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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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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)
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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 and, beginning in taxable | ||||||
13 | year 2008, to a health savings account, as defined in | ||||||
14 | the Medicare Prescription Drug, Improvement and | ||||||
15 | Modernization Act of 2003 to the
extent the | ||||||
16 | contribution is accepted by the account
administrator | ||||||
17 | as provided in that Act;
| ||||||
18 | (T) An amount, to the extent included in adjusted | ||||||
19 | gross income, equal to
the amount of interest earned in | ||||||
20 | the taxable year on a medical care savings
account | ||||||
21 | established under the Medical Care Savings Account Act | ||||||
22 | or the Medical
Care Savings Account Act of 2000 and, | ||||||
23 | beginning in taxable year 2008, on a health savings | ||||||
24 | account, established under the Medicare Prescription | ||||||
25 | Drug, Improvement and Modernization Act of 2003 on | ||||||
26 | behalf of the
taxpayer, other than interest added |
| |||||||
| |||||||
1 | pursuant to item (D-5) of this paragraph
(2);
| ||||||
2 | (U) For one taxable year beginning on or after | ||||||
3 | January 1,
1994, an
amount equal to the total amount of | ||||||
4 | tax imposed and paid under subsections (a)
and (b) of | ||||||
5 | Section 201 of this Act on grant amounts received by | ||||||
6 | the taxpayer
under the Nursing Home Grant Assistance | ||||||
7 | Act during the taxpayer's taxable years
1992 and 1993;
| ||||||
8 | (V) Beginning with tax years ending on or after | ||||||
9 | December 31, 1995 and
ending with tax years ending on | ||||||
10 | or before December 31, 2004, an amount equal to
the | ||||||
11 | amount paid by a taxpayer who is a
self-employed | ||||||
12 | taxpayer, a partner of a partnership, or a
shareholder | ||||||
13 | in a Subchapter S corporation for health insurance or | ||||||
14 | long-term
care insurance for that taxpayer or that | ||||||
15 | taxpayer's spouse or dependents, to
the extent that the | ||||||
16 | amount paid for that health insurance or long-term care
| ||||||
17 | insurance may be deducted under Section 213 of the | ||||||
18 | Internal Revenue Code of
1986, has not been deducted on | ||||||
19 | the federal income tax return of the taxpayer,
and does | ||||||
20 | not exceed the taxable income attributable to that | ||||||
21 | taxpayer's income,
self-employment income, or | ||||||
22 | Subchapter S corporation income; except that no
| ||||||
23 | deduction shall be allowed under this item (V) if the | ||||||
24 | taxpayer is eligible to
participate in any health | ||||||
25 | insurance or long-term care insurance plan of an
| ||||||
26 | employer of the taxpayer or the taxpayer's
spouse. The |
| |||||||
| |||||||
1 | amount of the health insurance and long-term care | ||||||
2 | insurance
subtracted under this item (V) shall be | ||||||
3 | determined by multiplying total
health insurance and | ||||||
4 | long-term care insurance premiums paid by the taxpayer
| ||||||
5 | times a number that represents the fractional | ||||||
6 | percentage of eligible medical
expenses under Section | ||||||
7 | 213 of the Internal Revenue Code of 1986 not actually
| ||||||
8 | deducted on the taxpayer's federal income tax return;
| ||||||
9 | (W) For taxable years beginning on or after January | ||||||
10 | 1, 1998,
all amounts included in the taxpayer's federal | ||||||
11 | gross income
in the taxable year from amounts converted | ||||||
12 | from a regular IRA to a Roth IRA.
This paragraph is | ||||||
13 | exempt from the provisions of Section
250;
| ||||||
14 | (X) For taxable year 1999 and thereafter, an amount | ||||||
15 | equal to the
amount of any (i) distributions, to the | ||||||
16 | extent includible in gross income for
federal income | ||||||
17 | tax purposes, made to the taxpayer because of his or | ||||||
18 | her status
as a victim of persecution for racial or | ||||||
19 | religious reasons by Nazi Germany or
any other Axis | ||||||
20 | regime or as an heir of the victim and (ii) items
of | ||||||
21 | income, to the extent
includible in gross income for | ||||||
22 | federal income tax purposes, attributable to,
derived | ||||||
23 | from or in any way related to assets stolen from, | ||||||
24 | hidden from, or
otherwise lost to a victim of
| ||||||
25 | persecution for racial or religious reasons by Nazi | ||||||
26 | Germany or any other Axis
regime immediately prior to, |
| |||||||
| |||||||
1 | during, and immediately after World War II,
including, | ||||||
2 | but
not limited to, interest on the proceeds receivable | ||||||
3 | as insurance
under policies issued to a victim of | ||||||
4 | persecution for racial or religious
reasons
by Nazi | ||||||
5 | Germany or any other Axis regime by European insurance | ||||||
6 | companies
immediately prior to and during World War II;
| ||||||
7 | provided, however, this subtraction from federal | ||||||
8 | adjusted gross income does not
apply to assets acquired | ||||||
9 | with such assets or with the proceeds from the sale of
| ||||||
10 | such assets; provided, further, this paragraph shall | ||||||
11 | only apply to a taxpayer
who was the first recipient of | ||||||
12 | such assets after their recovery and who is a
victim of | ||||||
13 | persecution for racial or religious reasons
by Nazi | ||||||
14 | Germany or any other Axis regime or as an heir of the | ||||||
15 | victim. The
amount of and the eligibility for any | ||||||
16 | public assistance, benefit, or
similar entitlement is | ||||||
17 | not affected by the inclusion of items (i) and (ii) of
| ||||||
18 | this paragraph in gross income for federal income tax | ||||||
19 | purposes.
