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1 | AN ACT in relation to taxes.
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2 | Be it enacted by the People of the State of Illinois, | ||||||||||||||||||||||||
3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by | ||||||||||||||||||||||||
5 | changing Section 203 as
follows:
| ||||||||||||||||||||||||
6 | (35 ILCS 5/203) (from Ch. 120, par. 2-203)
| ||||||||||||||||||||||||
7 | Sec. 203. Base income defined.
| ||||||||||||||||||||||||
8 | (a) Individuals.
| ||||||||||||||||||||||||
9 | (1) In general. In the case of an individual, base | ||||||||||||||||||||||||
10 | income means an
amount equal to the taxpayer's adjusted | ||||||||||||||||||||||||
11 | gross income for the taxable
year as modified by paragraph | ||||||||||||||||||||||||
12 | (2).
| ||||||||||||||||||||||||
13 | (2) Modifications. The adjusted gross income referred | ||||||||||||||||||||||||
14 | to in
paragraph (1) shall be modified by adding thereto the | ||||||||||||||||||||||||
15 | sum of the
following amounts:
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16 | (A) An amount equal to all amounts paid or accrued | ||||||||||||||||||||||||
17 | to the taxpayer
as interest or dividends during the | ||||||||||||||||||||||||
18 | taxable year to the extent excluded
from gross income | ||||||||||||||||||||||||
19 | in the computation of adjusted gross income, except | ||||||||||||||||||||||||
20 | stock
dividends of qualified public utilities | ||||||||||||||||||||||||
21 | described in Section 305(e) of the
Internal Revenue | ||||||||||||||||||||||||
22 | Code;
| ||||||||||||||||||||||||
23 | (B) An amount equal to the amount of tax imposed by |
| |||||||
| |||||||
1 | this Act to the
extent deducted from gross income in | ||||||
2 | the computation of adjusted gross
income for the | ||||||
3 | taxable year;
| ||||||
4 | (C) An amount equal to the amount received during | ||||||
5 | the taxable year
as a recovery or refund of real | ||||||
6 | property taxes paid with respect to the
taxpayer's | ||||||
7 | principal residence under the Revenue Act of
1939 and | ||||||
8 | for which a deduction was previously taken under | ||||||
9 | subparagraph (L) of
this paragraph (2) prior to July 1, | ||||||
10 | 1991, the retrospective application date of
Article 4 | ||||||
11 | of Public Act 87-17. In the case of multi-unit or | ||||||
12 | multi-use
structures and farm dwellings, the taxes on | ||||||
13 | the taxpayer's principal residence
shall be that | ||||||
14 | portion of the total taxes for the entire property | ||||||
15 | which is
attributable to such principal residence;
| ||||||
16 | (D) An amount equal to the amount of the capital | ||||||
17 | gain deduction
allowable under the Internal Revenue | ||||||
18 | Code, to the extent deducted from gross
income in the | ||||||
19 | computation of adjusted gross income;
| ||||||
20 | (D-5) An amount, to the extent not included in | ||||||
21 | adjusted gross income,
equal to the amount of money | ||||||
22 | withdrawn by the taxpayer in the taxable year from
a | ||||||
23 | medical care savings account and the interest earned on | ||||||
24 | the account in the
taxable year of a withdrawal | ||||||
25 | pursuant to subsection (b) of Section 20 of the
Medical | ||||||
26 | Care Savings Account Act or subsection (b) of Section |
| |||||||
| |||||||
1 | 20 of the
Medical Care Savings Account Act of 2000;
| ||||||
2 | (D-10) For taxable years ending after December 31, | ||||||
3 | 1997, an
amount equal to any eligible remediation costs | ||||||
4 | that the individual
deducted in computing adjusted | ||||||
5 | gross income and for which the
individual claims a | ||||||
6 | credit under subsection (l) of Section 201;
| ||||||
7 | (D-15) For taxable years 2001 and thereafter, an | ||||||
8 | amount equal to the
bonus depreciation deduction taken | ||||||
9 | on the taxpayer's federal income tax return for the | ||||||
10 | taxable
year under subsection (k) of Section 168 of the | ||||||
11 | Internal Revenue Code;
| ||||||
12 | (D-16) If the taxpayer sells, transfers, abandons, | ||||||
13 | or otherwise disposes of property for which the | ||||||
14 | taxpayer was required in any taxable year to
make an | ||||||
15 | addition modification under subparagraph (D-15), then | ||||||
16 | an amount equal
to the aggregate amount of the | ||||||
17 | deductions taken in all taxable
years under | ||||||
18 | subparagraph (Z) with respect to that property.
| ||||||
19 | If the taxpayer continues to own property through | ||||||
20 | the last day of the last tax year for which the | ||||||
21 | taxpayer may claim a depreciation deduction for | ||||||
22 | federal income tax purposes and for which the taxpayer | ||||||
23 | was allowed in any taxable year to make a subtraction | ||||||
24 | modification under subparagraph (Z), then an amount | ||||||
25 | equal to that subtraction modification.
| ||||||
26 | The taxpayer is required to make the addition |
| |||||||
| |||||||
1 | modification under this
subparagraph
only once with | ||||||
2 | respect to any one piece of property;
| ||||||
3 | (D-17) For taxable years ending on or after | ||||||
4 | December 31, 2004, an amount equal to the amount | ||||||
5 | otherwise allowed as a deduction in computing base | ||||||
6 | income for interest paid, accrued, or incurred, | ||||||
7 | directly or indirectly, to a foreign person who would | ||||||
8 | be a member of the same unitary business group but for | ||||||
9 | the fact that foreign person's business activity | ||||||
10 | outside the United States is 80% or more of the foreign | ||||||
11 | person's total business activity. The addition | ||||||
12 | modification required by this subparagraph shall be | ||||||
13 | reduced to the extent that dividends were included in | ||||||
14 | base income of the unitary group for the same taxable | ||||||
15 | year and received by the taxpayer or by a member of the | ||||||
16 | taxpayer's unitary business group (including amounts | ||||||
17 | included in gross income under Sections 951 through 964 | ||||||
18 | of the Internal Revenue Code and amounts included in | ||||||
19 | gross income under Section 78 of the Internal Revenue | ||||||
20 | Code) with respect to the stock of the same person to | ||||||
21 | whom the interest was paid, accrued, or incurred. | ||||||
22 | This paragraph shall not apply to the following:
| ||||||
23 | (i) an item of interest paid, accrued, or | ||||||
24 | incurred, directly or indirectly, to a foreign | ||||||
25 | person who is subject in a foreign country or | ||||||
26 | state, other than a state which requires mandatory |
| |||||||
| |||||||
1 | unitary reporting, to a tax on or measured by net | ||||||
2 | income with respect to such interest; or | ||||||
3 | (ii) an item of interest paid, accrued, or | ||||||
4 | incurred, directly or indirectly, to a foreign | ||||||
5 | person if the taxpayer can establish, based on a | ||||||
6 | preponderance of the evidence, both of the | ||||||
7 | following: | ||||||
8 | (a) the foreign person, during the same | ||||||
9 | taxable year, paid, accrued, or incurred, the | ||||||
10 | interest to a person that is not a related | ||||||
11 | member, and | ||||||
12 | (b) the transaction giving rise to the | ||||||
13 | interest expense between the taxpayer and the | ||||||
14 | foreign person did not have as a principal | ||||||
15 | purpose the avoidance of Illinois income tax, | ||||||
16 | and is paid pursuant to a contract or agreement | ||||||
17 | that reflects an arm's-length interest rate | ||||||
18 | and terms; or
| ||||||
19 | (iii) the taxpayer can establish, based on | ||||||
20 | clear and convincing evidence, that the interest | ||||||
21 | paid, accrued, or incurred relates to a contract or | ||||||
22 | agreement entered into at arm's-length rates and | ||||||
23 | terms and the principal purpose for the payment is | ||||||
24 | not federal or Illinois tax avoidance; or
| ||||||
25 | (iv) an item of interest paid, accrued, or | ||||||
26 | incurred, directly or indirectly, to a foreign |
| |||||||
| |||||||
1 | person if the taxpayer establishes by clear and | ||||||
2 | convincing evidence that the adjustments are | ||||||
3 | unreasonable; or if the taxpayer and the Director | ||||||
4 | agree in writing to the application or use of an | ||||||
5 | alternative method of apportionment under Section | ||||||
6 | 304(f).
| ||||||
7 | Nothing in this subsection shall preclude the | ||||||
8 | Director from making any other adjustment | ||||||
9 | otherwise allowed under Section 404 of this Act for | ||||||
10 | any tax year beginning after the effective date of | ||||||
11 | this amendment provided such adjustment is made | ||||||
12 | pursuant to regulation adopted by the Department | ||||||
13 | and such regulations provide methods and standards | ||||||
14 | by which the Department will utilize its authority | ||||||
15 | under Section 404 of this Act;
| ||||||
16 | (D-18) For taxable years ending on or after | ||||||
17 | December 31, 2004, an amount equal to the amount of | ||||||
18 | intangible expenses and costs otherwise allowed as a | ||||||
19 | deduction in computing base income, and that were paid, | ||||||
20 | accrued, or incurred, directly or indirectly, to a | ||||||
21 | foreign person who would be a member of the same | ||||||
22 | unitary business group but for the fact that the | ||||||
23 | foreign person's business activity outside the United | ||||||
24 | States is 80% or more of that person's total business | ||||||
25 | activity. The addition modification required by this | ||||||
26 | subparagraph shall be reduced to the extent that |
| |||||||
| |||||||
1 | dividends were included in base income of the unitary | ||||||
2 | group for the same taxable year and received by the | ||||||
3 | taxpayer or by a member of the taxpayer's unitary | ||||||
4 | business group (including amounts included in gross | ||||||
5 | income under Sections 951 through 964 of the Internal | ||||||
6 | Revenue Code and amounts included in gross income under | ||||||
7 | Section 78 of the Internal Revenue Code) with respect | ||||||
8 | to the stock of the same person to whom the intangible | ||||||
9 | expenses and costs were directly or indirectly paid, | ||||||
10 | incurred, or accrued. The preceding sentence does not | ||||||
11 | apply to the extent that the same dividends caused a | ||||||
12 | reduction to the addition modification required under | ||||||
13 | Section 203(a)(2)(D-17) of this Act. As used in this | ||||||
14 | subparagraph, the term "intangible expenses and costs" | ||||||
15 | includes (1) expenses, losses, and costs for, or | ||||||
16 | related to, the direct or indirect acquisition, use, | ||||||
17 | maintenance or management, ownership, sale, exchange, | ||||||
18 | or any other disposition of intangible property; (2) | ||||||
19 | losses incurred, directly or indirectly, from | ||||||
20 | factoring transactions or discounting transactions; | ||||||
21 | (3) royalty, patent, technical, and copyright fees; | ||||||
22 | (4) licensing fees; and (5) other similar expenses and | ||||||
23 | costs.
For purposes of this subparagraph, "intangible | ||||||
24 | property" includes patents, patent applications, trade | ||||||
25 | names, trademarks, service marks, copyrights, mask | ||||||
26 | works, trade secrets, and similar types of intangible |
| |||||||
| |||||||
1 | assets. | ||||||
2 | This paragraph shall not apply to the following: | ||||||
3 | (i) any item of intangible expenses or costs | ||||||
4 | paid, accrued, or incurred, directly or | ||||||
5 | indirectly, from a transaction with a foreign | ||||||
6 | person who is subject in a foreign country or | ||||||
7 | state, other than a state which requires mandatory | ||||||
8 | unitary reporting, to a tax on or measured by net | ||||||
9 | income with respect to such item; or | ||||||
10 | (ii) any item of intangible expense or cost | ||||||
11 | paid, accrued, or incurred, directly or | ||||||
12 | indirectly, if the taxpayer can establish, based | ||||||
13 | on a preponderance of the evidence, both of the | ||||||
14 | following: | ||||||
15 | (a) the foreign person during the same | ||||||
16 | taxable year paid, accrued, or incurred, the | ||||||
17 | intangible expense or cost to a person that is | ||||||
18 | not a related member, and | ||||||
19 | (b) the transaction giving rise to the | ||||||
20 | intangible expense or cost between the | ||||||
21 | taxpayer and the foreign person did not have as | ||||||
22 | a principal purpose the avoidance of Illinois | ||||||
23 | income tax, and is paid pursuant to a contract | ||||||
24 | or agreement that reflects arm's-length terms; | ||||||
25 | or | ||||||
26 | (iii) any item of intangible expense or cost |
| |||||||
| |||||||
1 | paid, accrued, or incurred, directly or | ||||||
2 | indirectly, from a transaction with a foreign | ||||||
3 | person if the taxpayer establishes by clear and | ||||||
4 | convincing evidence, that the adjustments are | ||||||
5 | unreasonable; or if the taxpayer and the Director | ||||||
6 | agree in writing to the application or use of an | ||||||
7 | alternative method of apportionment under Section | ||||||
8 | 304(f);
| ||||||
9 | Nothing in this subsection shall preclude the | ||||||
10 | Director from making any other adjustment | ||||||
11 | otherwise allowed under Section 404 of this Act for | ||||||
12 | any tax year beginning after the effective date of | ||||||
13 | this amendment provided such adjustment is made | ||||||
14 | pursuant to regulation adopted by the Department | ||||||
15 | and such regulations provide methods and standards | ||||||
16 | by which the Department will utilize its authority | ||||||
17 | under Section 404 of this Act;
| ||||||
18 | (D-20) For taxable years beginning on or after | ||||||
19 | January 1,
2002, in
the
case of a distribution from a | ||||||
20 | qualified tuition program under Section 529 of
the | ||||||
21 | Internal Revenue Code, other than (i) a distribution | ||||||
22 | from a College Savings
Pool created under Section 16.5 | ||||||
23 | of the State Treasurer Act or (ii) a
distribution from | ||||||
24 | the Illinois Prepaid Tuition Trust Fund, an amount | ||||||
25 | equal to
the amount excluded from gross income under | ||||||
26 | Section 529(c)(3)(B);
|
| |||||||
| |||||||
1 | and by deducting from the total so obtained the
sum of the | ||||||
2 | following amounts:
| ||||||
3 | (E) For taxable years ending before December 31, | ||||||
4 | 2001,
any amount included in such total in respect of | ||||||
5 | any compensation
(including but not limited to any | ||||||
6 | compensation paid or accrued to a
serviceman while a | ||||||
7 | prisoner of war or missing in action) paid to a | ||||||
8 | resident
by reason of being on active duty in the Armed | ||||||
9 | Forces of the United States
and in respect of any | ||||||
10 | compensation paid or accrued to a resident who as a
| ||||||
11 | governmental employee was a prisoner of war or missing | ||||||
12 | in action, and in
respect of any compensation paid to a | ||||||
13 | resident in 1971 or thereafter for
annual training | ||||||
14 | performed pursuant to Sections 502 and 503, Title 32,
| ||||||
15 | United States Code as a member of the Illinois National | ||||||
16 | Guard.
