Sen. Patrick Welch
Adopted in Senate on May 20, 2004
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1 | AMENDMENT TO HOUSE BILL 848
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2 | AMENDMENT NO. ______. Amend House Bill 848 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 1. Short title; effectiveness. This Act may be | ||||||
5 | cited as the Tax Shelter Voluntary Compliance Act. This Act is | ||||||
6 | of no force and effect unless and until House Bill 4266 of the | ||||||
7 | 93rd General Assembly becomes law in the same form as it passed | ||||||
8 | both houses of the General Assembly on April 29, 2004. | ||||||
9 | Section 5. Tax shelter voluntary compliance program. | ||||||
10 | (a) In general. The Department shall establish and | ||||||
11 | administer a tax shelter voluntary compliance program as | ||||||
12 | provided in this Section for eligible taxpayers subject to tax | ||||||
13 | under the Illinois Income Tax Act. The tax shelter voluntary | ||||||
14 | compliance program shall be conducted from October 15, 2004 to | ||||||
15 | November 30, 2004 and shall apply to tax liabilities under | ||||||
16 | Section 201 of the Illinois Income Tax Act attributable to the | ||||||
17 | use of abusive tax avoidance transactions for taxable years | ||||||
18 | beginning before January 1, 2004. The Department shall adopt | ||||||
19 | rules, issue forms and instructions, and take such other | ||||||
20 | actions as it deems necessary to implement the provisions of | ||||||
21 | this Act. Any correspondence mailed by the Department to a | ||||||
22 | taxpayer at the taxpayer's last known address outlining the tax | ||||||
23 | shelter voluntary compliance program constitutes a "contact" | ||||||
24 | within the meaning of Sections 1005(b)(6) and 1005(c) of the |
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1 | Illinois Income Tax Act for taxable years to which this Act | ||||||
2 | applies. | ||||||
3 | (b) Election. An eligible taxpayer that meets the | ||||||
4 | requirements of subsection (c) of this Section with respect to | ||||||
5 | any taxable year to which this Act applies may elect to | ||||||
6 | participate in the tax shelter voluntary compliance program | ||||||
7 | under either (but not both) paragraph (1) or paragraph (2) of | ||||||
8 | this subsection. Such election shall be made in the form and | ||||||
9 | manner prescribed by the Department and, once made, shall be | ||||||
10 | irrevocable. | ||||||
11 | (1) Voluntary compliance without appeal. If a taxpayer | ||||||
12 | elects to participate under this paragraph, then: (i) the | ||||||
13 | Department shall abate and not seek to collect any penalty | ||||||
14 | that may be applicable to the underreporting or | ||||||
15 | underpayment of Illinois income tax attributable to the use | ||||||
16 | of abusive tax avoidance transactions for such taxable | ||||||
17 | year; (ii) except as otherwise provided in this Act, the | ||||||
18 | Department shall not seek civil or criminal prosecution | ||||||
19 | against the taxpayer for such taxable year with respect to | ||||||
20 | abusive tax avoidance transactions; and (iii) the taxpayer | ||||||
21 | may not file a claim for credit or refund of amounts paid | ||||||
22 | for such taxable year in connection with abusive tax | ||||||
23 | avoidance transactions. No penalty may be waived or abated | ||||||
24 | under this Act if the penalty imposed relates to an amount | ||||||
25 | of Illinois income tax assessed prior to October 15, 2004. | ||||||
26 | (2) Voluntary compliance with appeal. If an eligible | ||||||
27 | taxpayer elects to participate under this paragraph, then: | ||||||
28 | (i) the Department shall abate and not seek to collect the | ||||||
29 | penalties imposed under Sections 1005(b) and 1005(c) of the | ||||||
30 | Illinois Income Tax Act with respect to such taxable year; | ||||||
31 | (ii) except as otherwise provided in this Act, the | ||||||
32 | Department shall not seek civil or criminal prosecution | ||||||
33 | against the taxpayer for such taxable year with respect to | ||||||
34 | abusive tax avoidance transactions; and (iii) the taxpayer |
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1 | may file a claim for credit or refund as provided in the | ||||||
2 | Illinois Income Tax Act with respect to such taxable year. | ||||||
3 | Notwithstanding Section 909(e) of the Illinois Income Tax | ||||||
4 | Act, the taxpayer may not file a written protest until | ||||||
5 | after either of the following: (i) the Department issues a | ||||||
6 | notice of denial, or (ii) the earlier of (1) the date which | ||||||
7 | is 180 days after the date of a final determination by the | ||||||
8 | Internal Revenue Service with respect to the transactions | ||||||
9 | at issue, or (2) the date that is 4 years after the date | ||||||
10 | the claim for refund was filed or one year after full | ||||||
11 | payment of all tax, including penalty and interest. No | ||||||
12 | penalty may be waived or abated under this Act if the | ||||||
13 | penalty imposed relates to an amount of Illinois income tax | ||||||
14 | assessed prior to October 15, 2004. | ||||||
15 | (c) Eligible taxpayer. The tax shelter voluntary | ||||||
16 | compliance program applies to any taxpayer who, during the | ||||||
17 | period from October 15, 2004 to November 30, 2004, does both of | ||||||
18 | the following: | ||||||
19 | (1) Files an amended return for the taxable year for | ||||||
20 | which the taxpayer used an abusive tax avoidance | ||||||
21 | transaction to under report the taxpayer's Illinois income | ||||||
22 | tax liability, reporting the total Illinois net income and | ||||||
23 | tax for such taxable year computed without regard to any | ||||||
24 | abusive tax avoidance transactions; and | ||||||
25 | (2) Makes full payment of the entire amount of Illinois | ||||||
26 | income tax and interest due for such taxable year (not | ||||||
27 | including a payment made under protest as provided in | ||||||
28 | Section 2a.1 of the State Officers and Employees Money | ||||||
29 | Disposition Act (30 ILCS 230/2a.1)). | ||||||
30 | Section 10. Abusive tax avoidance transaction. For | ||||||
31 | purposes of this Act, the term "abusive tax avoidance | ||||||
32 | transaction" means a plan or arrangement devised for the | ||||||
33 | principal purpose of avoiding federal or Illinois income tax. |
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1 | Abusive tax avoidance transactions include, but are not limited | ||||||
2 | to, "listed transactions", as defined in Treasury Regulations | ||||||
3 | Section 1.6011-4(b)(2), and Illinois listed transactions as | ||||||
4 | defined in Section 501(b)(2)(A)(2) of the Illinois Income Tax | ||||||
5 | Act. | ||||||
6 | Section 15. Article 2 Credits. In the event a taxpayer does | ||||||
7 | not participate in the tax shelter voluntary compliance program | ||||||
8 | with respect to a taxable year in which there exists a | ||||||
9 | deficiency attributable in whole or in part to an abusive tax | ||||||
10 | avoidance transaction, the following apply: | ||||||
11 | (i) Any Article 2 credit otherwise earned in such | ||||||
12 | taxable year shall be disallowed. | ||||||
13 | (ii) Any Article 2 credit carried over or back to such | ||||||
14 | taxable year shall be disallowed. | ||||||
15 | Any Article 2 credit disallowed under item (i) or (ii), or | ||||||
16 | both, of this Section shall be deemed absorbed in such taxable | ||||||
17 | year, and shall not be carried forward or back to any other | ||||||
18 | taxable year. | ||||||
19 | Section 20. The fact of a taxpayer's participation in the | ||||||
20 | tax shelter voluntary compliance program shall not be | ||||||
21 | considered evidence that the taxpayer in fact engaged in an | ||||||
22 | abusive tax avoidance transaction. | ||||||
23 | Section 25. Application of Act. Nothing in this Act | ||||||
24 | applies to small businesses as defined in the Small Business | ||||||
25 | Advisory Act. | ||||||
26 | Section 905. If and only if House Bill 4266 of the 93rd | ||||||
27 | General Assembly becomes law in the same form as passed both | ||||||
28 | houses of the General Assembly on April 29, 2004, the Statute | ||||||
29 | on Statutes is amended by changing Section 1.23 as follows:
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1 | (5 ILCS 70/1.23) (from Ch. 1, par. 1024)
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2 | Sec. 1.23. General Revenue Law of Illinois; economic | ||||||
3 | substance doctrine.
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4 | (a) The "General Revenue Law of Illinois", or any
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5 | equivalent expression, when used with reference to revenue, | ||||||
6 | shall be deemed to
refer to the Property Tax Code and all | ||||||
7 | existing and future amendments thereto
and modifications | ||||||
8 | thereof, and all rules now or hereafter adopted pursuant
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9 | thereto.
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10 | (b) Economic substance doctrine. In applying the | ||||||
11 | provisions of Chapter 35 (relating to revenue), the economic | ||||||
12 | substance doctrine shall apply. | ||||||
13 | The economic substance doctrine means the common law | ||||||
14 | doctrine under which tax benefits with respect to a transaction | ||||||
15 | or arrangement are not allowable if the transaction or | ||||||
16 | arrangement does not have economic substance or lacks a | ||||||
17 | business purpose (including a transaction or arrangement in | ||||||
18 | which an entity is disregarded as lacking economic substance). | ||||||
19 | For purposes of applying the economic substance doctrine, a | ||||||
20 | transaction or arrangement shall be considered as having | ||||||
21 | economic substance only if (i) the transaction changes in a | ||||||
22 | meaningful way (apart from its tax effects), the taxpayer's | ||||||
23 | economic position, and (ii) the taxpayer has a substantial | ||||||
24 | nontax purpose for entering into such transaction and the | ||||||
25 | transaction is a reasonable means of accomplishing such | ||||||
26 | purpose.
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27 | (c) The changes made to this Section by this amendatory Act | ||||||
28 | of the 93rd General Assembly do not apply to any small business | ||||||
29 | as defined in the Small Business Advisory Act.
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30 | (Source: P.A. 88-670, eff. 12-2-94.)
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31 | Section 910. If and only if House Bill 4266 of the 93rd | ||||||
32 | General Assembly becomes law in the same form as passed both | ||||||
33 | houses of the General Assembly on April 29, 2004, the Illinois |
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1 | Income Tax Act is amended by changing Sections 203, 205, 207, | ||||||
2 | 304, 305, 501, 502, 711, 712, 713, 804, 905, 911, 1001, 1002, | ||||||
3 | 1005, and 1501 and by adding Sections 709.5, 1007, 1008, | ||||||
4 | 1405.5, and 1405.6 as follows:
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5 | (35 ILCS 5/203) (from Ch. 120, par. 2-203)
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6 | Sec. 203. Base income defined.
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7 | (a) Individuals.
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8 | (1) In general. In the case of an individual, base | ||||||
9 | income means an
amount equal to the taxpayer's adjusted | ||||||
10 | gross income for the taxable
year as modified by paragraph | ||||||
11 | (2).
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12 | (2) Modifications. The adjusted gross income referred | ||||||
13 | to in
paragraph (1) shall be modified by adding thereto the | ||||||
14 | sum of the
following amounts:
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15 | (A) An amount equal to all amounts paid or accrued | ||||||
16 | to the taxpayer
as interest or dividends during the | ||||||
17 | taxable year to the extent excluded
from gross income | ||||||
18 | in the computation of adjusted gross income, except | ||||||
19 | stock
dividends of qualified public utilities | ||||||
20 | described in Section 305(e) of the
Internal Revenue | ||||||
21 | Code;
| ||||||
22 | (B) An amount equal to the amount of tax imposed by | ||||||
23 | this Act to the
extent deducted from gross income in | ||||||
24 | the computation of adjusted gross
income for the | ||||||
25 | taxable year;
| ||||||
26 | (C) An amount equal to the amount received during | ||||||
27 | the taxable year
as a recovery or refund of real | ||||||
28 | property taxes paid with respect to the
taxpayer's | ||||||
29 | principal residence under the Revenue Act of
1939 and | ||||||
30 | for which a deduction was previously taken under | ||||||
31 | subparagraph (L) of
this paragraph (2) prior to July 1, | ||||||
32 | 1991, the retrospective application date of
Article 4 | ||||||
33 | of Public Act 87-17. In the case of multi-unit or |
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1 | multi-use
structures and farm dwellings, the taxes on | ||||||
2 | the taxpayer's principal residence
shall be that | ||||||
3 | portion of the total taxes for the entire property | ||||||
4 | which is
attributable to such principal residence;
| ||||||
5 | (D) An amount equal to the amount of the capital | ||||||
6 | gain deduction
allowable under the Internal Revenue | ||||||
7 | Code, to the extent deducted from gross
income in the | ||||||
8 | computation of adjusted gross income;
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9 | (D-5) An amount, to the extent not included in | ||||||
10 | adjusted gross income,
equal to the amount of money | ||||||
11 | withdrawn by the taxpayer in the taxable year from
a | ||||||
12 | medical care savings account and the interest earned on | ||||||
13 | the account in the
taxable year of a withdrawal | ||||||
14 | pursuant to subsection (b) of Section 20 of the
Medical | ||||||
15 | Care Savings Account Act or subsection (b) of Section | ||||||
16 | 20 of the
Medical Care Savings Account Act of 2000;
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17 | (D-10) For taxable years ending after December 31, | ||||||
18 | 1997, an
amount equal to any eligible remediation costs | ||||||
19 | that the individual
deducted in computing adjusted | ||||||
20 | gross income and for which the
individual claims a | ||||||
21 | credit under subsection (l) of Section 201;
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22 | (D-15) For taxable years ending on or after | ||||||
23 | December 31, 2000 and before December 31, 2004
2001 and | ||||||
24 | thereafter , an amount equal to the
bonus depreciation | ||||||
25 | deduction (30% of the adjusted basis of the qualified
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26 | property) taken on the taxpayer's federal income tax | ||||||
27 | return for the taxable
year under subsection (k) of | ||||||
28 | Section 168 of the Internal Revenue Code; and
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29 | (D-16) If the taxpayer reports a capital gain or | ||||||
30 | loss on the
taxpayer's federal income tax return for | ||||||
31 | the taxable year based on a sale or
transfer of | ||||||
32 | property for which the taxpayer was required in any | ||||||
33 | taxable year to
make an addition modification under | ||||||
34 | subparagraph (D-15), then an amount equal
to the |
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1 | aggregate amount of the deductions taken in all taxable
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2 | years under subparagraph (Z) with respect to that | ||||||
3 | property . ;
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4 | The taxpayer is required to make the addition | ||||||
5 | modification under this
subparagraph
only once with | ||||||
6 | respect to any one piece of property ; . and
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7 | (D-17) For taxable years ending on or after | ||||||
8 | December 31, 2004, an amount equal to the amount | ||||||
9 | otherwise allowed as a deduction in computing base | ||||||
10 | income for interest paid, accrued, or incurred, | ||||||
11 | directly or indirectly, to a foreign person who would | ||||||
12 | be a member of the same unitary business group but for | ||||||
13 | the fact that foreign person's business activity | ||||||
14 | outside the United States is 80% or more of the foreign | ||||||
15 | person's total business activity. The addition | ||||||
16 | modification required by this subparagraph shall be | ||||||
17 | reduced to the extent that dividends were included in | ||||||
18 | base income for the same taxable year and received by | ||||||
19 | the taxpayer or by a member of the taxpayer's unitary | ||||||
20 | business group (including amounts included in gross | ||||||
21 | income under Sections 951 through 964 of the Internal | ||||||
22 | Revenue Code and amounts included in gross income under | ||||||
23 | Section 78 of the Internal Revenue Code) with respect | ||||||
24 | to the stock of the same person to whom the interest | ||||||
25 | was paid, accrued, or incurred. This subparagraph does | ||||||
26 | not apply to an item of interest paid, accrued, or | ||||||
27 | incurred, directly or indirectly, to a foreign person | ||||||
28 | that is subject in a foreign country to a tax on or | ||||||
29 | measured by net income with respect to such interest;
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30 | (D-18) For taxable years ending on or after | ||||||
31 | December 31, 2004, an amount equal to the amount of | ||||||
32 | intangible expenses and costs otherwise allowed as a | ||||||
33 | deduction in computing base income, and that were paid, | ||||||
34 | accrued, or incurred, directly or indirectly, to a |
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1 | foreign person who would be a member of the same | ||||||
2 | unitary business group but for the fact that the | ||||||
3 | foreign person's business activity outside the United | ||||||
4 | States is 80% or more of that person's total business | ||||||
5 | activity. The addition modification required by this | ||||||
6 | subparagraph shall be reduced to the extent that | ||||||
7 | dividends were included in base income for the same | ||||||
8 | taxable year and received by the taxpayer or by a | ||||||
9 | member of the taxpayer's unitary business group | ||||||
10 | (including amounts included in gross income under | ||||||
11 | Sections 951 through 964 of the Internal Revenue Code | ||||||
12 | and amounts included in gross income under Section 78 | ||||||
13 | of the Internal Revenue Code) with respect to the stock | ||||||
14 | of the same person to whom the intangible expenses and | ||||||
15 | costs were directly or indirectly paid, incurred, or | ||||||
16 | accrued. The preceding sentence does not apply to the | ||||||
17 | extent that the same dividends caused a reduction to | ||||||
18 | the addition modification required under Section | ||||||
19 | 203(a)(2)(D-17) of this Act. This subparagraph shall | ||||||
20 | not apply to any item of intangible expenses or costs | ||||||
21 | paid, accrued, or incurred, directly or indirectly, | ||||||
22 | from a transaction with a foreign person that is | ||||||
23 | subject in a foreign country to a tax on or measured by | ||||||
24 | net income with respect to such item.
As used in this | ||||||
25 | subparagraph, the term "intangible expenses and costs" | ||||||
26 | includes (1) expenses, losses, and costs for, or | ||||||
27 | related to, the direct or indirect acquisition, use, | ||||||
28 | maintenance or management, ownership, sale, exchange, | ||||||
29 | or any other disposition of intangible property; (2) | ||||||
30 | losses incurred, directly or indirectly, from | ||||||
31 | factoring transactions or discounting transactions; | ||||||
32 | (3) royalty, patent, technical, and copyright fees; | ||||||
33 | (4) licensing fees; and (5) other similar expenses and | ||||||
34 | costs.
For purposes of this subparagraph, "intangible |
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1 | property" includes patents, patent applications, trade | ||||||
2 | names, trademarks, service marks, copyrights, mask | ||||||
3 | works, trade secrets, and similar types of intangible | ||||||
4 | assets;
| ||||||
5 | (D-20)
(D-15) For taxable years beginning on or | ||||||
6 | after January 1,
2002, in
the
case of a distribution | ||||||
7 | from a qualified tuition program under Section 529 of
| ||||||
8 | the Internal Revenue Code, other than (i) a | ||||||
9 | distribution from a College Savings
Pool created under | ||||||
10 | Section 16.5 of the State Treasurer Act or (ii) a
| ||||||
11 | distribution from the Illinois Prepaid Tuition Trust | ||||||
12 | Fund, an amount equal to
the amount excluded from gross | ||||||
13 | income under Section 529(c)(3)(B); and
| ||||||
14 | (D-25) For taxable years ending on or after | ||||||
15 | December 31, 2004, an amount equal to the amount | ||||||
16 | excluded from gross income under Section 101(a) of the | ||||||
17 | Internal Revenue Code with respect to an | ||||||
18 | employer-owned life insurance contract, but only to | ||||||
19 | the extent that this amount exceeds the sum of the | ||||||
20 | premiums or other amounts paid for the contract. The | ||||||
21 | addition modification provided under this subparagraph | ||||||
22 | does not apply to the extent that proceeds are payable | ||||||
23 | to a member of the family (within the meaning of | ||||||
24 | Section 267(c)(4) of the Internal Revenue Code) of the | ||||||
25 | insured, to any individual who is the designated | ||||||
26 | beneficiary (other than the employer or an affiliate of | ||||||
27 | the employer) of the insured under the contract, to a | ||||||
28 | trust established for the benefit of any such person, | ||||||
29 | or to the estate of the insured, or are to be used to | ||||||
30 | purchase an equity interest in the employer (or an | ||||||
31 | affiliate) from any such person.
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32 | and by deducting from the total so obtained the
sum of the | ||||||
33 | following amounts:
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34 | (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
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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 National | ||||||
13 | Guard.
For taxable years ending on or after December | ||||||
14 | 31, 2001, any amount included in
such total in respect | ||||||
15 | of any compensation (including but not limited to any
| ||||||
16 | compensation paid or accrued to a serviceman while a | ||||||
17 | prisoner of war or missing
in action) paid to a | ||||||
18 | resident by reason of being a member of any component | ||||||
19 | of
the Armed Forces of the United States and in respect | ||||||
20 | of any compensation paid
or accrued to a resident who | ||||||
21 | as a governmental employee was a prisoner of war
or | ||||||
22 | missing in action, and in respect of any compensation | ||||||
23 | paid to a resident in
2001 or thereafter by reason of | ||||||
24 | being a member of the Illinois National Guard.
The | ||||||
25 | provisions of this amendatory Act of the 92nd General | ||||||
26 | Assembly are exempt
from the provisions of Section 250;
| ||||||
27 | (F) An amount equal to all amounts included in such | ||||||
28 | total pursuant
to the provisions of Sections 402(a), | ||||||
29 | 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the | ||||||
30 | Internal Revenue Code, or included in such total as
| ||||||
31 | distributions under the provisions of any retirement | ||||||
32 | or disability plan for
employees of any governmental | ||||||
33 | agency or unit, or retirement payments to
retired | ||||||
34 | partners, which payments are excluded in computing net |
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1 | earnings
from self employment by Section 1402 of the | ||||||
2 | Internal Revenue Code and
regulations adopted pursuant | ||||||
3 | thereto;
| ||||||
4 | (G) The valuation limitation amount;
| ||||||
5 | (H) An amount equal to the amount of any tax | ||||||
6 | imposed by this Act
which was refunded to the taxpayer | ||||||
7 | and included in such total for the
taxable year;
| ||||||
8 | (I) An amount equal to all amounts included in such | ||||||
9 | total pursuant
to the provisions of Section 111 of the | ||||||
10 | Internal Revenue Code as a
recovery of items previously | ||||||
11 | deducted from adjusted gross income in the
computation | ||||||
12 | of taxable income;
| ||||||
13 | (J) An amount equal to those dividends included in | ||||||
14 | such total which were
paid by a corporation which | ||||||
15 | conducts business operations in an Enterprise
Zone or | ||||||
16 | zones created under the Illinois Enterprise Zone Act, | ||||||
17 | and conducts
substantially all of its operations in an | ||||||
18 | Enterprise Zone or zones;
| ||||||
19 | (K) 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 a | ||||||
23 | High Impact
Business located in Illinois; provided | ||||||
24 | that dividends eligible for the
deduction provided in | ||||||
25 | subparagraph (J) of paragraph (2) of this subsection
| ||||||
26 | shall not be eligible for the deduction provided under | ||||||
27 | this subparagraph
(K);
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28 | (L) For taxable years ending after December 31, | ||||||
29 | 1983, an amount equal to
all social security benefits | ||||||
30 | and railroad retirement benefits included in
such | ||||||
31 | total pursuant to Sections 72(r) and 86 of the Internal | ||||||
32 | Revenue Code;
| ||||||
33 | (M) With the exception of any amounts subtracted | ||||||
34 | under subparagraph
(N), an amount equal to the sum of |
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| |||||||
1 | all amounts disallowed as
deductions by (i) Sections | ||||||
2 | 171(a) (2), and 265(2) of the Internal Revenue Code
of | ||||||
3 | 1954, as now or hereafter amended, and all amounts of | ||||||
4 | expenses allocable
to interest and disallowed as | ||||||
5 | deductions by Section 265(1) of the Internal
Revenue | ||||||
6 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
7 | taxable years
ending on or after August 13, 1999, | ||||||
8 | Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | ||||||
9 | the Internal Revenue Code; the provisions of this
| ||||||
10 | subparagraph are exempt from the provisions of Section | ||||||
11 | 250;
| ||||||
12 | (N) An amount equal to all amounts included in such | ||||||
13 | total which are
exempt from taxation by this State | ||||||
14 | either by reason of its statutes or
Constitution
or by | ||||||
15 | reason of the Constitution, treaties or statutes of the | ||||||
16 | United States;
provided that, in the case of any | ||||||
17 | statute of this State or of the United States, any | ||||||
18 | treaty of the United States, the Illinois | ||||||
19 | Constitution, or the United States Constitution that | ||||||
20 | exempts income
derived from bonds or other obligations | ||||||
21 | from the tax imposed under this Act,
the amount | ||||||
22 | exempted shall be the income
interest net of bond | ||||||
23 | premium amortization , interest expense incurred on | ||||||
24 | indebtedness to carry the bond or other obligation, | ||||||
25 | expenses incurred in producing the income to be | ||||||
26 | deducted, and all other related expenses. The amount of | ||||||
27 | expenses to be taken into account under this provision | ||||||
28 | may not exceed the amount of income that is exempted ;
| ||||||
29 | (O) An amount equal to any contribution made to a | ||||||
30 | job training
project established pursuant to the Tax | ||||||
31 | Increment Allocation Redevelopment Act;
| ||||||
32 | (P) An amount equal to the amount of the deduction | ||||||
33 | used to compute the
federal income tax credit for | ||||||
34 | restoration of substantial amounts held under
claim of |
| |||||||
| |||||||
1 | right for the taxable year pursuant to Section 1341 of | ||||||
2 | the
Internal Revenue Code of 1986;
| ||||||
3 | (Q) An amount equal to any amounts included in such | ||||||
4 | total, received by
the taxpayer as an acceleration in | ||||||
5 | the payment of life, endowment or annuity
benefits in | ||||||
6 | advance of the time they would otherwise be payable as | ||||||
7 | an indemnity
for a terminal illness;
| ||||||
8 | (R) An amount equal to the amount of any federal or | ||||||
9 | State bonus paid
to veterans of the Persian Gulf War;
| ||||||
10 | (S) An amount, to the extent included in adjusted | ||||||
11 | gross income, equal
to the amount of a contribution | ||||||
12 | made in the taxable year on behalf of the
taxpayer to a | ||||||
13 | medical care savings account established under the | ||||||
14 | Medical Care
Savings Account Act or the Medical Care | ||||||
15 | Savings Account Act of 2000 to the
extent the | ||||||
16 | contribution is accepted by the account
administrator | ||||||
17 | as provided in that Act;
| ||||||
18 | (T) An amount, to the extent included in adjusted | ||||||
19 | gross income, equal to
the amount of interest earned in | ||||||
20 | the taxable year on a medical care savings
account | ||||||
21 | established under the Medical Care Savings Account Act | ||||||
22 | or the Medical
Care Savings Account Act of 2000 on | ||||||
23 | behalf of the
taxpayer, other than interest added | ||||||
24 | pursuant to item (D-5) of this paragraph
(2);
| ||||||
25 | (U) For one taxable year beginning on or after | ||||||
26 | January 1,
1994, an
amount equal to the total amount of | ||||||
27 | tax imposed and paid under subsections (a)
and (b) of | ||||||
28 | Section 201 of this Act on grant amounts received by | ||||||
29 | the taxpayer
under the Nursing Home Grant Assistance | ||||||
30 | Act during the taxpayer's taxable years
1992 and 1993;
| ||||||
31 | (V) Beginning with tax years ending on or after | ||||||
32 | December 31, 1995 and
ending with tax years ending on | ||||||
33 | or before December 31, 2004, an amount equal to
the | ||||||
34 | amount paid by a taxpayer who is a
self-employed |
| |||||||
| |||||||
1 | taxpayer, a partner of a partnership, or a
shareholder | ||||||
2 | in a Subchapter S corporation for health insurance or | ||||||
3 | long-term
care insurance for that taxpayer or that | ||||||
4 | taxpayer's spouse or dependents, to
the extent that the | ||||||
5 | amount paid for that health insurance or long-term care
| ||||||
6 | insurance may be deducted under Section 213 of the | ||||||
7 | Internal Revenue Code of
1986, has not been deducted on | ||||||
8 | the federal income tax return of the taxpayer,
and does | ||||||
9 | not exceed the taxable income attributable to that | ||||||
10 | taxpayer's income,
self-employment income, or | ||||||
11 | Subchapter S corporation income; except that no
| ||||||
12 | deduction shall be allowed under this item (V) if the | ||||||
13 | taxpayer is eligible to
participate in any health | ||||||
14 | insurance or long-term care insurance plan of an
| ||||||
15 | employer of the taxpayer or the taxpayer's
spouse. The | ||||||
16 | amount of the health insurance and long-term care | ||||||
17 | insurance
subtracted under this item (V) shall be | ||||||
18 | determined by multiplying total
health insurance and | ||||||
19 | long-term care insurance premiums paid by the taxpayer
| ||||||
20 | times a number that represents the fractional | ||||||
21 | percentage of eligible medical
expenses under Section | ||||||
22 | 213 of the Internal Revenue Code of 1986 not actually
| ||||||
23 | deducted on the taxpayer's federal income tax return;
| ||||||
24 | (W) For taxable years beginning on or after January | ||||||
25 | 1, 1998,
all amounts included in the taxpayer's federal | ||||||
26 | gross income
in the taxable year from amounts converted | ||||||
27 | from a regular IRA to a Roth IRA.
This paragraph is | ||||||
28 | exempt from the provisions of Section
250;
| ||||||
29 | (X) For taxable year 1999 and thereafter, an amount | ||||||
30 | equal to the
amount of any (i) distributions, to the | ||||||
31 | extent includible in gross income for
federal income | ||||||
32 | tax purposes, made to the taxpayer because of his or | ||||||
33 | her status
as a victim of persecution for racial or | ||||||
34 | religious reasons by Nazi Germany or
any other Axis |
| |||||||
| |||||||
1 | regime or as an heir of the victim and (ii) items
of | ||||||
2 | income, to the extent
includible in gross income for | ||||||
3 | federal income tax purposes, attributable to,
derived | ||||||
4 | from or in any way related to assets stolen from, | ||||||
5 | hidden from, or
otherwise lost to a victim of
| ||||||
6 | persecution for racial or religious reasons by Nazi | ||||||
7 | Germany or any other Axis
regime immediately prior to, | ||||||
8 | during, and immediately after World War II,
including, | ||||||
9 | but
not limited to, interest on the proceeds receivable | ||||||
10 | as insurance
under policies issued to a victim of | ||||||
11 | persecution for racial or religious
reasons
by Nazi | ||||||
12 | Germany or any other Axis regime by European insurance | ||||||
13 | companies
immediately prior to and during World War II;
| ||||||
14 | provided, however, this subtraction from federal | ||||||
15 | adjusted gross income does not
apply to assets acquired | ||||||
16 | with such assets or with the proceeds from the sale of
| ||||||
17 | such assets; provided, further, this paragraph shall | ||||||
18 | only apply to a taxpayer
who was the first recipient of | ||||||
19 | such assets after their recovery and who is a
victim of | ||||||
20 | persecution for racial or religious reasons
by Nazi | ||||||
21 | Germany or any other Axis regime or as an heir of the | ||||||
22 | victim. The
amount of and the eligibility for any | ||||||
23 | public assistance, benefit, or
similar entitlement is | ||||||
24 | not affected by the inclusion of items (i) and (ii) of
| ||||||
25 | this paragraph in gross income for federal income tax | ||||||
26 | purposes.
This paragraph is exempt from the provisions | ||||||
27 | of Section 250;
| ||||||
28 | (Y) For taxable years beginning on or after January | ||||||
29 | 1, 2002,
moneys contributed in the taxable year to a | ||||||
30 | College Savings Pool account under
Section 16.5 of the | ||||||
31 | State Treasurer Act, except that amounts excluded from
| ||||||
32 | gross income under Section 529(c)(3) (C) (i) of the | ||||||
33 | Internal Revenue Code
shall not be considered moneys | ||||||
34 | contributed under this subparagraph (Y). This
|
| |||||||
| |||||||
1 | subparagraph (Y) is exempt from the provisions of | ||||||
2 | Section 250;
| ||||||
3 | (Z) For each taxable year ending before December | ||||||
4 | 31, 2004
years 2001 and thereafter , for the taxable | ||||||
5 | year in
which the bonus depreciation deduction (30% of | ||||||
6 | the adjusted basis of the
qualified property) is taken | ||||||
7 | on the taxpayer's federal income tax return under
| ||||||
8 | subsection (k) of Section 168 of the Internal Revenue | ||||||
9 | Code and for each
applicable taxable year thereafter, | ||||||
10 | an amount equal to "x", where:
| ||||||
11 | (1) "y" equals the amount of the depreciation | ||||||
12 | deduction taken for the
taxable year
on the | ||||||
13 | taxpayer's federal income tax return on property | ||||||
14 | for which the bonus
depreciation deduction (30% of | ||||||
15 | the adjusted basis of the qualified property)
was | ||||||
16 | taken in any year under subsection (k) of Section | ||||||
17 | 168 of the Internal
Revenue Code (for this purpose, | ||||||
18 | the depreciation deduction taken for the taxable | ||||||
19 | year on the taxpayer's federal income tax return is | ||||||
20 | deemed to take into account any depreciation | ||||||
21 | adjustment required under Section 203(e)(2)(I)) , | ||||||
22 | but not including the bonus depreciation | ||||||
23 | deduction; and
| ||||||
24 | (2) for property on which a bonus depreciation | ||||||
25 | deduction of 30% of the adjusted basis was taken,
| ||||||
26 | "x" equals "y" multiplied by 30 and then divided by | ||||||
27 | 70 (or "y"
multiplied by 0.429) , and for property | ||||||
28 | on which a bonus depreciation deduction of 50% of | ||||||
29 | the adjusted basis was taken, "x" equals "y" | ||||||
30 | multiplied by 1.0 .
| ||||||
31 | The aggregate amount deducted under this | ||||||
32 | subparagraph in all taxable
years for any one piece of | ||||||
33 | property may not exceed the amount of the bonus
| ||||||
34 | depreciation deduction (30% of the adjusted basis of |
| |||||||
| |||||||
1 | the qualified property)
taken on that property on the | ||||||
2 | taxpayer's federal income tax return under
subsection | ||||||
3 | (k) of Section 168 of the Internal Revenue Code; and
| ||||||
4 | (AA) If the taxpayer reports a capital gain or loss | ||||||
5 | on the taxpayer's
federal income tax return for the | ||||||
6 | taxable year based on a sale or transfer of
property | ||||||
7 | for which the taxpayer was required in any taxable year | ||||||
8 | to make an
addition modification under subparagraph | ||||||
9 | (D-15), then an amount equal to that
addition | ||||||
10 | modification.
| ||||||
11 | The taxpayer is allowed to take the deduction under | ||||||
12 | this subparagraph
only once with respect to any one | ||||||
13 | piece of property; and
| ||||||
14 | (BB)
(Z) Any amount included in adjusted gross | ||||||
15 | income, other
than
salary,
received by a driver in a | ||||||
16 | ridesharing arrangement using a motor vehicle ; .
| ||||||
17 | (CC) The amount of (i) any interest income (net of | ||||||
18 | the deductions allocable thereto) taken into account | ||||||
19 | for the taxable year with respect to a transaction with | ||||||
20 | a taxpayer that is required to make an addition | ||||||
21 | modification with respect to such transaction under | ||||||
22 | Section 203(a)(2)(D-17), 203(b)(2)(E-13), | ||||||
23 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
24 | the amount of that addition modification, and
(ii) any | ||||||
25 | income from intangible property (net of the deductions | ||||||
26 | allocable thereto) taken into account for the taxable | ||||||
27 | year with respect to a transaction with a taxpayer that | ||||||
28 | is required to make an addition modification with | ||||||
29 | respect to such transaction under Section | ||||||
30 | 203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or | ||||||
31 | 203(d)(2)(D-8), but not to exceed the amount of that | ||||||
32 | addition modification; | ||||||
33 | (DD) An amount equal to the interest income taken | ||||||
34 | into account for the taxable year (net of the |
| |||||||
| |||||||
1 | deductions allocable thereto) with respect to | ||||||
2 | transactions with a foreign person who would be a | ||||||
3 | member of the taxpayer's unitary business group but for | ||||||
4 | the fact that the foreign person's business activity | ||||||
5 | outside the United States is 80% or more of that | ||||||
6 | person's total business activity, but not to exceed the | ||||||
7 | addition modification required to be made for the same | ||||||
8 | taxable year under Section 203(a)(2)(D-17) for | ||||||
9 | interest paid, accrued, or incurred, directly or | ||||||
10 | indirectly, to the same foreign person; and | ||||||
11 | (EE) An amount equal to the income from intangible | ||||||
12 | property taken into account for the taxable year (net | ||||||
13 | of the deductions allocable thereto) with respect to | ||||||
14 | transactions with a foreign person who would be a | ||||||
15 | member of the taxpayer's unitary business group but for | ||||||
16 | the fact that the foreign person's business activity | ||||||
17 | outside the United States is 80% or more of that | ||||||
18 | person's total business activity, but not to exceed the | ||||||
19 | addition modification required to be made for the same | ||||||
20 | taxable year under Section 203(a)(2)(D-18) for | ||||||
21 | intangible expenses and costs paid, accrued, or | ||||||
22 | incurred, directly or indirectly, to the same foreign | ||||||
23 | person.
| ||||||
24 | (b) Corporations.
| ||||||
25 | (1) In general. In the case of a corporation, base | ||||||
26 | income means an
amount equal to the taxpayer's taxable | ||||||
27 | income for the taxable year as
modified by paragraph (2).