This paragraph is exempt from the provisions | ||||||
20 | of Section 250;
| ||||||
21 | (Y) For taxable years beginning on or after January | ||||||
22 | 1, 2002
and ending
on or before December 31, 2004, | ||||||
23 | moneys contributed in the taxable year to a College | ||||||
24 | Savings Pool account under
Section 16.5 of the State | ||||||
25 | Treasurer Act, except that amounts excluded from
gross | ||||||
26 | income under Section 529(c)(3)(C)(i) of the Internal |
| |||||||
| |||||||
1 | Revenue Code
shall not be considered moneys | ||||||
2 | contributed under this subparagraph (Y). For taxable | ||||||
3 | years beginning on or after January 1, 2005, a maximum | ||||||
4 | of $10,000
contributed
in the
taxable year to (i) a | ||||||
5 | College Savings Pool account under Section 16.5 of the
| ||||||
6 | State
Treasurer Act or (ii) the Illinois Prepaid | ||||||
7 | Tuition Trust Fund,
except that
amounts excluded from | ||||||
8 | gross income under Section 529(c)(3)(C)(i) of the
| ||||||
9 | Internal
Revenue Code shall not be considered moneys | ||||||
10 | contributed under this subparagraph
(Y). This
| ||||||
11 | subparagraph (Y) is exempt from the provisions of | ||||||
12 | Section 250;
| ||||||
13 | (Z) For taxable years 2001 and thereafter, for the | ||||||
14 | taxable year in
which the bonus depreciation deduction
| ||||||
15 | is taken on the taxpayer's federal income tax return | ||||||
16 | under
subsection (k) of Section 168 of the Internal | ||||||
17 | Revenue Code and for each
applicable taxable year | ||||||
18 | thereafter, an amount equal to "x", where:
| ||||||
19 | (1) "y" equals the amount of the depreciation | ||||||
20 | deduction taken for the
taxable year
on the | ||||||
21 | taxpayer's federal income tax return on property | ||||||
22 | for which the bonus
depreciation deduction
was | ||||||
23 | taken in any year under subsection (k) of Section | ||||||
24 | 168 of the Internal
Revenue Code, but not including | ||||||
25 | the bonus depreciation deduction;
| ||||||
26 | (2) for taxable years ending on or before |
| |||||||
| |||||||
1 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
2 | and then divided by 70 (or "y"
multiplied by | ||||||
3 | 0.429); and | ||||||
4 | (3) for taxable years ending after December | ||||||
5 | 31, 2005: | ||||||
6 | (i) for property on which a bonus | ||||||
7 | depreciation deduction of 30% of the adjusted | ||||||
8 | basis was taken, "x" equals "y" multiplied by | ||||||
9 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
10 | 0.429); and | ||||||
11 | (ii) for property on which a bonus | ||||||
12 | depreciation deduction of 50% of the adjusted | ||||||
13 | basis was taken, "x" equals "y" multiplied by | ||||||
14 | 1.0.
| ||||||
15 | The aggregate amount deducted under this | ||||||
16 | subparagraph in all taxable
years for any one piece of | ||||||
17 | property may not exceed the amount of the bonus
| ||||||
18 | depreciation deduction
taken on that property on the | ||||||
19 | taxpayer's federal income tax return under
subsection | ||||||
20 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
21 | subparagraph (Z) is exempt from the provisions of | ||||||
22 | Section 250;
| ||||||
23 | (AA) 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-15), then |
| |||||||
| |||||||
1 | an amount equal to that
addition modification.
| ||||||
2 | If the taxpayer continues to own property through | ||||||
3 | the last day of the last tax year for which the | ||||||
4 | taxpayer may claim a depreciation deduction for | ||||||
5 | federal income tax purposes and for which the taxpayer | ||||||
6 | was required in any taxable year to make an addition | ||||||
7 | modification under subparagraph (D-15), then an amount | ||||||
8 | equal to that addition modification.
| ||||||
9 | The taxpayer is allowed to take the deduction under | ||||||
10 | this subparagraph
only once with respect to any one | ||||||
11 | piece of property. | ||||||
12 | This subparagraph (AA) is exempt from the | ||||||
13 | provisions of Section 250;
| ||||||
14 | (BB) Any amount included in adjusted gross income, | ||||||
15 | other
than
salary,
received by a driver in a | ||||||
16 | ridesharing arrangement using a motor vehicle;
| ||||||
17 | (CC) The amount of (i) any interest income (net of | ||||||
18 | the deductions allocable thereto) taken into account | ||||||
19 | for the taxable year with respect to a transaction with | ||||||
20 | a taxpayer that is required to make an addition | ||||||
21 | modification with respect to such transaction under | ||||||
22 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
23 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
24 | the amount of that addition modification, and
(ii) any | ||||||
25 | income from intangible property (net of the deductions | ||||||
26 | allocable thereto) taken into account for the taxable |
| |||||||
| |||||||
1 | year with respect to a transaction with a taxpayer that | ||||||
2 | is required to make an addition modification with | ||||||
3 | respect to such transaction under Section | ||||||
4 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
5 | 203(d)(2)(D-8), but not to exceed the amount of that | ||||||
6 | addition modification; | ||||||
7 | (DD) An amount equal to the interest income taken | ||||||
8 | into account for the taxable year (net of the | ||||||
9 | deductions allocable thereto) with respect to | ||||||
10 | transactions with a foreign person who would be a | ||||||
11 | member of the taxpayer's unitary business group but for | ||||||
12 | the fact that the foreign person's business activity | ||||||
13 | outside the United States is 80% or more of that | ||||||
14 | person's total business activity, but not to exceed the | ||||||
15 | addition modification required to be made for the same | ||||||
16 | taxable year under Section 203(a)(2)(D-17) for | ||||||
17 | interest paid, accrued, or incurred, directly or | ||||||
18 | indirectly, to the same foreign person; and | ||||||
19 | (EE) An amount equal to the income from intangible | ||||||
20 | property taken into account for the taxable year (net | ||||||
21 | of the deductions allocable thereto) with respect to | ||||||
22 | transactions with a foreign person who would be a | ||||||
23 | member of the taxpayer's unitary business group but for | ||||||
24 | the fact that the foreign person's business activity | ||||||
25 | outside the United States is 80% or more of that | ||||||
26 | person's total business activity, but not to exceed the |
| |||||||
| |||||||
1 | addition modification required to be made for the same | ||||||
2 | taxable year under Section 203(a)(2)(D-18) for | ||||||
3 | intangible expenses and costs paid, accrued, or | ||||||
4 | incurred, directly or indirectly, to the same foreign | ||||||
5 | person.
| ||||||
6 | (b) Corporations.
| ||||||
7 | (1) In general. In the case of a corporation, base | ||||||
8 | income means an
amount equal to the taxpayer's taxable | ||||||
9 | income for the taxable year as
modified by paragraph (2).
