103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4669

 

Introduced 2/6/2024, by Rep. Amy Elik

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203
35 ILCS 735/3-3.5 new

    Amends the Illinois Income Tax Act. Creates an income tax deduction for an amount of up to $50,000 per tax year contributed to a small business asset purchase account and all interest earned on such accounts during the tax year. Provides that a "small business asset purchase account" means an account established by a taxpayer, the proceeds of which are used to purchase property used primarily in Illinois for which a federal income tax deduction is claimed under Section 179 of the Internal Revenue Code. Provides an addition modification for amounts withdrawn from a small business asset purchase account that are not used for qualified purchases. Amends the Uniform Penalty and Interest Act to establish a penalty for improper use of moneys in a small business asset purchase account. Effective immediately.


LRB103 38044 HLH 68176 b

 

 

A BILL FOR

 

HB4669LRB103 38044 HLH 68176 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)
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
15    the 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
10        1, 1991, the retrospective application date of Article
11        4 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
24        on the account in the taxable year of a withdrawal
25        pursuant to subsection (b) of Section 20 of the
26        Medical Care Savings Account Act or subsection (b) of

 

 

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

 

 

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

 

 

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

 

 

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1                (iii) the taxpayer can establish, based on
2            clear and convincing evidence, that the interest
3            paid, accrued, or incurred relates to a contract
4            or agreement entered into at arm's-length rates
5            and terms and the principal purpose for the
6            payment is not federal or Illinois tax avoidance;
7            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
18            for any tax year beginning after the effective
19            date of this amendment provided such adjustment is
20            made pursuant to regulation adopted by the
21            Department and such regulations provide methods
22            and standards by which the Department will utilize
23            its authority under Section 404 of this Act;
24            (D-18) 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

 

 

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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 under Sections 951 through 964 of the Internal
21        Revenue Code and amounts included in gross income
22        under Section 78 of the Internal Revenue Code) with
23        respect to the stock of the same person to whom the
24        intangible expenses and costs were directly or
25        indirectly paid, incurred, or accrued. The preceding
26        sentence does not apply to the extent that the same

 

 

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1        dividends caused a reduction to the addition
2        modification required under Section 203(a)(2)(D-17) 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
21            is subject in a foreign country or state, other
22            than a state which requires mandatory unitary
23            reporting, to a tax on or measured by net income
24            with respect to such item; or
25                (ii) any item of intangible expense or cost
26            paid, accrued, or incurred, directly or

 

 

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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
18            the 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
22            alternative method of apportionment under Section
23            304(f);
24                Nothing in this subsection shall preclude the
25            Director from making any other adjustment
26            otherwise allowed under Section 404 of this Act

 

 

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

 

 

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1        stock of the same person to whom the premiums and costs
2        were directly or indirectly paid, incurred, or
3        accrued. The preceding sentence does not apply to the
4        extent that the same dividends caused a reduction to
5        the addition modification required under Section
6        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
7        Act;
8            (D-20) For taxable years beginning on or after
9        January 1, 2002 and ending on or before December 31,
10        2006, in the case of a distribution from a qualified
11        tuition program under Section 529 of the Internal
12        Revenue Code, other than (i) a distribution from a
13        College Savings Pool created under Section 16.5 of the
14        State Treasurer Act or (ii) a distribution from the
15        Illinois Prepaid Tuition Trust Fund, an amount equal
16        to the amount excluded from gross income under Section
17        529(c)(3)(B). For taxable years beginning on or after
18        January 1, 2007, in the case of a distribution from a
19        qualified tuition program under Section 529 of the
20        Internal Revenue Code, other than (i) a distribution
21        from a College Savings Pool created under Section 16.5
22        of the State Treasurer Act, (ii) a distribution from
23        the Illinois Prepaid Tuition Trust Fund, or (iii) a
24        distribution from a qualified tuition program under
25        Section 529 of the Internal Revenue Code that (I)
26        adopts and determines that its offering materials

 

 

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1        comply with the College Savings Plans Network's
2        disclosure principles and (II) has made reasonable
3        efforts to inform in-state residents of the existence
4        of in-state qualified tuition programs by informing
5        Illinois residents directly and, where applicable, to
6        inform financial intermediaries distributing the
7        program to inform in-state residents of the existence
8        of in-state qualified tuition programs at least
9        annually, an amount equal to the amount excluded from
10        gross income under Section 529(c)(3)(B).
11            For the purposes of this subparagraph (D-20), a
12        qualified tuition program has made reasonable efforts
13        if it makes disclosures (which may use the term
14        "in-state program" or "in-state plan" and need not
15        specifically refer to Illinois or its qualified
16        programs by name) (i) directly to prospective
17        participants in its offering materials or makes a
18        public disclosure, such as a website posting; and (ii)
19        where applicable, to intermediaries selling the
20        out-of-state program in the same manner that the
21        out-of-state program distributes its offering
22        materials;
23            (D-20.5) For taxable years beginning on or after
24        January 1, 2018, in the case of a distribution from a
25        qualified ABLE program under Section 529A of the
26        Internal Revenue Code, other than a distribution from

 

 

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1        a qualified ABLE program created under Section 16.6 of
2        the State Treasurer Act, an amount equal to the amount
3        excluded from gross income under Section 529A(c)(1)(B)
4        of the Internal Revenue Code;
5            (D-21) For taxable years beginning on or after
6        January 1, 2007, in the case of transfer of moneys from
7        a qualified tuition program under Section 529 of the
8        Internal Revenue Code that is administered by the
9        State to an out-of-state program, an amount equal to
10        the amount of moneys previously deducted from base
11        income under subsection (a)(2)(Y) of this Section;
12            (D-21.5) For taxable years beginning on or after
13        January 1, 2018, in the case of the transfer of moneys
14        from a qualified tuition program under Section 529 or
15        a qualified ABLE program under Section 529A of the
16        Internal Revenue Code that is administered by this
17        State to an ABLE account established under an
18        out-of-state ABLE account program, an amount equal to
19        the contribution component of the transferred amount
20        that was previously deducted from base income under
21        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
22        Section;
23            (D-22) For taxable years beginning on or after
24        January 1, 2009, and prior to January 1, 2018, in the
25        case of a nonqualified withdrawal or refund of moneys
26        from a qualified tuition program under Section 529 of

 

 

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1        the Internal Revenue Code administered by the State
2        that is not used for qualified expenses at an eligible
3        education institution, an amount equal to the
4        contribution component of the nonqualified withdrawal
5        or refund that was previously deducted from base
6        income under subsection (a)(2)(y) of this Section,
7        provided that the withdrawal or refund did not result
8        from the beneficiary's death or disability. For
9        taxable years beginning on or after January 1, 2018:
10        (1) in the case of a nonqualified withdrawal or
11        refund, as defined under Section 16.5 of the State
12        Treasurer Act, of moneys from a qualified tuition
13        program under Section 529 of the Internal Revenue Code
14        administered by the State, an amount equal to the
15        contribution component of the nonqualified withdrawal
16        or refund that was previously deducted from base
17        income under subsection (a)(2)(Y) of this Section, and
18        (2) in the case of a nonqualified withdrawal or refund
19        from a qualified ABLE program under Section 529A of
20        the Internal Revenue Code administered by the State
21        that is not used for qualified disability expenses, an
22        amount equal to the contribution component of the
23        nonqualified withdrawal or refund that was previously
24        deducted from base income under subsection (a)(2)(HH)
25        of this Section;
26            (D-23) An amount equal to the credit allowable to

 

 

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1        the taxpayer under Section 218(a) of this Act,
2        determined without regard to Section 218(c) of this
3        Act;
4            (D-24) For taxable years ending on or after
5        December 31, 2017, an amount equal to the deduction
6        allowed under Section 199 of the Internal Revenue Code
7        for the taxable year;
8            (D-25) In the case of a resident, an amount equal
9        to the amount of tax for which a credit is allowed
10        pursuant to Section 201(p)(7) of this Act;
11            (D-26) An amount that is withdrawn by the taxpayer
12        from a small business asset purchase account during
13        the taxable year and that is not used for the purchase
14        of qualified property; as used in this subparagraph
15        (D-26), "qualified property" means property that is
16        used predominantly in Illinois and for which a
17        deduction under Section 179 of the Internal Revenue
18        Code is claimed for the tax year in which the amount is
19        withdrawn from the small business asset purchase
20        account; amounts that are subject to the addition
21        modification under this subparagraph (D-26) are also
22        subject to the 10% penalty for ineligible use under
23        Section 3-3.5 of the Uniform Penalty and Interest Act;
24    and by deducting from the total so obtained the sum of the
25    following amounts:
26            (E) For taxable years ending before December 31,