| ||||||
28 | (2) Modifications. The taxable income referred to in | ||||||
29 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
30 | of the following amounts:
| ||||||
31 | (A) An amount equal to all amounts paid or accrued | ||||||
32 | to the taxpayer
as interest and all distributions | ||||||
33 | received from regulated investment
companies during |
| |||||||
| |||||||
1 | the taxable year to the extent excluded from gross
| ||||||
2 | income in the computation of taxable income;
| ||||||
3 | (B) An amount equal to the amount of tax imposed by | ||||||
4 | this Act to the
extent deducted from gross income in | ||||||
5 | the computation of taxable income
for the taxable year;
| ||||||
6 | (C) In the case of a regulated investment company, | ||||||
7 | an amount equal to
the excess of (i) the net long-term | ||||||
8 | capital gain for the taxable year, over
(ii) the amount | ||||||
9 | of the capital gain dividends designated as such in | ||||||
10 | accordance
with Section 852(b)(3)(C) of the Internal | ||||||
11 | Revenue Code and any amount
designated under Section | ||||||
12 | 852(b)(3)(D) of the Internal Revenue Code,
| ||||||
13 | attributable to the taxable year (this amendatory Act | ||||||
14 | of 1995
(Public Act 89-89) is declarative of existing | ||||||
15 | law and is not a new
enactment);
| ||||||
16 | (D) The amount of any net operating loss deduction | ||||||
17 | taken in arriving
at taxable income, other than a net | ||||||
18 | operating loss carried forward from a
taxable year | ||||||
19 | ending prior to December 31, 1986;
| ||||||
20 | (E) For taxable years in which a net operating loss | ||||||
21 | carryback or
carryforward from a taxable year ending | ||||||
22 | prior to December 31, 1986 is an
element of taxable | ||||||
23 | income under paragraph (1) of subsection (e) or
| ||||||
24 | subparagraph (E) of paragraph (2) of subsection (e), | ||||||
25 | the amount by which
addition modifications other than | ||||||
26 | those provided by this subparagraph (E)
exceeded | ||||||
27 | subtraction modifications in such earlier taxable | ||||||
28 | year, with the
following limitations applied in the | ||||||
29 | order that they are listed:
| ||||||
30 | (i) the addition modification relating to the | ||||||
31 | net operating loss
carried back or forward to the | ||||||
32 | taxable year from any taxable year ending
prior to | ||||||
33 | December 31, 1986 shall be reduced by the amount of | ||||||
34 | addition
modification under this subparagraph (E) |
| |||||||
| |||||||
1 | which related to that net operating
loss and which | ||||||
2 | was taken into account in calculating the base | ||||||
3 | income of an
earlier taxable year, and
| ||||||
4 | (ii) the addition modification relating to the | ||||||
5 | net operating loss
carried back or forward to the | ||||||
6 | taxable year from any taxable year ending
prior to | ||||||
7 | December 31, 1986 shall not exceed the amount of | ||||||
8 | such carryback or
carryforward;
| ||||||
9 | For taxable years in which there is a net operating | ||||||
10 | loss carryback or
carryforward from more than one other | ||||||
11 | taxable year ending prior to December
31, 1986, the | ||||||
12 | addition modification provided in this subparagraph | ||||||
13 | (E) shall
be the sum of the amounts computed | ||||||
14 | independently under the preceding
provisions of this | ||||||
15 | subparagraph (E) for each such taxable year;
| ||||||
16 | (E-5) For taxable years ending after December 31, | ||||||
17 | 1997, an
amount equal to any eligible remediation costs | ||||||
18 | that the corporation
deducted in computing adjusted | ||||||
19 | gross income and for which the
corporation claims a | ||||||
20 | credit under subsection (l) of Section 201;
| ||||||
21 | (E-10) For taxable years ending on or after | ||||||
22 | December 31, 2000 and before December 31, 2004
2001 and | ||||||
23 | thereafter , an amount equal to the
bonus depreciation | ||||||
24 | deduction (30% of the adjusted basis of the qualified
| ||||||
25 | property) taken on the taxpayer's federal income tax | ||||||
26 | return for the taxable
year under subsection (k) of | ||||||
27 | Section 168 of the Internal Revenue Code; and
| ||||||
28 | (E-11) If the taxpayer reports a capital gain or | ||||||
29 | loss on the
taxpayer's federal income tax return for | ||||||
30 | the taxable year based on a sale or
transfer of | ||||||
31 | property for which the taxpayer was required in any | ||||||
32 | taxable year to
make an addition modification under | ||||||
33 | subparagraph (E-10), then an amount equal
to the | ||||||
34 | aggregate amount of the deductions taken in all taxable
|
| |||||||
| |||||||
1 | years under subparagraph (T) with respect to that | ||||||
2 | property . ;
| ||||||
3 | The taxpayer is required to make the addition | ||||||
4 | modification under this
subparagraph
only once with | ||||||
5 | respect to any one piece of property;
| ||||||
6 | (E-12) For taxable years ending on or after | ||||||
7 | December 31, 2004, to the extent not otherwise included | ||||||
8 | in base income, an amount equal to the amount of | ||||||
9 | dividends received, directly or indirectly, (including | ||||||
10 | amounts included in gross income pursuant to Sections | ||||||
11 | 951 through 964 of the Internal Revenue Code and | ||||||
12 | amounts included in gross income under Section 78 of | ||||||
13 | the Internal Revenue Code) with respect to the stock of | ||||||
14 | a passive income affiliate, as defined in Section | ||||||
15 | 1501(a)(29) of this Act;
| ||||||
16 | (E-13) For taxable years ending on or after | ||||||
17 | December 31, 2004, an amount equal to the amount | ||||||
18 | otherwise allowed as a deduction in computing base | ||||||
19 | income for interest paid, accrued, or incurred, | ||||||
20 | directly or indirectly, to a foreign person who would | ||||||
21 | be a member of the same unitary business group but for | ||||||
22 | the fact the foreign person's business activity | ||||||
23 | outside the United States is 80% or more of the foreign | ||||||
24 | person's total business activity. The addition | ||||||
25 | modification required by this subparagraph shall be | ||||||
26 | reduced to the extent that dividends were included in | ||||||
27 | base income for the same taxable year and received by | ||||||
28 | the taxpayer or by a member of the taxpayer's unitary | ||||||
29 | business group (including amounts included in gross | ||||||
30 | income pursuant to Sections 951 through 964 of the | ||||||
31 | Internal Revenue Code and amounts included in gross | ||||||
32 | income under Section 78 of the Internal Revenue Code) | ||||||
33 | with respect to the stock of the same person to whom | ||||||
34 | the interest was paid, accrued, or incurred. This |
| |||||||
| |||||||
1 | subparagraph shall not apply to an item of interest | ||||||
2 | paid, accrued, or incurred, directly or indirectly, to | ||||||
3 | a foreign person who is subject in a foreign country to | ||||||
4 | a tax on or measured by net income with respect to such | ||||||
5 | interest;
| ||||||
6 | (E-14) For taxable years ending on or after | ||||||
7 | December 31, 2004, an amount equal to the amount of | ||||||
8 | intangible expenses and costs otherwise allowed as a | ||||||
9 | deduction in computing base income, and that were paid, | ||||||
10 | accrued, or incurred, directly or indirectly, to a | ||||||
11 | foreign person who would be a member of the same | ||||||
12 | unitary business group but for the fact that the | ||||||
13 | foreign person's business activity outside the United | ||||||
14 | States is 80% or more of that person's total business | ||||||
15 | activity. The addition modification required by this | ||||||
16 | subparagraph shall be reduced to the extent that | ||||||
17 | dividends were included in base income for the same | ||||||
18 | taxable year and received by the taxpayer or by a | ||||||
19 | member of the taxpayer's unitary business group | ||||||
20 | (including amounts included in gross income pursuant | ||||||
21 | to Sections 951 through 964 of the Internal Revenue | ||||||
22 | Code and amounts included in gross income under Section | ||||||
23 | 78 of the Internal Revenue Code) with respect to the | ||||||
24 | stock of the same person to whom the intangible | ||||||
25 | expenses and costs were directly or indirectly paid, | ||||||
26 | incurred, or accrued. The preceding sentence shall not | ||||||
27 | apply to the extent that the same dividends caused a | ||||||
28 | reduction to the addition modification required under | ||||||
29 | Section 203(b)(2)(E-13) of this Act. This subparagraph | ||||||
30 | shall not apply to any item of intangible expenses or | ||||||
31 | costs paid, accrued, or incurred, directly or | ||||||
32 | indirectly, from a transaction with a foreign person | ||||||
33 | who is subject in a foreign country to a tax on or | ||||||
34 | measured by net income with respect to such item.
As |
| |||||||
| |||||||
1 | used in this subparagraph, the term "intangible | ||||||
2 | expenses and costs" includes (1) expenses, losses, and | ||||||
3 | costs for, or related to, the direct or indirect | ||||||
4 | acquisition, use, maintenance or management, | ||||||
5 | ownership, sale, exchange, or any other disposition of | ||||||
6 | intangible property; (2) losses incurred, directly or | ||||||
7 | indirectly, from factoring transactions or discounting | ||||||
8 | transactions; (3) royalty, patent, technical, and | ||||||
9 | copyright fees; (4) licensing fees; and (5) other | ||||||
10 | similar expenses and costs.
For purposes of this | ||||||
11 | subparagraph, "intangible property" includes patents, | ||||||
12 | patent applications, trade names, trademarks, service | ||||||
13 | marks, copyrights, mask works, trade secrets, and | ||||||
14 | similar types of intangible assets; and
| ||||||
15 | (E-15) For taxable years ending on or after | ||||||
16 | December 31, 2004, an amount equal to the amount | ||||||
17 | excluded from gross income under Section 101(a) of the | ||||||
18 | Internal Revenue Code with respect to an | ||||||
19 | employer-owned life insurance contract, but only to | ||||||
20 | the extent that this amount exceeds the sum of the | ||||||
21 | premiums or other amounts paid for the contract. The | ||||||
22 | addition modification provided under this subparagraph | ||||||
23 | does not apply to the extent that proceeds are payable | ||||||
24 | to a member of the family (within the meaning of | ||||||
25 | Section 267(c)(4) of the Internal Revenue Code) of the | ||||||
26 | insured, to any individual who is the designated | ||||||
27 | beneficiary (other than the employer or an affiliate of | ||||||
28 | the employer) of the insured under the contract, to a | ||||||
29 | trust established for the benefit of any such person, | ||||||
30 | or to the estate of the insured, or are to be used to | ||||||
31 | purchase an equity interest in the employer (or an | ||||||
32 | affiliate) from any such person.
| ||||||
33 | and by deducting from the total so obtained the sum of the | ||||||
34 | following
amounts:
|
| |||||||
| |||||||
1 | (F) An amount equal to the amount of any tax | ||||||
2 | imposed by this Act
which was refunded to the taxpayer | ||||||
3 | and included in such total for the
taxable year;
| ||||||
4 | (G) An amount equal to any amount included in such | ||||||
5 | total under
Section 78 of the Internal Revenue Code;
| ||||||
6 | (H) In the case of a regulated investment company, | ||||||
7 | an amount equal
to the amount of exempt interest | ||||||
8 | dividends as defined in subsection (b)
(5) of Section | ||||||
9 | 852 of the Internal Revenue Code, paid to shareholders
| ||||||
10 | for the taxable year;
| ||||||
11 | (I) With the exception of any amounts subtracted | ||||||
12 | under subparagraph
(J),
an amount equal to the sum of | ||||||
13 | all amounts disallowed as
deductions by (i) Sections | ||||||
14 | 171(a) (2), and 265(a)(2) and amounts disallowed as
| ||||||
15 | interest expense by Section 291(a)(3) of the Internal | ||||||
16 | Revenue Code, as now
or hereafter amended, and all | ||||||
17 | amounts of expenses allocable to interest and
| ||||||
18 | disallowed as deductions by Section 265(a)(1) of the | ||||||
19 | Internal Revenue Code,
as now or hereafter amended;
and | ||||||
20 | (ii) for taxable years
ending on or after August 13, | ||||||
21 | 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | ||||||
22 | 832(b)(5)(B)(i) of the Internal Revenue Code; the
| ||||||
23 | provisions of this
subparagraph are exempt from the | ||||||
24 | provisions of Section 250;
| ||||||
25 | (J) An amount equal to all amounts included in such | ||||||
26 | total which are
exempt from taxation by this State | ||||||
27 | either by reason of its statutes or
Constitution
or by | ||||||
28 | reason of the Constitution, treaties or statutes of the | ||||||
29 | United States;
provided that, in the case of any | ||||||
30 | statute of this State or of the United States, any | ||||||
31 | treaty of the United States, the Illinois | ||||||
32 | Constitution, or the United States Constitution that | ||||||
33 | exempts income
derived from bonds or other obligations | ||||||
34 | from the tax imposed under this Act,
the amount |
| |||||||
| |||||||
1 | exempted shall be the income
interest net of bond | ||||||
2 | premium amortization , interest expense incurred on | ||||||
3 | indebtedness to carry the bond or other obligation, | ||||||
4 | expenses incurred in producing the income to be | ||||||
5 | deducted, and all other related expenses. The amount of | ||||||
6 | expenses to be taken into account under this provision | ||||||
7 | may not exceed the amount of income that is exempted ;
| ||||||
8 | (K) An amount equal to those dividends included in | ||||||
9 | such total
which were paid by a corporation which | ||||||
10 | conducts
business operations in an Enterprise Zone or | ||||||
11 | zones created under
the Illinois Enterprise Zone Act | ||||||
12 | and conducts substantially all of its
operations in an | ||||||
13 | Enterprise Zone or zones;
| ||||||
14 | (L) An amount equal to those dividends included in | ||||||
15 | such total that
were paid by a corporation that | ||||||
16 | conducts business operations in a federally
designated | ||||||
17 | Foreign Trade Zone or Sub-Zone and that is designated a | ||||||
18 | High Impact
Business located in Illinois; provided | ||||||
19 | that dividends eligible for the
deduction provided in | ||||||
20 | subparagraph (K) of paragraph 2 of this subsection
| ||||||
21 | shall not be eligible for the deduction provided under | ||||||
22 | this subparagraph
(L);
| ||||||
23 | (M) For any taxpayer that is a financial | ||||||
24 | organization within the meaning
of Section 304(c) of | ||||||
25 | this Act, an amount included in such total as interest
| ||||||
26 | income from a loan or loans made by such taxpayer to a | ||||||
27 | borrower, to the extent
that such a loan is secured by | ||||||
28 | property which is eligible for the Enterprise
Zone | ||||||
29 | Investment Credit. To determine the portion of a loan | ||||||
30 | or loans that is
secured by property eligible for a | ||||||
31 | Section 201(f) investment
credit to the borrower, the | ||||||
32 | entire principal amount of the loan or loans
between | ||||||
33 | the taxpayer and the borrower should be divided into | ||||||
34 | the basis of the
Section 201(f) investment credit |
| |||||||
| |||||||
1 | property which secures the
loan or loans, using for | ||||||
2 | this purpose the original basis of such property on
the | ||||||
3 | date that it was placed in service in the
Enterprise | ||||||
4 | Zone. The subtraction modification available to | ||||||
5 | taxpayer in any
year under this subsection shall be | ||||||
6 | that portion of the total interest paid
by the borrower | ||||||
7 | with respect to such loan attributable to the eligible
| ||||||
8 | property as calculated under the previous sentence;
| ||||||
9 | (M-1) For any taxpayer that is a financial | ||||||
10 | organization within the
meaning of Section 304(c) of | ||||||
11 | this Act, an amount included in such total as
interest | ||||||
12 | income from a loan or loans made by such taxpayer to a | ||||||
13 | borrower,
to the extent that such a loan is secured by | ||||||
14 | property which is eligible for
the High Impact Business | ||||||
15 | Investment Credit. To determine the portion of a
loan | ||||||
16 | or loans that is secured by property eligible for a | ||||||
17 | Section 201(h) investment credit to the borrower, the | ||||||
18 | entire principal amount of
the loan or loans between | ||||||
19 | the taxpayer and the borrower should be divided into
| ||||||
20 | the basis of the Section 201(h) investment credit | ||||||
21 | property which
secures the loan or loans, using for | ||||||
22 | this purpose the original basis of such
property on the | ||||||
23 | date that it was placed in service in a federally | ||||||
24 | designated
Foreign Trade Zone or Sub-Zone located in | ||||||
25 | Illinois. No taxpayer that is
eligible for the | ||||||
26 | deduction provided in subparagraph (M) of paragraph | ||||||
27 | (2) of
this subsection shall be eligible for the | ||||||
28 | deduction provided under this
subparagraph (M-1). The | ||||||
29 | subtraction modification available to taxpayers in
any | ||||||
30 | year under this subsection shall be that portion of the | ||||||
31 | total interest
paid by the borrower with respect to | ||||||
32 | such loan attributable to the eligible
property as | ||||||
33 | calculated under the previous sentence;
| ||||||
34 | (N) Two times any contribution made during the |
| |||||||
| |||||||
1 | taxable year to a
designated zone organization to the | ||||||
2 | extent that the contribution (i)
qualifies as a | ||||||
3 | charitable contribution under subsection (c) of | ||||||
4 | Section 170
of the Internal Revenue Code and (ii) must, | ||||||
5 | by its terms, be used for a
project approved by the | ||||||
6 | Department of Commerce and Economic Opportunity
| ||||||
7 | Community Affairs under Section 11 of the Illinois | ||||||
8 | Enterprise Zone Act;
| ||||||
9 | (O) An amount equal to: (i) 85% for taxable years | ||||||
10 | ending on or before
December 31, 1992, or, a percentage | ||||||
11 | equal to the percentage allowable under
Section | ||||||
12 | 243(a)(1) of the Internal Revenue Code of 1986 for | ||||||
13 | taxable years ending
after December 31, 1992, of the | ||||||
14 | amount by which dividends included in taxable
income | ||||||
15 | and received from a corporation that is not created or | ||||||
16 | organized under
the laws of the United States or any | ||||||
17 | state or political subdivision thereof,
including, for | ||||||
18 | taxable years ending on or after December 31, 1988, | ||||||
19 | dividends
received or deemed received or paid or deemed | ||||||
20 | paid under Sections 951 through
964 of the Internal | ||||||
21 | Revenue Code, exceed the amount of the modification
| ||||||
22 | provided under subparagraph (G) of paragraph (2) of | ||||||
23 | this subsection (b) which
is related to such dividends; | ||||||
24 | plus (ii) 100% of the amount by which dividends,
| ||||||
25 | included in taxable income and received, including, | ||||||
26 | for taxable years ending on
or after December 31, 1988, | ||||||
27 | dividends received or deemed received or paid or
deemed | ||||||
28 | paid under Sections 951 through 964 of the Internal | ||||||
29 | Revenue Code, from
any such corporation specified in | ||||||
30 | clause (i) that would but for the provisions
of Section | ||||||
31 | 1504 (b) (3) of the Internal Revenue Code be treated as | ||||||
32 | a member of
the affiliated group which includes the | ||||||
33 | dividend recipient, exceed the amount
of the | ||||||
34 | modification provided under subparagraph (G) of |
| |||||||
| |||||||
1 | paragraph (2) of this
subsection (b) which is related | ||||||
2 | to such dividends;
| ||||||
3 | (P) An amount equal to any contribution made to a | ||||||
4 | job training project
established pursuant to the Tax | ||||||
5 | Increment Allocation Redevelopment Act;
| ||||||
6 | (Q) An amount equal to the amount of the deduction | ||||||
7 | used to compute the
federal income tax credit for | ||||||
8 | restoration of substantial amounts held under
claim of | ||||||
9 | right for the taxable year pursuant to Section 1341 of | ||||||
10 | the
Internal Revenue Code of 1986;
| ||||||
11 | (R) In the case of an attorney-in-fact with respect | ||||||
12 | to whom an
interinsurer or a reciprocal insurer has | ||||||
13 | made the election under Section 835 of
the Internal | ||||||
14 | Revenue Code, 26 U.S.C. 835, an amount equal to the | ||||||
15 | excess, if
any, of the amounts paid or incurred by that | ||||||
16 | interinsurer or reciprocal insurer
in the taxable year | ||||||
17 | to the attorney-in-fact over the deduction allowed to | ||||||
18 | that
interinsurer or reciprocal insurer with respect | ||||||
19 | to the attorney-in-fact under
Section 835(b) of the | ||||||
20 | Internal Revenue Code for the taxable year;
| ||||||
21 | (S) For taxable years ending on or after December | ||||||
22 | 31, 1997, in the
case of a Subchapter
S corporation, an | ||||||
23 | amount equal to all amounts of income allocable to a
| ||||||
24 | shareholder subject to the Personal Property Tax | ||||||
25 | Replacement Income Tax imposed
by subsections (c) and | ||||||
26 | (d) of Section 201 of this Act, including amounts
| ||||||
27 | allocable to organizations exempt from federal income | ||||||
28 | tax by reason of Section
501(a) of the Internal Revenue | ||||||
29 | Code. This subparagraph (S) is exempt from
the | ||||||
30 | provisions of Section 250;
| ||||||
31 | (T) For each taxable year ending before December | ||||||
32 | 31, 2004
years 2001 and thereafter , for the taxable | ||||||
33 | year in
which the bonus depreciation deduction (30% of | ||||||
34 | the adjusted basis of the
qualified property) is taken |
| |||||||
| |||||||
1 | on the taxpayer's federal income tax return under
| ||||||
2 | subsection (k) of Section 168 of the Internal Revenue | ||||||
3 | Code and for each
applicable taxable year thereafter, | ||||||
4 | an amount equal to "x", where:
| ||||||
5 | (1) "y" equals the amount of the depreciation | ||||||
6 | deduction taken for the
taxable year
on the | ||||||
7 | taxpayer's federal income tax return on property | ||||||
8 | for which the bonus
depreciation deduction (30% of | ||||||
9 | the adjusted basis of the qualified property)
was | ||||||
10 | taken in any year under subsection (k) of Section | ||||||
11 | 168 of the Internal
Revenue Code (for this purpose, | ||||||
12 | the depreciation deduction taken for the taxable | ||||||
13 | year on the taxpayer's federal income tax return is | ||||||
14 | deemed to take into account any depreciation | ||||||
15 | adjustment required under Section 203(e)(2)(I)) , | ||||||
16 | but not including the bonus depreciation | ||||||
17 | deduction; and
| ||||||
18 | (2) for property on which a bonus depreciation | ||||||
19 | deduction of 30% of the adjusted basis was taken,
| ||||||
20 | "x" equals "y" multiplied by 30 and then divided by | ||||||
21 | 70 (or "y"
multiplied by 0.429) , and for property | ||||||
22 | on which a bonus depreciation deduction of 50% of | ||||||
23 | the adjusted basis was taken, "x" equals "y" | ||||||
24 | multiplied by 1.0 .
| ||||||
25 | The aggregate amount deducted under this | ||||||
26 | subparagraph in all taxable
years for any one piece of | ||||||
27 | property may not exceed the amount of the bonus
| ||||||
28 | depreciation deduction (30% of the adjusted basis of | ||||||
29 | the qualified property)
taken on that property on the | ||||||
30 | taxpayer's federal income tax return under
subsection | ||||||
31 | (k) of Section 168 of the Internal Revenue Code; and
| ||||||
32 | (U) If the taxpayer reports a capital gain or loss | ||||||
33 | on the taxpayer's
federal income tax return for the | ||||||
34 | taxable year based on a sale or transfer of
property |
| |||||||
| |||||||
1 | for which the taxpayer was required in any taxable year | ||||||
2 | to make an
addition modification under subparagraph | ||||||
3 | (E-10), then an amount equal to that
addition | ||||||
4 | modification.
| ||||||
5 | The taxpayer is allowed to take the deduction under | ||||||
6 | this subparagraph
only once with respect to any one | ||||||
7 | piece of property ; .
| ||||||
8 | (V) The amount of: (i) any interest income (net of | ||||||
9 | the deductions allocable thereto) taken into account | ||||||
10 | for the taxable year with respect to a transaction with | ||||||
11 | a taxpayer that is required to make an addition | ||||||
12 | modification with respect to such transaction under | ||||||
13 | Section 203(a)(2)(D-17), 203(b)(2)(E-13), | ||||||
14 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
15 | the amount of such addition modification and
(ii) any | ||||||
16 | income from intangible property (net of the deductions | ||||||
17 | allocable thereto) taken into account for the taxable | ||||||
18 | year with respect to a transaction with a taxpayer that | ||||||
19 | is required to make an addition modification with | ||||||
20 | respect to such transaction under Section | ||||||
21 | 203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or | ||||||
22 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
23 | addition modification;
| ||||||
24 | (W) An amount equal to the interest income taken | ||||||
25 | into account for the taxable year (net of the | ||||||
26 | deductions allocable thereto) with respect to | ||||||
27 | transactions with a foreign person who would be a | ||||||
28 | member of the taxpayer's unitary business group but for | ||||||
29 | the fact that the foreign person's business activity | ||||||
30 | outside the United States is 80% or more of that | ||||||
31 | person's total business activity, but not to exceed the | ||||||
32 | addition modification required to be made for the same | ||||||
33 | taxable year under Section 203(b)(2)(E-13) for | ||||||
34 | interest paid, accrued, or incurred, directly or |
| |||||||
| |||||||
1 | indirectly, to the same foreign person; and
| ||||||
2 | (X) 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 a foreign person who would be a | ||||||
6 | member of the taxpayer's unitary business group but for | ||||||
7 | the fact that the foreign person's business activity | ||||||
8 | outside the United States is 80% or more of that | ||||||
9 | person's total business activity, but not to exceed the | ||||||
10 | addition modification required to be made for the same | ||||||
11 | taxable year under Section 203(b)(2)(E-14) for | ||||||
12 | intangible expenses and costs paid, accrued, or | ||||||
13 | incurred, directly or indirectly, to the same foreign | ||||||
14 | person.
| ||||||
15 | (3) Special rule. For purposes of paragraph (2) (A), | ||||||
16 | "gross income"
in the case of a life insurance company, for | ||||||
17 | tax years ending on and after
December 31, 1994,
shall mean | ||||||
18 | the gross investment income for the taxable year.
| ||||||
19 | (c) Trusts and estates.
| ||||||
20 | (1) In general. In the case of a trust or estate, base | ||||||
21 | income means
an amount equal to the taxpayer's taxable | ||||||
22 | income for the taxable year as
modified by paragraph (2).
| ||||||
23 | (2) Modifications. Subject to the provisions of | ||||||
24 | paragraph (3), the
taxable income referred to in paragraph | ||||||
25 | (1) shall be modified by adding
thereto the sum of the | ||||||
26 | following amounts:
| ||||||
27 | (A) An amount equal to all amounts paid or accrued | ||||||
28 | to the taxpayer
as interest or dividends during the | ||||||
29 | taxable year to the extent excluded
from gross income | ||||||
30 | in the computation of taxable income;
| ||||||
31 | (B) In the case of (i) an estate, $600; (ii) a | ||||||
32 | trust which, under
its governing instrument, is | ||||||
33 | required to distribute all of its income
currently, |
| |||||||
| |||||||
1 | $300; and (iii) any other trust, $100, but in each such | ||||||
2 | case,
only to the extent such amount was deducted in | ||||||
3 | the computation of
taxable income;
| ||||||
4 | (C) An amount equal to the amount of tax imposed by | ||||||
5 | this Act to the
extent deducted from gross income in | ||||||
6 | the computation of taxable income
for the taxable year;
| ||||||
7 | (D) The amount of any net operating loss deduction | ||||||
8 | taken in arriving at
taxable income, other than a net | ||||||
9 | operating loss carried forward from a
taxable year | ||||||
10 | ending prior to December 31, 1986;
| ||||||
11 | (E) For taxable years in which a net operating loss | ||||||
12 | carryback or
carryforward from a taxable year ending | ||||||
13 | prior to December 31, 1986 is an
element of taxable | ||||||
14 | income under paragraph (1) of subsection (e) or | ||||||
15 | subparagraph
(E) of paragraph (2) of subsection (e), | ||||||
16 | the amount by which addition
modifications other than | ||||||
17 | those provided by this subparagraph (E) exceeded
| ||||||
18 | subtraction modifications in such taxable year, with | ||||||
19 | the following limitations
applied in the order that | ||||||
20 | they are listed:
| ||||||
21 | (i) the addition modification relating to the | ||||||
22 | net operating loss
carried back or forward to the | ||||||
23 | taxable year from any taxable year ending
prior to | ||||||
24 | December 31, 1986 shall be reduced by the amount of | ||||||
25 | addition
modification under this subparagraph (E) | ||||||
26 | which related to that net
operating loss and which | ||||||
27 | was taken into account in calculating the base
| ||||||
28 | income of an earlier taxable year, and
| ||||||
29 | (ii) the addition modification relating to the | ||||||
30 | net operating loss
carried back or forward to the | ||||||
31 | taxable year from any taxable year ending
prior to | ||||||
32 | December 31, 1986 shall not exceed the amount of | ||||||
33 | such carryback or
carryforward;
| ||||||
34 | For taxable years in which there is a net operating |
| |||||||
| |||||||
1 | loss carryback or
carryforward from more than one other | ||||||
2 | taxable year ending prior to December
31, 1986, the | ||||||
3 | addition modification provided in this subparagraph | ||||||
4 | (E) shall
be the sum of the amounts computed | ||||||
5 | independently under the preceding
provisions of this | ||||||
6 | subparagraph (E) for each such taxable year;
| ||||||
7 | (F) For taxable years ending on or after January 1, | ||||||
8 | 1989, an amount
equal to the tax deducted pursuant to | ||||||
9 | Section 164 of the Internal Revenue
Code if the trust | ||||||
10 | or estate is claiming the same tax for purposes of the
| ||||||
11 | Illinois foreign tax credit under Section 601 of this | ||||||
12 | Act;
| ||||||
13 | (G) An amount equal to the amount of the capital | ||||||
14 | gain deduction
allowable under the Internal Revenue | ||||||
15 | Code, to the extent deducted from
gross income in the | ||||||
16 | computation of taxable income;
| ||||||
17 | (G-5) For taxable years ending after December 31, | ||||||
18 | 1997, an
amount equal to any eligible remediation costs | ||||||
19 | that the trust or estate
deducted in computing adjusted | ||||||
20 | gross income and for which the trust
or estate claims a | ||||||
21 | credit under subsection (l) of Section 201;
| ||||||
22 | (G-10) For taxable years ending on or after | ||||||
23 | December 31, 2000 and before December 31, 2004
2001 and | ||||||
24 | thereafter , an amount equal to the
bonus depreciation | ||||||
25 | deduction (30% of the adjusted basis of the qualified
| ||||||
26 | property) taken on the taxpayer's federal income tax | ||||||
27 | return for the taxable
year under subsection (k) of | ||||||
28 | Section 168 of the Internal Revenue Code; and
| ||||||
29 | (G-11) If the taxpayer reports a capital gain or | ||||||
30 | loss on the
taxpayer's federal income tax return for | ||||||
31 | the taxable year based on a sale or
transfer of | ||||||
32 | property for which the taxpayer was required in any | ||||||
33 | taxable year to
make an addition modification under | ||||||
34 | subparagraph (G-10), then an amount equal
to the |
| |||||||
| |||||||
1 | aggregate amount of the deductions taken in all taxable
| ||||||
2 | years under subparagraph (R) with respect to that | ||||||
3 | property . ;
| ||||||
4 | The taxpayer is required to make the addition | ||||||
5 | modification under this
subparagraph
only once with | ||||||
6 | respect to any one piece of property;
| ||||||
7 | (G-12) For taxable years ending on or after | ||||||
8 | December 31, 2004, an amount equal to the amount | ||||||
9 | otherwise allowed as a deduction in computing base | ||||||
10 | income for interest paid, accrued, or incurred, | ||||||
11 | directly or indirectly, to a foreign person who would | ||||||
12 | be a member of the same unitary business group but for | ||||||
13 | the fact that the foreign person's business activity | ||||||
14 | outside the United States is 80% or more of the foreign | ||||||
15 | person's total business activity. The addition | ||||||
16 | modification required by this subparagraph shall be | ||||||
17 | reduced to the extent that dividends were included in | ||||||
18 | base income for the same taxable year and received by | ||||||
19 | the 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 interest was paid, accrued, or incurred. This | ||||||
26 | subparagraph shall not apply to an item of interest | ||||||
27 | paid, accrued, or incurred, directly or indirectly, to | ||||||
28 | a foreign person that is subject in a foreign country | ||||||
29 | to a tax on or measured by net income with respect to | ||||||
30 | such interest;
| ||||||
31 | (G-13) For taxable years ending on or after | ||||||
32 | December 31, 2004, an amount equal to the amount of | ||||||
33 | intangible expenses and costs otherwise allowed as a | ||||||
34 | deduction in computing base income, and that were paid, |
| |||||||
| |||||||
1 | accrued, or incurred, directly or indirectly, to a | ||||||
2 | foreign person who would be a member of the same | ||||||
3 | unitary business group but for the fact that the | ||||||
4 | foreign person's business activity outside the United | ||||||
5 | States is 80% or more of that person's total business | ||||||
6 | activity. The addition modification required by this | ||||||
7 | subparagraph shall be reduced to the extent that | ||||||
8 | dividends were included in base income for the same | ||||||
9 | taxable year and received by the taxpayer or by a | ||||||
10 | member of the taxpayer's unitary business group | ||||||
11 | (including amounts included in gross income pursuant | ||||||
12 | to Sections 951 through 964 of the Internal Revenue | ||||||
13 | Code and amounts included in gross income under Section | ||||||
14 | 78 of the Internal Revenue Code) with respect to the | ||||||
15 | stock of the same person to whom the intangible | ||||||
16 | expenses and costs were directly or indirectly paid, | ||||||
17 | incurred, or accrued. The preceding sentence shall not | ||||||
18 | apply to the extent that the same dividends caused a | ||||||
19 | reduction to the addition modification required under | ||||||
20 | Section 203 (c)(2)(G-12) of this Act. This | ||||||
21 | subparagraph shall not apply to any item of intangible | ||||||
22 | expenses or costs paid, accrued, or incurred, directly | ||||||
23 | or indirectly, from a transaction with a foreign person | ||||||
24 | who is subject in a foreign country to a tax on or | ||||||
25 | measured by net income with respect to such item.
As | ||||||
26 | used in this subparagraph, the term "intangible | ||||||
27 | expenses and costs" includes: (1) expenses, losses, | ||||||
28 | and costs for or related to the direct or indirect | ||||||
29 | acquisition, use, maintenance or management, | ||||||
30 | ownership, sale, exchange, or any other disposition of | ||||||
31 | intangible property; (2) losses incurred, directly or | ||||||
32 | indirectly, from factoring transactions or discounting | ||||||
33 | transactions; (3) royalty, patent, technical, and | ||||||
34 | copyright fees; (4) licensing fees; and (5) other |
| |||||||
| |||||||
1 | similar expenses and costs. For purposes of this | ||||||
2 | subparagraph, "intangible property" includes patents, | ||||||
3 | patent applications, trade names, trademarks, service | ||||||
4 | marks, copyrights, mask works, trade secrets, and | ||||||
5 | similar types of intangible assets; and | ||||||
6 | (G-15) For taxable years ending on or after | ||||||
7 | December 31, 2004, an amount equal to the amount | ||||||
8 | excluded from gross income under Section 101(a) of the | ||||||
9 | Internal Revenue Code with respect to an | ||||||
10 | employer-owned life insurance contract, but only to | ||||||
11 | the extent that this amount exceeds the sum of the | ||||||
12 | premiums or other amounts paid for the contract. The | ||||||
13 | addition modification provided under this item does | ||||||
14 | not apply to the extent that proceeds are payable to a | ||||||
15 | member of the family (within the meaning of Section | ||||||
16 | 267(c)(4) of the Internal Revenue Code) of the insured, | ||||||
17 | to any individual who is the designated beneficiary | ||||||
18 | (other than the employer or an affiliate of the | ||||||
19 | employer) of the insured under the contract, to a trust | ||||||
20 | established for the benefit of any such person, or to | ||||||
21 | the estate of the insured, or are to be used to | ||||||
22 | purchase an equity interest in the employer (or an | ||||||
23 | affiliate) from any such person.
| ||||||
24 | and by deducting from the total so obtained the sum of the | ||||||
25 | following
amounts:
| ||||||
26 | (H) An amount equal to all amounts included in such | ||||||
27 | total pursuant
to the provisions of Sections 402(a), | ||||||
28 | 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | ||||||
29 | Internal Revenue Code or included in such total as
| ||||||
30 | distributions under the provisions of any retirement | ||||||
31 | or disability plan for
employees of any governmental | ||||||
32 | agency or unit, or retirement payments to
retired | ||||||
33 | partners, which payments are excluded in computing net | ||||||
34 | earnings
from self employment by Section 1402 of the |
| |||||||
| |||||||
1 | Internal Revenue Code and
regulations adopted pursuant | ||||||
2 | thereto;
| ||||||
3 | (I) The valuation limitation amount;
| ||||||
4 | (J) An amount equal to the amount of any tax | ||||||
5 | imposed by this Act
which was refunded to the taxpayer | ||||||
6 | and included in such total for the
taxable year;
| ||||||
7 | (K) An amount equal to all amounts included in | ||||||
8 | taxable income as
modified by subparagraphs (A), (B), | ||||||
9 | (C), (D), (E), (F) and (G) which
are exempt from | ||||||
10 | taxation by this State either by reason of its statutes | ||||||
11 | or
Constitution
or by reason of the Constitution, | ||||||
12 | treaties or statutes of the United States;
provided | ||||||
13 | that, in the case of any statute of this State or of | ||||||
14 | the United States, any treaty of the United States, the | ||||||
15 | Illinois Constitution, or the United States | ||||||
16 | Constitution that exempts income
derived from bonds or | ||||||
17 | other obligations from the tax imposed under this Act,
| ||||||
18 | the amount exempted shall be the income
interest net of | ||||||
19 | bond premium amortization , interest expense incurred | ||||||
20 | on indebtedness to carry the bond or other obligation, | ||||||
21 | expenses incurred in producing the income to be | ||||||
22 | deducted, and all other related expenses. The amount of | ||||||
23 | expenses to be taken into account under this provision | ||||||
24 | may not exceed the amount of income that is exempted ;
| ||||||
25 | (L) With the exception of any amounts subtracted | ||||||
26 | under subparagraph
(K),
an amount equal to the sum of | ||||||
27 | all amounts disallowed as
deductions by (i) Sections | ||||||
28 | 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, | ||||||
29 | as now or hereafter amended, and all amounts of | ||||||
30 | expenses allocable
to interest and disallowed as | ||||||
31 | deductions by Section 265(1) of the Internal
Revenue | ||||||
32 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
33 | taxable years
ending on or after August 13, 1999, | ||||||
34 | Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of |
| |||||||
| |||||||
1 | the Internal Revenue Code; the provisions of this
| ||||||
2 | subparagraph are exempt from the provisions of Section | ||||||
3 | 250;
| ||||||
4 | (M) An amount equal to those dividends included in | ||||||
5 | such total
which were paid by a corporation which | ||||||
6 | conducts business operations in an
Enterprise Zone or | ||||||
7 | zones created under the Illinois Enterprise Zone Act | ||||||
8 | and
conducts substantially all of its operations in an | ||||||
9 | Enterprise Zone or Zones;
| ||||||
10 | (N) An amount equal to any contribution made to a | ||||||
11 | job training
project established pursuant to the Tax | ||||||
12 | Increment Allocation
Redevelopment Act;
| ||||||
13 | (O) An amount equal to those dividends included in | ||||||
14 | such total
that were paid by a corporation that | ||||||
15 | conducts business operations in a
federally designated | ||||||
16 | Foreign Trade Zone or Sub-Zone and that is designated
a | ||||||
17 | High Impact Business located in Illinois; provided | ||||||
18 | that dividends eligible
for the deduction provided in | ||||||
19 | subparagraph (M) of paragraph (2) of this
subsection | ||||||
20 | shall not be eligible for the deduction provided under | ||||||
21 | this
subparagraph (O);
| ||||||
22 | (P) An amount equal to the amount of the deduction | ||||||
23 | used to compute the
federal income tax credit for | ||||||
24 | restoration of substantial amounts held under
claim of | ||||||
25 | right for the taxable year pursuant to Section 1341 of | ||||||
26 | the
Internal Revenue Code of 1986;
| ||||||
27 | (Q) For taxable year 1999 and thereafter, an amount | ||||||
28 | equal to the
amount of any
(i) distributions, to the | ||||||
29 | extent includible in gross income for
federal income | ||||||
30 | tax purposes, made to the taxpayer because of
his or | ||||||
31 | her status as a victim of
persecution for racial or | ||||||
32 | religious reasons by Nazi Germany or any other Axis
| ||||||
33 | regime or as an heir of the victim and (ii) items
of | ||||||
34 | income, to the extent
includible in gross income for |
| |||||||
| |||||||
1 | federal income tax purposes, attributable to,
derived | ||||||
2 | from or in any way related to assets stolen from, | ||||||
3 | hidden from, or
otherwise lost to a victim of
| ||||||
4 | persecution for racial or religious reasons by Nazi
| ||||||
5 | Germany or any other Axis regime
immediately prior to, | ||||||
6 | during, and immediately after World War II, including,
| ||||||
7 | but
not limited to, interest on the proceeds receivable | ||||||
8 | as insurance
under policies issued to a victim of | ||||||
9 | persecution for racial or religious
reasons by Nazi | ||||||
10 | Germany or any other Axis regime by European insurance
| ||||||
11 | companies
immediately prior to and during World War II;
| ||||||
12 | provided, however, this subtraction from federal | ||||||
13 | adjusted gross income does not
apply to assets acquired | ||||||
14 | with such assets or with the proceeds from the sale of
| ||||||
15 | such assets; provided, further, this paragraph shall | ||||||
16 | only apply to a taxpayer
who was the first recipient of | ||||||
17 | such assets after their recovery and who is a
victim of
| ||||||
18 | persecution for racial or religious reasons
by Nazi | ||||||
19 | Germany or any other Axis regime or as an heir of the | ||||||
20 | victim. The
amount of and the eligibility for any | ||||||
21 | public assistance, benefit, or
similar entitlement is | ||||||
22 | not affected by the inclusion of items (i) and (ii) of
| ||||||
23 | this paragraph in gross income for federal income tax | ||||||
24 | purposes.