| ||||||
10 | (2) Modifications. The taxable income referred to in | ||||||
11 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
12 | of the following amounts:
| ||||||
13 | (A) An amount equal to all amounts paid or accrued | ||||||
14 | to the taxpayer
as interest and all distributions | ||||||
15 | received from regulated investment
companies during | ||||||
16 | the taxable year to the extent excluded from gross
| ||||||
17 | income in the computation of taxable income;
| ||||||
18 | (B) An amount equal to the amount of tax imposed by | ||||||
19 | this Act to the
extent deducted from gross income in | ||||||
20 | the computation of taxable income
for the taxable year;
| ||||||
21 | (C) In the case of a regulated investment company, | ||||||
22 | an amount equal to
the excess of (i) the net long-term | ||||||
23 | capital gain for the taxable year, over
(ii) the amount | ||||||
24 | of the capital gain dividends designated as such in | ||||||
25 | accordance
with Section 852(b)(3)(C) of the Internal |
| |||||||
| |||||||
1 | Revenue Code and any amount
designated under Section | ||||||
2 | 852(b)(3)(D) of the Internal Revenue Code,
| ||||||
3 | attributable to the taxable year (this amendatory Act | ||||||
4 | of 1995
(Public Act 89-89) is declarative of existing | ||||||
5 | law and is not a new
enactment);
| ||||||
6 | (D) The amount of any net operating loss deduction | ||||||
7 | taken in arriving
at taxable income, other than a net | ||||||
8 | operating loss carried forward from a
taxable year | ||||||
9 | ending prior to December 31, 1986;
| ||||||
10 | (E) For taxable years in which a net operating loss | ||||||
11 | carryback or
carryforward from a taxable year ending | ||||||
12 | prior to December 31, 1986 is an
element of taxable | ||||||
13 | income under paragraph (1) of subsection (e) or
| ||||||
14 | subparagraph (E) of paragraph (2) of subsection (e), | ||||||
15 | the amount by which
addition modifications other than | ||||||
16 | those provided by this subparagraph (E)
exceeded | ||||||
17 | subtraction modifications in such earlier taxable | ||||||
18 | year, with the
following limitations applied in the | ||||||
19 | order that they are listed:
| ||||||
20 | (i) the addition modification relating to the | ||||||
21 | net operating loss
carried back or forward to the | ||||||
22 | taxable year from any taxable year ending
prior to | ||||||
23 | December 31, 1986 shall be reduced by the amount of | ||||||
24 | addition
modification under this subparagraph (E) | ||||||
25 | which related to that net operating
loss and which | ||||||
26 | was taken into account in calculating the base |
| |||||||
| |||||||
1 | income of an
earlier taxable year, and
| ||||||
2 | (ii) the addition modification relating to the | ||||||
3 | net operating loss
carried back or forward to the | ||||||
4 | taxable year from any taxable year ending
prior to | ||||||
5 | December 31, 1986 shall not exceed the amount of | ||||||
6 | such carryback or
carryforward;
| ||||||
7 | For taxable years in which there is a net operating | ||||||
8 | loss carryback or
carryforward from more than one other | ||||||
9 | taxable year ending prior to December
31, 1986, the | ||||||
10 | addition modification provided in this subparagraph | ||||||
11 | (E) shall
be the sum of the amounts computed | ||||||
12 | independently under the preceding
provisions of this | ||||||
13 | subparagraph (E) for each such taxable year;
| ||||||
14 | (E-5) For taxable years ending after December 31, | ||||||
15 | 1997, an
amount equal to any eligible remediation costs | ||||||
16 | that the corporation
deducted in computing adjusted | ||||||
17 | gross income and for which the
corporation claims a | ||||||
18 | credit under subsection (l) of Section 201;
| ||||||
19 | (E-10) For taxable years 2001 and thereafter, an | ||||||
20 | amount equal to the
bonus depreciation deduction taken | ||||||
21 | on the taxpayer's federal income tax return for the | ||||||
22 | taxable
year under subsection (k) of Section 168 of the | ||||||
23 | Internal Revenue Code; and
| ||||||
24 | (E-11) If the taxpayer sells, transfers, abandons, | ||||||
25 | or otherwise disposes of property for which the | ||||||
26 | taxpayer was required in any taxable year to
make an |
| |||||||
| |||||||
1 | addition modification under subparagraph (E-10), then | ||||||
2 | an amount equal
to the aggregate amount of the | ||||||
3 | deductions taken in all taxable
years under | ||||||
4 | subparagraph (T) with respect to that property.
| ||||||
5 | If the taxpayer continues to own property through | ||||||
6 | the last day of the last tax year for which the | ||||||
7 | taxpayer may claim a depreciation deduction for | ||||||
8 | federal income tax purposes and for which the taxpayer | ||||||
9 | was allowed in any taxable year to make a subtraction | ||||||
10 | modification under subparagraph (T), then an amount | ||||||
11 | equal to that subtraction modification.
| ||||||
12 | The taxpayer is required to make the addition | ||||||
13 | modification under this
subparagraph
only once with | ||||||
14 | respect to any one piece of property;
| ||||||
15 | (E-12) For taxable years ending on or after | ||||||
16 | December 31, 2004, an amount equal to the amount | ||||||
17 | otherwise allowed as a deduction in computing base | ||||||
18 | income for interest paid, accrued, or incurred, | ||||||
19 | directly or indirectly, to a foreign person who would | ||||||
20 | be a member of the same unitary business group but for | ||||||
21 | the fact the foreign person's business activity | ||||||
22 | outside the United States is 80% or more of the foreign | ||||||
23 | person's total business activity. The addition | ||||||
24 | modification required by this subparagraph shall be | ||||||
25 | reduced to the extent that dividends were included in | ||||||
26 | base income of the unitary group for the same taxable |
| |||||||
| |||||||
1 | year and received by the taxpayer or by a member of the | ||||||
2 | taxpayer's unitary business group (including amounts | ||||||
3 | included in gross income pursuant to Sections 951 | ||||||
4 | through 964 of the Internal Revenue Code and amounts | ||||||
5 | included in gross income under Section 78 of the | ||||||
6 | Internal Revenue Code) with respect to the stock of the | ||||||
7 | same person to whom the interest was paid, accrued, or | ||||||
8 | incurred.