 

 

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

 

 

HB4669- 17 -LRB103 38044 HLH 68176 b

1        Illinois National Guard or, beginning with taxable
2        years ending on or after December 31, 2007, the
3        National Guard of any other state. The provisions of
4        this subparagraph (E) are exempt from the provisions
5        of Section 250;
6            (F) An amount equal to all amounts included in
7        such total pursuant to the provisions of Sections
8        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
9        408 of the Internal Revenue Code, or included in such
10        total as distributions under the provisions of any
11        retirement or disability plan for employees of any
12        governmental agency or unit, or retirement payments to
13        retired partners, which payments are excluded in
14        computing net earnings from self employment by Section
15        1402 of the Internal Revenue Code and regulations
16        adopted pursuant thereto;
17            (G) The valuation limitation amount;
18            (H) An amount equal to the amount of any tax
19        imposed by this Act which was refunded to the taxpayer
20        and included in such total for the taxable year;
21            (I) An amount equal to all amounts included in
22        such total pursuant to the provisions of Section 111
23        of the Internal Revenue Code as a recovery of items
24        previously deducted from adjusted gross income in the
25        computation of taxable income;
26            (J) An amount equal to those dividends included in

 

 

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

 

 

HB4669- 19 -LRB103 38044 HLH 68176 b

1        disallowed as deductions by Section 265(a)(1) of the
2        Internal Revenue Code; and (ii) for taxable years
3        ending on or after August 13, 1999, Sections
4        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
5        Internal Revenue Code, plus, for taxable years ending
6        on or after December 31, 2011, Section 45G(e)(3) of
7        the Internal Revenue Code and, for taxable years
8        ending on or after December 31, 2008, any amount
9        included in gross income under Section 87 of the
10        Internal Revenue Code; the provisions of this
11        subparagraph are exempt from the provisions of Section
12        250;
13            (N) An amount equal to all amounts included in
14        such total which are exempt from taxation by this
15        State either by reason of its statutes or Constitution
16        or by reason of the Constitution, treaties or statutes
17        of the United States; provided that, in the case of any
18        statute of this State that exempts income derived from
19        bonds or other obligations from the tax imposed under
20        this Act, the amount exempted shall be the interest
21        net of bond premium amortization;
22            (O) An amount equal to any contribution made to a
23        job training project established pursuant to the Tax
24        Increment Allocation Redevelopment Act;
25            (P) An amount equal to the amount of the deduction
26        used to compute the federal income tax credit for

 

 

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1        restoration of substantial amounts held under claim of
2        right for the taxable year pursuant to Section 1341 of
3        the Internal Revenue Code or of any itemized deduction
4        taken from adjusted gross income in the computation of
5        taxable income for restoration of substantial amounts
6        held under claim of right for the taxable year;
7            (Q) An amount equal to any amounts included in
8        such total, received by the taxpayer as an
9        acceleration in the payment of life, endowment or
10        annuity benefits in advance of the time they would
11        otherwise be payable as an indemnity for a terminal
12        illness;
13            (R) An amount equal to the amount of any federal or
14        State bonus paid to veterans of the Persian Gulf War;
15            (S) An amount, to the extent included in adjusted
16        gross income, equal to the amount of a contribution
17        made in the taxable year on behalf of the taxpayer to a
18        medical care savings account established under the
19        Medical Care Savings Account Act or the Medical Care
20        Savings Account Act of 2000 to the extent the
21        contribution is accepted by the account administrator
22        as provided in that Act;
23            (T) An amount, to the extent included in adjusted
24        gross income, equal to the amount of interest earned
25        in the taxable year on a medical care savings account
26        established under the Medical Care Savings Account Act

 

 

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

 

 

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1        insurance or long-term care insurance plan of an
2        employer of the taxpayer or the taxpayer's spouse. The
3        amount of the health insurance and long-term care
4        insurance subtracted under this item (V) shall be
5        determined by multiplying total health insurance and
6        long-term care insurance premiums paid by the taxpayer
7        times a number that represents the fractional
8        percentage of eligible medical expenses under Section
9        213 of the Internal Revenue Code of 1986 not actually
10        deducted on the taxpayer's federal income tax return;
11            (W) For taxable years beginning on or after
12        January 1, 1998, all amounts included in the
13        taxpayer's federal gross income in the taxable year
14        from amounts converted from a regular IRA to a Roth
15        IRA. This paragraph is exempt from the provisions of
16        Section 250;
17            (X) For taxable year 1999 and thereafter, an
18        amount equal to the amount of any (i) distributions,
19        to the extent includible in gross income for federal
20        income tax purposes, made to the taxpayer because of
21        his or her status as a victim of persecution for racial
22        or religious reasons by Nazi Germany or any other Axis
23        regime or as an heir of the victim and (ii) items of
24        income, to the extent includible in gross income for
25        federal income tax purposes, attributable to, derived
26        from or in any way related to assets stolen from,

 

 

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1        hidden from, or otherwise lost to a victim of
2        persecution for racial or religious reasons by Nazi
3        Germany or any other Axis regime immediately prior to,
4        during, and immediately after World War II, including,
5        but not limited to, interest on the proceeds
6        receivable as insurance under policies issued to a
7        victim of persecution for racial or religious reasons
8        by Nazi Germany or any other Axis regime by European
9        insurance companies immediately prior to and during
10        World War II; provided, however, this subtraction from
11        federal adjusted gross income does not apply to assets
12        acquired with such assets or with the proceeds from
13        the sale of such assets; provided, further, this
14        paragraph shall only apply to a taxpayer who was the
15        first recipient of such assets after their recovery
16        and who is a victim of persecution for racial or
17        religious reasons by Nazi Germany or any other Axis
18        regime or as an heir of the victim. The amount of and
19        the eligibility for any public assistance, benefit, or
20        similar entitlement is not affected by the inclusion
21        of items (i) and (ii) of this paragraph in gross income
22        for federal income tax purposes. This paragraph is
23        exempt from the provisions of Section 250;
24            (Y) For taxable years beginning on or after
25        January 1, 2002 and ending on or before December 31,
26        2004, moneys contributed in the taxable year to a

 

 

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1        College Savings Pool account under Section 16.5 of the
2        State Treasurer Act, except that amounts excluded from
3        gross income under Section 529(c)(3)(C)(i) of the
4        Internal Revenue Code shall not be considered moneys
5        contributed under this subparagraph (Y). For taxable
6        years beginning on or after January 1, 2005, a maximum
7        of $10,000 contributed in the taxable year to (i) a
8        College Savings Pool account under Section 16.5 of the
9        State Treasurer Act or (ii) the Illinois Prepaid
10        Tuition Trust Fund, except that amounts excluded from
11        gross income under Section 529(c)(3)(C)(i) of the
12        Internal Revenue Code shall not be considered moneys
13        contributed under this subparagraph (Y). For purposes
14        of this subparagraph, contributions made by an
15        employer on behalf of an employee, or matching
16        contributions made by an employee, shall be treated as
17        made by the employee. This subparagraph (Y) is exempt
18        from the provisions of Section 250;
19            (Z) For taxable years 2001 and thereafter, for the
20        taxable year in which the bonus depreciation deduction
21        is taken on the taxpayer's federal income tax return
22        under subsection (k) of Section 168 of the Internal
23        Revenue Code and for each applicable taxable year
24        thereafter, an amount equal to "x", where:
25                (1) "y" equals the amount of the depreciation
26            deduction taken for the taxable year on the

 

 

