98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB3008

 

Introduced 2/7/2014, by Sen. John M. Sullivan

 

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

    Amends the Illinois Income Tax Act. Provides that individual taxpayers are entitled to a deduction in an amount equal to compensation paid to that taxpayer by reason of employment as a National Guard dual status military technician.


LRB098 16919 HLH 51994 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3008LRB098 16919 HLH 51994 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB3008- 11 -LRB098 16919 HLH 51994 b

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

 

 

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

 

 

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

 

 

SB3008- 14 -LRB098 16919 HLH 51994 b

1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois National
4        Guard or, beginning with taxable years ending on or
5        after December 31, 2007, the National Guard of any
6        other state. For taxable years ending on or after
7        December 31, 2001, any amount included in such total in
8        respect of any compensation (including but not limited
9        to any compensation paid or accrued to a serviceman
10        while a prisoner of war or missing in action) paid to a
11        resident by reason of being a member of any component
12        of the Armed Forces of the United States and in respect
13        of any compensation paid or accrued to a resident who
14        as a governmental employee was a prisoner of war or
15        missing in action, and in respect of any compensation
16        paid to a resident in 2001 or thereafter by reason of
17        being a member of the Illinois National Guard or,
18        beginning with taxable years ending on or after
19        December 31, 2007, the National Guard of any other
20        state, or, beginning with taxable years ending on or
21        after December 31, 2015, by reason of employment as a
22        National Guard dual status military technician under
23        the provisions of Section 709, Title 32, of the United
24        States Code. The provisions of this subparagraph (E)
25        are exempt from the provisions of Section 250;
26            (F) An amount equal to all amounts included in such

 

 

SB3008- 15 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 16 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 17 -LRB098 16919 HLH 51994 b

1        Revenue Code and, for taxable years ending on or after
2        December 31, 2008, any amount included in gross income
3        under Section 87 of the Internal Revenue Code; the
4        provisions of this subparagraph are exempt from the
5        provisions of Section 250;
6            (N) An amount equal to all amounts included in such
7        total which are exempt from taxation by this State
8        either by reason of its statutes or Constitution or by
9        reason of the Constitution, treaties or statutes of the
10        United States; provided that, in the case of any
11        statute of this State that exempts income derived from
12        bonds or other obligations from the tax imposed under
13        this Act, the amount exempted shall be the interest net
14        of bond premium amortization;
15            (O) An amount equal to any contribution made to a
16        job training project established pursuant to the Tax
17        Increment Allocation Redevelopment Act;
18            (P) An amount equal to the amount of the deduction
19        used to compute the federal income tax credit for
20        restoration of substantial amounts held under claim of
21        right for the taxable year pursuant to Section 1341 of
22        the Internal Revenue Code or of any itemized deduction
23        taken from adjusted gross income in the computation of
24        taxable income for restoration of substantial amounts
25        held under claim of right for the taxable year;
26            (Q) An amount equal to any amounts included in such

 

 

SB3008- 18 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 19 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 20 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 21 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 22 -LRB098 16919 HLH 51994 b

1        Tuition Trust Fund, except that amounts excluded from
2        gross income under Section 529(c)(3)(C)(i) of the
3        Internal Revenue Code shall not be considered moneys
4        contributed under this subparagraph (Y). For purposes
5        of this subparagraph, contributions made by an
6        employer on behalf of an employee, or matching
7        contributions made by an employee, shall be treated as
8        made by the employee. This subparagraph (Y) is exempt
9        from the provisions of Section 250;
10            (Z) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not including
22            the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

SB3008- 23 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 24 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 25 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 26 -LRB098 16919 HLH 51994 b

1        of the 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 that 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(a)(2)(D-18) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same foreign
18        person. This subparagraph (EE) is exempt from the
19        provisions of Section 250;
20            (FF) An amount equal to any amount awarded to the
21        taxpayer during the taxable year by the Court of Claims
22        under subsection (c) of Section 8 of the Court of
23        Claims Act for time unjustly served in a State prison.
24        This subparagraph (FF) is exempt from the provisions of
25        Section 250; and
26            (GG) For taxable years ending on or after December

 

 

SB3008- 27 -LRB098 16919 HLH 51994 b

1        31, 2011, in the case of a taxpayer who was required to
2        add back any insurance premiums under Section
3        203(a)(2)(D-19), 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 (GG),
11        the insurer to which the premiums were paid must add
12        back to income the amount subtracted by the taxpayer
13        pursuant to this subparagraph (GG). This subparagraph
14        (GG) is exempt from the provisions of Section 250.
 