| ||||||
9 | This paragraph shall not apply to the following:
| ||||||
10 | (i) an item of interest paid, accrued, or | ||||||
11 | incurred, directly or indirectly, to a foreign | ||||||
12 | person who is subject in a foreign country or | ||||||
13 | state, other than a state which requires mandatory | ||||||
14 | unitary reporting, to a tax on or measured by net | ||||||
15 | income with respect to such interest; or | ||||||
16 | (ii) an item of interest paid, accrued, or | ||||||
17 | incurred, directly or indirectly, to a foreign | ||||||
18 | person if the taxpayer can establish, based on a | ||||||
19 | preponderance of the evidence, both of the | ||||||
20 | following: | ||||||
21 | (a) the foreign person, during the same | ||||||
22 | taxable year, paid, accrued, or incurred, the | ||||||
23 | interest to a person that is not a related | ||||||
24 | member, and | ||||||
25 | (b) the transaction giving rise to the | ||||||
26 | interest expense between the taxpayer and the |
| |||||||
| |||||||
1 | foreign person did not have as a principal | ||||||
2 | purpose the avoidance of Illinois income tax, | ||||||
3 | and is paid pursuant to a contract or agreement | ||||||
4 | that reflects an arm's-length interest rate | ||||||
5 | and terms; or
| ||||||
6 | (iii) the taxpayer can establish, based on | ||||||
7 | clear and convincing evidence, that the interest | ||||||
8 | paid, accrued, or incurred relates to a contract or | ||||||
9 | agreement entered into at arm's-length rates and | ||||||
10 | terms and the principal purpose for the payment is | ||||||
11 | not federal or Illinois tax avoidance; or
| ||||||
12 | (iv) an item of interest paid, accrued, or | ||||||
13 | incurred, directly or indirectly, to 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 | (E-13) For taxable years ending on or after | ||||||
4 | December 31, 2004, an amount equal to the amount of | ||||||
5 | intangible expenses and costs otherwise allowed as a | ||||||
6 | deduction in computing base income, and that were paid, | ||||||
7 | accrued, or incurred, directly or indirectly, to a | ||||||
8 | foreign person who would be a member of the same | ||||||
9 | unitary business group but for the fact that the | ||||||
10 | foreign person's business activity outside the United | ||||||
11 | States is 80% or more of that person's total business | ||||||
12 | activity. The addition modification required by this | ||||||
13 | subparagraph shall be reduced to the extent that | ||||||
14 | dividends were included in base income of the unitary | ||||||
15 | group for the same taxable year and received by the | ||||||
16 | taxpayer or by a member of the taxpayer's unitary | ||||||
17 | business group (including amounts included in gross | ||||||
18 | income pursuant to Sections 951 through 964 of the | ||||||
19 | Internal Revenue Code and amounts included in gross | ||||||
20 | income under Section 78 of the Internal Revenue Code) | ||||||
21 | with respect to the stock of the same person to whom | ||||||
22 | the intangible expenses and costs were directly or | ||||||
23 | indirectly paid, incurred, or accrued. The preceding | ||||||
24 | sentence shall not apply to the extent that the same | ||||||
25 | dividends caused a reduction to the addition | ||||||
26 | modification required under Section 203(b)(2)(E-12) of |
| |||||||
| |||||||
1 | this Act.
As used in this subparagraph, the term | ||||||
2 | "intangible expenses and costs" includes (1) expenses, | ||||||
3 | losses, and costs for, or related to, the direct or | ||||||
4 | indirect acquisition, use, maintenance or management, | ||||||
5 | ownership, sale, exchange, or any other disposition of | ||||||
6 | intangible property; (2) losses incurred, directly or | ||||||
7 | indirectly, from factoring transactions or discounting | ||||||
8 | transactions; (3) royalty, patent, technical, and | ||||||
9 | copyright fees; (4) licensing fees; and (5) other | ||||||
10 | similar expenses and costs.
For purposes of this | ||||||
11 | subparagraph, "intangible property" includes patents, | ||||||
12 | patent applications, trade names, trademarks, service | ||||||
13 | marks, copyrights, mask works, trade secrets, and | ||||||
14 | similar types of intangible assets. | ||||||
15 | This paragraph shall not apply to the following: | ||||||
16 | (i) any item of intangible expenses or costs | ||||||
17 | paid, accrued, or incurred, directly or | ||||||
18 | indirectly, from a transaction with a 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 item; or | ||||||
23 | (ii) any item of intangible expense or cost | ||||||
24 | paid, accrued, or incurred, directly or | ||||||
25 | indirectly, if the taxpayer can establish, based | ||||||
26 | on a preponderance of the evidence, both of the |
| |||||||
| |||||||
1 | following: | ||||||
2 | (a) the foreign person during the same | ||||||
3 | taxable year paid, accrued, or incurred, the | ||||||
4 | intangible expense or cost to a person that is | ||||||
5 | not a related member, and | ||||||
6 | (b) the transaction giving rise to the | ||||||
7 | intangible expense or cost between the | ||||||
8 | taxpayer and the foreign person did not have as | ||||||
9 | a principal purpose the avoidance of Illinois | ||||||
10 | income tax, and is paid pursuant to a contract | ||||||
11 | or agreement that reflects arm's-length terms; | ||||||
12 | or | ||||||
13 | (iii) any item of intangible expense or cost | ||||||
14 | paid, accrued, or incurred, directly or | ||||||
15 | indirectly, from a transaction with a foreign | ||||||
16 | person if the taxpayer establishes by clear and | ||||||
17 | convincing evidence, that the adjustments are | ||||||
18 | unreasonable; or if the taxpayer and the Director | ||||||
19 | agree in writing to the application or use of an | ||||||
20 | alternative method of apportionment under Section | ||||||
21 | 304(f);
| ||||||
22 | Nothing in this subsection shall preclude the | ||||||
23 | Director from making any other adjustment | ||||||
24 | otherwise allowed under Section 404 of this Act for | ||||||
25 | any tax year beginning after the effective date of | ||||||
26 | this amendment provided such adjustment is made |
| |||||||
| |||||||
1 | pursuant to regulation adopted by the Department | ||||||
2 | and such regulations provide methods and standards | ||||||
3 | by which the Department will utilize its authority | ||||||
4 | under Section 404 of this Act;
| ||||||
5 | and by deducting from the total so obtained the sum of the | ||||||
6 | following
amounts:
| ||||||
7 | (F) An amount equal to the amount of any tax | ||||||
8 | imposed by this Act
which was refunded to the taxpayer | ||||||
9 | and included in such total for the
taxable year;
| ||||||
10 | (G) An amount equal to any amount included in such | ||||||
11 | total under
Section 78 of the Internal Revenue Code;
| ||||||
12 | (H) In the case of a regulated investment company, | ||||||
13 | an amount equal
to the amount of exempt interest | ||||||
14 | dividends as defined in subsection (b)
(5) of Section | ||||||
15 | 852 of the Internal Revenue Code, paid to shareholders
| ||||||
16 | for the taxable year;
| ||||||
17 | (I) With the exception of any amounts subtracted | ||||||
18 | under subparagraph
(J),
an amount equal to the sum of | ||||||
19 | all amounts disallowed as
deductions by (i) Sections | ||||||
20 | 171(a) (2), and 265(a)(2) and amounts disallowed as
| ||||||
21 | interest expense by Section 291(a)(3) of the Internal | ||||||
22 | Revenue Code, as now