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1            taxpayer's federal income tax return on property
2            for which the bonus depreciation deduction was
3            taken in any year under subsection (k) of Section
4            168 of the Internal Revenue Code, but not
5            including the bonus depreciation deduction;
6                (2) for taxable years ending on or before
7            December 31, 2005, "x" equals "y" multiplied by 30
8            and then divided by 70 (or "y" multiplied by
9            0.429); and
10                (3) for taxable years ending after December
11            31, 2005:
12                    (i) for property on which a bonus
13                depreciation deduction of 30% of the adjusted
14                basis was taken, "x" equals "y" multiplied by
15                30 and then divided by 70 (or "y" multiplied
16                by 0.429);
17                    (ii) for property on which a bonus
18                depreciation deduction of 50% of the adjusted
19                basis was taken, "x" equals "y" multiplied by
20                1.0;
21                    (iii) for property on which a bonus
22                depreciation deduction of 100% of the adjusted
23                basis was taken in a taxable year ending on or
24                after December 31, 2021, "x" equals the
25                depreciation deduction that would be allowed
26                on that property if the taxpayer had made the

 

 

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1                election under Section 168(k)(7) of the
2                Internal Revenue Code to not claim bonus
3                depreciation on that property; and
4                    (iv) for property on which a bonus
5                depreciation deduction of a percentage other
6                than 30%, 50% or 100% of the adjusted basis
7                was taken in a taxable year ending on or after
8                December 31, 2021, "x" equals "y" multiplied
9                by 100 times the percentage bonus depreciation
10                on the property (that is, 100(bonus%)) and
11                then divided by 100 times 1 minus the
12                percentage bonus depreciation on the property
13                (that is, 100(1-bonus%)).
14            The aggregate amount deducted under this
15        subparagraph in all taxable years for any one piece of
16        property may not exceed the amount of the bonus
17        depreciation deduction taken on that property on the
18        taxpayer's federal income tax return under subsection
19        (k) of Section 168 of the Internal Revenue Code. This
20        subparagraph (Z) is exempt from the provisions of
21        Section 250;
22            (AA) 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-15), then
26        an amount equal to that addition modification.

 

 

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

 

 

HB4669- 28 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 29 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 30 -LRB103 38044 HLH 68176 b

1        prison. This subparagraph (FF) is exempt from the
2        provisions of Section 250;
3            (GG) For taxable years ending on or after December
4        31, 2011, in the case of a taxpayer who was required to
5        add back any insurance premiums under Section
6        203(a)(2)(D-19), such taxpayer may elect to subtract
7        that part of a reimbursement received from the
8        insurance company equal to the amount of the expense
9        or loss (including expenses incurred by the insurance
10        company) that would have been taken into account as a
11        deduction for federal income tax purposes if the
12        expense or loss had been uninsured. If a taxpayer
13        makes the election provided for by this subparagraph
14        (GG), the insurer to which the premiums were paid must
15        add back to income the amount subtracted by the
16        taxpayer pursuant to this subparagraph (GG). This
17        subparagraph (GG) is exempt from the provisions of
18        Section 250;
19            (HH) For taxable years beginning on or after
20        January 1, 2018 and prior to January 1, 2028, a maximum
21        of $10,000 contributed in the taxable year to a
22        qualified ABLE account under Section 16.6 of the State
23        Treasurer Act, except that amounts excluded from gross
24        income under Section 529(c)(3)(C)(i) or Section
25        529A(c)(1)(C) of the Internal Revenue Code shall not
26        be considered moneys contributed under this

 

 

HB4669- 31 -LRB103 38044 HLH 68176 b

1        subparagraph (HH). For purposes of this subparagraph
2        (HH), contributions made by an employer on behalf of
3        an employee, or matching contributions made by an
4        employee, shall be treated as made by the employee;
5            (II) For taxable years that begin on or after
6        January 1, 2021 and begin before January 1, 2026, the
7        amount that is included in the taxpayer's federal
8        adjusted gross income pursuant to Section 61 of the
9        Internal Revenue Code as discharge of indebtedness
10        attributable to student loan forgiveness and that is
11        not excluded from the taxpayer's federal adjusted
12        gross income pursuant to paragraph (5) of subsection
13        (f) of Section 108 of the Internal Revenue Code; and
14            (JJ) For taxable years beginning on or after
15        January 1, 2023, for any cannabis establishment
16        operating in this State and licensed under the
17        Cannabis Regulation and Tax Act or any cannabis
18        cultivation center or medical cannabis dispensing
19        organization operating in this State and licensed
20        under the Compassionate Use of Medical Cannabis
21        Program Act, an amount equal to the deductions that
22        were disallowed under Section 280E of the Internal
23        Revenue Code for the taxable year and that would not be
24        added back under this subsection. The provisions of
25        this subparagraph (JJ) are exempt from the provisions
26        of Section 250; .

 

 

HB4669- 32 -LRB103 38044 HLH 68176 b

1            (KK) (JJ) To the extent includible in gross income
2        for federal income tax purposes, any amount awarded or
3        paid to the taxpayer as a result of a judgment or
4        settlement for fertility fraud as provided in Section
5        15 of the Illinois Fertility Fraud Act, donor
6        fertility fraud as provided in Section 20 of the
7        Illinois Fertility Fraud Act, or similar action in
8        another state; and .
9            (LL) For taxable years beginning on or after
10        January 1, 2025, an amount of up to $50,000 per tax
11        year contributed by the taxpayer to a small business
12        asset purchase account during the tax year, plus all
13        interest earned on those accounts during the tax year;
14        as used in this subparagraph (LL), "small business
15        asset purchase account" means an account established
16        by a taxpayer, the proceeds of which are used to
17        purchase property that is used primarily in Illinois
18        and for which a federal income tax deduction is
19        claimed under Section 179 of the Internal Revenue
20        Code.
 
21    (b) Corporations.
22        (1) In general. In the case of a corporation, 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

 

 

HB4669- 33 -LRB103 38044 HLH 68176 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 and all distributions
5        received from regulated investment companies during
6        the taxable year to the extent excluded from gross
7        income in the computation of taxable income;
8            (B) An amount equal to the amount of tax imposed by
9        this Act to the extent deducted from gross income in
10        the computation of taxable income for the taxable
11        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
15        amount of the capital gain dividends designated as
16        such in accordance with Section 852(b)(3)(C) of the
17        Internal Revenue Code and any amount designated under
18        Section 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

 

 

HB4669- 34 -LRB103 38044 HLH 68176 b

1        loss carryback or carryforward from a taxable year
2        ending prior to December 31, 1986 is an element of
3        taxable income under paragraph (1) of subsection (e)
4        or subparagraph (E) of paragraph (2) of subsection
5        (e), the amount by which addition modifications other
6        than 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
14            of addition modification under this subparagraph
15            (E) which related to that net operating loss and
16            which was taken into account in calculating the
17            base 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
24        operating loss carryback or carryforward from more
25        than one other taxable year ending prior to December
26        31, 1986, the addition modification provided in this

 

 

HB4669- 35 -LRB103 38044 HLH 68176 b

1        subparagraph (E) shall be the sum of the amounts
2        computed independently under the preceding provisions
3        of this 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
6        costs that the corporation deducted in computing
7        adjusted gross income and for which the corporation
8        claims a 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
13        the 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 a
23        subtraction is allowed with respect to that property
24        under subparagraph (T) and for which the taxpayer was
25        allowed in any taxable year to make a subtraction
26        modification under subparagraph (T), then an amount

 

 

HB4669- 36 -LRB103 38044 HLH 68176 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

 

 

HB4669- 37 -LRB103 38044 HLH 68176 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
4        the same person to whom the interest was paid,
5        accrued, or 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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        of the Internal Revenue Code) with respect to the
2        stock of the same person to whom the premiums and costs
3        were directly or indirectly paid, incurred, or
4        accrued. The preceding sentence does not apply to the
5        extent that the same dividends caused a reduction to
6        the addition modification required under Section
7        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
8        Act;
9            (E-15) For taxable years beginning after December
10        31, 2008, any deduction for dividends paid by a
11        captive real estate investment trust that is allowed
12        to a real estate investment trust under Section
13        857(b)(2)(B) of the Internal Revenue Code for
14        dividends paid;
15            (E-16) An amount equal to the credit allowable to
16        the taxpayer under Section 218(a) of this Act,
17        determined without regard to Section 218(c) of this
18        Act;
19            (E-17) For taxable years ending on or after
20        December 31, 2017, an amount equal to the deduction
21        allowed under Section 199 of the Internal Revenue Code
22        for the taxable year;
23            (E-18) for taxable years beginning after December
24        31, 2018, an amount equal to the deduction allowed
25        under Section 250(a)(1)(A) of the Internal Revenue
26        Code for the taxable year;