For taxable years ending on or after December | ||||||
17 | 31, 2001, any amount included in
such total in respect | ||||||
18 | of any compensation (including but not limited to any
| ||||||
19 | compensation paid or accrued to a serviceman while a | ||||||
20 | prisoner of war or missing
in action) paid to a | ||||||
21 | resident by reason of being a member of any component | ||||||
22 | of
the Armed Forces of the United States and in respect | ||||||
23 | of any compensation paid
or accrued to a resident who | ||||||
24 | as a governmental employee was a prisoner of war
or | ||||||
25 | missing in action, and in respect of any compensation | ||||||
26 | paid to a resident in
2001 or thereafter by reason of |
| |||||||
| |||||||
1 | being a member of the Illinois National Guard.
The | ||||||
2 | provisions of this amendatory Act of the 92nd General | ||||||
3 | Assembly are exempt
from the provisions of Section 250;
| ||||||
4 | (F) An amount equal to all amounts included in such | ||||||
5 | total pursuant
to the provisions of Sections 402(a), | ||||||
6 | 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the | ||||||
7 | Internal Revenue Code, or included in such total as
| ||||||
8 | distributions under the provisions of any retirement | ||||||
9 | or disability plan for
employees of any governmental | ||||||
10 | agency or unit, or retirement payments to
retired | ||||||
11 | partners, which payments are excluded in computing net | ||||||
12 | earnings
from self employment by Section 1402 of the | ||||||
13 | Internal Revenue Code and
regulations adopted pursuant | ||||||
14 | thereto;
| ||||||
15 | (G) The valuation limitation amount;
| ||||||
16 | (H) An amount equal to the amount of any tax | ||||||
17 | imposed by this Act
which was refunded to the taxpayer | ||||||
18 | and included in such total for the
taxable year;
| ||||||
19 | (I) An amount equal to all amounts included in such | ||||||
20 | total pursuant
to the provisions of Section 111 of the | ||||||
21 | Internal Revenue Code as a
recovery of items previously | ||||||
22 | deducted from adjusted gross income in the
computation | ||||||
23 | of taxable income;
| ||||||
24 | (J) An amount equal to those dividends included in | ||||||
25 | such total which were
paid by a corporation which | ||||||
26 | conducts business operations in an Enterprise
Zone or |
| |||||||
| |||||||
1 | zones created under the Illinois Enterprise Zone Act or | ||||||
2 | a River Edge Redevelopment Zone or zones created under | ||||||
3 | the River Edge Redevelopment Zone Act, and conducts
| ||||||
4 | substantially all of its operations in an Enterprise | ||||||
5 | Zone or zones or a River Edge Redevelopment Zone or | ||||||
6 | zones. This subparagraph (J) is exempt from the | ||||||
7 | provisions of Section 250;
| ||||||
8 | (K) An amount equal to those dividends included in | ||||||
9 | such total that
were paid by a corporation that | ||||||
10 | conducts business operations in a federally
designated | ||||||
11 | Foreign Trade Zone or Sub-Zone and that is designated a | ||||||
12 | High Impact
Business located in Illinois; provided | ||||||
13 | that dividends eligible for the
deduction provided in | ||||||
14 | subparagraph (J) of paragraph (2) of this subsection
| ||||||
15 | shall not be eligible for the deduction provided under | ||||||
16 | this subparagraph
(K);
| ||||||
17 | (L) For taxable years ending after December 31, | ||||||
18 | 1983, an amount equal to
all social security benefits | ||||||
19 | and railroad retirement benefits included in
such | ||||||
20 | total pursuant to Sections 72(r) and 86 of the Internal | ||||||
21 | Revenue Code;
| ||||||
22 | (M) With the exception of any amounts subtracted | ||||||
23 | under subparagraph
(N), an amount equal to the sum of | ||||||
24 | all amounts disallowed as
deductions by (i) Sections | ||||||
25 | 171(a) (2), and 265(2) of the Internal Revenue Code
of | ||||||
26 | 1954, as now or hereafter amended, and all amounts of |
| |||||||
| |||||||
1 | expenses allocable
to interest and disallowed as | ||||||
2 | deductions by Section 265(1) of the Internal
Revenue | ||||||
3 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
4 | taxable years
ending on or after August 13, 1999, | ||||||
5 | Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | ||||||
6 | the Internal Revenue Code; the provisions of this
| ||||||
7 | subparagraph are exempt from the provisions of Section | ||||||
8 | 250;
| ||||||
9 | (N) An amount equal to all amounts included in such | ||||||
10 | total which are
exempt from taxation by this State | ||||||
11 | either by reason of its statutes or
Constitution
or by | ||||||
12 | reason of the Constitution, treaties or statutes of the | ||||||
13 | United States;
provided that, in the case of any | ||||||
14 | statute of this State that exempts income
derived from | ||||||
15 | bonds or other obligations from the tax imposed under | ||||||
16 | this Act,
the amount exempted shall be the interest net | ||||||
17 | of bond premium amortization;
| ||||||
18 | (O) An amount equal to any contribution made to a | ||||||
19 | job training
project established pursuant to the Tax | ||||||
20 | Increment Allocation Redevelopment Act;
| ||||||
21 | (P) An amount equal to the amount of the deduction | ||||||
22 | used to compute the
federal income tax credit for | ||||||
23 | restoration of substantial amounts held under
claim of | ||||||
24 | right for the taxable year pursuant to Section 1341 of | ||||||
25 | the
Internal Revenue Code of 1986;
| ||||||
26 | (Q) An amount equal to any amounts included in such |
| |||||||
| |||||||
1 | total, received by
the taxpayer as an acceleration in | ||||||
2 | the payment of life, endowment or annuity
benefits in | ||||||
3 | advance of the time they would otherwise be payable as | ||||||
4 | an indemnity
for a terminal illness;
| ||||||
5 | (R) An amount equal to the amount of any federal or | ||||||
6 | State bonus paid
to veterans of the Persian Gulf War;
| ||||||
7 | (S) An amount, to the extent included in adjusted | ||||||
8 | gross income, equal
to the amount of a contribution | ||||||
9 | made in the taxable year on behalf of the
taxpayer to a | ||||||
10 | medical care savings account established under the | ||||||
11 | Medical Care
Savings Account Act or the Medical Care | ||||||
12 | Savings Account Act of 2000 to the
extent the | ||||||
13 | contribution is accepted by the account
administrator | ||||||
14 | as provided in that Act;
| ||||||
15 | (T) An amount, to the extent included in adjusted | ||||||
16 | gross income, equal to
the amount of interest earned in | ||||||
17 | the taxable year on a medical care savings
account | ||||||
18 | established under the Medical Care Savings Account Act | ||||||
19 | or the Medical
Care Savings Account Act of 2000 on | ||||||
20 | behalf of the
taxpayer, other than interest added | ||||||
21 | pursuant to item (D-5) of this paragraph
(2);
| ||||||
22 | (U) For one taxable year beginning on or after | ||||||
23 | January 1,
1994, an
amount equal to the total amount of | ||||||
24 | tax imposed and paid under subsections (a)
and (b) of | ||||||
25 | Section 201 of this Act on grant amounts received by | ||||||
26 | the taxpayer
under the Nursing Home Grant Assistance |
| |||||||
| |||||||
1 | Act during the taxpayer's taxable years
1992 and 1993;
| ||||||
2 | (V) Beginning with tax years ending on or after | ||||||
3 | December 31, 1995 and
ending with tax years ending on | ||||||
4 | or before December 31, 2004, an amount equal to
the | ||||||
5 | amount paid by a taxpayer who is a
self-employed | ||||||
6 | taxpayer, a partner of a partnership, or a
shareholder | ||||||
7 | in a Subchapter S corporation for health insurance or | ||||||
8 | long-term
care insurance for that taxpayer or that | ||||||
9 | taxpayer's spouse or dependents, to
the extent that the | ||||||
10 | amount paid for that health insurance or long-term care
| ||||||
11 | insurance may be deducted under Section 213 of the | ||||||
12 | Internal Revenue Code of
1986, has not been deducted on | ||||||
13 | the federal income tax return of the taxpayer,
and does | ||||||
14 | not exceed the taxable income attributable to that | ||||||
15 | taxpayer's income,
self-employment income, or | ||||||
16 | Subchapter S corporation income; except that no
| ||||||
17 | deduction shall be allowed under this item (V) if the | ||||||
18 | taxpayer is eligible to
participate in any health | ||||||
19 | insurance or long-term care insurance plan of an
| ||||||
20 | employer of the taxpayer or the taxpayer's
spouse. The | ||||||
21 | amount of the health insurance and long-term care | ||||||
22 | insurance
subtracted under this item (V) shall be | ||||||
23 | determined by multiplying total
health insurance and | ||||||
24 | long-term care insurance premiums paid by the taxpayer
| ||||||
25 | times a number that represents the fractional | ||||||
26 | percentage of eligible medical
expenses under Section |
| |||||||
| |||||||
1 | 213 of the Internal Revenue Code of 1986 not actually
| ||||||
2 | deducted on the taxpayer's federal income tax return;
| ||||||
3 | (W) For taxable years beginning on or after January | ||||||
4 | 1, 1998,
all amounts included in the taxpayer's federal | ||||||
5 | gross income
in the taxable year from amounts converted | ||||||
6 | from a regular IRA to a Roth IRA.
This paragraph is | ||||||
7 | exempt from the provisions of Section
250;
| ||||||
8 | (X) For taxable year 1999 and thereafter, an amount | ||||||
9 | equal to the
amount of any (i) distributions, to the | ||||||
10 | extent includible in gross income for
federal income | ||||||
11 | tax purposes, made to the taxpayer because of his or | ||||||
12 | her status
as a victim of persecution for racial or | ||||||
13 | religious reasons by Nazi Germany or
any other Axis | ||||||
14 | regime or as an heir of the victim and (ii) items
of | ||||||
15 | income, to the extent
includible in gross income for | ||||||
16 | federal income tax purposes, attributable to,
derived | ||||||
17 | from or in any way related to assets stolen from, | ||||||
18 | hidden from, or
otherwise lost to a victim of
| ||||||
19 | persecution for racial or religious reasons by Nazi | ||||||
20 | Germany or any other Axis
regime immediately prior to, | ||||||
21 | during, and immediately after World War II,
including, | ||||||
22 | but
not limited to, interest on the proceeds receivable | ||||||
23 | as insurance
under policies issued to a victim of | ||||||
24 | persecution for racial or religious
reasons
by Nazi | ||||||
25 | Germany or any other Axis regime by European insurance | ||||||
26 | companies
immediately prior to and during World War II;
|
| |||||||
| |||||||
1 | provided, however, this subtraction from federal | ||||||
2 | adjusted gross income does not
apply to assets acquired | ||||||
3 | with such assets or with the proceeds from the sale of
| ||||||
4 | such assets; provided, further, this paragraph shall | ||||||
5 | only apply to a taxpayer
who was the first recipient of | ||||||
6 | such assets after their recovery and who is a
victim of | ||||||
7 | persecution for racial or religious reasons
by Nazi | ||||||
8 | Germany or any other Axis regime or as an heir of the | ||||||
9 | victim. The
amount of and the eligibility for any | ||||||
10 | public assistance, benefit, or
similar entitlement is | ||||||
11 | not affected by the inclusion of items (i) and (ii) of
| ||||||
12 | this paragraph in gross income for federal income tax | ||||||
13 | purposes.
This paragraph is exempt from the provisions | ||||||
14 | of Section 250;
| ||||||
15 | (Y) For taxable years beginning on or after January | ||||||
16 | 1, 2002
and ending
on or before December 31, 2004, | ||||||
17 | moneys contributed in the taxable year to a College | ||||||
18 | Savings Pool account under
Section 16.5 of the State | ||||||
19 | Treasurer Act, except that amounts excluded from
gross | ||||||
20 | income under Section 529(c)(3)(C)(i) of the Internal | ||||||
21 | Revenue Code
shall not be considered moneys | ||||||
22 | contributed under this subparagraph (Y). For taxable | ||||||
23 | years beginning on or after January 1, 2005, a maximum | ||||||
24 | of $10,000
contributed
in the
taxable year to (i) a | ||||||
25 | College Savings Pool account under Section 16.5 of the
| ||||||
26 | State
Treasurer Act or (ii) the Illinois Prepaid |
| |||||||
| |||||||
1 | Tuition Trust Fund,
except that
amounts excluded from | ||||||
2 | gross income under Section 529(c)(3)(C)(i) of the
| ||||||
3 | Internal
Revenue Code shall not be considered moneys | ||||||
4 | contributed under this subparagraph
(Y). This
| ||||||
5 | subparagraph (Y) is exempt from the provisions of | ||||||
6 | Section 250;
| ||||||
7 | (Z) For taxable years 2001 and thereafter, for the | ||||||
8 | taxable year in
which the bonus depreciation deduction
| ||||||
9 | is taken on the taxpayer's federal income tax return | ||||||
10 | under
subsection (k) of Section 168 of the Internal | ||||||
11 | Revenue Code and for each
applicable taxable year | ||||||
12 | thereafter, an amount equal to "x", where:
| ||||||
13 | (1) "y" equals the amount of the depreciation | ||||||
14 | deduction taken for the
taxable year
on the | ||||||
15 | taxpayer's federal income tax return on property | ||||||
16 | for which the bonus
depreciation deduction
was | ||||||
17 | taken in any year under subsection (k) of Section | ||||||
18 | 168 of the Internal
Revenue Code, but not including | ||||||
19 | the bonus depreciation deduction;
| ||||||
20 | (2) for taxable years ending on or before | ||||||
21 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
22 | and then divided by 70 (or "y"
multiplied by | ||||||
23 | 0.429); and | ||||||
24 | (3) for taxable years ending after December | ||||||
25 | 31, 2005: | ||||||
26 | (i) for property on which a bonus |
| |||||||
| |||||||
1 | depreciation deduction of 30% of the adjusted | ||||||
2 | basis was taken, "x" equals "y" multiplied by | ||||||
3 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
4 | 0.429); and | ||||||
5 | (ii) for property on which a bonus | ||||||
6 | depreciation deduction of 50% of the adjusted | ||||||
7 | basis was taken, "x" equals "y" multiplied by | ||||||
8 | 1.0.
| ||||||
9 | The aggregate amount deducted under this | ||||||
10 | subparagraph in all taxable
years for any one piece of | ||||||
11 | property may not exceed the amount of the bonus
| ||||||
12 | depreciation deduction
taken on that property on the | ||||||
13 | taxpayer's federal income tax return under
subsection | ||||||
14 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
15 | subparagraph (Z) is exempt from the provisions of | ||||||
16 | Section 250;
| ||||||
17 | (AA) If the taxpayer sells, transfers, abandons, | ||||||
18 | or otherwise disposes of
property for which the | ||||||
19 | taxpayer was required in any taxable year to make an
| ||||||
20 | addition modification under subparagraph (D-15), then | ||||||
21 | an amount equal to that
addition modification.
