98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2657

 

Introduced 2/21/2013, by Rep. Rich Brauer

 

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

    Amends the Illinois Income Tax Act. Creates a deduction in an amount not to exceed $1,000 for individual taxpayers who are members in good standing of a volunteer fire department or fire protection district during the entire taxable year and who have completed a Basic Firefighter Certification Program through the Office of the State Fire Marshal. Effective immediately.


LRB098 08167 HLH 38263 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2657LRB098 08167 HLH 38263 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

 

 

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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

 

 

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

 

 

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

 

 

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

 

 

HB2657- 17 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 18 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 19 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 20 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 21 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 22 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 23 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 24 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 25 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 26 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 27 -LRB098 08167 HLH 38263 b

1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (GG),
7        the insurer to which the premiums were paid must add
8        back to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (GG). This subparagraph
10        (GG) is exempt from the provisions of Section 250; and
11        .
12            (HH) For taxable years ending on or after December
13        31, 2013, if the taxpayer was a member in good standing
14        of a volunteer fire department or fire protection
15        district during the entire taxable year, and if the
16        taxpayer has completed a Basic Firefighter
17        Certification Program through the Office of the State
18        Fire Marshal during that taxable year or any previous
19        taxable year, an amount not to exceed $1,000; this
20        subparagraph (HH) is exempt from the provisions of
21        Section 250.
 
22    (b) Corporations.
23        (1) In general. In the case of a corporation, base
24    income means an amount equal to the taxpayer's taxable
25    income for the taxable year as modified by paragraph (2).

 

 

HB2657- 28 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 29 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 30 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 31 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 32 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 33 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 34 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 35 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 36 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 37 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 38 -LRB098 08167 HLH 38263 b

1        directly or indirectly paid, incurred, or accrued. The
2        preceding sentence does not apply to the extent that
3        the same dividends caused a reduction to the addition
4        modification required under Section 203(b)(2)(E-12) or
5        Section 203(b)(2)(E-13) of this Act;
6            (E-15) For taxable years beginning after December
7        31, 2008, any deduction for dividends paid by a captive
8        real estate investment trust that is allowed to a real
9        estate investment trust under Section 857(b)(2)(B) of
10        the Internal Revenue Code for dividends paid;
11            (E-16) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (F) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (G) An amount equal to any amount included in such
21        total under Section 78 of the Internal Revenue Code;
22            (H) In the case of a regulated investment company,
23        an amount equal to the amount of exempt interest
24        dividends as defined in subsection (b) (5) of Section
25        852 of the Internal Revenue Code, paid to shareholders
26        for the taxable year;

 

 

HB2657- 39 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 40 -LRB098 08167 HLH 38263 b

1            (J) An amount equal to all amounts included in such
2        total which are exempt from taxation by this State
3        either by reason of its statutes or Constitution or by
4        reason of the Constitution, treaties or statutes of the
5        United States; provided that, in the case of any
6        statute of this State that exempts income derived from
7        bonds or other obligations from the tax imposed under
8        this Act, the amount exempted shall be the interest net
9        of bond premium amortization;
10            (K) An amount equal to those dividends included in
11        such total which were paid by a corporation which
12        conducts business operations in a River Edge
13        Redevelopment Zone or zones created under the River
14        Edge Redevelopment Zone Act and conducts substantially
15        all of its operations in a River Edge Redevelopment
16        Zone or zones. This subparagraph (K) is exempt from the
17        provisions of Section 250;
18            (L) 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 (L);

 

 

HB2657- 41 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 42 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 43 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 44 -LRB098 08167 HLH 38263 b

1        after December 31, 1988, dividends received or deemed
2        received or paid or deemed paid under Sections 951
3        through 964 of the Internal Revenue Code and including,
4        for taxable years ending on or after December 31, 2008,
5        dividends received from a captive real estate
6        investment trust, from any such corporation specified
7        in clause (i) that would but for the provisions of
8        Section 1504 (b) (3) of the Internal Revenue Code be
9        treated as a member of the affiliated group which
10        includes the dividend recipient, exceed the amount of
11        the modification provided under subparagraph (G) of
12        paragraph (2) of this subsection (b) which is related
13        to such dividends. This subparagraph (O) is exempt from
14        the provisions of Section 250 of this Act;
15            (P) An amount equal to any contribution made to a
16        job training project established pursuant to the Tax
17        Increment Allocation Redevelopment Act;
18            (Q) 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;
23            (R) On and after July 20, 1999, in the case of an
24        attorney-in-fact with respect to whom an interinsurer
25        or a reciprocal insurer has made the election under
26        Section 835 of the Internal Revenue Code, 26 U.S.C.