 

 

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1            (E-19) for taxable years ending on or after June
2        30, 2021, an amount equal to the deduction allowed
3        under Section 250(a)(1)(B)(i) of the Internal Revenue
4        Code for the taxable year;
5            (E-20) for taxable years ending on or after June
6        30, 2021, an amount equal to the deduction allowed
7        under Sections 243(e) and 245A(a) of the Internal
8        Revenue Code for the taxable year; and .
9            (E-21) An amount that is withdrawn by the taxpayer
10        from a small business asset purchase account during
11        the taxable year and that is not used for the purchase
12        of qualified property; as used in this subparagraph
13        (E-21), "qualified property" means property that is
14        used predominantly in Illinois and for which a
15        deduction under Section 179 of the Internal Revenue
16        Code is claimed for the tax year in which the amount is
17        withdrawn from the small business asset purchase
18        account; amounts that are subject to the addition
19        modification under this subparagraph (E-21) are also
20        subject to the 10% penalty for ineligible use under
21        Section 3-3.5 of the Uniform Penalty and Interest Act;
22    and by deducting from the total so obtained the sum of the
23    following amounts:
24            (F) An amount equal to the amount of any tax
25        imposed by this Act which was refunded to the taxpayer
26        and included in such total for the taxable year;

 

 

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1            (G) An amount equal to any amount included in such
2        total under Section 78 of the Internal Revenue Code;
3            (H) In the case of a regulated investment company,
4        an amount equal to the amount of exempt interest
5        dividends as defined in subsection (b)(5) of Section
6        852 of the Internal Revenue Code, paid to shareholders
7        for the taxable year;
8            (I) With the exception of any amounts subtracted
9        under subparagraph (J), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a)(2) and 265(a)(2) and amounts disallowed as
12        interest expense by Section 291(a)(3) of the Internal
13        Revenue Code, and all amounts of expenses allocable to
14        interest and disallowed as deductions by Section
15        265(a)(1) of the Internal Revenue Code; and (ii) for
16        taxable years ending on or after August 13, 1999,
17        Sections 171(a)(2), 265, 280C, 291(a)(3), and
18        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
19        for tax years ending on or after December 31, 2011,
20        amounts disallowed as deductions by Section 45G(e)(3)
21        of the Internal Revenue Code and, for taxable years
22        ending on or after December 31, 2008, any amount
23        included in gross income under Section 87 of the
24        Internal Revenue Code and the policyholders' share of
25        tax-exempt interest of a life insurance company under
26        Section 807(a)(2)(B) of the Internal Revenue Code (in

 

 

HB4669- 46 -LRB103 38044 HLH 68176 b

1        the case of a life insurance company with gross income
2        from a decrease in reserves for the tax year) or
3        Section 807(b)(1)(B) of the Internal Revenue Code (in
4        the case of a life insurance company allowed a
5        deduction for an increase in reserves for the tax
6        year); the provisions of this subparagraph are exempt
7        from the provisions of Section 250;
8            (J) An amount equal to all amounts included in
9        such total which are exempt from taxation by this
10        State either by reason of its statutes or Constitution
11        or by reason of the Constitution, treaties or statutes
12        of the United States; provided that, in the case of any
13        statute of this State that exempts income derived from
14        bonds or other obligations from the tax imposed under
15        this Act, the amount exempted shall be the interest
16        net of bond premium amortization;
17            (K) An amount equal to those dividends included in
18        such total which were paid by a corporation which
19        conducts business operations in a River Edge
20        Redevelopment Zone or zones created under the River
21        Edge Redevelopment Zone Act and conducts substantially
22        all of its operations in a River Edge Redevelopment
23        Zone or zones. This subparagraph (K) is exempt from
24        the provisions of Section 250;
25            (L) An amount equal to those dividends included in
26        such total that were paid by a corporation that

 

 

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

 

 

HB4669- 48 -LRB103 38044 HLH 68176 b

1        such loan attributable to the eligible property as
2        calculated under the previous sentence. This
3        subparagraph (M) is exempt from the provisions of
4        Section 250;
5            (M-1) For any taxpayer that is a financial
6        organization within the meaning of Section 304(c) of
7        this Act, an amount included in such total as interest
8        income from a loan or loans made by such taxpayer to a
9        borrower, to the extent that such a loan is secured by
10        property which is eligible for the High Impact
11        Business Investment Credit. To determine the portion
12        of a loan or loans that is secured by property eligible
13        for a Section 201(h) investment credit to the
14        borrower, the entire principal amount of the loan or
15        loans between the taxpayer and the borrower should be
16        divided into the basis of the Section 201(h)
17        investment credit property which secures the loan or
18        loans, using for this purpose the original basis of
19        such property on the date that it was placed in service
20        in a federally designated Foreign Trade Zone or
21        Sub-Zone located in Illinois. No taxpayer that is
22        eligible for the deduction provided in subparagraph
23        (M) of paragraph (2) of this subsection shall be
24        eligible for the deduction provided under this
25        subparagraph (M-1). The subtraction modification
26        available to taxpayers in any year under this

 

 

HB4669- 49 -LRB103 38044 HLH 68176 b

1        subsection shall be that portion of the total interest
2        paid by the borrower with respect to such loan
3        attributable to the eligible property as calculated
4        under the previous sentence;
5            (N) Two times any contribution made during the
6        taxable year to a designated zone organization to the
7        extent that the contribution (i) qualifies as a
8        charitable contribution under subsection (c) of
9        Section 170 of the Internal Revenue Code and (ii)
10        must, by its terms, be used for a project approved by
11        the Department of Commerce and Economic Opportunity
12        under Section 11 of the Illinois Enterprise Zone Act
13        or under Section 10-10 of the River Edge Redevelopment
14        Zone Act. This subparagraph (N) is exempt from the
15        provisions of Section 250;
16            (O) An amount equal to: (i) 85% for taxable years
17        ending on or before December 31, 1992, or, a
18        percentage equal to the percentage allowable under
19        Section 243(a)(1) of the Internal Revenue Code of 1986
20        for taxable years ending after December 31, 1992, of
21        the amount by which dividends included in taxable
22        income and received from a corporation that is not
23        created or organized under the laws of the United
24        States or any state or political subdivision thereof,
25        including, for taxable years ending on or after
26        December 31, 1988, dividends received or deemed

 

 

HB4669- 50 -LRB103 38044 HLH 68176 b

1        received or paid or deemed paid under Sections 951
2        through 965 of the Internal Revenue Code, exceed the
3        amount of the modification provided under subparagraph
4        (G) of paragraph (2) of this subsection (b) which is
5        related to such dividends, and including, for taxable
6        years ending on or after December 31, 2008, dividends
7        received from a captive real estate investment trust;
8        plus (ii) 100% of the amount by which dividends,
9        included in taxable income and received, including,
10        for taxable years ending on or after December 31,
11        1988, dividends received or deemed received or paid or
12        deemed paid under Sections 951 through 964 of the
13        Internal Revenue Code and including, for taxable years
14        ending on or after December 31, 2008, dividends
15        received from a captive real estate investment trust,
16        from any such corporation specified in clause (i) that
17        would but for the provisions of Section 1504(b)(3) of
18        the Internal Revenue Code be treated as a member of the
19        affiliated group which includes the dividend
20        recipient, exceed the amount of the modification
21        provided under subparagraph (G) of paragraph (2) of
22        this subsection (b) which is related to such
23        dividends. For taxable years ending on or after June
24        30, 2021, (i) for purposes of this subparagraph, the
25        term "dividend" does not include any amount treated as
26        a dividend under Section 1248 of the Internal Revenue

 

 