This paragraph is exempt from the provisions | ||||||
25 | of Section 250;
| ||||||
26 | (R) For each taxable year ending before December | ||||||
27 | 31, 2004
years 2001 and thereafter , for the taxable | ||||||
28 | year in
which the bonus depreciation deduction (30% of | ||||||
29 | the adjusted basis of the
qualified property) is taken | ||||||
30 | on the taxpayer's federal income tax return under
| ||||||
31 | subsection (k) of Section 168 of the Internal Revenue | ||||||
32 | Code and for each
applicable taxable year thereafter, | ||||||
33 | an amount equal to "x", where:
| ||||||
34 | (1) "y" equals the amount of the depreciation |
| |||||||
| |||||||
1 | deduction taken for the
taxable year
on the | ||||||
2 | taxpayer's federal income tax return on property | ||||||
3 | for which the bonus
depreciation deduction (30% of | ||||||
4 | the adjusted basis of the qualified property)
was | ||||||
5 | taken in any year under subsection (k) of Section | ||||||
6 | 168 of the Internal
Revenue Code (for this purpose, | ||||||
7 | the depreciation deduction taken for the taxable | ||||||
8 | year on the taxpayer's federal income tax return is | ||||||
9 | deemed to take into account any depreciation | ||||||
10 | adjustment required under Section 203(e)(2)(I)) , | ||||||
11 | but not including the bonus depreciation | ||||||
12 | deduction; and
| ||||||
13 | (2) for property on which a bonus depreciation | ||||||
14 | deduction of 30% of the adjusted basis was taken,
| ||||||
15 | "x" equals "y" multiplied by 30 and then divided by | ||||||
16 | 70 (or "y"
multiplied by 0.429) , and for property | ||||||
17 | on which a bonus depreciation deduction of 50% of | ||||||
18 | the adjusted basis was taken, "x" equals "y" | ||||||
19 | multiplied by 1.0 .
| ||||||
20 | The aggregate amount deducted under this | ||||||
21 | subparagraph in all taxable
years for any one piece of | ||||||
22 | property may not exceed the amount of the bonus
| ||||||
23 | depreciation deduction (30% of the adjusted basis of | ||||||
24 | the qualified property)
taken on that property on the | ||||||
25 | taxpayer's federal income tax return under
subsection | ||||||
26 | (k) of Section 168 of the Internal Revenue Code; and
| ||||||
27 | (S) If the taxpayer reports a capital gain or loss | ||||||
28 | on the taxpayer's
federal income tax return for the | ||||||
29 | taxable year based on a sale or transfer of
property | ||||||
30 | for which the taxpayer was required in any taxable year | ||||||
31 | to make an
addition modification under subparagraph | ||||||
32 | (G-10), then an amount equal to that
addition | ||||||
33 | modification.
| ||||||
34 | The taxpayer is allowed to take the deduction under |
| |||||||
| |||||||
1 | this subparagraph
only once with respect to any one | ||||||
2 | piece of property ; .
| ||||||
3 | (T) The amount of (i) any interest income (net of | ||||||
4 | the deductions allocable thereto) taken into account | ||||||
5 | for the taxable year with respect to a transaction with | ||||||
6 | a taxpayer that is required to make an addition | ||||||
7 | modification with respect to such transaction under | ||||||
8 | Section 203(a)(2)(D-17), 203(b)(2)(E-13), | ||||||
9 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
10 | the amount of such addition modification and
(ii) any | ||||||
11 | income from intangible property (net of the deductions | ||||||
12 | allocable thereto) taken into account for the taxable | ||||||
13 | year with respect to a transaction with a taxpayer that | ||||||
14 | is required to make an addition modification with | ||||||
15 | respect to such transaction under Section | ||||||
16 | 203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or | ||||||
17 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
18 | addition modification;
| ||||||
19 | (U) An amount equal to the interest income taken | ||||||
20 | into account for the taxable year (net of the | ||||||
21 | deductions allocable thereto) with respect to | ||||||
22 | transactions with a foreign person who would be a | ||||||
23 | member of the taxpayer's unitary business group but for | ||||||
24 | the fact the foreign person's business activity | ||||||
25 | outside the United States is 80% or more of that | ||||||
26 | person's total business activity, but not to exceed the | ||||||
27 | addition modification required to be made for the same | ||||||
28 | taxable year under Section 203(c)(2)(G-12) for | ||||||
29 | interest paid, accrued, or incurred, directly or | ||||||
30 | indirectly, to the same foreign person; and
| ||||||
31 | (V) An amount equal to the income from intangible | ||||||
32 | property taken into account for the taxable year (net | ||||||
33 | of the deductions allocable thereto) with respect to | ||||||
34 | transactions with a foreign person who would be a |
| |||||||
| |||||||
1 | member of the taxpayer's unitary business group but for | ||||||
2 | the fact that the foreign person's business activity | ||||||
3 | outside the United States is 80% or more of that | ||||||
4 | person's total business activity, but not to exceed the | ||||||
5 | addition modification required to be made for the same | ||||||
6 | taxable year under Section 203(c)(2)(G-13) for | ||||||
7 | intangible expenses and costs paid, accrued, or | ||||||
8 | incurred, directly or indirectly, to the same foreign | ||||||
9 | person.
| ||||||
10 | (3) Limitation. The amount of any modification | ||||||
11 | otherwise required
under this subsection shall, under | ||||||
12 | regulations prescribed by the
Department, be adjusted by | ||||||
13 | any amounts included therein which were
properly paid, | ||||||
14 | credited, or required to be distributed, or permanently set
| ||||||
15 | aside for charitable purposes pursuant to Internal Revenue | ||||||
16 | Code Section
642(c) during the taxable year.
| ||||||
17 | (d) Partnerships.
| ||||||
18 | (1) In general. In the case of a partnership, base | ||||||
19 | income means an
amount equal to the taxpayer's taxable | ||||||
20 | income for the taxable year as
modified by paragraph (2).
| ||||||
21 | (2) Modifications. The taxable income referred to in | ||||||
22 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
23 | of the following amounts:
| ||||||
24 | (A) An amount equal to all amounts paid or accrued | ||||||
25 | to the taxpayer as
interest or dividends during the | ||||||
26 | taxable year to the extent excluded from
gross income | ||||||
27 | in the computation of taxable income;
| ||||||
28 | (B) An amount equal to the amount of tax imposed by | ||||||
29 | this Act to the
extent deducted from gross income for | ||||||
30 | the taxable year;
| ||||||
31 | (C) The amount of deductions allowed to the | ||||||
32 | partnership pursuant to
Section 707 (c) of the Internal | ||||||
33 | Revenue Code in calculating its taxable income;
|
| |||||||
| |||||||
1 | (D) An amount equal to the amount of the capital | ||||||
2 | gain deduction
allowable under the Internal Revenue | ||||||
3 | Code, to the extent deducted from
gross income in the | ||||||
4 | computation of taxable income;
| ||||||
5 | (D-5) For taxable years ending on or after December | ||||||
6 | 31, 2000 and before December 31, 2004
2001 and | ||||||
7 | thereafter , an amount equal to the
bonus depreciation | ||||||
8 | deduction (30% of the adjusted basis of the qualified
| ||||||
9 | property) taken on the taxpayer's federal income tax | ||||||
10 | return for the taxable
year under subsection (k) of | ||||||
11 | Section 168 of the Internal Revenue Code; and
| ||||||
12 | (D-6) If the taxpayer reports a capital gain or | ||||||
13 | loss on the taxpayer's
federal income tax return for | ||||||
14 | the taxable year based on a sale or transfer of
| ||||||
15 | property for which the taxpayer was required in any | ||||||
16 | taxable year to make an
addition modification under | ||||||
17 | subparagraph (D-5), then an amount equal to the
| ||||||
18 | aggregate amount of the deductions taken in all taxable | ||||||
19 | years
under subparagraph (O) with respect to that | ||||||
20 | property . ;
| ||||||
21 | The taxpayer is required to make the addition | ||||||
22 | modification under this
subparagraph
only once with | ||||||
23 | respect to any one piece of property;
| ||||||
24 | (D-7) For taxable years ending on or after December | ||||||
25 | 31, 2004, an amount equal to the amount otherwise | ||||||
26 | allowed as a deduction in computing base income for | ||||||
27 | interest paid, accrued, or incurred, directly or | ||||||
28 | indirectly, to a foreign person who would be a member | ||||||
29 | of the same unitary business group but for the fact the | ||||||
30 | foreign person's business activity outside the United | ||||||
31 | States is 80% or more of the foreign person's total | ||||||
32 | business activity. The addition modification required | ||||||
33 | by this subparagraph shall be reduced to the extent | ||||||
34 | that dividends were included in base income for the |
| |||||||
| |||||||
1 | same taxable year and received by the taxpayer or by a | ||||||
2 | member of the taxpayer's unitary business group | ||||||
3 | (including amounts included in gross income pursuant | ||||||
4 | to Sections 951 through 964 of the Internal Revenue | ||||||
5 | Code and amounts included in gross income under Section | ||||||
6 | 78 of the Internal Revenue Code) with respect to the | ||||||
7 | stock of the same person to whom the interest was paid, | ||||||
8 | accrued, or incurred. This subparagraph shall not | ||||||
9 | apply to an item of interest paid, accrued, or | ||||||
10 | incurred, directly or indirectly, to a foreign person | ||||||
11 | that is subject in a foreign country to a tax on or | ||||||
12 | measured by net income with respect to such interest;
| ||||||
13 | (D-8) For taxable years ending on or after December | ||||||
14 | 31, 2004, 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, to a foreign person | ||||||
18 | who would be a member of the same unitary business | ||||||
19 | group but for the fact that the foreign person's | ||||||
20 | business activity outside the United States is 80% or | ||||||
21 | more of that person's total business activity. The | ||||||
22 | addition modification required by this subparagraph | ||||||
23 | shall be reduced to the extent that dividends were | ||||||
24 | included in base income for the same taxable year and | ||||||
25 | received by the taxpayer or by a member of the | ||||||
26 | taxpayer's unitary business group (including amounts | ||||||
27 | included in gross income pursuant to Sections 951 | ||||||
28 | through 964 of the Internal Revenue Code and amounts | ||||||
29 | included in gross income under Section 78 of the | ||||||
30 | Internal Revenue Code) with respect to the stock of the | ||||||
31 | same person to whom the intangible expenses and costs | ||||||
32 | were directly or indirectly paid, incurred or accrued. | ||||||
33 | The preceding sentence shall not apply to the extent | ||||||
34 | that the same dividends caused a reduction to the |
| |||||||
| |||||||
1 | addition modification required under Section 203 | ||||||
2 | (d)(2)(D-7) of this Act. This subparagraph shall not | ||||||
3 | apply to any item of intangible expenses or costs paid, | ||||||
4 | accrued, or incurred, directly or indirectly, from a | ||||||
5 | transaction with a foreign person that is subject in a | ||||||
6 | foreign country to a tax on or measured by net income | ||||||
7 | with respect to such item.
As used in this | ||||||
8 | subparagraph, the term "intangible expenses and costs" | ||||||
9 | includes (1) expenses, losses, and costs for, or | ||||||
10 | related to, the direct or indirect acquisition, use, | ||||||
11 | maintenance or management, ownership, sale, exchange, | ||||||
12 | or any other disposition of intangible property; (2) | ||||||
13 | losses incurred, directly or indirectly, from | ||||||
14 | factoring transactions or discounting transactions; | ||||||
15 | (3) royalty, patent, technical, and copyright fees; | ||||||
16 | (4) licensing fees; and (5) other similar expenses and | ||||||
17 | costs. For purposes of this subparagraph, "intangible | ||||||
18 | property" includes patents, patent applications, trade | ||||||
19 | names, trademarks, service marks, copyrights, mask | ||||||
20 | works, trade secrets, and similar types of intangible | ||||||
21 | assets; and | ||||||
22 | (D-10) For taxable years ending on or after | ||||||
23 | December 31, 2004, an amount equal to the amount | ||||||
24 | excluded from gross income under Section 101(a) of the | ||||||
25 | Internal Revenue Code with respect to an | ||||||
26 | employer-owned life insurance contract, but only to | ||||||
27 | the extent that this amount exceeds the sum of the | ||||||
28 | premiums or other amounts paid for the contract. The | ||||||
29 | addition modification provided under this item does | ||||||
30 | not apply to the extent that proceeds are payable to a | ||||||
31 | member of the family (within the meaning of Section | ||||||
32 | 267(c)(4) of the Internal Revenue Code) of the insured, | ||||||
33 | to any individual who is the designated beneficiary | ||||||
34 | (other than the employer or an affiliate of the |
| |||||||
| |||||||
1 | employer) of the insured under the contract, to a trust | ||||||
2 | established for the benefit of any such person, or to | ||||||
3 | the estate of the insured, or are to be used to | ||||||
4 | purchase an equity interest in the employer (or an | ||||||
5 | affiliate) from any such person;
| ||||||
6 | and by deducting from the total so obtained the following | ||||||
7 | amounts:
| ||||||
8 | (E) The valuation limitation amount;
| ||||||
9 | (F) An amount equal to the amount of any tax | ||||||
10 | imposed by this Act which
was refunded to the taxpayer | ||||||
11 | and included in such total for the taxable year;
| ||||||
12 | (G) An amount equal to all amounts included in | ||||||
13 | taxable income as
modified by subparagraphs (A), (B), | ||||||
14 | (C) and (D) which are exempt from
taxation by this | ||||||
15 | State either by reason of its statutes or Constitution | ||||||
16 | or
by reason of
the Constitution, treaties or statutes | ||||||
17 | of the United States;
provided that, in the case of any | ||||||
18 | statute of this State or of the United States, any | ||||||
19 | treaty of the United States, the Illinois | ||||||
20 | Constitution, or the United States Constitution that | ||||||
21 | exempts income
derived from bonds or other obligations | ||||||
22 | from the tax imposed under this Act,
the amount | ||||||
23 | exempted shall be the interest net of bond premium | ||||||
24 | amortization , interest expense incurred on | ||||||
25 | indebtedness to carry the bond or other obligation, | ||||||
26 | expenses incurred in producing the income to be | ||||||
27 | deducted, and all other related expenses. The amount of | ||||||
28 | expenses to be taken into account under this provision | ||||||
29 | may not exceed the amount of income that is exempted ;
| ||||||
30 | (H) Any income of the partnership which | ||||||
31 | constitutes personal service
income as defined in | ||||||
32 | Section 1348 (b) (1) of the Internal Revenue Code (as
| ||||||
33 | in effect December 31, 1981) or a reasonable allowance | ||||||
34 | for compensation
paid or accrued for services rendered |
| |||||||
| |||||||
1 | by partners to the partnership,
whichever is greater;
| ||||||
2 | (I) An amount equal to all amounts of income | ||||||
3 | distributable to an entity
subject to the Personal | ||||||
4 | Property Tax Replacement Income Tax imposed by
| ||||||
5 | subsections (c) and (d) of Section 201 of this Act | ||||||
6 | including amounts
distributable to organizations | ||||||
7 | exempt from federal income tax by reason of
Section | ||||||
8 | 501(a) of the Internal Revenue Code;
| ||||||
9 | (J) With the exception of any amounts subtracted | ||||||
10 | under subparagraph
(G),
an amount equal to the sum of | ||||||
11 | all amounts disallowed as deductions
by (i) Sections | ||||||
12 | 171(a) (2), and 265(2) of the Internal Revenue Code of | ||||||
13 | 1954,
as now or hereafter amended, and all amounts of | ||||||
14 | expenses allocable to
interest and disallowed as | ||||||
15 | deductions by Section 265(1) of the Internal
Revenue | ||||||
16 | Code, as now or hereafter amended;
and (ii) for taxable | ||||||
17 | years
ending on or after August 13, 1999, Sections
| ||||||
18 | 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | ||||||
19 | Internal Revenue Code; the provisions of this
| ||||||
20 | subparagraph are exempt from the provisions of Section | ||||||
21 | 250;
| ||||||
22 | (K) An amount equal to those dividends included in | ||||||
23 | such total which were
paid by a corporation which | ||||||
24 | conducts business operations in an Enterprise
Zone or | ||||||
25 | zones created under the Illinois Enterprise Zone Act, | ||||||
26 | enacted by
the 82nd General Assembly, and
conducts | ||||||
27 | substantially all of its operations
in an Enterprise | ||||||
28 | Zone or Zones;
| ||||||
29 | (L) An amount equal to any contribution made to a | ||||||
30 | job training project
established pursuant to the Real | ||||||
31 | Property Tax Increment Allocation
Redevelopment Act;
| ||||||
32 | (M) An amount equal to those dividends included in | ||||||
33 | such total
that were paid by a corporation that | ||||||
34 | conducts business operations in a
federally designated |
| |||||||
| |||||||
1 | Foreign Trade Zone or Sub-Zone and that is designated a
| ||||||
2 | High Impact Business located in Illinois; provided | ||||||
3 | that dividends eligible
for the deduction provided in | ||||||
4 | subparagraph (K) of paragraph (2) of this
subsection | ||||||
5 | shall not be eligible for the deduction provided under | ||||||
6 | this
subparagraph (M);
| ||||||
7 | (N) An amount equal to the amount of the deduction | ||||||
8 | used to compute the
federal income tax credit for | ||||||
9 | restoration of substantial amounts held under
claim of | ||||||
10 | right for the taxable year pursuant to Section 1341 of | ||||||
11 | the
Internal Revenue Code of 1986;
| ||||||
12 | (O) For each taxable year ending before December | ||||||
13 | 31, 2004
years 2001 and thereafter , for the taxable | ||||||
14 | year in
which the bonus depreciation deduction (30% of | ||||||
15 | the adjusted basis of the
qualified property) is taken | ||||||
16 | on the taxpayer's federal income tax return under
| ||||||
17 | subsection (k) of Section 168 of the Internal Revenue | ||||||
18 | Code and for each
applicable taxable year thereafter, | ||||||
19 | 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 (30% of | ||||||
24 | the adjusted basis of the qualified property)
was | ||||||
25 | taken in any year under subsection (k) of Section | ||||||
26 | 168 of the Internal
Revenue Code (for this purpose, | ||||||
27 | the depreciation deduction taken for the taxable | ||||||
28 | year on the taxpayer's federal income tax return is | ||||||
29 | deemed to take into account any depreciation | ||||||
30 | adjustment required under Section 203(e)(2)(I)) , | ||||||
31 | but not including the bonus depreciation | ||||||
32 | deduction; and
| ||||||
33 | (2) for property on which a bonus depreciation | ||||||
34 | deduction of 30% of the adjusted basis was taken,
|
| |||||||
| |||||||
1 | "x" equals "y" multiplied by 30 and then divided by | ||||||
2 | 70 (or "y"
multiplied by 0.429) , and for property | ||||||
3 | on which a bonus depreciation deduction of 50% of | ||||||
4 | the adjusted basis was taken, "x" equals "y" | ||||||
5 | multiplied by 1.0 .
| ||||||
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 (30% of the adjusted basis of | ||||||
10 | the qualified property)
taken on that property on the | ||||||
11 | taxpayer's federal income tax return under
subsection | ||||||
12 | (k) of Section 168 of the Internal Revenue Code; and
| ||||||
13 | (P) If the taxpayer reports a capital gain or loss | ||||||
14 | on the taxpayer's
federal income tax return for the | ||||||
15 | taxable year based on a sale or transfer of
property | ||||||
16 | for which the taxpayer was required in any taxable year | ||||||
17 | to make an
addition modification under subparagraph | ||||||
18 | (D-5), then an amount equal to that
addition | ||||||
19 | modification.
| ||||||
20 | The taxpayer is allowed to take the deduction under | ||||||
21 | this subparagraph
only once with respect to any one | ||||||
22 | piece of property ; .
| ||||||
23 | (Q) The amount of (i) any interest income (net of | ||||||
24 | the deductions allocable thereto) taken into account | ||||||
25 | for the taxable year with respect to a transaction with | ||||||
26 | a taxpayer that is required to make an addition | ||||||
27 | modification with respect to such transaction under | ||||||
28 | Section 203(a)(2)(D-17), 203(b)(2)(E-13), | ||||||
29 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
30 | the amount of such addition modification and
(ii) any | ||||||
31 | income from intangible property (net of the deductions | ||||||
32 | allocable thereto) taken into account for the taxable | ||||||
33 | year with respect to a transaction with a taxpayer that | ||||||
34 | is required to make an addition modification with |
| |||||||
| |||||||
1 | respect to such transaction under Section | ||||||
2 | 203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or | ||||||
3 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
4 | addition modification;
| ||||||
5 | (R) An amount equal to the interest income taken | ||||||
6 | into account for the taxable year (net of the | ||||||
7 | deductions allocable thereto) with respect to | ||||||
8 | transactions with a foreign person who would be a | ||||||
9 | member of the taxpayer's unitary business group but for | ||||||
10 | the fact that the foreign person's business activity | ||||||
11 | outside the United States is 80% or more of that | ||||||
12 | person's total business activity, but not to exceed the | ||||||
13 | addition modification required to be made for the same | ||||||
14 | taxable year under Section 203(d)(2)(D-7) for interest | ||||||
15 | paid, accrued, or incurred, directly or indirectly, to | ||||||
16 | the same foreign person; and
| ||||||
17 | (S) An amount equal to the income from intangible | ||||||
18 | property taken into account for the taxable year (net | ||||||
19 | of the deductions allocable thereto) with respect to | ||||||
20 | transactions with a foreign person who would be a | ||||||
21 | member of the taxpayer's unitary business group but for | ||||||
22 | the fact that the foreign person's business activity | ||||||
23 | outside the United States is 80% or more of that | ||||||
24 | person's total business activity, but not to exceed the | ||||||
25 | addition modification required to be made for the same | ||||||
26 | taxable year under Section 203(d)(2)(D-8) for | ||||||
27 | intangible expenses and costs paid, accrued, or | ||||||
28 | incurred, directly or indirectly, to the same foreign | ||||||
29 | person.
| ||||||
30 | (e) Gross income; adjusted gross income; taxable income.
| ||||||
31 | (1) In general. Subject to the provisions of paragraph | ||||||
32 | (2) and
subsection (b) (3), for purposes of this Section | ||||||
33 | and Section 803(e), a
taxpayer's gross income, adjusted |
| |||||||
| |||||||
1 | gross income, or taxable income for
the taxable year shall | ||||||
2 | mean the amount of gross income, adjusted gross
income or | ||||||
3 | taxable income properly reportable for federal income tax
| ||||||
4 | purposes for the taxable year under the provisions of the | ||||||
5 | Internal
Revenue Code. With respect to taxable years ending | ||||||
6 | on or after December 31, 2004, for purposes of determining | ||||||
7 | the amount of gross income, adjusted gross income, or | ||||||
8 | taxable income properly reportable for federal income tax | ||||||
9 | purposes: (i) there shall be taken into account the | ||||||
10 | depreciation adjustment and the basis adjustment required | ||||||
11 | by paragraph (2)(I) of this subsection; (ii) the provisions | ||||||
12 | of Section 179 of the Internal Revenue Code apply to the | ||||||
13 | extent that the Section is elected for federal income tax | ||||||
14 | purposes with respect to "Section 179 property", except | ||||||
15 | that the dollar limitation of Section 179(b)(1) shall be | ||||||
16 | deemed to be $25,000 for all taxable years and the | ||||||
17 | reduction in limitation under Section 179(b)(2) shall be | ||||||
18 | deemed to be $200,000 for all taxable years, without any | ||||||
19 | adjustment under Section 179(b)(5); and (iii) the gross | ||||||
20 | income, adjusted gross income, or taxable income shall be | ||||||
21 | determined as if the Internal Revenue Code required that, | ||||||
22 | with respect to property placed in service in taxable years | ||||||
23 | ending on or after December 31, 2004, the depreciation | ||||||
24 | deduction determined under Section 168 of the Internal | ||||||
25 | Revenue Code must be determined under Section 168(g)(2) | ||||||
26 | (including the straight-line method and without any | ||||||
27 | special allowance under Section 168(k)). Taxable income | ||||||
28 | may be less than zero. However, for taxable
years ending on | ||||||
29 | or after December 31, 1986, net operating loss
| ||||||
30 | carryforwards from taxable years ending prior to December | ||||||
31 | 31, 1986, may not
exceed the sum of federal taxable income | ||||||
32 | for the taxable year before net
operating loss deduction, | ||||||
33 | plus the excess of addition modifications over
subtraction | ||||||
34 | modifications for the taxable year. For taxable years |
| |||||||
| |||||||
1 | ending
prior to December 31, 1986, taxable income may never | ||||||
2 | be an amount in excess
of the net operating loss for the | ||||||
3 | taxable year as defined in subsections
(c) and (d) of | ||||||
4 | Section 172 of the Internal Revenue Code, provided that | ||||||
5 | when
taxable income of a corporation (other than a | ||||||
6 | Subchapter S corporation),
trust, or estate is less than | ||||||
7 | zero and addition modifications, other than
those provided | ||||||
8 | by subparagraph (E) of paragraph (2) of subsection (b) for
| ||||||
9 | corporations or subparagraph (E) of paragraph (2) of | ||||||
10 | subsection (c) for
trusts and estates, exceed subtraction | ||||||
11 | modifications, an addition
modification must be made under | ||||||
12 | those subparagraphs for any other taxable
year to which the | ||||||
13 | taxable income less than zero (net operating loss) is
| ||||||
14 | applied under Section 172 of the Internal Revenue Code or | ||||||
15 | under
subparagraph (E) of paragraph (2) of this subsection | ||||||
16 | (e) applied in
conjunction with Section 172 of the Internal | ||||||
17 | Revenue Code.
| ||||||
18 | (2) Special rule. For purposes of paragraph (1) of this | ||||||
19 | subsection,
the taxable income properly reportable for | ||||||
20 | federal income tax purposes
shall mean:
| ||||||
21 | (A) Certain life insurance companies. In the case | ||||||
22 | of a life
insurance company subject to the tax imposed | ||||||
23 | by Section 801 of the
Internal Revenue Code, life | ||||||
24 | insurance company taxable income, plus the
amount of | ||||||
25 | distribution from pre-1984 policyholder surplus | ||||||
26 | accounts as
calculated under Section 815a of the | ||||||
27 | Internal Revenue Code;
| ||||||
28 | (B) Certain other insurance companies. In the case | ||||||
29 | of mutual
insurance companies subject to the tax | ||||||
30 | imposed by Section 831 of the
Internal Revenue Code, | ||||||
31 | insurance company taxable income;
| ||||||
32 | (C) Regulated investment companies. In the case of | ||||||
33 | a regulated
investment company subject to the tax | ||||||
34 | imposed by Section 852 of the
Internal Revenue Code, |
| |||||||
| |||||||
1 | investment company taxable income;
| ||||||
2 | (D) Real estate investment trusts. In the case of a | ||||||
3 | real estate
investment trust subject to the tax imposed | ||||||
4 | by Section 857 of the
Internal Revenue Code, real | ||||||
5 | estate investment trust taxable income;
| ||||||
6 | (E) Consolidated corporations. In the case of a | ||||||
7 | corporation which
is a member of an affiliated group of | ||||||
8 | corporations filing a consolidated
income tax return | ||||||
9 | for the taxable year for federal income tax purposes,
| ||||||
10 | taxable income determined as if such corporation had | ||||||
11 | filed a separate
return for federal income tax purposes | ||||||
12 | for the taxable year and each
preceding taxable year | ||||||
13 | for which it was a member of an affiliated group.
For | ||||||
14 | purposes of this subparagraph, the taxpayer's separate | ||||||
15 | taxable
income shall be determined as if the election | ||||||
16 | provided by Section
243(b) (2) of the Internal Revenue | ||||||
17 | Code had been in effect for all such years;
| ||||||
18 | (F) Cooperatives. In the case of a cooperative | ||||||
19 | corporation or
association, the taxable income of such | ||||||
20 | organization determined in
accordance with the | ||||||
21 | provisions of Section 1381 through 1388 of the
Internal | ||||||
22 | Revenue Code;
| ||||||
23 | (G) Subchapter S corporations. In the case of: (i) | ||||||
24 | a Subchapter S
corporation for which there is in effect | ||||||
25 | an election for the taxable year
under Section 1362 of | ||||||
26 | the Internal Revenue Code, the taxable income of such
| ||||||
27 | corporation determined in accordance with Section | ||||||
28 | 1363(b) of the Internal
Revenue Code, except that | ||||||
29 | taxable income shall take into
account those items | ||||||
30 | which are required by Section 1363(b)(1) of the
| ||||||
31 | Internal Revenue Code to be separately stated; and (ii) | ||||||
32 | a Subchapter
S corporation for which there is in effect | ||||||
33 | a federal election to opt out of
the provisions of the | ||||||
34 | Subchapter S Revision Act of 1982 and have applied
|
| |||||||
| |||||||
1 | instead the prior federal Subchapter S rules as in | ||||||
2 | effect on July 1, 1982,
the taxable income of such | ||||||
3 | corporation determined in accordance with the
federal | ||||||
4 | Subchapter S rules as in effect on July 1, 1982; and
| ||||||
5 | (H) Partnerships. In the case of a partnership, | ||||||
6 | taxable income
determined in accordance with Section | ||||||
7 | 703 of the Internal Revenue Code,
except that taxable | ||||||
8 | income shall take into account those items which are
| ||||||
9 | required by Section 703(a)(1) to be separately stated | ||||||
10 | but which would be
taken into account by an individual | ||||||
11 | in calculating his taxable income.
| ||||||
12 | (I) Depreciation and basis adjustments for all | ||||||
13 | taxpayers. | ||||||
14 | (A) Depreciation adjustment. With respect to | ||||||
15 | property placed in service in taxable years ending | ||||||
16 | before December 31, 2004, the depreciation | ||||||
17 | deduction allowed under Section 167 of the | ||||||
18 | Internal Revenue Code, with respect to property as | ||||||
19 | to which the deduction is determined under Section | ||||||
20 | 168 of the Code, shall be determined as if the | ||||||
21 | Internal Revenue Code required a switch to the | ||||||
22 | straight-line method beginning with that | ||||||
23 | property's adjusted basis for federal income tax | ||||||
24 | purposes as of the beginning of the last taxable | ||||||
25 | year beginning before December 31, 2004. | ||||||
26 | (B) Basis adjustment. With respect to property | ||||||
27 | subject to subparagraph (A) of this paragraph, the | ||||||
28 | adjustment otherwise required under Section 1016 | ||||||
29 | of the Internal Revenue Code shall take into | ||||||
30 | account the depreciation adjustment required under | ||||||
31 | subparagraph (A).
| ||||||
32 | (3) Recapture of business expenses on disposition of | ||||||
33 | asset or business. Notwithstanding any other law to the | ||||||
34 | contrary, if in prior years income from an asset or |
| |||||||
| |||||||
1 | business has been classified as business income and in a | ||||||
2 | later year is demonstrated to be non-business income, then | ||||||
3 | all expenses, without limitation, deducted in prior 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 asset | ||||||
7 | or business. Such amount shall be apportioned to Illinois | ||||||
8 | using the greater of the apportionment fraction computed | ||||||
9 | for the business under Section 304 of this Act for the | ||||||
10 | taxable year or the average of the apportionment fractions | ||||||
11 | computed for the business under Section 304 of this Act for | ||||||
12 | the taxable year and for the 2 immediately preceding | ||||||
13 | 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; plus
| ||||||
23 | (B) The lesser of (i) the sum of the pre-August 1, | ||||||
24 | 1969 appreciation
amounts (to the extent consisting of | ||||||
25 | capital gain) for all property in
respect of which such | ||||||
26 | gain was reported for federal income tax purposes
for | ||||||
27 | the taxable year, or (ii) the net capital gain for the | ||||||
28 | taxable year,
reduced in either case by any amount of | ||||||
29 | such gain included in the amount
determined under | ||||||
30 | subsection (a) (2) (F) or (c) (2) (H).
| ||||||
31 | (2) Pre-August 1, 1969 appreciation amount.
| ||||||
32 | (A) If the fair market value of property referred | ||||||
33 | to in paragraph
(1) was readily ascertainable on August |
| |||||||
| |||||||
1 | 1, 1969, the pre-August 1, 1969
appreciation amount for | ||||||
2 | such property is the lesser of (i) the excess of
such | ||||||
3 | fair market value over the taxpayer's basis (for | ||||||
4 | determining gain)
for such property on that date | ||||||
5 | (determined under the Internal Revenue
Code as in | ||||||
6 | effect on that date), or (ii) the total gain realized | ||||||
7 | and
reportable for federal income tax purposes in | ||||||
8 | respect of the sale,
exchange or other disposition of | ||||||
9 | such property.
| ||||||
10 | (B) If the fair market value of property referred | ||||||
11 | to in paragraph
(1) was not readily ascertainable on | ||||||
12 | August 1, 1969, the pre-August 1,
1969 appreciation | ||||||
13 | amount for such property is that amount which bears
the | ||||||
14 | same ratio to the total gain reported in respect of the | ||||||
15 | property for
federal income tax purposes for the | ||||||
16 | taxable year, as the number of full
calendar months in | ||||||
17 | that part of the taxpayer's holding period for the
| ||||||
18 | property ending July 31, 1969 bears to the number of | ||||||
19 | full calendar
months in the taxpayer's entire holding | ||||||
20 | period for the
property.
| ||||||
21 | (C) The Department shall prescribe such | ||||||
22 | regulations as may be
necessary to carry out the | ||||||
23 | purposes of this paragraph.
| ||||||
24 | (g) Double deductions. Unless specifically provided | ||||||
25 | otherwise, nothing
in this Section shall permit the same item | ||||||
26 | to be deducted more than once.
| ||||||
27 | (h) Legislative intention. Except as expressly provided by | ||||||
28 | this
Section there shall be no modifications or limitations on | ||||||
29 | the amounts
of income, gain, loss or deduction taken into | ||||||
30 | account in determining
gross income, adjusted gross income or | ||||||
31 | taxable income for federal income
tax purposes for the taxable | ||||||
32 | year, or in the amount of such items
entering into the |
| |||||||
| |||||||
1 | computation of base income and net income under this
Act for | ||||||
2 | such taxable year, whether in respect of property values as of
| ||||||
3 | August 1, 1969 or otherwise.
| ||||||
4 | (i) The changes made to this Section by this amendatory Act | ||||||
5 | of the 93rd General Assembly do not apply to any small business | ||||||
6 | as defined in the Small Business Advisory Act.
| ||||||
7 | (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99; | ||||||
8 | 91-357, eff.
7-29-99; 91-541, eff. 8-13-99; 91-676, eff. | ||||||
9 | 12-23-99; 91-845, eff. 6-22-00;
91-913, eff. 1-1-01; 92-16, | ||||||
10 | eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff.
8-17-01; | ||||||
11 | 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff. | ||||||
12 | 7-11-02;
92-846, eff. 8-23-02; revised 10-15-03.)
| ||||||
13 | (35 ILCS 5/205) (from Ch. 120, par. 2-205)
| ||||||
14 | Sec. 205. Exempt organizations.
| ||||||
15 | (a) Charitable, etc. organizations. The base income of an
| ||||||
16 | organization which is exempt from the federal income tax by | ||||||
17 | reason of
Section 501(a) of the Internal Revenue Code shall not | ||||||
18 | be determined
under section 203 of this Act, but shall be its | ||||||
19 | unrelated business
taxable income as determined under section | ||||||
20 | 512 of the Internal Revenue
Code, without any deduction for the | ||||||
21 | tax imposed by this Act. The
standard exemption provided by | ||||||
22 | section 204 of this Act shall not be
allowed in determining the | ||||||
23 | net income of an organization to which this
subsection applies.
| ||||||
24 | (b) Partnerships. A partnership as such shall not be | ||||||
25 | subject to
the tax imposed by subsection 201 (a) and (b) of | ||||||
26 | this Act, but shall be
subject to the replacement tax imposed | ||||||
27 | by subsection 201 (c) and (d) of
this Act and shall compute its | ||||||
28 | base income as described in subsection (d)
of Section 203 of | ||||||
29 | this Act. For taxable years ending on or after December 31, | ||||||
30 | 2004, an investment partnership, as defined in Section | ||||||
31 | 1501(a)(11.5) of this Act, shall not be subject to the tax | ||||||
32 | imposed by subsections (c) and (d) of Section 201 of this Act.
| ||||||
33 | A partnership shall file such returns and other
information at |
| |||||||
| |||||||
1 | such
time and in such manner as may be required under Article 5 | ||||||
2 | of this Act.