 

 

HB2657- 45 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 46 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 47 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 48 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 49 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 50 -LRB098 08167 HLH 38263 b

1        required to apportion business income under different
2        subsections of Section 304, but not to exceed the
3        addition modification required to be made for the same
4        taxable year under Section 203(b)(2)(E-13) for
5        intangible expenses and costs paid, accrued, or
6        incurred, directly or indirectly, to the same foreign
7        person. This subparagraph (X) is exempt from the
8        provisions of Section 250;
9            (Y) For taxable years ending on or after December
10        31, 2011, in the case of a taxpayer who was required to
11        add back any insurance premiums under Section
12        203(b)(2)(E-14), such taxpayer may elect to subtract
13        that part of a reimbursement received from the
14        insurance company equal to the amount of the expense or
15        loss (including expenses incurred by the insurance
16        company) that would have been taken into account as a
17        deduction for federal income tax purposes if the
18        expense or loss had been uninsured. If a taxpayer makes
19        the election provided for by this subparagraph (Y), the
20        insurer to which the premiums were paid must add back
21        to income the amount subtracted by the taxpayer
22        pursuant to this subparagraph (Y). This subparagraph
23        (Y) is exempt from the provisions of Section 250; and
24            (Z) The difference between the nondeductible
25        controlled foreign corporation dividends under Section
26        965(e)(3) of the Internal Revenue Code over the taxable

 

 

HB2657- 51 -LRB098 08167 HLH 38263 b

1        income of the taxpayer, computed without regard to
2        Section 965(e)(2)(A) of the Internal Revenue Code, and
3        without regard to any net operating loss deduction.
4        This subparagraph (Z) is exempt from the provisions of
5        Section 250.
6        (3) Special rule. For purposes of paragraph (2) (A),
7    "gross income" in the case of a life insurance company, for
8    tax years ending on and after December 31, 1994, and prior
9    to December 31, 2011, shall mean the gross investment
10    income for the taxable year and, for tax years ending on or
11    after December 31, 2011, shall mean all amounts included in
12    life insurance gross income under Section 803(a)(3) of the
13    Internal Revenue Code.
 
14    (c) Trusts and estates.
15        (1) In general. In the case of a trust or estate, 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. Subject to the provisions of
19    paragraph (3), the taxable income referred to in paragraph
20    (1) shall be modified by adding thereto the sum of the
21    following amounts:
22            (A) An amount equal to all amounts paid or accrued
23        to the taxpayer as interest or dividends during the
24        taxable year to the extent excluded from gross income
25        in the computation of taxable income;

 

 

HB2657- 52 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 53 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 54 -LRB098 08167 HLH 38263 b

1        computation of taxable income;
2            (G-5) For taxable years ending after December 31,
3        1997, an amount equal to any eligible remediation costs
4        that the trust or estate deducted in computing adjusted
5        gross income and for which the trust or estate claims a
6        credit under subsection (l) of Section 201;
7            (G-10) For taxable years 2001 and thereafter, an
8        amount equal to the bonus depreciation deduction taken
9        on the taxpayer's federal income tax return for the
10        taxable year under subsection (k) of Section 168 of the
11        Internal Revenue Code; and
12            (G-11) If the taxpayer sells, transfers, abandons,
13        or otherwise disposes of property for which the
14        taxpayer was required in any taxable year to make an
15        addition modification under subparagraph (G-10), then
16        an amount equal to the aggregate amount of the
17        deductions taken in all taxable years under
18        subparagraph (R) 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 (R), then an amount
25        equal to that subtraction modification.
26            The taxpayer is required to make the addition

 

 