HB4669- 51 -LRB103 38044 HLH 68176 b

1        Code, and (ii) this subparagraph shall not apply to
2        dividends for which a deduction is allowed under
3        Section 245(a) of the Internal Revenue Code. This
4        subparagraph (O) is exempt from the provisions of
5        Section 250 of this Act;
6            (P) An amount equal to any contribution made to a
7        job training project established pursuant to the Tax
8        Increment Allocation Redevelopment Act;
9            (Q) An amount equal to the amount of the deduction
10        used to compute the federal income tax credit for
11        restoration of substantial amounts held under claim of
12        right for the taxable year pursuant to Section 1341 of
13        the Internal Revenue Code;
14            (R) On and after July 20, 1999, in the case of an
15        attorney-in-fact with respect to whom an interinsurer
16        or a reciprocal insurer has made the election under
17        Section 835 of the Internal Revenue Code, 26 U.S.C.
18        835, an amount equal to the excess, if any, of the
19        amounts paid or incurred by that interinsurer or
20        reciprocal insurer in the taxable year to the
21        attorney-in-fact over the deduction allowed to that
22        interinsurer or reciprocal insurer with respect to the
23        attorney-in-fact under Section 835(b) of the Internal
24        Revenue Code for the taxable year; the provisions of
25        this subparagraph are exempt from the provisions of
26        Section 250;

 

 

HB4669- 52 -LRB103 38044 HLH 68176 b

1            (S) For taxable years ending on or after December
2        31, 1997, in the case of a Subchapter S corporation, an
3        amount equal to all amounts of income allocable to a
4        shareholder subject to the Personal Property Tax
5        Replacement Income Tax imposed by subsections (c) and
6        (d) of Section 201 of this Act, including amounts
7        allocable to organizations exempt from federal income
8        tax by reason of Section 501(a) of the Internal
9        Revenue Code. This subparagraph (S) is exempt from the
10        provisions of Section 250;
11            (T) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not
23            including the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

HB4669- 53 -LRB103 38044 HLH 68176 b

1            0.429); and
2                (3) for taxable years ending after December
3            31, 2005:
4                    (i) for property on which a bonus
5                depreciation deduction of 30% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                30 and then divided by 70 (or "y" multiplied
8                by 0.429);
9                    (ii) for property on which a bonus
10                depreciation deduction of 50% of the adjusted
11                basis was taken, "x" equals "y" multiplied by
12                1.0;
13                    (iii) for property on which a bonus
14                depreciation deduction of 100% of the adjusted
15                basis was taken in a taxable year ending on or
16                after December 31, 2021, "x" equals the
17                depreciation deduction that would be allowed
18                on that property if the taxpayer had made the
19                election under Section 168(k)(7) of the
20                Internal Revenue Code to not claim bonus
21                depreciation on that property; and
22                    (iv) for property on which a bonus
23                depreciation deduction of a percentage other
24                than 30%, 50% or 100% of the adjusted basis
25                was taken in a taxable year ending on or after
26                December 31, 2021, "x" equals "y" multiplied

 

 

HB4669- 54 -LRB103 38044 HLH 68176 b

1                by 100 times the percentage bonus depreciation
2                on the property (that is, 100(bonus%)) and
3                then divided by 100 times 1 minus the
4                percentage bonus depreciation on the property
5                (that is, 100(1-bonus%)).
6            The aggregate amount deducted under this
7        subparagraph in all taxable years for any one piece of
8        property may not exceed the amount of the bonus
9        depreciation deduction taken on that property on the
10        taxpayer's federal income tax return under subsection
11        (k) of Section 168 of the Internal Revenue Code. This
12        subparagraph (T) is exempt from the provisions of
13        Section 250;
14            (U) If the taxpayer sells, transfers, abandons, or
15        otherwise disposes of property for which the taxpayer
16        was required in any taxable year to make an addition
17        modification under subparagraph (E-10), then an amount
18        equal to that addition modification.
19            If the taxpayer continues to own property through
20        the last day of the last tax year for which a
21        subtraction is allowed with respect to that property
22        under subparagraph (T) and for which the taxpayer was
23        required in any taxable year to make an addition
24        modification under subparagraph (E-10), then an amount
25        equal to that addition modification.
26            The taxpayer is allowed to take the deduction

 

 

HB4669- 55 -LRB103 38044 HLH 68176 b

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

 

 

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

 

 

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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
4        for the fact that the foreign person's business
5        activity outside the United States is 80% or more of
6        that person's total business activity and (ii) for
7        taxable years ending on or after December 31, 2008, 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, but
14        not to exceed the addition modification required to be
15        made for the same taxable year under Section
16        203(b)(2)(E-13) for intangible expenses and costs
17        paid, accrued, or incurred, directly or indirectly, to
18        the same foreign person. This subparagraph (X) is
19        exempt from the provisions of Section 250;
20            (Y) For taxable years ending on or after December
21        31, 2011, in the case of a taxpayer who was required to
22        add back any insurance premiums under Section
23        203(b)(2)(E-14), such taxpayer may elect to subtract
24        that part of a reimbursement received from the
25        insurance company equal to the amount of the expense
26        or loss (including expenses incurred by the insurance

 

 

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1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer
4        makes the election provided for by this subparagraph
5        (Y), the insurer to which the premiums were paid must
6        add back to income the amount subtracted by the
7        taxpayer pursuant to this subparagraph (Y). This
8        subparagraph (Y) is exempt from the provisions of
9        Section 250;
10            (Z) The difference between the nondeductible
11        controlled foreign corporation dividends under Section
12        965(e)(3) of the Internal Revenue Code over the
13        taxable income of the taxpayer, computed without
14        regard to Section 965(e)(2)(A) of the Internal Revenue
15        Code, and without regard to any net operating loss
16        deduction. This subparagraph (Z) is exempt from the
17        provisions of Section 250; and
18            (AA) For taxable years beginning on or after
19        January 1, 2023, for any cannabis establishment
20        operating in this State and licensed under the
21        Cannabis Regulation and Tax Act or any cannabis
22        cultivation center or medical cannabis dispensing
23        organization operating in this State and licensed
24        under the Compassionate Use of Medical Cannabis
25        Program Act, an amount equal to the deductions that
26        were disallowed under Section 280E of the Internal

 

 

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1        Revenue Code for the taxable year and that would not be
2        added back under this subsection. The provisions of
3        this subparagraph (AA) are exempt from the provisions
4        of Section 250; and .
5            (BB) For taxable years beginning on or after
6        January 1, 2025, an amount of up to $50,000 per tax
7        year contributed by the taxpayer to a small business
8        asset purchase account during the tax year, plus all
9        interest earned on those accounts during the tax year;
10        as used in this subparagraph (BB), "small business
11        asset purchase account" means an account established
12        by a taxpayer, the proceeds of which are used to
13        purchase property that is used primarily in Illinois
14        and for which a federal income tax deduction is
15        claimed under Section 179 of the Internal Revenue
16        Code.
17        (3) Special rule. For purposes of paragraph (2)(A),
18    "gross income" in the case of a life insurance company,
19    for tax years ending on and after December 31, 1994, and
20    prior to December 31, 2011, shall mean the gross
21    investment income for the taxable year and, for tax years
22    ending on or after December 31, 2011, shall mean all
23    amounts included in life insurance gross income under
24    Section 803(a)(3) of the Internal Revenue Code.
 
25    (c) Trusts and estates.