or hereafter amended, and all | ||||||
23 | amounts of expenses allocable to interest and
| ||||||
24 | disallowed as deductions by Section 265(a)(1) of the | ||||||
25 | Internal Revenue Code,
as now or hereafter amended;
and | ||||||
26 | (ii) for taxable years
ending on or after August 13, |
| |||||||
| |||||||
1 | 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | ||||||
2 | 832(b)(5)(B)(i) of the Internal Revenue Code; the
| ||||||
3 | provisions of this
subparagraph are exempt from the | ||||||
4 | provisions of Section 250;
| ||||||
5 | (J) An amount equal to all amounts included in such | ||||||
6 | total which are
exempt from taxation by this State | ||||||
7 | either by reason of its statutes or
Constitution
or by | ||||||
8 | reason of the Constitution, treaties or statutes of the | ||||||
9 | United States;
provided that, in the case of any | ||||||
10 | statute of this State that exempts income
derived from | ||||||
11 | bonds or other obligations from the tax imposed under | ||||||
12 | this Act,
the amount exempted shall be the interest net | ||||||
13 | of bond premium amortization;
| ||||||
14 | (K) An amount equal to those dividends included in | ||||||
15 | such total
which were paid by a corporation which | ||||||
16 | conducts
business operations in an Enterprise Zone or | ||||||
17 | zones created under
the Illinois Enterprise Zone Act or | ||||||
18 | a River Edge Redevelopment Zone or zones created under | ||||||
19 | the River Edge Redevelopment Zone Act and conducts | ||||||
20 | substantially all of its
operations in an Enterprise | ||||||
21 | Zone or zones or a River Edge Redevelopment Zone or | ||||||
22 | zones. This subparagraph (K) is exempt from the | ||||||
23 | provisions of Section 250;
| ||||||
24 | (L) An amount equal to those dividends included in | ||||||
25 | such total that
were paid by a corporation that | ||||||
26 | conducts business operations in a federally
designated |
| |||||||
| |||||||
1 | Foreign Trade Zone or Sub-Zone and that is designated a | ||||||
2 | High Impact
Business located in Illinois; provided | ||||||
3 | that dividends eligible for the
deduction provided in | ||||||
4 | subparagraph (K) of paragraph 2 of this subsection
| ||||||
5 | shall not be eligible for the deduction provided under | ||||||
6 | this subparagraph
(L);
| ||||||
7 | (M) For any taxpayer that is a financial | ||||||
8 | organization within the meaning
of Section 304(c) of | ||||||
9 | this Act, an amount included in such total as interest
| ||||||
10 | income from a loan or loans made by such taxpayer to a | ||||||
11 | borrower, to the extent
that such a loan is secured by | ||||||
12 | property which is eligible for the Enterprise
Zone | ||||||
13 | Investment Credit or the River Edge Redevelopment Zone | ||||||
14 | Investment Credit. To determine the portion of a loan | ||||||
15 | or loans that is
secured by property eligible for a | ||||||
16 | Section 201(f) investment
credit to the borrower, the | ||||||
17 | entire principal amount of the loan or loans
between | ||||||
18 | the taxpayer and the borrower should be divided into | ||||||
19 | the basis of the
Section 201(f) investment credit | ||||||
20 | property which secures the
loan or loans, using for | ||||||
21 | this purpose the original basis of such property on
the | ||||||
22 | date that it was placed in service in the
Enterprise | ||||||
23 | Zone or the River Edge Redevelopment Zone. The | ||||||
24 | subtraction modification available to taxpayer in any
| ||||||
25 | year under this subsection shall be that portion of the | ||||||
26 | total interest paid
by the borrower with respect to |
| |||||||
| |||||||
1 | such loan attributable to the eligible
property as | ||||||
2 | calculated under the previous sentence. This | ||||||
3 | subparagraph (M) is exempt from the provisions of | ||||||
4 | Section 250;
| ||||||
5 | (M-1) For any taxpayer that is a financial | ||||||
6 | organization within the
meaning of Section 304(c) of | ||||||
7 | this Act, an amount included in such total as
interest | ||||||
8 | income from a loan or loans made by such taxpayer to a | ||||||
9 | borrower,
to the extent that such a loan is secured by | ||||||
10 | property which is eligible for
the High Impact Business | ||||||
11 | Investment Credit. To determine the portion of a
loan | ||||||
12 | or loans that is secured by property eligible for a | ||||||
13 | Section 201(h) investment credit to the borrower, the | ||||||
14 | entire principal amount of
the loan or loans between | ||||||
15 | the taxpayer and the borrower should be divided into
| ||||||
16 | the basis of the Section 201(h) investment credit | ||||||
17 | property which
secures the loan or loans, using for | ||||||
18 | this purpose the original basis of such
property on the | ||||||
19 | date that it was placed in service in a federally | ||||||
20 | designated
Foreign Trade Zone or Sub-Zone located in | ||||||
21 | Illinois. No taxpayer that is
eligible for the | ||||||
22 | deduction provided in subparagraph (M) of paragraph | ||||||
23 | (2) of
this subsection shall be eligible for the | ||||||
24 | deduction provided under this
subparagraph (M-1). The | ||||||
25 | subtraction modification available to taxpayers in
any | ||||||
26 | year under this subsection shall be that portion of the |
| |||||||
| |||||||
1 | total interest
paid by the borrower with respect to | ||||||
2 | such loan attributable to the eligible
property as | ||||||
3 | calculated under the previous sentence;
| ||||||
4 | (N) Two times any contribution made during the | ||||||
5 | taxable year to a
designated zone organization to the | ||||||
6 | extent that the contribution (i)
qualifies as a | ||||||
7 | charitable contribution under subsection (c) of | ||||||
8 | Section 170
of the Internal Revenue Code and (ii) must, | ||||||
9 | by its terms, be used for a
project approved by the | ||||||
10 | Department of Commerce and Economic Opportunity under | ||||||
11 | Section 11 of the Illinois Enterprise Zone Act or under | ||||||
12 | Section 10-10 of the Illinois River Edge Redevelopment | ||||||
13 | Zone Act. This subparagraph (N) is exempt from the | ||||||
14 | provisions of Section 250;
| ||||||
15 | (O) An amount equal to: (i) 85% for taxable years | ||||||
16 | ending on or before
December 31, 1992, or, a percentage | ||||||
17 | equal to the percentage allowable under
Section | ||||||
18 | 243(a)(1) of the Internal Revenue Code of 1986 for | ||||||
19 | taxable years ending
after December 31, 1992, of the | ||||||
20 | amount by which dividends included in taxable
income | ||||||
21 | and received from a corporation that is not created or | ||||||
22 | organized under
the laws of the United States or any | ||||||
23 | state or political subdivision thereof,
including, for | ||||||
24 | taxable years ending on or after December 31, 1988, | ||||||
25 | dividends
received or deemed received or paid or deemed | ||||||
26 | paid under Sections 951 through
964 of the Internal |
| |||||||
| |||||||
1 | Revenue Code, exceed the amount of the modification
| ||||||
2 | provided under subparagraph (G) of paragraph (2) of | ||||||
3 | this subsection (b) which
is related to such dividends; | ||||||
4 | plus (ii) 100% of the amount by which dividends,
| ||||||
5 | included in taxable income and received, including, | ||||||
6 | for taxable years ending on
or after December 31, 1988, | ||||||
7 | dividends received or deemed received or paid or
deemed | ||||||