HB2657- 55 -LRB098 08167 HLH 38263 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        the same dividends caused a reduction to the addition
2        modification required under Section 203(c)(2)(G-12) or
3        Section 203(c)(2)(G-13) of this Act;
4            (G-15) 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            (H) An amount equal to all amounts included in such
11        total pursuant to the provisions of Sections 402(a),
12        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
13        Internal Revenue Code or included in such total as
14        distributions under the provisions of any retirement
15        or disability plan for employees of any governmental
16        agency or unit, or retirement payments to retired
17        partners, which payments are excluded in computing net
18        earnings from self employment by Section 1402 of the
19        Internal Revenue Code and regulations adopted pursuant
20        thereto;
21            (I) The valuation limitation amount;
22            (J) An amount equal to the amount of any tax
23        imposed by this Act which was refunded to the taxpayer
24        and included in such total for the taxable year;
25            (K) An amount equal to all amounts included in
26        taxable income as modified by subparagraphs (A), (B),

 

 

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1        (C), (D), (E), (F) and (G) which are exempt from
2        taxation by this State either by reason of its statutes
3        or Constitution or by reason of the Constitution,
4        treaties or statutes of the United States; provided
5        that, in the case of any statute of this State that
6        exempts income derived from bonds or other obligations
7        from the tax imposed under this Act, the amount
8        exempted shall be the interest net of bond premium
9        amortization;
10            (L) With the exception of any amounts subtracted
11        under subparagraph (K), an amount equal to the sum of
12        all amounts disallowed as deductions by (i) Sections
13        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
14        and all amounts of expenses allocable to interest and
15        disallowed as deductions by Section 265(1) of the
16        Internal Revenue Code; and (ii) for taxable years
17        ending on or after August 13, 1999, Sections 171(a)(2),
18        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
19        Code, plus, (iii) for taxable years ending on or after
20        December 31, 2011, Section 45G(e)(3) of the Internal
21        Revenue Code and, for taxable years ending on or after
22        December 31, 2008, any amount included in gross income
23        under Section 87 of the Internal Revenue Code; the
24        provisions of this subparagraph are exempt from the
25        provisions of Section 250;
26            (M) An amount equal to those dividends included in

 

 

HB2657- 64 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 65 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 66 -LRB098 08167 HLH 38263 b

1        public assistance, benefit, or similar entitlement is
2        not affected by the inclusion of items (i) and (ii) of
3        this paragraph in gross income for federal income tax
4        purposes. This paragraph is exempt from the provisions
5        of Section 250;
6            (R) 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

 

 

HB2657- 67 -LRB098 08167 HLH 38263 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 (R) is exempt from the provisions of
15        Section 250;
16            (S) 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 (G-10), 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 (G-10), then an amount

 

 

HB2657- 68 -LRB098 08167 HLH 38263 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 (S) is exempt from the
6        provisions of Section 250;
7            (T) 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 (T) is exempt
23        from the provisions of Section 250;
24            (U) 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

 

 

HB2657- 69 -LRB098 08167 HLH 38263 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 the foreign person's business activity
4        outside the United States is 80% or more of that
5        person's total business activity and (ii) for taxable
6        years ending on or after December 31, 2008, to a person
7        who would be a member of the same unitary business
8        group but for the fact that the person is prohibited
9        under Section 1501(a)(27) from being included in the
10        unitary business group because he or she is ordinarily
11        required to apportion business income under different
12        subsections of Section 304, but not to exceed the
13        addition modification required to be made for the same
14        taxable year under Section 203(c)(2)(G-12) for
15        interest paid, accrued, or incurred, directly or
16        indirectly, to the same person. This subparagraph (U)
17        is exempt from the provisions of Section 250;
18            (V) 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

 

 

HB2657- 70 -LRB098 08167 HLH 38263 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(c)(2)(G-13) for
9        intangible expenses and costs paid, accrued, or
10        incurred, directly or indirectly, to the same foreign
11        person. This subparagraph (V) is exempt from the
12        provisions of Section 250;
13            (W) in the case of an estate, an amount equal to
14        all amounts included in such total pursuant to the
15        provisions of Section 111 of the Internal Revenue Code
16        as a recovery of items previously deducted by the
17        decedent from adjusted gross income in the computation
18        of taxable income. This subparagraph (W) is exempt from
19        Section 250;
20            (X) an amount equal to the refund included in such
21        total of any tax deducted for federal income tax
22        purposes, to the extent that deduction was added back
23        under subparagraph (F). This subparagraph (X) is
24        exempt from the provisions of Section 250; and
25            (Y) For taxable years ending on or after December
26        31, 2011, in the case of a taxpayer who was required to