 

 

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1        (1) In general. In the case of a trust or estate, base
2    income means an amount equal to the taxpayer's taxable
3    income for the taxable year as modified by paragraph (2).
4        (2) Modifications. Subject to the provisions of
5    paragraph (3), the taxable income referred to in paragraph
6    (1) shall be modified by adding thereto the sum of the
7    following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest or dividends during the
10        taxable year to the extent excluded from gross income
11        in the computation of taxable income;
12            (B) In the case of (i) an estate, $600; (ii) a
13        trust which, under its governing instrument, is
14        required to distribute all of its income currently,
15        $300; and (iii) any other trust, $100, but in each such
16        case, only to the extent such amount was deducted in
17        the computation of taxable income;
18            (C) An amount equal to the amount of tax imposed by
19        this Act to the extent deducted from gross income in
20        the computation of taxable income for the taxable
21        year;
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

 

 

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1        loss carryback or carryforward from a taxable year
2        ending prior to December 31, 1986 is an element of
3        taxable income under paragraph (1) of subsection (e)
4        or subparagraph (E) of paragraph (2) of subsection
5        (e), the amount by which addition modifications other
6        than those provided by this subparagraph (E) exceeded
7        subtraction modifications in such taxable year, with
8        the following limitations applied in the order that
9        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
14            of addition modification under this subparagraph
15            (E) which related to that net operating loss and
16            which was taken into account in calculating the
17            base 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
24        operating loss carryback or carryforward from more
25        than one other taxable year ending prior to December
26        31, 1986, the addition modification provided in this

 

 

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1        subparagraph (E) shall be the sum of the amounts
2        computed independently under the preceding provisions
3        of this subparagraph (E) for each such taxable year;
4            (F) For taxable years ending on or after January
5        1, 1989, an amount equal to the tax deducted pursuant
6        to Section 164 of the Internal Revenue Code if the
7        trust or estate is claiming the same tax for purposes
8        of the Illinois foreign tax credit under Section 601
9        of this Act;
10            (G) An amount equal to the amount of the capital
11        gain deduction allowable under the Internal Revenue
12        Code, to the extent deducted from gross income in the
13        computation of taxable income;
14            (G-5) For taxable years ending after December 31,
15        1997, an amount equal to any eligible remediation
16        costs that the trust or estate deducted in computing
17        adjusted gross income and for which the trust or
18        estate claims a credit under subsection (l) of Section
19        201;
20            (G-10) For taxable years 2001 and thereafter, an
21        amount equal to the bonus depreciation deduction taken
22        on the taxpayer's federal income tax return for the
23        taxable year under subsection (k) of Section 168 of
24        the Internal Revenue Code; and
25            (G-11) If the taxpayer sells, transfers, abandons,
26        or otherwise disposes of property for which the

 

 

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

 

 

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

 

 

HB4669- 65 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 66 -LRB103 38044 HLH 68176 b

1                Nothing in this subsection shall preclude the
2            Director from making any other adjustment
3            otherwise allowed under Section 404 of this Act
4            for any tax year beginning after the effective
5            date of this amendment provided such adjustment is
6            made pursuant to regulation adopted by the
7            Department and such regulations provide methods
8            and standards by which the Department will utilize
9            its authority under Section 404 of this Act;
10            (G-13) An amount equal to the amount of intangible
11        expenses and costs otherwise allowed as a deduction in
12        computing base income, and that were paid, accrued, or
13        incurred, directly or indirectly, (i) for taxable
14        years ending on or after December 31, 2004, to a
15        foreign person who would be a member of the same
16        unitary business group but for the fact that the
17        foreign person's business activity outside the United
18        States is 80% or more of that person's total business
19        activity and (ii) for taxable years ending on or after
20        December 31, 2008, to a person who would be a member of
21        the same unitary business group but for the fact that
22        the person is prohibited under Section 1501(a)(27)
23        from being included in the unitary business group
24        because he or she is ordinarily required to apportion
25        business income under different subsections of Section
26        304. The addition modification required by this

 

 

HB4669- 67 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 68 -LRB103 38044 HLH 68176 b

1        trademarks, service marks, copyrights, mask works,
2        trade secrets, and similar types of intangible assets.
3            This paragraph shall not apply to the following:
4                (i) any item of intangible expenses or costs
5            paid, accrued, or incurred, directly or
6            indirectly, from a transaction with 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 item; or
11                (ii) any item of intangible expense or cost
12            paid, accrued, or incurred, directly or
13            indirectly, if the taxpayer can establish, based
14            on a preponderance of the evidence, both of the
15            following:
16                    (a) the person during the same taxable
17                year paid, accrued, or incurred, the
18                intangible expense or cost to a person that is
19                not a related member, and
20                    (b) the transaction giving rise to the
21                intangible expense or cost between the
22                taxpayer and the person did not have as a
23                principal purpose the avoidance of Illinois
24                income tax, and is paid pursuant to a contract
25                or agreement that reflects arm's-length terms;
26                or

 

 

HB4669- 69 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 70 -LRB103 38044 HLH 68176 b

1        included in the unitary business group because he or
2        she is ordinarily required to apportion business
3        income under different subsections of Section 304. The
4        addition modification required by this subparagraph
5        shall be reduced to the extent that dividends were
6        included in base income of the unitary group for the
7        same taxable year and received by the taxpayer or by a
8        member of the taxpayer's unitary business group
9        (including amounts included in gross income under
10        Sections 951 through 964 of the Internal Revenue Code
11        and amounts included in gross income under Section 78
12        of the Internal Revenue Code) with respect to the
13        stock of the same person to whom the premiums and costs
14        were directly or indirectly paid, incurred, or
15        accrued. The preceding sentence does not apply to the
16        extent that the same dividends caused a reduction to
17        the addition modification required under Section
18        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
19        Act;
20            (G-15) An amount equal to the credit allowable to
21        the taxpayer under Section 218(a) of this Act,
22        determined without regard to Section 218(c) of this
23        Act;
24            (G-16) For taxable years ending on or after
25        December 31, 2017, an amount equal to the deduction
26        allowed under Section 199 of the Internal Revenue Code

 

 

HB4669- 71 -LRB103 38044 HLH 68176 b

1        for the taxable year;
2            (G-17) An amount that is withdrawn by the taxpayer
3        from a small business asset purchase account during
4        the taxable year and that is not used for the purchase
5        of qualified property; as used in this subparagraph
6        (G-17), "qualified property" means property that is
7        used predominantly in Illinois and for which a
8        deduction under Section 179 of the Internal Revenue
9        Code is claimed for the tax year in which the amount is
10        withdrawn from the small business asset purchase
11        account; amounts that are subject to the addition
12        modification under this subparagraph (G-17) are also
13        subject to the 10% penalty for ineligible use under
14        Section 3-3.5 of the Uniform Penalty and Interest Act;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (H) An amount equal to all amounts included in
18        such total pursuant to the provisions of Sections
19        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
20        of the Internal Revenue Code or included in such total
21        as distributions under the provisions of any
22        retirement or disability plan for employees of any
23        governmental agency or unit, or retirement payments to
24        retired partners, which payments are excluded in
25        computing net earnings from self employment by Section
26        1402 of the Internal Revenue Code and regulations

 

 

HB4669- 72 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 73 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 74 -LRB103 38044 HLH 68176 b

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

 

 

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

 

 

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1                (2) for taxable years ending on or before
2            December 31, 2005, "x" equals "y" multiplied by 30
3            and then divided by 70 (or "y" multiplied by
4            0.429); and
5                (3) for taxable years ending after December
6            31, 2005:
7                    (i) for property on which a bonus
8                depreciation deduction of 30% of the adjusted
9                basis was taken, "x" equals "y" multiplied by
10                30 and then divided by 70 (or "y" multiplied
11                by 0.429);
12                    (ii) for property on which a bonus
13                depreciation deduction of 50% of the adjusted
14                basis was taken, "x" equals "y" multiplied by
15                1.0;
16                    (iii) for property on which a bonus
17                depreciation deduction of 100% of the adjusted
18                basis was taken in a taxable year ending on or
19                after December 31, 2021, "x" equals the
20                depreciation deduction that would be allowed
21                on that property if the taxpayer had made the
22                election under Section 168(k)(7) of the
23                Internal Revenue Code to not claim bonus
24                depreciation on that property; and
25                    (iv) for property on which a bonus
26                depreciation deduction of a percentage other

 

 

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1                than 30%, 50% or 100% of the adjusted basis
2                was taken in a taxable year ending on or after
3                December 31, 2021, "x" equals "y" multiplied
4                by 100 times the percentage bonus depreciation
5                on the property (that is, 100(bonus%)) and
6                then divided by 100 times 1 minus the
7                percentage bonus depreciation on the property
8                (that is, 100(1-bonus%)).
9            The aggregate amount deducted under this
10        subparagraph in all taxable years for any one piece of
11        property may not exceed the amount of the bonus
12        depreciation deduction taken on that property on the
13        taxpayer's federal income tax return under subsection
14        (k) of Section 168 of the Internal Revenue Code. This
15        subparagraph (R) is exempt from the provisions of
16        Section 250;
17            (S) If the taxpayer sells, transfers, abandons, or
18        otherwise disposes of property for which the taxpayer
19        was required in any taxable year to make an addition
20        modification under subparagraph (G-10), then an amount
21        equal to that addition modification.
22            If the taxpayer continues to own property through
23        the last day of the last tax year for which a
24        subtraction is allowed with respect to that property
25        under subparagraph (R) and for which the taxpayer was
26        required in any taxable year to make an addition

