3)(C)(i) of the
4        Internal Revenue Code shall not be considered moneys
5        contributed under this subparagraph (Y). For purposes
6        of this subparagraph, contributions made by an
7        employer on behalf of an employee, or matching
8        contributions made by an employee, shall be treated as
9        made by the employee. This subparagraph (Y) is exempt
10        from the provisions of Section 250;
11            (Z) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not including
23            the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB2955 Engrossed- 27 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 28 -LRB097 08285 HLH 48412 b

1        the taxable year to the extent excluded from gross
2        income in the computation of taxable income;
3            (B) An amount equal to the amount of tax imposed by
4        this Act to the extent deducted from gross income in
5        the computation of taxable income for the taxable year;
6            (C) In the case of a regulated investment company,
7        an amount equal to the excess of (i) the net long-term
8        capital gain for the taxable year, over (ii) the amount
9        of the capital gain dividends designated as such in
10        accordance with Section 852(b)(3)(C) of the Internal
11        Revenue Code and any amount designated under Section
12        852(b)(3)(D) of the Internal Revenue Code,
13        attributable to the taxable year (this amendatory Act
14        of 1995 (Public Act 89-89) is declarative of existing
15        law and is not a new enactment);
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

 

 

HB2955 Engrossed- 29 -LRB097 08285 HLH 48412 b

1        subtraction modifications in such earlier taxable
2        year, with the following limitations applied in the
3        order that 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            (E-5) For taxable years ending after December 31,
25        1997, an amount equal to any eligible remediation costs
26        that the corporation deducted in computing adjusted

 

 

HB2955 Engrossed- 30 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 31 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 32 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 33 -LRB097 08285 HLH 48412 b

1            not federal or Illinois tax avoidance; or
2                (iv) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer establishes by clear and convincing
5            evidence that the adjustments are unreasonable; or
6            if the taxpayer and the Director agree in writing
7            to the application or use of an alternative method
8            of apportionment under Section 304(f).
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act for
12            any tax year beginning after the effective date of
13            this amendment provided such adjustment is made
14            pursuant to regulation adopted by the Department
15            and such regulations provide methods and standards
16            by which the Department will utilize its authority
17            under Section 404 of this Act;
18            (E-13) An amount equal to the amount of intangible
19        expenses and costs otherwise allowed as a deduction in
20        computing base income, and that were paid, accrued, or
21        incurred, directly or indirectly, (i) for taxable
22        years ending on or after December 31, 2004, to a
23        foreign person who would be a member of the same
24        unitary business group but for the fact that the
25        foreign person's business activity outside the United
26        States is 80% or more of that person's total business

 

 

HB2955 Engrossed- 34 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 35 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 36 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 37 -LRB097 08285 HLH 48412 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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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

 

 

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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 965 964 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

 

 

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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 of 1986;
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

 

 

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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

 

 

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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

 

 

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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

 

 

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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

 

 

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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; and
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

 

 

HB2955 Engrossed- 50 -LRB097 08285 HLH 48412 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

 

 

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1        without regard to any net operating loss deduction.
2        This subparagraph (Z) is exempt from the provisions of
3        Section 250.
4        (3) Special rule. For purposes of paragraph (2) (A),
5    "gross income" in the case of a life insurance company, for
6    tax years ending on and after December 31, 1994, and prior
7    to December 31, 2011, shall mean the gross investment
8    income for the taxable year and, for tax years ending on or
9    after December 31, 2011, shall mean all amounts included in
10    life insurance gross income under Section 803(a)(3) of the
11    Internal Revenue Code.
 
12    (c) Trusts and estates.
13        (1) In general. In the case of a trust or estate, base
14    income means an amount equal to the taxpayer's taxable
15    income for the taxable year as modified by paragraph (2).
16        (2) Modifications. Subject to the provisions of
17    paragraph (3), the taxable income referred to in paragraph
18    (1) shall be modified by adding thereto the sum of the
19    following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of taxable income;
24            (B) In the case of (i) an estate, $600; (ii) a
25        trust which, under its governing instrument, is

 

 

HB2955 Engrossed- 52 -LRB097 08285 HLH 48412 b

1        required to distribute all of its income currently,
2        $300; and (iii) any other trust, $100, but in each such
3        case, only to the extent such amount was deducted in
4        the computation of taxable income;
5            (C) An amount equal to the amount of tax imposed by
6        this Act to the extent deducted from gross income in
7        the computation of taxable income for the taxable year;
8            (D) The amount of any net operating loss deduction
9        taken in arriving at taxable income, other than a net
10        operating loss carried forward from a taxable year
11        ending prior to December 31, 1986;
12            (E) For taxable years in which a net operating loss
13        carryback or carryforward from a taxable year ending
14        prior to December 31, 1986 is an element of taxable
15        income under paragraph (1) of subsection (e) or
16        subparagraph (E) of paragraph (2) of subsection (e),
17        the amount by which addition modifications other than
18        those provided by this subparagraph (E) exceeded
19        subtraction modifications in such taxable year, with
20        the following limitations applied in the order that
21        they are listed:
22                (i) the addition modification relating to the
23            net operating loss carried back or forward to the
24            taxable year from any taxable year ending prior to
25            December 31, 1986 shall be reduced by the amount of
26            addition modification under this subparagraph (E)

 

 

HB2955 Engrossed- 53 -LRB097 08285 HLH 48412 b

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

 

 

HB2955 Engrossed- 54 -LRB097 08285 HLH 48412 b

1        1997, an amount equal to any eligible remediation costs
2        that the trust or estate deducted in computing adjusted
3        gross income and for which the trust or estate claims a
4        credit under subsection (l) of Section 201;
5            (G-10) For taxable years 2001 and thereafter, an
6        amount equal to the bonus depreciation deduction taken
7        on the taxpayer's federal income tax return for the
8        taxable year under subsection (k) of Section 168 of the
9        Internal Revenue Code; and
10            (G-11) If the taxpayer sells, transfers, abandons,
11        or otherwise disposes of property for which the
12        taxpayer was required in any taxable year to make an
13        addition modification under subparagraph (G-10), then
14        an amount equal to the aggregate amount of the
15        deductions taken in all taxable years under
16        subparagraph (R) 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 (R), 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;

 

 

HB2955 Engrossed- 55 -LRB097 08285 HLH 48412 b

1            (G-12) 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 that the foreign person's business activity
8        outside 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

 

 

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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

 

 

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

 

 

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1        foreign person's business activity outside the United
2        States is 80% or more of that person's total business
3        activity and (ii) for taxable years ending on or after
4        December 31, 2008, to a person who would be a member of
5        the same unitary business group but for the fact that
6        the person is prohibited under Section 1501(a)(27)
7        from being included in the unitary business group
8        because he or she is ordinarily required to apportion
9        business income under different subsections of Section
10        304. The addition modification required by this
11        subparagraph shall be reduced to the extent that
12        dividends were included in base income of the unitary
13        group for the same taxable year and received by the
14        taxpayer or by a member of the taxpayer's unitary
15        business group (including amounts included in gross
16        income 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(c)(2)(G-12) of
25        this Act. As used in this subparagraph, the term
26        "intangible expenses and costs" includes: (1)

 

 

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

 

 

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

 

 

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

 

 

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1        Section 203(c)(2)(G-13) of this Act;
2            (G-15) 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 sum of the
7    following amounts:
8            (H) An amount equal to all amounts included in such
9        total pursuant to the provisions of Sections 402(a),
10        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
11        Internal Revenue Code or included in such total as
12        distributions under the provisions of any retirement
13        or disability plan for employees of any governmental
14        agency or unit, or retirement payments to retired
15        partners, which payments are excluded in computing net
16        earnings from self employment by Section 1402 of the
17        Internal Revenue Code and regulations adopted pursuant
18        thereto;
19            (I) The valuation limitation amount;
20            (J) An amount equal to the amount of any tax
21        imposed by this Act which was refunded to the taxpayer
22        and included in such total for the taxable year;
23            (K) An amount equal to all amounts included in
24        taxable income as modified by subparagraphs (A), (B),
25        (C), (D), (E), (F) and (G) which are exempt from
26        taxation by this State either by reason of its statutes

 

 

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1        or Constitution or by reason of the Constitution,
2        treaties or statutes of the United States; provided
3        that, in the case of any statute of this State that
4        exempts income derived from bonds or other obligations
5        from the tax imposed under this Act, the amount
6        exempted shall be the interest net of bond premium
7        amortization;
8            (L) With the exception of any amounts subtracted
9        under subparagraph (K), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
12        as now or hereafter amended, and all amounts of
13        expenses allocable to interest and disallowed as
14        deductions by Section 265(1) of the Internal Revenue
15        Code of 1954, as now or hereafter amended; and (ii) for
16        taxable years ending on or after August 13, 1999,
17        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
18        the Internal Revenue Code, plus, (iii) for taxable
19        years ending on or after December 31, 2011, Section
20        45G(e)(3) of the Internal Revenue Code and any amount
21        included in gross income under Section 87 of the
22        Internal Revenue Code; the provisions of this
23        subparagraph are exempt from the provisions of Section
24        250;
25            (M) An amount equal to those dividends included in
26        such total which were paid by a corporation which

 

 

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1        conducts business operations in an Enterprise Zone or
2        zones created under the Illinois Enterprise Zone Act or
3        a River Edge Redevelopment Zone or zones created under
4        the River Edge Redevelopment Zone Act and conducts
5        substantially all of its operations in an Enterprise
6        Zone or Zones or a River Edge Redevelopment Zone or
7        zones. This subparagraph (M) is exempt from the
8        provisions of Section 250;
9            (N) An amount equal to any contribution made to a
10        job training project established pursuant to the Tax
11        Increment Allocation Redevelopment Act;
12            (O) An amount equal to those dividends included in
13        such total that were paid by a corporation that
14        conducts business operations in a federally designated
15        Foreign Trade Zone or Sub-Zone and that is designated a
16        High Impact Business located in Illinois; provided
17        that dividends eligible for the deduction provided in
18        subparagraph (M) of paragraph (2) of this subsection
19        shall not be eligible for the deduction provided under
20        this subparagraph (O);
21            (P) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code of 1986;
26            (Q) For taxable year 1999 and thereafter, an amount

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB2955 Engrossed- 72 -LRB097 08285 HLH 48412 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        all amounts disallowed as deductions by (i) Sections
2        171(a) (2), and 265(2) of the Internal Revenue Code of
3        1954, as now or hereafter amended, and all amounts of
4        expenses allocable to interest and disallowed as
5        deductions by Section 265(1) of the Internal Revenue
6        Code, as now or hereafter amended; and (ii) for taxable
7        years ending on or after August 13, 1999, Sections
8        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
9        Internal Revenue Code, plus, (iii) for taxable years
10        ending on or after December 31, 2011, Section 45G(e)(3)
11        of the Internal Revenue Code and any amount included in
12        gross income under Section 87 of the Internal Revenue
13        Code; the provisions of this subparagraph are exempt
14        from the provisions of Section 250;
15            (K) An amount equal to those dividends included in
16        such total which were paid by a corporation which
17        conducts business operations in an Enterprise Zone or
18        zones created under the Illinois Enterprise Zone Act,
19        enacted by the 82nd General Assembly, or a River Edge
20        Redevelopment Zone or zones created under the River
21        Edge Redevelopment Zone Act and conducts substantially
22        all of its operations in an Enterprise Zone or Zones or
23        from a River Edge Redevelopment Zone or zones. This
24        subparagraph (K) is exempt from the provisions of
25        Section 250;
26            (L) An amount equal to any contribution made to a

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        that part of a reimbursement received from the
2        insurance company equal to the amount of the expense or
3        loss (including expenses incurred by the insurance
4        company) that would have been taken into account as a
5        deduction for federal income tax purposes if the
6        expense or loss had been uninsured. If a taxpayer makes
7        the election provided for by this subparagraph (T), the
8        insurer to which the premiums were paid must add back
9        to income the amount subtracted by the taxpayer
10        pursuant to this subparagraph (T). This subparagraph
11        (T) is exempt from the provisions of Section 250.
 