| ||||||
22 | If the taxpayer continues to own property through | ||||||
23 | the last day of the last tax year for which the | ||||||
24 | taxpayer may claim a depreciation deduction for | ||||||
25 | federal income tax purposes and for which the taxpayer | ||||||
26 | was required in any taxable year to make an addition |
| |||||||
| |||||||
1 | modification under subparagraph (D-15), then an amount | ||||||
2 | equal to that addition modification.
| ||||||
3 | The taxpayer is allowed to take the deduction under | ||||||
4 | this subparagraph
only once with respect to any one | ||||||
5 | piece of property. | ||||||
6 | This subparagraph (AA) is exempt from the | ||||||
7 | provisions of Section 250;
| ||||||
8 | (BB) Any amount included in adjusted gross income, | ||||||
9 | other
than
salary,
received by a driver in a | ||||||
10 | ridesharing arrangement using a motor vehicle;
| ||||||
11 | (CC) The amount of (i) any interest income (net of | ||||||
12 | the deductions allocable thereto) taken into account | ||||||
13 | for the taxable year with respect to a transaction with | ||||||
14 | a taxpayer that is required to make an addition | ||||||
15 | modification with respect to such transaction under | ||||||
16 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
17 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
18 | the amount of that addition modification, and
(ii) any | ||||||
19 | income from intangible property (net of the deductions | ||||||
20 | allocable thereto) taken into account for the taxable | ||||||
21 | year with respect to a transaction with a taxpayer that | ||||||
22 | is required to make an addition modification with | ||||||
23 | respect to such transaction under Section | ||||||
24 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
25 | 203(d)(2)(D-8), but not to exceed the amount of that | ||||||
26 | addition modification; |
| |||||||
| |||||||
1 | (DD) An amount equal to the interest income taken | ||||||
2 | into account for the taxable year (net of the | ||||||
3 | deductions allocable thereto) with respect to | ||||||
4 | transactions with a foreign person who would be a | ||||||
5 | member of the taxpayer's unitary business group but for | ||||||
6 | the fact that the foreign person's business activity | ||||||
7 | outside the United States is 80% or more of that | ||||||
8 | person's total business activity, but not to exceed the | ||||||
9 | addition modification required to be made for the same | ||||||
10 | taxable year under Section 203(a)(2)(D-17) for | ||||||
11 | interest paid, accrued, or incurred, directly or | ||||||
12 | indirectly, to the same foreign person; and | ||||||
13 | (EE) An amount equal to the income from intangible | ||||||
14 | property taken into account for the taxable year (net | ||||||
15 | of the deductions allocable thereto) with respect to | ||||||
16 | transactions with a foreign person who would be a | ||||||
17 | member of the taxpayer's unitary business group but for | ||||||
18 | the fact that the foreign person's business activity | ||||||
19 | outside the United States is 80% or more of that | ||||||
20 | person's total business activity, but not to exceed the | ||||||
21 | addition modification required to be made for the same | ||||||
22 | taxable year under Section 203(a)(2)(D-18) for | ||||||
23 | intangible expenses and costs paid, accrued, or | ||||||
24 | incurred, directly or indirectly, to the same foreign | ||||||
25 | person ; and | ||||||
26 | (FF) Beginning with tax years ending on or after |
| |||||||
| |||||||
1 | December 31, 2007,
and
ending with tax years ending on | ||||||
2 | or before December 30, 2018, all
unreimbursed amounts, | ||||||
3 | but not more than a total amount that would result in a
| ||||||
4 | tax liability of less than zero for the taxpayer, | ||||||
5 | expended by persons 65 years
of age or older for home | ||||||
6 | health services, as defined by Section 2.05 of the
Home | ||||||
7 | Health Agency Licensing Act, if provided by a public or | ||||||
8 | private
organization licensed under that Act, or for | ||||||
9 | services provided to a person at
that person's | ||||||
10 | residence by a licensed practical nurse or registered | ||||||
11 | nurse in
accordance with a plan of treatment for | ||||||
12 | illness or infirmity prescribed by a
physician .
| ||||||
13 | (b) Corporations.
| ||||||
14 | (1) In general. In the case of a corporation, base | ||||||
15 | income means an
amount equal to the taxpayer's taxable | ||||||
16 | income for the taxable year as
modified by paragraph (2).
| ||||||
17 | (2) Modifications. The taxable income referred to in | ||||||
18 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
19 | of the following amounts:
| ||||||
20 | (A) An amount equal to all amounts paid or accrued | ||||||
21 | to the taxpayer
as interest and all distributions | ||||||
22 | received from regulated investment
companies during | ||||||
23 | the taxable year to the extent excluded from gross
| ||||||
24 | income in the computation of taxable income;
| ||||||
25 | (B) An amount equal to the amount of tax imposed by |
| |||||||
| |||||||
1 | this Act to the
extent deducted from gross income in | ||||||
2 | the computation of taxable income
for the taxable year;
| ||||||
3 | (C) In the case of a regulated investment company, | ||||||
4 | an amount equal to
the excess of (i) the net long-term | ||||||
5 | capital gain for the taxable year, over
(ii) the amount | ||||||
6 | of the capital gain dividends designated as such in | ||||||
7 | accordance
with Section 852(b)(3)(C) of the Internal | ||||||
8 | Revenue Code and any amount
designated under Section | ||||||
9 | 852(b)(3)(D) of the Internal Revenue Code,
| ||||||
10 | attributable to the taxable year (this amendatory Act | ||||||
11 | of 1995
(Public Act 89-89) is declarative of existing | ||||||
12 | law and is not a new
enactment);
| ||||||
13 | (D) The amount of any net operating loss deduction | ||||||
14 | taken in arriving
at taxable income, other than a net | ||||||
15 | operating loss carried forward from a
taxable year | ||||||
16 | ending prior to December 31, 1986;
| ||||||
17 | (E) For taxable years in which a net operating loss | ||||||
18 | carryback or
carryforward from a taxable year ending | ||||||
19 | prior to December 31, 1986 is an
element of taxable | ||||||
20 | income under paragraph (1) of subsection (e) or
| ||||||
21 | subparagraph (E) of paragraph (2) of subsection (e), | ||||||
22 | the amount by which
addition modifications other than | ||||||
23 | those provided by this subparagraph (E)
exceeded | ||||||
24 | subtraction modifications in such earlier taxable | ||||||
25 | year, with the
following limitations applied in the | ||||||
26 | order that they are listed:
|
| |||||||
| |||||||
1 | (i) the addition modification relating to the | ||||||
2 | net operating loss
carried back or forward to the | ||||||
3 | taxable year from any taxable year ending
prior to | ||||||
4 | December 31, 1986 shall be reduced by the amount of | ||||||
5 | addition
modification under this subparagraph (E) | ||||||
6 | which related to that net operating
loss and which | ||||||
7 | was taken into account in calculating the base | ||||||
8 | income of an
earlier taxable year, and
| ||||||
9 | (ii) the addition modification relating to the | ||||||
10 | net operating loss
carried back or forward to the | ||||||
11 | taxable year from any taxable year ending
prior to | ||||||
12 | December 31, 1986 shall not exceed the amount of | ||||||
13 | such carryback or
carryforward;
| ||||||
14 | For taxable years in which there is a net operating | ||||||
15 | loss carryback or
carryforward from more than one other | ||||||
16 | taxable year ending prior to December
31, 1986, the | ||||||
17 | addition modification provided in this subparagraph | ||||||
18 | (E) shall
be the sum of the amounts computed | ||||||
19 | independently under the preceding
provisions of this | ||||||
20 | subparagraph (E) for each such taxable year;
| ||||||
21 | (E-5) For taxable years ending after December 31, | ||||||
22 | 1997, an
amount equal to any eligible remediation costs | ||||||
23 | that the corporation
deducted in computing adjusted | ||||||
24 | gross income and for which the
corporation claims a | ||||||
25 | credit under subsection (l) of Section 201;
| ||||||
26 | (E-10) For taxable years 2001 and thereafter, an |
| |||||||
| |||||||
1 | amount equal to the
bonus depreciation deduction taken | ||||||
2 | on the taxpayer's federal income tax return for the | ||||||
3 | taxable
year under subsection (k) of Section 168 of the | ||||||
4 | Internal Revenue Code; and
| ||||||
5 | (E-11) If the taxpayer sells, transfers, abandons, | ||||||
6 | or otherwise disposes of property for which the | ||||||
7 | taxpayer was required in any taxable year to
make an | ||||||
8 | addition modification under subparagraph (E-10), then | ||||||
9 | an amount equal
to the aggregate amount of the | ||||||
10 | deductions taken in all taxable
years under | ||||||
11 | subparagraph (T) with respect to that property.
| ||||||
12 | If the taxpayer continues to own property through | ||||||
13 | the last day of the last tax year for which the | ||||||
14 | taxpayer may claim a depreciation deduction for | ||||||
15 | federal income tax purposes and for which the taxpayer | ||||||
16 | was allowed in any taxable year to make a subtraction | ||||||
17 | modification under subparagraph (T), then an amount | ||||||
18 | equal to that subtraction modification.
| ||||||
19 | The taxpayer is required to make the addition | ||||||
20 | modification under this
subparagraph
only once with | ||||||
21 | respect to any one piece of property;
| ||||||
22 | (E-12) For taxable years ending on or after | ||||||
23 | December 31, 2004, an amount equal to the amount | ||||||
24 | otherwise allowed as a deduction in computing base | ||||||
25 | income for interest paid, accrued, or incurred, | ||||||
26 | directly or indirectly, to a foreign person who would |
| |||||||
| |||||||
1 | be a member of the same unitary business group but for | ||||||
2 | the fact the foreign person's business activity | ||||||
3 | outside the United States is 80% or more of the foreign | ||||||
4 | person's total business activity. The addition | ||||||
5 | modification required by this subparagraph shall be | ||||||
6 | reduced to the extent that dividends were included in | ||||||
7 | base income of the unitary group for the same taxable | ||||||
8 | year and received by the taxpayer or by a member of the | ||||||
9 | taxpayer's unitary business group (including amounts | ||||||
10 | included in gross income pursuant to Sections 951 | ||||||
11 | through 964 of the Internal Revenue Code and amounts | ||||||
12 | included in gross income under Section 78 of the | ||||||
13 | Internal Revenue Code) with respect to the stock of the | ||||||
14 | same person to whom the interest was paid, accrued, or | ||||||
15 | incurred.
| ||||||
16 | This paragraph shall not apply to the following:
| ||||||
17 | (i) an item of interest paid, accrued, or | ||||||
18 | incurred, directly or indirectly, to a foreign | ||||||
19 | person who is subject in a foreign country or | ||||||
20 | state, other than a state which requires mandatory | ||||||
21 | unitary reporting, to a tax on or measured by net | ||||||
22 | income with respect to such interest; or | ||||||
23 | (ii) an item of interest paid, accrued, or | ||||||
24 | incurred, directly or indirectly, to a foreign | ||||||
25 | person if the taxpayer can establish, based on a | ||||||
26 | preponderance of the evidence, both of the |
| |||||||
| |||||||
1 | following: | ||||||
2 | (a) the foreign person, during the same | ||||||
3 | taxable year, paid, accrued, or incurred, the | ||||||
4 | interest to a person that is not a related | ||||||
5 | member, and | ||||||
6 | (b) the transaction giving rise to the | ||||||
7 | interest expense between the taxpayer and the | ||||||
8 | foreign person did not have as a principal | ||||||
9 | purpose the avoidance of Illinois income tax, | ||||||
10 | and is paid pursuant to a contract or agreement | ||||||
11 | that reflects an arm's-length interest rate | ||||||
12 | and terms; or
| ||||||
13 | (iii) the taxpayer can establish, based on | ||||||
14 | clear and convincing evidence, that the interest | ||||||
15 | paid, accrued, or incurred relates to a contract or | ||||||
16 | agreement entered into at arm's-length rates and | ||||||
17 | terms and the principal purpose for the payment is | ||||||
18 | not federal or Illinois tax avoidance; or
| ||||||
19 | (iv) an item of interest paid, accrued, or | ||||||
20 | incurred, directly or indirectly, to a foreign | ||||||
21 | person if the taxpayer establishes by clear and | ||||||
22 | convincing evidence that the adjustments are | ||||||
23 | unreasonable; or if the taxpayer and the Director | ||||||
24 | agree in writing to the application or use of an | ||||||
25 | alternative method of apportionment under Section | ||||||
26 | 304(f).
|
| |||||||
| |||||||
1 | Nothing in this subsection shall preclude the | ||||||
2 | Director from making any other adjustment | ||||||
3 | otherwise allowed under Section 404 of this Act for | ||||||
4 | any tax year beginning after the effective date of | ||||||
5 | this amendment provided such adjustment is made | ||||||
6 | pursuant to regulation adopted by the Department | ||||||
7 | and such regulations provide methods and standards | ||||||
8 | by which the Department will utilize its authority | ||||||
9 | under Section 404 of this Act;
| ||||||
10 | (E-13) For taxable years ending on or after | ||||||
11 | December 31, 2004, an amount equal to the amount of | ||||||
12 | intangible expenses and costs otherwise allowed as a | ||||||
13 | deduction in computing base income, and that were paid, | ||||||
14 | accrued, or incurred, directly or indirectly, to a | ||||||
15 | foreign person who would be a member of the same | ||||||
16 | unitary business group but for the fact that the | ||||||
17 | foreign person's business activity outside the United | ||||||
18 | States is 80% or more of that person's total business | ||||||
19 | activity. The addition modification required by this | ||||||
20 | subparagraph shall be reduced to the extent that | ||||||
21 | dividends were included in base income of the unitary | ||||||
22 | group for the same taxable year and received by the | ||||||
23 | taxpayer or by a member of the taxpayer's unitary | ||||||
24 | business group (including amounts included in gross | ||||||
25 | income pursuant to Sections 951 through 964 of the | ||||||
26 | Internal Revenue Code and amounts included in gross |
| |||||||
| |||||||
1 | income under Section 78 of the Internal Revenue Code) | ||||||
2 | with respect to the stock of the same person to whom | ||||||
3 | the intangible expenses and costs were directly or | ||||||
4 | indirectly paid, incurred, or accrued. The preceding | ||||||
5 | sentence shall not apply to the extent that the same | ||||||
6 | dividends caused a reduction to the addition | ||||||
7 | modification required under Section 203(b)(2)(E-12) of | ||||||
8 | this Act.
As used in this subparagraph, the term | ||||||
9 | "intangible expenses and costs" includes (1) expenses, | ||||||
10 | losses, and costs for, or related to, the direct or | ||||||
11 | indirect acquisition, use, maintenance or management, | ||||||
12 | ownership, sale, exchange, or any other disposition of | ||||||
13 | intangible property; (2) losses incurred, directly or | ||||||
14 | indirectly, from factoring transactions or discounting | ||||||
15 | transactions; (3) royalty, patent, technical, and | ||||||
16 | copyright fees; (4) licensing fees; and (5) other | ||||||
17 | similar expenses and costs.