15    (b) Corporations.
16        (1) In general. In the case of a corporation, base
17    income means an amount equal to the taxpayer's taxable
18    income for the taxable year as modified by paragraph (2).
19        (2) Modifications. The taxable income referred to in
20    paragraph (1) shall be modified by adding thereto the sum
21    of the following amounts:
22            (A) An amount equal to all amounts paid or accrued
23        to the taxpayer as interest and all distributions
24        received from regulated investment companies during
25        the taxable year to the extent excluded from gross

 

 

SB3008- 28 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 29 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 30 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 31 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 32 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 33 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 34 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 35 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 36 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 37 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 38 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 39 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 40 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 41 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 42 -LRB098 16919 HLH 51994 b

1        the basis of the Section 201(h) investment credit
2        property which secures the loan or loans, using for
3        this purpose the original basis of such property on the
4        date that it was placed in service in a federally
5        designated Foreign Trade Zone or Sub-Zone located in
6        Illinois. No taxpayer that is eligible for the
7        deduction provided in subparagraph (M) of paragraph
8        (2) of this subsection shall be eligible for the
9        deduction provided under this subparagraph (M-1). The
10        subtraction modification available to taxpayers in any
11        year under this subsection shall be that portion of the
12        total interest paid by the borrower with respect to
13        such loan attributable to the eligible property as
14        calculated under the previous sentence;
15            (N) Two times any contribution made during the
16        taxable year to a designated zone organization to the
17        extent that the contribution (i) qualifies as a
18        charitable contribution under subsection (c) of
19        Section 170 of the Internal Revenue Code and (ii) must,
20        by its terms, be used for a project approved by the
21        Department of Commerce and Economic Opportunity under
22        Section 11 of the Illinois Enterprise Zone Act or under
23        Section 10-10 of the River Edge Redevelopment Zone Act.
24        This subparagraph (N) is exempt from the provisions of
25        Section 250;
26            (O) An amount equal to: (i) 85% for taxable years

 

 

SB3008- 43 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 44 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 45 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 46 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 47 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 48 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 49 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 50 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 51 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 52 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 53 -LRB098 16919 HLH 51994 b

1            taxable year from any taxable year ending prior to
2            December 31, 1986 shall not exceed the amount of
3            such carryback or carryforward;
4            For taxable years in which there is a net operating
5        loss carryback or carryforward from more than one other
6        taxable year ending prior to December 31, 1986, the
7        addition modification provided in this subparagraph
8        (E) shall be the sum of the amounts computed
9        independently under the preceding provisions of this
10        subparagraph (E) for each such taxable year;
11            (F) For taxable years ending on or after January 1,
12        1989, an amount equal to the tax deducted pursuant to
13        Section 164 of the Internal Revenue Code if the trust
14        or estate is claiming the same tax for purposes of the
15        Illinois foreign tax credit under Section 601 of this
16        Act;
17            (G) An amount equal to the amount of the capital
18        gain deduction allowable under the Internal Revenue
19        Code, to the extent deducted from gross income in the
20        computation of taxable income;
21            (G-5) For taxable years ending after December 31,
22        1997, an amount equal to any eligible remediation costs
23        that the trust or estate deducted in computing adjusted
24        gross income and for which the trust or estate claims a
25        credit under subsection (l) of Section 201;
26            (G-10) For taxable years 2001 and thereafter, an

 

 

SB3008- 54 -LRB098 16919 HLH 51994 b

1        amount equal to the bonus depreciation deduction taken
2        on the taxpayer's federal income tax return for the
3        taxable year under subsection (k) of Section 168 of the
4        Internal Revenue Code; and
5            (G-11) If the taxpayer sells, transfers, abandons,
6        or otherwise disposes of property for which the
7        taxpayer was required in any taxable year to make an
8        addition modification under subparagraph (G-10), then
9        an amount equal to the aggregate amount of the
10        deductions taken in all taxable years under
11        subparagraph (R) with respect to that property.
12            If the taxpayer continues to own property through
13        the last day of the last tax year for which the
14        taxpayer may claim a depreciation deduction for
15        federal income tax purposes and for which the taxpayer
16        was allowed in any taxable year to make a subtraction
17        modification under subparagraph (R), then an amount
18        equal to that subtraction modification.
19            The taxpayer is required to make the addition
20        modification under this subparagraph only once with
21        respect to any one piece of property;
22            (G-12) An amount equal to the amount otherwise
23        allowed as a deduction in computing base income for
24        interest paid, accrued, or incurred, directly or
25        indirectly, (i) for taxable years ending on or after
26        December 31, 2004, to a foreign person who would be a