 

 

HB2657- 71 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 72 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 73 -LRB098 08167 HLH 38263 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB2657- 83 -LRB098 08167 HLH 38263 b

1        conducts business operations in a federally designated
2        Foreign Trade Zone or Sub-Zone and that is designated a
3        High Impact Business located in Illinois; provided
4        that dividends eligible for the deduction provided in
5        subparagraph (K) of paragraph (2) of this subsection
6        shall not be eligible for the deduction provided under
7        this subparagraph (M);
8            (N) An amount equal to the amount of the deduction
9        used to compute the federal income tax credit for
10        restoration of substantial amounts held under claim of
11        right for the taxable year pursuant to Section 1341 of
12        the Internal Revenue Code;
13            (O) 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

 

 

HB2657- 84 -LRB098 08167 HLH 38263 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 (O) is exempt from the provisions of
22        Section 250;
23            (P) 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 (D-5), then an amount

 

 

HB2657- 85 -LRB098 08167 HLH 38263 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 (D-5), 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 (P) is exempt from the
13        provisions of Section 250;
14            (Q) 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 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

 

 

HB2657- 86 -LRB098 08167 HLH 38263 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. This subparagraph (Q) is exempt
4        from Section 250;
5            (R) 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(d)(2)(D-7) for interest
22        paid, accrued, or incurred, directly or indirectly, to
23        the same person. This subparagraph (R) is exempt from
24        Section 250;
25            (S) An amount equal to the income from intangible
26        property taken into account for the taxable year (net

 

 

HB2657- 87 -LRB098 08167 HLH 38263 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(d)(2)(D-8) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same person.
18        This subparagraph (S) is exempt from Section 250; and
19            (T) For taxable years ending on or after December
20        31, 2011, in the case of a taxpayer who was required to
21        add back any insurance premiums under Section
22        203(d)(2)(D-9), such taxpayer may elect to subtract
23        that part of a reimbursement received from the
24        insurance company equal to the amount of the expense or
25        loss (including expenses incurred by the insurance
26        company) that would have been taken into account as a

 

 

HB2657- 88 -LRB098 08167 HLH 38263 b

1        deduction for federal income tax purposes if the
2        expense or loss had been uninsured. If a taxpayer makes
3        the election provided for by this subparagraph (T), the
4        insurer to which the premiums were paid must add back
5        to income the amount subtracted by the taxpayer
6        pursuant to this subparagraph (T). This subparagraph
7        (T) is exempt from the provisions of Section 250.
 
8    (e) Gross income; adjusted gross income; taxable income.
9        (1) In general. Subject to the provisions of paragraph
10    (2) and subsection (b) (3), for purposes of this Section
11    and Section 803(e), a taxpayer's gross income, adjusted
12    gross income, or taxable income for the taxable year shall
13    mean the amount of gross income, adjusted gross income or
14    taxable income properly reportable for federal income tax
15    purposes for the taxable year under the provisions of the
16    Internal Revenue Code. Taxable income may be less than
17    zero. However, for taxable years ending on or after
18    December 31, 1986, net operating loss carryforwards from
19    taxable years ending prior to December 31, 1986, may not
20    exceed the sum of federal taxable income for the taxable
21    year before net operating loss deduction, plus the excess
22    of addition modifications over subtraction modifications
23    for the taxable year. For taxable years ending prior to
24    December 31, 1986, taxable income may never be an amount in
25    excess of the net operating loss for the taxable year as

 

 

HB2657- 89 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 90 -LRB098 08167 HLH 38263 b

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

 

 