For purposes of this | ||||||
18 | subparagraph, "intangible property" includes patents, | ||||||
19 | patent applications, trade names, trademarks, service | ||||||
20 | marks, copyrights, mask works, trade secrets, and | ||||||
21 | similar types of intangible assets. | ||||||
22 | This paragraph shall not apply to the following: | ||||||
23 | (i) any item of intangible expenses or costs | ||||||
24 | paid, accrued, or incurred, directly or | ||||||
25 | indirectly, from a transaction with a foreign | ||||||
26 | person who is subject in a foreign country or |
| |||||||
| |||||||
1 | state, other than a state which requires mandatory | ||||||
2 | unitary reporting, to a tax on or measured by net | ||||||
3 | income with respect to such item; or | ||||||
4 | (ii) any item of intangible expense or cost | ||||||
5 | paid, accrued, or incurred, directly or | ||||||
6 | indirectly, if the taxpayer can establish, based | ||||||
7 | on a preponderance of the evidence, both of the | ||||||
8 | following: | ||||||
9 | (a) the foreign person during the same | ||||||
10 | taxable year paid, accrued, or incurred, the | ||||||
11 | intangible expense or cost to a person that is | ||||||
12 | not a related member, and | ||||||
13 | (b) the transaction giving rise to the | ||||||
14 | intangible expense or cost between the | ||||||
15 | taxpayer and the foreign person did not have as | ||||||
16 | a principal purpose the avoidance of Illinois | ||||||
17 | income tax, and is paid pursuant to a contract | ||||||
18 | or agreement that reflects arm's-length terms; | ||||||
19 | or | ||||||
20 | (iii) any item of intangible expense or cost | ||||||
21 | paid, accrued, or incurred, directly or | ||||||
22 | indirectly, from a transaction with a foreign | ||||||
23 | person if the taxpayer establishes by clear and | ||||||
24 | convincing evidence, that the adjustments are | ||||||
25 | unreasonable; or if the taxpayer and the Director | ||||||
26 | agree in writing to the application or use of an |
| |||||||
| |||||||
1 | alternative method of apportionment under Section | ||||||
2 | 304(f);
| ||||||
3 | Nothing in this subsection shall preclude the | ||||||
4 | Director from making any other adjustment | ||||||
5 | otherwise allowed under Section 404 of this Act for | ||||||
6 | any tax year beginning after the effective date of | ||||||
7 | this amendment provided such adjustment is made | ||||||
8 | pursuant to regulation adopted by the Department | ||||||
9 | and such regulations provide methods and standards | ||||||
10 | by which the Department will utilize its authority | ||||||
11 | under Section 404 of this Act;
| ||||||
12 | and by deducting from the total so obtained the sum of the | ||||||
13 | following
amounts:
| ||||||
14 | (F) An amount equal to the amount of any tax | ||||||
15 | imposed by this Act
which was refunded to the taxpayer | ||||||
16 | and included in such total for the
taxable year;
| ||||||
17 | (G) An amount equal to any amount included in such | ||||||
18 | total under
Section 78 of the Internal Revenue Code;
| ||||||
19 | (H) In the case of a regulated investment company, | ||||||
20 | an amount equal
to the amount of exempt interest | ||||||
21 | dividends as defined in subsection (b)
(5) of Section | ||||||
22 | 852 of the Internal Revenue Code, paid to shareholders
| ||||||
23 | for the taxable year;
| ||||||
24 | (I) With the exception of any amounts subtracted | ||||||
25 | under subparagraph
(J),
an amount equal to the sum of | ||||||
26 | all amounts disallowed as
deductions by (i) Sections |
| |||||||
| |||||||
1 | 171(a) (2), and 265(a)(2) and amounts disallowed as
| ||||||
2 | interest expense by Section 291(a)(3) of the Internal | ||||||
3 | Revenue Code, as now
or hereafter amended, and all | ||||||
4 | amounts of expenses allocable to interest and
| ||||||
5 | disallowed as deductions by Section 265(a)(1) of the | ||||||
6 | Internal Revenue Code,
as now or hereafter amended;
and | ||||||
7 | (ii) for taxable years
ending on or after August 13, | ||||||
8 | 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | ||||||
9 | 832(b)(5)(B)(i) of the Internal Revenue Code; the
| ||||||
10 | provisions of this
subparagraph are exempt from the | ||||||
11 | provisions of Section 250;
| ||||||
12 | (J) 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 that exempts income
derived from | ||||||
18 | bonds or other obligations from the tax imposed under | ||||||
19 | this Act,
the amount exempted shall be the interest net | ||||||
20 | of bond premium amortization;
| ||||||
21 | (K) An amount equal to those dividends included in | ||||||
22 | such total
which were paid by a corporation which | ||||||
23 | conducts
business operations in an Enterprise Zone or | ||||||
24 | zones created under
the Illinois Enterprise Zone Act or | ||||||
25 | a River Edge Redevelopment Zone or zones created under | ||||||
26 | the River Edge Redevelopment Zone Act and conducts |
| |||||||
| |||||||
1 | substantially all of its
operations in an Enterprise | ||||||
2 | Zone or zones or a River Edge Redevelopment Zone or | ||||||
3 | zones. This subparagraph (K) is exempt from the | ||||||
4 | provisions of Section 250;
| ||||||
5 | (L) An amount equal to those dividends included in | ||||||
6 | such total that
were paid by a corporation that | ||||||
7 | conducts business operations in a federally
designated | ||||||
8 | Foreign Trade Zone or Sub-Zone and that is designated a | ||||||
9 | High Impact
Business located in Illinois; provided | ||||||
10 | that dividends eligible for the
deduction provided in | ||||||
11 | subparagraph (K) of paragraph 2 of this subsection
| ||||||
12 | shall not be eligible for the deduction provided under | ||||||
13 | this subparagraph
(L);
| ||||||
14 | (M) For any taxpayer that is a financial | ||||||
15 | organization within the meaning
of Section 304(c) of | ||||||
16 | this Act, an amount included in such total as interest
| ||||||
17 | income from a loan or loans made by such taxpayer to a | ||||||
18 | borrower, to the extent
that such a loan is secured by | ||||||
19 | property which is eligible for the Enterprise
Zone | ||||||
20 | Investment Credit or the River Edge Redevelopment Zone | ||||||
21 | Investment Credit. To determine the portion of a loan | ||||||
22 | or loans that is
secured by property eligible for a | ||||||
23 | Section 201(f) investment
credit to the borrower, the | ||||||
24 | entire principal amount of the loan or loans
between | ||||||
25 | the taxpayer and the borrower should be divided into | ||||||
26 | 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 or the River Edge Redevelopment Zone. The | ||||||
5 | subtraction modification available to taxpayer in any
| ||||||
6 | year under this subsection shall be that portion of the | ||||||
7 | total interest paid
by the borrower with respect to | ||||||
8 | such loan attributable to the eligible
property as | ||||||
9 | calculated under the previous sentence. This | ||||||
10 | subparagraph (M) is exempt from the provisions of | ||||||
11 | Section 250;
| ||||||
12 | (M-1) For any taxpayer that is a financial | ||||||
13 | organization within the
meaning of Section 304(c) of | ||||||
14 | this Act, an amount included in such total as
interest | ||||||
15 | income from a loan or loans made by such taxpayer to a | ||||||
16 | borrower,
to the extent that such a loan is secured by | ||||||
17 | property which is eligible for
the High Impact Business | ||||||
18 | Investment Credit. To determine the portion of a
loan | ||||||
19 | or loans that is secured by property eligible for a | ||||||
20 | Section 201(h) investment credit to the borrower, the | ||||||
21 | entire principal amount of
the loan or loans between | ||||||
22 | the taxpayer and the borrower should be divided into
| ||||||
23 | the basis of the Section 201(h) investment credit | ||||||
24 | property which
secures the loan or loans, using for | ||||||
25 | this purpose the original basis of such
property on the | ||||||
26 | date that it was placed in service in a federally |
| |||||||
| |||||||
1 | designated
Foreign Trade Zone or Sub-Zone located in | ||||||
2 | Illinois. No taxpayer that is
eligible for the | ||||||
3 | deduction provided in subparagraph (M) of paragraph | ||||||
4 | (2) of
this subsection shall be eligible for the | ||||||
5 | deduction provided under this
subparagraph (M-1). The | ||||||
6 | subtraction modification available to taxpayers in
any | ||||||
7 | year under this subsection shall be that portion of the | ||||||
8 | total interest
paid by the borrower with respect to | ||||||
9 | such loan attributable to the eligible
property as | ||||||
10 | calculated under the previous sentence;
| ||||||
11 | (N) Two times any contribution made during the | ||||||
12 | taxable year to a
designated zone organization to the | ||||||
13 | extent that the contribution (i)
qualifies as a | ||||||
14 | charitable contribution under subsection (c) of | ||||||
15 | Section 170
of the Internal Revenue Code and (ii) must, | ||||||
16 | by its terms, be used for a
project approved by the | ||||||
17 | Department of Commerce and Economic Opportunity under | ||||||
18 | Section 11 of the Illinois Enterprise Zone Act or under | ||||||
19 | Section 10-10 of the Illinois River Edge Redevelopment | ||||||
20 | Zone Act. This subparagraph (N) is exempt from the | ||||||
21 | provisions of Section 250;
| ||||||
22 | (O) An amount equal to: (i) 85% for taxable years | ||||||
23 | ending on or before
December 31, 1992, or, a percentage | ||||||
24 | equal to the percentage allowable under
Section | ||||||
25 | 243(a)(1) of the Internal Revenue Code of 1986 for | ||||||
26 | taxable years ending
after December 31, 1992, of the |
| |||||||
| |||||||
1 | amount by which dividends included in taxable
income | ||||||
2 | and received from a corporation that is not created or | ||||||
3 | organized under
the laws of the United States or any | ||||||
4 | state or political subdivision thereof,
including, for | ||||||
5 | taxable years ending on or after December 31, 1988, | ||||||
6 | dividends
received or deemed received or paid or deemed | ||||||
7 | paid under Sections 951 through
964 of the Internal | ||||||
8 | Revenue Code, exceed the amount of the modification
| ||||||
9 | provided under subparagraph (G) of paragraph (2) of | ||||||
10 | this subsection (b) which
is related to such dividends; | ||||||
11 | plus (ii) 100% of the amount by which dividends,
| ||||||
12 | included in taxable income and received, including, | ||||||
13 | for taxable years ending on
or after December 31, 1988, | ||||||
14 | dividends received or deemed received or paid or
deemed | ||||||
15 | paid under Sections 951 through 964 of the Internal | ||||||
16 | Revenue Code, from
any such corporation specified in | ||||||
17 | clause (i) that would but for the provisions
of Section | ||||||
18 | 1504 (b) (3) of the Internal Revenue Code be treated as | ||||||
19 | a member of
the affiliated group which includes the | ||||||
20 | dividend recipient, exceed the amount
of the | ||||||
21 | modification provided under subparagraph (G) of | ||||||
22 | paragraph (2) of this
subsection (b) which is related | ||||||
23 | to such dividends;
| ||||||
24 | (P) An amount equal to any contribution made to a | ||||||
25 | job training project
established pursuant to the Tax | ||||||
26 | Increment Allocation Redevelopment Act;
|
| |||||||
| |||||||
1 | (Q) An amount equal to the amount of the deduction | ||||||
2 | used to compute the
federal income tax credit for | ||||||
3 | restoration of substantial amounts held under
claim of | ||||||
4 | right for the taxable year pursuant to Section 1341 of | ||||||
5 | the
Internal Revenue Code of 1986;
| ||||||
6 | (R) On and after July 20, 1999, in the case of an | ||||||
7 | attorney-in-fact with respect to whom an
interinsurer | ||||||
8 | or a reciprocal insurer has made the election under | ||||||
9 | Section 835 of
the Internal Revenue Code, 26 U.S.C. | ||||||
10 | 835, an amount equal to the excess, if
any, of the | ||||||
11 | amounts paid or incurred by that interinsurer or | ||||||
12 | reciprocal insurer
in the taxable year to the | ||||||
13 | attorney-in-fact over the deduction allowed to that
| ||||||
14 | interinsurer or reciprocal insurer with respect to the | ||||||
15 | attorney-in-fact under
Section 835(b) of the Internal | ||||||
16 | Revenue Code for the taxable year; the provisions of | ||||||
17 | this subparagraph are exempt from the provisions of | ||||||
18 | Section 250;
| ||||||
19 | (S) For taxable years ending on or after December | ||||||
20 | 31, 1997, in the
case of a Subchapter
S corporation, an | ||||||
21 | amount equal to all amounts of income allocable to a
| ||||||
22 | shareholder subject to the Personal Property Tax | ||||||
23 | Replacement Income Tax imposed
by subsections (c) and | ||||||
24 | (d) of Section 201 of this Act, including amounts
| ||||||
25 | allocable to organizations exempt from federal income | ||||||
26 | tax by reason of Section
501(a) of the Internal Revenue |
| |||||||
| |||||||
1 | Code. This subparagraph (S) is exempt from
the | ||||||
2 | provisions of Section 250;
| ||||||
3 | (T) For taxable years 2001 and thereafter, for the | ||||||
4 | taxable year in
which the bonus depreciation deduction
| ||||||
5 | is taken on the taxpayer's federal income tax return | ||||||
6 | under
subsection (k) of Section 168 of the Internal | ||||||
7 | Revenue Code and for each
applicable taxable year | ||||||
8 | thereafter, an amount equal to "x", where:
| ||||||
9 | (1) "y" equals the amount of the depreciation | ||||||
10 | deduction taken for the
taxable year
on the | ||||||
11 | taxpayer's federal income tax return on property | ||||||
12 | for which the bonus
depreciation deduction
was | ||||||
13 | taken in any year under subsection (k) of Section | ||||||
14 | 168 of the Internal
Revenue Code, but not including | ||||||
15 | the bonus depreciation deduction;
| ||||||
16 | (2) for taxable years ending on or before | ||||||
17 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
18 | and then divided by 70 (or "y"
multiplied by | ||||||
19 | 0.429); and | ||||||
20 | (3) for taxable years ending after December | ||||||
21 | 31, 2005: | ||||||
22 | (i) for property on which a bonus | ||||||
23 | depreciation deduction of 30% of the adjusted | ||||||
24 | basis was taken, "x" equals "y" multiplied by | ||||||
25 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
26 | 0.429); and |
| |||||||
| |||||||
1 | (ii) for property on which a bonus | ||||||
2 | depreciation deduction of 50% of the adjusted | ||||||
3 | basis was taken, "x" equals "y" multiplied by | ||||||
4 | 1.0.
| ||||||
5 | The aggregate amount deducted under this | ||||||
6 | subparagraph in all taxable
years for any one piece of | ||||||
7 | property may not exceed the amount of the bonus
| ||||||
8 | depreciation deduction
taken on that property on the | ||||||
9 | taxpayer's federal income tax return under
subsection | ||||||
10 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
11 | subparagraph (T) is exempt from the provisions of | ||||||
12 | Section 250;
| ||||||
13 | (U) If the taxpayer sells, transfers, abandons, or | ||||||
14 | otherwise disposes of
property for which the taxpayer | ||||||
15 | was required in any taxable year to make an
addition | ||||||
16 | modification under subparagraph (E-10), then an amount | ||||||
17 | equal to that
addition modification.