12    (e) Gross income; adjusted gross income; taxable income.
13        (1) In general. Subject to the provisions of paragraph
14    (2) and subsection (b) (3), for purposes of this Section
15    and Section 803(e), a taxpayer's gross income, adjusted
16    gross income, or taxable income for the taxable year shall
17    mean the amount of gross income, adjusted gross income or
18    taxable income properly reportable for federal income tax
19    purposes for the taxable year under the provisions of the
20    Internal Revenue Code. Taxable income may be less than
21    zero. However, for taxable years ending on or after
22    December 31, 1986, net operating loss carryforwards from
23    taxable years ending prior to December 31, 1986, may not
24    exceed the sum of federal taxable income for the taxable
25    year before net operating loss deduction, plus the excess

 

 

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1    of addition modifications over subtraction modifications
2    for the taxable year. For taxable years ending prior to
3    December 31, 1986, taxable income may never be an amount in
4    excess of the net operating loss for the taxable year as
5    defined in subsections (c) and (d) of Section 172 of the
6    Internal Revenue Code, provided that when taxable income of
7    a corporation (other than a Subchapter S corporation),
8    trust, or estate is less than zero and addition
9    modifications, other than those provided by subparagraph
10    (E) of paragraph (2) of subsection (b) for corporations or
11    subparagraph (E) of paragraph (2) of subsection (c) for
12    trusts and estates, exceed subtraction modifications, an
13    addition modification must be made under those
14    subparagraphs for any other taxable year to which the
15    taxable income less than zero (net operating loss) is
16    applied under Section 172 of the Internal Revenue Code or
17    under subparagraph (E) of paragraph (2) of this subsection
18    (e) applied in conjunction with Section 172 of the Internal
19    Revenue Code.
20        (2) Special rule. For purposes of paragraph (1) of this
21    subsection, the taxable income properly reportable for
22    federal income tax purposes shall mean:
23            (A) Certain life insurance companies. In the case
24        of a life insurance company subject to the tax imposed
25        by Section 801 of the Internal Revenue Code, life
26        insurance company taxable income, plus the amount of

 

 

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1        distribution from pre-1984 policyholder surplus
2        accounts as calculated under Section 815a of the
3        Internal Revenue Code;
4            (B) Certain other insurance companies. In the case
5        of mutual insurance companies subject to the tax
6        imposed by Section 831 of the Internal Revenue Code,
7        insurance company taxable income;
8            (C) Regulated investment companies. In the case of
9        a regulated investment company subject to the tax
10        imposed by Section 852 of the Internal Revenue Code,
11        investment company taxable income;
12            (D) Real estate investment trusts. In the case of a
13        real estate investment trust subject to the tax imposed
14        by Section 857 of the Internal Revenue Code, real
15        estate investment trust taxable income;
16            (E) Consolidated corporations. In the case of a
17        corporation which is a member of an affiliated group of
18        corporations filing a consolidated income tax return
19        for the taxable year for federal income tax purposes,
20        taxable income determined as if such corporation had
21        filed a separate return for federal income tax purposes
22        for the taxable year and each preceding taxable year
23        for which it was a member of an affiliated group. For
24        purposes of this subparagraph, the taxpayer's separate
25        taxable income shall be determined as if the election
26        provided by Section 243(b) (2) of the Internal Revenue

 

 

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1        Code had been in effect for all such years;
2            (F) Cooperatives. In the case of a cooperative
3        corporation or association, the taxable income of such
4        organization determined in accordance with the
5        provisions of Section 1381 through 1388 of the Internal
6        Revenue Code, but without regard to the prohibition
7        against offsetting losses from patronage activities
8        against income from nonpatronage activities; except
9        that a cooperative corporation or association may make
10        an election to follow its federal income tax treatment
11        of patronage losses and nonpatronage losses. In the
12        event such election is made, such losses shall be
13        computed and carried over in a manner consistent with
14        subsection (a) of Section 207 of this Act and
15        apportioned by the apportionment factor reported by
16        the cooperative on its Illinois income tax return filed
17        for the taxable year in which the losses are incurred.
18        The election shall be effective for all taxable years
19        with original returns due on or after the date of the
20        election. In addition, the cooperative may file an
21        amended return or returns, as allowed under this Act,
22        to provide that the election shall be effective for
23        losses incurred or carried forward for taxable years
24        occurring prior to the date of the election. Once made,
25        the election may only be revoked upon approval of the
26        Director. The Department shall adopt rules setting

 

 

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1        forth requirements for documenting the elections and
2        any resulting Illinois net loss and the standards to be
3        used by the Director in evaluating requests to revoke
4        elections. Public Act 96-932 This amendatory Act of the
5        96th General Assembly is declaratory of existing law;
6            (G) Subchapter S corporations. In the case of: (i)
7        a Subchapter S corporation for which there is in effect
8        an election for the taxable year under Section 1362 of
9        the Internal Revenue Code, the taxable income of such
10        corporation determined in accordance with Section
11        1363(b) of the Internal Revenue Code, except that
12        taxable income shall take into account those items
13        which are required by Section 1363(b)(1) of the
14        Internal Revenue Code to be separately stated; and (ii)
15        a Subchapter S corporation for which there is in effect
16        a federal election to opt out of the provisions of the
17        Subchapter S Revision Act of 1982 and have applied
18        instead the prior federal Subchapter S rules as in
19        effect on July 1, 1982, the taxable income of such
20        corporation determined in accordance with the federal
21        Subchapter S rules as in effect on July 1, 1982; and
22            (H) Partnerships. In the case of a partnership,
23        taxable income determined in accordance with Section
24        703 of the Internal Revenue Code, except that taxable
25        income shall take into account those items which are
26        required by Section 703(a)(1) to be separately stated

 

 

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1        but which would be taken into account by an individual
2        in calculating his taxable income.
3        (3) Recapture of business expenses on disposition of
4    asset or business. Notwithstanding any other law to the
5    contrary, if in prior years income from an asset or
6    business has been classified as business income and in a
7    later year is demonstrated to be non-business income, then
8    all expenses, without limitation, deducted in such later
9    year and in the 2 immediately preceding taxable years
10    related to that asset or business that generated the
11    non-business income shall be added back and recaptured as
12    business income in the year of the disposition of the asset
13    or business. Such amount shall be apportioned to Illinois
14    using the greater of the apportionment fraction computed
15    for the business under Section 304 of this Act for the
16    taxable year or the average of the apportionment fractions
17    computed for the business under Section 304 of this Act for
18    the taxable year and for the 2 immediately preceding
19    taxable years.
 
20    (f) Valuation limitation amount.
21        (1) In general. The valuation limitation amount
22    referred to in subsections (a) (2) (G), (c) (2) (I) and
23    (d)(2) (E) is an amount equal to:
24            (A) The sum of the pre-August 1, 1969 appreciation
25        amounts (to the extent consisting of gain reportable

 

 

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1        under the provisions of Section 1245 or 1250 of the
2        Internal Revenue Code) for all property in respect of
3        which such gain was reported for the taxable year; plus
4            (B) The lesser of (i) the sum of the pre-August 1,
5        1969 appreciation amounts (to the extent consisting of
6        capital gain) for all property in respect of which such
7        gain was reported for federal income tax purposes for
8        the taxable year, or (ii) the net capital gain for the
9        taxable year, reduced in either case by any amount of
10        such gain included in the amount determined under
11        subsection (a) (2) (F) or (c) (2) (H).
12        (2) Pre-August 1, 1969 appreciation amount.
13            (A) If the fair market value of property referred
14        to in paragraph (1) was readily ascertainable on August
15        1, 1969, the pre-August 1, 1969 appreciation amount for
16        such property is the lesser of (i) the excess of such
17        fair market value over the taxpayer's basis (for
18        determining gain) for such property on that date
19        (determined under the Internal Revenue Code as in
20        effect on that date), or (ii) the total gain realized
21        and reportable for federal income tax purposes in
22        respect of the sale, exchange or other disposition of
23        such property.
24            (B) If the fair market value of property referred
25        to in paragraph (1) was not readily ascertainable on
26        August 1, 1969, the pre-August 1, 1969 appreciation

 

 

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1        amount for such property is that amount which bears the
2        same ratio to the total gain reported in respect of the
3        property for federal income tax purposes for the
4        taxable year, as the number of full calendar months in
5        that part of the taxpayer's holding period for the
6        property ending July 31, 1969 bears to the number of
7        full calendar months in the taxpayer's entire holding
8        period for the property.
9            (C) The Department shall prescribe such
10        regulations as may be necessary to carry out the
11        purposes of this paragraph.
 
12    (g) Double deductions. Unless specifically provided
13otherwise, nothing in this Section shall permit the same item
14to be deducted more than once.
 
15    (h) Legislative intention. Except as expressly provided by
16this Section there shall be no modifications or limitations on
17the amounts of income, gain, loss or deduction taken into
18account in determining gross income, adjusted gross income or
19taxable income for federal income tax purposes for the taxable
20year, or in the amount of such items entering into the
21computation of base income and net income under this Act for
22such taxable year, whether in respect of property values as of
23August 1, 1969 or otherwise.
24(Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286,

 

 

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1eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08;
295-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09;
396-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff.
48-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935,
5eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)
 
6    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)
7    Sec. 204. Standard Exemption.
8    (a) Allowance of exemption. In computing net income under
9this Act, there shall be allowed as an exemption the sum of the
10amounts determined under subsections (b), (c) and (d),
11multiplied by a fraction the numerator of which is the amount
12of the taxpayer's base income allocable to this State for the
13taxable year and the denominator of which is the taxpayer's
14total base income for the taxable year.
15    (b) Basic amount. For the purpose of subsection (a) of this
16Section, except as provided by subsection (a) of Section 205
17and in this subsection, each taxpayer shall be allowed a basic
18amount of $1000, except that for corporations the basic amount
19shall be zero for tax years ending on or after December 31,
202003, and for individuals the basic amount shall be:
21        (1) for taxable years ending on or after December 31,
22    1998 and prior to December 31, 1999, $1,300;
23        (2) for taxable years ending on or after December 31,
24    1999 and prior to December 31, 2000, $1,650;
25        (3) for taxable years ending on or after December 31,

 

 

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1    2000, $2,000.
2For taxable years ending on or after December 31, 1992, a
3taxpayer whose Illinois base income exceeds the basic amount
4and who is claimed as a dependent on another person's tax
5return under the Internal Revenue Code of 1986 shall not be
6allowed any basic amount under this subsection.
7    (c) Additional amount for individuals. In the case of an
8individual taxpayer, there shall be allowed for the purpose of
9subsection (a), in addition to the basic amount provided by
10subsection (b), an additional exemption equal to the basic
11amount for each exemption in excess of one allowable to such
12individual taxpayer for the taxable year under Section 151 of
13the Internal Revenue Code.
14    (d) Additional exemptions for an individual taxpayer and
15his or her spouse. In the case of an individual taxpayer and
16his or her spouse, he or she shall each be allowed additional
17exemptions as follows:
18        (1) Additional exemption for taxpayer or spouse 65
19    years of age or older.
20            (A) For taxpayer. An additional exemption of
21        $1,000 for the taxpayer if he or she has attained the
22        age of 65 before the end of the taxable year.
23            (B) For spouse when a joint return is not filed. An
24        additional exemption of $1,000 for the spouse of the
25        taxpayer if a joint return is not made by the taxpayer
26        and his spouse, and if the spouse has attained the age

 

 

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1        of 65 before the end of such taxable year, and, for the
2        calendar year in which the taxable year of the taxpayer
3        begins, has no gross income and is not the dependent of
4        another taxpayer.
5        (2) Additional exemption for blindness of taxpayer or
6    spouse.
7            (A) For taxpayer. An additional exemption of
8        $1,000 for the taxpayer if he or she is blind at the
9        end of the taxable year.
10            (B) For spouse when a joint return is not filed. An
11        additional exemption of $1,000 for the spouse of the
12        taxpayer if a separate return is made by the taxpayer,
13        and if the spouse is blind and, for the calendar year
14        in which the taxable year of the taxpayer begins, has
15        no gross income and is not the dependent of another
16        taxpayer. For purposes of this paragraph, the
17        determination of whether the spouse is blind shall be
18        made as of the end of the taxable year of the taxpayer;
19        except that if the spouse dies during such taxable year
20        such determination shall be made as of the time of such
21        death.
22            (C) Blindness defined. For purposes of this
23        subsection, an individual is blind only if his or her
24        central visual acuity does not exceed 20/200 in the
25        better eye with correcting lenses, or if his or her
26        visual acuity is greater than 20/200 but is accompanied

 

 

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1        by a limitation in the fields of vision such that the
2        widest diameter of the visual fields subtends an angle
3        no greater than 20 degrees.
4    (e) Cross reference. See Article 3 for the manner of
5determining base income allocable to this State.
6    (f) Application of Section 250. Section 250 does not apply
7to the amendments to this Section made by Public Act 90-613.
8(Source: P.A. 93-29, eff. 6-20-03.)
 
9    (35 ILCS 5/205)  (from Ch. 120, par. 2-205)
10    Sec. 205. Exempt organizations.
11    (a) Charitable, etc. organizations. The base income of an
12organization which is exempt from the federal income tax by
13reason of Section 501(a) of the Internal Revenue Code shall not
14be determined under section 203 of this Act, but shall be its
15unrelated business taxable income as determined under section
16512 of the Internal Revenue Code, without any deduction for the
17tax imposed by this Act. The standard exemption provided by
18section 204 of this Act shall not be allowed in determining the
19net income of an organization to which this subsection applies.
20    (b) Partnerships. A partnership as such shall not be
21subject to the tax imposed by subsection 201 (a) and (b) of
22this Act, but shall be subject to the replacement tax imposed
23by subsection 201 (c) and (d) of this Act and shall compute its
24base income as described in subsection (d) of Section 203 of
25this Act. For taxable years ending on or after December 31,

 

 

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12004, an investment partnership, as defined in Section
21501(a)(11.5) of this Act, shall not be subject to the tax
3imposed by subsections (c) and (d) of Section 201 of this Act.
4A partnership shall file such returns and other information at
5such time and in such manner as may be required under Article 5
6of this Act. The partners in a partnership shall be liable for
7the replacement tax imposed by subsection 201 (c) and (d) of
8this Act on such partnership, to the extent such tax is not
9paid by the partnership, as provided under the laws of Illinois
10governing the liability of partners for the obligations of a
11partnership. Persons carrying on business as partners shall be
12liable for the tax imposed by subsection 201 (a) and (b) of
13this Act only in their separate or individual capacities.
14    (c) Subchapter S corporations. A Subchapter S corporation
15shall not be subject to the tax imposed by subsection 201 (a)
16and (b) of this Act but shall be subject to the replacement tax
17imposed by subsection 201 (c) and (d) of this Act and shall
18file such returns and other information at such time and in
19such manner as may be required under Article 5 of this Act.
20    (d) Combat zone, terrorist attack, and certain other deaths
21death. An individual relieved from the federal income tax for
22any taxable year by reason of section 692 of the Internal
23Revenue Code shall not be subject to the tax imposed by this
24Act for such taxable year.
25    (e) Certain trusts. A common trust fund described in
26Section 584 of the Internal Revenue Code, and any other trust

 

 

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1to the extent that the grantor is treated as the owner thereof
2under sections 671 through 678 of the Internal Revenue Code
3shall not be subject to the tax imposed by this Act.
4    (f) Certain business activities. A person not otherwise
5subject to the tax imposed by this Act shall not become subject
6to the tax imposed by this Act by reason of:
7        (1) that person's ownership of tangible personal
8    property located at the premises of a printer in this State
9    with which the person has contracted for printing, or
10        (2) activities of the person's employees or agents
11    located solely at the premises of a printer and related to
12    quality control, distribution, or printing services
13    performed by a printer in the State with which the person
14    has contracted for printing.
15    (g) A nonprofit risk organization that holds a certificate
16of authority under Article VIID of the Illinois Insurance Code
17is exempt from the tax imposed under this Act with respect to
18its activities or operations in furtherance of the powers
19conferred upon it under that Article VIID of the Illinois
20Insurance Code.
21(Source: P.A. 95-233, eff. 8-16-07; 95-331, eff. 8-21-07.)
 