 

 

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

 

 

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

 

 

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

 

 

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1        31, 2011, in the case of a taxpayer who was required to
2        add back any insurance premiums under Section
3        203(c)(2)(G-14), such taxpayer may elect to subtract
4        that part of a reimbursement received from the
5        insurance company equal to the amount of the expense
6        or loss (including expenses incurred by the insurance
7        company) that would have been taken into account as a
8        deduction for federal income tax purposes if the
9        expense or loss had been uninsured. If a taxpayer
10        makes the election provided for by this subparagraph
11        (Y), the insurer to which the premiums were paid must
12        add back to income the amount subtracted by the
13        taxpayer pursuant to this subparagraph (Y). This
14        subparagraph (Y) is exempt from the provisions of
15        Section 250;
16            (Z) For taxable years beginning after December 31,
17        2018 and before January 1, 2026, the amount of excess
18        business loss of the taxpayer disallowed as a
19        deduction by Section 461(l)(1)(B) of the Internal
20        Revenue Code; and
21            (AA) For taxable years beginning on or after
22        January 1, 2023, for any cannabis establishment
23        operating in this State and licensed under the
24        Cannabis Regulation and Tax Act or any cannabis
25        cultivation center or medical cannabis dispensing
26        organization operating in this State and licensed

 

 

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1        under the Compassionate Use of Medical Cannabis
2        Program Act, an amount equal to the deductions that
3        were disallowed under Section 280E of the Internal
4        Revenue Code for the taxable year and that would not be
5        added back under this subsection. The provisions of
6        this subparagraph (AA) are exempt from the provisions
7        of Section 250; and .
8            (BB) For taxable years beginning on or after
9        January 1, 2025, an amount of up to $50,000 per tax
10        year contributed by the taxpayer to a small business
11        asset purchase account during the tax year, plus all
12        interest earned on those accounts during the tax year;
13        as used in this subparagraph (BB), "small business
14        asset purchase account" means an account established
15        by a taxpayer, the proceeds of which are used to
16        purchase property that is used primarily in Illinois
17        and for which a federal income tax deduction is
18        claimed under Section 179 of the Internal Revenue
19        Code.
20        (3) Limitation. The amount of any modification
21    otherwise required under this subsection shall, under
22    regulations prescribed by the Department, be adjusted by
23    any amounts included therein which were properly paid,
24    credited, or required to be distributed, or permanently
25    set aside for charitable purposes pursuant to Internal
26    Revenue Code Section 642(c) during the taxable year.
 

 

 

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1    (d) Partnerships.
2        (1) In general. In the case of a partnership, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. The taxable income referred to in
6    paragraph (1) shall be modified by adding thereto the sum
7    of the following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest or dividends during the
10        taxable year to the extent excluded from gross income
11        in the computation of taxable income;
12            (B) An amount equal to the amount of tax imposed by
13        this Act to the extent deducted from gross income for
14        the taxable year;
15            (C) The amount of deductions allowed to the
16        partnership pursuant to Section 707 (c) of the
17        Internal Revenue Code in calculating its taxable
18        income;
19            (D) An amount equal to the amount of the capital
20        gain deduction allowable under the Internal Revenue
21        Code, to the extent deducted from gross income in the
22        computation of taxable income;
23            (D-5) For taxable years 2001 and thereafter, an
24        amount equal to the bonus depreciation deduction taken
25        on the taxpayer's federal income tax return for the

 

 

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

 

 

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1        the United States is 80% or more of the foreign
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. The addition modification
10        required by this subparagraph shall be reduced to the
11        extent that dividends were included in base income of
12        the unitary group for the same taxable year and
13        received by the taxpayer or by a member of the
14        taxpayer's unitary business group (including amounts
15        included in gross income pursuant to Sections 951
16        through 964 of the Internal Revenue Code and amounts
17        included in gross income under Section 78 of the
18        Internal Revenue Code) with respect to the stock of
19        the same person to whom the interest was paid,
20        accrued, or incurred.
21            This paragraph shall not apply to the following:
22                (i) an item of interest paid, accrued, or
23            incurred, directly or indirectly, to a person who
24            is subject in a foreign country or state, other
25            than a state which requires mandatory unitary
26            reporting, to a tax on or measured by net income

 

 

HB4669- 86 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 87 -LRB103 38044 HLH 68176 b

1            evidence that the adjustments are unreasonable; or
2            if the taxpayer and the Director agree in writing
3            to the application or use of an alternative method
4            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
8            for any tax year beginning after the effective
9            date of this amendment provided such adjustment is
10            made pursuant to regulation adopted by the
11            Department and such regulations provide methods
12            and standards by which the Department will utilize
13            its authority under Section 404 of this Act; and
14            (D-8) An amount equal to the amount of intangible
15        expenses and costs otherwise allowed as a deduction in
16        computing base income, and that were paid, accrued, or
17        incurred, directly or indirectly, (i) for taxable
18        years ending on or after December 31, 2004, to a
19        foreign person who would be a member of the same
20        unitary business group but for the fact that the
21        foreign person's business activity outside the United
22        States is 80% or more of that person's total business
23        activity and (ii) for taxable years ending on or after
24        December 31, 2008, to a person who would be a member of
25        the same unitary business group but for the fact that
26        the person is prohibited under Section 1501(a)(27)

 

 

HB4669- 88 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 89 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 90 -LRB103 38044 HLH 68176 b

1                principal purpose the avoidance of Illinois
2                income tax, and is paid pursuant to a contract
3                or agreement that reflects arm's-length terms;
4                or
5                (iii) any item of intangible expense or cost
6            paid, accrued, or incurred, directly or
7            indirectly, from a transaction with a person if
8            the taxpayer establishes by clear and convincing
9            evidence, that the adjustments are unreasonable;
10            or if the taxpayer and the Director agree in
11            writing to the application or use of an
12            alternative method of apportionment under Section
13            304(f);
14                Nothing in this subsection shall preclude the
15            Director from making any other adjustment
16            otherwise allowed under Section 404 of this Act
17            for any tax year beginning after the effective
18            date of this amendment provided such adjustment is
19            made pursuant to regulation adopted by the
20            Department and such regulations provide methods
21            and standards by which the Department will utilize
22            its authority under Section 404 of this Act;
23            (D-9) For taxable years ending on or after
24        December 31, 2008, an amount equal to the amount of
25        insurance premium expenses and costs otherwise allowed
26        as a deduction in computing base income, and that were

 

 

HB4669- 91 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 92 -LRB103 38044 HLH 68176 b

1            (D-11) For taxable years ending on or after
2        December 31, 2017, an amount equal to the deduction
3        allowed under Section 199 of the Internal Revenue Code
4        for the taxable year;
5            (D-12) An amount that is withdrawn by the taxpayer
6        during the taxable year from a small business asset
7        purchase account and that is not used for the purchase
8        of qualified property; as used in this subparagraph
9        (D-12), "qualified property" means property that is
10        used predominantly in Illinois and for which a
11        deduction under Section 179 of the Internal Revenue
12        Code is claimed for the tax year in which the amount is
13        withdrawn from the small business asset purchase
14        account; amounts that are subject to the addition
15        modification under this subparagraph (D-12) are also
16        subject to the 10% penalty for ineligible use under
17        Section 3-3.5 of the Uniform Penalty and Interest 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
7        net 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 in
11        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(a)(2) of the Internal Revenue Code,
2        and all amounts of expenses allocable to interest and
3        disallowed as deductions by Section 265(a)(1) of the
4        Internal Revenue Code; and (ii) for taxable years
5        ending on or after August 13, 1999, Sections
6        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
7        Internal Revenue Code, plus, (iii) for taxable years
8        ending on or after December 31, 2011, Section
9        45G(e)(3) of the Internal Revenue Code and, for
10        taxable years ending on or after December 31, 2008,
11        any amount included in gross income under Section 87
12        of the Internal Revenue Code; the provisions of this
13        subparagraph are exempt from the provisions of Section
14        250;
15            (K) An amount equal to those dividends included in
16        such total which were paid by a corporation which
17        conducts business operations in a River Edge
18        Redevelopment Zone or zones created under the River
19        Edge Redevelopment Zone Act and conducts substantially
20        all of its operations from a River Edge Redevelopment
21        Zone or zones. This subparagraph (K) is exempt from
22        the provisions of Section 250;
23            (L) An amount equal to any contribution made to a
24        job training project established pursuant to the Real
25        Property Tax Increment Allocation Redevelopment Act;
26            (M) An amount equal to those dividends included in