 

 

SB3008- 55 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 56 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 57 -LRB098 16919 HLH 51994 b

1            the taxpayer establishes by clear and convincing
2            evidence that the adjustments are unreasonable; or
3            if the taxpayer and the Director agree in writing
4            to the application or use of an alternative method
5            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            (G-13) An amount equal to the amount of intangible
16        expenses and costs otherwise allowed as a deduction in
17        computing base income, and that were paid, accrued, or
18        incurred, directly or indirectly, (i) for taxable
19        years ending on or after December 31, 2004, to a
20        foreign person who would be a member of the same
21        unitary business group but for the fact that the
22        foreign person's business activity outside the United
23        States is 80% or more of that person's total business
24        activity and (ii) for taxable years ending on or after
25        December 31, 2008, to a person who would be a member of
26        the same unitary business group but for the fact that

 

 

SB3008- 58 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 59 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 60 -LRB098 16919 HLH 51994 b

1                taxpayer and the person did not have as a
2                principal purpose the avoidance of Illinois
3                income tax, and is paid pursuant to a contract
4                or agreement that reflects arm's-length terms;
5                or
6                (iii) any item of intangible expense or cost
7            paid, accrued, or incurred, directly or
8            indirectly, from a transaction with a person if the
9            taxpayer establishes by clear and convincing
10            evidence, that the adjustments are unreasonable;
11            or if the taxpayer and the Director agree in
12            writing to the application or use of an alternative
13            method 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            (G-14) For taxable years ending on or after
24        December 31, 2008, an amount equal to the amount of
25        insurance premium expenses and costs otherwise allowed
26        as a deduction in computing base income, and that were

 

 

SB3008- 61 -LRB098 16919 HLH 51994 b

1        paid, accrued, or incurred, directly or indirectly, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304. The
8        addition modification required by this subparagraph
9        shall be reduced to the extent that dividends were
10        included in base income of the unitary group for the
11        same taxable year and received by the taxpayer or by a
12        member of the taxpayer's unitary business group
13        (including amounts included in gross income under
14        Sections 951 through 964 of the Internal Revenue Code
15        and amounts included in gross income under Section 78
16        of the Internal Revenue Code) with respect to the stock
17        of the same person to whom the premiums and costs were
18        directly or indirectly paid, incurred, or accrued. The
19        preceding sentence does not apply to the extent that
20        the same dividends caused a reduction to the addition
21        modification required under Section 203(c)(2)(G-12) or
22        Section 203(c)(2)(G-13) of this Act;
23            (G-15) An amount equal to the credit allowable to
24        the taxpayer under Section 218(a) of this Act,
25        determined without regard to Section 218(c) of this
26        Act;

 

 

SB3008- 62 -LRB098 16919 HLH 51994 b

1    and by deducting from the total so obtained the sum of the
2    following amounts:
3            (H) An amount equal to all amounts included in such
4        total pursuant to the provisions of Sections 402(a),
5        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
6        Internal Revenue Code or included in such total as
7        distributions under the provisions of any retirement
8        or disability plan for employees of any governmental
9        agency or unit, or retirement payments to retired
10        partners, which payments are excluded in computing net
11        earnings from self employment by Section 1402 of the
12        Internal Revenue Code and regulations adopted pursuant
13        thereto;
14            (I) The valuation limitation amount;
15            (J) An amount equal to the amount of any tax
16        imposed by this Act which was refunded to the taxpayer
17        and included in such total for the taxable year;
18            (K) An amount equal to all amounts included in
19        taxable income as modified by subparagraphs (A), (B),
20        (C), (D), (E), (F) and (G) which are exempt from
21        taxation by this State either by reason of its statutes
22        or Constitution or by reason of the Constitution,
23        treaties or statutes of the United States; provided
24        that, in the case of any statute of this State that
25        exempts income derived from bonds or other obligations
26        from the tax imposed under this Act, the amount

 

 

SB3008- 63 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 64 -LRB098 16919 HLH 51994 b