22    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
23    Sec. 207. Net Losses.
24    (a) If after applying all of the (i) modifications provided
25for in paragraph (2) of Section 203(b), paragraph (2) of

 

 

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1Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
2allocation and apportionment provisions of Article 3 of this
3Act and subsection (c) of this Section, the taxpayer's net
4income results in a loss;
5        (1) for any taxable year ending prior to December 31,
6    1999, such loss shall be allowed as a carryover or
7    carryback deduction in the manner allowed under Section 172
8    of the Internal Revenue Code;
9        (2) for any taxable year ending on or after December
10    31, 1999 and prior to December 31, 2003, such loss shall be
11    allowed as a carryback to each of the 2 taxable years
12    preceding the taxable year of such loss and shall be a net
13    operating loss carryover to each of the 20 taxable years
14    following the taxable year of such loss; and
15        (3) for any taxable year ending on or after December
16    31, 2003, such loss shall be allowed as a net operating
17    loss carryover to each of the 12 taxable years following
18    the taxable year of such loss, except as provided in
19    subsection (d).
20    (a-5) Election to relinquish carryback and order of
21application of losses.
22            (A) For losses incurred in tax years ending prior
23        to December 31, 2003, the taxpayer may elect to
24        relinquish the entire carryback period with respect to
25        such loss. Such election shall be made in the form and
26        manner prescribed by the Department and shall be made

 

 

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1        by the due date (including extensions of time) for
2        filing the taxpayer's return for the taxable year in
3        which such loss is incurred, and such election, once
4        made, shall be irrevocable.
5            (B) The entire amount of such loss shall be carried
6        to the earliest taxable year to which such loss may be
7        carried. The amount of such loss which shall be carried
8        to each of the other taxable years shall be the excess,
9        if any, of the amount of such loss over the sum of the
10        deductions for carryback or carryover of such loss
11        allowable for each of the prior taxable years to which
12        such loss may be carried.
13    (b) Any loss determined under subsection (a) of this
14Section must be carried back or carried forward in the same
15manner for purposes of subsections (a) and (b) of Section 201
16of this Act as for purposes of subsections (c) and (d) of
17Section 201 of this Act.
18    (c) Notwithstanding any other provision of this Act, for
19each taxable year ending on or after December 31, 2008, for
20purposes of computing the loss for the taxable year under
21subsection (a) of this Section and the deduction taken into
22account for the taxable year for a net operating loss carryover
23under paragraphs (1), (2), and (3) of subsection (a) of this
24Section, the loss and net operating loss carryover shall be
25reduced in an amount equal to the reduction to the net
26operating loss and net operating loss carryover to the taxable

 

 

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1year, respectively, required under Section 108(b)(2)(A) of the
2Internal Revenue Code, multiplied by a fraction, the numerator
3of which is the amount of discharge of indebtedness income that
4is excluded from gross income for the taxable year (but only if
5the taxable year ends on or after December 31, 2008) under
6Section 108(a) of the Internal Revenue Code and that would have
7been allocated and apportioned to this State under Article 3 of
8this Act but for that exclusion, and the denominator of which
9is the total amount of discharge of indebtedness income
10excluded from gross income under Section 108(a) of the Internal
11Revenue Code for the taxable year. The reduction required under
12this subsection (c) shall be made after the determination of
13Illinois net income for the taxable year in which the
14indebtedness is discharged.
15    (d) In the case of a corporation (other than a Subchapter S
16corporation), no carryover deduction shall be allowed under
17this Section for any taxable year ending after December 31,
182010 and prior to December 31, 2014; provided that, for
19purposes of determining the taxable years to which a net loss
20may be carried under subsection (a) of this Section, no taxable
21year for which a deduction is disallowed under this subsection
22shall be counted.
23    (e) In the case of a residual interest holder in a real
24estate mortgage investment conduit subject to Section 860E of
25the Internal Revenue Code, the net loss in subsection (a) shall
26be equal to:

 

 

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1        (1) the amount computed under subsection (a), without
2    regard to this subsection (e), or if that amount is
3    positive, zero;
4        (2) minus an amount equal to the amount computed under
5    subsection (a), without regard to this subsection (e),
6    minus the amount that would be computed under subsection
7    (a) if the taxpayer's federal taxable income were computed
8    without regard to Section 860E of the Internal Revenue Code
9    and without regard to this subsection (e).
10    The modification in this subsection (e) is exempt from the
11provisions of Section 250.
12(Source: P.A. 95-233, eff. 8-16-07; 96-1496, eff. 1-13-11.)
 
13    (35 ILCS 5/214)
14    Sec. 214. Tax credit for affordable housing donations.
15    (a) Beginning with taxable years ending on or after
16December 31, 2001 and until the taxable year ending on December
1731, 2016, a taxpayer who makes a donation under Section 7.28 of
18the Illinois Housing Development Act is entitled to a credit
19against the tax imposed by subsections (a) and (b) of Section
20201 in an amount equal to 50% of the value of the donation.
21Partners, shareholders of subchapter S corporations, and
22owners of limited liability companies (if the limited liability
23company is treated as a partnership for purposes of federal and
24State income taxation) are entitled to a credit under this
25Section to be determined in accordance with the determination

 

 

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1of income and distributive share of income under Sections 702
2and 703 and subchapter S of the Internal Revenue Code. Persons
3or entities not subject to the tax imposed by subsections (a)
4and (b) of Section 201 and who make a donation under Section
57.28 of the Illinois Housing Development Act are entitled to a
6credit as described in this subsection and may transfer that
7credit as described in subsection (c).
8    (b) If the amount of the credit exceeds the tax liability
9for the year, the excess may be carried forward and applied to
10the tax liability of the 5 taxable years following the excess
11credit year. The tax credit shall be applied to the earliest
12year for which there is a tax liability. If there are credits
13for more than one year that are available to offset a
14liability, the earlier credit shall be applied first.
15    (c) The transfer of the tax credit allowed under this
16Section may be made (i) to the purchaser of land that has been
17designated solely for affordable housing projects in
18accordance with the Illinois Housing Development Act or (ii) to
19another donor who has also made a donation in accordance with
20Section 7.28 of the Illinois Housing Development Act.
21    (d) A taxpayer claiming the credit provided by this Section
22must maintain and record any information that the Department
23may require by regulation regarding the project for which the
24credit is claimed. When claiming the credit provided by this
25Section, the taxpayer must provide information regarding the
26taxpayer's donation to the project under the Illinois Housing

 

 

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1Development Act.
2(Source: P.A. 96-1276, eff. 7-26-10.)
 
3    (35 ILCS 5/220)
4    Sec. 220. Angel investment credit.
5    (a) As used in this Section:
6    "Applicant" means a corporation, partnership, limited
7liability company, or a natural person that makes an investment
8in a qualified new business venture. The term "applicant" does
9not include a corporation, partnership, limited liability
10company, or a natural person who has a direct or indirect
11ownership interest of at least 51% in the profits, capital, or
12value of the investment or a related member.
13    "Claimant" means an a applicant certified by the Department
14who files a claim for a credit under this Section.
15    "Department" means the Department of Commerce and Economic
16Opportunity.
17    "Qualified new business venture" means a business that is
18registered with the Department under this Section.
19    "Related member" means a person that, with respect to the
20investment, is any one of the following:
21        (1) An individual, if the individual and the members of
22    the individual's family (as defined in Section 318 of the
23    Internal Revenue Code) own directly, indirectly,
24    beneficially, or constructively, in the aggregate, at
25    least 50% of the value of the outstanding profits, capital,

 

 

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1    stock, or other ownership interest in the applicant.
2        (2) A partnership, estate, or trust and any partner or
3    beneficiary, if the partnership, estate, or trust and its
4    partners or beneficiaries own directly, indirectly,
5    beneficially, or constructively, in the aggregate, at
6    least 50% of the profits, capital, stock, or other
7    ownership interest in the applicant.
8        (3) A corporation, and any party related to the
9    corporation in a manner that would require an attribution
10    of stock from the corporation under the attribution rules
11    of Section 318 of the Internal Revenue Code, if the
12    applicant and any other related member own, in the
13    aggregate, directly, indirectly, beneficially, or
14    constructively, at least 50% of the value of the
15    corporation's outstanding stock.
16        (4) A corporation and any party related to that
17    corporation in a manner that would require an attribution
18    of stock from the corporation to the party or from the
19    party to the corporation under the attribution rules of
20    Section 318 of the Internal Revenue Code, if the
21    corporation and all such related parties own, in the
22    aggregate, at least 50% of the profits, capital, stock, or
23    other ownership interest in the applicant.
24        (5) A person to or from whom there is attribution of
25    stock ownership in accordance with Section 1563(e) of the
26    Internal Revenue Code, except that for purposes of

 

 

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1    determining whether a person is a related member under this
2    paragraph, "20%" shall be substituted for "5%" whenever
3    "5%" appears in Section 1563(e) of the Internal Revenue
4    Code.
5    (b) For taxable years beginning after December 31, 2010,
6and ending on or before December 31, 2016, subject to the
7limitations provided in this Section, a claimant may claim, as
8a credit against the tax imposed under subsections (a) and (b)
9of Section 201 of this Act, an amount equal to 25% of the
10claimant's investment made directly in a qualified new business
11venture. The credit under this Section may not exceed the
12taxpayer's Illinois income tax liability for the taxable year.
13If the amount of the credit exceeds the tax liability for the
14year, the excess may be carried forward and applied to the tax
15liability of the 5 taxable years following the excess credit
16year. The credit shall be applied to the earliest year for
17which there is a tax liability. If there are credits from more
18than one tax year that are available to offset a liability, the
19earlier credit shall be applied first. In the case of a
20partnership or Subchapter S Corporation, the credit is allowed
21to the partners or shareholders in accordance with the
22determination of income and distributive share of income under
23Sections 702 and 704 and Subchapter S of the Internal Revenue
24Code.
25    (c) The maximum amount of an applicant's investment that
26may be used as the basis for a credit under this Section is

 

 

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1$2,000,000 for each investment made directly in a qualified new
2business venture.
3    (d) The Department shall implement a program to certify an
4applicant for an angel investment credit. Upon satisfactory
5review, the Department shall issue a tax credit certificate
6stating the amount of the tax credit to which the applicant is
7entitled. The Department shall annually certify that the
8claimant's investment has been made and remains in the
9qualified new business venture for no less than 3 years. If an
10investment for which a claimant is allowed a credit under
11subsection (b) is held by the claimant for less than 3 years,
12or, if within that period of time the qualified new business
13venture is moved from the State of Illinois, the claimant shall
14pay to the Department of Revenue, in the manner prescribed by
15the Department of Revenue, the amount of the credit that the
16claimant received related to the investment.
17    (e) The Department shall implement a program to register
18qualified new business ventures for purposes of this Section. A
19business desiring registration shall submit an application to
20the Department in each taxable year for which the business
21desires registration. The Department may register the business
22only if the business satisfies all of the following conditions:
23        (1) it has its headquarters in this State;
24        (2) at least 51% of the employees employed by the
25    business are employed in this State;
26        (3) it has the potential for increasing jobs in this

 

 

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1    State, increasing capital investment in this State, or
2    both, and either of the following apply:
3            (A) it is principally engaged in innovation in any
4        of the following: manufacturing; biotechnology;
5        nanotechnology; communications; agricultural sciences;
6        clean energy creation or storage technology;
7        processing or assembling products, including medical
8        devices, pharmaceuticals, computer software, computer
9        hardware, semiconductors, other innovative technology
10        products, or other products that are produced using
11        manufacturing methods that are enabled by applying
12        proprietary technology; or providing services that are
13        enabled by applying proprietary technology; or
14            (B) it is undertaking pre-commercialization
15        activity related to proprietary technology that
16        includes conducting research, developing a new product
17        or business process, or developing a service that is
18        principally reliant on applying proprietary
19        technology;
20        (4) it is not principally engaged in real estate
21    development, insurance, banking, lending, lobbying,
22    political consulting, professional services provided by
23    attorneys, accountants, business consultants, physicians,
24    or health care consultants, wholesale or retail trade,
25    leisure, hospitality, transportation, or construction,
26    except construction of power production plants that derive

 

 

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1    energy from a renewable energy resource, as defined in
2    Section 1 of the Illinois Power Agency Act;
3        (5) it has fewer than 100 employees;
4        (6) it has been in operation in Illinois for not more
5    than 10 consecutive years prior to the year of
6    certification; and
7        (7) it has received not more than (i) $10,000,000 in
8    aggregate private equity investment in cash or (ii)
9    $4,000,000 in investments that qualified for tax credits
10    under this Section.
11    (f) The Department, in consultation with the Department of
12Revenue, shall adopt rules to administer this Section. The
13aggregate amount of the tax credits that may be claimed under
14this Section for investments made in qualified new business
15ventures shall be limited at $10,000,000 per calendar year.
16    (g) A claimant may not sell or otherwise transfer a credit
17awarded under this Section to another person.
18    (h) On or before March 1 of each year, the Department shall
19report to the Governor and to the General Assembly on the tax
20credit certificates awarded under this Section for the prior
21calendar year.
22        (1) This report must include, for each tax credit
23    certificate awarded:
24            (A) the name of the claimant and the amount of
25        credit awarded or allocated to that claimant;
26            (B) the name and address of the qualified new

 

 

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1        business venture that received the investment giving
2        rise to the credit and the county in which the
3        qualified new business venture is located; and
4            (C) the date of approval by the Department of the
5        applications for the tax credit certificate.
6        (2) The report must also include:
7            (A) the total number of applicants and amount for
8        tax credit certificates awarded under this Section in
9        the prior calendar year;
10            (B) the total number of applications and amount for
11        which tax credit certificates were issued in the prior
12        calendar year; and
13            (C) the total tax credit certificates and amount
14        authorized under this Section for all calendar years.
15(Source: P.A. 96-939, eff. 1-1-11.)
 