| ||||||
18 | If the taxpayer continues to own property through | ||||||
19 | the last day of the last tax year for which the | ||||||
20 | taxpayer may claim a depreciation deduction for | ||||||
21 | federal income tax purposes and for which the taxpayer | ||||||
22 | was required in any taxable year to make an addition | ||||||
23 | modification under subparagraph (E-10), then an amount | ||||||
24 | equal to that addition modification.
| ||||||
25 | The taxpayer is allowed to take the deduction under | ||||||
26 | this subparagraph
only once with respect to any one |
| |||||||
| |||||||
1 | piece of property. | ||||||
2 | This subparagraph (U) is exempt from the | ||||||
3 | provisions of Section 250;
| ||||||
4 | (V) The amount of: (i) any interest income (net of | ||||||
5 | the deductions allocable thereto) taken into account | ||||||
6 | for the taxable year with respect to a transaction with | ||||||
7 | a taxpayer that is required to make an addition | ||||||
8 | modification with respect to such transaction under | ||||||
9 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
10 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
11 | the amount of such addition modification and
(ii) any | ||||||
12 | income from intangible property (net of the deductions | ||||||
13 | allocable thereto) taken into account for the taxable | ||||||
14 | year with respect to a transaction with a taxpayer that | ||||||
15 | is required to make an addition modification with | ||||||
16 | respect to such transaction under Section | ||||||
17 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
18 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
19 | addition modification;
| ||||||
20 | (W) An amount equal to the interest income taken | ||||||
21 | into account for the taxable year (net of the | ||||||
22 | deductions allocable thereto) with respect to | ||||||
23 | transactions with a foreign person who would be a | ||||||
24 | member of the taxpayer's unitary business group but for | ||||||
25 | the fact that the foreign person's business activity | ||||||
26 | outside the United States is 80% or more of that |
| |||||||
| |||||||
1 | person's total business activity, but not to exceed the | ||||||
2 | addition modification required to be made for the same | ||||||
3 | taxable year under Section 203(b)(2)(E-12) for | ||||||
4 | interest paid, accrued, or incurred, directly or | ||||||
5 | indirectly, to the same foreign person; and
| ||||||
6 | (X) An amount equal to the income from intangible | ||||||
7 | property taken into account for the taxable year (net | ||||||
8 | of the deductions allocable thereto) with respect to | ||||||
9 | transactions with a foreign person who would be a | ||||||
10 | member of the taxpayer's unitary business group but for | ||||||
11 | the fact that the foreign person's business activity | ||||||
12 | outside the United States is 80% or more of that | ||||||
13 | person's total business activity, but not to exceed the | ||||||
14 | addition modification required to be made for the same | ||||||
15 | taxable year under Section 203(b)(2)(E-13) for | ||||||
16 | intangible expenses and costs paid, accrued, or | ||||||
17 | incurred, directly or indirectly, to the same foreign | ||||||
18 | person.
| ||||||
19 | (3) Special rule. For purposes of paragraph (2) (A), | ||||||
20 | "gross income"
in the case of a life insurance company, for | ||||||
21 | tax years ending on and after
December 31, 1994,
shall mean | ||||||
22 | the gross investment income for the taxable year.
| ||||||
23 | (c) Trusts and estates.
| ||||||
24 | (1) In general. In the case of a trust or estate, base | ||||||
25 | income means
an amount equal to the taxpayer's taxable |
| |||||||
| |||||||
1 | income for the taxable year as
modified by paragraph (2).
| ||||||
2 | (2) Modifications. Subject to the provisions of | ||||||
3 | paragraph (3), the
taxable income referred to in paragraph | ||||||
4 | (1) shall be modified by adding
thereto the sum of the | ||||||
5 | following amounts:
| ||||||
6 | (A) An amount equal to all amounts paid or accrued | ||||||
7 | to the taxpayer
as interest or dividends during the | ||||||
8 | taxable year to the extent excluded
from gross income | ||||||
9 | in the computation of taxable income;
| ||||||
10 | (B) In the case of (i) an estate, $600; (ii) a | ||||||
11 | trust which, under
its governing instrument, is | ||||||
12 | required to distribute all of its income
currently, | ||||||
13 | $300; and (iii) any other trust, $100, but in each such | ||||||
14 | case,
only to the extent such amount was deducted in | ||||||
15 | the computation of
taxable income;
| ||||||
16 | (C) An amount equal to the amount of tax imposed by | ||||||
17 | this Act to the
extent deducted from gross income in | ||||||
18 | the computation of taxable income
for the taxable year;
| ||||||
19 | (D) The amount of any net operating loss deduction | ||||||
20 | taken in arriving at
taxable income, other than a net | ||||||
21 | operating loss carried forward from a
taxable year | ||||||
22 | ending prior to December 31, 1986;
| ||||||
23 | (E) For taxable years in which a net operating loss | ||||||
24 | carryback or
carryforward from a taxable year ending | ||||||
25 | prior to December 31, 1986 is an
element of taxable | ||||||
26 | income under paragraph (1) of subsection (e) or |
| |||||||
| |||||||
1 | subparagraph
(E) of paragraph (2) of subsection (e), | ||||||
2 | the amount by which addition
modifications other than | ||||||
3 | those provided by this subparagraph (E) exceeded
| ||||||
4 | subtraction modifications in such taxable year, with | ||||||
5 | the following limitations
applied in the order that | ||||||
6 | they are listed:
| ||||||
7 | (i) the addition modification relating to the | ||||||
8 | net operating loss
carried back or forward to the | ||||||
9 | taxable year from any taxable year ending
prior to | ||||||
10 | December 31, 1986 shall be reduced by the amount of | ||||||
11 | addition
modification under this subparagraph (E) | ||||||
12 | which related to that net
operating loss and which | ||||||
13 | was taken into account in calculating the base
| ||||||
14 | income of an earlier taxable year, and
| ||||||
15 | (ii) the addition modification relating to the | ||||||
16 | net operating loss
carried back or forward to the | ||||||
17 | taxable year from any taxable year ending
prior to | ||||||
18 | December 31, 1986 shall not exceed the amount of | ||||||
19 | such carryback or
carryforward;
| ||||||
20 | For taxable years in which there is a net operating | ||||||
21 | loss carryback or
carryforward from more than one other | ||||||
22 | taxable year ending prior to December
31, 1986, the | ||||||
23 | addition modification provided in this subparagraph | ||||||
24 | (E) shall
be the sum of the amounts computed | ||||||
25 | independently under the preceding
provisions of this | ||||||
26 | subparagraph (E) for each such taxable year;
|
| |||||||
| |||||||
1 | (F) For taxable years ending on or after January 1, | ||||||
2 | 1989, an amount
equal to the tax deducted pursuant to | ||||||
3 | Section 164 of the Internal Revenue
Code if the trust | ||||||
4 | or estate is claiming the same tax for purposes of the
| ||||||
5 | Illinois foreign tax credit under Section 601 of this | ||||||
6 | Act;
| ||||||
7 | (G) An amount equal to the amount of the capital | ||||||
8 | gain deduction
allowable under the Internal Revenue | ||||||
9 | Code, to the extent deducted from
gross income in the | ||||||
10 | computation of taxable income;
| ||||||
11 | (G-5) For taxable years ending after December 31, | ||||||
12 | 1997, an
amount equal to any eligible remediation costs | ||||||
13 | that the trust or estate
deducted in computing adjusted | ||||||
14 | gross income and for which the trust
or estate claims a | ||||||
15 | credit under subsection (l) of Section 201;
| ||||||
16 | (G-10) For taxable years 2001 and thereafter, an | ||||||
17 | amount equal to the
bonus depreciation deduction taken | ||||||
18 | on the taxpayer's federal income tax return for the | ||||||
19 | taxable
year under subsection (k) of Section 168 of the | ||||||
20 | Internal Revenue Code; and
| ||||||
21 | (G-11) If the taxpayer sells, transfers, abandons, | ||||||
22 | or otherwise disposes of property for which the | ||||||
23 | taxpayer was required in any taxable year to
make an | ||||||
24 | addition modification under subparagraph (G-10), then | ||||||
25 | an amount equal
to the aggregate amount of the | ||||||
26 | deductions taken in all taxable
years under |
| |||||||
| |||||||
1 | subparagraph (R) with respect to that property.
| ||||||
2 | If the taxpayer continues to own property through | ||||||
3 | the last day of the last tax year for which the | ||||||
4 | taxpayer may claim a depreciation deduction for | ||||||
5 | federal income tax purposes and for which the taxpayer | ||||||
6 | was allowed in any taxable year to make a subtraction | ||||||
7 | modification under subparagraph (R), then an amount | ||||||
8 | equal to that subtraction modification.
| ||||||
9 | The taxpayer is required to make the addition | ||||||
10 | modification under this
subparagraph
only once with | ||||||
11 | respect to any one piece of property;
| ||||||
12 | (G-12) For taxable years ending on or after | ||||||
13 | December 31, 2004, an amount equal to the amount | ||||||
14 | otherwise allowed as a deduction in computing base | ||||||
15 | income for interest paid, accrued, or incurred, | ||||||
16 | directly or indirectly, to a foreign person who would | ||||||
17 | be a member of the same unitary business group but for | ||||||
18 | the fact that the foreign person's business activity | ||||||
19 | outside the United States is 80% or more of the foreign | ||||||
20 | person's total business activity. The addition | ||||||
21 | modification required by this subparagraph shall be | ||||||
22 | reduced to the extent that dividends were included in | ||||||
23 | base income of the unitary group for the same taxable | ||||||
24 | year and received by the taxpayer or by a member of the | ||||||
25 | taxpayer's unitary business group (including amounts | ||||||
26 | included in gross income pursuant to Sections 951 |
| |||||||
| |||||||
1 | through 964 of the Internal Revenue Code and amounts | ||||||
2 | included in gross income under Section 78 of the | ||||||
3 | Internal Revenue Code) with respect to the stock of the | ||||||
4 | same person to whom the interest was paid, accrued, or | ||||||
5 | incurred.
| ||||||
6 | This paragraph shall not apply to the following:
| ||||||
7 | (i) an item of interest paid, accrued, or | ||||||
8 | incurred, directly or indirectly, to a foreign | ||||||
9 | person who is subject in a foreign country or | ||||||
10 | state, other than a state which requires mandatory | ||||||
11 | unitary reporting, to a tax on or measured by net | ||||||
12 | income with respect to such interest; or | ||||||
13 | (ii) an item of interest paid, accrued, or | ||||||
14 | incurred, directly or indirectly, to a foreign | ||||||
15 | person if the taxpayer can establish, based on a | ||||||
16 | preponderance of the evidence, both of the | ||||||
17 | following: | ||||||
18 | (a) the foreign person, during the same | ||||||
19 | taxable year, paid, accrued, or incurred, the | ||||||
20 | interest to a person that is not a related | ||||||
21 | member, and | ||||||
22 | (b) the transaction giving rise to the | ||||||
23 | interest expense between the taxpayer and the | ||||||
24 | foreign person did not have as a principal | ||||||
25 | purpose the avoidance of Illinois income tax, | ||||||
26 | and is paid pursuant to a contract or agreement |
| |||||||
| |||||||
1 | that reflects an arm's-length interest rate | ||||||
2 | and terms; or
| ||||||
3 | (iii) the taxpayer can establish, based on | ||||||
4 | clear and convincing evidence, that the interest | ||||||
5 | paid, accrued, or incurred relates to a contract or | ||||||
6 | agreement entered into at arm's-length rates and | ||||||
7 | terms and the principal purpose for the payment is | ||||||
8 | not federal or Illinois tax avoidance; or
| ||||||
9 | (iv) an item of interest paid, accrued, or | ||||||
10 | incurred, directly or indirectly, to a foreign | ||||||
11 | person if the taxpayer establishes by clear and | ||||||
12 | convincing evidence that the adjustments are | ||||||
13 | unreasonable; or if the taxpayer and the Director | ||||||
14 | agree in writing to the application or use of an | ||||||
15 | alternative method of apportionment under Section | ||||||
16 | 304(f).