8 | paid under Sections 951 through 964 of the Internal | ||||||
9 | Revenue Code, from
any such corporation specified in | ||||||
10 | clause (i) that would but for the provisions
of Section | ||||||
11 | 1504 (b) (3) of the Internal Revenue Code be treated as | ||||||
12 | a member of
the affiliated group which includes the | ||||||
13 | dividend recipient, exceed the amount
of the | ||||||
14 | modification provided under subparagraph (G) of | ||||||
15 | paragraph (2) of this
subsection (b) which is related | ||||||
16 | to such dividends;
| ||||||
17 | (P) An amount equal to any contribution made to a | ||||||
18 | job training project
established pursuant to the Tax | ||||||
19 | Increment Allocation Redevelopment Act;
| ||||||
20 | (Q) An amount equal to the amount of the deduction | ||||||
21 | used to compute the
federal income tax credit for | ||||||
22 | restoration of substantial amounts held under
claim of | ||||||
23 | right for the taxable year pursuant to Section 1341 of | ||||||
24 | the
Internal Revenue Code of 1986;
| ||||||
25 | (R) On and after July 20, 1999, in the case of an | ||||||
26 | attorney-in-fact with respect to whom an
interinsurer |
| |||||||
| |||||||
1 | or a reciprocal insurer has made the election under | ||||||
2 | Section 835 of
the Internal Revenue Code, 26 U.S.C. | ||||||
3 | 835, an amount equal to the excess, if
any, of the | ||||||
4 | amounts paid or incurred by that interinsurer or | ||||||
5 | reciprocal insurer
in the taxable year to the | ||||||
6 | attorney-in-fact over the deduction allowed to that
| ||||||
7 | interinsurer or reciprocal insurer with respect to the | ||||||
8 | attorney-in-fact under
Section 835(b) of the Internal | ||||||
9 | Revenue Code for the taxable year; the provisions of | ||||||
10 | this subparagraph are exempt from the provisions of | ||||||
11 | Section 250;
| ||||||
12 | (S) For taxable years ending on or after December | ||||||
13 | 31, 1997, in the
case of a Subchapter
S corporation, an | ||||||
14 | amount equal to all amounts of income allocable to a
| ||||||
15 | shareholder subject to the Personal Property Tax | ||||||
16 | Replacement Income Tax imposed
by subsections (c) and | ||||||
17 | (d) of Section 201 of this Act, including amounts
| ||||||
18 | allocable to organizations exempt from federal income | ||||||
19 | tax by reason of Section
501(a) of the Internal Revenue | ||||||
20 | Code. This subparagraph (S) is exempt from
the | ||||||
21 | provisions of Section 250;
| ||||||
22 | (T) For taxable years 2001 and thereafter, for the | ||||||
23 | taxable year in
which the bonus depreciation deduction
| ||||||
24 | is taken on the taxpayer's federal income tax return | ||||||
25 | under
subsection (k) of Section 168 of the Internal | ||||||
26 | Revenue Code and for each
applicable taxable year |
| |||||||
| |||||||
1 | thereafter, an amount equal to "x", where:
| ||||||
2 | (1) "y" equals the amount of the depreciation | ||||||
3 | deduction taken for the
taxable year
on the | ||||||
4 | taxpayer's federal income tax return on property | ||||||
5 | for which the bonus
depreciation deduction
was | ||||||
6 | taken in any year under subsection (k) of Section | ||||||
7 | 168 of the Internal
Revenue Code, but not including | ||||||
8 | the bonus depreciation deduction;
| ||||||
9 | (2) for taxable years ending on or before | ||||||
10 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
11 | and then divided by 70 (or "y"
multiplied by | ||||||
12 | 0.429); and | ||||||
13 | (3) for taxable years ending after December | ||||||
14 | 31, 2005: | ||||||
15 | (i) for property on which a bonus | ||||||
16 | depreciation deduction of 30% of the adjusted | ||||||
17 | basis was taken, "x" equals "y" multiplied by | ||||||
18 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
19 | 0.429); and | ||||||
20 | (ii) for property on which a bonus | ||||||
21 | depreciation deduction of 50% of the adjusted | ||||||
22 | basis was taken, "x" equals "y" multiplied by | ||||||
23 | 1.0.
| ||||||
24 | The aggregate amount deducted under this | ||||||
25 | subparagraph in all taxable
years for any one piece of | ||||||
26 | property may not exceed the amount of the bonus
|
| |||||||
| |||||||
1 | depreciation deduction
taken on that property on the | ||||||
2 | taxpayer's federal income tax return under
subsection | ||||||
3 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
4 | subparagraph (T) is exempt from the provisions of | ||||||
5 | Section 250;
| ||||||
6 | (U) If the taxpayer sells, transfers, abandons, or | ||||||
7 | otherwise disposes of
property for which the taxpayer | ||||||
8 | was required in any taxable year to make an
addition | ||||||
9 | modification under subparagraph (E-10), then an amount | ||||||
10 | equal to that
addition modification.
| ||||||
11 | If the taxpayer continues to own property through | ||||||
12 | the last day of the last tax year for which the | ||||||
13 | taxpayer may claim a depreciation deduction for | ||||||
14 | federal income tax purposes and 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 | The taxpayer is allowed to take the deduction under | ||||||
19 | this subparagraph
only once with respect to any one | ||||||
20 | piece of property. | ||||||
21 | This subparagraph (U) is exempt from the | ||||||
22 | provisions of Section 250;
| ||||||
23 | (V) The amount of: (i) any interest income (net of | ||||||
24 | the deductions allocable thereto) taken into account | ||||||
25 | for the taxable year with respect to a transaction with | ||||||
26 | a taxpayer that is required to make an addition |
| |||||||
| |||||||
1 | modification with respect to such transaction under | ||||||
2 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
3 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
4 | the amount of such addition modification and
(ii) any | ||||||
5 | income from intangible property (net of the deductions | ||||||
6 | allocable thereto) taken into account for the taxable | ||||||
7 | year with respect to a transaction with a taxpayer that | ||||||
8 | is required to make an addition modification with | ||||||
9 | respect to such transaction under Section | ||||||
10 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
11 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
12 | addition modification;
| ||||||
13 | (W) An amount equal to the interest income taken | ||||||
14 | into account for the taxable year (net of the | ||||||
15 | deductions allocable thereto) with respect to | ||||||
16 | transactions with 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(b)(2)(E-12) for | ||||||
23 | interest paid, accrued, or incurred, directly or | ||||||
24 | indirectly, to the same foreign person; and
| ||||||
25 | (X) An amount equal to the income from intangible | ||||||
26 | property taken into account for the taxable year (net |
| |||||||
| |||||||
1 | of the deductions allocable thereto) with respect to | ||||||
2 | transactions with a foreign person who would be a | ||||||
3 | member of the taxpayer's unitary business group but for | ||||||
4 | the fact that the foreign person's business activity | ||||||
5 | outside the United States is 80% or more of that | ||||||
6 | person's total business activity, but not to exceed the | ||||||
7 | addition modification required to be made for the same | ||||||
8 | taxable year under Section 203(b)(2)(E-13) for | ||||||
9 | intangible expenses and costs paid, accrued, or | ||||||
10 | incurred, directly or indirectly, to the same foreign | ||||||
11 | person.