16    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
17    Sec. 304. Business income of persons other than residents.
18    (a) In general. The business income of a person other than
19a resident shall be allocated to this State if such person's
20business income is derived solely from this State. If a person
21other than a resident derives business income from this State
22and one or more other states, then, for tax years ending on or
23before December 30, 1998, and except as otherwise provided by
24this Section, such person's business income shall be
25apportioned to this State by multiplying the income by a

 

 

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1fraction, the numerator of which is the sum of the property
2factor (if any), the payroll factor (if any) and 200% of the
3sales factor (if any), and the denominator of which is 4
4reduced by the number of factors other than the sales factor
5which have a denominator of zero and by an additional 2 if the
6sales factor has a denominator of zero. For tax years ending on
7or after December 31, 1998, and except as otherwise provided by
8this Section, persons other than residents who derive business
9income from this State and one or more other states shall
10compute their apportionment factor by weighting their
11property, payroll, and sales factors as provided in subsection
12(h) of this Section.
13    (1) Property factor.
14        (A) The property factor is a fraction, the numerator of
15    which is the average value of the person's real and
16    tangible personal property owned or rented and used in the
17    trade or business in this State during the taxable year and
18    the denominator of which is the average value of all the
19    person's real and tangible personal property owned or
20    rented and used in the trade or business during the taxable
21    year.
22        (B) Property owned by the person is valued at its
23    original cost. Property rented by the person is valued at 8
24    times the net annual rental rate. Net annual rental rate is
25    the annual rental rate paid by the person less any annual
26    rental rate received by the person from sub-rentals.

 

 

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

 

 

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

 

 

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

 

 

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1                athletic team includes conducting training and
2                rehabilitation activities, when such
3                activities are conducted at team facilities.
4                    (B) Also included in duty days are game
5                days, practice days, days spent at team
6                meetings, promotional caravans, preseason
7                training camps, and days served with the team
8                through all post-season games in which the team
9                competes or is scheduled to compete.
10                    (C) Duty days for any person who joins a
11                team during the period from the beginning of
12                the professional athletic team's official
13                pre-season training period through the last
14                game in which the team competes, or is
15                scheduled to compete, shall begin on the day
16                that person joins the team. Conversely, duty
17                days for any person who leaves a team during
18                this period shall end on the day that person
19                leaves the team. Where a person switches teams
20                during a taxable year, a separate duty-day
21                calculation shall be made for the period the
22                person was with each team.
23                    (D) Days for which a member of a
24                professional athletic team is not compensated
25                and is not performing services for the team in
26                any manner, including days when such member of

 

 

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

 

 

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

 

 

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

 

 

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1        or purchaser is a person with 80% or more of total
2        business activity outside of the United States and the
3        property is purchased for resale.
4        (B-1) Patents, copyrights, trademarks, and similar
5    items of intangible personal property.
6            (i) Gross receipts from the licensing, sale, or
7        other disposition of a patent, copyright, trademark,
8        or similar item of intangible personal property, other
9        than gross receipts governed by paragraph (B-7) of this
10        item (3), are in this State to the extent the item is
11        utilized in this State during the year the gross
12        receipts are included in gross income.
13            (ii) Place of utilization.
14                (I) A patent is utilized in a state to the
15            extent that it is employed in production,
16            fabrication, manufacturing, or other processing in
17            the state or to the extent that a patented product
18            is produced in the state. If a patent is utilized
19            in more than one state, the extent to which it is
20            utilized in any one state shall be a fraction equal
21            to the gross receipts of the licensee or purchaser
22            from sales or leases of items produced,
23            fabricated, manufactured, or processed within that
24            state using the patent and of patented items
25            produced within that state, divided by the total of
26            such gross receipts for all states in which the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            service providers, as defined in 47 CFR 20.3;
2                (h) "Ancillary services"; or
3                (i) Digital products "delivered
4            electronically", including but not limited to
5            software, music, video, reading materials or ring
6            tones.
7            "Vertical service" means an "ancillary service"
8        that is offered in connection with one or more
9        "telecommunications services", which offers advanced
10        calling features that allow customers to identify
11        callers and to manage multiple calls and call
12        connections, including "conference bridging services".
13            "Voice mail service" means an "ancillary service"
14        that enables the customer to store, send or receive
15        recorded messages. "Voice mail service" does not
16        include any "vertical services" that the customer may
17        be required to have in order to utilize the "voice mail
18        service".
19            (ii) Receipts from the sale of telecommunications
20        service sold on an individual call-by-call basis are in
21        this State if either of the following applies:
22                (a) The call both originates and terminates in
23            this State.
24                (b) The call either originates or terminates
25            in this State and the service address is located in
26            this State.

 

 

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1            (iii) Receipts from the sale of postpaid
2        telecommunications service at retail are in this State
3        if the origination point of the telecommunication
4        signal, as first identified by the service provider's
5        telecommunication system or as identified by
6        information received by the seller from its service
7        provider if the system used to transport
8        telecommunication signals is not the seller's, is
9        located in this State.
10            (iv) Receipts from the sale of prepaid
11        telecommunications service or prepaid mobile
12        telecommunications service at retail are in this State
13        if the purchaser obtains the prepaid card or similar
14        means of conveyance at a location in this State.
15        Receipts from recharging a prepaid telecommunications
16        service or mobile telecommunications service is in
17        this State if the purchaser's billing information
18        indicates a location in this State.
19            (v) Receipts from the sale of private
20        communication services are in this State as follows:
21                (a) 100% of receipts from charges imposed at
22            each channel termination point in this State.
23                (b) 100% of receipts from charges for the total
24            channel mileage between each channel termination
25            point in this State.
26                (c) 50% of the total receipts from charges for

 

 

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1            service segments when those segments are between 2
2            customer channel termination points, 1 of which is
3            located in this State and the other is located
4            outside of this State, which segments are
5            separately charged.
6                (d) The receipts from charges for service
7            segments with a channel termination point located
8            in this State and in two or more other states, and
9            which segments are not separately billed, are in
10            this State based on a percentage determined by
11            dividing the number of customer channel
12            termination points in this State by the total
13            number of customer channel termination points.
14            (vi) Receipts from charges for ancillary services
15        for telecommunications service sold to customers at
16        retail are in this State if the customer's primary
17        place of use of telecommunications services associated
18        with those ancillary services is in this State. If the
19        seller of those ancillary services cannot determine
20        where the associated telecommunications are located,
21        then the ancillary services shall be based on the
22        location of the purchaser.
23            (vii) Receipts to access a carrier's network or
24        from the sale of telecommunication services or
25        ancillary services for resale are in this State as
26        follows:

 

 

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1                (a) 100% of the receipts from access fees
2            attributable to intrastate telecommunications
3            service that both originates and terminates in
4            this State.
5                (b) 50% of the receipts from access fees
6            attributable to interstate telecommunications
7            service if the interstate call either originates
8            or terminates in this State.
9                (c) 100% of the receipts from interstate end
10            user access line charges, if the customer's
11            service address is in this State. As used in this
12            subdivision, "interstate end user access line
13            charges" includes, but is not limited to, the
14            surcharge approved by the federal communications
15            commission and levied pursuant to 47 CFR 69.
16                (d) Gross receipts from sales of
17            telecommunication services or from ancillary
18            services for telecommunications services sold to
19            other telecommunication service providers for
20            resale shall be sourced to this State using the
21            apportionment concepts used for non-resale
22            receipts of telecommunications services if the
23            information is readily available to make that
24            determination. If the information is not readily
25            available, then the taxpayer may use any other
26            reasonable and consistent method.

 

 

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1        (B-7) For taxable years ending on or after December 31,
2    2008, receipts from the sale of broadcasting services are
3    in this State if the broadcasting services are received in
4    this State. For purposes of this paragraph (B-7), the
5    following terms have the following meanings:
6            "Advertising revenue" means consideration received
7        by the taxpayer in exchange for broadcasting services
8        or allowing the broadcasting of commercials or
9        announcements in connection with the broadcasting of
10        film or radio programming, from sponsorships of the
11        programming, or from product placements in the
12        programming.
13            "Audience factor" means the ratio that the
14        audience or subscribers located in this State of a
15        station, a network, or a cable system bears to the
16        total audience or total subscribers for that station,
17        network, or cable system. The audience factor for film
18        or radio programming shall be determined by reference
19        to the books and records of the taxpayer or by
20        reference to published rating statistics provided the
21        method used by the taxpayer is consistently used from
22        year to year for this purpose and fairly represents the
23        taxpayer's activity in this State.
24            "Broadcast" or "broadcasting" or "broadcasting
25        services" means the transmission or provision of film
26        or radio programming, whether through the public

 

 

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1        airwaves, by cable, by direct or indirect satellite
2        transmission, or by any other means of communication,
3        either through a station, a network, or a cable system.
4            "Film" or "film programming" means the broadcast
5        on television of any and all performances, events, or
6        productions, including but not limited to news,
7        sporting events, plays, stories, or other literary,
8        commercial, educational, or artistic works, either
9        live or through the use of video tape, disc, or any
10        other type of format or medium. Each episode of a
11        series of films produced for television shall
12        constitute separate "film" notwithstanding that the
13        series relates to the same principal subject and is
14        produced during one or more tax periods.
15            "Radio" or "radio programming" means the broadcast
16        on radio of any and all performances, events, or
17        productions, including but not limited to news,
18        sporting events, plays, stories, or other literary,
19        commercial, educational, or artistic works, either
20        live or through the use of an audio tape, disc, or any
21        other format or medium. Each episode in a series of
22        radio programming produced for radio broadcast shall
23        constitute a separate "radio programming"
24        notwithstanding that the series relates to the same
25        principal subject and is produced during one or more
26        tax periods.

 

 

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1                (i) In the case of advertising revenue from
2            broadcasting, the customer is the advertiser and
3            the service is received in this State if the
4            commercial domicile of the advertiser is in this
5            State.
6                (ii) In the case where film or radio
7            programming is broadcast by a station, a network,
8            or a cable system for a fee or other remuneration
9            received from the recipient of the broadcast, the
10            portion of the service that is received in this
11            State is measured by the portion of the recipients
12            of the broadcast located in this State.
13            Accordingly, the fee or other remuneration for
14            such service that is included in the Illinois
15            numerator of the sales factor is the total of those
16            fees or other remuneration received from
17            recipients in Illinois. For purposes of this
18            paragraph, a taxpayer may determine the location
19            of the recipients of its broadcast using the
20            address of the recipient shown in its contracts
21            with the recipient or using the billing address of
22            the recipient in the taxpayer's records.
23                (iii) In the case where film or radio
24            programming is broadcast by a station, a network,
25            or a cable system for a fee or other remuneration
26            from the person providing the programming, the

 

 

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1            portion of the broadcast service that is received
2            by such station, network, or cable system in this
3            State is measured by the portion of recipients of
4            the broadcast located in this State. Accordingly,
5            the amount of revenue related to such an
6            arrangement that is included in the Illinois
7            numerator of the sales factor is the total fee or
8            other total remuneration from the person providing
9            the programming related to that broadcast
10            multiplied by the Illinois audience factor for
11            that broadcast.
12                (iv) In the case where film or radio
13            programming is provided by a taxpayer that is a
14            network or station to a customer for broadcast in
15            exchange for a fee or other remuneration from that
16            customer the broadcasting service is received at
17            the location of the office of the customer from
18            which the services were ordered in the regular
19            course of the customer's trade or business.
20            Accordingly, in such a case the revenue derived by
21            the taxpayer that is included in the taxpayer's
22            Illinois numerator of the sales factor is the
23            revenue from such customers who receive the
24            broadcasting service in Illinois.
25                (v) In the case where film or radio programming
26            is provided by a taxpayer that is not a network or

 

 