| ||||||
17 | Nothing in this subsection shall preclude the | ||||||
18 | Director from making any other adjustment | ||||||
19 | otherwise allowed under Section 404 of this Act for | ||||||
20 | any tax year beginning after the effective date of | ||||||
21 | this amendment provided such adjustment is made | ||||||
22 | pursuant to regulation adopted by the Department | ||||||
23 | and such regulations provide methods and standards | ||||||
24 | by which the Department will utilize its authority | ||||||
25 | under Section 404 of this Act;
| ||||||
26 | (G-13) For taxable years ending on or after |
| |||||||
| |||||||
1 | December 31, 2004, an amount equal to the amount of | ||||||
2 | intangible expenses and costs otherwise allowed as a | ||||||
3 | deduction in computing base income, and that were paid, | ||||||
4 | accrued, or incurred, directly or indirectly, to a | ||||||
5 | foreign person who would be a member of the same | ||||||
6 | unitary business group but for the fact that the | ||||||
7 | foreign person's business activity outside the United | ||||||
8 | States is 80% or more of that person's total business | ||||||
9 | activity. The addition modification required by this | ||||||
10 | subparagraph shall be reduced to the extent that | ||||||
11 | dividends were included in base income of the unitary | ||||||
12 | group for the same taxable year and received by the | ||||||
13 | taxpayer or by a member of the taxpayer's unitary | ||||||
14 | business group (including amounts included in gross | ||||||
15 | income pursuant to Sections 951 through 964 of the | ||||||
16 | Internal Revenue Code and amounts included in gross | ||||||
17 | income under Section 78 of the Internal Revenue Code) | ||||||
18 | with respect to the stock of the same person to whom | ||||||
19 | the intangible expenses and costs were directly or | ||||||
20 | indirectly paid, incurred, or accrued. The preceding | ||||||
21 | sentence shall not apply to the extent that the same | ||||||
22 | dividends caused a reduction to the addition | ||||||
23 | modification required under Section 203(c)(2)(G-12) of | ||||||
24 | this Act. As used in this subparagraph, the term | ||||||
25 | "intangible expenses and costs" includes: (1) | ||||||
26 | expenses, losses, and costs for or related to the |
| |||||||
| |||||||
1 | direct or indirect acquisition, use, maintenance or | ||||||
2 | management, ownership, sale, exchange, or any other | ||||||
3 | disposition of intangible property; (2) losses | ||||||
4 | incurred, directly or indirectly, from factoring | ||||||
5 | transactions or discounting transactions; (3) royalty, | ||||||
6 | patent, technical, and copyright fees; (4) licensing | ||||||
7 | fees; and (5) other similar expenses and costs. For | ||||||
8 | purposes of this subparagraph, "intangible property" | ||||||
9 | includes patents, patent applications, trade names, | ||||||
10 | trademarks, service marks, copyrights, mask works, | ||||||
11 | trade secrets, and similar types of intangible assets. | ||||||
12 | This paragraph shall not apply to the following: | ||||||
13 | (i) any item of intangible expenses or costs | ||||||
14 | paid, accrued, or incurred, directly or | ||||||
15 | indirectly, from a transaction with a foreign | ||||||
16 | person who is subject in a foreign country or | ||||||
17 | state, other than a state which requires mandatory | ||||||
18 | unitary reporting, to a tax on or measured by net | ||||||
19 | income with respect to such item; or | ||||||
20 | (ii) any item of intangible expense or cost | ||||||
21 | paid, accrued, or incurred, directly or | ||||||
22 | indirectly, if the taxpayer can establish, based | ||||||
23 | on a preponderance of the evidence, both of the | ||||||
24 | following: | ||||||
25 | (a) the foreign person during the same | ||||||
26 | taxable year paid, accrued, or incurred, the |
| |||||||
| |||||||
1 | intangible expense or cost to a person that is | ||||||
2 | not a related member, and | ||||||
3 | (b) the transaction giving rise to the | ||||||
4 | intangible expense or cost between the | ||||||
5 | taxpayer and the foreign person did not have as | ||||||
6 | a principal purpose the avoidance of Illinois | ||||||
7 | income tax, and is paid pursuant to a contract | ||||||
8 | or agreement that reflects arm's-length terms; | ||||||
9 | or | ||||||
10 | (iii) any item of intangible expense or cost | ||||||
11 | paid, accrued, or incurred, directly or | ||||||
12 | indirectly, from a transaction with a foreign | ||||||
13 | person if the taxpayer establishes by clear and | ||||||
14 | convincing evidence, that the adjustments are | ||||||
15 | unreasonable; or if the taxpayer and the Director | ||||||
16 | agree in writing to the application or use of an | ||||||
17 | alternative method of apportionment under Section | ||||||
18 | 304(f);
| ||||||
19 | Nothing in this subsection shall preclude the | ||||||
20 | Director from making any other adjustment | ||||||
21 | otherwise allowed under Section 404 of this Act for | ||||||
22 | any tax year beginning after the effective date of | ||||||
23 | this amendment provided such adjustment is made | ||||||
24 | pursuant to regulation adopted by the Department | ||||||
25 | and such regulations provide methods and standards | ||||||
26 | by which the Department will utilize its authority |
| |||||||
| |||||||
1 | under Section 404 of this Act;
| ||||||
2 | and by deducting from the total so obtained the sum of the | ||||||
3 | following
amounts:
| ||||||
4 | (H) An amount equal to all amounts included in such | ||||||
5 | total pursuant
to the provisions of Sections 402(a), | ||||||
6 | 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | ||||||
7 | Internal Revenue Code or included in such total as
| ||||||
8 | distributions under the provisions of any retirement | ||||||
9 | or disability plan for
employees of any governmental | ||||||
10 | agency or unit, or retirement payments to
retired | ||||||
11 | partners, which payments are excluded in computing net | ||||||
12 | earnings
from self employment by Section 1402 of the | ||||||
13 | Internal Revenue Code and
regulations adopted pursuant | ||||||
14 | thereto;
| ||||||
15 | (I) The valuation limitation amount;
| ||||||
16 | (J) An amount equal to the amount of any tax | ||||||
17 | imposed by this Act
which was refunded to the taxpayer | ||||||
18 | and included in such total for the
taxable year;
| ||||||
19 | (K) An amount equal to all amounts included in | ||||||
20 | taxable income as
modified by subparagraphs (A), (B), | ||||||
21 | (C), (D), (E), (F) and (G) which
are exempt from | ||||||
22 | taxation by this State either by reason of its statutes | ||||||
23 | or
Constitution
or by reason of the Constitution, | ||||||
24 | treaties or statutes of the United States;
provided | ||||||
25 | that, in the case of any statute of this State that | ||||||
26 | exempts income
derived from bonds or other obligations |
| |||||||
| |||||||
1 | from the tax imposed under this Act,
the amount | ||||||
2 | exempted shall be the interest net of bond premium | ||||||
3 | amortization;
| ||||||
4 | (L) With the exception of any amounts subtracted | ||||||
5 | under subparagraph
(K),
an amount equal to the sum of | ||||||
6 | all amounts disallowed as
deductions by (i) Sections | ||||||
7 | 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, | ||||||
8 | as now or hereafter amended, and all amounts of | ||||||
9 | expenses allocable
to interest and disallowed as | ||||||
10 | deductions by Section 265(1) of the Internal
Revenue | ||||||
11 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
12 | taxable years
ending on or after August 13, 1999, | ||||||
13 | Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | ||||||
14 | the Internal Revenue Code; the provisions of this
| ||||||
15 | subparagraph are exempt from the provisions of Section | ||||||
16 | 250;
| ||||||
17 | (M) An amount equal to those dividends included in | ||||||
18 | such total
which were paid by a corporation which | ||||||
19 | conducts business operations in an
Enterprise Zone or | ||||||
20 | zones created under the Illinois Enterprise Zone Act or | ||||||
21 | a River Edge Redevelopment Zone or zones created under | ||||||
22 | the River Edge Redevelopment Zone Act and
conducts | ||||||
23 | substantially all of its operations in an Enterprise | ||||||
24 | Zone or Zones or a River Edge Redevelopment Zone or | ||||||
25 | zones. This subparagraph (M) is exempt from the | ||||||
26 | provisions of Section 250;
|
| |||||||
| |||||||
1 | (N) An amount equal to any contribution made to a | ||||||
2 | job training
project established pursuant to the Tax | ||||||
3 | Increment Allocation
Redevelopment Act;
| ||||||
4 | (O) An amount equal to those dividends included in | ||||||
5 | such total
that were paid by a corporation that | ||||||
6 | conducts business operations in a
federally designated | ||||||
7 | Foreign Trade Zone or Sub-Zone and that is designated
a | ||||||
8 | High Impact Business located in Illinois; provided | ||||||
9 | that dividends eligible
for the deduction provided in | ||||||
10 | subparagraph (M) of paragraph (2) of this
subsection | ||||||
11 | shall not be eligible for the deduction provided under | ||||||
12 | this
subparagraph (O);
| ||||||
13 | (P) An amount equal to the amount of the deduction | ||||||
14 | used to compute the
federal income tax credit for | ||||||
15 | restoration of substantial amounts held under
claim of | ||||||
16 | right for the taxable year pursuant to Section 1341 of | ||||||
17 | the
Internal Revenue Code of 1986;
| ||||||
18 | (Q) For taxable year 1999 and thereafter, an amount | ||||||
19 | equal to the
amount of any
(i) distributions, to the | ||||||
20 | extent includible in gross income for
federal income | ||||||
21 | tax purposes, made to the taxpayer because of
his or | ||||||
22 | her status as a victim of
persecution for racial or | ||||||
23 | religious reasons by Nazi Germany or any other Axis
| ||||||
24 | regime or as an heir of the victim and (ii) items
of | ||||||
25 | income, to the extent
includible in gross income for | ||||||
26 | federal income tax purposes, attributable to,
derived |
| |||||||
| |||||||
1 | from or in any way related to assets stolen from, | ||||||
2 | hidden from, or
otherwise lost to a victim of
| ||||||
3 | persecution for racial or religious reasons by Nazi
| ||||||
4 | Germany or any other Axis regime
immediately prior to, | ||||||
5 | during, and immediately after World War II, including,
| ||||||
6 | but
not limited to, interest on the proceeds receivable | ||||||
7 | as insurance
under policies issued to a victim of | ||||||
8 | persecution for racial or religious
reasons by Nazi | ||||||
9 | Germany or any other Axis regime by European insurance
| ||||||
10 | companies
immediately prior to and during World War II;
| ||||||
11 | provided, however, this subtraction from federal | ||||||
12 | adjusted gross income does not
apply to assets acquired | ||||||
13 | with such assets or with the proceeds from the sale of
| ||||||
14 | such assets; provided, further, this paragraph shall | ||||||
15 | only apply to a taxpayer
who was the first recipient of | ||||||
16 | such assets after their recovery and who is a
victim of
| ||||||
17 | persecution for racial or religious reasons
by Nazi | ||||||
18 | Germany or any other Axis regime or as an heir of the | ||||||
19 | victim. The
amount of and the eligibility for any | ||||||
20 | public assistance, benefit, or
similar entitlement is | ||||||
21 | not affected by the inclusion of items (i) and (ii) of
| ||||||
22 | this paragraph in gross income for federal income tax | ||||||
23 | purposes.
This paragraph is exempt from the provisions | ||||||
24 | of Section 250;
| ||||||
25 | (R) For taxable years 2001 and thereafter, for the | ||||||
26 | taxable year in
which the bonus depreciation deduction
|
| |||||||
| |||||||
1 | is taken on the taxpayer's federal income tax return | ||||||
2 | under
subsection (k) of Section 168 of the Internal | ||||||
3 | Revenue Code and for each
applicable taxable year | ||||||
4 | thereafter, an amount equal to "x", where:
| ||||||
5 | (1) "y" equals the amount of the depreciation | ||||||
6 | deduction taken for the
taxable year
on the | ||||||
7 | taxpayer's federal income tax return on property | ||||||
8 | for which the bonus
depreciation deduction
was | ||||||
9 | taken in any year under subsection (k) of Section | ||||||
10 | 168 of the Internal
Revenue Code, but not including | ||||||
11 | the bonus depreciation deduction;
| ||||||
12 | (2) for taxable years ending on or before | ||||||
13 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
14 | and then divided by 70 (or "y"
multiplied by | ||||||
15 | 0.429); and | ||||||
16 | (3) for taxable years ending after December | ||||||
17 | 31, 2005: | ||||||
18 | (i) for property on which a bonus | ||||||
19 | depreciation deduction of 30% of the adjusted | ||||||
20 | basis was taken, "x" equals "y" multiplied by | ||||||
21 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
22 | 0.429); and | ||||||
23 | (ii) for property on which a bonus | ||||||
24 | depreciation deduction of 50% of the adjusted | ||||||
25 | basis was taken, "x" equals "y" multiplied by | ||||||
26 | 1.0.
|
| |||||||
| |||||||
1 | The aggregate amount deducted under this | ||||||
2 | subparagraph in all taxable
years for any one piece of | ||||||
3 | property may not exceed the amount of the bonus
| ||||||
4 | depreciation deduction
taken on that property on the | ||||||
5 | taxpayer's federal income tax return under
subsection | ||||||
6 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
7 | subparagraph (R) is exempt from the provisions of | ||||||
8 | Section 250;
| ||||||
9 | (S) If the taxpayer sells, transfers, abandons, or | ||||||
10 | otherwise disposes of
property for which the taxpayer | ||||||
11 | was required in any taxable year to make an
addition | ||||||
12 | modification under subparagraph (G-10), then an amount | ||||||
13 | equal to that
addition modification.
| ||||||
14 | If the taxpayer continues to own property through | ||||||
15 | the last day of the last tax year for which the | ||||||
16 | taxpayer may claim a depreciation deduction for | ||||||
17 | federal income tax purposes and for which the taxpayer | ||||||
18 | was required in any taxable year to make an addition | ||||||
19 | modification under subparagraph (G-10), then an amount | ||||||
20 | equal to that addition modification.
| ||||||
21 | The taxpayer is allowed to take the deduction under | ||||||
22 | this subparagraph
only once with respect to any one | ||||||
23 | piece of property. | ||||||
24 | This subparagraph (S) is exempt from the | ||||||
25 | provisions of Section 250;
| ||||||
26 | (T) The amount of (i) any interest income (net of |
| |||||||
| |||||||
1 | the deductions allocable thereto) taken into account | ||||||
2 | for the taxable year with respect to a transaction with | ||||||
3 | a taxpayer that is required to make an addition | ||||||
4 | modification with respect to such transaction under | ||||||
5 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
6 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
7 | the amount of such addition modification and
(ii) any | ||||||
8 | income from intangible property (net of the deductions | ||||||
9 | allocable thereto) taken into account for the taxable | ||||||
10 | year with respect to a transaction with a taxpayer that | ||||||
11 | is required to make an addition modification with | ||||||
12 | respect to such transaction under Section | ||||||
13 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
14 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
15 | addition modification;
| ||||||
16 | (U) An amount equal to the interest income taken | ||||||
17 | into account for the taxable year (net of the | ||||||
18 | deductions allocable thereto) with respect to | ||||||
19 | transactions with a foreign person who would be a | ||||||
20 | member of the taxpayer's unitary business group but for | ||||||
21 | the fact the foreign person's business activity | ||||||
22 | outside the United States is 80% or more of that | ||||||
23 | person's total business activity, but not to exceed the | ||||||
24 | addition modification required to be made for the same | ||||||
25 | taxable year under Section 203(c)(2)(G-12) for | ||||||
26 | interest paid, accrued, or incurred, directly or |
| |||||||
| |||||||
1 | indirectly, to the same foreign person; and
| ||||||
2 | (V) 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(c)(2)(G-13) for | ||||||
12 | intangible expenses and costs paid, accrued, or | ||||||
13 | incurred, directly or indirectly, to the same foreign | ||||||
14 | person.
| ||||||
15 | (3) Limitation. The amount of any modification | ||||||
16 | otherwise required
under this subsection shall, under | ||||||
17 | regulations prescribed by the
Department, be adjusted by | ||||||
18 | any amounts included therein which were
properly paid, | ||||||
19 | credited, or required to be distributed, or permanently set
| ||||||
20 | aside for charitable purposes pursuant to Internal Revenue | ||||||
21 | Code Section
642(c) during the taxable year.
| ||||||
22 | (d) Partnerships.
| ||||||
23 | (1) In general. In the case of a partnership, base | ||||||
24 | income means an
amount equal to the taxpayer's taxable | ||||||
25 | income for the taxable year as
modified by paragraph (2).
|
| |||||||
| |||||||
1 | (2) Modifications. The taxable income referred to in | ||||||
2 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
3 | of the following amounts:
| ||||||
4 | (A) An amount equal to all amounts paid or accrued | ||||||
5 | to the taxpayer as
interest or dividends during the | ||||||
6 | taxable year to the extent excluded from
gross income | ||||||
7 | in the computation of taxable income;
| ||||||
8 | (B) An amount equal to the amount of tax imposed by | ||||||
9 | this Act to the
extent deducted from gross income for | ||||||
10 | the taxable year;
| ||||||
11 | (C) The amount of deductions allowed to the | ||||||
12 | partnership pursuant to
Section 707 (c) of the Internal | ||||||
13 | Revenue Code in calculating its taxable income;
| ||||||
14 | (D) An amount equal to the amount of the capital | ||||||
15 | gain deduction
allowable under the Internal Revenue | ||||||
16 | Code, to the extent deducted from
gross income in the | ||||||
17 | computation of taxable income;
| ||||||
18 | (D-5) For taxable years 2001 and thereafter, an | ||||||
19 | amount equal to the
bonus depreciation deduction taken | ||||||
20 | on the taxpayer's federal income tax return for the | ||||||
21 | taxable
year under subsection (k) of Section 168 of the | ||||||
22 | Internal Revenue Code;
| ||||||
23 | (D-6) If the taxpayer sells, transfers, abandons, | ||||||
24 | or otherwise disposes of
property for which the | ||||||
25 | taxpayer was required in any taxable year to make an
| ||||||
26 | addition modification under subparagraph (D-5), then |
| |||||||
| |||||||
1 | an amount equal to the
aggregate amount of the | ||||||
2 | deductions taken in all taxable years
under | ||||||
3 | subparagraph (O) with respect to that property.