The partners in a partnership shall be liable for | ||||||
3 | the replacement tax imposed
by subsection 201 (c) and (d) of | ||||||
4 | this Act on such partnership, to the extent
such tax is not | ||||||
5 | paid by the partnership, as provided under the laws of Illinois
| ||||||
6 | governing the liability of partners for the obligations of a | ||||||
7 | partnership.
Persons carrying on business as partners shall be | ||||||
8 | liable for the tax
imposed by subsection 201 (a) and (b) of | ||||||
9 | this Act only in their separate
or individual capacities.
| ||||||
10 | (c) Subchapter S corporations. A Subchapter S corporation | ||||||
11 | shall not
be subject to the tax imposed by subsection 201 (a) | ||||||
12 | and
(b) of this Act but shall be subject to the replacement tax | ||||||
13 | imposed by subsection
201 (c) and (d) of this Act and shall | ||||||
14 | file such returns
and other information
at such time and in | ||||||
15 | such manner as may be required under Article 5 of this Act.
| ||||||
16 | (d) Combat zone death. An individual relieved from the | ||||||
17 | federal
income tax for any taxable year by reason of section | ||||||
18 | 692 of the Internal
Revenue Code shall not be subject to the | ||||||
19 | tax imposed by this Act for
such taxable year.
| ||||||
20 | (e) Certain trusts. A common trust fund described in | ||||||
21 | Section 584
of the Internal Revenue Code, and any other trust | ||||||
22 | to the extent that the
grantor is treated as the owner thereof | ||||||
23 | under sections 671 through 678
of the Internal Revenue Code | ||||||
24 | shall not be subject to the tax imposed by
this Act.
| ||||||
25 | (f) Certain business activities. A person not otherwise | ||||||
26 | subject to the tax
imposed by this Act shall not become subject | ||||||
27 | to the tax imposed by this Act by
reason of:
| ||||||
28 | (1) that person's ownership of tangible personal | ||||||
29 | property located at the
premises of
a printer in this State | ||||||
30 | with which the person has contracted for printing, or
| ||||||
31 | (2) activities of the person's employees or agents | ||||||
32 | located solely at the
premises of a printer and related to | ||||||
33 | quality control, distribution, or printing
services | ||||||
34 | performed by a printer in the State with which the person |
| |||||||
| |||||||
1 | has
contracted for printing.
| ||||||
2 | (g) The changes made to this Section by this amendatory Act | ||||||
3 | of the 93rd General Assembly do not apply to any small business | ||||||
4 | as defined in the Small Business Advisory Act.
| ||||||
5 | (Source: P.A. 88-361.)
| ||||||
6 | (35 ILCS 5/207) (from Ch. 120, par. 2-207)
| ||||||
7 | Sec. 207. Net Losses.
| ||||||
8 | (a) If after applying all of the (i) modifications
provided | ||||||
9 | for in paragraph (2) of Section 203(b), paragraph (2) of | ||||||
10 | Section
203(c) and paragraph (2) of Section 203(d) and (ii) the | ||||||
11 | allocation and
apportionment provisions of Article 3 of this
| ||||||
12 | Act and subsection (c) of this Section , the taxpayer's net | ||||||
13 | income results in a loss;
| ||||||
14 | (1) for any taxable year ending prior to December 31, | ||||||
15 | 1999, such loss
shall be allowed
as a carryover or | ||||||
16 | carryback deduction in the manner allowed under Section
172 | ||||||
17 | of the Internal Revenue Code;
| ||||||
18 | (2) for any taxable year ending on or after December | ||||||
19 | 31, 1999 and prior
to December 31, 2003, such loss
shall be | ||||||
20 | allowed as a carryback to each of the 2 taxable years | ||||||
21 | preceding the
taxable year of such loss and shall be a net | ||||||
22 | operating loss carryover to each of the
20 taxable years | ||||||
23 | following the taxable year of such loss; and
| ||||||
24 | (3) for any taxable year ending on or after December | ||||||
25 | 31, 2003, such loss
shall be allowed as a net operating | ||||||
26 | loss carryover to each of the 12 taxable years
following | ||||||
27 | the taxable year of such loss.
| ||||||
28 | (a-5) Election to relinquish carryback and order of | ||||||
29 | application of
losses.
| ||||||
30 | (A) For losses incurred in tax years ending prior | ||||||
31 | to December 31,
2003, the taxpayer may elect to | ||||||
32 | relinquish the entire carryback period
with respect to | ||||||
33 | such loss. Such election shall be made in the form and |
| |||||||
| |||||||
1 | manner
prescribed by the Department and shall be made | ||||||
2 | by the due date (including
extensions of time) for | ||||||
3 | filing the taxpayer's return for the taxable year in
| ||||||
4 | which such loss is incurred, and such election, once | ||||||
5 | made, shall be
irrevocable.
| ||||||
6 | (B) The entire amount of such loss shall be carried | ||||||
7 | to the earliest
taxable year to which such loss may be | ||||||
8 | carried. The amount of such loss which
shall be carried | ||||||
9 | to each of the other taxable years shall be the excess, | ||||||
10 | if
any, of the amount of such loss over the sum of the | ||||||
11 | deductions for carryback or
carryover of such loss | ||||||
12 | allowable for each of the prior taxable years to which
| ||||||
13 | such loss may be carried.
| ||||||
14 | (b) Any loss determined under subsection (a) of this | ||||||
15 | Section must be carried
back or carried forward in the same | ||||||
16 | manner for purposes of subsections (a)
and (b) of Section 201 | ||||||
17 | of this Act as for purposes of subsections (c) and
(d) of | ||||||
18 | Section 201 of this Act.
| ||||||
19 | (c) Notwithstanding any other provision of this Act, for | ||||||
20 | each taxable year ending on or after December 31, 2004, for | ||||||
21 | purposes of computing the loss for the taxable year under | ||||||
22 | subsection (a) of this Section and the deduction taken into | ||||||
23 | account for the taxable year for a net operating loss carryover | ||||||
24 | under paragraphs (1), (2), and (3) of subsection (a) of this | ||||||
25 | Section, the loss and net operating loss carryover shall be | ||||||
26 | reduced in an amount equal to the reduction to the net | ||||||
27 | operating loss and net operating loss carryover to the taxable | ||||||
28 | year, respectively, required under Section 108(b)(2)(A) of the | ||||||
29 | Internal Revenue Code, multiplied by a fraction, the numerator | ||||||
30 | of which is the amount of discharge of indebtedness income that | ||||||
31 | is excluded from gross income for the taxable year (but only if | ||||||
32 | the taxable year ends on or after December 31, 2004) under | ||||||
33 | Section 108(a) of the Internal Revenue Code and that would have | ||||||
34 | been allocated and apportioned to this State under Article 3 of |
| |||||||
| |||||||
1 | this Act but for that exclusion, and the denominator of which | ||||||
2 | is the total amount of discharge of indebtedness income | ||||||
3 | excluded from gross income under Section 108(a) of the Internal | ||||||
4 | Revenue Code for the taxable year. The reduction required under | ||||||
5 | this subsection (c) shall be made after the determination of | ||||||
6 | Illinois net income for the taxable year in which the | ||||||
7 | indebtedness is discharged.
| ||||||
8 | (d) The changes made to this Section by this amendatory Act | ||||||
9 | of the 93rd General Assembly do not apply to any small business | ||||||
10 | as defined in the Small Business Advisory Act.
| ||||||
11 | (Source: P.A. 93-29, eff. 6-20-03.)
| ||||||
12 | (35 ILCS 5/304) (from Ch. 120, par. 3-304)
| ||||||
13 | Sec. 304. Business income of persons other than residents.
| ||||||
14 | (a) In general. The business income of a person other than | ||||||
15 | a
resident shall be allocated to this State if such person's | ||||||
16 | business
income is derived solely from this State. If a person | ||||||
17 | other than a
resident derives business income from this State | ||||||
18 | and one or more other
states, then, for tax years ending on or | ||||||
19 | before December 30, 1998, and
except as otherwise provided by | ||||||
20 | this Section, such
person's business income shall be | ||||||
21 | apportioned to this State by
multiplying the income by a | ||||||
22 | fraction, the numerator of which is the sum
of the property | ||||||
23 | factor (if any), the payroll factor (if any) and 200% of the
| ||||||
24 | sales factor (if any), and the denominator of which is 4 | ||||||
25 | reduced by the
number of factors other than the sales factor | ||||||
26 | which have a denominator
of zero and by an additional 2 if the | ||||||
27 | sales factor has a denominator of zero.
For tax years ending on | ||||||
28 | or after December 31, 1998, and except as otherwise
provided by | ||||||
29 | this Section, persons other than
residents who derive business | ||||||
30 | income from this State and one or more other
states shall | ||||||
31 | compute their apportionment factor by weighting their | ||||||
32 | property,
payroll, and sales factors as provided in
subsection | ||||||
33 | (h) of this Section.
|
| |||||||
| |||||||
1 | (1) Property factor.
| ||||||
2 | (A) The property factor is a fraction, the numerator of | ||||||
3 | which is the
average value of the person's real and | ||||||
4 | tangible personal property owned
or rented and used in the | ||||||
5 | trade or business in this State during the
taxable year and | ||||||
6 | the denominator of which is the average value of all
the | ||||||
7 | person's real and tangible personal property owned or | ||||||
8 | rented and
used in the trade or business during the taxable | ||||||
9 | year.
| ||||||
10 | (B) Property owned by the person is valued at its | ||||||
11 | original cost.
Property rented by the person is valued at 8 | ||||||
12 | times the net annual rental
rate. Net annual rental rate is | ||||||
13 | the annual rental rate paid by the
person less any annual | ||||||
14 | rental rate received by the person from
sub-rentals.
| ||||||
15 | (C) The average value of property shall be determined | ||||||
16 | by averaging
the values at the beginning and ending of the | ||||||
17 | taxable year but the
Director may require the averaging of | ||||||
18 | monthly values during the taxable
year if reasonably | ||||||
19 | required to reflect properly the average value of the
| ||||||
20 | person's property.
| ||||||
21 | (2) Payroll factor.
| ||||||
22 | (A) The payroll factor is a fraction, the numerator of | ||||||
23 | which is the
total amount paid in this State during the | ||||||
24 | taxable year by the person
for compensation, and the | ||||||
25 | denominator of which is the total compensation
paid | ||||||
26 | everywhere during the taxable year.
| ||||||
27 | (B) Compensation is paid in this State if:
| ||||||
28 | (i) The individual's service is performed entirely | ||||||
29 | within this
State;
| ||||||
30 | (ii) The individual's service is performed both | ||||||
31 | within and without
this State, but the service | ||||||
32 | performed without this State is incidental
to the | ||||||
33 | individual's service performed within this State; or
| ||||||
34 | (iii) Some of the service is performed within this |
| |||||||
| |||||||
1 | State and either
the base of operations, or if there is | ||||||
2 | no base of operations, the place
from which the service | ||||||
3 | is directed or controlled is within this State,
or the | ||||||
4 | base of operations or the place from which the service | ||||||
5 | is
directed or controlled is not in any state in which | ||||||
6 | some part of the
service is performed, but the | ||||||
7 | individual's residence is in this State.
| ||||||
8 | Beginning with taxable years ending on or after | ||||||
9 | December 31, 1992, for
residents of states that impose a | ||||||
10 | comparable tax liability on residents of this State, for
| ||||||
11 | purposes of item (i) of this paragraph (B), in the case of | ||||||
12 | persons who
perform personal services under personal | ||||||
13 | service contracts for sports
performances, services by | ||||||
14 | that person at a sporting event taking place in
Illinois | ||||||
15 | shall be deemed to be a performance entirely within this | ||||||
16 | State.
| ||||||
17 | (3) Sales factor.
| ||||||
18 | (A) The sales factor is a fraction, the numerator of | ||||||
19 | which is the
total sales of the person in this State during | ||||||
20 | the taxable year, and the
denominator of which is the total | ||||||
21 | sales of the person everywhere during
the taxable year.
| ||||||
22 | (B) Sales of tangible personal property are in this | ||||||
23 | State if:
| ||||||
24 | (i) The property is delivered or shipped to a | ||||||
25 | purchaser, other than
the United States government, | ||||||
26 | within this State regardless of the f. o.
b. point or | ||||||
27 | other conditions of the sale; or
| ||||||
28 | (ii) The property is shipped from an office, store, | ||||||
29 | warehouse,
factory or other place of storage in this | ||||||
30 | State and either the purchaser
is the United States | ||||||
31 | government or the person is not taxable in the
state of | ||||||
32 | the purchaser; provided, however, that premises owned | ||||||
33 | or leased
by a person who has independently contracted | ||||||
34 | with the seller for the printing
of newspapers, |
| |||||||
| |||||||
1 | periodicals or books shall not be deemed to be an | ||||||
2 | office,
store, warehouse, factory or other place of | ||||||
3 | storage for purposes of this
Section. For taxable years | ||||||
4 | ending before December 31, 2004, sales
Sales of | ||||||
5 | tangible personal property are not in this State if the
| ||||||
6 | seller and purchaser would be members of the same | ||||||
7 | unitary business group
but for the fact that either the | ||||||
8 | seller or purchaser is a person with 80%
or more of | ||||||
9 | total business activity outside of the United States | ||||||
10 | and the
property is purchased for resale.
| ||||||
11 | (B-1) Patents, copyrights, trademarks, and similar | ||||||
12 | items of intangible
personal property.
| ||||||
13 | (i) Gross receipts from the licensing, sale, or | ||||||
14 | other disposition of a
patent, copyright, trademark, | ||||||
15 | or similar item of intangible personal property
are in | ||||||
16 | this State to the extent the item is utilized in this | ||||||
17 | State during the
year the gross receipts are included | ||||||
18 | in gross income.
| ||||||
19 | (ii) Place of utilization.
| ||||||
20 | (I) A patent is utilized in a state to the | ||||||
21 | extent that it is employed
in production, | ||||||
22 | fabrication, manufacturing, or other processing in | ||||||
23 | the state or
to the extent that a patented product | ||||||
24 | is produced in the state. If a patent is
utilized | ||||||
25 | in
more than one state, the extent to which it is | ||||||
26 | utilized in any one state shall
be a fraction equal | ||||||
27 | to the gross receipts of the licensee or purchaser | ||||||
28 | from
sales or leases of items produced, | ||||||
29 | fabricated, manufactured, or processed
within that | ||||||
30 | state using the patent and of patented items | ||||||
31 | produced within that
state, divided by the total of | ||||||
32 | such gross receipts for all states in which the
| ||||||
33 | patent is utilized.
| ||||||
34 | (II) A copyright is utilized in a state to the |
| |||||||
| |||||||
1 | extent that printing or
other publication | ||||||
2 | originates in the state. If a copyright is utilized | ||||||
3 | in more
than one state, the extent to which it is | ||||||
4 | utilized in any one state shall be a
fraction equal | ||||||
5 | to the gross receipts from sales or licenses of | ||||||
6 | materials
printed or published in that state | ||||||
7 | divided by the total of such gross receipts
for all | ||||||
8 | states in which the copyright is utilized.
| ||||||
9 | (III) Trademarks and other items of intangible | ||||||
10 | personal property
governed by this paragraph (B-1) | ||||||
11 | are utilized in the state in which the
commercial | ||||||
12 | domicile of the licensee or purchaser is located.
| ||||||
13 | (iii) If the state of utilization of an item of | ||||||
14 | property governed by
this paragraph (B-1) cannot be | ||||||
15 | determined from the taxpayer's books and
records or | ||||||
16 | from the books and records of any person related to the | ||||||
17 | taxpayer
within the meaning of Section 267(b) of the | ||||||
18 | Internal Revenue Code, 26 U.S.C.
267, the gross
| ||||||
19 | receipts attributable to that item shall be excluded | ||||||
20 | from both the numerator
and the denominator of the | ||||||
21 | sales factor.
| ||||||
22 | (B-2) Gross receipts from the license, sale, or other | ||||||
23 | disposition of
patents, copyrights, trademarks, and | ||||||
24 | similar items of intangible personal
property may be | ||||||
25 | included in the numerator or denominator of the sales | ||||||
26 | factor
only if gross receipts from licenses, sales, or | ||||||
27 | other disposition of such items
comprise more than 50% of | ||||||
28 | the taxpayer's total gross receipts included in gross
| ||||||
29 | income during the tax year and during each of the 2 | ||||||
30 | immediately preceding tax
years; provided that, when a | ||||||
31 | taxpayer is a member of a unitary business group,
such | ||||||
32 | determination shall be made on the basis of the gross | ||||||
33 | receipts of the
entire unitary business group.
| ||||||
34 | (C) For taxable years ending before December 31, 2004, |
| |||||||
| |||||||
1 | sales
Sales , other than sales governed by paragraphs (B) ,
| ||||||
2 | and (B-1) , and (B-2) , are in
this State if:
| ||||||
3 | (i) The income-producing activity is performed in | ||||||
4 | this State; or
| ||||||
5 | (ii) The income-producing activity is performed | ||||||
6 | both within and
without this State and a greater | ||||||
7 | proportion of the income-producing
activity is | ||||||
8 | performed within this State than without this State, | ||||||
9 | based
on performance costs.
| ||||||
10 | (C-5) For taxable years ending on or after December 31, | ||||||
11 | 2004, sales, other than sales governed by paragraphs (B), | ||||||
12 | (B-1), and (B-2), are in this State if the purchaser is in | ||||||
13 | this State or the sale is otherwise attributable to this | ||||||
14 | State's marketplace. The following examples are | ||||||
15 | illustrative: | ||||||
16 | (i) Sales from the sale or lease of real property | ||||||
17 | are in this State if the property is located in this | ||||||
18 | State. | ||||||
19 | (ii) Sales from the lease or rental of tangible | ||||||
20 | personal property are in this State if the property is | ||||||
21 | located in this State during the rental period. Sales | ||||||
22 | from the lease or rental of tangible personal property | ||||||
23 | that is characteristically moving property, including, | ||||||
24 | but not limited to, motor vehicles, rolling stock, | ||||||
25 | aircraft, vessels, or mobile equipment are in this | ||||||
26 | State to the extent that the property is used in this | ||||||
27 | State. | ||||||
28 | (iii) Sales of intangible personal property are in | ||||||
29 | this State if the purchaser uses or realizes benefit | ||||||
30 | from the property in this State. If the purchaser uses | ||||||
31 | or realizes benefit from the the property both within | ||||||
32 | and without this State, the gross receipts from the | ||||||
33 | sale shall be divided among those states having | ||||||
34 | jurisdiction to tax the sale in proportion to the use |
| |||||||
| |||||||
1 | or benefit in each state. If the proportionate use or | ||||||
2 | benefit in this State cannot be determined, the sale | ||||||
3 | shall be excluded from both the numerator and the | ||||||
4 | denominator of the sales factor. | ||||||
5 | (iv) Sales of services are in this State if the | ||||||
6 | benefit of the service is enjoyed or realized in this | ||||||
7 | State. If the benefit of the service is enjoyed or | ||||||
8 | realized both within and without this State, the gross | ||||||
9 | receipts from the sale shall be divided among those | ||||||
10 | states having jurisdiction to tax the sale in | ||||||
11 | proportion to the benefit of service enjoyed or | ||||||
12 | realized in each state. If the proportionate benefit in | ||||||
13 | this State cannot be determined, the sale shall be | ||||||
14 | excluded from both the numerator and the denominator of | ||||||
15 | the sales factor. The Department may adopt rules | ||||||
16 | prescribing where the benefit of specific types of | ||||||
17 | service, including, but not limited to, | ||||||
18 | telecommunications, broadcast, cable, advertising, | ||||||
19 | publishing, and utility service, is enjoyed or | ||||||
20 | realized.
| ||||||
21 | (D) For taxable years ending on or after December 31, | ||||||
22 | 1995, the following
items of income shall not be included | ||||||
23 | in the numerator or denominator of the
sales factor: | ||||||
24 | dividends; amounts included under Section 78 of the | ||||||
25 | Internal
Revenue Code; and Subpart F income as defined in | ||||||
26 | Section 952 of the Internal
Revenue Code.
No inference | ||||||
27 | shall be drawn from the enactment of this paragraph (D) in
| ||||||
28 | construing this Section for taxable years ending before | ||||||
29 | December 31, 1995.
| ||||||
30 | (E) Paragraphs (B-1) and (B-2) shall apply to tax years | ||||||
31 | ending on or
after December 31, 1999, provided that a | ||||||
32 | taxpayer may elect to apply the
provisions of these | ||||||
33 | paragraphs to prior tax years. Such election shall be made
| ||||||
34 | in the form and manner prescribed by the Department, shall |
| |||||||
| |||||||
1 | be irrevocable, and
shall apply to all tax years; provided | ||||||
2 | that, if a taxpayer's Illinois income
tax liability for any | ||||||
3 | tax year, as assessed under Section 903 prior to January
1, | ||||||
4 | 1999, was computed in a manner contrary to the provisions | ||||||
5 | of paragraphs
(B-1) or (B-2), no refund shall be payable to | ||||||
6 | the taxpayer for that tax year to
the extent such refund is | ||||||
7 | the result of applying the provisions of paragraph
(B-1) or | ||||||
8 | (B-2) retroactively. In the case of a unitary business | ||||||
9 | group, such
election shall apply to all members of such | ||||||
10 | group for every tax year such group
is in existence, but | ||||||
11 | shall not apply to any taxpayer for any period during
which | ||||||
12 | that taxpayer is not a member of such group.
| ||||||
13 | (b) Insurance companies.
| ||||||
14 | (1) In general. Except as otherwise
provided by | ||||||
15 | paragraph (2), business income of an insurance company for | ||||||
16 | a
taxable year shall be apportioned to this State by | ||||||
17 | multiplying such
income by a fraction, the numerator of | ||||||
18 | which is the direct premiums
written for insurance upon | ||||||
19 | property or risk in this State, and the
denominator of | ||||||
20 | which is the direct premiums written for insurance upon
| ||||||
21 | property or risk everywhere. For purposes of this | ||||||
22 | subsection, the term
"direct premiums written" means the | ||||||
23 | total amount of direct premiums
written, assessments and | ||||||
24 | annuity considerations , and surplus line contracts, but | ||||||
25 | excluding deposit-type funds, as reported for the
taxable | ||||||
26 | year on the annual statement filed by the company with the
| ||||||
27 | Illinois Director of Insurance in the form approved by the | ||||||
28 | National
Convention of Insurance Commissioners as filed by | ||||||
29 | the taxpayer with the Illinois Department of Insurance or, | ||||||
30 | if no report is filed with the Illinois Department of | ||||||
31 | Insurance, as filed by the taxpayer with its state of | ||||||
32 | domicile. If no such annual report is filed with any of the | ||||||
33 | United States for a particular year, "direct premiums | ||||||
34 | written" shall be determined by applying the instructions |
| |||||||
| |||||||
1 | to the Illinois annual report form for that year
or such | ||||||
2 | other form as may be
prescribed in lieu thereof .
| ||||||
3 | (2) Reinsurance. If the principal source of premiums | ||||||
4 | written by an
insurance company consists of premiums for | ||||||
5 | reinsurance accepted by it,
the business income of such | ||||||
6 | company shall be apportioned to this State
by multiplying | ||||||
7 | such income by a fraction, the numerator of which is the
| ||||||
8 | sum of (i) direct premiums written for insurance upon | ||||||
9 | property or risk
in this State, plus (ii) premiums written | ||||||
10 | for reinsurance accepted in
respect of property or risk in | ||||||
11 | this State, and the denominator of which
is the sum of | ||||||
12 | (iii) direct premiums written for insurance upon property
| ||||||
13 | or risk everywhere, plus (iv) premiums written for | ||||||
14 | reinsurance accepted
in respect of property or risk | ||||||
15 | everywhere. For taxable years ending before December 31, | ||||||
16 | 2004, for purposes of this
paragraph, premiums written for | ||||||
17 | reinsurance accepted in respect of
property or risk in this | ||||||
18 | State, whether or not otherwise determinable,
may, at the | ||||||
19 | election of the company, be determined on the basis of the
| ||||||
20 | proportion which premiums written for reinsurance accepted | ||||||
21 | from
companies commercially domiciled in Illinois bears to | ||||||
22 | premiums written
for reinsurance accepted from all | ||||||
23 | sources, or, alternatively, in the
proportion which the sum | ||||||
24 | of the direct premiums written for insurance
upon property | ||||||
25 | or risk in this State by each ceding company from which
| ||||||
26 | reinsurance is accepted bears to the sum of the total | ||||||
27 | direct premiums
written by each such ceding company for the | ||||||
28 | taxable year.
| ||||||
29 | (c) Financial organizations.
| ||||||
30 | (1) In general. For taxable years ending before | ||||||
31 | December 31, 2004, business
Business income of a financial
| ||||||
32 | organization shall be apportioned to this State by | ||||||
33 | multiplying such
income by a fraction, the numerator of | ||||||
34 | which is its business income from
sources within this |
| |||||||
| |||||||
1 | State, and the denominator of which is its business
income | ||||||
2 | from all sources. For the purposes of this subsection, the
| ||||||
3 | business income of a financial organization from sources | ||||||
4 | within this
State is the sum of the amounts referred to in | ||||||
5 | subparagraphs (A) through
(E) following, but excluding the | ||||||
6 | adjusted income of an international banking
facility as | ||||||
7 | determined in paragraph (2):
| ||||||
8 | (A) Fees, commissions or other compensation for | ||||||
9 | financial services
rendered within this State;
| ||||||
10 | (B) Gross profits from trading in stocks, bonds or | ||||||
11 | other securities
managed within this State;
| ||||||
12 | (C) Dividends, and interest from Illinois | ||||||
13 | customers, which are received
within this State;
| ||||||
14 | (D) Interest charged to customers at places of | ||||||
15 | business maintained
within this State for carrying | ||||||
16 | debit balances of margin accounts,
without deduction | ||||||
17 | of any costs incurred in carrying such accounts; and
| ||||||
18 | (E) Any other gross income resulting from the | ||||||
19 | operation as a
financial organization within this | ||||||
20 | State. In computing the amounts
referred to in | ||||||
21 | paragraphs (A) through (E) of this subsection, any | ||||||
22 | amount
received by a member of an affiliated group | ||||||
23 | (determined under Section
1504(a) of the Internal | ||||||
24 | Revenue Code but without reference to whether
any such | ||||||
25 | corporation is an "includible corporation" under | ||||||
26 | Section
1504(b) of the Internal Revenue Code) from | ||||||
27 | another member of such group
shall be included only to | ||||||
28 | the extent such amount exceeds expenses of the
| ||||||
29 | recipient directly related thereto.
| ||||||
30 | (2) International Banking Facility. For taxable years | ||||||
31 | ending before December 31, 2004:
| ||||||
32 | (A) Adjusted Income. The adjusted income of an | ||||||
33 | international banking
facility is its income reduced | ||||||
34 | by the amount of the floor amount.
|
| |||||||
| |||||||
1 | (B) Floor Amount. The floor amount shall be the | ||||||
2 | amount, if any,
determined
by multiplying the income of | ||||||
3 | the international banking facility by a fraction,
not | ||||||
4 | greater than one, which is determined as follows:
| ||||||
5 | (i) The numerator shall be:
| ||||||
6 | The average aggregate, determined on a | ||||||
7 | quarterly basis, of the
financial
organization's | ||||||
8 | loans to banks in foreign countries, to foreign | ||||||
9 | domiciled
borrowers (except where secured | ||||||
10 | primarily by real estate) and to foreign
| ||||||
11 | governments and other foreign official | ||||||
12 | institutions, as reported for its
branches, | ||||||
13 | agencies and offices within the state on its | ||||||
14 | "Consolidated Report
of Condition", Schedule A, | ||||||
15 | Lines 2.c., 5.b., and 7.a., which was filed with
| ||||||
16 | the Federal Deposit Insurance Corporation and | ||||||
17 | other regulatory authorities,
for the year 1980, | ||||||
18 | minus
| ||||||
19 | The average aggregate, determined on a | ||||||
20 | quarterly basis, of such loans
(other
than loans of | ||||||
21 | an international banking facility), as reported by | ||||||
22 | the financial
institution for its branches, | ||||||
23 | agencies and offices within the state, on
the | ||||||
24 | corresponding Schedule and lines of the | ||||||
25 | Consolidated Report of Condition
for the current | ||||||
26 | taxable year, provided, however, that in no case | ||||||
27 | shall the
amount determined in this clause (the | ||||||
28 | subtrahend) exceed the amount determined
in the | ||||||
29 | preceding clause (the minuend); and
| ||||||
30 | (ii) the denominator shall be the average | ||||||
31 | aggregate, determined on a
quarterly basis, of the | ||||||
32 | international banking facility's loans to banks in
| ||||||
33 | foreign countries, to foreign domiciled borrowers | ||||||
34 | (except where secured
primarily by real estate) |
| |||||||
| |||||||
1 | and to foreign governments and other foreign
| ||||||
2 | official institutions, which were recorded in its | ||||||
3 | financial accounts for
the current taxable year.
| ||||||
4 | (C) Change to Consolidated Report of Condition and | ||||||
5 | in Qualification.
In the event the Consolidated Report | ||||||
6 | of Condition which is filed with the
Federal Deposit | ||||||
7 | Insurance Corporation and other regulatory authorities | ||||||
8 | is
altered so that the information required for | ||||||
9 | determining the floor amount
is not found on Schedule | ||||||
10 | A, lines 2.c., 5.b. and 7.a., the financial
institution | ||||||
11 | shall notify the Department and the Department may, by
| ||||||
12 | regulations or otherwise, prescribe or authorize the | ||||||
13 | use of an alternative
source for such information. The | ||||||
14 | financial institution shall also notify
the Department | ||||||
15 | should its international banking facility fail to | ||||||
16 | qualify as
such, in whole or in part, or should there | ||||||
17 | be any amendment or change to
the Consolidated Report | ||||||
18 | of Condition, as originally filed, to the extent
such | ||||||
19 | amendment or change alters the information used in | ||||||
20 | determining the floor
amount.
| ||||||
21 | (3) For taxable years ending on or after December 31, | ||||||
22 | 2004, the business income of a financial organization shall | ||||||
23 | be apportioned to this State by multiplying such income by | ||||||
24 | a fraction, the numerator of which is its gross receipts | ||||||
25 | from sources in this State or otherwise attributable to | ||||||
26 | this State's marketplace and the denominator of which is | ||||||
27 | its gross receipts everywhere during the taxable year. | ||||||
28 | "Gross receipts" for purposes of this subparagraph (3) | ||||||
29 | means gross income, including net taxable gain on | ||||||
30 | disposition of assets, including securities and money | ||||||
31 | market instruments, when derived from transactions and | ||||||
32 | activities in the regular course of the financial | ||||||
33 | organization's trade or business. The following examples | ||||||
34 | are illustrative:
|
| |||||||
| |||||||
1 | (i) Receipts from the lease or rental of real or | ||||||
2 | tangible personal property are in this State if the | ||||||
3 | property is located in this State during the rental | ||||||
4 | period. Receipts from the lease or rental of tangible | ||||||
5 | personal property that is characteristically moving | ||||||
6 | property, including, but not limited to, motor | ||||||
7 | vehicles, rolling stock, aircraft, vessels, or mobile | ||||||
8 | equipment are in this State to the extent that the | ||||||
9 | property is used in this State. | ||||||
10 | (ii) Interest income, commissions, fees, gains on | ||||||
11 | disposition, and other receipts from assets in the | ||||||
12 | nature of loans that are secured primarily by real | ||||||
13 | estate or tangible personal property are attributable | ||||||
14 | to this State's marketplace if the security is located | ||||||
15 | in this State. | ||||||
16 | (iii) Interest income, commissions, fees, gains on | ||||||
17 | disposition, and other receipts from consumer loans | ||||||
18 | that are not secured by real or tangible personal | ||||||
19 | property are this State if the debtor is a resident of | ||||||
20 | this State. | ||||||
21 | (iv) Interest income, commissions, fees, gains on | ||||||
22 | disposition, and other receipts from commercial loans | ||||||
23 | and installment obligations that are not unsecured by | ||||||
24 | real or tangible personal property are in this State if | ||||||
25 | the proceeds of the loan are to be applied in this | ||||||
26 | State. If it cannot be determined where the funds are | ||||||
27 | to be applied, the income and receipts are attributable | ||||||
28 | to this State's marketplace if the office of the | ||||||
29 | borrower from which the loan was procured in the | ||||||
30 | regular course of business is located in this State. If | ||||||
31 | the location of this office cannot be determined, such | ||||||
32 | receipts shall be excluded from the numerator and | ||||||
33 | denominator of the sales factor.
| ||||||
34 | (v) Interest income, fees, gains on disposition, |
| |||||||
| |||||||
1 | service charges, and other receipts from credit card | ||||||
2 | receivables are in this State if the card charges are | ||||||
3 | regularly billed to a customer in this State. | ||||||
4 | (vi) Receipts from the performance of fiduciary | ||||||
5 | and other services are in this State if the benefit of | ||||||
6 | the service is enjoyed or realized in this State. If | ||||||
7 | the benefit of the service is enjoyed or realized both | ||||||
8 | within and without this State, the gross receipts from | ||||||
9 | the sale shall be divided among those states having | ||||||
10 | jurisdiction to tax the sale in proportion to the | ||||||
11 | benefit of service enjoyed or realized in each state. | ||||||
12 | If the proportionate benefit in this State cannot be | ||||||
13 | determined, the sale shall be excluded from both the | ||||||
14 | numerator and the denominator of the gross receipts | ||||||
15 | factor. | ||||||
16 | (vii) Receipts from the issuance of travelers | ||||||
17 | checks and money orders are in this State if the checks | ||||||
18 | and money orders are issued from a location within this | ||||||
19 | State. | ||||||
20 | (viii) In the case of a financial organization that | ||||||
21 | accepts deposits, receipts from investments and from | ||||||
22 | money market instruments are apportioned to this State | ||||||
23 | based on the ratio that the total deposits of the | ||||||
24 | financial organization (including all members of the | ||||||
25 | financial organization's unitary group) from this | ||||||
26 | State, its residents, any business with an office or | ||||||
27 | other place of business in this State, and its | ||||||
28 | political subdivisions, agencies, and | ||||||
29 | instrumentalities bear to total deposits everywhere. | ||||||
30 | For purposes of this subdivision, deposits must be | ||||||
31 | attributed to this State under the preceding sentence, | ||||||
32 | whether or not the deposits are accepted or maintained | ||||||
33 | by the financial organization at locations within this | ||||||
34 | State. In the case of a financial organization that |
| |||||||
| |||||||
1 | does not accept deposits, receipts from investments in | ||||||
2 | securities and from money market instruments shall be | ||||||
3 | excluded from the numerator and the denominator of the | ||||||
4 | gross receipts factor.
| ||||||
5 | (4) As used in subparagraph (3), "deposit" includes but | ||||||
6 | is not limited to: | ||||||
7 | (i) the unpaid balance of money or its equivalent | ||||||
8 | received or held by a financial institution in the | ||||||
9 | usual course of business and for which it has given or | ||||||
10 | is obligated to give credit, either conditionally or | ||||||
11 | unconditionally, to a commercial, checking, savings, | ||||||
12 | time, or thrift account whether or not advance notice | ||||||
13 | is required to withdraw the credited funds, or which is | ||||||
14 | evidenced by its certificate of deposit, thrift | ||||||
15 | certificate, investment certificate, or certificate of | ||||||
16 | indebtedness, or other similar name, or a check or | ||||||
17 | draft drawn against a deposit account and certified by | ||||||
18 | the financial organization, or a letter of credit or a | ||||||
19 | traveler's check on which the financial organization | ||||||
20 | is primarily liable. However, without limiting the | ||||||
21 | generality of the term "money or its equivalent", any | ||||||
22 | such account or instrument must be regarded as | ||||||
23 | evidencing the receipt of the equivalent of money when | ||||||
24 | credited or issued in exchange for checks or drafts or | ||||||
25 | for a promissory note upon which the person obtaining | ||||||
26 | the credit or instrument is primarily or secondarily | ||||||
27 | liable, or for a charge against a deposit account, or | ||||||
28 | in settlement of checks, drafts, or other instruments | ||||||
29 | forwarded to the bank for collection; | ||||||
30 | (ii) trust funds received or held by the financial | ||||||
31 | organization, whether held in the trust department or | ||||||
32 | held or deposited in any other department of the | ||||||
33 | financial organization; | ||||||
34 | (iii) money received or held by a financial |
| |||||||
| |||||||
1 | organization, or the credit given for money or its | ||||||
2 | equivalent received or held by a financial | ||||||
3 | organization, in the usual course of business for a | ||||||
4 | special or specific purpose, regardless of the legal | ||||||
5 | relationship so established. Under this paragraph, | ||||||
6 | "deposit" includes, but is not limited to, escrow | ||||||
7 | funds, funds held as security for an obligation due to | ||||||
8 | the financial organization or others, including funds | ||||||
9 | held as dealers reserves, or for securities loaned by | ||||||
10 | the financial organization, funds deposited by a | ||||||
11 | debtor to meet maturing obligations, funds deposited | ||||||
12 | as advance payment on subscriptions to United States | ||||||
13 | government securities, funds held for distribution or | ||||||
14 | purchase of securities, funds held to meet its | ||||||
15 | acceptances or letters of credit, and withheld taxes. | ||||||
16 | It does not include funds received by the financial | ||||||
17 | organization for immediate application to the | ||||||
18 | reduction of an indebtedness to the receiving | ||||||
19 | financial organization, or under condition that the | ||||||
20 | receipt of the funds immediately reduces or | ||||||
21 | extinguishes the indebtedness; | ||||||
22 | (iv) outstanding drafts, including advice of | ||||||
23 | another financial organization, cashier's checks, | ||||||
24 | money orders, or other officer's checks issued in the | ||||||
25 | usual course of business for any purpose, but not | ||||||
26 | including those issued in payment for services, | ||||||
27 | dividends, or purchases or other costs or expenses of | ||||||
28 | the financial organization itself; and | ||||||
29 | (v) money or its equivalent held as a credit | ||||||
30 | balance by a financial organization on behalf of its | ||||||
31 | customer if the entity is engaged in soliciting and | ||||||
32 | holding such balances in the regular course of its | ||||||
33 | business.