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1            station to another person for broadcasting in
2            exchange for a fee or other remuneration from that
3            person, the broadcasting service is received at
4            the location of the office of the customer from
5            which the services were ordered in the regular
6            course of the customer's trade or business.
7            Accordingly, in such a case the revenue derived by
8            the taxpayer that is included in the taxpayer's
9            Illinois numerator of the sales factor is the
10            revenue from such customers who receive the
11            broadcasting service in Illinois.
12        (C) For taxable years ending before December 31, 2008,
13    sales, other than sales governed by paragraphs (B), (B-1),
14    and (B-2), are in this State if:
15            (i) The income-producing activity is performed in
16        this State; or
17            (ii) The income-producing activity is performed
18        both within and without this State and a greater
19        proportion of the income-producing activity is
20        performed within this State than without this State,
21        based on performance costs.
22        (C-5) For taxable years ending on or after December 31,
23    2008, sales, other than sales governed by paragraphs (B),
24    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
25    the following criteria are met:
26            (i) Sales from the sale or lease of real property

 

 

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1        are in this State if the property is located in this
2        State.
3            (ii) Sales from the lease or rental of tangible
4        personal property are in this State if the property is
5        located in this State during the rental period. Sales
6        from the lease or rental of tangible personal property
7        that is characteristically moving property, including,
8        but not limited to, motor vehicles, rolling stock,
9        aircraft, vessels, or mobile equipment are in this
10        State to the extent that the property is used in this
11        State.
12            (iii) In the case of interest, net gains (but not
13        less than zero) and other items of income from
14        intangible personal property, the sale is in this State
15        if:
16                (a) in the case of a taxpayer who is a dealer
17            in the item of intangible personal property within
18            the meaning of Section 475 of the Internal Revenue
19            Code, the income or gain is received from a
20            customer in this State. For purposes of this
21            subparagraph, a customer is in this State if the
22            customer is an individual, trust or estate who is a
23            resident of this State and, for all other
24            customers, if the customer's commercial domicile
25            is in this State. Unless the dealer has actual
26            knowledge of the residence or commercial domicile

 

 

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1            of a customer during a taxable year, the customer
2            shall be deemed to be a customer in this State if
3            the billing address of the customer, as shown in
4            the records of the dealer, is in this State; or
5                (b) in all other cases, if the
6            income-producing activity of the taxpayer is
7            performed in this State or, if the
8            income-producing activity of the taxpayer is
9            performed both within and without this State, if a
10            greater proportion of the income-producing
11            activity of the taxpayer is performed within this
12            State than in any other state, based on performance
13            costs.
14            (iv) Sales of services are in this State if the
15        services are received in this State. For the purposes
16        of this section, gross receipts from the performance of
17        services provided to a corporation, partnership, or
18        trust may only be attributed to a state where that
19        corporation, partnership, or trust has a fixed place of
20        business. If the state where the services are received
21        is not readily determinable or is a state where the
22        corporation, partnership, or trust receiving the
23        service does not have a fixed place of business, the
24        services shall be deemed to be received at the location
25        of the office of the customer from which the services
26        were ordered in the regular course of the customer's

 

 

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1        trade or business. If the ordering office cannot be
2        determined, the services shall be deemed to be received
3        at the office of the customer to which the services are
4        billed. If the taxpayer is not taxable in the state in
5        which the services are received, the sale must be
6        excluded from both the numerator and the denominator of
7        the sales factor. The Department shall adopt rules
8        prescribing where specific types of service are
9        received, including, but not limited to, publishing,
10        and utility service.
11        (D) For taxable years ending on or after December 31,
12    1995, the following items of income shall not be included
13    in the numerator or denominator of the sales factor:
14    dividends; amounts included under Section 78 of the
15    Internal Revenue Code; and Subpart F income as defined in
16    Section 952 of the Internal Revenue Code. No inference
17    shall be drawn from the enactment of this paragraph (D) in
18    construing this Section for taxable years ending before
19    December 31, 1995.
20        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
21    ending on or after December 31, 1999, provided that a
22    taxpayer may elect to apply the provisions of these
23    paragraphs to prior tax years. Such election shall be made
24    in the form and manner prescribed by the Department, shall
25    be irrevocable, and shall apply to all tax years; provided
26    that, if a taxpayer's Illinois income tax liability for any

 

 

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1    tax year, as assessed under Section 903 prior to January 1,
2    1999, was computed in a manner contrary to the provisions
3    of paragraphs (B-1) or (B-2), no refund shall be payable to
4    the taxpayer for that tax year to the extent such refund is
5    the result of applying the provisions of paragraph (B-1) or
6    (B-2) retroactively. In the case of a unitary business
7    group, such election shall apply to all members of such
8    group for every tax year such group is in existence, but
9    shall not apply to any taxpayer for any period during which
10    that taxpayer is not a member of such group.
11    (b) Insurance companies.
12        (1) In general. Except as otherwise provided by
13    paragraph (2), business income of an insurance company for
14    a taxable year shall be apportioned to this State by
15    multiplying such income by a fraction, the numerator of
16    which is the direct premiums written for insurance upon
17    property or risk in this State, and the denominator of
18    which is the direct premiums written for insurance upon
19    property or risk everywhere. For purposes of this
20    subsection, the term "direct premiums written" means the
21    total amount of direct premiums written, assessments and
22    annuity considerations as reported for the taxable year on
23    the annual statement filed by the company with the Illinois
24    Director of Insurance in the form approved by the National
25    Convention of Insurance Commissioners or such other form as
26    may be prescribed in lieu thereof.

 

 

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1        (2) Reinsurance. If the principal source of premiums
2    written by an insurance company consists of premiums for
3    reinsurance accepted by it, the business income of such
4    company shall be apportioned to this State by multiplying
5    such income by a fraction, the numerator of which is the
6    sum of (i) direct premiums written for insurance upon
7    property or risk in this State, plus (ii) premiums written
8    for reinsurance accepted in respect of property or risk in
9    this State, and the denominator of which is the sum of
10    (iii) direct premiums written for insurance upon property
11    or risk everywhere, plus (iv) premiums written for
12    reinsurance accepted in respect of property or risk
13    everywhere. For taxable years ending before December 31,
14    2008, for purposes of this paragraph, premiums written for
15    reinsurance accepted in respect of property or risk in this
16    State, whether or not otherwise determinable, may, at the
17    election of the company, be determined on the basis of the
18    proportion which premiums written for reinsurance accepted
19    from companies commercially domiciled in Illinois bears to
20    premiums written for reinsurance accepted from all
21    sources, or, alternatively, in the proportion which the sum
22    of the direct premiums written for insurance upon property
23    or risk in this State by each ceding company from which
24    reinsurance is accepted bears to the sum of the total
25    direct premiums written by each such ceding company for the
26    taxable year. The election made by a company under this

 

 

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1    paragraph for its first taxable year ending on or after
2    December 31, 2011, shall be binding for that company for
3    that taxable year and for all subsequent taxable years, and
4    may be altered only with the written permission of the
5    Department, which shall not be unreasonably withheld.
6    (c) Financial organizations.
7        (1) In general. For taxable years ending before
8    December 31, 2008, business income of a financial
9    organization shall be apportioned to this State by
10    multiplying such income by a fraction, the numerator of
11    which is its business income from sources within this
12    State, and the denominator of which is its business income
13    from all sources. For the purposes of this subsection, the
14    business income of a financial organization from sources
15    within this State is the sum of the amounts referred to in
16    subparagraphs (A) through (E) following, but excluding the
17    adjusted income of an international banking facility as
18    determined in paragraph (2):
19            (A) Fees, commissions or other compensation for
20        financial services rendered within this State;
21            (B) Gross profits from trading in stocks, bonds or
22        other securities managed within this State;
23            (C) Dividends, and interest from Illinois
24        customers, which are received within this State;
25            (D) Interest charged to customers at places of
26        business maintained within this State for carrying

 

 

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1        debit balances of margin accounts, without deduction
2        of any costs incurred in carrying such accounts; and
3            (E) Any other gross income resulting from the
4        operation as a financial organization within this
5        State. In computing the amounts referred to in
6        paragraphs (A) through (E) of this subsection, any
7        amount received by a member of an affiliated group
8        (determined under Section 1504(a) of the Internal
9        Revenue Code but without reference to whether any such
10        corporation is an "includible corporation" under
11        Section 1504(b) of the Internal Revenue Code) from
12        another member of such group shall be included only to
13        the extent such amount exceeds expenses of the
14        recipient directly related thereto.
15        (2) International Banking Facility. For taxable years
16    ending before December 31, 2008:
17            (A) Adjusted Income. The adjusted income of an
18        international banking facility is its income reduced
19        by the amount of the floor amount.
20            (B) Floor Amount. The floor amount shall be the
21        amount, if any, determined by multiplying the income of
22        the international banking facility by a fraction, not
23        greater than one, which is determined as follows:
24                (i) The numerator shall be:
25                The average aggregate, determined on a
26            quarterly basis, of the financial organization's

 

 

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1            loans to banks in foreign countries, to foreign
2            domiciled borrowers (except where secured
3            primarily by real estate) and to foreign
4            governments and other foreign official
5            institutions, as reported for its branches,
6            agencies and offices within the state on its
7            "Consolidated Report of Condition", Schedule A,
8            Lines 2.c., 5.b., and 7.a., which was filed with
9            the Federal Deposit Insurance Corporation and
10            other regulatory authorities, for the year 1980,
11            minus
12                The average aggregate, determined on a
13            quarterly basis, of such loans (other than loans of
14            an international banking facility), as reported by
15            the financial institution for its branches,
16            agencies and offices within the state, on the
17            corresponding Schedule and lines of the
18            Consolidated Report of Condition for the current
19            taxable year, provided, however, that in no case
20            shall the amount determined in this clause (the
21            subtrahend) exceed the amount determined in the
22            preceding clause (the minuend); and
23                (ii) the denominator shall be the average
24            aggregate, determined on a quarterly basis, of the
25            international banking facility's loans to banks in
26            foreign countries, to foreign domiciled borrowers

 

 

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1            (except where secured primarily by real estate)
2            and to foreign governments and other foreign
3            official institutions, which were recorded in its
4            financial accounts for the current taxable year.
5            (C) Change to Consolidated Report of Condition and
6        in Qualification. In the event the Consolidated Report
7        of Condition which is filed with the Federal Deposit
8        Insurance Corporation and other regulatory authorities
9        is altered so that the information required for
10        determining the floor amount is not found on Schedule
11        A, lines 2.c., 5.b. and 7.a., the financial institution
12        shall notify the Department and the Department may, by
13        regulations or otherwise, prescribe or authorize the
14        use of an alternative source for such information. The
15        financial institution shall also notify the Department
16        should its international banking facility fail to
17        qualify as such, in whole or in part, or should there
18        be any amendment or change to the Consolidated Report
19        of Condition, as originally filed, to the extent such
20        amendment or change alters the information used in
21        determining the floor amount.
22        (3) For taxable years ending on or after December 31,
23    2008, the business income of a financial organization shall
24    be apportioned to this State by multiplying such income by
25    a fraction, the numerator of which is its gross receipts
26    from sources in this State or otherwise attributable to

 

 

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1    this State's marketplace and the denominator of which is
2    its gross receipts everywhere during the taxable year.
3    "Gross receipts" for purposes of this subparagraph (3)
4    means gross income, including net taxable gain on
5    disposition of assets, including securities and money
6    market instruments, when derived from transactions and
7    activities in the regular course of the financial
8    organization's trade or business. The following examples
9    are illustrative:
10            (i) Receipts from the lease or rental of real or
11        tangible personal property are in this State if the
12        property is located in this State during the rental
13        period. Receipts from the lease or rental of tangible
14        personal property that is characteristically moving
15        property, including, but not limited to, motor
16        vehicles, rolling stock, aircraft, vessels, or mobile
17        equipment are from sources in this State to the extent
18        that the property is used in this State.
19            (ii) Interest income, commissions, fees, gains on
20        disposition, and other receipts from assets in the
21        nature of loans that are secured primarily by real
22        estate or tangible personal property are from sources
23        in this State if the security is located in this State.
24            (iii) Interest income, commissions, fees, gains on
25        disposition, and other receipts from consumer loans
26        that are not secured by real or tangible personal

 

 

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1        property are from sources in this State if the debtor
2        is a resident of this State.
3            (iv) Interest income, commissions, fees, gains on
4        disposition, and other receipts from commercial loans
5        and installment obligations that are not secured by
6        real or tangible personal property are from sources in
7        this State if the proceeds of the loan are to be
8        applied in this State. If it cannot be determined where
9        the funds are to be applied, the income and receipts
10        are from sources in this State if the office of the
11        borrower from which the loan was negotiated in the
12        regular course of business is located in this State. If
13        the location of this office cannot be determined, the
14        income and receipts shall be excluded from the
15        numerator and denominator of the sales factor.
16            (v) Interest income, fees, gains on disposition,
17        service charges, merchant discount income, and other
18        receipts from credit card receivables are from sources
19        in this State if the card charges are regularly billed
20        to a customer in this State.
21            (vi) Receipts from the performance of services,
22        including, but not limited to, fiduciary, advisory,
23        and brokerage services, are in this State if the
24        services are received in this State within the meaning
25        of subparagraph (a)(3)(C-5)(iv) of this Section.
26            (vii) Receipts from the issuance of travelers

 

 