| ||||||
12 | (3) Special rule. For purposes of paragraph (2) (A), | ||||||
13 | "gross income"
in the case of a life insurance company, for | ||||||
14 | tax years ending on and after
December 31, 1994,
shall mean | ||||||
15 | the gross investment income for the taxable year.
| ||||||
16 | (c) Trusts and estates.
| ||||||
17 | (1) In general. In the case of a trust or estate, base | ||||||
18 | income means
an amount equal to the taxpayer's taxable | ||||||
19 | income for the taxable year as
modified by paragraph (2).
| ||||||
20 | (2) Modifications. Subject to the provisions of | ||||||
21 | paragraph (3), the
taxable income referred to in paragraph | ||||||
22 | (1) shall be modified by adding
thereto the sum of the | ||||||
23 | following amounts:
| ||||||
24 | (A) An amount equal to all amounts paid or accrued | ||||||
25 | to the taxpayer
as interest or dividends during the |
| |||||||
| |||||||
1 | taxable year to the extent excluded
from gross income | ||||||
2 | in the computation of taxable income;
| ||||||
3 | (B) In the case of (i) an estate, $600; (ii) a | ||||||
4 | trust which, under
its governing instrument, is | ||||||
5 | required to distribute all of its income
currently, | ||||||
6 | $300; and (iii) any other trust, $100, but in each such | ||||||
7 | case,
only to the extent such amount was deducted in | ||||||
8 | the computation of
taxable income;
| ||||||
9 | (C) An amount equal to the amount of tax imposed by | ||||||
10 | this Act to the
extent deducted from gross income in | ||||||
11 | the computation of taxable income
for the taxable year;
| ||||||
12 | (D) The amount of any net operating loss deduction | ||||||
13 | taken in arriving at
taxable income, other than a net | ||||||
14 | operating loss carried forward from a
taxable year | ||||||
15 | ending prior to December 31, 1986;
| ||||||
16 | (E) For taxable years in which a net operating loss | ||||||
17 | carryback or
carryforward from a taxable year ending | ||||||
18 | prior to December 31, 1986 is an
element of taxable | ||||||
19 | income under paragraph (1) of subsection (e) or | ||||||
20 | subparagraph
(E) of paragraph (2) of subsection (e), | ||||||
21 | the amount by which addition
modifications other than | ||||||
22 | those provided by this subparagraph (E) exceeded
| ||||||
23 | subtraction modifications in such taxable year, with | ||||||
24 | the following limitations
applied in the order that | ||||||
25 | they are listed:
| ||||||
26 | (i) the addition modification relating to the |
| |||||||
| |||||||
1 | net operating loss
carried back or forward to the | ||||||
2 | taxable year from any taxable year ending
prior to | ||||||
3 | December 31, 1986 shall be reduced by the amount of | ||||||
4 | addition
modification under this subparagraph (E) | ||||||
5 | which related to that net
operating loss and which | ||||||
6 | was taken into account in calculating the base
| ||||||
7 | income of an earlier taxable year, and
| ||||||
8 | (ii) the addition modification relating to the | ||||||
9 | net operating loss
carried back or forward to the | ||||||
10 | taxable year from any taxable year ending
prior to | ||||||
11 | December 31, 1986 shall not exceed the amount of | ||||||
12 | such carryback or
carryforward;
| ||||||
13 | For taxable years in which there is a net operating | ||||||
14 | loss carryback or
carryforward from more than one other | ||||||
15 | taxable year ending prior to December
31, 1986, the | ||||||
16 | addition modification provided in this subparagraph | ||||||
17 | (E) shall
be the sum of the amounts computed | ||||||
18 | independently under the preceding
provisions of this | ||||||
19 | subparagraph (E) for each such taxable year;
| ||||||
20 | (F) For taxable years ending on or after January 1, | ||||||
21 | 1989, an amount
equal to the tax deducted pursuant to | ||||||
22 | Section 164 of the Internal Revenue
Code if the trust | ||||||
23 | or estate is claiming the same tax for purposes of the
| ||||||
24 | Illinois foreign tax credit under Section 601 of this | ||||||
25 | Act;
| ||||||
26 | (G) An amount equal to the amount of the capital |
| |||||||
| |||||||
1 | gain deduction
allowable under the Internal Revenue | ||||||
2 | Code, to the extent deducted from
gross income in the | ||||||
3 | computation of taxable income;
| ||||||
4 | (G-5) For taxable years ending after December 31, | ||||||
5 | 1997, an
amount equal to any eligible remediation costs | ||||||
6 | that the trust or estate
deducted in computing adjusted | ||||||
7 | gross income and for which the trust
or estate claims a | ||||||
8 | credit under subsection (l) of Section 201;
| ||||||
9 | (G-10) For taxable years 2001 and thereafter, an | ||||||
10 | amount equal to the
bonus depreciation deduction taken | ||||||
11 | on the taxpayer's federal income tax return for the | ||||||
12 | taxable
year under subsection (k) of Section 168 of the | ||||||
13 | Internal Revenue Code; and
| ||||||
14 | (G-11) If the taxpayer sells, transfers, abandons, | ||||||
15 | or otherwise disposes of property for which the | ||||||
16 | taxpayer was required in any taxable year to
make an | ||||||
17 | addition modification under subparagraph (G-10), then | ||||||
18 | an amount equal
to the aggregate amount of the | ||||||
19 | deductions taken in all taxable
years under | ||||||
20 | subparagraph (R) with respect to that property.