| ||||||
34 | (5) As used in subparagraph (3), "money market |
| |||||||
| |||||||
1 | instruments" includes but is not limited to: | ||||||
2 | (i) Interest-bearing deposits, federal funds sold | ||||||
3 | and securities purchased under agreements to resell, | ||||||
4 | commercial paper, banker's acceptances, and purchased | ||||||
5 | certificates of deposit and similar instruments to the | ||||||
6 | extent that the instruments are reflected as assets | ||||||
7 | under generally accepted accounting principles. | ||||||
8 | "Securities" means United States Treasury | ||||||
9 | securities, obligations of United States government | ||||||
10 | agencies and corporations, obligations of state and | ||||||
11 | political subdivisions, corporate stock, bonds, and | ||||||
12 | other securities, participations in securities backed | ||||||
13 | by mortgages held by United States or state government | ||||||
14 | agencies, loan-backed securities and similar | ||||||
15 | investments to the extent the investments are | ||||||
16 | reflected as assets under generally accepted | ||||||
17 | accounting principles. | ||||||
18 | (ii) For purposes of subparagraph (3), "money | ||||||
19 | market instruments shall include investments in | ||||||
20 | investment partnerships, trusts, pools, funds, | ||||||
21 | investment companies, or any similar entity in | ||||||
22 | proportion to the investment of such entity in money | ||||||
23 | market instruments, and "securities" shall include | ||||||
24 | investments in investment partnerships, trusts, pools, | ||||||
25 | funds, investment companies, or any similar entity in | ||||||
26 | proportion to the investment of such entity in | ||||||
27 | securities.
| ||||||
28 | (d) Transportation services. For taxable years ending | ||||||
29 | before December 31, 2004, business
Business income derived from | ||||||
30 | furnishing
transportation services shall be apportioned to | ||||||
31 | this State in accordance
with paragraphs (1) and (2):
| ||||||
32 | (1) Such business income (other than that derived from
| ||||||
33 | transportation by pipeline) shall be apportioned to this | ||||||
34 | State by
multiplying such income by a fraction, the |
| |||||||
| |||||||
1 | numerator of which is the
revenue miles of the person in | ||||||
2 | this State, and the denominator of which
is the revenue | ||||||
3 | miles of the person everywhere. For purposes of this
| ||||||
4 | paragraph, a revenue mile is the transportation of 1 | ||||||
5 | passenger or 1 net
ton of freight the distance of 1 mile | ||||||
6 | for a consideration. Where a
person is engaged in the | ||||||
7 | transportation of both passengers and freight,
the | ||||||
8 | fraction above referred to shall be determined by means of | ||||||
9 | an
average of the passenger revenue mile fraction and the | ||||||
10 | freight revenue
mile fraction, weighted to reflect the | ||||||
11 | person's
| ||||||
12 | (A) relative railway operating income from total | ||||||
13 | passenger and total
freight service, as reported to the | ||||||
14 | Interstate Commerce Commission, in
the case of | ||||||
15 | transportation by railroad, and
| ||||||
16 | (B) relative gross receipts from passenger and | ||||||
17 | freight
transportation, in case of transportation | ||||||
18 | other than by railroad.
| ||||||
19 | (2) Such business income derived from transportation | ||||||
20 | by pipeline
shall be apportioned to this State by | ||||||
21 | multiplying such income by a
fraction, the numerator of | ||||||
22 | which is the revenue miles of the person in
this State, and | ||||||
23 | the denominator of which is the revenue miles of the
person | ||||||
24 | everywhere. For the purposes of this paragraph, a revenue | ||||||
25 | mile is
the transportation by pipeline of 1 barrel of oil, | ||||||
26 | 1,000 cubic feet of
gas, or of any specified quantity of | ||||||
27 | any other substance, the distance
of 1 mile for a | ||||||
28 | consideration.
| ||||||
29 | (3) For taxable years ending on or after December 31, | ||||||
30 | 2004, business income derived from providing | ||||||
31 | transportation services other than airline services shall | ||||||
32 | be apportioned to this State by using a fraction, (a) the | ||||||
33 | numerator of which shall be (i) all receipts from any | ||||||
34 | movement or shipment of people, goods, mail , oil, gas, or |
| |||||||
| |||||||
1 | any other substance that both originates and terminates in | ||||||
2 | this State, plus (ii) that portion of the person's gross | ||||||
3 | receipts from movements or shipments of people, goods, | ||||||
4 | mail, oil, gas, or any other substance passing through, | ||||||
5 | into, or out of this State, that is determined by the ratio | ||||||
6 | that the miles traveled in this State bears to total miles | ||||||
7 | from point of origin to point of destination and (b) the | ||||||
8 | denominator of which shall be all revenue derived from the | ||||||
9 | movement or shipment of people, goods, mail, oil, gas, or | ||||||
10 | any other substance. If a person derives business income | ||||||
11 | from activities other than the provision of transportation | ||||||
12 | services, only its business income from transportation | ||||||
13 | services shall be apportioned according to this | ||||||
14 | subsection.
| ||||||
15 | (4) For taxable years ending on or after December 31, | ||||||
16 | 2004, business income derived from providing airline | ||||||
17 | services shall be apportioned to this State by using a | ||||||
18 | fraction, (a) the numerator of which shall be all receipts | ||||||
19 | from any movement or shipment of people, goods, or mail, | ||||||
20 | multiplied by the ratio equal to arrivals of aircraft to | ||||||
21 | and departures from this State weighted as to cost of | ||||||
22 | aircraft by type divided by total arrivals and departures | ||||||
23 | of aircraft weighted as to cost of aircraft by type and (b) | ||||||
24 | the denominator of which shall be all revenue derived from | ||||||
25 | the movement or shipment of people, goods, or mail. If a | ||||||
26 | person derives business income from activities other than | ||||||
27 | the provision of airline services only, its business income | ||||||
28 | from airline services shall be apportioned according to | ||||||
29 | this subsection.
| ||||||
30 | (e) Combined apportionment. Where 2 or more persons are | ||||||
31 | engaged in
a unitary business as described in subsection | ||||||
32 | (a)(27) of
Section 1501,
a part of which is conducted in this | ||||||
33 | State by one or more members of the
group, the business income | ||||||
34 | attributable to this State by any such member
or members shall |
| |||||||
| |||||||
1 | be apportioned by means of the combined apportionment method.
| ||||||
2 | (f) Alternative allocation. If the allocation and | ||||||
3 | apportionment
provisions of subsections (a) through (e) and of | ||||||
4 | subsection (h) do not
fairly represent the
extent of a person's | ||||||
5 | business activity in this State, the person may
petition for, | ||||||
6 | or the Director may , without a petition, permit or require, in | ||||||
7 | respect of all or any part
of the person's business activity, | ||||||
8 | if reasonable:
| ||||||
9 | (1) Separate accounting;
| ||||||
10 | (2) The exclusion of any one or more factors;
| ||||||
11 | (3) The inclusion of one or more additional factors | ||||||
12 | which will
fairly represent the person's business | ||||||
13 | activities in this State; or
| ||||||
14 | (4) The employment of any other method to effectuate an | ||||||
15 | equitable
allocation and apportionment of the person's | ||||||
16 | business income.
| ||||||
17 | (g) Cross reference. For allocation of business income by | ||||||
18 | residents,
see Section 301(a).
| ||||||
19 | (h) For tax years ending on or after December 31, 1998, the | ||||||
20 | apportionment
factor of persons who apportion their business | ||||||
21 | income to this State under
subsection (a) shall be equal to:
| ||||||
22 | (1) for tax years ending on or after December 31, 1998 | ||||||
23 | and before December
31, 1999, 16 2/3% of the property | ||||||
24 | factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | ||||||
25 | the sales factor;
| ||||||
26 | (2) for tax years ending on or after December 31, 1999 | ||||||
27 | and before December
31,
2000, 8 1/3% of the property factor | ||||||
28 | plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales | ||||||
29 | factor;
| ||||||
30 | (3) for tax years ending on or after December 31, 2000, | ||||||
31 | the sales factor.
| ||||||
32 | If, in any tax year ending on or after December 31, 1998 and | ||||||
33 | before December
31, 2000, the denominator of the payroll, | ||||||
34 | property, or sales factor is zero,
the apportionment
factor |
| |||||||
| |||||||
1 | computed in paragraph (1) or (2) of this subsection for that | ||||||
2 | year shall
be divided by an amount equal to 100% minus the | ||||||
3 | percentage weight given to each
factor whose denominator is | ||||||
4 | equal to zero.
| ||||||
5 | (i) The changes made to this Section by this amendatory Act | ||||||
6 | of the 93rd General Assembly do not apply to any small business | ||||||
7 | as defined in the Small Business Advisory Act.
| ||||||
8 | (Source: P.A. 90-562, eff. 12-16-97; 90-613, eff. 7-9-98; | ||||||
9 | 91-541, eff.
8-13-99.)
| ||||||
10 | (35 ILCS 5/305) (from Ch. 120, par. 3-305)
| ||||||
11 | Sec. 305. Allocation of Partnership Income by partnerships | ||||||
12 | and
partners other than residents.
(a) Allocation of | ||||||
13 | partnership business income by partners other
than residents. | ||||||
14 | The respective shares of partners other than
residents in so | ||||||
15 | much of the business income of the partnership as is
allocated | ||||||
16 | or apportioned to this State in the possession of the | ||||||
17 | partnership
shall be taken into account by such partners pro | ||||||
18 | rata in accordance with
their respective distributive shares of | ||||||
19 | such partnership income for the
partnership's taxable year and | ||||||
20 | allocated to this State.
| ||||||
21 | (b) Allocation of partnership nonbusiness income by | ||||||
22 | partners other
than residents. The respective shares of | ||||||
23 | partners other than
residents in the items of partnership | ||||||
24 | income and deduction not taken
into account in computing the | ||||||
25 | business income of a partnership shall be
taken into account by | ||||||
26 | such partners pro rata in accordance with their
respective | ||||||
27 | distributive shares of such partnership income for the
| ||||||
28 | partnership's taxable year, and allocated as if such items had | ||||||
29 | been
paid, incurred or accrued directly to such partners in | ||||||
30 | their separate
capacities.
| ||||||
31 | (c) Allocation or apportionment of base income by | ||||||
32 | partnership.
Base income of a partnership shall be allocated or | ||||||
33 | apportioned to
this State pursuant to Article 3, in the same |
| |||||||
| |||||||
1 | manner as it is allocated
or apportioned for any other | ||||||
2 | nonresident.
| ||||||
3 | (c-5) Taxable income of an investment partnership, as | ||||||
4 | defined in Section 1501(a)(11.5) of this Act, that is | ||||||
5 | distributable to a nonresident partner shall be treated as | ||||||
6 | nonbusiness income and shall be allocated to the partner's | ||||||
7 | state of residence (in the case of an individual) or commercial | ||||||
8 | domicile (in the case of any other person). However, any income | ||||||
9 | distributable to a nonresident partner shall be treated as | ||||||
10 | business income and apportioned as if such income had been | ||||||
11 | received directly by the partner if the partner has made an | ||||||
12 | election under Section 1501(a)(1) of this Act to treat all | ||||||
13 | income as business income or if such income is from investment | ||||||
14 | activity: | ||||||
15 | (1) that is directly or integrally related to any other | ||||||
16 | business activity conducted in this State by the | ||||||
17 | nonresident partner (or any member of that partner's | ||||||
18 | unitary business group); | ||||||
19 | (2) that serves an operational function to any other | ||||||
20 | business activity of the nonresident partner (or any member | ||||||
21 | of that partner's unitary business group) in this State; or | ||||||
22 | (3) where assets of the investment partnership were | ||||||
23 | acquired with working capital from a trade or business | ||||||
24 | activity conducted in this State in which the nonresident | ||||||
25 | partner (or any member of that partner's unitary business | ||||||
26 | group) owns an interest. | ||||||
27 | (d) Cross reference. For allocation of partnership income | ||||||
28 | or
deductions by residents, see Section 301(a).
| ||||||
29 | (e) The changes made to this Section by this amendatory Act | ||||||
30 | of the 93rd General Assembly do not apply to any small business | ||||||
31 | as defined in the Small Business Advisory Act.
| ||||||
32 | (Source: P.A. 84-550.)
| ||||||
33 | (35 ILCS 5/501) (from Ch. 120, par. 5-501)
|
| |||||||
| |||||||
1 | Sec. 501. Notice
or Regulations Requiring Records, | ||||||
2 | Statements and Special Returns.
| ||||||
3 | (a) In general. Every person liable for any tax imposed by | ||||||
4 | this Act shall keep such
records, render such statements, make | ||||||
5 | such returns and notices, and comply
with such rules and | ||||||
6 | regulations as the Department may from time to time
prescribe. | ||||||
7 | Whenever in the judgment of the Director it is necessary, he | ||||||
8 | may
require any person, by notice served upon such person or by | ||||||
9 | regulations, to
make such returns and notices, render such | ||||||
10 | statements, or keep such
records, as the Director deems | ||||||
11 | sufficient to show whether or not such
person is liable for tax | ||||||
12 | under this Act.
| ||||||
13 | (b) Reportable transactions. | ||||||
14 | (1) Federal transactions. For each taxable year in which a | ||||||
15 | taxpayer is required to make a disclosure statement under | ||||||
16 | Treasury Regulations Section 1.6011-4 (26 CFR 1.6011-4) | ||||||
17 | (including any taxpayer that is a member of a consolidated | ||||||
18 | group required to make such disclosure) with respect to a | ||||||
19 | reportable transaction (including a listed transaction) in | ||||||
20 | which the taxpayer participated in a taxable year for which a | ||||||
21 | return is required under Section 502 of this Act, such taxpayer | ||||||
22 | shall file a copy of such disclosure with the Department. | ||||||
23 | Disclosure under this paragraph (1) is required to be made by | ||||||
24 | any taxpayer that is a member of a unitary business group that | ||||||
25 | includes any person required to make a disclosure statement | ||||||
26 | under Treasury Regulations Section 1.6011-4. Disclosure under | ||||||
27 | this paragraph (1) is required with respect to any transaction | ||||||
28 | entered into after February 28, 2000 that becomes a listed | ||||||
29 | transaction at any time and shall be made in the manner | ||||||
30 | prescribed by the Department. With respect to listed | ||||||
31 | transactions in which the taxpayer participated for taxable | ||||||
32 | years ending before December 31, 2004, disclosure shall be made | ||||||
33 | by the due date (including extensions) of the first return | ||||||
34 | required under Section 502 of this Act due after the effective |
| |||||||
| |||||||
1 | date of this Public Act of the 93rd General Assembly. With | ||||||
2 | respect to transactions in which the taxpayer participated for | ||||||
3 | taxable years ending on and after December 31, 2004, disclosure | ||||||
4 | shall be made at the time disclosure is required under Treasury | ||||||
5 | regulations (Section 1.6011-4). | ||||||
6 | (2) Illinois transactions. Any taxpayer that has | ||||||
7 | participated in an "Illinois reportable transaction" is | ||||||
8 | required to disclose such transaction on a return or statement | ||||||
9 | at the time, and in the form and manner prescribed by the | ||||||
10 | Department. Disclosure is required for each taxable year in | ||||||
11 | which the taxpayer participates in an Illinois reportable | ||||||
12 | transaction. If such reportable transaction results in a loss | ||||||
13 | which is carried back to a prior year, such disclosure must be | ||||||
14 | attached to the taxpayer's amended tax return for that prior | ||||||
15 | year. | ||||||
16 | (A) Definitions. | ||||||
17 | (i) Illinois reportable transaction. The term | ||||||
18 | "Illinois reportable transaction" means any | ||||||
19 | transaction of a type that the Department shall by | ||||||
20 | regulation determine as having a potential for | ||||||
21 | avoidance or evasion of the tax imposed by this Act, | ||||||
22 | including deductions, basis, credits, entity | ||||||
23 | classification, dividend elimination, or ommission of | ||||||
24 | income. An Illinois reportable transaction includes | ||||||
25 | (but is not limited to) "Illinois listed transactions" | ||||||
26 | as defined in this subparagraph (A), "confidential | ||||||
27 | transactions" as defined under Treasury Regulations | ||||||
28 | Section 1.6011-4(b)(3) and "transactions with | ||||||
29 | contractual protection" as defined under Treasury | ||||||
30 | Regulations Section 1.6011-4(b)(4). | ||||||
31 | (ii) Illinois listed transactions. The term | ||||||
32 | "Illinois listed transaction" means a reportable | ||||||
33 | transaction that is the same as, or substantially | ||||||
34 | similar to, one of the types of reportable transactions |
| |||||||
| |||||||
1 | and that has been specifically identified by the | ||||||
2 | Department as a tax avoidance transaction. | ||||||
3 | (iii) Participated. For purposes of paragraph (2) | ||||||
4 | of this subsection (b), the term "participated" shall | ||||||
5 | be defined for each type of Illinois reportable | ||||||
6 | transaction in the regulation or other published | ||||||
7 | guidance identifying that type of reportable | ||||||
8 | transaction or listed transaction. | ||||||
9 | (B) The Department shall identify and publish Illinois | ||||||
10 | listed transactions through the use of Informational | ||||||
11 | Bulletins or other published guidance. | ||||||
12 | (c) Inconsistent return position. Pursuant to regulations | ||||||
13 | prescribed by the Department, any taxpayer that reports for any | ||||||
14 | taxable year any item for Illinois income tax purposes in a | ||||||
15 | manner inconsistent with the manner in which the same item is | ||||||
16 | reported or reflected on any return filed for the same taxable | ||||||
17 | year with another state with respect to a tax on or measured by | ||||||
18 | net income or with the manner in which a substantially | ||||||
19 | identical item was reported or reflected for Illinois income | ||||||
20 | tax purposes for the immediately preceding taxable year | ||||||
21 | (inconsistent return position), shall disclose such | ||||||
22 | inconsistent return position on a return or statement in the | ||||||
23 | form and manner prescribed by the Department. An inconsistent | ||||||
24 | return position shall include, but shall not be limited to, the | ||||||
25 | following: | ||||||
26 | (1) The reporting of the same item as business | ||||||
27 | income on the Illinois return and as nonbusiness income | ||||||
28 | on the return filed in another state, or as nonbusiness | ||||||
29 | income on the Illinois return and as business income on | ||||||
30 | the return filed in another state (except that an item | ||||||
31 | reported as business income in Illinois by virtue of | ||||||
32 | the election provided under Section 1501(a)(1) of this | ||||||
33 | Act shall not be deemed to give rise to an inconsistent | ||||||
34 | return position). |
| |||||||
| |||||||
1 | (2) The reporting of the same item of gross | ||||||
2 | receipts as attributable to another state on the | ||||||
3 | Illinois return and as attributable to Illinois on the | ||||||
4 | return filed in another state. | ||||||
5 | (3) The reporting of the same person as a member of | ||||||
6 | the taxpayer's unitary business on the Illinois return | ||||||
7 | and as not a member of the unitary business on the | ||||||
8 | return filed in another state or the reporting of the | ||||||
9 | same person as not a member of the taxpayer's unitary | ||||||
10 | business on the Illinois return and as a member of the | ||||||
11 | unitary business on the return filed in another state.
| ||||||
12 | (d) The changes made to this Section by this amendatory Act | ||||||
13 | of the 93rd General Assembly do not apply to any small business | ||||||
14 | as defined in the Small Business Advisory Act.
| ||||||
15 | (Source: P.A. 76-261.)
| ||||||
16 | (35 ILCS 5/502) (from Ch. 120, par. 5-502)
| ||||||
17 | Sec. 502. Returns and notices.
| ||||||
18 | (a) In general. A return with respect to the taxes imposed | ||||||
19 | by this
Act shall be made by every person for any taxable year:
| ||||||
20 | (1) for which such person is liable for a tax imposed | ||||||
21 | by this Act,
or
| ||||||
22 | (2) in the case of a resident or in the case of a | ||||||
23 | corporation which
is qualified to do business in this | ||||||
24 | State, for which such person is
required to make a federal | ||||||
25 | income tax return, regardless of whether such
person is | ||||||
26 | liable for a tax imposed by this Act. However, this | ||||||
27 | paragraph
shall not require a resident to make a return if | ||||||
28 | such person has
an
Illinois base income of the basic amount | ||||||
29 | in Section 204(b) or
less and is either claimed as a | ||||||
30 | dependent on
another person's tax return under the Internal | ||||||
31 | Revenue Code of 1986, or is
claimed as a dependent on | ||||||
32 | another person's tax return under this Act.
| ||||||
33 | Notwithstanding the provisions of paragraph (1), a |
| |||||||
| |||||||
1 | nonresident whose Illinois income tax liability under | ||||||
2 | subsections (a), (b), (c), and (d) of Section 201 of this Act | ||||||
3 | is paid in full after taking into account the credits allowed | ||||||
4 | under subsection (f) of this Section or allowed under Section | ||||||
5 | 709.5 of this Act shall not be required to file a return under | ||||||
6 | this subsection (a).
| ||||||
7 | (b) Fiduciaries and receivers.
| ||||||
8 | (1) Decedents. If an individual is deceased, any return | ||||||
9 | or notice
required of such individual under this Act shall | ||||||
10 | be made by his
executor, administrator, or other person | ||||||
11 | charged with the property of
such decedent.
| ||||||
12 | (2) Individuals under a disability. If an individual is | ||||||
13 | unable
to make a return or notice required under this Act, | ||||||
14 | the return or notice
required of such individual shall be | ||||||
15 | made by his duly authorized agent,
guardian, fiduciary or | ||||||
16 | other person charged with the care
of the person or | ||||||
17 | property of such individual.
| ||||||
18 | (3) Estates and trusts. Returns or notices required of | ||||||
19 | an estate
or a trust shall be made by the fiduciary | ||||||
20 | thereof.
| ||||||
21 | (4) Receivers, trustees and assignees for | ||||||
22 | corporations. In a
case where a receiver, trustee in | ||||||
23 | bankruptcy, or assignee, by order of a
court of competent | ||||||
24 | jurisdiction, by operation of law, or otherwise, has
| ||||||
25 | possession of or holds title to all or substantially all | ||||||
26 | the property or
business of a corporation, whether or not | ||||||
27 | such property or business is
being operated, such receiver, | ||||||
28 | trustee, or assignee shall make the
returns and notices | ||||||
29 | required of such corporation in the same manner and
form as | ||||||
30 | corporations are required to make such returns and notices.
| ||||||
31 | (c) Joint returns by husband and wife.
| ||||||
32 | (1) Except as provided in paragraph (3), if a husband | ||||||
33 | and wife file a
joint federal income tax return for a | ||||||
34 | taxable year they shall file a joint
return under this Act |
| |||||||
| |||||||
1 | for such taxable year and their liabilities shall be
joint | ||||||
2 | and several, but if the federal income tax liability of | ||||||
3 | either spouse is
determined on a separate federal income | ||||||
4 | tax return, they shall file separate
returns under this | ||||||
5 | Act.
| ||||||
6 | (2) If neither spouse is required to file a federal | ||||||
7 | income tax
return and either or both are required to file a | ||||||
8 | return under this Act,
they may elect to file separate or | ||||||
9 | joint returns and pursuant to such
election their | ||||||
10 | liabilities shall be separate or joint and several.
| ||||||
11 | (3) If either husband or wife is a resident and the | ||||||
12 | other is a
nonresident, they shall file separate returns in | ||||||
13 | this State on such
forms as may be required by the | ||||||
14 | Department in which event their tax
liabilities shall be | ||||||
15 | separate; but they may elect to determine their
joint net | ||||||
16 | income and file a joint return as if both were residents | ||||||
17 | and
in such case, their liabilities shall be joint and | ||||||
18 | several.
| ||||||
19 | (4) Innocent spouses.
| ||||||
20 | (A) However, for tax liabilities arising and paid | ||||||
21 | prior to August 13,
1999, an innocent spouse shall be | ||||||
22 | relieved of
liability for tax
(including interest and | ||||||
23 | penalties) for any taxable year for which a joint
| ||||||
24 | return has been made, upon submission of proof that the | ||||||
25 | Internal Revenue
Service has made a determination | ||||||
26 | under Section 6013(e) of the Internal
Revenue Code, for | ||||||
27 | the same taxable year, which determination relieved | ||||||
28 | the
spouse from liability for federal income taxes.
If | ||||||
29 | there is no federal income tax liability at issue for | ||||||
30 | the
same taxable year, the Department shall rely on the | ||||||
31 | provisions of Section
6013(e) to determine whether the | ||||||
32 | person requesting innocent spouse abatement of
tax, | ||||||
33 | penalty, and interest is entitled to that relief.
| ||||||
34 | (B) For tax liabilities arising on and after August |
| |||||||
| |||||||
1 | 13, 1999 or which arose prior to that date, but remain | ||||||
2 | unpaid as of that date, if
an individual
who filed a | ||||||
3 | joint return for any taxable year has made an election | ||||||
4 | under this
paragraph, the individual's liability for | ||||||
5 | any tax shown on the joint return
shall not exceed the | ||||||
6 | individual's separate return amount and the | ||||||
7 | individual's
liability for any deficiency assessed for | ||||||
8 | that taxable year shall not exceed
the portion of the | ||||||
9 | deficiency properly allocable to the individual. For
| ||||||
10 | purposes of this paragraph:
| ||||||
11 | (i) An election properly made pursuant to | ||||||
12 | Section 6015 of the Internal
Revenue Code shall | ||||||
13 | constitute an election under this paragraph, | ||||||
14 | provided that
the election shall not be effective | ||||||
15 | until the individual has notified the
Department | ||||||
16 | of the election in the form and manner prescribed | ||||||
17 | by the Department.
| ||||||
18 | (ii) If no election has been made under Section | ||||||
19 | 6015, the individual
may make an election under | ||||||
20 | this paragraph in the form and manner prescribed by
| ||||||
21 | the Department, provided that no election may be | ||||||
22 | made if the Department finds
that assets were | ||||||
23 | transferred
between individuals filing a joint | ||||||
24 | return as part of a scheme by such
individuals to | ||||||
25 | avoid payment of Illinois income tax and the | ||||||
26 | election shall not
eliminate the individual's | ||||||
27 | liability for any portion of a deficiency
| ||||||
28 | attributable to an error on the return of which the | ||||||
29 | individual had actual
knowledge as of the date of | ||||||
30 | filing.
| ||||||
31 | (iii) In determining the separate return | ||||||
32 | amount or portion of any
deficiency attributable | ||||||
33 | to an individual, the Department shall follow the
| ||||||
34 | provisions in subsections (c) and (d) of Section |
| |||||||
| |||||||
1 | 6015 of the Internal Revenue Code.
| ||||||
2 | (iv) In determining the validity of an | ||||||
3 | individual's election under
subparagraph (ii) and | ||||||
4 | in determining an electing individual's separate | ||||||
5 | return
amount or portion of any deficiency under | ||||||
6 | subparagraph (iii), any determination
made by the | ||||||
7 | Secretary of the Treasury, by the United States Tax | ||||||
8 | Court on
petition for review of a determination by | ||||||
9 | the Secretary of the Treasury, or on
appeal from | ||||||
10 | the United States Tax Court under Section 6015 of
| ||||||
11 | the Internal
Revenue Code regarding criteria for | ||||||
12 | eligibility or under subsection (d) of
Section | ||||||
13 | 6015
of the Internal Revenue Code regarding the | ||||||
14 | allocation of any item of income,
deduction, | ||||||
15 | payment, or credit between an individual making | ||||||
16 | the federal election
and that individual's spouse | ||||||
17 | shall be conclusively presumed to be correct.
With | ||||||
18 | respect to any item that is not the subject of a | ||||||
19 | determination by the
Secretary of the Treasury or | ||||||
20 | the federal courts, in any proceeding
involving | ||||||
21 | this subsection, the
individual making the | ||||||
22 | election shall have the burden of proof with | ||||||
23 | respect to
any item except that the Department | ||||||
24 | shall have the burden of proof with respect
to | ||||||
25 | items in subdivision (ii).
| ||||||
26 | (v) Any election made by an individual under | ||||||
27 | this subsection shall
apply to all years for which | ||||||
28 | that individual and the spouse named in the
| ||||||
29 | election have filed a joint return.
| ||||||
30 | (vi) After receiving a notice that the federal | ||||||
31 | election has been made
or after receiving an | ||||||
32 | election under subdivision (ii), the Department | ||||||
33 | shall
take no collection action against the | ||||||
34 | electing individual for any liability
arising from |
| |||||||
| |||||||
1 | a joint return covered by the election until the | ||||||
2 | Department has
notified the electing individual in | ||||||
3 | writing that the election is invalid or of
the | ||||||
4 | portion of the liability the Department has | ||||||
5 | allocated to the electing
individual. Within 60 | ||||||
6 | days (150 days if the individual is outside the | ||||||
7 | United
States) after the issuance of such | ||||||
8 | notification, the individual may file a
written | ||||||
9 | protest of the denial of the election or of the | ||||||
10 | Department's
determination of the liability | ||||||
11 | allocated to him or her and shall be granted a
| ||||||
12 | hearing within the Department under the provisions | ||||||
13 | of Section 908. If a
protest is filed, the | ||||||
14 | Department shall take no collection action against | ||||||
15 | the
electing individual until the decision | ||||||
16 | regarding the protest has become final
under | ||||||
17 | subsection (d) of Section 908 or, if | ||||||
18 | administrative review of the
Department's decision
| ||||||
19 | is requested under Section 1201, until the | ||||||
20 | decision of the court becomes
final.
| ||||||
21 | (d) Partnerships. Every partnership having any base income
| ||||||
22 | allocable to this State in accordance with section 305(c) shall | ||||||
23 | retain
information concerning all items of income, gain, loss | ||||||
24 | and
deduction; the names and addresses of all of the partners, | ||||||
25 | or names and
addresses of members of a limited liability | ||||||
26 | company, or other
persons who would be entitled to share in the | ||||||
27 | base income of the
partnership if distributed; the amount of | ||||||
28 | the distributive share of
each; and such other pertinent | ||||||
29 | information as the Department may by
forms or regulations | ||||||
30 | prescribe. The partnership shall make that information
| ||||||
31 | available to the Department when requested by the Department.
| ||||||
32 | (e) For taxable years ending on or after December 31, 1985, | ||||||
33 | and before
December 31, 1993, taxpayers
that are corporations | ||||||
34 | (other than Subchapter S corporations) having the
same taxable |
| |||||||
| |||||||
1 | year and that are members of the same unitary business group
| ||||||
2 | may elect to be treated as one taxpayer for purposes of any | ||||||
3 | original return,
amended return which includes the same | ||||||
4 | taxpayers of the unitary group which
joined in the election to | ||||||
5 | file the original return, extension, claim for
refund, | ||||||
6 | assessment, collection and payment and determination of the
| ||||||
7 | group's tax liability under this Act. This subsection (e) does | ||||||
8 | not permit the
election to be made for some, but not all, of | ||||||
9 | the purposes enumerated above.
For taxable years ending on or | ||||||
10 | after December 31, 1987, corporate members
(other than | ||||||
11 | Subchapter S corporations) of the same unitary business group
| ||||||
12 | making this subsection (e) election are not required to have | ||||||
13 | the same taxable
year.
| ||||||
14 | For taxable years ending on or after December 31, 1993, | ||||||
15 | taxpayers that are
corporations (other than Subchapter S | ||||||
16 | corporations) and that are members of
the same unitary business | ||||||
17 | group shall be treated as one taxpayer for purposes
of any | ||||||
18 | original return, amended return which includes the same | ||||||
19 | taxpayers of the
unitary group which joined in filing the | ||||||
20 | original return, extension, claim for
refund, assessment, | ||||||
21 | collection and payment and determination of the group's tax
| ||||||
22 | liability under this Act.
| ||||||
23 | (f) The Department may promulgate regulations to permit | ||||||
24 | nonresident
individual partners of the same partnership, | ||||||
25 | nonresident Subchapter S
corporation shareholders of the same | ||||||
26 | Subchapter S corporation, and
nonresident individuals | ||||||
27 | transacting an insurance business in Illinois under
a Lloyds | ||||||
28 | plan of operation, and nonresident individual members of the | ||||||
29 | same
limited liability company that is treated as a partnership | ||||||
30 | under Section 1501
(a)(16) of this Act, to file composite | ||||||
31 | individual income tax returns
reflecting the composite income | ||||||
32 | of such individuals allocable to Illinois
and to make composite | ||||||
33 | individual income tax payments. The Department may
by | ||||||
34 | regulation also permit such composite returns to include the |
| |||||||
| |||||||
1 | income tax
owed by Illinois residents attributable to their | ||||||
2 | income from partnerships,
Subchapter S corporations, insurance | ||||||
3 | businesses organized under a Lloyds
plan of operation, or | ||||||
4 | limited liability companies that are treated as
partnership | ||||||
5 | under Section 1501(a)(16) of this Act, in which case such
| ||||||
6 | Illinois residents will be permitted to claim credits on their | ||||||
7 | individual
returns for their shares of the composite tax | ||||||
8 | payments. This paragraph of
subsection (f) applies to taxable | ||||||
9 | years ending on or after December 31, 1987.
| ||||||
10 | For taxable years ending on or after December 31, 1999, the | ||||||
11 | Department may,
by regulation, also permit any persons | ||||||
12 | transacting an insurance business
organized under a Lloyds plan | ||||||
13 | of operation to file composite returns reflecting
the income of | ||||||
14 | such persons allocable to Illinois and the tax rates applicable
| ||||||
15 | to such persons under Section 201 and to make composite tax | ||||||
16 | payments and shall,
by regulation, also provide that the income | ||||||
17 | and apportionment factors
attributable to the transaction of an | ||||||
18 | insurance business organized under a
Lloyds plan of operation | ||||||
19 | by any person joining in the filing of a composite
return | ||||||
20 | shall, for purposes of allocating and apportioning income under | ||||||
21 | Article
3 of this Act and computing net income under Section | ||||||
22 | 202 of this Act, be
excluded from any other income and | ||||||
23 | apportionment factors of that person or of
any unitary business | ||||||
24 | group, as defined in subdivision (a)(27) of Section 1501,
to | ||||||
25 | which that person may belong.
| ||||||
26 | For taxable years ending on or after December 31, 2004, | ||||||
27 | every nonresident shall be allowed a credit against his or her | ||||||
28 | liability under subsections (a) and (b) of Section 201 for any | ||||||
29 | amount of tax reported on a composite return and paid on his or | ||||||
30 | her behalf under this subsection (f). Residents (other than | ||||||
31 | persons transacting an insurance business organized under a | ||||||
32 | Lloyds plan of operation) may claim a credit for taxes reported | ||||||
33 | on a composite return and paid on their behalf under this | ||||||
34 | subsection (f) only as permitted by the Department by rule.
|
| |||||||
| |||||||
1 | (f-5) For taxable years ending on or after December 31, | ||||||
2 | 2004, the Department may promulgate rules to provide that, when | ||||||
3 | a partnership or Subchapter S corporation has made an error in | ||||||
4 | determining the amount of any item of income, deduction, | ||||||
5 | addition, subtraction, or credit required to be reported on its | ||||||
6 | return that affects the liability imposed under this Act on a | ||||||
7 | partner or shareholder, the partnership or Subchapter S | ||||||
8 | corporation may report the changes in liabilities of its | ||||||
9 | partners or shareholders and claim a refund of the resulting | ||||||
10 | overpayments, or pay the resulting underpayments, on behalf of | ||||||
11 | its partners and shareholders.
| ||||||
12 | (g) The Department may adopt rules to authorize the | ||||||
13 | electronic filing of
any return required to be filed under this | ||||||
14 | Section.
| ||||||
15 | (h) The changes made to this Section by this amendatory Act | ||||||
16 | of the 93rd General Assembly do not apply to any small business | ||||||
17 | as defined in the Small Business Advisory Act.
| ||||||
18 | (Source: P.A. 91-541, eff. 8-13-99; 91-913, eff. 1-1-01; | ||||||
19 | 92-846, eff.