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1        checks and money orders are from sources in this State
2        if the checks and money orders are issued from a
3        location within this State.
4            (viii) Receipts from investment assets and
5        activities and trading assets and activities are
6        included in the receipts factor as follows:
7                (1) Interest, dividends, net gains (but not
8            less than zero) and other income from investment
9            assets and activities from trading assets and
10            activities shall be included in the receipts
11            factor. Investment assets and activities and
12            trading assets and activities include but are not
13            limited to: investment securities; trading account
14            assets; federal funds; securities purchased and
15            sold under agreements to resell or repurchase;
16            options; futures contracts; forward contracts;
17            notional principal contracts such as swaps;
18            equities; and foreign currency transactions. With
19            respect to the investment and trading assets and
20            activities described in subparagraphs (A) and (B)
21            of this paragraph, the receipts factor shall
22            include the amounts described in such
23            subparagraphs.
24                    (A) The receipts factor shall include the
25                amount by which interest from federal funds
26                sold and securities purchased under resale

 

 

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1                agreements exceeds interest expense on federal
2                funds purchased and securities sold under
3                repurchase agreements.
4                    (B) The receipts factor shall include the
5                amount by which interest, dividends, gains and
6                other income from trading assets and
7                activities, including but not limited to
8                assets and activities in the matched book, in
9                the arbitrage book, and foreign currency
10                transactions, exceed amounts paid in lieu of
11                interest, amounts paid in lieu of dividends,
12                and losses from such assets and activities.
13                (2) The numerator of the receipts factor
14            includes interest, dividends, net gains (but not
15            less than zero), and other income from investment
16            assets and activities and from trading assets and
17            activities described in paragraph (1) of this
18            subsection that are attributable to this State.
19                    (A) The amount of interest, dividends, net
20                gains (but not less than zero), and other
21                income from investment assets and activities
22                in the investment account to be attributed to
23                this State and included in the numerator is
24                determined by multiplying all such income from
25                such assets and activities by a fraction, the
26                numerator of which is the gross income from

 

 

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1                such assets and activities which are properly
2                assigned to a fixed place of business of the
3                taxpayer within this State and the denominator
4                of which is the gross income from all such
5                assets and activities.
6                    (B) The amount of interest from federal
7                funds sold and purchased and from securities
8                purchased under resale agreements and
9                securities sold under repurchase agreements
10                attributable to this State and included in the
11                numerator is determined by multiplying the
12                amount described in subparagraph (A) of
13                paragraph (1) of this subsection from such
14                funds and such securities by a fraction, the
15                numerator of which is the gross income from
16                such funds and such securities which are
17                properly assigned to a fixed place of business
18                of the taxpayer within this State and the
19                denominator of which is the gross income from
20                all such funds and such securities.
21                    (C) The amount of interest, dividends,
22                gains, and other income from trading assets and
23                activities, including but not limited to
24                assets and activities in the matched book, in
25                the arbitrage book and foreign currency
26                transactions (but excluding amounts described

 

 

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1                in subparagraphs (A) or (B) of this paragraph),
2                attributable to this State and included in the
3                numerator is determined by multiplying the
4                amount described in subparagraph (B) of
5                paragraph (1) of this subsection by a fraction,
6                the numerator of which is the gross income from
7                such trading assets and activities which are
8                properly assigned to a fixed place of business
9                of the taxpayer within this State and the
10                denominator of which is the gross income from
11                all such assets and activities.
12                    (D) Properly assigned, for purposes of
13                this paragraph (2) of this subsection, means
14                the investment or trading asset or activity is
15                assigned to the fixed place of business with
16                which it has a preponderance of substantive
17                contacts. An investment or trading asset or
18                activity assigned by the taxpayer to a fixed
19                place of business without the State shall be
20                presumed to have been properly assigned if:
21                        (i) the taxpayer has assigned, in the
22                    regular course of its business, such asset
23                    or activity on its records to a fixed place
24                    of business consistent with federal or
25                    state regulatory requirements;
26                        (ii) such assignment on its records is

 

 

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1                    based upon substantive contacts of the
2                    asset or activity to such fixed place of
3                    business; and
4                        (iii) the taxpayer uses such records
5                    reflecting assignment of such assets or
6                    activities for the filing of all state and
7                    local tax returns for which an assignment
8                    of such assets or activities to a fixed
9                    place of business is required.
10                    (E) The presumption of proper assignment
11                of an investment or trading asset or activity
12                provided in subparagraph (D) of paragraph (2)
13                of this subsection may be rebutted upon a
14                showing by the Department, supported by a
15                preponderance of the evidence, that the
16                preponderance of substantive contacts
17                regarding such asset or activity did not occur
18                at the fixed place of business to which it was
19                assigned on the taxpayer's records. If the
20                fixed place of business that has a
21                preponderance of substantive contacts cannot
22                be determined for an investment or trading
23                asset or activity to which the presumption in
24                subparagraph (D) of paragraph (2) of this
25                subsection does not apply or with respect to
26                which that presumption has been rebutted, that

 

 

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1                asset or activity is properly assigned to the
2                state in which the taxpayer's commercial
3                domicile is located. For purposes of this
4                subparagraph (E), it shall be presumed,
5                subject to rebuttal, that taxpayer's
6                commercial domicile is in the state of the
7                United States or the District of Columbia to
8                which the greatest number of employees are
9                regularly connected with the management of the
10                investment or trading income or out of which
11                they are working, irrespective of where the
12                services of such employees are performed, as of
13                the last day of the taxable year.
14        (4) (Blank).
15        (5) (Blank).
16    (d) Transportation services. For taxable years ending
17before December 31, 2008, business income derived from
18furnishing transportation services shall be apportioned to
19this State in accordance with paragraphs (1) and (2):
20        (1) Such business income (other than that derived from
21    transportation by pipeline) shall be apportioned to this
22    State by multiplying such income by a fraction, the
23    numerator of which is the revenue miles of the person in
24    this State, and the denominator of which is the revenue
25    miles of the person everywhere. For purposes of this
26    paragraph, a revenue mile is the transportation of 1

 

 

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1    passenger or 1 net ton of freight the distance of 1 mile
2    for a consideration. Where a person is engaged in the
3    transportation of both passengers and freight, the
4    fraction above referred to shall be determined by means of
5    an average of the passenger revenue mile fraction and the
6    freight revenue mile fraction, weighted to reflect the
7    person's
8            (A) relative railway operating income from total
9        passenger and total freight service, as reported to the
10        Interstate Commerce Commission, in the case of
11        transportation by railroad, and
12            (B) relative gross receipts from passenger and
13        freight transportation, in case of transportation
14        other than by railroad.
15        (2) Such business income derived from transportation
16    by pipeline shall be apportioned to this State by
17    multiplying such income by a fraction, the numerator of
18    which is the revenue miles of the person in this State, and
19    the denominator of which is the revenue miles of the person
20    everywhere. For the purposes of this paragraph, a revenue
21    mile is the transportation by pipeline of 1 barrel of oil,
22    1,000 cubic feet of gas, or of any specified quantity of
23    any other substance, the distance of 1 mile for a
24    consideration.
25        (3) For taxable years ending on or after December 31,
26    2008, business income derived from providing

 

 

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1    transportation services other than airline services shall
2    be apportioned to this State by using a fraction, (a) the
3    numerator of which shall be (i) all receipts from any
4    movement or shipment of people, goods, mail, oil, gas, or
5    any other substance (other than by airline) that both
6    originates and terminates in this State, plus (ii) that
7    portion of the person's gross receipts from movements or
8    shipments of people, goods, mail, oil, gas, or any other
9    substance (other than by airline) that originates in one
10    state or jurisdiction and terminates in another state or
11    jurisdiction, that is determined by the ratio that the
12    miles traveled in this State bears to total miles
13    everywhere and (b) the denominator of which shall be all
14    revenue derived from the movement or shipment of people,
15    goods, mail, oil, gas, or any other substance (other than
16    by airline). Where a taxpayer is engaged in the
17    transportation of both passengers and freight, the
18    fraction above referred to shall first be determined
19    separately for passenger miles and freight miles. Then an
20    average of the passenger miles fraction and the freight
21    miles fraction shall be weighted to reflect the taxpayer's:
22            (A) relative railway operating income from total
23        passenger and total freight service, as reported to the
24        Surface Transportation Board, in the case of
25        transportation by railroad; and
26            (B) relative gross receipts from passenger and

 

 

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1        freight transportation, in case of transportation
2        other than by railroad.
3        (4) For taxable years ending on or after December 31,
4    2008, business income derived from furnishing airline
5    transportation services shall be apportioned to this State
6    by multiplying such income by a fraction, the numerator of
7    which is the revenue miles of the person in this State, and
8    the denominator of which is the revenue miles of the person
9    everywhere. For purposes of this paragraph, a revenue mile
10    is the transportation of one passenger or one net ton of
11    freight the distance of one mile for a consideration. If a
12    person is engaged in the transportation of both passengers
13    and freight, the fraction above referred to shall be
14    determined by means of an average of the passenger revenue
15    mile fraction and the freight revenue mile fraction,
16    weighted to reflect the person's relative gross receipts
17    from passenger and freight airline transportation.
18    (e) Combined apportionment. Where 2 or more persons are
19engaged in a unitary business as described in subsection
20(a)(27) of Section 1501, a part of which is conducted in this
21State by one or more members of the group, the business income
22attributable to this State by any such member or members shall
23be apportioned by means of the combined apportionment method.
24    (f) Alternative allocation. If the allocation and
25apportionment provisions of subsections (a) through (e) and of
26subsection (h) do not fairly represent the extent of a person's

 

 

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1business activity in this State, the person may petition for,
2or the Director may, without a petition, permit or require, in
3respect of all or any part of the person's business activity,
4if reasonable:
5        (1) Separate accounting;
6        (2) The exclusion of any one or more factors;
7        (3) The inclusion of one or more additional factors
8    which will fairly represent the person's business
9    activities in this State; or
10        (4) The employment of any other method to effectuate an
11    equitable allocation and apportionment of the person's
12    business income.
13    (g) Cross reference. For allocation of business income by
14residents, see Section 301(a).
15    (h) For tax years ending on or after December 31, 1998, the
16apportionment factor of persons who apportion their business
17income to this State under subsection (a) shall be equal to:
18        (1) for tax years ending on or after December 31, 1998
19    and before December 31, 1999, 16 2/3% of the property
20    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
21    the sales factor;
22        (2) for tax years ending on or after December 31, 1999
23    and before December 31, 2000, 8 1/3% of the property factor
24    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
25    factor;
26        (3) for tax years ending on or after December 31, 2000,

 

 

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1    the sales factor.
2If, in any tax year ending on or after December 31, 1998 and
3before December 31, 2000, the denominator of the payroll,
4property, or sales factor is zero, the apportionment factor
5computed in paragraph (1) or (2) of this subsection for that
6year shall be divided by an amount equal to 100% minus the
7percentage weight given to each factor whose denominator is
8equal to zero.
9(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
1096-763, eff. 8-25-09.)
 
11    (35 ILCS 5/502)  (from Ch. 120, par. 5-502)
12    Sec. 502. Returns and notices.
13    (a) In general. A return with respect to the taxes imposed
14by this Act shall be made by every person for any taxable year:
15        (1) for which such person is liable for a tax imposed
16    by this Act, or
17        (2) in the case of a resident or in the case of a
18    corporation which is qualified to do business in this
19    State, for which such person is required to make a federal
20    income tax return, regardless of whether such person is
21    liable for a tax imposed by this Act. However, this
22    paragraph shall not require a resident to make a return if
23    such person has an Illinois base income of the basic amount
24    in Section 204(b) or less and is either claimed as a
25    dependent on another person's tax return under the Internal

 

 

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1    Revenue Code of 1986, or is claimed as a dependent on
2    another person's tax return under this Act.
3    Notwithstanding the provisions of paragraph (1), a
4nonresident (other than, for taxable years ending on or after
5December 31, 2011, a nonresident required to withhold tax under
6Section 709.5) whose Illinois income tax liability under
7subsections (a), (b), (c), and (d) of Section 201 of this Act
8is paid in full after taking into account the credits allowed
9under subsection (f) of this Section or allowed under Section
10709.5 of this Act shall not be required to file a return under
11this subsection (a).
12    (b) Fiduciaries and receivers.
13        (1) Decedents. If an individual is deceased, any return
14    or notice required of such individual under this Act shall
15    be made by his executor, administrator, or other person
16    charged with the property of such decedent.
17        (2) Individuals under a disability. If an individual is
18    unable to make a return or notice required under this Act,
19    the return or notice required of such individual shall be
20    made by his duly authorized agent, guardian, fiduciary or
21    other person charged with the care of the person or
22    property of such individual.
23        (3) Estates and trusts. Returns or notices required of
24    an estate or a trust shall be made by the fiduciary
25    thereof.
26        (4) Receivers, trustees and assignees for

 

 

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1    corporations. In a case where a receiver, trustee in
2    bankruptcy, or assignee, by order of a court of competent
3    jurisdiction, by operation of law, or otherwise, has
4    possession of or holds title to all or substantially all
5    the property or business of a corporation, whether or not
6    such property or business is being operated, such receiver,
7    trustee, or assignee shall make the returns and notices
8    required of such corporation in the same manner and form as
9    corporations are required to make such returns and notices.
10    (c) Joint returns by husband and wife.
11        (1) Except as provided in paragraph (3):
12            (A) if a husband and wife file a joint federal
13        income tax return for a taxable year ending before
14        December 31, 2009, they shall file a joint return under
15        this Act for such taxable year and their liabilities
16        shall be joint and several;
17            (B) if a husband and wife file a joint federal
18        income tax return for a taxable year ending on or after
19        December 31, 2009, they may elect to file separate
20        returns under this Act for such taxable year. The
21        election under this paragraph must be made on or before
22        the due date (including extensions) of the return and,
23        once made, shall be irrevocable. If no election is
24        timely made under this paragraph for a taxable year:
25                (i) the couple must file a joint return under
26            this Act for such taxable year,