 

 

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

 

 

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1                (2) for taxable years ending on or before
2            December 31, 2005, "x" equals "y" multiplied by 30
3            and then divided by 70 (or "y" multiplied by
4            0.429); and
5                (3) for taxable years ending after December
6            31, 2005:
7                    (i) for property on which a bonus
8                depreciation deduction of 30% of the adjusted
9                basis was taken, "x" equals "y" multiplied by
10                30 and then divided by 70 (or "y" multiplied
11                by 0.429);
12                    (ii) for property on which a bonus
13                depreciation deduction of 50% of the adjusted
14                basis was taken, "x" equals "y" multiplied by
15                1.0;
16                    (iii) for property on which a bonus
17                depreciation deduction of 100% of the adjusted
18                basis was taken in a taxable year ending on or
19                after December 31, 2021, "x" equals the
20                depreciation deduction that would be allowed
21                on that property if the taxpayer had made the
22                election under Section 168(k)(7) of the
23                Internal Revenue Code to not claim bonus
24                depreciation on that property; and
25                    (iv) for property on which a bonus
26                depreciation deduction of a percentage other

 

 

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1                than 30%, 50% or 100% of the adjusted basis
2                was taken in a taxable year ending on or after
3                December 31, 2021, "x" equals "y" multiplied
4                by 100 times the percentage bonus depreciation
5                on the property (that is, 100(bonus%)) and
6                then divided by 100 times 1 minus the
7                percentage bonus depreciation on the property
8                (that is, 100(1-bonus%)).
9            The aggregate amount deducted under this
10        subparagraph in all taxable years for any one piece of
11        property may not exceed the amount of the bonus
12        depreciation deduction taken on that property on the
13        taxpayer's federal income tax return under subsection
14        (k) of Section 168 of the Internal Revenue Code. This
15        subparagraph (O) is exempt from the provisions of
16        Section 250;
17            (P) If the taxpayer sells, transfers, abandons, or
18        otherwise disposes of property for which the taxpayer
19        was required in any taxable year to make an addition
20        modification under subparagraph (D-5), then an amount
21        equal to that addition modification.
22            If the taxpayer continues to own property through
23        the last day of the last tax year for which a
24        subtraction is allowed with respect to that property
25        under subparagraph (O) and for which the taxpayer was
26        required in any taxable year to make an addition

 

 

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

 

 

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

 

 

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1        taxable years ending on or after December 31, 2008, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304, but
8        not to exceed the addition modification required to be
9        made for the same taxable year under Section
10        203(d)(2)(D-8) for intangible expenses and costs paid,
11        accrued, or incurred, directly or indirectly, to the
12        same person. This subparagraph (S) is exempt from
13        Section 250;
14            (T) For taxable years ending on or after December
15        31, 2011, in the case of a taxpayer who was required to
16        add back any insurance premiums under Section
17        203(d)(2)(D-9), such taxpayer may elect to subtract
18        that part of a reimbursement received from the
19        insurance company equal to the amount of the expense
20        or loss (including expenses incurred by the insurance
21        company) that would have been taken into account as a
22        deduction for federal income tax purposes if the
23        expense or loss had been uninsured. If a taxpayer
24        makes the election provided for by this subparagraph
25        (T), the insurer to which the premiums were paid must
26        add back to income the amount subtracted by the

 

 

HB4669- 101 -LRB103 38044 HLH 68176 b

1        taxpayer pursuant to this subparagraph (T). This
2        subparagraph (T) is exempt from the provisions of
3        Section 250; and
4            (U) For taxable years beginning on or after
5        January 1, 2023, for any cannabis establishment
6        operating in this State and licensed under the
7        Cannabis Regulation and Tax Act or any cannabis
8        cultivation center or medical cannabis dispensing
9        organization operating in this State and licensed
10        under the Compassionate Use of Medical Cannabis
11        Program Act, an amount equal to the deductions that
12        were disallowed under Section 280E of the Internal
13        Revenue Code for the taxable year and that would not be
14        added back under this subsection. The provisions of
15        this subparagraph (U) are exempt from the provisions
16        of Section 250; and .
17            (V) For taxable years beginning on or after
18        January 1, 2025, an amount of up to $50,000 per tax
19        year contributed by the taxpayer to a small business
20        asset purchase account during the tax year, plus all
21        interest earned on those accounts during the tax year;
22        as used in this subparagraph (V), "small business
23        asset purchase account" means an account established
24        by a taxpayer, the proceeds of which are used to
25        purchase property that is used primarily in Illinois
26        and for which a federal income tax deduction is

 

 

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1        claimed under Section 179 of the Internal Revenue
2        Code.
 
3    (e) Gross income; adjusted gross income; taxable income.
4        (1) In general. Subject to the provisions of paragraph
5    (2) and subsection (b)(3), for purposes of this Section
6    and Section 803(e), a taxpayer's gross income, adjusted
7    gross income, or taxable income for the taxable year shall
8    mean the amount of gross income, adjusted gross income or
9    taxable income properly reportable for federal income tax
10    purposes for the taxable year under the provisions of the
11    Internal Revenue Code. Taxable income may be less than
12    zero. However, for taxable years ending on or after
13    December 31, 1986, net operating loss carryforwards from
14    taxable years ending prior to December 31, 1986, may not
15    exceed the sum of federal taxable income for the taxable
16    year before net operating loss deduction, plus the excess
17    of addition modifications over subtraction modifications
18    for the taxable year. For taxable years ending prior to
19    December 31, 1986, taxable income may never be an amount
20    in excess of the net operating loss for the taxable year as
21    defined in subsections (c) and (d) of Section 172 of the
22    Internal Revenue Code, provided that when taxable income
23    of a corporation (other than a Subchapter S corporation),
24    trust, or estate is less than zero and addition
25    modifications, other than those provided by subparagraph

 

 

HB4669- 103 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 104 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 105 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 106 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 107 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 108 -LRB103 38044 HLH 68176 b

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

 

 

HB4669- 109 -LRB103 38044 HLH 68176 b

1        property ending July 31, 1969 bears to the number of
2        full calendar months in the taxpayer's entire holding
3        period for the property.
4            (C) The Department shall prescribe such
5        regulations as may be necessary to carry out the
6        purposes of this paragraph.
 
7    (g) Double deductions. Unless specifically provided
8otherwise, nothing in this Section shall permit the same item
9to be deducted more than once.
 
10    (h) Legislative intention. Except as expressly provided by
11this Section there shall be no modifications or limitations on
12the amounts of income, gain, loss or deduction taken into
13account in determining gross income, adjusted gross income or
14taxable income for federal income tax purposes for the taxable
15year, or in the amount of such items entering into the
16computation of base income and net income under this Act for
17such taxable year, whether in respect of property values as of
18August 1, 1969 or otherwise.
19(Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
20102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
2112-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
229-26-23.)
 
23    Section 10. The Uniform Penalty and Interest Act is

 

 

HB4669- 110 -LRB103 38044 HLH 68176 b

1amended by adding Section 3-3.5 as follows:
 
2    (35 ILCS 735/3-3.5 new)
3    Sec. 3-3.5. Penalty for improper use of proceeds of Small
4Business Asset Purchase Account. A penalty of 10% of the
5amount withdrawn from a small business asset purchase account,
6as defined in Section 203 of the Illinois Income Tax Act,
7during a tax year that is used for purchases of property for
8which a deduction under Section 179 of the Internal Revenue
9Code is not claimed for the tax year in which the amount is
10withdrawn, or purchases of property for which the deduction
11under Section 179 of the Internal Revenue Code is claimed that
12is not used predominantly in Illinois.
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.