8-23-02.)
| ||||||
20 | (35 ILCS 5/709.5 new)
| ||||||
21 | Sec. 709.5. Withholding by partnerships, Subchapter S | ||||||
22 | corporations, and trusts. | ||||||
23 | (a) In general. For each taxable year ending on or after | ||||||
24 | December 31, 2004, every partnership (other than a publicly | ||||||
25 | traded partnership under Section 7704 of the Internal Revenue | ||||||
26 | Code), Subchapter S corporation, and trust must withhold from | ||||||
27 | each nonresident partner, shareholder, or beneficiary (other | ||||||
28 | than a partner, shareholder, or beneficiary included on a | ||||||
29 | composite return filed by the partnership or Subchapter S | ||||||
30 | corporation for the taxable year under subsection (f) of | ||||||
31 | Section 502 of this Act) an amount equal to the distributable | ||||||
32 | share of the business income apportionable to Illinois of that | ||||||
33 | partner, shareholder, or beneficiary under Sections 702 and 704 |
| |||||||
| |||||||
1 | and Subchapter S of the Internal Revenue Code, whether or not | ||||||
2 | distributed, multiplied by the applicable rates of tax for that | ||||||
3 | partner or shareholder under subsections (a) through (d) of | ||||||
4 | Section 201 of this Act. | ||||||
5 | (b) Credit for taxes withheld. Any amount withheld under | ||||||
6 | subsection (a) of this Section and paid to the Department shall | ||||||
7 | be treated as a payment of the estimated tax liability or of | ||||||
8 | the liability for withholding under this Section of the | ||||||
9 | partner, shareholder, or beneficiary to whom the income is | ||||||
10 | distributable for the taxable year in which that person | ||||||
11 | incurred a liability under this Act with respect to that | ||||||
12 | income.
| ||||||
13 | (c) The changes made to this Section by this amendatory Act | ||||||
14 | of the 93rd General Assembly do not apply to any small business | ||||||
15 | as defined in the Small Business Advisory Act.
| ||||||
16 | (35 ILCS 5/711) (from Ch. 120, par. 7-711)
| ||||||
17 | Sec. 711. Payor's Return and Payment of Tax Withheld. (a) | ||||||
18 | In general. Every
payor required to deduct and withhold tax | ||||||
19 | under Section 710 (and until
January 1, 1989, Sections 708 and | ||||||
20 | 709)
shall be subject to the same reporting requirements | ||||||
21 | regarding taxes
withheld and the same monthly and quarter | ||||||
22 | monthly (weekly) payment requirements as
an employer subject to | ||||||
23 | the provisions of Section 701. For purposes of
monthly and | ||||||
24 | quarter monthly (weekly) payments, the total tax withheld
under | ||||||
25 | Sections 701 , 708, 709 and 710 shall be considered in the
| ||||||
26 | aggregate.
| ||||||
27 | (a-5) Every partnership, Subchapter S corporation, or | ||||||
28 | trust required to withhold tax under Section 709.5 shall report | ||||||
29 | the amounts withheld and the partners, shareholders, or | ||||||
30 | beneficiaries from whom the amounts were withheld, and pay over | ||||||
31 | the amount withheld, no later than the due date (without regard | ||||||
32 | to extensions) of the tax return of the partnership, Subchapter | ||||||
33 | S corporation, or trust for the taxable year.
|
| |||||||
| |||||||
1 | (b) Information statement. Every payor required to deduct | ||||||
2 | and withhold
tax under Section 710 (and until January 1, 1989, | ||||||
3 | Sections 708 and 709)
shall furnish in
duplicate to each party
| ||||||
4 | entitled to the credit for such withholding under subsection | ||||||
5 | (b) of Section 709.5
(c) of
Section 708, subsection (c) of | ||||||
6 | Section 709 , and subsection (b) of Section
710, respectively, | ||||||
7 | on or before January 31 of the succeeding calendar
year for | ||||||
8 | amounts withheld under Section 710 or the due date (without | ||||||
9 | regard to extensions) of the return of the partnership, | ||||||
10 | Subchapter S corporation, or trust for the taxable year for | ||||||
11 | amounts withheld under Section 709.5 for the taxable year , a | ||||||
12 | written statement
in such form as the Department may by | ||||||
13 | regulation prescribe showing the amount
of the payments, the | ||||||
14 | amount deducted and withheld as tax, and such other
information | ||||||
15 | as the
Department may prescribe. A copy of such statement shall | ||||||
16 | be filed by the
party entitled to the credit for the | ||||||
17 | withholding under subsection (b) of Section 709.5
(c) of
| ||||||
18 | Section 708, subsection (c) of Section 709, or subsection (b) | ||||||
19 | of Section
710 with his return for the taxable year to which it | ||||||
20 | relates.
| ||||||
21 | (c) The changes made to this Section by this amendatory Act | ||||||
22 | of the 93rd General Assembly do not apply to any small business | ||||||
23 | as defined in the Small Business Advisory Act.
| ||||||
24 | (Source: P.A. 85-299; 85-982.)
| ||||||
25 | (35 ILCS 5/712) (from Ch. 120, par. 7-712)
| ||||||
26 | Sec. 712. Payor's Liability For Withheld Taxes. Every payor | ||||||
27 | who deducts
and withholds or is required to deduct and withhold | ||||||
28 | tax under Sections 709.5 or
Section
710 (and until January 1, | ||||||
29 | 1989, Sections 708 and 709) is liable for such
tax. For | ||||||
30 | purposes of assessment and
collection, any amount withheld or | ||||||
31 | required to be withheld and paid
over to the Department, and | ||||||
32 | any penalties and interest
with respect thereto, shall be | ||||||
33 | considered the tax of the payor. Any amount
of tax actually |
| |||||||
| |||||||
1 | deducted and withheld under Sections 709.5 or
Section 710 (and | ||||||
2 | until
January 1, 1989, Sections 708 and 709) shall
be held to | ||||||
3 | be a special fund in trust for the Department. No payee shall | ||||||
4 | have
any right of action against his payor in respect of any | ||||||
5 | money deducted and
withheld and paid over to the Department in | ||||||
6 | compliance or in intended compliance
with Sections and 709.5 or
| ||||||
7 | Section 710 (and until January 1, 1989, Sections 708 and 709).
| ||||||
8 | The changes made to this Section by this amendatory Act of | ||||||
9 | the 93rd General Assembly do not apply to any small business as | ||||||
10 | defined in the Small Business Advisory Act.
| ||||||
11 | (Source: P.A. 85-299; 85-982.)
| ||||||
12 | (35 ILCS 5/713) (from Ch. 120, par. 7-713)
| ||||||
13 | Sec. 713. Payor's Failure To Withhold. If a payor fails to | ||||||
14 | deduct and
withhold any amount of tax as required under | ||||||
15 | Sections and 709.5 or
Section 710 (and until
January 1, 1989, | ||||||
16 | Sections 708 and 709) and
thereafter the tax on account of | ||||||
17 | which such amount was required to be deducted and
withheld is | ||||||
18 | paid, such amount of tax shall not be collected from the payor,
| ||||||
19 | but the payor shall not be relieved from liability for | ||||||
20 | penalties or interest
otherwise applicable in respect of such | ||||||
21 | failure to deduct and withhold.
For purposes of this Section, | ||||||
22 | the tax on account of which an amount is required
to be | ||||||
23 | deducted and withheld is the tax of the individual or | ||||||
24 | individuals
who are entitled to a credit under subsection (b) | ||||||
25 | of Section 709.5
(c) of Section 708,
subsection (c) of Section | ||||||
26 | 709, or subsection (b) of Section 710 for the withheld tax.
| ||||||
27 | The changes made to this Section by this amendatory Act of | ||||||
28 | the 93rd General Assembly do not apply to any small business as | ||||||
29 | defined in the Small Business Advisory Act.
| ||||||
30 | (Source: P.A. 85-299; 85-982.)
| ||||||
31 | (35 ILCS 5/804) (from Ch. 120, par. 8-804)
| ||||||
32 | Sec. 804. Failure to Pay Estimated Tax.
|
| |||||||
| |||||||
1 | (a) In general. In case of any underpayment of estimated | ||||||
2 | tax by a
taxpayer, except as provided in subsection (d) or (e), | ||||||
3 | the taxpayer shall
be liable to a penalty in an amount | ||||||
4 | determined at the rate prescribed by
Section 3-3 of the Uniform | ||||||
5 | Penalty and Interest Act upon the amount of the
underpayment | ||||||
6 | (determined under subsection (b)) for each required | ||||||
7 | installment.
| ||||||
8 | (b) Amount of underpayment. For purposes of subsection (a), | ||||||
9 | the
amount of the underpayment shall be the excess of:
| ||||||
10 | (1) the amount of the installment which would be | ||||||
11 | required to be paid
under subsection (c), over
| ||||||
12 | (2) the amount, if any, of the installment paid on or | ||||||
13 | before the
last date prescribed for payment.
| ||||||
14 | (c) Amount of Required Installments.
| ||||||
15 | (1) Amount.
| ||||||
16 | (A) In General. Except as provided in paragraph | ||||||
17 | (2), the amount of any
required installment shall be | ||||||
18 | 25% of the required annual payment.
| ||||||
19 | (B) Required Annual Payment. For purposes of | ||||||
20 | subparagraph (A),
the term "required annual payment" | ||||||
21 | means the lesser of
| ||||||
22 | (i) 90% of the tax shown on the return for the | ||||||
23 | taxable year, or
if no return is filed, 90% of the | ||||||
24 | tax for such year, or
| ||||||
25 | (ii) 100% of the tax shown on the return of the | ||||||
26 | taxpayer for the
preceding taxable year if a return | ||||||
27 | showing a liability for tax was filed by
the | ||||||
28 | taxpayer for the preceding taxable year and such | ||||||
29 | preceding year was a
taxable year of 12 months.
| ||||||
30 | (2) Lower Required Installment where Annualized Income | ||||||
31 | Installment is Less
Than Amount Determined Under Paragraph | ||||||
32 | (1).
| ||||||
33 | (A) In General. In the case of any required | ||||||
34 | installment if a taxpayer
establishes that the |
| ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
1 | annualized income installment is less than the amount
| |||||||||||||||||||||||||
2 | determined under paragraph (1),
| |||||||||||||||||||||||||
3 | (i) the amount of such required installment | |||||||||||||||||||||||||
4 | shall be the annualized
income installment, and
| |||||||||||||||||||||||||
5 | (ii) any reduction in a required installment | |||||||||||||||||||||||||
6 | resulting from the
application of this | |||||||||||||||||||||||||
7 | subparagraph shall be recaptured by increasing the
| |||||||||||||||||||||||||
8 | amount of the next required installment determined | |||||||||||||||||||||||||
9 | under paragraph (1) by
the amount of such | |||||||||||||||||||||||||
10 | reduction, and by increasing subsequent required
| |||||||||||||||||||||||||
11 | installments to the extent that the reduction has | |||||||||||||||||||||||||
12 | not previously been
recaptured under this clause.
| |||||||||||||||||||||||||
13 | (B) Determination of Annualized Income | |||||||||||||||||||||||||
14 | Installment. In the case of
any required installment, | |||||||||||||||||||||||||
15 | the annualized income installment is the
excess, if | |||||||||||||||||||||||||
16 | any, of
| |||||||||||||||||||||||||
17 | (i) an amount equal to the applicable | |||||||||||||||||||||||||
18 | percentage of the tax for the
taxable year computed | |||||||||||||||||||||||||
19 | by placing on an annualized basis the net income | |||||||||||||||||||||||||
20 | for
months in the taxable year ending before the | |||||||||||||||||||||||||
21 | due date for the installment, over
| |||||||||||||||||||||||||
22 | (ii) the aggregate amount of any prior | |||||||||||||||||||||||||
23 | required installments for
the taxable year.
| |||||||||||||||||||||||||
24 | (C) Applicable Percentage.
| |||||||||||||||||||||||||
| ||||||||||||||||||||||||||
31 | (D) Annualized Net Income; Individuals. For | |||||||||||||||||||||||||
32 | individuals, net
income shall be placed on an | |||||||||||||||||||||||||
33 | annualized basis by:
| |||||||||||||||||||||||||
34 | (i) multiplying by 12, or in the case of a |
| |||||||
| |||||||
1 | taxable year of
less than 12 months, by the number | ||||||
2 | of months in the taxable year, the
net income | ||||||
3 | computed without regard to the standard exemption | ||||||
4 | for the months
in the taxable
year ending before | ||||||
5 | the month in which the installment is required to | ||||||
6 | be paid;
| ||||||
7 | (ii) dividing the resulting amount by the | ||||||
8 | number of months in the
taxable year ending before | ||||||
9 | the month in which such installment date falls; and
| ||||||
10 | (iii) deducting from such amount the standard | ||||||
11 | exemption allowable for
the taxable year, such | ||||||
12 | standard exemption being determined as of the last
| ||||||
13 | date prescribed for payment of the installment.
| ||||||
14 | (E) Annualized Net Income; Corporations. For | ||||||
15 | corporations,
net income shall be placed on an | ||||||
16 | annualized basis by multiplying
by 12 the taxable | ||||||
17 | income
| ||||||
18 | (i) for the first 3 months of the taxable year, | ||||||
19 | in the case of the
installment required to be paid | ||||||
20 | in the 4th month,
| ||||||
21 | (ii) for the first 3 months or for the first 5 | ||||||
22 | months of the taxable
year, in the case of the | ||||||
23 | installment required to be paid in the 6th month,
| ||||||
24 | (iii) for the first 6 months or for the first 8 | ||||||
25 | months of the taxable
year, in the case of the | ||||||
26 | installment required to be paid in the 9th month, | ||||||
27 | and
| ||||||
28 | (iv) for the first 9 months or for the first 11 | ||||||
29 | months of the taxable
year, in the case of the | ||||||
30 | installment required to be paid in the 12th month
| ||||||
31 | of the taxable year,
| ||||||
32 | then dividing the resulting amount by the number of | ||||||
33 | months in the taxable
year (3, 5, 6, 8, 9, or 11 as the | ||||||
34 | case may be).
|
| |||||||
| |||||||
1 | (d) Exceptions. Notwithstanding the provisions of the | ||||||
2 | preceding
subsections, the penalty imposed by subsection (a) | ||||||
3 | shall not
be imposed if the taxpayer was not required to file | ||||||
4 | an Illinois income
tax return for the preceding taxable year, | ||||||
5 | or, for individuals, if the
taxpayer had no tax liability for | ||||||
6 | the preceding taxable year and such year
was a taxable year of | ||||||
7 | 12 months.
The penalty imposed by subsection (a) shall
also not | ||||||
8 | be imposed on any underpayments of estimated tax due before the
| ||||||
9 | effective date of this amendatory Act of 1998 which | ||||||
10 | underpayments are solely
attributable to the change in | ||||||
11 | apportionment from subsection (a) to subsection
(h) of Section | ||||||
12 | 304. The provisions of this amendatory Act of 1998 apply to tax
| ||||||
13 | years ending on or after December 31, 1998.
| ||||||
14 | (e) The penalty imposed for underpayment of estimated tax | ||||||
15 | by subsection
(a) of this Section shall not be imposed to the | ||||||
16 | extent that the Director
Department
or his or her designate | ||||||
17 | determines, pursuant to Section 3-8 of the Uniform Penalty
and | ||||||
18 | Interest Act that the penalty should not be imposed.
| ||||||
19 | (f) Definition of tax. For purposes of subsections (b) and | ||||||
20 | (c),
the term "tax" means the excess of the tax imposed under | ||||||
21 | Article 2 of
this Act, over the amounts credited against such | ||||||
22 | tax under Sections
601(b) (3) and (4).
| ||||||
23 | (g) Application of Section in case of tax withheld under | ||||||
24 | Article 7
on compensation .
For purposes of applying this | ||||||
25 | Section :
| ||||||
26 | (1) in the case of an individual, tax
withheld from | ||||||
27 | compensation
under Article 7 for the taxable year shall be | ||||||
28 | deemed a payment
of estimated tax, and an equal part of | ||||||
29 | such amount shall be deemed paid
on each installment date | ||||||
30 | for such taxable year, unless the taxpayer
establishes the | ||||||
31 | dates on which all amounts were actually withheld, in
which | ||||||
32 | case the amounts so withheld shall be deemed payments of | ||||||
33 | estimated
tax on the dates on which such amounts were | ||||||
34 | actually withheld ;
.
|
| |||||||
| |||||||
1 | (2) amounts timely paid by a partnership, Subchapter S | ||||||
2 | corporation, or trust on behalf of a partner, shareholder, | ||||||
3 | or beneficiary pursuant to subsection (f) of Section 502 or | ||||||
4 | Section 709.5 and claimed as a payment of estimated tax | ||||||
5 | shall be deemed a payment of estimated tax made on the last | ||||||
6 | day of the taxable year of the partnership, Subchapter S | ||||||
7 | corporation, or trust for which the income from the | ||||||
8 | withholding is made was computed; and | ||||||
9 | (3) all other amounts pursuant to Article 7 shall be | ||||||
10 | deemed a payment of estimated tax on the date the payment | ||||||
11 | is made to the taxpayer of the amount from which the tax is | ||||||
12 | withheld.
| ||||||
13 | (g-5) Amounts withheld under the State Salary and Annuity | ||||||
14 | Withholding
Act. An individual who has amounts withheld under | ||||||
15 | paragraph (10) of Section 4
of the State Salary and Annuity | ||||||
16 | Withholding Act may elect to have those amounts
treated as | ||||||
17 | payments of estimated tax made on the dates on which those | ||||||
18 | amounts
are actually withheld.
| ||||||
19 | (i) Short taxable year. The application of this Section to
| ||||||
20 | taxable years of less than 12 months shall be in accordance | ||||||
21 | with
regulations prescribed by the Department.
| ||||||
22 | The changes in this Section made by Public Act 84-127 shall | ||||||
23 | apply to
taxable years ending on or after January 1, 1986.
| ||||||
24 | (Source: P.A. 90-448, eff. 8-16-97; 90-613, eff. 7-9-98 .)
| ||||||
25 | (35 ILCS 5/905) (from Ch. 120, par. 9-905)
| ||||||
26 | Sec. 905. Limitations on Notices of Deficiency.
| ||||||
27 | (a) In general. Except as otherwise provided in this Act:
| ||||||
28 | (1) A notice of deficiency shall be issued not later | ||||||
29 | than 3 years
after the date the return was filed, and
| ||||||
30 | (2) No deficiency shall be assessed or collected with | ||||||
31 | respect to the
year for which the return was filed unless | ||||||
32 | such notice is issued within such
period.
| ||||||
33 | (b) Substantial omission of items. |
| |||||||
| |||||||
1 | (1) Omission of more than 25% of income. If the | ||||||
2 | taxpayer omits
from base income an amount properly | ||||||
3 | includible therein which is in
excess of 25% of the amount | ||||||
4 | of base income stated in the return, a
notice of deficiency | ||||||
5 | may be issued not later than 6 years after the
return was | ||||||
6 | filed. For purposes of this paragraph, there shall not be
| ||||||
7 | taken into account any amount which is omitted in the | ||||||
8 | return if such
amount is disclosed in the return, or in a | ||||||
9 | statement attached to the
return, in a manner adequate to | ||||||
10 | apprise the Department of the nature and
the amount of such | ||||||
11 | item.
| ||||||
12 | (2) Reportable transactions. If a taxpayer fails to | ||||||
13 | include on any return or statement for any taxable year any | ||||||
14 | information with respect to a reportable transaction or | ||||||
15 | Illinois reportable transaction, as required under Section | ||||||
16 | 501(b) of this Act, or fails to disclose an inconsistent | ||||||
17 | return position, as required under Section 501(c) of this | ||||||
18 | Act, a notice of deficiency may be issued not later than 6 | ||||||
19 | years after the return is filed with respect to the taxable | ||||||
20 | year in which the taxpayer participated in the reportable | ||||||
21 | transaction or was required to disclose an inconsistent | ||||||
22 | return position.
| ||||||
23 | (c) No return or fraudulent return. If no return is filed | ||||||
24 | or a
false and fraudulent return is filed with intent to evade | ||||||
25 | the tax
imposed by this Act, a notice of deficiency may be | ||||||
26 | issued at any time.
| ||||||
27 | (d) Failure to report federal change. If a taxpayer fails | ||||||
28 | to
notify the Department in any case where notification is | ||||||
29 | required by
Section 304(c) or 506(b), or fails to report a | ||||||
30 | change or correction which is
treated in the same manner as if | ||||||
31 | it were a deficiency for federal income
tax purposes, a notice | ||||||
32 | of deficiency may be issued (i) at any time or
(ii) on or after | ||||||
33 | August 13, 1999, at any time for the
taxable year for which the | ||||||
34 | notification is required or for any taxable year to
which the |
| |||||||
| |||||||
1 | taxpayer may carry an Article 2 credit, or a Section 207 loss,
| ||||||
2 | earned, incurred, or used in the year for which the | ||||||
3 | notification is required;
provided, however, that the amount of | ||||||
4 | any proposed assessment set forth in the
notice shall be | ||||||
5 | limited to the amount of any deficiency resulting under this
| ||||||
6 | Act from the recomputation of the taxpayer's net income, | ||||||
7 | Article 2 credits, or
Section 207 loss earned, incurred, or | ||||||
8 | used in the taxable year for which the
notification is required | ||||||
9 | after giving effect to the item or items required to
be | ||||||
10 | reported.
| ||||||
11 | (e) Report of federal change.
| ||||||
12 | (1) Before August 13, 1999, in any case where | ||||||
13 | notification of
an alteration is given as required by | ||||||
14 | Section 506(b), a notice of
deficiency may be issued at any | ||||||
15 | time within 2 years after the date such
notification is | ||||||
16 | given, provided, however, that the amount of any
proposed | ||||||
17 | assessment set forth in such notice shall be limited to the
| ||||||
18 | amount of any deficiency resulting under this Act from | ||||||
19 | recomputation of
the taxpayer's net income, net loss, or | ||||||
20 | Article 2 credits
for the taxable year after giving
effect | ||||||
21 | to the item
or items reflected in the reported alteration.
| ||||||
22 | (2) On and after August 13, 1999, in any case where | ||||||
23 | notification of
an alteration is given as required by | ||||||
24 | Section 506(b), a notice of
deficiency may be issued at any | ||||||
25 | time within 2 years after the date such
notification is | ||||||
26 | given for the taxable year for which the notification is
| ||||||
27 | given or for any taxable year to which the taxpayer may | ||||||
28 | carry an Article 2
credit, or a Section 207 loss, earned, | ||||||
29 | incurred, or used in the year for which
the notification is | ||||||
30 | given, provided, however, that the amount of any
proposed | ||||||
31 | assessment set forth in such notice shall be limited to the
| ||||||
32 | amount of any deficiency resulting under this Act from | ||||||
33 | recomputation of
the taxpayer's net income, Article 2 | ||||||
34 | credits, or Section 207
loss earned, incurred, or used in
|
| |||||||
| |||||||
1 | the taxable year for which the notification is given after | ||||||
2 | giving
effect to the item
or items reflected in the | ||||||
3 | reported alteration.
| ||||||
4 | (f) Extension by agreement. Where, before the expiration of | ||||||
5 | the
time prescribed in this Section for the issuance of a | ||||||
6 | notice of
deficiency, both the Department and the taxpayer | ||||||
7 | shall have consented in
writing to its issuance after such | ||||||
8 | time, such notice may be issued at
any time prior to the | ||||||
9 | expiration of the period agreed upon.
In the case of a taxpayer | ||||||
10 | who is a partnership, Subchapter S corporation, or
trust and | ||||||
11 | who enters into an agreement with the Department pursuant to | ||||||
12 | this
subsection on or after January 1, 2003, a notice of | ||||||
13 | deficiency may be issued to
the partners, shareholders, or | ||||||
14 | beneficiaries of the taxpayer at any time prior
to the | ||||||
15 | expiration of the period agreed upon. Any
proposed assessment | ||||||
16 | set forth in the notice, however, shall be limited to the
| ||||||
17 | amount of
any deficiency resulting under this Act from | ||||||
18 | recomputation of items of income,
deduction, credits, or other | ||||||
19 | amounts of the taxpayer that are taken into
account by the | ||||||
20 | partner, shareholder, or beneficiary in computing its | ||||||
21 | liability
under this Act.
The period
so agreed upon may be | ||||||
22 | extended by subsequent agreements in writing made
before the | ||||||
23 | expiration of the period previously agreed upon.
| ||||||
24 | (g) Erroneous refunds. In any case in which there has been | ||||||
25 | an
erroneous refund of tax payable under this Act, a notice of | ||||||
26 | deficiency
may be issued at any time within 2 years from the | ||||||
27 | making of such refund,
or within 5 years from the making of | ||||||
28 | such refund if it appears that any
part of the refund was | ||||||
29 | induced by fraud or the misrepresentation of a
material fact, | ||||||
30 | provided, however, that the amount of any proposed
assessment | ||||||
31 | set forth in such notice shall be limited to the amount of
such | ||||||
32 | erroneous refund.
| ||||||
33 | Beginning July 1, 1993, in any case in which there has been | ||||||
34 | a refund of tax
payable under this Act attributable to a net |
| |||||||
| |||||||
1 | loss carryback as provided for in
Section 207, and that refund | ||||||
2 | is subsequently determined to be an erroneous
refund due to a | ||||||
3 | reduction in the amount of the net loss which was originally
| ||||||
4 | carried back, a notice of deficiency for the erroneous refund | ||||||
5 | amount may be
issued at any time during the same time period in | ||||||
6 | which a notice of deficiency
can be issued on the loss year | ||||||
7 | creating the carryback amount and subsequent
erroneous refund. | ||||||
8 | The amount of any proposed assessment set forth in the notice
| ||||||
9 | shall be limited to the amount of such erroneous refund.
| ||||||
10 | (h) Time return deemed filed. For purposes of this Section | ||||||
11 | a tax
return filed before the last day prescribed by law | ||||||
12 | (including any
extension thereof) shall be deemed to have been | ||||||
13 | filed on such last day.
| ||||||
14 | (i) Request for prompt determination of liability. For | ||||||
15 | purposes
of subsection (a)(1), in the case of a tax return | ||||||
16 | required under this
Act in respect of a decedent, or by his | ||||||
17 | estate during the period of
administration, or by a | ||||||
18 | corporation, the period referred to in such
Subsection shall be | ||||||
19 | 18 months after a written request for prompt
determination of | ||||||
20 | liability is filed with the Department (at such time
and in | ||||||
21 | such form and manner as the Department shall by regulations
| ||||||
22 | prescribe) by the executor, administrator, or other fiduciary
| ||||||
23 | representing the estate of such decedent, or by such | ||||||
24 | corporation, but
not more than 3 years after the date the | ||||||
25 | return was filed. This
subsection shall not apply in the case | ||||||
26 | of a corporation unless:
| ||||||
27 | (1) (A) such written request notifies the Department | ||||||
28 | that the
corporation contemplates dissolution at or before | ||||||
29 | the expiration of such
18-month period, (B) the dissolution | ||||||
30 | is begun in good faith before the
expiration of such | ||||||
31 | 18-month period, and (C) the dissolution is completed;
| ||||||
32 | (2) (A) such written request notifies the Department | ||||||
33 | that a
dissolution has in good faith been begun, and (B) | ||||||
34 | the dissolution is
completed; or
|
| |||||||
| |||||||
1 | (3) a dissolution has been completed at the time such | ||||||
2 | written
request is made.
| ||||||
3 | (j) Withholding tax. In the case of returns required under | ||||||
4 | Article 7
of this Act (with respect to any amounts withheld as | ||||||
5 | tax or any amounts
required to have been withheld as tax) a | ||||||
6 | notice of deficiency shall be
issued not later than 3 years | ||||||
7 | after the 15th day of the 4th month
following the close of the | ||||||
8 | calendar year in which such withholding was
required.
| ||||||
9 | (k) Penalties for failure to make information reports. A | ||||||
10 | notice of
deficiency for the penalties provided by Subsection | ||||||
11 | 1405.1(c) of this Act may
not be issued more than 3 years after | ||||||
12 | the due date of the reports with respect
to which the penalties | ||||||
13 | are asserted.
| ||||||
14 | (l) Penalty for failure to file withholding returns. A | ||||||
15 | notice of deficiency
for penalties provided by Section 1004 of | ||||||
16 | this Act for taxpayer's failure
to file withholding returns may | ||||||
17 | not be issued more than three years after
the 15th day of the | ||||||
18 | 4th month following the close of the calendar year in
which the | ||||||
19 | withholding giving rise to taxpayer's obligation to file those
| ||||||
20 | returns occurred.
| ||||||
21 | (m) Transferee liability. A notice of deficiency may be | ||||||
22 | issued to a
transferee relative to a liability asserted under | ||||||
23 | Section 1405 during time
periods defined as follows:
| ||||||
24 | 1) Initial Transferee. In the case of the liability of | ||||||
25 | an initial
transferee, up to 2 years after the expiration | ||||||
26 | of the period of limitation for
assessment against the | ||||||
27 | transferor, except that if a court proceeding for review
of | ||||||
28 | the assessment against the transferor has begun, then up to | ||||||
29 | 2 years after
the return of the certified copy of the | ||||||
30 | judgment in the court proceeding.
| ||||||
31 | 2) Transferee of Transferee. In the case of the | ||||||
32 | liability of a
transferee,
up to 2 years after the | ||||||
33 | expiration of the period of limitation for assessment
| ||||||
34 | against the preceding transferee, but not more than 3 years |
| |||||||
| |||||||
1 | after the
expiration of the period of limitation for | ||||||
2 | assessment against the initial
transferor; except that if, | ||||||
3 | before the expiration of the period of limitation
for the | ||||||
4 | assessment of the liability of the transferee, a court | ||||||
5 | proceeding for
the collection of the tax or liability in | ||||||
6 | respect thereof has been begun
against the initial | ||||||
7 | transferor or the last preceding transferee, as the case
| ||||||
8 | may be, then the period of limitation for assessment of the | ||||||
9 | liability of the
transferee shall expire 2 years after the | ||||||
10 | return of the certified copy of the
judgment in the court | ||||||
11 | proceeding.
| ||||||
12 | (n) Notice of decrease in net loss. On and after the | ||||||
13 | effective date of
this amendatory Act of the 92nd General | ||||||
14 | Assembly, no notice of deficiency shall
be issued as the result | ||||||
15 | of a decrease determined by the Department in the net
loss | ||||||
16 | incurred by a taxpayer under Section 207 of this Act unless the | ||||||
17 | Department
has notified the taxpayer of the proposed decrease | ||||||
18 | within 3 years after the
return reporting the loss was filed or | ||||||
19 | within one year after an amended return
reporting an increase | ||||||
20 | in the loss was filed, provided that in the case of an
amended | ||||||
21 | return, a decrease proposed by the Department more than 3 years | ||||||
22 | after
the original return was filed may not exceed the increase | ||||||
23 | claimed by the
taxpayer on the original return.
| ||||||
24 | (o) The changes made to this Section by this amendatory Act | ||||||
25 | of the 93rd General Assembly do not apply to any small business | ||||||
26 | as defined in the Small Business Advisory Act.
| ||||||
27 | (Source: P.A. 91-541, eff. 8-13-99; 92-846, eff.
8-23-02.)
| ||||||
28 | (35 ILCS 5/911) (from Ch. 120, par. 9-911)
| ||||||
29 | Sec. 911. Limitations on Claims for Refund.
| ||||||
30 | (a) In general. Except
as otherwise provided in this Act:
| ||||||
31 | (1) A claim for refund shall be filed not later than 3 | ||||||
32 | years after
the date the return was filed (in the case of | ||||||
33 | returns required under
Article 7 of this Act respecting any |
| |||||||
| |||||||
1 | amounts withheld as tax, not later
than 3 years after the | ||||||
2 | 15th day of the 4th month following the close of
the | ||||||
3 | calendar year in which such withholding was made), or one | ||||||
4 | year after
the date the tax was paid, whichever is the | ||||||
5 | later; and
| ||||||
6 | (2) No credit or refund shall be allowed or made with | ||||||
7 | respect to the
year for which the claim was filed unless | ||||||
8 | such claim is filed within
such period.
| ||||||
9 | (b) Federal changes.
| ||||||
10 | (1) In general. In any case where
notification of an | ||||||
11 | alteration is required by Section 506(b), a claim
for | ||||||
12 | refund may be filed within 2 years after the date on which | ||||||
13 | such
notification was due (regardless of whether such | ||||||
14 | notice was given), but
the amount recoverable pursuant to a | ||||||
15 | claim filed under this Section
shall be limited to the | ||||||
16 | amount of any overpayment resulting under this
Act from | ||||||
17 | recomputation of the taxpayer's net income, net loss, or | ||||||
18 | Article 2
credits for the taxable
year after giving effect | ||||||
19 | to the item or items reflected in the
alteration required | ||||||
20 | to be reported.
| ||||||
21 | (2) Tentative carryback adjustments paid before | ||||||
22 | January 1, 1974.
If, as the result of the payment before | ||||||
23 | January 1, 1974 of a federal
tentative carryback | ||||||
24 | adjustment, a notification of an alteration is
required | ||||||
25 | under Section 506(b), a claim for refund may be filed at | ||||||
26 | any
time before January 1, 1976, but the amount recoverable | ||||||
27 | pursuant to a
claim filed under this Section shall be | ||||||
28 | limited to the amount of any
overpayment resulting under | ||||||
29 | this Act from recomputation of the
taxpayer's base income | ||||||
30 | for the taxable year after giving effect to the
federal | ||||||
31 | alteration resulting from the tentative carryback | ||||||
32 | adjustment
irrespective of any limitation imposed in | ||||||
33 | paragraph (l) of this
subsection.
| ||||||
34 | (c) Extension by agreement. Where, before the expiration of |
| |||||||
| |||||||
1 | the
time prescribed in this section for the filing of a claim | ||||||
2 | for refund,
both the Department and the claimant shall have | ||||||
3 | consented in writing to
its filing after such time, such claim | ||||||
4 | may be filed at any time prior to
the expiration of the period | ||||||
5 | agreed upon. The period so agreed upon may
be extended by | ||||||
6 | subsequent agreements in writing made before the
expiration of | ||||||
7 | the period previously agreed upon.
In the case of a taxpayer | ||||||
8 | who is a partnership, Subchapter S corporation, or
trust and | ||||||
9 | who enters into an agreement with the Department pursuant to | ||||||
10 | this
subsection on or after January 1, 2003, a claim for refund | ||||||
11 | may be issued to the
partners, shareholders, or beneficiaries | ||||||
12 | of the taxpayer at any time prior to
the expiration of the | ||||||
13 | period agreed upon. Any refund
allowed pursuant to the claim, | ||||||
14 | however, shall be limited to the amount of any
overpayment
of | ||||||
15 | tax due under this Act that results from recomputation of items | ||||||
16 | of income,
deduction, credits, or other amounts of the taxpayer | ||||||
17 | that are taken into
account by the partner, shareholder, or | ||||||
18 | beneficiary in computing its liability
under this Act.
| ||||||
19 | (d) Limit on amount of credit or refund.
| ||||||
20 | (1) Limit where claim filed within 3-year period. If | ||||||
21 | the claim was
filed by the claimant during the 3-year | ||||||
22 | period prescribed in subsection
(a), the amount of the | ||||||
23 | credit or refund shall not exceed the portion of
the tax | ||||||
24 | paid within the period, immediately preceding the filing of | ||||||
25 | the
claim, equal to 3 years plus the period of any | ||||||
26 | extension of time for
filing the return.
| ||||||
27 | (2) Limit where claim not filed within 3-year period. | ||||||
28 | If the claim
was not filed within such 3-year period, the | ||||||
29 | amount of the credit or
refund shall not exceed the portion | ||||||
30 | of the tax paid during the one year
immediately preceding | ||||||
31 | the filing of the claim.
| ||||||
32 | (e) Time return deemed filed. For purposes of this section | ||||||
33 | a tax
return filed before the last day prescribed by law for | ||||||
34 | the filing of
such return (including any extensions thereof) |
| |||||||
| |||||||
1 | shall be deemed to have
been filed on such last day.
| ||||||
2 | (f) No claim for refund based on the taxpayer's taking a | ||||||
3 | credit for
estimated tax payments as provided by Section | ||||||
4 | 601(b)(2) or for any amount
paid by a taxpayer pursuant to | ||||||
5 | Section 602(a) or for any amount of credit for
tax withheld | ||||||
6 | pursuant to Article 7
Section 701 may be filed more than 3
| ||||||
7 | years after the due date, as provided by Section 505, of the | ||||||
8 | return which
was required to be filed relative to the taxable | ||||||
9 | year for which the
payments were made or for which the tax was | ||||||
10 | withheld. The changes in
this subsection (f) made by this
| ||||||
11 | amendatory Act of 1987 shall apply to all taxable years ending | ||||||
12 | on or after
December 31, 1969.
| ||||||
13 | (g) Special Period of Limitation with Respect to Net Loss | ||||||
14 | Carrybacks.
If the claim for refund relates to an overpayment | ||||||
15 | attributable to a net
loss carryback as provided by Section | ||||||
16 | 207, in lieu of the 3 year period of
limitation prescribed in | ||||||
17 | subsection (a), the period shall be that period
which ends 3 | ||||||
18 | years after the time prescribed by law for filing the return
| ||||||
19 | (including extensions thereof) for the taxable year of the net | ||||||
20 | loss which
results in such carryback (or, on and after August | ||||||
21 | 13, 1999, with respect to a change in the
carryover of
an | ||||||
22 | Article 2 credit to a taxable year resulting from the carryback | ||||||
23 | of a Section
207 loss incurred in a taxable year beginning on | ||||||
24 | or after January 1, 2000, the
period shall be that period
that | ||||||
25 | ends 3 years after the time prescribed by law for filing the | ||||||
26 | return
(including extensions of that time) for that subsequent | ||||||
27 | taxable year),
or the period prescribed in subsection (c) in
| ||||||
28 | respect of such taxable year, whichever expires later. In the | ||||||
29 | case of such
a claim, the amount of the refund may exceed the | ||||||
30 | portion of the tax paid
within the period provided in | ||||||
31 | subsection (d) to the extent of the amount of
the overpayment | ||||||
32 | attributable to such carryback.
On and after August 13, 1999, | ||||||
33 | if the claim for refund relates to an overpayment attributable | ||||||
34 | to
the
carryover
of an Article 2 credit, or of a Section 207 |
| |||||||
| |||||||
1 | loss, earned, incurred (in a
taxable year beginning on or after | ||||||
2 | January 1, 2000), or used in
a
year for which a notification of | ||||||
3 | a change affecting federal taxable income must
be filed under | ||||||
4 | subsection (b) of Section 506, the claim may be filed within | ||||||
5 | the
period
prescribed in paragraph (1) of subsection (b) in | ||||||
6 | respect of the year for which
the
notification is required. In | ||||||
7 | the case of such a claim, the amount of the
refund may exceed | ||||||
8 | the portion of the tax paid within the period provided in
| ||||||
9 | subsection (d) to the extent of the amount of the overpayment | ||||||
10 | attributable to
the recomputation of the taxpayer's Article 2 | ||||||
11 | credits, or Section 207 loss,
earned, incurred, or used in the | ||||||
12 | taxable year for which the notification is
given.
| ||||||
13 | (h) Claim for refund based on net loss. On and after the | ||||||
14 | effective date
of this amendatory Act of the 92nd General | ||||||
15 | Assembly, no claim for refund shall
be allowed to the extent | ||||||
16 | the refund is the result of an amount of net loss
incurred | ||||||
17 | under Section 207 of this Act that was not reported to the | ||||||
18 | Department
within 3 years of the due date (including | ||||||
19 | extensions) of the return for the
loss year on either the | ||||||
20 | original return filed by the taxpayer or on amended
return.
| ||||||
21 | (i) The changes made to this Section by this amendatory Act | ||||||
22 | of the 93rd General Assembly do not apply to any small business | ||||||
23 | as defined in the Small Business Advisory Act.
| ||||||
24 | (Source: P.A. 91-541, eff. 8-13-99; 92-846, eff.