 

 

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1                (ii) their liabilities shall be joint and
2            several, and
3                (iii) any overpayment for that taxable year
4            may be withheld under Section 909 of this Act or
5            under Section 2505-275 of the Civil Administrative
6            Code of Illinois and applied against a debt of
7            either spouse without regard to the amount of the
8            overpayment attributable to the other spouse; and
9            (C) if the federal income tax liability of either
10        spouse is determined on a separate federal income tax
11        return, they shall file separate returns under this
12        Act.
13        (2) If neither spouse is required to file a federal
14    income tax return and either or both are required to file a
15    return under this Act, they may elect to file separate or
16    joint returns and pursuant to such election their
17    liabilities shall be separate or joint and several.
18        (3) If either husband or wife is a resident and the
19    other is a nonresident, they shall file separate returns in
20    this State on such forms as may be required by the
21    Department in which event their tax liabilities shall be
22    separate; but if they file a joint federal income tax
23    return for a taxable year, they may elect to determine
24    their joint net income and file a joint return for that
25    taxable year under the provisions of paragraph (1) of this
26    subsection as if both were residents and in such case,

 

 

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1    their liabilities shall be joint and several.
2        (4) Innocent spouses.
3            (A) However, for tax liabilities arising and paid
4        prior to August 13, 1999, an innocent spouse shall be
5        relieved of liability for tax (including interest and
6        penalties) for any taxable year for which a joint
7        return has been made, upon submission of proof that the
8        Internal Revenue Service has made a determination
9        under Section 6013(e) of the Internal Revenue Code, for
10        the same taxable year, which determination relieved
11        the spouse from liability for federal income taxes. If
12        there is no federal income tax liability at issue for
13        the same taxable year, the Department shall rely on the
14        provisions of Section 6013(e) to determine whether the
15        person requesting innocent spouse abatement of tax,
16        penalty, and interest is entitled to that relief.
17            (B) For tax liabilities arising on and after August
18        13, 1999 or which arose prior to that date, but remain
19        unpaid as of that date, if an individual who filed a
20        joint return for any taxable year has made an election
21        under this paragraph, the individual's liability for
22        any tax shown on the joint return shall not exceed the
23        individual's separate return amount and the
24        individual's liability for any deficiency assessed for
25        that taxable year shall not exceed the portion of the
26        deficiency properly allocable to the individual. For

 

 

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1        purposes of this paragraph:
2                (i) An election properly made pursuant to
3            Section 6015 of the Internal Revenue Code shall
4            constitute an election under this paragraph,
5            provided that the election shall not be effective
6            until the individual has notified the Department
7            of the election in the form and manner prescribed
8            by the Department.
9                (ii) If no election has been made under Section
10            6015, the individual may make an election under
11            this paragraph in the form and manner prescribed by
12            the Department, provided that no election may be
13            made if the Department finds that assets were
14            transferred between individuals filing a joint
15            return as part of a scheme by such individuals to
16            avoid payment of Illinois income tax and the
17            election shall not eliminate the individual's
18            liability for any portion of a deficiency
19            attributable to an error on the return of which the
20            individual had actual knowledge as of the date of
21            filing.
22                (iii) In determining the separate return
23            amount or portion of any deficiency attributable
24            to an individual, the Department shall follow the
25            provisions in subsections (c) and (d) of Section
26            6015 of the Internal Revenue Code.

 

 

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1                (iv) In determining the validity of an
2            individual's election under subparagraph (ii) and
3            in determining an electing individual's separate
4            return amount or portion of any deficiency under
5            subparagraph (iii), any determination made by the
6            Secretary of the Treasury, by the United States Tax
7            Court on petition for review of a determination by
8            the Secretary of the Treasury, or on appeal from
9            the United States Tax Court under Section 6015 of
10            the Internal Revenue Code regarding criteria for
11            eligibility or under subsection (d) of Section
12            6015 of the Internal Revenue Code regarding the
13            allocation of any item of income, deduction,
14            payment, or credit between an individual making
15            the federal election and that individual's spouse
16            shall be conclusively presumed to be correct. With
17            respect to any item that is not the subject of a
18            determination by the Secretary of the Treasury or
19            the federal courts, in any proceeding involving
20            this subsection, the individual making the
21            election shall have the burden of proof with
22            respect to any item except that the Department
23            shall have the burden of proof with respect to
24            items in subdivision (ii).
25                (v) Any election made by an individual under
26            this subsection shall apply to all years for which

 

 

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1            that individual and the spouse named in the
2            election have filed a joint return.
3                (vi) After receiving a notice that the federal
4            election has been made or after receiving an
5            election under subdivision (ii), the Department
6            shall take no collection action against the
7            electing individual for any liability arising from
8            a joint return covered by the election until the
9            Department has notified the electing individual in
10            writing that the election is invalid or of the
11            portion of the liability the Department has
12            allocated to the electing individual. Within 60
13            days (150 days if the individual is outside the
14            United States) after the issuance of such
15            notification, the individual may file a written
16            protest of the denial of the election or of the
17            Department's determination of the liability
18            allocated to him or her and shall be granted a
19            hearing within the Department under the provisions
20            of Section 908. If a protest is filed, the
21            Department shall take no collection action against
22            the electing individual until the decision
23            regarding the protest has become final under
24            subsection (d) of Section 908 or, if
25            administrative review of the Department's decision
26            is requested under Section 1201, until the

 

 

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1            decision of the court becomes final.
2    (d) Partnerships. Every partnership having any base income
3allocable to this State in accordance with section 305(c) shall
4retain information concerning all items of income, gain, loss
5and deduction; the names and addresses of all of the partners,
6or names and addresses of members of a limited liability
7company, or other persons who would be entitled to share in the
8base income of the partnership if distributed; the amount of
9the distributive share of each; and such other pertinent
10information as the Department may by forms or regulations
11prescribe. The partnership shall make that information
12available to the Department when requested by the Department.
13    (e) For taxable years ending on or after December 31, 1985,
14and before December 31, 1993, taxpayers that are corporations
15(other than Subchapter S corporations) having the same taxable
16year and that are members of the same unitary business group
17may elect to be treated as one taxpayer for purposes of any
18original return, amended return which includes the same
19taxpayers of the unitary group which joined in the election to
20file the original return, extension, claim for refund,
21assessment, collection and payment and determination of the
22group's tax liability under this Act. This subsection (e) does
23not permit the election to be made for some, but not all, of
24the purposes enumerated above. For taxable years ending on or
25after December 31, 1987, corporate members (other than
26Subchapter S corporations) of the same unitary business group

 

 

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1making this subsection (e) election are not required to have
2the same taxable year.
3    For taxable years ending on or after December 31, 1993,
4taxpayers that are corporations (other than Subchapter S
5corporations) and that are members of the same unitary business
6group shall be treated as one taxpayer for purposes of any
7original return, amended return which includes the same
8taxpayers of the unitary group which joined in filing the
9original return, extension, claim for refund, assessment,
10collection and payment and determination of the group's tax
11liability under this Act.
12    (f) The Department may promulgate regulations to permit
13nonresident individual partners of the same partnership,
14nonresident Subchapter S corporation shareholders of the same
15Subchapter S corporation, and nonresident individuals
16transacting an insurance business in Illinois under a Lloyds
17plan of operation, and nonresident individual members of the
18same limited liability company that is treated as a partnership
19under Section 1501 (a)(16) of this Act, to file composite
20individual income tax returns reflecting the composite income
21of such individuals allocable to Illinois and to make composite
22individual income tax payments. The Department may by
23regulation also permit such composite returns to include the
24income tax owed by Illinois residents attributable to their
25income from partnerships, Subchapter S corporations, insurance
26businesses organized under a Lloyds plan of operation, or

 

 

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1limited liability companies that are treated as partnership
2under Section 1501(a)(16) of this Act, in which case such
3Illinois residents will be permitted to claim credits on their
4individual returns for their shares of the composite tax
5payments. This paragraph of subsection (f) applies to taxable
6years ending on or after December 31, 1987.
7    For taxable years ending on or after December 31, 1999, the
8Department may, by regulation, also permit any persons
9transacting an insurance business organized under a Lloyds plan
10of operation to file composite returns reflecting the income of
11such persons allocable to Illinois and the tax rates applicable
12to such persons under Section 201 and to make composite tax
13payments and shall, by regulation, also provide that the income
14and apportionment factors attributable to the transaction of an
15insurance business organized under a Lloyds plan of operation
16by any person joining in the filing of a composite return
17shall, for purposes of allocating and apportioning income under
18Article 3 of this Act and computing net income under Section
19202 of this Act, be excluded from any other income and
20apportionment factors of that person or of any unitary business
21group, as defined in subdivision (a)(27) of Section 1501, to
22which that person may belong.
23    For taxable years ending on or after December 31, 2008,
24every nonresident shall be allowed a credit against his or her
25liability under subsections (a) and (b) of Section 201 for any
26amount of tax reported on a composite return and paid on his or

 

 

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1her behalf under this subsection (f). Residents (other than
2persons transacting an insurance business organized under a
3Lloyds plan of operation) may claim a credit for taxes reported
4on a composite return and paid on their behalf under this
5subsection (f) only as permitted by the Department by rule.
6    (f-5) For taxable years ending on or after December 31,
72008, the Department may adopt rules to provide that, when a
8partnership or Subchapter S corporation has made an error in
9determining the amount of any item of income, deduction,
10addition, subtraction, or credit required to be reported on its
11return that affects the liability imposed under this Act on a
12partner or shareholder, the partnership or Subchapter S
13corporation may report the changes in liabilities of its
14partners or shareholders and claim a refund of the resulting
15overpayments, or pay the resulting underpayments, on behalf of
16its partners and shareholders.
17    (g) The Department may adopt rules to authorize the
18electronic filing of any return required to be filed under this
19Section.
20(Source: P.A. 95-233, eff. 8-16-07; 96-520, eff. 8-14-09.)
 
21    (35 ILCS 5/506)  (from Ch. 120, par. 5-506)
22    Sec. 506. Federal Returns.
23    (a) In general. Any person required to make a return for a
24taxable year under this Act may, at any time that a deficiency
25could be assessed or a refund claimed under this Act in respect

 

 

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1of any item reported or properly reportable on such return or
2any amendment thereof, be required to furnish to the Department
3a true and correct copy of any return which may pertain to such
4item and which was filed by such person under the provisions of
5the Internal Revenue Code.
6    (b) Changes affecting federal income tax. A person shall
7notify the Department if:
8        (1) the taxable income, any item of income or
9    deduction, the income tax liability, or any tax credit
10    reported in an original or amended a federal income tax
11    return of that person for any year or as determined by the
12    Internal Revenue Service or the courts is altered by
13    amendment of such return or as a result of any other
14    recomputation or redetermination of federal taxable income
15    or loss, and such alteration reflects a change or
16    settlement with respect to any item or items, affecting the
17    computation of such person's net income, net loss, or of
18    any credit provided by Article 2 of this Act for any year
19    under this Act, or in the number of personal exemptions
20    allowable to such person under Section 151 of the Internal
21    Revenue Code, or
22        (2) the amount of tax required to be withheld by that
23    person from compensation paid to employees and required to
24    be reported by that person on a federal return is altered
25    by amendment of the return or by any other recomputation or
26    redetermination that is agreed to or finally determined on

 

 

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1    or after January 1, 2003, and the alteration affects the
2    amount of compensation subject to withholding by that
3    person under Section 701 of this Act.
4Such notification shall be in the form of an amended return or
5such other form as the Department may by regulations prescribe,
6shall contain the person's name and address and such other
7information as the Department may by regulations prescribe,
8shall be signed by such person or his duly authorized
9representative, and shall be filed not later than 120 days
10after such alteration has been agreed to or finally determined
11for federal income tax purposes or any federal income tax
12deficiency or refund, tentative carryback adjustment,
13abatement or credit resulting therefrom has been assessed or
14paid, whichever shall first occur.
15(Source: P.A. 92-846, eff. 8-23-02.)
 
16    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)
17    Sec. 601. Payment on Due Date of Return.
18    (a) In general. Every taxpayer required to file a return
19under this Act shall, without assessment, notice or demand, pay
20any tax due thereon to the Department, at the place fixed for
21filing, on or before the date fixed for filing such return
22(determined without regard to any extension of time for filing
23the return) pursuant to regulations prescribed by the
24Department. If, however, the due date for payment of a
25taxpayer's federal income tax liability for a tax year (as

 

 

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1provided in the Internal Revenue Code or by Treasury
2regulation, or as extended by the Internal Revenue Service) is
3later than the date fixed for filing the taxpayer's Illinois
4income tax return for that tax year, the Department may, by
5rule, prescribe a due date for payment that is not later than
6the due date for payment of the taxpayer's federal income tax
7liability. For purposes of the Illinois Administrative
8Procedure Act, the adoption of rules to prescribe a later due
9date for payment shall be deemed an emergency and necessary for
10the public interest, safety, and welfare.
11    (b) Amount payable. In making payment as provided in this
12section there shall remain payable only the balance of such tax
13remaining due after giving effect to the following:
14        (1) Withheld tax. Any amount withheld during any
15    calendar year pursuant to Article 7 from compensation paid
16    to a taxpayer shall be deemed to have been paid on account
17    of any tax imposed by subsections 201(a) and (b) of this
18    Act on such taxpayer for his taxable year beginning in such
19    calendar year. If more than one taxable year begins in a
20    calendar year, such amount shall be deemed to have been
21    paid on account of such tax for the last taxable year so
22    beginning.
23        (2) Estimated and tentative tax payments. Any amount of
24    estimated tax paid by a taxpayer pursuant to Article 8 for
25    a taxable year shall be deemed to have been paid on account
26    of the tax imposed by this Act for such taxable year.