| ||||||
4 | If the taxpayer continues to own property through | ||||||
5 | the last day of the last tax year for which the | ||||||
6 | taxpayer may claim a depreciation deduction for | ||||||
7 | federal income tax purposes and for which the taxpayer | ||||||
8 | was allowed in any taxable year to make a subtraction | ||||||
9 | modification under subparagraph (O), then an amount | ||||||
10 | equal to that subtraction modification.
| ||||||
11 | The taxpayer is required to make the addition | ||||||
12 | modification under this
subparagraph
only once with | ||||||
13 | respect to any one piece of property;
| ||||||
14 | (D-7) For taxable years ending on or after December | ||||||
15 | 31, 2004, an amount equal to the amount otherwise | ||||||
16 | allowed as a deduction in computing base income for | ||||||
17 | interest paid, accrued, or incurred, directly or | ||||||
18 | indirectly, to a foreign person who would be a member | ||||||
19 | of the same unitary business group but for the fact the | ||||||
20 | foreign person's business activity outside the United | ||||||
21 | States is 80% or more of the foreign person's total | ||||||
22 | business activity. The addition modification required | ||||||
23 | by this subparagraph shall be reduced to the extent | ||||||
24 | that dividends were included in base income of the | ||||||
25 | unitary group for the same taxable year and received by | ||||||
26 | the taxpayer or by a member of the taxpayer's unitary |
| |||||||
| |||||||
1 | business group (including amounts included in gross | ||||||
2 | income pursuant to Sections 951 through 964 of the | ||||||
3 | Internal Revenue Code and amounts included in gross | ||||||
4 | income under Section 78 of the Internal Revenue Code) | ||||||
5 | with respect to the stock of the same person to whom | ||||||
6 | the interest was paid, accrued, or incurred.
| ||||||
7 | This paragraph shall not apply to the following:
| ||||||
8 | (i) an item of interest paid, accrued, or | ||||||
9 | incurred, directly or indirectly, to a foreign | ||||||
10 | person who is subject in a foreign country or | ||||||
11 | state, other than a state which requires mandatory | ||||||
12 | unitary reporting, to a tax on or measured by net | ||||||
13 | income with respect to such interest; or | ||||||
14 | (ii) an item of interest paid, accrued, or | ||||||
15 | incurred, directly or indirectly, to a foreign | ||||||
16 | person if the taxpayer can establish, based on a | ||||||
17 | preponderance of the evidence, both of the | ||||||
18 | following: | ||||||
19 | (a) the foreign person, during the same | ||||||
20 | taxable year, paid, accrued, or incurred, the | ||||||
21 | interest to a person that is not a related | ||||||
22 | member, and | ||||||
23 | (b) the transaction giving rise to the | ||||||
24 | interest expense between the taxpayer and the | ||||||
25 | foreign person did not have as a principal | ||||||
26 | purpose the avoidance of Illinois income tax, |
| |||||||
| |||||||
1 | and is paid pursuant to a contract or agreement | ||||||
2 | that reflects an arm's-length interest rate | ||||||
3 | and terms; or
| ||||||
4 | (iii) the taxpayer can establish, based on | ||||||
5 | clear and convincing evidence, that the interest | ||||||
6 | paid, accrued, or incurred relates to a contract or | ||||||
7 | agreement entered into at arm's-length rates and | ||||||
8 | terms and the principal purpose for the payment is | ||||||
9 | not federal or Illinois tax avoidance; or
| ||||||
10 | (iv) an item of interest paid, accrued, or | ||||||
11 | incurred, directly or indirectly, to a foreign | ||||||
12 | person if the taxpayer establishes by clear and | ||||||
13 | convincing evidence that the adjustments are | ||||||
14 | unreasonable; or if the taxpayer and the Director | ||||||
15 | agree in writing to the application or use of an | ||||||
16 | alternative method of apportionment under Section | ||||||
17 | 304(f).
| ||||||
18 | Nothing in this subsection shall preclude the | ||||||
19 | Director from making any other adjustment | ||||||
20 | otherwise allowed under Section 404 of this Act for | ||||||
21 | any tax year beginning after the effective date of | ||||||
22 | this amendment provided such adjustment is made | ||||||
23 | pursuant to regulation adopted by the Department | ||||||
24 | and such regulations provide methods and standards | ||||||
25 | by which the Department will utilize its authority | ||||||
26 | under Section 404 of this Act; and
|
| |||||||
| |||||||
1 | (D-8) For taxable years ending on or after December | ||||||
2 | 31, 2004, an amount equal to the amount of intangible | ||||||
3 | expenses and costs otherwise allowed as a deduction in | ||||||
4 | computing base income, and that were paid, accrued, or | ||||||
5 | incurred, directly or indirectly, to a foreign person | ||||||
6 | who would be a member of the same unitary business | ||||||
7 | group but for the fact that the foreign person's | ||||||
8 | business activity outside the United States is 80% or | ||||||
9 | more of that person's total business activity. The | ||||||
10 | addition modification required by this subparagraph | ||||||
11 | shall be reduced to the extent that dividends were | ||||||
12 | included in base income of the unitary group for the | ||||||
13 | same taxable year and received by the taxpayer or by a | ||||||
14 | member of the taxpayer's unitary business group | ||||||
15 | (including amounts included in gross income pursuant | ||||||
16 | to Sections 951 through 964 of the Internal Revenue | ||||||
17 | Code and amounts included in gross income under Section | ||||||
18 | 78 of the Internal Revenue Code) with respect to the | ||||||
19 | stock of the same person to whom the intangible | ||||||
20 | expenses and costs were directly or indirectly paid, | ||||||
21 | incurred or accrued. The preceding sentence shall not | ||||||
22 | apply to the extent that the same dividends caused a | ||||||
23 | reduction to the addition modification required under | ||||||
24 | Section 203(d)(2)(D-7) of this Act. As used in this | ||||||
25 | subparagraph, the term "intangible expenses and costs" | ||||||
26 | includes (1) expenses, losses, and costs for, or |
| |||||||
| |||||||
1 | related to, the direct or indirect acquisition, use, | ||||||
2 | maintenance or management, ownership, sale, exchange, | ||||||
3 | or any other disposition of intangible property; (2) | ||||||
4 | losses incurred, directly or indirectly, from | ||||||
5 | factoring transactions or discounting transactions; | ||||||
6 | (3) royalty, patent, technical, and copyright fees; | ||||||
7 | (4) licensing fees; and (5) other similar expenses and | ||||||
8 | costs. For purposes of this subparagraph, "intangible | ||||||
9 | property" includes patents, patent applications, trade | ||||||
10 | names, trademarks, service marks, copyrights, mask | ||||||
11 | works, trade secrets, and similar types of intangible | ||||||
12 | assets; | ||||||
13 | This paragraph shall not apply to the following: | ||||||
14 | (i) any item of intangible expenses or costs | ||||||
15 | paid, accrued, or incurred, directly or | ||||||
16 | indirectly, from a transaction with a foreign | ||||||
17 | person who is subject in a foreign country or | ||||||
18 | state, other than a state which requires mandatory | ||||||
19 | unitary reporting, to a tax on or measured by net | ||||||
20 | income with respect to such item; or | ||||||
21 | (ii) any item of intangible expense or cost | ||||||
22 | paid, accrued, or incurred, directly or | ||||||
23 | indirectly, if the taxpayer can establish, based | ||||||
24 | on a preponderance of the evidence, both of the | ||||||
25 | following: | ||||||
26 | (a) the foreign person during the same |
| |||||||
| |||||||
1 | taxable year paid, accrued, or incurred, the | ||||||
2 | intangible expense or cost to a person that is | ||||||
3 | not a related member, and | ||||||
4 | (b) the transaction giving rise to the | ||||||
5 | intangible expense or cost between the | ||||||
6 | taxpayer and the foreign person did not have as | ||||||
7 | a principal purpose the avoidance of Illinois | ||||||
8 | income tax, and is paid pursuant to a contract | ||||||
9 | or agreement that reflects arm's-length terms; | ||||||
10 | or | ||||||
11 | (iii) any item of intangible expense or cost | ||||||
12 | paid, accrued, or incurred, directly or | ||||||
13 | indirectly, from a transaction with a foreign | ||||||
14 | person if the taxpayer establishes by clear and | ||||||
15 | convincing evidence, that the adjustments are | ||||||
16 | unreasonable; or if the taxpayer and the Director | ||||||
17 | agree in writing to the application or use of an | ||||||
18 | alternative method of apportionment under Section | ||||||
19 | 304(f);
| ||||||
20 | Nothing in this subsection shall preclude the | ||||||
21 | Director from making any other adjustment | ||||||
22 | otherwise allowed under Section 404 of this Act for | ||||||
23 | any tax year beginning after the effective date of | ||||||
24 | this amendment provided such adjustment is made | ||||||
25 | pursuant to regulation adopted by the Department | ||||||
26 | and such regulations provide methods and standards |
| |||||||
| |||||||
1 | by which the Department will utilize its authority | ||||||
2 | under Section 404 of this Act;
| ||||||
3 | and by deducting from the total so obtained the following | ||||||
4 | amounts:
| ||||||
5 | (E) The valuation limitation amount;
| ||||||
6 | (F) An amount equal to the amount of any tax | ||||||
7 | imposed by this Act which
was refunded to the taxpayer | ||||||
8 | and included in such total for the taxable year;
| ||||||
9 | (G) An amount equal to all amounts included in | ||||||
10 | taxable income as
modified by subparagraphs (A), (B), | ||||||
11 | (C) and (D) which are exempt from
taxation by this | ||||||
12 | State either by reason of its statutes or Constitution | ||||||
13 | or
by reason of
the Constitution, treaties or statutes | ||||||
14 | of the United States;
provided that, in the case of any | ||||||
15 | statute of this State that exempts income
derived from | ||||||
16 | bonds or other obligations from the tax imposed under | ||||||
17 | this Act,
the amount exempted shall be the interest net | ||||||
18 | of bond premium amortization;
| ||||||
19 | (H) Any income of the partnership which | ||||||
20 | constitutes personal service
income as defined in | ||||||
21 | Section 1348 (b) (1) of the Internal Revenue Code (as
| ||||||
22 | in effect December 31, 1981) or a reasonable allowance | ||||||
23 | for compensation
paid or accrued for services rendered | ||||||
24 | by partners to the partnership,
whichever is greater;
| ||||||
25 | (I) An amount equal to all amounts of income | ||||||
26 | distributable to an entity
subject to the Personal |
| |||||||
| |||||||
1 | Property Tax Replacement Income Tax imposed by
| ||||||
2 | subsections (c) and (d) of Section 201 of this Act | ||||||
3 | including amounts
distributable to organizations | ||||||
4 | exempt from federal income tax by reason of
Section | ||||||
5 | 501(a) of the Internal Revenue Code;
| ||||||
6 | (J) With the exception of any amounts subtracted | ||||||
7 | under subparagraph
(G),
an amount equal to the sum of | ||||||
8 | all amounts disallowed as deductions
by (i) Sections | ||||||
9 | 171(a) (2), and 265(2) of the Internal Revenue Code of | ||||||
10 | 1954,
as now or hereafter amended, and all amounts of | ||||||
11 | expenses allocable to
interest and disallowed as | ||||||
12 | deductions by Section 265(1) of the Internal
Revenue | ||||||
13 | Code, as now or hereafter amended;
and (ii) for taxable | ||||||
14 | years
ending on or after August 13, 1999, Sections
| ||||||
15 | 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | ||||||
16 | Internal Revenue Code; the provisions of this
| ||||||
17 | subparagraph are exempt from the provisions of Section | ||||||
18 | 250;
| ||||||
19 | (K) An amount equal to those dividends included in | ||||||
20 | such total which were
paid by a corporation which | ||||||
21 | conducts business operations in an Enterprise
Zone or | ||||||
22 | zones created under the Illinois Enterprise Zone Act, | ||||||
23 | enacted by
the 82nd General Assembly, or a River Edge | ||||||
24 | Redevelopment Zone or zones created under the River | ||||||
25 | Edge Redevelopment Zone Act and
conducts substantially | ||||||
26 | all of its operations
in an Enterprise Zone or Zones or |
| |||||||
| |||||||
1 | from a River Edge Redevelopment Zone or zones. This | ||||||
2 | subparagraph (K) is exempt from the provisions of | ||||||
3 | Section 250;
| ||||||
4 | (L) An amount equal to any contribution made to a | ||||||
5 | job training project
established pursuant to the Real | ||||||
6 | Property Tax Increment Allocation
Redevelopment Act;
| ||||||
7 | (M) An amount equal to those dividends included in | ||||||
8 | such total
that were paid by a corporation that | ||||||
9 | conducts business operations in a
federally designated | ||||||
10 | Foreign Trade Zone or Sub-Zone and that is designated a
| ||||||
11 | High Impact Business located in Illinois; provided | ||||||
12 | that dividends eligible
for the deduction provided in | ||||||
13 | subparagraph (K) of paragraph (2) of this
subsection | ||||||
14 | shall not be eligible for the deduction provided under | ||||||
15 | this
subparagraph (M);
| ||||||
16 | (N) An amount equal to the amount of the deduction | ||||||
17 | used to compute the
federal income tax credit for | ||||||
18 | restoration of substantial amounts held under
claim of | ||||||
19 | right for the taxable year pursuant to Section 1341 of | ||||||
20 | the
Internal Revenue Code of 1986;
| ||||||
21 | (O) For taxable years 2001 and thereafter, for the | ||||||
22 | taxable year in
which the bonus depreciation deduction
| ||||||
23 | is taken on the taxpayer's federal income tax return | ||||||
24 | under
subsection (k) of Section 168 of the Internal | ||||||
25 | Revenue Code and for each
applicable taxable year | ||||||
26 | thereafter, an amount equal to "x", where:
|
| |||||||
| |||||||
1 | (1) "y" equals the amount of the depreciation | ||||||
2 | deduction taken for the
taxable year
on the | ||||||
3 | taxpayer's federal income tax return on property | ||||||
4 | for which the bonus
depreciation deduction
was | ||||||
5 | taken in any year under subsection (k) of Section | ||||||
6 | 168 of the Internal
Revenue Code, but not including | ||||||
7 | the bonus depreciation deduction;
| ||||||
8 | (2) for taxable years ending on or before | ||||||
9 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
10 | and then divided by 70 (or "y"
multiplied by | ||||||
11 | 0.429); and | ||||||
12 | (3) for taxable years ending after December | ||||||
13 | 31, 2005: | ||||||
14 | (i) for property on which a bonus | ||||||
15 | depreciation deduction of 30% of the adjusted | ||||||
16 | basis was taken, "x" equals "y" multiplied by | ||||||
17 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
18 | 0.429); and | ||||||
19 | (ii) for property on which a bonus | ||||||
20 | depreciation deduction of 50% of the adjusted | ||||||
21 | basis was taken, "x" equals "y" multiplied by | ||||||
22 | 1.0.