8-23-02.)
| ||||||
25 | (35 ILCS 5/1001) (from Ch. 120, par. 10-1001)
| ||||||
26 | Sec. 1001. Failure to File Tax Returns.
| ||||||
27 | (a) In case of failure to file any
tax return required | ||||||
28 | under this Act on the date prescribed therefor,
(determined | ||||||
29 | with regard to any extensions of time for filing) there shall
| ||||||
30 | be added as a penalty the amount prescribed by Section 3-3 of | ||||||
31 | the Uniform
Penalty and Interest Act.
| ||||||
32 | (b) Failure to disclose reportable transaction. Any | ||||||
33 | taxpayer who fails to comply with the requirements of Section |
| |||||||
| |||||||
1 | 501(b)(1) of this Act or who fails to include on a return or | ||||||
2 | statement any information with respect to an Illinois | ||||||
3 | reportable transaction required under Section 501(b)(2) of | ||||||
4 | this Act and regulations promulgated thereunder to be included | ||||||
5 | with that return or statement shall pay a penalty in the amount | ||||||
6 | determined under this subsection. Such penalty shall be deemed | ||||||
7 | assessed upon the date of filing of the return for the taxable | ||||||
8 | year in which the taxpayer participates in the reportable | ||||||
9 | transaction. A taxpayer shall not be considered to have | ||||||
10 | complied with the requirements of Section 501(b)(1) of this Act | ||||||
11 | unless the disclosure statement filed with the Department | ||||||
12 | includes all of the information required to be disclosed with | ||||||
13 | respect to a reportable transaction pursuant to Treasury | ||||||
14 | Regulations Section 1.6011-4 (26 CFR 1.6011-4) and regulations | ||||||
15 | promulgated by the Department under Section 501(b)(1) of this | ||||||
16 | Act. A taxpayer shall not be considered to have complied with | ||||||
17 | the requirements of Section 501(b)(2) of this Act unless the | ||||||
18 | disclosure required under such Section includes all of the | ||||||
19 | information required to be disclosed under regulations | ||||||
20 | promulgated by the Department pursuant to such Section. | ||||||
21 | (1) Amount of penalty. Except as provided in paragraph (2), | ||||||
22 | the amount of the penalty under this subsection shall be | ||||||
23 | $15,000 for each failure to comply with the requirements of | ||||||
24 | Section 501(b)(1) or Section 501(b)(2). | ||||||
25 | (2) Increase in penalty for listed transactions. In the | ||||||
26 | case of a failure to comply with the requirements of Section | ||||||
27 | 501(b)(1) with respect to a "listed transaction", or in the | ||||||
28 | case of failure to properly disclose participation an Illinois | ||||||
29 | listed transaction as defined under Section 501(b)(2) of this | ||||||
30 | Act, the penalty under this subsection shall be $30,000 for | ||||||
31 | each failure. | ||||||
32 | (3) Authority to Rescind Penalty. The Board of Appeals may | ||||||
33 | rescind all or any portion of any penalty imposed by this | ||||||
34 | subsection with respect to any violation, if all of the |
| |||||||
| |||||||
1 | following apply: | ||||||
2 | (A) The violation is with respect to a reportable | ||||||
3 | transaction or Illinois reportable transaction other than | ||||||
4 | a listed transaction or Illinois listed transaction; | ||||||
5 | (B) The person on whom the penalty is imposed has a | ||||||
6 | history of complying with the requirements of this Act; | ||||||
7 | (C) It is shown that the violation is due to an | ||||||
8 | unintentional mistake of fact; | ||||||
9 | (D) Imposing the penalty would be against equity and | ||||||
10 | good conscience; and | ||||||
11 | (E) Rescinding the penalty would promote compliance | ||||||
12 | with the requirements of this Act and effective tax | ||||||
13 | administration. | ||||||
14 | The exercise of authority under this subparagraph (3) shall | ||||||
15 | be at the sole discretion of the Board of Appeals and the | ||||||
16 | Director. Notwithstanding any other law or rule of law, any | ||||||
17 | determination under this subparagraph (3) may not be reviewed | ||||||
18 | in any administrative or judicial proceeding. | ||||||
19 | (4) Coordination with other penalties. The penalty imposed | ||||||
20 | by this subsection is in addition to any penalty imposed by | ||||||
21 | this Act or the Uniform Penalty and Interest Act. | ||||||
22 | (c) Penalty for failure to disclose inconsistent return | ||||||
23 | position. Any taxpayer that fails to properly disclose an | ||||||
24 | inconsistent return position with respect to any taxable year, | ||||||
25 | as required under Section 501(c) of this Act, shall incur a | ||||||
26 | penalty of $15,000 for each position not reported. Such penalty | ||||||
27 | shall be deemed assessed upon the date of filing of the return | ||||||
28 | for the taxable year with respect to which the taxpayer was | ||||||
29 | required to disclose the inconsistent return position. The | ||||||
30 | penalty imposed by this subsection is in addition to any | ||||||
31 | penalty imposed by this Act or the Uniform Penalty and Interest | ||||||
32 | Act. | ||||||
33 | (d) The total penalty imposed under subsection (b) or | ||||||
34 | subsection (c) of this Section with respect to any taxable year |
| |||||||
| |||||||
1 | shall not exceed 10% of the increase in net income (or | ||||||
2 | reduction in Illinois net loss under Section 207 of this Act) | ||||||
3 | that would result had the taxpayer not participated in any | ||||||
4 | reportable transaction or Illinois reportable transaction | ||||||
5 | affecting its net income for such taxable year and reported | ||||||
6 | each inconsistent return position in a manner that would cause | ||||||
7 | it to report the greatest net income (or smallest Illinois net | ||||||
8 | loss) on its Illinois income tax return for the taxable year.
| ||||||
9 | (e) The changes made to this Section by this amendatory Act | ||||||
10 | of the 93rd General Assembly do not apply to any small business | ||||||
11 | as defined in the Small Business Advisory Act.
| ||||||
12 | (Source: P.A. 87-205 .)
| ||||||
13 | (35 ILCS 5/1002) (from Ch. 120, par. 10-1002)
| ||||||
14 | Sec. 1002. Failure to Pay Tax.
| ||||||
15 | (a) Negligence. If any part of a deficiency is due to | ||||||
16 | negligence or
intentional disregard of rules and regulations | ||||||
17 | (but without intent to
defraud) there shall be added to the tax | ||||||
18 | as a penalty the amount prescribed
by Section 3-5 of the | ||||||
19 | Uniform Penalty and Interest Act.
| ||||||
20 | (b) Fraud. If any part of a deficiency is due to fraud, | ||||||
21 | there
shall be added to the tax as a penalty the amount | ||||||
22 | prescribed
by Section 3-6 of the Uniform Penalty and Interest | ||||||
23 | Act.
| ||||||
24 | (c) Nonwillful failure to pay withholding tax. If any | ||||||
25 | employer, without
intent to evade or defeat any tax imposed by | ||||||
26 | this Act or the payment
thereof, shall fail to make a return | ||||||
27 | and pay a tax withheld by him at the
time required by or under | ||||||
28 | the provisions of this Act, such employer shall
be liable for | ||||||
29 | such taxes and shall pay the same together with the interest
| ||||||
30 | and the penalty provided by Sections 3-2 and 3-3, respectively, | ||||||
31 | of the
Uniform Penalty and Interest Act and such interest and | ||||||
32 | penalty shall not be
charged to or collected from the employee | ||||||
33 | by the employer.
|
| |||||||
| |||||||
1 | (d) Willful failure to collect and pay over tax. Any person
| ||||||
2 | required to collect, truthfully account for, and pay over the | ||||||
3 | tax
imposed by this Act who willfully fails to collect such tax | ||||||
4 | or
truthfully account for and pay over such tax or willfully | ||||||
5 | attempts in
any manner to evade or defeat the tax or the | ||||||
6 | payment thereof, shall, in
addition to other penalties provided | ||||||
7 | by law, be liable for the penalty
imposed by Section 3-7 of the | ||||||
8 | Uniform Penalty and Interest Act.
| ||||||
9 | (e) Penalties assessable.
| ||||||
10 | (1) In general. Except as otherwise provided in this | ||||||
11 | Act
provided in paragraphs (2), (3) and (4) , the
penalties | ||||||
12 | provided by this Act shall be paid upon notice and demand | ||||||
13 | and
shall be assessed, collected, and paid in the same | ||||||
14 | manner as taxes and any
reference in this Act to the tax | ||||||
15 | imposed by this Act shall be deemed also
to refer to | ||||||
16 | penalties provided by this Act.
| ||||||
17 | (2) Procedure for assessing certain penalties. For the | ||||||
18 | purposes of
Article 9 any penalty under Section 804(a) or | ||||||
19 | Section 1001 shall be deemed
assessed upon the filing of | ||||||
20 | the return for the taxable year.
| ||||||
21 | (3) Procedure for assessing the penalty for failure to | ||||||
22 | file withholding
returns or annual transmittal forms for | ||||||
23 | wage and tax statements. The penalty
imposed by Section | ||||||
24 | 1004 will be asserted by the Department's issuance of
a | ||||||
25 | notice of deficiency. If taxpayer files a timely protest, | ||||||
26 | the procedures
of Section 908 will be followed. If taxpayer | ||||||
27 | does not file a timely protest,
the notice of deficiency | ||||||
28 | will constitute an assessment pursuant to subsection
(c) of | ||||||
29 | Section 904.
| ||||||
30 | (4) Assessment of penalty under Section 1005(a). The | ||||||
31 | penalty imposed under Section 1005(a) shall be deemed | ||||||
32 | assessed upon the assessment of the tax to which such | ||||||
33 | penalty relates and shall be collected and paid on notice | ||||||
34 | and demand in the same manner as the tax.
|
| |||||||
| |||||||
1 | (f) Determination of deficiency. For purposes of | ||||||
2 | subsections (a)
and (b), the amount shown as the tax by the | ||||||
3 | taxpayer upon his return
shall be taken into account in | ||||||
4 | determining the amount of the deficiency
only if such return | ||||||
5 | was filed on or before the last day prescribed by
law for the | ||||||
6 | filing of such return, including any extensions of the time
for | ||||||
7 | such filing.
| ||||||
8 | (g) The changes made to this Section by this amendatory Act | ||||||
9 | of the 93rd General Assembly do not apply to any small business | ||||||
10 | as defined in the Small Business Advisory Act.
| ||||||
11 | (Source: P.A. 89-379, eff. 1-1-96.)
| ||||||
12 | (35 ILCS 5/1005) (from Ch. 120, par. 10-1005)
| ||||||
13 | Sec. 1005. Penalty for Underpayment of Tax.
| ||||||
14 | (a) In general. If any amount of tax required to be shown | ||||||
15 | on a return
prescribed by this Act is not paid on or before the | ||||||
16 | date required for
filing such return (determined without regard | ||||||
17 | to any extension of time to
file), a penalty shall be imposed | ||||||
18 | in the manner and at the rate prescribed
by the Uniform Penalty | ||||||
19 | and Interest Act. The provisions of this subsection shall apply | ||||||
20 | to all taxable years ending on or after January 1, 1986.
| ||||||
21 | (b) Reportable transaction penalty. If a taxpayer has a | ||||||
22 | reportable transaction understatement for any taxable year, | ||||||
23 | there shall be added to the tax an amount equal to 20% of the | ||||||
24 | amount of that understatement. Such penalty shall be deemed | ||||||
25 | assessed upon the assessment of the tax to which such penalty | ||||||
26 | relates and shall be collected and paid on notice and demand in | ||||||
27 | the same manner as the tax. | ||||||
28 | (1) Reportable Transaction Understatement. For | ||||||
29 | purposes of this Section, the term "reportable transaction | ||||||
30 | understatement" means the sum of subparagraphs (A) and (B):
| ||||||
31 | (A) The product of (i) the amount of the increase | ||||||
32 | (if any) in Illinois net income (or decrease in | ||||||
33 | Illinois net loss under Section 207 of this Act) that |
| |||||||
| |||||||
1 | results from a difference between the proper tax | ||||||
2 | treatment of an item to which this subsection applies | ||||||
3 | and the taxpayer's treatment of that item (as shown on | ||||||
4 | the taxpayer's return of tax), and (ii) the applicable | ||||||
5 | tax rates under Section 201 of this Act. | ||||||
6 | (B) The amount of the decrease (if any) in the | ||||||
7 | aggregate amount of credits determined under this Act | ||||||
8 | (including credits that may be carried forward to other | ||||||
9 | taxable years) that results from a difference between | ||||||
10 | the taxpayer's treatment of an item to which this | ||||||
11 | subsection applies (as shown on the taxpayer's return | ||||||
12 | of tax) and the proper tax treatment of that item. | ||||||
13 | (2) Items to which subsection applies. This subsection | ||||||
14 | applies to any item that is attributable to any listed | ||||||
15 | transaction, as defined in Treasury Regulations, Section | ||||||
16 | 1.6011-4, or Illinois listed transaction, as defined in | ||||||
17 | Section 501(b)(2), and to any item that is attributable to | ||||||
18 | any reportable transaction, as defined in Treasury | ||||||
19 | Regulations, Section 1.6011-4, or Illinois reportable | ||||||
20 | transaction, as defined in Section 501(b)(2) (other than a | ||||||
21 | listed transaction or Illinois listed transaction) if a | ||||||
22 | significant purpose of the transaction is the avoidance or | ||||||
23 | evasion of federal or Illinois income tax. | ||||||
24 | (3) Subsection (b) shall be applied by substituting | ||||||
25 | "30%" for "20%" with respect to the portion of any | ||||||
26 | reportable transaction understatement with respect to the | ||||||
27 | relevant facts affecting the tax treatment of the item that | ||||||
28 | are not adequately disclosed in accordance with Section | ||||||
29 | 501(b) of this Act. A taxpayer shall be treated as making | ||||||
30 | adequate disclosure if the penalty for failure to disclose | ||||||
31 | is rescinded under Section 1001(b)(4) of this Act. | ||||||
32 | (4) Reasonable Cause Exception. | ||||||
33 | (A) In general. No penalty shall be imposed under | ||||||
34 | this subsection with respect to any portion of a |
| |||||||
| |||||||
1 | reportable transaction understatement if it is shown | ||||||
2 | that there was a reasonable cause for such portion and | ||||||
3 | that the taxpayer acted in good faith with respect to | ||||||
4 | such portion. | ||||||
5 | (B) Special rules. If the taxpayer has been | ||||||
6 | contacted by the Department regarding the use of a | ||||||
7 | potentially abusive tax shelter, subparagraph (A) does | ||||||
8 | not apply unless all of the following requirements are | ||||||
9 | met: | ||||||
10 | (i) There is or was substantial authority for | ||||||
11 | such treatment; and | ||||||
12 | (ii) The taxpayer reasonably believed that | ||||||
13 | such treatment was more likely than not the proper | ||||||
14 | treatment. | ||||||
15 | (C) Rules relating to reasonable belief. For | ||||||
16 | purposes of subparagraph (B), a taxpayer shall be | ||||||
17 | treated as having a reasonable belief with respect to | ||||||
18 | the tax treatment of an item only if such belief meets | ||||||
19 | the requirements of this subparagraph (C): | ||||||
20 | (i) Such belief must be based on the facts and | ||||||
21 | law that exist at the time the return of tax that | ||||||
22 | includes that tax treatment is filed; | ||||||
23 | (ii) Such belief must relate solely to the | ||||||
24 | taxpayer's chances of success on the merits of that | ||||||
25 | treatment and does not take into account the | ||||||
26 | possibility that the return will not be audited, | ||||||
27 | that the treatment will not be raised on audit, or | ||||||
28 | that the treatment will be resolved through | ||||||
29 | settlement if it is raised; and | ||||||
30 | (iii) Such belief is not based, in whole or in | ||||||
31 | part, on the opinion of a disqualified tax advisor | ||||||
32 | or on a disqualified opinion. | ||||||
33 | (5) Definitions. | ||||||
34 | (i) Disqualified tax advisor. The term |
| |||||||
| |||||||
1 | "disqualified tax advisor" is a tax advisor that meets | ||||||
2 | any of the following conditions: | ||||||
3 | (I) Is a material advisor who participates in | ||||||
4 | the organization, management, promotion, or sale | ||||||
5 | of the transaction or who is related (within the | ||||||
6 | meaning of Sections 267(b) or 707(b)(1) of the | ||||||
7 | Internal Revenue Code) to any person who so | ||||||
8 | participates; | ||||||
9 | (II) Is compensated directly or indirectly by | ||||||
10 | a material advisor with respect to the | ||||||
11 | transaction; | ||||||
12 | (III) Has a fee arrangement with respect to the | ||||||
13 | transaction that is contingent on all or part of | ||||||
14 | the intended tax benefits from the transaction | ||||||
15 | being sustained; or | ||||||
16 | (IV) As determined under regulations | ||||||
17 | prescribed by either the Secretary of the Treasury | ||||||
18 | for federal income tax purposes or the Department, | ||||||
19 | has a continuing financial interest with respect | ||||||
20 | to the transaction. | ||||||
21 | (ii) Disqualified opinion. The term "disqualified | ||||||
22 | opinion" means an opinion that meets any of the | ||||||
23 | following conditions: | ||||||
24 | (I) Is based on unreasonable factual or legal | ||||||
25 | assumptions (including assumptions as to future | ||||||
26 | events); | ||||||
27 | (II) Unreasonably relies on representations, | ||||||
28 | statements, findings, or agreements of the | ||||||
29 | taxpayer or any other person; | ||||||
30 | (III) Does not identify and consider all | ||||||
31 | relevant facts; or | ||||||
32 | (IV) Fails to meet any other requirement as | ||||||
33 | either the Secretary of the Treasury for federal | ||||||
34 | income tax purposes or the Department may |
| |||||||
| |||||||
1 | prescribe. | ||||||
2 | (iii) Material Advisor. The term "material | ||||||
3 | advisor" shall have substantially the same meaning as | ||||||
4 | the same term is defined under Treasury Regulations | ||||||
5 | Section 301.6112-1, (26 CFR 301.6112-1) and shall | ||||||
6 | include any person that is a material advisor for | ||||||
7 | federal income tax purposes under such regulation. | ||||||
8 | (6) Amended returns. Except as provided in Treasury | ||||||
9 | Regulations, in no event may any tax treatment included | ||||||
10 | with an amendment or supplement to a return of tax be taken | ||||||
11 | into account in determining the amount of any reportable | ||||||
12 | transaction understatement if the amendment or supplement | ||||||
13 | is filed after the date the taxpayer is first contacted by | ||||||
14 | either the Internal Revenue Service for federal income tax | ||||||
15 | purposes or by the Department regarding the examination of | ||||||
16 | the return or such other date as specified by the | ||||||
17 | Department by regulation. | ||||||
18 | (7) Effective date. This subsection shall apply to | ||||||
19 | taxable years ending on and after December 31, 2004, except | ||||||
20 | that a reportable transaction understatement shall include | ||||||
21 | an understatement (as determined under paragraph (1)) with | ||||||
22 | respect to any taxable year for which the limitations | ||||||
23 | period on assessment has not expired that is attributable | ||||||
24 | to a transaction in which the taxpayer has invested after | ||||||
25 | February 28, 2000 that becomes a listed transaction (as | ||||||
26 | defined in Treasury Regulations Section 1.6011-4(b)(2)) or | ||||||
27 | Illinois listed transaction (as defined in Section | ||||||
28 | 501(b)(2)(A)(2)) at any time. | ||||||
29 | (c) 100% Interest Penalty. If a taxpayer has been contacted | ||||||
30 | by the Internal Revenue Service or the Department regarding the | ||||||
31 | use of a potentially abusive tax shelter with respect to any | ||||||
32 | taxable year for which the limitations period on assessment has | ||||||
33 | not expired, and has a deficiency attributable to a potentially | ||||||
34 | abusive tax shelter with respect to such taxable year or years, |
| |||||||
| |||||||
1 | there shall be added to the tax an amount equal to 100% of the | ||||||
2 | interest assessed under the Uniform Penalty and Interest Act | ||||||
3 | for the period beginning on the last date prescribed by law for | ||||||
4 | the payment of such tax and ending on the date of the notice of | ||||||
5 | deficiency. Such penalty shall be deemed assessed upon the | ||||||
6 | assessment of the interest to which such penalty relates and | ||||||
7 | shall be collected and paid in the same manner as such | ||||||
8 | interest. The penalty imposed by this subsection is in addition | ||||||
9 | to any penalty imposed by this Act or the Uniform Penalty and | ||||||
10 | Interest Act. For purposes of this subsection and subsection | ||||||
11 | (d) of this Section, the term "potentially abusive tax shelter" | ||||||
12 | means (i) any tax shelter (as defined in Section 6111 of the | ||||||
13 | Internal Revenue Code) with respect to which registration is | ||||||
14 | required under Section 6111 of the Internal Revenue Code and | ||||||
15 | (ii) any entity, investment plan, arrangement, or other plan or | ||||||
16 | arrangement that is of a type that the Internal Revenue Service | ||||||
17 | or the Department determines by rule has a potential for tax | ||||||
18 | avoidance or evasion (including, but not limited to, listed | ||||||
19 | transactions and Illinois listed transactions). | ||||||
20 | (d) 150% Interest Rate. For taxable years ending on and | ||||||
21 | after July 1, 2002, for any notice of deficiency issued before | ||||||
22 | the taxpayer is contacted by the Internal Revenue Service or | ||||||
23 | the Department regarding a potentially abusive tax shelter, the | ||||||
24 | taxpayer is subject to interest as provided under Section 3-2 | ||||||
25 | of the Uniform Penalty and Interest Act, but with respect to | ||||||
26 | any deficiency attributable to a potentially abusive tax | ||||||
27 | shelter, the taxpayer is subject to interest at a rate of 150% | ||||||
28 | of the otherwise applicable rate. | ||||||
29 | (e) Coordination with other penalties. Except as provided | ||||||
30 | in regulations, the penalties imposed by this Section are in | ||||||
31 | addition to any other penalty imposed by this Act or the | ||||||
32 | Uniform Penalty and Interest Act. | ||||||
33 | (f) The changes made to this Section by this amendatory Act | ||||||
34 | of the 93rd General Assembly do not apply to any small business |
| |||||||
| |||||||
1 | as defined in the Small Business Advisory Act.
| ||||||
2 | The provisions of this Section shall apply to all taxable years | ||||||
3 | ending
on or after January 1, 1986. | ||||||
4 | (Source: P.A. 87-205 .)
| ||||||
5 | (35 ILCS 5/1007 new) | ||||||
6 | Sec. 1007. Failure to register tax shelter or maintain | ||||||
7 | list.
| ||||||
8 | (a) Penalty Imposed. Any person that fails to comply with | ||||||
9 | the requirements of Section 1405.5 or Section 1405.6 of this | ||||||
10 | Act shall incur a penalty as provided in this Section. A person | ||||||
11 | is not in compliance with the requirements of Section 1405.5 | ||||||
12 | unless and until the required registration has been filed and | ||||||
13 | contains all of the information required to be included with | ||||||
14 | such registration under Section 6111 of the Internal Revenue | ||||||
15 | Code or such Section 1405.5. A person is not in compliance with | ||||||
16 | the requirements of Section 1405.6 unless, at the time the | ||||||
17 | required list is made available to the Department, such list | ||||||
18 | contains all of the information required to be maintained under | ||||||
19 | Section 6112 of the Internal Revenue Code or such Section | ||||||
20 | 1405.6. | ||||||
21 | (b) Amount of Penalty. The following penalties apply: | ||||||
22 | (1) In the case of each failure to comply with | ||||||
23 | the requirements of subsection (a), subsection (b), or | ||||||
24 | subsection (e) of Section 1405.5, the penalty shall be | ||||||
25 | $15,000. | ||||||
26 | (2) If the failure is with respect to a listed | ||||||
27 | transaction or Illinois listed transaction under | ||||||
28 | subsection (c) of Section 1405.5, the penalty shall be | ||||||
29 | $100,000. | ||||||
30 | (3) In the case of each failure to comply with | ||||||
31 | the requirements of subsection (a) or subsection (b) of | ||||||
32 | Section 1405.6, the penalty shall be $15,000. | ||||||
33 | (4) If the failure is with respect to a listed |
| |||||||
| |||||||
1 | transaction or Illinois listed transaction under | ||||||
2 | subsection (c) of Section 1405.6, the penalty shall be | ||||||
3 | $100,000. | ||||||
4 | (c) Authority to rescind penalty. The Board of Appeals may | ||||||
5 | rescind all or any portion of any penalty imposed by this | ||||||
6 | Section with respect to any violation, if all of the following | ||||||
7 | apply: | ||||||
8 | (1) The violation is not with respect to a listed | ||||||
9 | transaction or Illinois listed transaction; | ||||||
10 | (2) The person on whom the penalty is imposed has a | ||||||
11 | history of complying with the requirements of this Act; | ||||||
12 | (3) It is shown that the violation is due to an | ||||||
13 | unintentional mistake of fact; | ||||||
14 | (4) Imposing the penalty would be against equity | ||||||
15 | and good conscience; and | ||||||
16 | (5) Rescinding the penalty would promote | ||||||
17 | compliance with the requirements of this Act and | ||||||
18 | effective tax administration.
The exercise of | ||||||
19 | authority under this subsection shall be at the sole | ||||||
20 | discretion of the Director. Notwithstanding any other | ||||||
21 | law or rule of law, any determination under this | ||||||
22 | subsection may not be reviewed in any administrative or | ||||||
23 | judicial proceeding. | ||||||
24 | (d) Coordination with other penalties. The penalty imposed | ||||||
25 | by this Section is in addition to any penalty imposed by this | ||||||
26 | Act or the Uniform Penalty and Interest Act. | ||||||
27 | (e) The changes made to this Section by this amendatory Act | ||||||
28 | of the 93rd General Assembly do not apply to any small business | ||||||
29 | as defined in the Small Business Advisory Act.
| ||||||
30 | (35 ILCS 5/1008 new) | ||||||
31 | Sec. 1008. Promoting abusive tax shelters.
Except as herein | ||||||
32 | provided, the provisions of Section 6700 of the Internal | ||||||
33 | Revenue Code shall apply for purposes of this Act as if such |
| |||||||
| |||||||
1 | section applied to an Illinois deduction, credit, exclusion | ||||||
2 | from income, allocation or apportionment rule, or other | ||||||
3 | Illinois tax benefit. Notwithstanding Section 6700(a) of the | ||||||
4 | Internal Revenue Code, if an activity with respect to which a | ||||||
5 | penalty imposed under Section 6700(a) of the Internal Revenue | ||||||
6 | Code, as applied for purposes of this Act, involves a statement | ||||||
7 | described in Section 6700(a)(2)(A) of the Internal Revenue | ||||||
8 | Code, as applied for purposes of this Act, the amount of the | ||||||
9 | penalty imposed under this Section shall be the greater of | ||||||
10 | $10,000 or 50% of the gross income received (or to be received) | ||||||
11 | from any person to whom such statement is furnished that is | ||||||
12 | required to file a return under Section 502 of this Act. | ||||||
13 | The changes made to this Section by this amendatory Act of | ||||||
14 | the 93rd General Assembly do not apply to any small business as | ||||||
15 | defined in the Small Business Advisory Act.
| ||||||
16 | (35 ILCS 5/1405.5 new) | ||||||
17 | Sec. 1405.5. Registration of tax shelters.
| ||||||
18 | (a) Federal tax shelter. Any tax shelter organizer required | ||||||
19 | to register a tax shelter under Section 6111 of the Internal | ||||||
20 | Revenue Code after the effective date of this amendatory Act of | ||||||
21 | the 93rd General Assembly shall send a duplicate of the federal | ||||||
22 | registration information (and any additional information | ||||||
23 | required by the Department) to the Department not later than | ||||||
24 | the day on which registration is required under federal law. | ||||||
25 | Any person required to register under Section 6111 of the | ||||||
26 | Internal Revenue Code who receives a tax registration number | ||||||
27 | from the Secretary of the Treasury shall, within 30 days after | ||||||
28 | request by the Department, file a statement of that | ||||||
29 | registration number. | ||||||
30 | (b) Illinois tax shelter. Registration with the Department | ||||||
31 | shall be required with respect to (i) any investment that would | ||||||
32 | be considered a "tax shelter" under Section 6111 of the | ||||||
33 | Internal Revenue Code if the definition of "tax shelter ratio" |
| |||||||
| |||||||
1 | in subsection (c) of such section included the provisions of | ||||||
2 | this Act for deductions, credits, apportionment and | ||||||
3 | allocation, or that would be considered a tax shelter under | ||||||
4 | subsection (d) of such Section but for the fact that a | ||||||
5 | significant purpose is the avoidance or evasion of the tax | ||||||
6 | imposed by this Act rather than avoidance or evasion of federal | ||||||
7 | income tax and (ii) any listed transaction or Illinois listed | ||||||
8 | transaction as defined under Section 501(b) of this Act. The | ||||||
9 | tax shelter organizer shall make the registration required | ||||||
10 | under this subsection with respect to tax shelters in which | ||||||
11 | interests are first offered for sale after the effective date | ||||||
12 | of this amendatory Act of the 93rd General Assembly in the form | ||||||
13 | and manner prescribed by the Department, which shall include | ||||||
14 | the same information required for federal tax shelters and any | ||||||
15 | other information required by the Department, and shall be made | ||||||
16 | not later than the day on which the first offering for sale of | ||||||
17 | interests in the shelter occurs or, if the tax shelter | ||||||
18 | organizer reasonably believes as of the day of such first | ||||||
19 | offering that the tax shelter will not satisfy the conditions | ||||||
20 | of subsection (d) of this Section, within 60 days after the tax | ||||||
21 | shelter meets any of the conditions of subsection (d) of this | ||||||
22 | Section. | ||||||
23 | (c) Additional requirements for listed transactions and | ||||||
24 | Illinois listed transactions. | ||||||
25 | (1) In addition to the requirements of this | ||||||
26 | Section, for any transactions entered into on or after | ||||||
27 | February 28, 2000 that become listed transactions (as | ||||||
28 | defined under Treasury Regulations Section 1.6011-4) | ||||||
29 | at any time, those transactions shall be registered | ||||||
30 | with the Department (in the form and manner prescribed | ||||||
31 | by the Department) by the later of (i) 60 days after | ||||||
32 | entering into the transaction, (ii) 60 days after the | ||||||
33 | transaction becomes a listed transaction, or (iii) | ||||||
34 | December 31, 2004; |
| |||||||
| |||||||
1 | (2) In addition to the requirements of this | ||||||
2 | Section, for any transactions entered into on or after | ||||||
3 | January 1, 2004 that become Illinois listed | ||||||
4 | transactions (as defined under Section 501(b) of this | ||||||
5 | Act) at any time, those transactions shall be | ||||||
6 | registered with the Department by the later of (i) 60 | ||||||
7 | days after entering into the transaction, (ii) 60 days | ||||||
8 | after the transaction becomes an Illinois listed | ||||||
9 | transaction, or (iii) December 31, 2004. | ||||||
10 | (d) Tax Shelters subject to this Section. The provisions of | ||||||
11 | this section apply to any tax shelter herein described that | ||||||
12 | additionally satisfies any of the following conditions:
(1) | ||||||
13 | organized in this State;
(2) doing business in this State; (3) | ||||||
14 | deriving income from sources in this State; or (4) at least one | ||||||
15 | of its investors is an Illinois taxpayer. | ||||||
16 | (e) Tax Shelter Identification Number. | ||||||
17 | (1) Any person who sells (or otherwise transfers) | ||||||
18 | an interest in an Illinois tax shelter shall (at such | ||||||
19 | times and in such manner as required by the Department) | ||||||
20 | furnish to each investor who purchases (or otherwise | ||||||
21 | acquires) an interest in such shelter from such person | ||||||
22 | the identification number assigned by the Department | ||||||
23 | to such tax shelter. | ||||||
24 | (2) Any person required to file a return under this | ||||||
25 | Act and required to include on the person's federal tax | ||||||
26 | return a tax shelter identification number pursuant to | ||||||
27 | Section 6111 of the Internal Revenue Code, shall | ||||||
28 | furnish such number upon filing of the person's | ||||||
29 | Illinois return. | ||||||
30 | (3) Any person claiming any deduction, credit, or | ||||||
31 | other tax benefit by reason of an Illinois tax shelter | ||||||
32 | shall include (in such manner as the Department may | ||||||
33 | prescribe) on the return of tax on which such | ||||||
34 | deduction, credit, or other benefit is claimed the |
| |||||||
| |||||||
1 | identification number assigned by the Department to | ||||||
2 | such tax shelter. | ||||||
3 | (f) The changes made to this Section by this amendatory Act | ||||||
4 | of the 93rd General Assembly do not apply to any small business | ||||||
5 | as defined in the Small Business Advisory Act.
| ||||||
6 | (35 ILCS 5/1405.6 new) | ||||||
7 | Sec. 1405.6. Investor lists.
| ||||||
8 | (a) Federal abusive tax shelter. Any person required to | ||||||
9 | maintain a list under Section 6112 of the Internal Revenue Code | ||||||
10 | and Treasury Regulations Section 301.6112-1 with respect to a | ||||||
11 | potentially abusive tax shelter shall furnish such list to the | ||||||
12 | Department not later than the time such list is required to be | ||||||
13 | furnished to the Internal Revenue Service under federal income | ||||||
14 | tax law. | ||||||
15 | (b) Illinois abusive tax shelter. Each organizer and seller | ||||||
16 | of an Illinois potentially abusive tax shelter shall maintain a | ||||||
17 | list identifying each person who was sold an interest in such | ||||||
18 | shelter. Any person required to maintain a list under this | ||||||
19 | subsection shall make such list available to the Department | ||||||
20 | upon request by the Department, and except as otherwise | ||||||
21 | provided under regulations prescribed by the Department, shall | ||||||
22 | retain any information required to be included on such list for | ||||||
23 | 7 years. | ||||||
24 | (1) Definitions. | ||||||
25 | (A) Illinois potentially abusive tax shelter. The | ||||||
26 | term "Illinois potentially abusive tax shelter" means | ||||||
27 | (i) any Illinois tax shelter (as defined in Section | ||||||
28 | 1405.5) required to be registered under Section 1405.5 | ||||||
29 | and (ii) any entity, investment, plan or arrangement, | ||||||
30 | or other plan or arrangement that is of a type that the | ||||||
31 | Department determines by regulation as having a | ||||||
32 | potential for avoidance or evasion of the tax imposed | ||||||
33 | by this Act (including an Illinois listed transaction |
| |||||||
| |||||||
1 | as defined under Section 501(b)). The term shall have | ||||||
2 | substantially the same meaning as a "potentially | ||||||
3 | abusive tax shelter" described in Treasury Regulations | ||||||
4 | Section 301.6112-1(b). | ||||||
5 | (B) Organizer or seller. An organizer or seller of | ||||||
6 | an Illinois potentially abusive tax shelter includes | ||||||
7 | any person that is a material adviser under Treasury | ||||||
8 | Regulations Section 301.6112-1 with respect to the | ||||||
9 | transaction that is an Illinois potentially abusive | ||||||
10 | tax shelter or would be considered a material adviser | ||||||
11 | under Treasury Regulations Section 301.6112-1 with | ||||||
12 | respect to the transaction if such transaction | ||||||
13 | constituted a potentially abusive tax shelter under | ||||||
14 | Treasury Regulations Section 301.6112-1. | ||||||
15 | (2) The list required under this Section shall include | ||||||
16 | the same information required with respect to a potentially | ||||||
17 | abusive tax shelter under Treasury Regulations Section | ||||||
18 | 301.6112-1 and any other information as the Department may | ||||||
19 | require. Unless otherwise prescribed by the Department, | ||||||
20 | the list required under this Section shall be maintained in | ||||||
21 | the same form and manner as required with respect to a | ||||||
22 | potentially abusive tax shelter under Treasury Regulations | ||||||
23 | Section 301.6112-1. | ||||||
24 | (c) Additional requirements for listed transactions and | ||||||
25 | Illinois listed transactions. | ||||||
26 | (1) For transactions entered into on or after February | ||||||
27 | 28, 2000, that become listed transactions (as defined under | ||||||
28 | Treasury Regulations Section 1.6011-4) at any time, the | ||||||
29 | list shall be furnished to the Department by the later of | ||||||
30 | (i) 60 days after entering into the transaction, (ii) 60 | ||||||
31 | days after the transaction becomes a listed transaction, or | ||||||
32 | (iii) December 31, 2004. | ||||||
33 | (2) For transactions entered into on or after January | ||||||
34 | 1, 2004 that become Illinois listed transactions (as |
| |||||||
| |||||||
1 | defined under Section 501(b) of this Act) at any time, the | ||||||
2 | list shall be furnished to the Department by the later of | ||||||
3 | (i) 60 days after entering into the transaction, (ii) 60 | ||||||
4 | days after the transaction becomes an Illinois listed | ||||||
5 | transaction, or (iii) December 31, 2004. | ||||||
6 | (d) Tax Shelters subject to this Section. The provisions of | ||||||
7 | this section apply to any tax shelter herein described that | ||||||
8 | additionally satisfies any of the following conditions: | ||||||
9 | (1) Organized in this State; | ||||||
10 | (2) Doing business in this State; | ||||||
11 | (3) Deriving income from sources in this State; or | ||||||
12 | (4) At least one of its investors is an Illinois | ||||||
13 | taxpayer. | ||||||
14 | (e) The changes made to this Section by this amendatory Act | ||||||
15 | of the 93rd General Assembly do not apply to any small business | ||||||
16 | as defined in the Small Business Advisory Act.
| ||||||
17 | (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
| ||||||
18 | Sec. 1501. Definitions.
| ||||||
19 | (a) In general. When used in this Act, where not
otherwise | ||||||
20 | distinctly expressed or manifestly incompatible with the | ||||||
21 | intent
thereof:
| ||||||
22 | (1) Business income. The term "business income" means | ||||||
23 | all income that may be treated as apportionable business | ||||||
24 | income under the Constitution of the United States. | ||||||
25 | Business income is net of the deductions allocable thereto
| ||||||
26 | income arising from
transactions and activity in the | ||||||
27 | regular course of the taxpayer's trade
or business, net of | ||||||
28 | the deductions allocable thereto, and includes income
from | ||||||
29 | tangible and intangible property if the acquisition, | ||||||
30 | management, and
disposition of the property constitute | ||||||
31 | integral parts of the taxpayer's
regular trade or business | ||||||
32 | operations . Such term does not include compensation
or the | ||||||
33 | deductions allocable thereto.