HB2657- 91 -LRB098 08167 HLH 38263 b

1        provisions of Section 1381 through 1388 of the Internal
2        Revenue Code, but without regard to the prohibition
3        against offsetting losses from patronage activities
4        against income from nonpatronage activities; except
5        that a cooperative corporation or association may make
6        an election to follow its federal income tax treatment
7        of patronage losses and nonpatronage losses. In the
8        event such election is made, such losses shall be
9        computed and carried over in a manner consistent with
10        subsection (a) of Section 207 of this Act and
11        apportioned by the apportionment factor reported by
12        the cooperative on its Illinois income tax return filed
13        for the taxable year in which the losses are incurred.
14        The election shall be effective for all taxable years
15        with original returns due on or after the date of the
16        election. In addition, the cooperative may file an
17        amended return or returns, as allowed under this Act,
18        to provide that the election shall be effective for
19        losses incurred or carried forward for taxable years
20        occurring prior to the date of the election. Once made,
21        the election may only be revoked upon approval of the
22        Director. The Department shall adopt rules setting
23        forth requirements for documenting the elections and
24        any resulting Illinois net loss and the standards to be
25        used by the Director in evaluating requests to revoke
26        elections. Public Act 96-932 is declaratory of

 

 

HB2657- 92 -LRB098 08167 HLH 38263 b

1        existing law;
2            (G) Subchapter S corporations. In the case of: (i)
3        a Subchapter S corporation for which there is in effect
4        an election for the taxable year under Section 1362 of
5        the Internal Revenue Code, the taxable income of such
6        corporation determined in accordance with Section
7        1363(b) of the Internal Revenue Code, except that
8        taxable income shall take into account those items
9        which are required by Section 1363(b)(1) of the
10        Internal Revenue Code to be separately stated; and (ii)
11        a Subchapter S corporation for which there is in effect
12        a federal election to opt out of the provisions of the
13        Subchapter S Revision Act of 1982 and have applied
14        instead the prior federal Subchapter S rules as in
15        effect on July 1, 1982, the taxable income of such
16        corporation determined in accordance with the federal
17        Subchapter S rules as in effect on July 1, 1982; and
18            (H) Partnerships. In the case of a partnership,
19        taxable income determined in accordance with Section
20        703 of the Internal Revenue Code, except that taxable
21        income shall take into account those items which are
22        required by Section 703(a)(1) to be separately stated
23        but which would be taken into account by an individual
24        in calculating his taxable income.
25        (3) Recapture of business expenses on disposition of
26    asset or business. Notwithstanding any other law to the

 

 

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1    contrary, if in prior years income from an asset or
2    business has been classified as business income and in a
3    later year is demonstrated to be non-business income, then
4    all expenses, without limitation, deducted in such later
5    year and in the 2 immediately preceding taxable years
6    related to that asset or business that generated the
7    non-business income shall be added back and recaptured as
8    business income in the year of the disposition of the asset
9    or business. Such amount shall be apportioned to Illinois
10    using the greater of the apportionment fraction computed
11    for the business under Section 304 of this Act for the
12    taxable year or the average of the apportionment fractions
13    computed for the business under Section 304 of this Act for
14    the taxable year and for the 2 immediately preceding
15    taxable years.
 
16    (f) Valuation limitation amount.
17        (1) In general. The valuation limitation amount
18    referred to in subsections (a) (2) (G), (c) (2) (I) and
19    (d)(2) (E) is an amount equal to:
20            (A) The sum of the pre-August 1, 1969 appreciation
21        amounts (to the extent consisting of gain reportable
22        under the provisions of Section 1245 or 1250 of the
23        Internal Revenue Code) for all property in respect of
24        which such gain was reported for the taxable year; plus
25            (B) The lesser of (i) the sum of the pre-August 1,

 

 

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

 

 

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1        that part of the taxpayer's holding period for the
2        property ending July 31, 1969 bears to the number of
3        full calendar months in the taxpayer's entire holding
4        period for the property.
5            (C) The Department shall prescribe such
6        regulations as may be necessary to carry out the
7        purposes of this paragraph.
 
8    (g) Double deductions. Unless specifically provided
9otherwise, nothing in this Section shall permit the same item
10to be deducted more than once.
 
11    (h) Legislative intention. Except as expressly provided by
12this Section there shall be no modifications or limitations on
13the amounts of income, gain, loss or deduction taken into
14account in determining gross income, adjusted gross income or
15taxable income for federal income tax purposes for the taxable
16year, or in the amount of such items entering into the
17computation of base income and net income under this Act for
18such taxable year, whether in respect of property values as of
19August 1, 1969 or otherwise.
20(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
21eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
2296-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
236-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
24eff. 8-23-11; 97-905, eff. 8-7-12.)
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.