| ||||||
23 | The aggregate amount deducted under this | ||||||
24 | subparagraph in all taxable
years for any one piece of | ||||||
25 | property may not exceed the amount of the bonus
| ||||||
26 | depreciation deduction
taken on that property on the |
| |||||||
| |||||||
1 | taxpayer's federal income tax return under
subsection | ||||||
2 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
3 | subparagraph (O) is exempt from the provisions of | ||||||
4 | Section 250;
| ||||||
5 | (P) If the taxpayer sells, transfers, abandons, or | ||||||
6 | otherwise disposes of
property for which the taxpayer | ||||||
7 | was required in any taxable year to make an
addition | ||||||
8 | modification under subparagraph (D-5), then an amount | ||||||
9 | equal to that
addition modification.
| ||||||
10 | If the taxpayer continues to own property through | ||||||
11 | the last day of the last tax year for which the | ||||||
12 | taxpayer may claim a depreciation deduction for | ||||||
13 | federal income tax purposes and for which the taxpayer | ||||||
14 | was required in any taxable year to make an addition | ||||||
15 | modification under subparagraph (D-5), then an amount | ||||||
16 | equal to that addition modification.
| ||||||
17 | The taxpayer is allowed to take the deduction under | ||||||
18 | this subparagraph
only once with respect to any one | ||||||
19 | piece of property. | ||||||
20 | This subparagraph (P) is exempt from the | ||||||
21 | provisions of Section 250;
| ||||||
22 | (Q) The amount of (i) any interest income (net of | ||||||
23 | the deductions allocable thereto) taken into account | ||||||
24 | for the taxable year with respect to a transaction with | ||||||
25 | a taxpayer that is required to make an addition | ||||||
26 | modification with respect to such transaction under |
| |||||||
| |||||||
1 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
2 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
3 | the amount of such addition modification and
(ii) any | ||||||
4 | income from intangible property (net of the deductions | ||||||
5 | allocable thereto) taken into account for the taxable | ||||||
6 | year with respect to a transaction with a taxpayer that | ||||||
7 | is required to make an addition modification with | ||||||
8 | respect to such transaction under Section | ||||||
9 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
10 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
11 | addition modification;
| ||||||
12 | (R) An amount equal to the interest income taken | ||||||
13 | into account for the taxable year (net of the | ||||||
14 | deductions allocable thereto) with respect to | ||||||
15 | transactions with a foreign person who would be a | ||||||
16 | member of the taxpayer's unitary business group but for | ||||||
17 | the fact that the foreign person's business activity | ||||||
18 | outside the United States is 80% or more of that | ||||||
19 | person's total business activity, but not to exceed the | ||||||
20 | addition modification required to be made for the same | ||||||
21 | taxable year under Section 203(d)(2)(D-7) for interest | ||||||
22 | paid, accrued, or incurred, directly or indirectly, to | ||||||
23 | the same foreign person; and
| ||||||
24 | (S) An amount equal to the income from intangible | ||||||
25 | property taken into account for the taxable year (net | ||||||
26 | of the deductions allocable thereto) with respect to |
| |||||||
| |||||||
1 | transactions with a foreign person who would be a | ||||||
2 | member of the taxpayer's unitary business group but for | ||||||
3 | the fact that the foreign person's business activity | ||||||
4 | outside the United States is 80% or more of that | ||||||
5 | person's total business activity, but not to exceed the | ||||||
6 | addition modification required to be made for the same | ||||||
7 | taxable year under Section 203(d)(2)(D-8) for | ||||||
8 | intangible expenses and costs paid, accrued, or | ||||||
9 | incurred, directly or indirectly, to the same foreign | ||||||
10 | person.
| ||||||
11 | (e) Gross income; adjusted gross income; taxable income.
| ||||||
12 | (1) In general. Subject to the provisions of paragraph | ||||||
13 | (2) and
subsection (b) (3), for purposes of this Section | ||||||
14 | and Section 803(e), a
taxpayer's gross income, adjusted | ||||||
15 | gross income, or taxable income for
the taxable year shall | ||||||
16 | mean the amount of gross income, adjusted gross
income or | ||||||
17 | taxable income properly reportable for federal income tax
| ||||||
18 | purposes for the taxable year under the provisions of the | ||||||
19 | Internal
Revenue Code. Taxable income may be less than | ||||||
20 | zero. However, for taxable
years ending on or after | ||||||
21 | December 31, 1986, net operating loss
carryforwards from | ||||||
22 | taxable years ending prior to December 31, 1986, may not
| ||||||
23 | exceed the sum of federal taxable income for the taxable | ||||||
24 | year before net
operating loss deduction, plus the excess | ||||||
25 | of addition modifications over
subtraction modifications |
| |||||||
| |||||||
1 | for the taxable year. For taxable years ending
prior to | ||||||
2 | December 31, 1986, taxable income may never be an amount in | ||||||
3 | excess
of the net operating loss for the taxable year as | ||||||
4 | defined in subsections
(c) and (d) of Section 172 of the | ||||||
5 | Internal Revenue Code, provided that when
taxable income of | ||||||
6 | a corporation (other than a Subchapter S corporation),
| ||||||
7 | trust, or estate is less than zero and addition | ||||||
8 | modifications, other than
those provided by subparagraph | ||||||
9 | (E) of paragraph (2) of subsection (b) for
corporations or | ||||||
10 | subparagraph (E) of paragraph (2) of subsection (c) for
| ||||||
11 | trusts and estates, exceed subtraction modifications, an | ||||||
12 | addition
modification must be made under those | ||||||
13 | subparagraphs for any other taxable
year to which the | ||||||
14 | taxable income less than zero (net operating loss) is
| ||||||
15 | applied under Section 172 of the Internal Revenue Code or | ||||||
16 | under
subparagraph (E) of paragraph (2) of this subsection | ||||||
17 | (e) applied in
conjunction with Section 172 of the Internal | ||||||
18 | Revenue Code.
| ||||||
19 | (2) Special rule. For purposes of paragraph (1) of this | ||||||
20 | subsection,
the taxable income properly reportable for | ||||||
21 | federal income tax purposes
shall mean:
| ||||||
22 | (A) Certain life insurance companies. In the case | ||||||
23 | of a life
insurance company subject to the tax imposed | ||||||
24 | by Section 801 of the
Internal Revenue Code, life | ||||||
25 | insurance company taxable income, plus the
amount of | ||||||
26 | distribution from pre-1984 policyholder surplus |
| |||||||
| |||||||
1 | accounts as
calculated under Section 815a of the | ||||||
2 | Internal Revenue Code;
| ||||||
3 | (B) Certain other insurance companies. In the case | ||||||
4 | of mutual
insurance companies subject to the tax | ||||||
5 | imposed by Section 831 of the
Internal Revenue Code, | ||||||
6 | insurance company taxable income;
| ||||||
7 | (C) Regulated investment companies. In the case of | ||||||
8 | a regulated
investment company subject to the tax | ||||||
9 | imposed by Section 852 of the
Internal Revenue Code, | ||||||
10 | investment company taxable income;
| ||||||
11 | (D) Real estate investment trusts. In the case of a | ||||||
12 | real estate
investment trust subject to the tax imposed | ||||||
13 | by Section 857 of the
Internal Revenue Code, real | ||||||
14 | estate investment trust taxable income;
| ||||||
15 | (E) Consolidated corporations. In the case of a | ||||||
16 | corporation which
is a member of an affiliated group of | ||||||
17 | corporations filing a consolidated
income tax return | ||||||
18 | for the taxable year for federal income tax purposes,
| ||||||
19 | taxable income determined as if such corporation had | ||||||
20 | filed a separate
return for federal income tax purposes | ||||||
21 | for the taxable year and each
preceding taxable year | ||||||
22 | for which it was a member of an affiliated group.
For | ||||||
23 | purposes of this subparagraph, the taxpayer's separate | ||||||
24 | taxable
income shall be determined as if the election | ||||||
25 | provided by Section
243(b) (2) of the Internal Revenue | ||||||
26 | Code had been in effect for all such years;
|
| |||||||
| |||||||
1 | (F) Cooperatives. In the case of a cooperative | ||||||
2 | corporation or
association, the taxable income of such | ||||||
3 | organization determined in
accordance with the | ||||||
4 | provisions of Section 1381 through 1388 of the
Internal | ||||||
5 | Revenue Code;
| ||||||
6 | (G) Subchapter S corporations. In the case of: (i) | ||||||
7 | a Subchapter S
corporation for which there is in effect | ||||||
8 | an election for the taxable year
under Section 1362 of | ||||||
9 | the Internal Revenue Code, the taxable income of such
| ||||||
10 | corporation determined in accordance with Section | ||||||
11 | 1363(b) of the Internal
Revenue Code, except that | ||||||
12 | taxable income shall take into
account those items | ||||||
13 | which are required by Section 1363(b)(1) of the
| ||||||
14 | Internal Revenue Code to be separately stated; and (ii) | ||||||
15 | a Subchapter
S corporation for which there is in effect | ||||||
16 | a federal election to opt out of
the provisions of the | ||||||
17 | Subchapter S Revision Act of 1982 and have applied
| ||||||
18 | instead the prior federal Subchapter S rules as in | ||||||
19 | effect on July 1, 1982,
the taxable income of such | ||||||
20 | corporation determined in accordance with the
federal | ||||||
21 | Subchapter S rules as in effect on July 1, 1982; and
| ||||||
22 | (H) Partnerships. In the case of a partnership, | ||||||
23 | taxable income
determined in accordance with Section | ||||||
24 | 703 of the Internal Revenue Code,
except that taxable | ||||||
25 | income shall take into account those items which are
| ||||||
26 | required by Section 703(a)(1) to be separately stated |
| |||||||
| |||||||
1 | but which would be
taken into account by an individual | ||||||
2 | in calculating his taxable income.
| ||||||
3 | (3) Recapture of business expenses on disposition of | ||||||
4 | asset or business. Notwithstanding any other law to the | ||||||
5 | contrary, if in prior years income from an asset or | ||||||
6 | business has been classified as business income and in a | ||||||
7 | later year is demonstrated to be non-business income, then | ||||||
8 | all expenses, without limitation, deducted in such later | ||||||
9 | year and in the 2 immediately preceding taxable years | ||||||
10 | related to that asset or business that generated the | ||||||
11 | non-business income shall be added back and recaptured as | ||||||
12 | business income in the year of the disposition of the asset | ||||||
13 | or business. Such amount shall be apportioned to Illinois | ||||||
14 | using the greater of the apportionment fraction computed | ||||||
15 | for the business under Section 304 of this Act for the | ||||||
16 | taxable year or the average of the apportionment fractions | ||||||
17 | computed for the business under Section 304 of this Act for | ||||||
18 | the taxable year and for the 2 immediately preceding | ||||||
19 | taxable years.
| ||||||
20 | (f) Valuation limitation amount.
| ||||||
21 | (1) In general. The valuation limitation amount | ||||||
22 | referred to in
subsections (a) (2) (G), (c) (2) (I) and | ||||||
23 | (d)(2) (E) is an amount equal to:
| ||||||
24 | (A) The sum of the pre-August 1, 1969 appreciation | ||||||
25 | amounts (to the
extent consisting of gain reportable | ||||||
26 | under the provisions of Section
1245 or 1250 of the |
| |||||||
| |||||||
1 | Internal Revenue Code) for all property in respect
of | ||||||
2 | which such gain was reported for the taxable year; plus
| ||||||
3 | (B) The lesser of (i) the sum of the pre-August 1, | ||||||
4 | 1969 appreciation
amounts (to the extent consisting of | ||||||
5 | capital gain) for all property in
respect of which such | ||||||
6 | gain was reported for federal income tax purposes
for | ||||||
7 | the taxable year, or (ii) the net capital gain for the | ||||||
8 | taxable year,
reduced in either case by any amount of | ||||||
9 | such gain included in the amount
determined under | ||||||
10 | subsection (a) (2) (F) or (c) (2) (H).
| ||||||
11 | (2) Pre-August 1, 1969 appreciation amount.
| ||||||
12 | (A) If the fair market value of property referred | ||||||
13 | to in paragraph
(1) was readily ascertainable on August | ||||||
14 | 1, 1969, the pre-August 1, 1969
appreciation amount for | ||||||
15 | such property is the lesser of (i) the excess of
such | ||||||
16 | fair market value over the taxpayer's basis (for | ||||||
17 | determining gain)
for such property on that date | ||||||
18 | (determined under the Internal Revenue
Code as in | ||||||
19 | effect on that date), or (ii) the total gain realized | ||||||
20 | and
reportable for federal income tax purposes in | ||||||
21 | respect of the sale,
exchange or other disposition of | ||||||
22 | such property.
| ||||||
23 | (B) If the fair market value of property referred | ||||||
24 | to in paragraph
(1) was not readily ascertainable on | ||||||
25 | August 1, 1969, the pre-August 1,
1969 appreciation | ||||||
26 | amount for such property is that amount which bears
the |
| |||||||
| |||||||
1 | same ratio to the total gain reported in respect of the | ||||||
2 | property for
federal income tax purposes for the | ||||||
3 | taxable year, as the number of full
calendar months in | ||||||
4 | that part of the taxpayer's holding period for the
| ||||||
5 | property ending July 31, 1969 bears to the number of | ||||||
6 | full calendar
months in the taxpayer's entire holding | ||||||
7 | period for the
property.
| ||||||
8 | (C) The Department shall prescribe such | ||||||
9 | regulations as may be
necessary to carry out the | ||||||
10 | purposes of this paragraph.
| ||||||
11 | (g) Double deductions. Unless specifically provided | ||||||
12 | otherwise, nothing
in this Section shall permit the same item | ||||||
13 | to be deducted more than once.
| ||||||
14 | (h) Legislative intention. Except as expressly provided by | ||||||
15 | this
Section there shall be no modifications or limitations on | ||||||
16 | the amounts
of income, gain, loss or deduction taken into | ||||||
17 | account in determining
gross income, adjusted gross income or | ||||||
18 | taxable income for federal income
tax purposes for the taxable | ||||||
19 | year, or in the amount of such items
entering into the | ||||||
20 | computation of base income and net income under this
Act for | ||||||
21 | such taxable year, whether in respect of property values as of
| ||||||
22 | August 1, 1969 or otherwise.
| ||||||
23 | (Source: P.A. 93-812, eff. 7-26-04; 93-840, eff. 7-30-04; | ||||||
24 | 94-776, eff. 5-19-06; 94-789, eff. 5-19-06; 94-1021, eff. |
| |||||||
| |||||||
1 | 7-12-06; revised 7-14-06.)
| ||||||
2 | Section 99. Effective date. This Act takes effect upon | ||||||
3 | becoming law.
|