For each taxable year |
| |||||||
| |||||||
1 | beginning on or after January 1, 2003, a taxpayer may
elect | ||||||
2 | to treat all income other than compensation as business | ||||||
3 | income. This
election shall be made in accordance with | ||||||
4 | rules adopted by the Department and,
once made, shall be | ||||||
5 | irrevocable.
| ||||||
6 | (2) Commercial domicile. The term "commercial | ||||||
7 | domicile" means the
principal
place from which the trade or | ||||||
8 | business of the taxpayer is directed or managed.
| ||||||
9 | (3) Compensation. The term "compensation" means wages, | ||||||
10 | salaries,
commissions
and any other form of remuneration | ||||||
11 | paid to employees for personal services.
| ||||||
12 | (4) Corporation. The term "corporation" includes | ||||||
13 | associations, joint-stock
companies, insurance companies | ||||||
14 | and cooperatives. Any entity, including a
limited | ||||||
15 | liability company formed under the Illinois Limited | ||||||
16 | Liability Company
Act, shall be treated as a corporation if | ||||||
17 | it is so classified for federal
income tax purposes.
| ||||||
18 | (5) Department. The term "Department" means the | ||||||
19 | Department of Revenue of
this State.
| ||||||
20 | (6) Director. The term "Director" means the Director of | ||||||
21 | Revenue of this
State.
| ||||||
22 | (7) Fiduciary. The term "fiduciary" means a guardian, | ||||||
23 | trustee, executor,
administrator, receiver, or any person | ||||||
24 | acting in any fiduciary capacity for any
person.
| ||||||
25 | (8) Financial organization.
| ||||||
26 | (A) The term "financial organization" means
any
| ||||||
27 | bank, bank holding company, trust company, savings | ||||||
28 | bank, industrial bank,
land bank, safe deposit | ||||||
29 | company, private banker, savings and loan association,
| ||||||
30 | building and loan association, credit union, currency | ||||||
31 | exchange, cooperative
bank, small loan company, sales | ||||||
32 | finance company, investment company, or any
person | ||||||
33 | which is owned by a bank or bank holding company. For | ||||||
34 | the purpose of
this Section a "person" will include |
| |||||||
| |||||||
1 | only those persons which a bank holding
company may | ||||||
2 | acquire and hold an interest in, directly or | ||||||
3 | indirectly, under the
provisions of the Bank Holding | ||||||
4 | Company Act of 1956 (12 U.S.C. 1841, et seq.),
except | ||||||
5 | where interests in any person must be disposed of | ||||||
6 | within certain
required time limits under the Bank | ||||||
7 | Holding Company Act of 1956.
| ||||||
8 | (B) For purposes of subparagraph (A) of this | ||||||
9 | paragraph, the term
"bank" includes (i) any entity that | ||||||
10 | is regulated by the Comptroller of the
Currency under | ||||||
11 | the National Bank Act, or by the Federal Reserve Board, | ||||||
12 | or by
the
Federal Deposit Insurance Corporation and | ||||||
13 | (ii) any federally or State chartered
bank
operating as | ||||||
14 | a credit card bank.
| ||||||
15 | (C) For purposes of subparagraph (A) of this | ||||||
16 | paragraph, the term
"sales finance company" has the | ||||||
17 | meaning provided in the following item (i) or
(ii):
| ||||||
18 | (i) A person primarily engaged in one or more | ||||||
19 | of the following
businesses: the business of | ||||||
20 | purchasing customer receivables, the business
of | ||||||
21 | making loans upon the security of customer | ||||||
22 | receivables, the
business of making loans for the | ||||||
23 | express purpose of funding purchases of
tangible | ||||||
24 | personal property or services by the borrower, or | ||||||
25 | the business of
finance leasing. For purposes of | ||||||
26 | this item (i), "customer receivable"
means:
| ||||||
27 | (a) a retail installment contract or | ||||||
28 | retail charge agreement within
the
meaning
of | ||||||
29 | the Sales Finance Agency Act, the Retail | ||||||
30 | Installment Sales Act, or the
Motor Vehicle | ||||||
31 | Retail Installment Sales Act;
| ||||||
32 | (b) an installment, charge, credit, or | ||||||
33 | similar contract or agreement
arising from
the | ||||||
34 | sale of tangible personal property or services |
| |||||||
| |||||||
1 | in a transaction involving
a deferred payment | ||||||
2 | price payable in one or more installments | ||||||
3 | subsequent
to the sale; or
| ||||||
4 | (c) the outstanding balance of a contract | ||||||
5 | or agreement described in
provisions
(a) or (b) | ||||||
6 | of this item (i).
| ||||||
7 | A customer receivable need not provide for | ||||||
8 | payment of interest on
deferred
payments. A sales | ||||||
9 | finance company may purchase a customer receivable | ||||||
10 | from, or
make a loan secured by a customer | ||||||
11 | receivable to, the seller in the original
| ||||||
12 | transaction or to a person who purchased the | ||||||
13 | customer receivable directly or
indirectly from | ||||||
14 | that seller.
| ||||||
15 | (ii) A corporation meeting each of the | ||||||
16 | following criteria:
| ||||||
17 | (a) the corporation must be a member of an | ||||||
18 | "affiliated group" within
the
meaning of | ||||||
19 | Section 1504(a) of the Internal Revenue Code, | ||||||
20 | determined
without regard to Section 1504(b) | ||||||
21 | of the Internal Revenue Code;
| ||||||
22 | (b) more than 50% of the gross income of | ||||||
23 | the corporation for the
taxable
year
must be | ||||||
24 | interest income derived from qualifying loans. | ||||||
25 | A "qualifying
loan" is a loan made to a member | ||||||
26 | of the corporation's affiliated group that
| ||||||
27 | originates customer receivables (within the | ||||||
28 | meaning of item (i)) or to whom
customer | ||||||
29 | receivables originated by a member of the | ||||||
30 | affiliated group have been
transferred, to
the | ||||||
31 | extent the average outstanding balance of | ||||||
32 | loans from that corporation
to members of its | ||||||
33 | affiliated group during the taxable year do not | ||||||
34 | exceed
the limitation amount for that |
| |||||||
| |||||||
1 | corporation. The "limitation amount" for a
| ||||||
2 | corporation is the average outstanding | ||||||
3 | balances during the taxable year of
customer | ||||||
4 | receivables (within the meaning of item (i)) | ||||||
5 | originated by
all members of the affiliated | ||||||
6 | group.
If the average outstanding balances of | ||||||
7 | the
loans made by a corporation to members of | ||||||
8 | its affiliated group exceed the
limitation | ||||||
9 | amount, the interest income of that | ||||||
10 | corporation from qualifying
loans shall be | ||||||
11 | equal to its interest income from loans to | ||||||
12 | members of its
affiliated groups times a | ||||||
13 | fraction equal to the limitation amount | ||||||
14 | divided by
the average outstanding balances of | ||||||
15 | the loans made by that corporation to
members | ||||||
16 | of its affiliated group;
| ||||||
17 | (c) the total of all shareholder's equity | ||||||
18 | (including, without
limitation,
paid-in
| ||||||
19 | capital on common and preferred stock and | ||||||
20 | retained earnings) of the
corporation plus the | ||||||
21 | total of all of its loans, advances, and other
| ||||||
22 | obligations payable or owed to members of its | ||||||
23 | affiliated group may not
exceed 20% of the | ||||||
24 | total assets of the corporation at any time | ||||||
25 | during the tax
year; and
| ||||||
26 | (d) more than 50% of all interest-bearing | ||||||
27 | obligations of the
affiliated group payable to | ||||||
28 | persons outside the group determined in | ||||||
29 | accordance
with generally accepted accounting | ||||||
30 | principles must be obligations of the
| ||||||
31 | corporation.
| ||||||
32 | This amendatory Act of the 91st General Assembly is | ||||||
33 | declaratory of
existing
law.
| ||||||
34 | (D) Subparagraphs
(B) and (C) of this paragraph are |
| |||||||
| |||||||
1 | declaratory of
existing law and apply retroactively, | ||||||
2 | for all tax years beginning on or before
December 31, | ||||||
3 | 1996,
to all original returns, to all amended returns | ||||||
4 | filed no later than 30
days after the effective date of | ||||||
5 | this amendatory Act of 1996, and to all
notices issued | ||||||
6 | on or before the effective date of this amendatory Act | ||||||
7 | of 1996
under subsection (a) of Section 903, subsection | ||||||
8 | (a) of Section 904,
subsection (e) of Section 909, or | ||||||
9 | Section 912.
A taxpayer that is a "financial | ||||||
10 | organization" that engages in any transaction
with an | ||||||
11 | affiliate shall be a "financial organization" for all | ||||||
12 | purposes of this
Act.
| ||||||
13 | (E) For all tax years beginning on or
before | ||||||
14 | December 31, 1996, a taxpayer that falls within the | ||||||
15 | definition
of a
"financial organization" under | ||||||
16 | subparagraphs (B) or (C) of this paragraph, but
who | ||||||
17 | does
not fall within the definition of a "financial | ||||||
18 | organization" under the Proposed
Regulations issued by | ||||||
19 | the Department of Revenue on July 19, 1996, may
| ||||||
20 | irrevocably elect to apply the Proposed Regulations | ||||||
21 | for all of those years as
though the Proposed | ||||||
22 | Regulations had been lawfully promulgated, adopted, | ||||||
23 | and in
effect for all of those years. For purposes of | ||||||
24 | applying subparagraphs (B) or
(C) of
this
paragraph to | ||||||
25 | all of those years, the election allowed by this | ||||||
26 | subparagraph
applies only to the taxpayer making the | ||||||
27 | election and to those members of the
taxpayer's unitary | ||||||
28 | business group who are ordinarily required to | ||||||
29 | apportion
business income under the same subsection of | ||||||
30 | Section 304 of this Act as the
taxpayer making the | ||||||
31 | election. No election allowed by this subparagraph | ||||||
32 | shall
be made under a claim
filed under subsection (d) | ||||||
33 | of Section 909 more than 30 days after the
effective | ||||||
34 | date of this amendatory Act of 1996.
|
| |||||||
| |||||||
1 | (F) Finance Leases. For purposes of this | ||||||
2 | subsection, a finance lease
shall be treated as a loan | ||||||
3 | or other extension of credit, rather than as a
lease,
| ||||||
4 | regardless of how the transaction is characterized for | ||||||
5 | any other purpose,
including the purposes of any | ||||||
6 | regulatory agency to which the lessor is subject.
A | ||||||
7 | finance lease is any transaction in the form of a lease | ||||||
8 | in which the lessee
is treated as the owner of the | ||||||
9 | leased asset entitled to any deduction for
| ||||||
10 | depreciation allowed under Section 167 of the Internal | ||||||
11 | Revenue Code.
| ||||||
12 | (9) Fiscal year. The term "fiscal year" means an | ||||||
13 | accounting period of
12 months ending on the last day of | ||||||
14 | any month other than December.
| ||||||
15 | (10) Includes and including. The terms "includes" and | ||||||
16 | "including" when
used in a definition contained in this Act | ||||||
17 | shall not be deemed to exclude
other things otherwise | ||||||
18 | within the meaning of the term defined.
| ||||||
19 | (11) Internal Revenue Code. The term "Internal Revenue | ||||||
20 | Code" means the
United States Internal Revenue Code of 1954 | ||||||
21 | or any successor law or laws
relating to federal income | ||||||
22 | taxes in effect for the taxable year. | ||||||
23 | (11.5) Investment partnership. | ||||||
24 | (A) The term "investment partnership" means any | ||||||
25 | entity that is treated as a partnership for federal | ||||||
26 | income tax purposes that meets the following | ||||||
27 | requirements: | ||||||
28 | (i) no less than 90% of the partnership's cost | ||||||
29 | of its total assets consists of qualifying | ||||||
30 | investment securities, deposits at banks or other | ||||||
31 | financial institutions, and office space and | ||||||
32 | equipment reasonably necessary to carry on its | ||||||
33 | activities as an investment partnership; | ||||||
34 | (ii) no less than 90% of its gross income |
| |||||||
| |||||||
1 | consists of interest, dividends, and gains from | ||||||
2 | the sale or exchange of qualifying investment | ||||||
3 | securities; and
| ||||||
4 | (iii) the partnership is not a dealer in | ||||||
5 | qualifying investment securities. | ||||||
6 | (B) For purposes of this paragraph (11.5), the term | ||||||
7 | 'qualifying investment securities' includes all of the | ||||||
8 | following:
| ||||||
9 | (i) common stock, including preferred or debt | ||||||
10 | securities convertible into common stock, and | ||||||
11 | preferred stock; | ||||||
12 | (ii) bonds, debentures, and other debt | ||||||
13 | securities; | ||||||
14 | (iii) foreign and domestic currency deposits | ||||||
15 | secured by federal, state, or local governmental | ||||||
16 | agencies; | ||||||
17 | (iv) mortgage or asset-backed securities | ||||||
18 | secured by federal, state, or local governmental | ||||||
19 | agencies; | ||||||
20 | (v) repurchase agreements and loan | ||||||
21 | participations; | ||||||
22 | (vi) foreign currency exchange contracts and | ||||||
23 | forward and futures contracts on foreign | ||||||
24 | currencies; | ||||||
25 | (vii) stock and bond index securities and | ||||||
26 | futures contracts and other similar financial | ||||||
27 | securities and futures contracts on those | ||||||
28 | securities;
| ||||||
29 | (viii) options for the purchase or sale of any | ||||||
30 | of the securities, currencies, contracts, or | ||||||
31 | financial instruments described in items (i) to | ||||||
32 | (vii), inclusive;
| ||||||
33 | (ix) regulated futures contracts;
| ||||||
34 | (x) commodities (not described in Section |
| |||||||
| |||||||
1 | 1221(a)(1) of the Internal Revenue Code) or | ||||||
2 | futures, forwards, and options with respect to | ||||||
3 | such commodities, provided, however, that any item | ||||||
4 | of a physical commodity to which title is actually | ||||||
5 | acquired in the partnership's capacity as a dealer | ||||||
6 | in such commodity shall not be a qualifying | ||||||
7 | investment security;
| ||||||
8 | (xi) derivatives; and
| ||||||
9 | (xii) a partnership interest in another | ||||||
10 | partnership that is an investment partnership.
| ||||||
11 | (12) Mathematical error. The term "mathematical error" | ||||||
12 | includes the
following types of errors, omissions, or | ||||||
13 | defects in a return filed by a
taxpayer which prevents | ||||||
14 | acceptance of the return as filed for processing:
| ||||||
15 | (A) arithmetic errors or incorrect computations on | ||||||
16 | the return or
supporting schedules;
| ||||||
17 | (B) entries on the wrong lines;
| ||||||
18 | (C) omission of required supporting forms or | ||||||
19 | schedules or the omission
of the information in whole | ||||||
20 | or in part called for thereon; and
| ||||||
21 | (D) an attempt to claim, exclude, deduct, or | ||||||
22 | improperly report, in a
manner
directly contrary to the | ||||||
23 | provisions of the Act and regulations thereunder
any | ||||||
24 | item of income, exemption, deduction, or credit.
| ||||||
25 | (13) Nonbusiness income. The term "nonbusiness income" | ||||||
26 | means all income
other than business income or | ||||||
27 | compensation.
| ||||||
28 | (14) Nonresident. The term "nonresident" means a | ||||||
29 | person who is not a
resident.
| ||||||
30 | (15) Paid, incurred and accrued. The terms "paid", | ||||||
31 | "incurred" and
"accrued"
shall be construed according to | ||||||
32 | the method of accounting upon the basis
of which the | ||||||
33 | person's base income is computed under this Act.
| ||||||
34 | (16) Partnership and partner. The term "partnership" |
| |||||||
| |||||||
1 | includes a syndicate,
group, pool, joint venture or other | ||||||
2 | unincorporated organization, through
or by means of which | ||||||
3 | any business, financial operation, or venture is carried
| ||||||
4 | on, and which is not, within the meaning of this Act, a | ||||||
5 | trust or estate
or a corporation; and the term "partner" | ||||||
6 | includes a member in such syndicate,
group, pool, joint | ||||||
7 | venture or organization.
| ||||||
8 | The term "partnership" includes any entity, including | ||||||
9 | a limited
liability company formed under the Illinois
| ||||||
10 | Limited Liability Company Act, classified as a partnership | ||||||
11 | for federal income tax purposes.
| ||||||
12 | The term "partnership" does not include a syndicate, | ||||||
13 | group, pool,
joint venture, or other unincorporated | ||||||
14 | organization established for the
sole purpose of playing | ||||||
15 | the Illinois State Lottery.
| ||||||
16 | (17) Part-year resident. The term "part-year resident" | ||||||
17 | means an individual
who became a resident during the | ||||||
18 | taxable year or ceased to be a resident
during the taxable | ||||||
19 | year. Under Section 1501(a)(20)(A)(i) residence
commences | ||||||
20 | with presence in this State for other than a temporary or | ||||||
21 | transitory
purpose and ceases with absence from this State | ||||||
22 | for other than a temporary or
transitory purpose. Under | ||||||
23 | Section 1501(a)(20)(A)(ii) residence commences
with the | ||||||
24 | establishment of domicile in this State and ceases with the
| ||||||
25 | establishment of domicile in another State.
| ||||||
26 | (18) Person. The term "person" shall be construed to | ||||||
27 | mean and include
an individual, a trust, estate, | ||||||
28 | partnership, association, firm, company,
corporation, | ||||||
29 | limited liability company, or fiduciary. For purposes of | ||||||
30 | Section
1301 and 1302 of this Act, a "person" means (i) an | ||||||
31 | individual, (ii) a
corporation, (iii) an officer, agent, or | ||||||
32 | employee of a
corporation, (iv) a member, agent or employee | ||||||
33 | of a partnership, or (v)
a member,
manager, employee, | ||||||
34 | officer, director, or agent of a limited liability company
|
| |||||||
| |||||||
1 | who in such capacity commits an offense specified in | ||||||
2 | Section 1301 and 1302.
| ||||||
3 | (18A) Records. The term "records" includes all data | ||||||
4 | maintained by the
taxpayer, whether on paper, microfilm, | ||||||
5 | microfiche, or any type of
machine-sensible data | ||||||
6 | compilation.
| ||||||
7 | (19) Regulations. The term "regulations" includes | ||||||
8 | rules promulgated and
forms prescribed by the Department.
| ||||||
9 | (20) Resident. The term "resident" means:
| ||||||
10 | (A) an individual (i) who is
in this State for | ||||||
11 | other than a temporary or transitory purpose during the
| ||||||
12 | taxable year; or (ii) who is domiciled in this State | ||||||
13 | but is absent from
the State for a temporary or | ||||||
14 | transitory purpose during the taxable year;
| ||||||
15 | (B) The estate of a decedent who at his or her | ||||||
16 | death was domiciled in
this
State;
| ||||||
17 | (C) A trust created by a will of a decedent who at | ||||||
18 | his death was
domiciled
in this State; and
| ||||||
19 | (D) An irrevocable trust, the grantor of which was | ||||||
20 | domiciled in this
State
at the time such trust became | ||||||
21 | irrevocable. For purpose of this subparagraph,
a trust | ||||||
22 | shall be considered irrevocable to the extent that the | ||||||
23 | grantor is
not treated as the owner thereof under | ||||||
24 | Sections 671 through 678 of the Internal
Revenue Code.
| ||||||
25 | (21) Sales. The term "sales" means all gross receipts | ||||||
26 | of the taxpayer
not allocated under Sections 301, 302 and | ||||||
27 | 303.
| ||||||
28 | (22) State. The term "state" when applied to a | ||||||
29 | jurisdiction other than
this State means any state of the | ||||||
30 | United States, the District of Columbia,
the Commonwealth | ||||||
31 | of Puerto Rico, any Territory or Possession of the United
| ||||||
32 | States, and any foreign country, or any political | ||||||
33 | subdivision of any of the
foregoing. For purposes of the | ||||||
34 | foreign tax credit under Section 601, the
term "state" |
| |||||||
| |||||||
1 | means any state of the United States, the District of | ||||||
2 | Columbia,
the Commonwealth of Puerto Rico, and any | ||||||
3 | territory or possession of the
United States, or any | ||||||
4 | political subdivision of any of the foregoing,
effective | ||||||
5 | for tax years ending on or after December 31, 1989.
| ||||||
6 | (23) Taxable year. The term "taxable year" means the | ||||||
7 | calendar year, or
the fiscal year ending during such | ||||||
8 | calendar year, upon the basis of which
the base income is | ||||||
9 | computed under this Act. "Taxable year" means, in the
case | ||||||
10 | of a return made for a fractional part of a year under the | ||||||
11 | provisions
of this Act, the period for which such return is | ||||||
12 | made.
| ||||||
13 | (24) Taxpayer. The term "taxpayer" means any person | ||||||
14 | subject to the tax
imposed by this Act.
| ||||||
15 | (25) International banking facility. The term | ||||||
16 | international banking
facility shall have the same meaning | ||||||
17 | as is set forth in the Illinois Banking
Act or as is set | ||||||
18 | forth in the laws of the United States or regulations of
| ||||||
19 | the Board of Governors of the Federal Reserve System.
| ||||||
20 | (26) Income Tax Return Preparer.
| ||||||
21 | (A) The term "income tax return preparer"
means any | ||||||
22 | person who prepares for compensation, or who employs | ||||||
23 | one or more
persons to prepare for compensation, any | ||||||
24 | return of tax imposed by this Act
or any claim for | ||||||
25 | refund of tax imposed by this Act. The preparation of a
| ||||||
26 | substantial portion of a return or claim for refund | ||||||
27 | shall be treated as
the preparation of that return or | ||||||
28 | claim for refund.
| ||||||
29 | (B) A person is not an income tax return preparer | ||||||
30 | if all he or she does
is
| ||||||
31 | (i) furnish typing, reproducing, or other | ||||||
32 | mechanical assistance;
| ||||||
33 | (ii) prepare returns or claims for refunds for | ||||||
34 | the employer by whom he
or she is regularly and |
| |||||||
| |||||||
1 | continuously employed;
| ||||||
2 | (iii) prepare as a fiduciary returns or claims | ||||||
3 | for refunds for any
person; or
| ||||||
4 | (iv) prepare claims for refunds for a taxpayer | ||||||
5 | in response to any
notice
of deficiency issued to | ||||||
6 | that taxpayer or in response to any waiver of
| ||||||
7 | restriction after the commencement of an audit of | ||||||
8 | that taxpayer or of another
taxpayer if a | ||||||
9 | determination in the audit of the other taxpayer | ||||||
10 | directly or
indirectly affects the tax liability | ||||||
11 | of the taxpayer whose claims he or she is
| ||||||
12 | preparing.
| ||||||
13 | (27) Unitary business group. The term "unitary | ||||||
14 | business group" means
a group of persons related through | ||||||
15 | common ownership whose business activities
are integrated | ||||||
16 | with, dependent upon and contribute to each other. The | ||||||
17 | group
will not include those members who, in taxable years | ||||||
18 | on or after December 31, 2004, are foreign persons and
| ||||||
19 | whose business activity outside the United
States is 80% or | ||||||
20 | more of any such member's total business activity; for
| ||||||
21 | purposes of this paragraph and clause (a)(3)(B)(ii) of | ||||||
22 | Section 304,
business
activity within the United States | ||||||
23 | shall be measured by means of the factors
ordinarily | ||||||
24 | applicable under subsections (a), (b), (c), (d), or (h)
of | ||||||
25 | Section
304 except that, in the case of members ordinarily | ||||||
26 | required to apportion
business income by means of the 3 | ||||||
27 | factor formula of property, payroll and sales
specified in | ||||||
28 | subsection (a) of Section 304, including the
formula as | ||||||
29 | weighted in subsection (h) of Section 304, such members | ||||||
30 | shall
not use the sales factor in the computation and the | ||||||
31 | results of the property
and payroll factor computations of | ||||||
32 | subsection (a) of Section 304 shall be
divided by 2 (by one | ||||||
33 | if either
the property or payroll factor has a denominator | ||||||
34 | of zero). The computation
required by the preceding |
| |||||||
| |||||||
1 | sentence shall, in each case, involve the division of
the | ||||||
2 | member's property, payroll, or revenue miles in the United | ||||||
3 | States,
insurance premiums on property or risk in the | ||||||
4 | United States, or financial
organization business income | ||||||
5 | from sources within the United States, as the
case may be, | ||||||
6 | by the respective worldwide figures for such items. Common
| ||||||
7 | ownership in the case of corporations is the direct or | ||||||
8 | indirect control or
ownership of more than 50% of the | ||||||
9 | outstanding voting stock of the persons
carrying on unitary | ||||||
10 | business activity. Unitary business activity can
| ||||||
11 | ordinarily be illustrated where the activities of the | ||||||
12 | members are: (1) in the
same general line (such as | ||||||
13 | manufacturing, wholesaling, retailing of tangible
personal | ||||||
14 | property, insurance, transportation or finance); or (2) | ||||||
15 | are steps in a
vertically structured enterprise or process | ||||||
16 | (such as the steps involved in the
production of natural | ||||||
17 | resources, which might include exploration, mining,
| ||||||
18 | refining, and marketing); and, in either instance, the | ||||||
19 | members are functionally
integrated through the exercise | ||||||
20 | of strong centralized management (where, for
example, | ||||||
21 | authority over such matters as purchasing, financing, tax | ||||||
22 | compliance,
product line, personnel, marketing and capital | ||||||
23 | investment is not left to each
member). For taxable years | ||||||
24 | ending before December 31, 2004, a
In no event, however, | ||||||
25 | will any unitary business group shall not include members
| ||||||
26 | which are ordinarily required to apportion business income | ||||||
27 | under different
subsections of Section 304 , except that for | ||||||
28 | tax years ending on or after
December 31, 1987 and before | ||||||
29 | December 31, 2004, this prohibition shall not apply to a | ||||||
30 | unitary business group
composed of one or more taxpayers | ||||||
31 | all of which apportion business income
pursuant to | ||||||
32 | subsection (b) of Section 304, or all of which apportion | ||||||
33 | business
income pursuant to subsection (d) of Section 304, | ||||||
34 | and a holding company of such
single-factor taxpayers (see |
| |||||||
| |||||||
1 | definition of "financial organization" for rule
regarding | ||||||
2 | holding companies of financial organizations). If a | ||||||
3 | unitary business
group would, but for the preceding | ||||||
4 | sentence, include members that are
ordinarily required to | ||||||
5 | apportion business income under different subsections of
| ||||||
6 | Section 304, then for each subsection of Section 304 for | ||||||
7 | which there are two or
more members, there shall be a | ||||||
8 | separate unitary business group composed of such
members. | ||||||
9 | For purposes of the preceding two sentences, a member is | ||||||
10 | "ordinarily
required to apportion business income" under a | ||||||
11 | particular subsection of Section
304 if it would be | ||||||
12 | required to use the apportionment method prescribed by such
| ||||||
13 | subsection except for the fact that it derives business | ||||||
14 | income solely from
Illinois. Pursuant to rules adopted by | ||||||
15 | the Department, the members of a unitary business group (as | ||||||
16 | defined in this Section) may jointly elect to include in | ||||||
17 | the group for any taxable year ending on or after December | ||||||
18 | 31, 2004, a passive income affiliate, as defined in | ||||||
19 | paragraph (29) of this subsection. Where the election is | ||||||
20 | made to include a passive income affiliate in the unitary | ||||||
21 | business group, for purposes of computing the affiliate's | ||||||
22 | base income under Section 203 of this Act, the affiliate's | ||||||
23 | federal taxable income shall be deemed to consist solely of | ||||||
24 | its passive income, as defined in subparagraph (B) of | ||||||
25 | paragraph (29) of this subsection, net of related expenses. | ||||||
26 | As used in this paragraph, for taxable years ending on or | ||||||
27 | after December 31, 2004, the phrase "United States" means | ||||||
28 | the 50 states, the District of Columbia, any territory or | ||||||
29 | possession of the United States, and any area over which | ||||||
30 | the United States has asserted jurisdiction or claimed | ||||||
31 | exclusive rights with respect to the exploration for or | ||||||
32 | exploitation of natural resources. This definition | ||||||
33 | includes, but is not limited to, Puerto Rico and the outer | ||||||
34 | continental shelf and any artificial islands and |
| |||||||
| |||||||
1 | structures therein.
| ||||||
2 | If the unitary business group members' accounting | ||||||
3 | periods differ,
the common parent's accounting period or, | ||||||
4 | if there is no common parent, the
accounting period of the | ||||||
5 | member that is expected to have, on a recurring basis,
the | ||||||
6 | greatest Illinois income tax liability must be used to | ||||||
7 | determine whether to
use the apportionment method provided | ||||||
8 | in subsection (a) or subsection (h) of
Section 304. The
| ||||||
9 | prohibition against membership in a unitary business group | ||||||
10 | for taxpayers
ordinarily required to apportion income | ||||||
11 | under different subsections of Section
304 does not apply | ||||||
12 | to taxpayers required to apportion income under subsection
| ||||||
13 | (a) and subsection (h) of Section
304. The provisions of | ||||||
14 | this amendatory Act of 1998 apply to tax
years ending on or | ||||||
15 | after December 31, 1998.
| ||||||
16 | (28) Subchapter S corporation. The term "Subchapter S | ||||||
17 | corporation"
means a corporation for which there is in | ||||||
18 | effect an election under Section
1362 of the Internal | ||||||
19 | Revenue Code, or for which there is a federal election
to | ||||||
20 | opt out of the provisions of the Subchapter S Revision Act | ||||||
21 | of 1982 and
have applied instead the prior federal | ||||||
22 | Subchapter S rules as in effect on July
1, 1982.
| ||||||
23 | (29) Passive income affiliate. | ||||||
24 | (A) In general. The term "passive income | ||||||
25 | affiliate" means any person if (i) the person would be | ||||||
26 | a member of a unitary business group under paragraph | ||||||
27 | (27) of this subsection except for the fact that the | ||||||
28 | person is a foreign person and 80% or more of the | ||||||
29 | person's business activity is outside the United | ||||||
30 | States (as determined under paragraph (27)) and (ii) at | ||||||
31 | least 50% of the person's total gross income (as | ||||||
32 | defined in this Section) for the taxable year consists | ||||||
33 | of "passive income" as set forth in subparagraph (B) of | ||||||
34 | this paragraph. |
| |||||||
| |||||||
1 | (B) Passive income. For purpose of subparagraph | ||||||
2 | (A), "passive income" includes the following items | ||||||
3 | (whether or not business income): | ||||||
4 | (i) dividends, interest, annuities, and | ||||||
5 | royalties (except that "royalties" does not | ||||||
6 | include "active business computer software | ||||||
7 | royalties", as defined in Section 543(d) of the | ||||||
8 | Internal Revenue Code); | ||||||
9 | (ii) gains from the sale or exchange of stock | ||||||
10 | or securities; | ||||||
11 | (iii) gains from futures transactions in any | ||||||
12 | commodity on or subject to the rules of a board of | ||||||
13 | trade or commodity exchange (except that, pursuant | ||||||
14 | to rules adopted by the Department, gains by a | ||||||
15 | producer, processor, merchant, or handler of the | ||||||
16 | commodity that arise out of bona fide hedging | ||||||
17 | transactions reasonably necessary to the conduct | ||||||
18 | of its business in the manner in which the business | ||||||
19 | is customarily and usually conducted by others | ||||||
20 | shall not be included); | ||||||
21 | (iv) amounts included in income under part I of | ||||||
22 | subchapter J of the Internal Revenue Code and gains | ||||||
23 | from the sale of other disposition of any interest | ||||||
24 | in an estate or trust; | ||||||
25 | (v) amounts received as compensation (however | ||||||
26 | designated and from whomever received) for the use | ||||||
27 | of, or the right to use, property of the person in | ||||||
28 | any case where the party entitled to the use of the | ||||||
29 | property (whether the right is obtained directly | ||||||
30 | from the person or by means of a sublease or other | ||||||
31 | arrangement) would be a member of the person's | ||||||
32 | unitary business group under paragraph (27) of | ||||||
33 | this subsection but for the fact that the person's | ||||||
34 | business activity outside the United States is 80% |
| |||||||
| |||||||
1 | or more of total business activity as determined | ||||||
2 | under paragraph (27); | ||||||
3 | (vi) rents, unless constituting 50% or more of | ||||||
4 | the gross income. The term "rents" as used in this | ||||||
5 | subparagraph means compensation, however | ||||||
6 | designated, for the use of, or right to use, | ||||||
7 | property but does not include amounts described in | ||||||
8 | subparagraph (v); and | ||||||
9 | (vii) pursuant to rules adopted by the | ||||||
10 | Department, amounts similar to the items set forth | ||||||
11 | in (i) through (vi) above. | ||||||
12 | (C) Gross income and special rules. | ||||||
13 | (i) Gross income. The term "gross income" | ||||||
14 | means the gross income of the person computed under | ||||||
15 | Section 61 of the Internal Revenue Code (without | ||||||
16 | regard to the provisions of subchapter N of the | ||||||
17 | Internal Revenue Code) in any case as if such | ||||||
18 | person were a domestic corporation, partnership, | ||||||
19 | or trust, as applicable. Gross income determined | ||||||
20 | with respect to transactions described in | ||||||
21 | subparagraphs (ii) and (iii) of subparagraph (B) | ||||||
22 | of this paragraph shall include only the excess of | ||||||
23 | gains over losses from such transactions. | ||||||
24 | (ii) 80/20 dividends. Dividends received by a | ||||||
25 | person, directly or indirectly, with respect to | ||||||
26 | the stock of a corporation that is not a passive | ||||||
27 | income affiliate (as defined in this paragraph) | ||||||
28 | and that would be a member of that person's unitary | ||||||
29 | business group under paragraph (27) of this | ||||||
30 | subsection but for the fact that the corporation or | ||||||
31 | person conducts 80% or more of their business | ||||||
32 | activities outside the United States (as | ||||||
33 | determined under paragraph (27) of this | ||||||
34 | subsection) shall not be considered passive income |
| |||||||
| |||||||
1 | under subparagraph (B) of this paragraph. | ||||||
2 | (iii) Exclusion of banks. A person that is | ||||||
3 | organized and doing business under the banking or | ||||||
4 | credit laws of a state or foreign country shall not | ||||||
5 | be considered a passive income affiliate if it is | ||||||
6 | established to the satisfaction of the Director | ||||||
7 | that the person is not formed or availed of for the | ||||||
8 | purpose of avoiding federal income tax or Illinois | ||||||
9 | income tax. If the Director is satisfied that the | ||||||
10 | person is not so formed or availed of, the Director | ||||||
11 | shall issue to the person annually or at other | ||||||
12 | periodic intervals a certification that the person | ||||||
13 | is not a passive income affiliate.
| ||||||
14 | (30) Foreign person. The term "foreign person" means | ||||||
15 | any person who is a nonresident alien individual and any | ||||||
16 | nonindividual other than a person created or organized in | ||||||
17 | the United States or under the law of the United States or | ||||||
18 | of any State.
| ||||||
19 | (31) Employer-owned life insurance contract. The term | ||||||
20 | "employer-owned life insurance contract" means a life | ||||||
21 | insurance contract: | ||||||
22 | (i) that is owned by a person engaged in a trade or | ||||||
23 | business; | ||||||
24 | (ii) under which that person (or the trade or | ||||||
25 | business of that person) is directly or indirectly the | ||||||
26 | beneficiary under the contract; and | ||||||
27 | (iii) covers the life of an insured who is an | ||||||
28 | employee with respect to the trade or business of that | ||||||
29 | person (or an affiliate thereof) on the date the | ||||||
30 | contract is issued. | ||||||
31 | If coverage for each insured under a master contract is | ||||||
32 | treated as a separate contract for purposes of Sections | ||||||
33 | 817(h), 7702, and 7702A of the Internal Revenue Code, then | ||||||
34 | coverage for each insured shall be treated as a separate |
| |||||||
| |||||||
1 | contract. | ||||||
2 | The term "employer-owned life insurance contract" does | ||||||
3 | not include a life insurance contract under which, at the | ||||||
4 | time the contract is issued, the insured is either a | ||||||
5 | director or a highly compensated employee within the | ||||||
6 | meaning of Section 414(q) of the Internal Revenue Code | ||||||
7 | (without regard to paragraph (1)(B)(ii) thereof) or a | ||||||
8 | highly compensated individual within the meaning of | ||||||
9 | Section 105(h)(5) (except that "35 percent" shall be | ||||||
10 | substituted for "25 percent" in subparagraph (C) thereof) | ||||||
11 | of the Internal Revenue Code. | ||||||
12 | For purposes of this definition, the term "employee" | ||||||
13 | includes any officer or director of the taxpayer, and the | ||||||
14 | term "affiliate" includes any person who is related within | ||||||
15 | the meaning of Section 267(b) or 707(b)(1) of the Internal | ||||||
16 | Revenue Code. | ||||||
17 | (32) Small business. The term "small business" means | ||||||
18 | that term as it is defined in the Small Business Advisory | ||||||
19 | Act.
| ||||||
20 | (b) Other definitions.
| ||||||
21 | (1) Words denoting number, gender, and so forth,
when | ||||||
22 | used in this Act, where not otherwise distinctly expressed | ||||||
23 | or manifestly
incompatible with the intent thereof:
| ||||||
24 | (A) Words importing the singular include and apply | ||||||
25 | to several persons,
parties or things;
| ||||||
26 | (B) Words importing the plural include the | ||||||
27 | singular; and
| ||||||
28 | (C) Words importing the masculine gender include | ||||||
29 | the feminine as well.
| ||||||
30 | (2) "Company" or "association" as including successors | ||||||
31 | and assigns. The
word "company" or "association", when used | ||||||
32 | in reference to a corporation,
shall be deemed to embrace | ||||||
33 | the words "successors and assigns of such company
or |
| |||||||
| |||||||
1 | association", and in like manner as if these last-named | ||||||
2 | words, or words
of similar import, were expressed.
| ||||||
3 | (3) Other terms. Any term used in any Section of this | ||||||
4 | Act with respect
to the application of, or in connection | ||||||
5 | with, the provisions of any other
Section of this Act shall | ||||||
6 | have the same meaning as in such other Section.
| ||||||
7 | (c) The changes made to this Section by this amendatory Act | ||||||
8 | of the 93rd General Assembly do not apply to any small business | ||||||
9 | as defined in the Small Business Advisory Act.
| ||||||
10 | (Source: P.A. 91-535, eff. 1-1-00; 91-913, eff.
1-1-01; 92-846, | ||||||
11 | eff. 8-23-02.)
| ||||||
12 | Section 999. Effective date. This Act takes effect July 1, | ||||||
13 | 2004.".
|