 

 

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1        (3) Foreign tax. The aggregate amount of tax which is
2    imposed upon or measured by income and which is paid by a
3    resident for a taxable year to another state or states on
4    income which is also subject to the tax imposed by
5    subsections 201(a) and (b) of this Act shall be credited
6    against the tax imposed by subsections 201(a) and (b)
7    otherwise due under this Act for such taxable year. For
8    taxable years ending prior to December 31, 2009, the
9    aggregate credit provided under this paragraph shall not
10    exceed that amount which bears the same ratio to the tax
11    imposed by subsections 201(a) and (b) otherwise due under
12    this Act as the amount of the taxpayer's base income
13    subject to tax both by such other state or states and by
14    this State bears to his total base income subject to tax by
15    this State for the taxable year. For taxable years ending
16    on or after December 31, 2009, the credit provided under
17    this paragraph for tax paid to other states shall not
18    exceed that amount which bears the same ratio to the tax
19    imposed by subsections 201(a) and (b) otherwise due under
20    this Act as the amount of the taxpayer's base income that
21    would be allocated or apportioned to other states if all
22    other states had adopted the provisions in Article 3 of
23    this Act bears to the taxpayer's total base income subject
24    to tax by this State for the taxable year. The credit
25    provided by this paragraph shall not be allowed if any
26    creditable tax was deducted in determining base income for

 

 

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1    the taxable year. Any person claiming such credit shall
2    attach a statement in support thereof and shall notify the
3    Director of any refund or reductions in the amount of tax
4    claimed as a credit hereunder all in such manner and at
5    such time as the Department shall by regulations prescribe.
6        (4) Accumulation and capital gain distributions. If
7    the net income of a taxpayer includes amounts included in
8    his base income by reason of Section 667 668 or 669 of the
9    Internal Revenue Code (relating to accumulation and
10    capital gain distributions by a trust, respectively), the
11    tax imposed on such taxpayer by this Act shall be credited
12    with his pro rata portion of the taxes imposed by this Act
13    on such trust for preceding taxable years which would not
14    have been payable for such preceding years if the trust had
15    in fact made distributions to its beneficiaries at the
16    times and in the amounts specified in Sections 666 and 669
17    of the Internal Revenue Code. The credit provided by this
18    paragraph shall not reduce the tax otherwise due from the
19    taxpayer to an amount less than that which would be due if
20    the amounts included by reason of Section 667 Sections 668
21    and 669 of the Internal Revenue Code were excluded from his
22    or her base income.
23    (c) Cross reference. For application against tax due of
24overpayments of tax for a prior year, see Section 909.
25(Source: P.A. 96-468, eff. 8-14-09.)
 

 

 

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1    (35 ILCS 5/701)  (from Ch. 120, par. 7-701)
2    Sec. 701. Requirement and Amount of Withholding.
3    (a) In General. Every employer maintaining an office or
4transacting business within this State and required under the
5provisions of the Internal Revenue Code to withhold a tax on:
6        (1) compensation paid in this State (as determined
7    under Section 304(a)(2)(B) to an individual; or
8        (2) payments described in subsection (b) shall deduct
9    and withhold from such compensation for each payroll period
10    (as defined in Section 3401 of the Internal Revenue Code)
11    an amount equal to the amount by which such individual's
12    compensation exceeds the proportionate part of this
13    withholding exemption (computed as provided in Section
14    702) attributable to the payroll period for which such
15    compensation is payable multiplied by a percentage equal to
16    the percentage tax rate for individuals provided in
17    subsection (b) of Section 201.
18    (b) Payment to Residents. Any payment (including
19compensation) to a resident by a payor maintaining an office or
20transacting business within this State (including any agency,
21officer, or employee of this State or of any political
22subdivision of this State) and on which withholding of tax is
23required under the provisions of the Internal Revenue Code
24shall be deemed to be compensation paid in this State by an
25employer to an employee for the purposes of Article 7 and
26Section 601(b)(1) to the extent such payment is included in the

 

 

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1recipient's base income and not subjected to withholding by
2another state. Notwithstanding any other provision to the
3contrary, no amount shall be withheld from unemployment
4insurance benefit payments made to an individual pursuant to
5the Unemployment Insurance Act unless the individual has
6voluntarily elected the withholding pursuant to rules
7promulgated by the Director of Employment Security.
8    (c) Special Definitions. Withholding shall be considered
9required under the provisions of the Internal Revenue Code to
10the extent the Internal Revenue Code either requires
11withholding or allows for voluntary withholding the payor and
12recipient have entered into such a voluntary withholding
13agreement. For the purposes of Article 7 and Section 1002(c)
14the term "employer" includes any payor who is required to
15withhold tax pursuant to this Section.
16    (d) Reciprocal Exemption. The Director may enter into an
17agreement with the taxing authorities of any state which
18imposes a tax on or measured by income to provide that
19compensation paid in such state to residents of this State
20shall be exempt from withholding of such tax; in such case, any
21compensation paid in this State to residents of such state
22shall be exempt from withholding. All reciprocal agreements
23shall be subject to the requirements of Section 2505-575 of the
24Department of Revenue Law (20 ILCS 2505/2505-575).
25    (e) Notwithstanding subsection (a)(2) of this Section, no
26withholding is required on payments for which withholding is

 

 

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1required under Section 3405 or 3406 of the Internal Revenue
2Code of 1954.
3(Source: P.A. 92-846, eff. 8-23-02; 93-634, eff. 1-1-04.)
 
4    (35 ILCS 5/702)  (from Ch. 120, par. 7-702)
5    Sec. 702. Amount Exempt from Withholding. For purposes of
6this Section an employee shall be entitled to a withholding
7exemption in an amount equal to the basic amount in Section
8204(b) for each personal or dependent exemption which he is
9entitled to claim on his federal return pursuant to Section 151
10of the Internal Revenue Code of 1986; plus an allowance equal
11to $1,000 for each $1,000 he is entitled to deduct from gross
12income in arriving at adjusted gross income pursuant to Section
1362 of the Internal Revenue Code of 1986; plus an additional
14allowance equal to $1,000 for each $1,000 eligible for
15subtraction on his Illinois income tax return as Illinois real
16estate taxes paid during the taxable year; or in any lesser
17amount claimed by him. Every employee shall furnish to his
18employer such information as is required for the employer to
19make an accurate withholding under this Act. The employer may
20rely on this information for withholding purposes. If any
21employee fails or refuses to furnish such information, the
22employer shall withhold the full rate of tax from the
23employee's total compensation.
24(Source: P.A. 90-613, eff. 7-9-98.)
 

 

 

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1    (35 ILCS 5/703)  (from Ch. 120, par. 7-703)
2    Sec. 703. Information statement. Every employer required
3to deduct and withhold tax under this Act from compensation of
4an employee, or who would have been required so to deduct and
5withhold tax if the employee's withholding exemption were not
6in excess of the basic amount in Section 204(b), shall furnish
7in duplicate to each such employee in respect of the
8compensation paid by such employer to such employee during the
9calendar year on or before January 31 of the succeeding year,
10or, if his employment is terminated before the close of such
11calendar year, on the date on which the last payment of
12compensation is made, a written statement in such form as the
13Department may by regulation prescribe showing the amount of
14compensation paid by the employer to the employee, the amount
15deducted and withheld as tax, the tax-exempt amount contributed
16to a medical savings account, and such other information as the
17Department shall prescribe. A copy of such statement shall be
18filed by the employee with his return for his taxable year to
19which it relates (as determined under Section 601(b)(1)).
20(Source: P.A. 91-841, eff. 6-22-00; 92-16, eff. 6-28-01.)
 
21    (35 ILCS 5/704A)
22    Sec. 704A. Employer's return and payment of tax withheld.
23    (a) In general, every employer who deducts and withholds or
24is required to deduct and withhold tax under this Act on or
25after January 1, 2008 shall make those payments and returns as

 

 

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1provided in this Section.
2    (b) Returns. Every employer shall, in the form and manner
3required by the Department, make returns with respect to taxes
4withheld or required to be withheld under this Article 7 for
5each quarter beginning on or after January 1, 2008, on or
6before the last day of the first month following the close of
7that quarter.
8    (c) Payments. With respect to amounts withheld or required
9to be withheld on or after January 1, 2008:
10        (1) Semi-weekly payments. For each calendar year, each
11    employer who withheld or was required to withhold more than
12    $12,000 during the one-year period ending on June 30 of the
13    immediately preceding calendar year, payment must be made:
14            (A) on or before each Friday of the calendar year,
15        for taxes withheld or required to be withheld on the
16        immediately preceding Saturday, Sunday, Monday, or
17        Tuesday;
18            (B) on or before each Wednesday of the calendar
19        year, for taxes withheld or required to be withheld on
20        the immediately preceding Wednesday, Thursday, or
21        Friday.
22        Beginning with calendar year 2011, payments payment
23    made under this paragraph (1) of subsection (c) must be
24    made by electronic funds transfer.
25        (2) Semi-weekly payments. Any employer who withholds
26    or is required to withhold more than $12,000 in any quarter

 

 

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1    of a calendar year is required to make payments on the
2    dates set forth under item (1) of this subsection (c) for
3    each remaining quarter of that calendar year and for the
4    subsequent calendar year.
5        (3) Monthly payments. Each employer, other than an
6    employer described in items (1) or (2) of this subsection,
7    shall pay to the Department, on or before the 15th day of
8    each month the taxes withheld or required to be withheld
9    during the immediately preceding month.
10        (4) Payments with returns. Each employer shall pay to
11    the Department, on or before the due date for each return
12    required to be filed under this Section, any tax withheld
13    or required to be withheld during the period for which the
14    return is due and not previously paid to the Department.
15    (d) Regulatory authority. The Department may, by rule:
16        (1) Permit employers, in lieu of the requirements of
17    subsections (b) and (c), to file annual returns due on or
18    before January 31 of the year for taxes withheld or
19    required to be withheld during the previous calendar year
20    and, if the aggregate amounts required to be withheld by
21    the employer under this Article 7 (other than amounts
22    required to be withheld under Section 709.5) do not exceed
23    $1,000 for the previous calendar year, to pay the taxes
24    required to be shown on each such return no later than the
25    due date for such return.
26        (2) Provide that any payment required to be made under

 

 

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1    subsection (c)(1) or (c)(2) is deemed to be timely to the
2    extent paid by electronic funds transfer on or before the
3    due date for deposit of federal income taxes withheld from,
4    or federal employment taxes due with respect to, the wages
5    from which the Illinois taxes were withheld.
6        (3) Designate one or more depositories to which payment
7    of taxes required to be withheld under this Article 7 must
8    be paid by some or all employers.
9        (4) Increase the threshold dollar amounts at which
10    employers are required to make semi-weekly payments under
11    subsection (c)(1) or (c)(2).
12    (e) Annual return and payment. Every employer who deducts
13and withholds or is required to deduct and withhold tax from a
14person engaged in domestic service employment, as that term is
15defined in Section 3510 of the Internal Revenue Code, may
16comply with the requirements of this Section with respect to
17such employees by filing an annual return and paying the taxes
18required to be deducted and withheld on or before the 15th day
19of the fourth month following the close of the employer's
20taxable year. The Department may allow the employer's return to
21be submitted with the employer's individual income tax return
22or to be submitted with a return due from the employer under
23Section 1400.2 of the Unemployment Insurance Act.
24    (f) Magnetic media and electronic filing. Any W-2 Form
25that, under the Internal Revenue Code and regulations
26promulgated thereunder, is required to be submitted to the

 

 

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1Internal Revenue Service on magnetic media or electronically
2must also be submitted to the Department on magnetic media or
3electronically for Illinois purposes, if required by the
4Department.
5    (g) For amounts deducted or withheld after December 31,
62009, a taxpayer who makes an election under subsection (f) of
7Section 5-15 of the Economic Development for a Growing Economy
8Tax Credit Act for a taxable year shall be allowed a credit
9against payments due under this Section for amounts withheld
10during the first calendar year beginning after the end of that
11taxable year equal to the amount of the credit for the
12incremental income tax attributable to full-time employees of
13the taxpayer awarded to the taxpayer by the Department of
14Commerce and Economic Opportunity under the Economic
15Development for a Growing Economy Tax Credit Act for the
16taxable year and credits not previously claimed and allowed to
17be carried forward under Section 211(4) of this Act as provided
18in subsection (f) of Section 5-15 of the Economic Development
19for a Growing Economy Tax Credit Act. The credit or credits may
20not reduce the taxpayer's obligation for any payment due under
21this Section to less than zero. If the amount of the credit or
22credits exceeds the total payments due under this Section with
23respect to amounts withheld during the calendar year, the
24excess may be carried forward and applied against the
25taxpayer's liability under this Section in the succeeding
26calendar years as allowed to be carried forward under paragraph

 

 

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