1            (N) An amount equal to any contribution made to a
2        job training project established pursuant to the Tax
3        Increment Allocation Redevelopment Act;
4            (O) An amount equal to those dividends included in
5        such total that were paid by a corporation that
6        conducts business operations in a federally designated
7        Foreign Trade Zone or Sub-Zone and that is designated a
8        High Impact Business located in Illinois; provided
9        that dividends eligible for the deduction provided in
10        subparagraph (M) of paragraph (2) of this subsection
11        shall not be eligible for the deduction provided under
12        this subparagraph (O);
13            (P) An amount equal to the amount of the deduction
14        used to compute the federal income tax credit for
15        restoration of substantial amounts held under claim of
16        right for the taxable year pursuant to Section 1341 of
17        the Internal Revenue Code;
18            (Q) For taxable year 1999 and thereafter, an amount
19        equal to the amount of any (i) distributions, to the
20        extent includible in gross income for federal income
21        tax purposes, made to the taxpayer because of his or
22        her status as a victim of persecution for racial or
23        religious reasons by Nazi Germany or any other Axis
24        regime or as an heir of the victim and (ii) items of
25        income, to the extent includible in gross income for
26        federal income tax purposes, attributable to, derived

 

 

SB3008- 65 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 66 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 67 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 68 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 69 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 70 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 71 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 72 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 73 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 74 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 75 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 76 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 77 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 78 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 79 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 80 -LRB098 16919 HLH 51994 b

1        of the same person to whom the premiums and costs were
2        directly or indirectly paid, incurred, or accrued. The
3        preceding sentence does not apply to the extent that
4        the same dividends caused a reduction to the addition
5        modification required under Section 203(d)(2)(D-7) or
6        Section 203(d)(2)(D-8) of this Act;
7            (D-10) An amount equal to the credit allowable to
8        the taxpayer under Section 218(a) of this Act,
9        determined without regard to Section 218(c) of this
10        Act;
11    and by deducting from the total so obtained the following
12    amounts:
13            (E) The valuation limitation amount;
14            (F) An amount equal to the amount of any tax
15        imposed by this Act which was refunded to the taxpayer
16        and included in such total for the taxable year;
17            (G) An amount equal to all amounts included in
18        taxable income as modified by subparagraphs (A), (B),
19        (C) and (D) which are exempt from taxation by this
20        State either by reason of its statutes or Constitution
21        or by reason of the Constitution, treaties or statutes
22        of the United States; provided that, in the case of any
23        statute of this State that exempts income derived from
24        bonds or other obligations from the tax imposed under
25        this Act, the amount exempted shall be the interest net
26        of bond premium amortization;

 

 

SB3008- 81 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 82 -LRB098 16919 HLH 51994 b

1        December 31, 2011, Section 45G(e)(3) of the Internal
2        Revenue Code and, for taxable years ending on or after
3        December 31, 2008, any amount included in gross income
4        under Section 87 of the Internal Revenue Code; the
5        provisions of this subparagraph are exempt from the
6        provisions of Section 250;
7            (K) An amount equal to those dividends included in
8        such total which were paid by a corporation which
9        conducts business operations in a River Edge
10        Redevelopment Zone or zones created under the River
11        Edge Redevelopment Zone Act and conducts substantially
12        all of its operations from a River Edge Redevelopment
13        Zone or zones. This subparagraph (K) is exempt from the
14        provisions of Section 250;
15            (L) An amount equal to any contribution made to a
16        job training project established pursuant to the Real
17        Property Tax Increment Allocation Redevelopment Act;
18            (M) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated a
22        High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (K) of paragraph (2) of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (M);

 

 

SB3008- 83 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 84 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 85 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 86 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 87 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 88 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 89 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 90 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 91 -LRB098 16919 HLH 51994 b

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

 

 

SB3008- 92 -LRB098 16919 HLH 51994 b

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

 

 

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

 

 

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

 

 

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1    (g) Double deductions. Unless specifically provided
2otherwise, nothing in this Section shall permit the same item
3to be deducted more than once.
 
4    (h) Legislative intention. Except as expressly provided by
5this Section there shall be no modifications or limitations on
6the amounts of income, gain, loss or deduction taken into
7account in determining gross income, adjusted gross income or
8taxable income for federal income tax purposes for the taxable
9year, or in the amount of such items entering into the
10computation of base income and net income under this Act for
11such taxable year, whether in respect of property values as of
12August 1, 1969 or otherwise.
13(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
14eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1596-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
166-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
17eff. 8-23-11; 97-905, eff. 8-7-12.)