| ||||||
21 | If the taxpayer continues to own property through | ||||||
22 | the last day of the last tax year for which the | ||||||
23 | taxpayer may claim a depreciation deduction for | ||||||
24 | federal income tax purposes and for which the taxpayer | ||||||
25 | was allowed in any taxable year to make a subtraction | ||||||
26 | modification under subparagraph (R), then an amount |
| |||||||
| |||||||
1 | equal to that subtraction modification.
| ||||||
2 | The taxpayer is required to make the addition | ||||||
3 | modification under this
subparagraph
only once with | ||||||
4 | respect to any one piece of property;
| ||||||
5 | (G-12) For taxable years ending on or after | ||||||
6 | December 31, 2004, an amount equal to the amount | ||||||
7 | otherwise allowed as a deduction in computing base | ||||||
8 | income for interest paid, accrued, or incurred, | ||||||
9 | directly or indirectly, to a foreign person who would | ||||||
10 | be a member of the same 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 the foreign | ||||||
13 | person's total business activity. The addition | ||||||
14 | modification required by this subparagraph shall be | ||||||
15 | reduced to the extent that dividends were included in | ||||||
16 | base income of the unitary group for the same taxable | ||||||
17 | year and received by the taxpayer or by a member of the | ||||||
18 | taxpayer's unitary business group (including amounts | ||||||
19 | included in gross income pursuant to Sections 951 | ||||||
20 | through 964 of the Internal Revenue Code and amounts | ||||||
21 | included in gross income under Section 78 of the | ||||||
22 | Internal Revenue Code) with respect to the stock of the | ||||||
23 | same person to whom the interest was paid, accrued, or | ||||||
24 | incurred.
| ||||||
25 | This paragraph shall not apply to the following:
| ||||||
26 | (i) an item of interest paid, accrued, or |
| |||||||
| |||||||
1 | incurred, directly or indirectly, to a foreign | ||||||
2 | person who is subject in a foreign country or | ||||||
3 | state, other than a state which requires mandatory | ||||||
4 | unitary reporting, to a tax on or measured by net | ||||||
5 | income with respect to such interest; or | ||||||
6 | (ii) an item of interest paid, accrued, or | ||||||
7 | incurred, directly or indirectly, to a foreign | ||||||
8 | person if the taxpayer can establish, based on a | ||||||
9 | preponderance of the evidence, both of the | ||||||
10 | following: | ||||||
11 | (a) the foreign person, during the same | ||||||
12 | taxable year, paid, accrued, or incurred, the | ||||||
13 | interest to a person that is not a related | ||||||
14 | member, and | ||||||
15 | (b) the transaction giving rise to the | ||||||
16 | interest expense between the taxpayer and the | ||||||
17 | foreign person did not have as a principal | ||||||
18 | purpose the avoidance of Illinois income tax, | ||||||
19 | and is paid pursuant to a contract or agreement | ||||||
20 | that reflects an arm's-length interest rate | ||||||
21 | and terms; or
| ||||||
22 | (iii) the taxpayer can establish, based on | ||||||
23 | clear and convincing evidence, that the interest | ||||||
24 | paid, accrued, or incurred relates to a contract or | ||||||
25 | agreement entered into at arm's-length rates and | ||||||
26 | terms and the principal purpose for the payment is |
| |||||||
| |||||||
1 | not federal or Illinois tax avoidance; or
| ||||||
2 | (iv) an item of interest paid, accrued, or | ||||||
3 | incurred, directly or indirectly, to a foreign | ||||||
4 | person if the taxpayer establishes by clear and | ||||||
5 | convincing evidence that the adjustments are | ||||||
6 | unreasonable; or if the taxpayer and the Director | ||||||
7 | agree in writing to the application or use of an | ||||||
8 | alternative method of apportionment under Section | ||||||
9 | 304(f).
| ||||||
10 | Nothing in this subsection shall preclude the | ||||||
11 | Director from making any other adjustment | ||||||
12 | otherwise allowed under Section 404 of this Act for | ||||||
13 | any tax year beginning after the effective date of | ||||||
14 | this amendment provided such adjustment is made | ||||||
15 | pursuant to regulation adopted by the Department | ||||||
16 | and such regulations provide methods and standards | ||||||
17 | by which the Department will utilize its authority | ||||||
18 | under Section 404 of this Act;
| ||||||
19 | (G-13) For taxable years ending on or after | ||||||
20 | December 31, 2004, an amount equal to the amount of | ||||||
21 | intangible expenses and costs otherwise allowed as a | ||||||
22 | deduction in computing base income, and that were paid, | ||||||
23 | accrued, or incurred, directly or indirectly, to a | ||||||
24 | foreign person who would be a member of the same | ||||||
25 | unitary business group but for the fact that the | ||||||
26 | foreign person's business activity outside the United |
| |||||||
| |||||||
1 | States is 80% or more of that person's total business | ||||||
2 | activity. The addition modification required by this | ||||||
3 | subparagraph shall be reduced to the extent that | ||||||
4 | dividends were included in base income of the unitary | ||||||
5 | group for the same taxable year and received by the | ||||||
6 | taxpayer or by a member of the taxpayer's unitary | ||||||
7 | business group (including amounts included in gross | ||||||
8 | income pursuant to Sections 951 through 964 of the | ||||||
9 | Internal Revenue Code and amounts included in gross | ||||||
10 | income under Section 78 of the Internal Revenue Code) | ||||||
11 | with respect to the stock of the same person to whom | ||||||
12 | the intangible expenses and costs were directly or | ||||||
13 | indirectly paid, incurred, or accrued. The preceding | ||||||
14 | sentence shall not apply to the extent that the same | ||||||
15 | dividends caused a reduction to the addition | ||||||
16 | modification required under Section 203(c)(2)(G-12) of | ||||||
17 | this Act. As used in this subparagraph, the term | ||||||
18 | "intangible expenses and costs" includes: (1) | ||||||
19 | expenses, losses, and costs for or related to the | ||||||
20 | direct or indirect acquisition, use, maintenance or | ||||||
21 | management, ownership, sale, exchange, or any other | ||||||
22 | disposition of intangible property; (2) losses | ||||||
23 | incurred, directly or indirectly, from factoring | ||||||
24 | transactions or discounting transactions; (3) royalty, | ||||||
25 | patent, technical, and copyright fees; (4) licensing | ||||||
26 | fees; and (5) other similar expenses and costs. For |
| |||||||
| |||||||
1 | purposes of this subparagraph, "intangible property" | ||||||
2 | includes patents, patent applications, trade names, | ||||||
3 | trademarks, service marks, copyrights, mask works, | ||||||
4 | trade secrets, and similar types of intangible assets. | ||||||
5 | This paragraph shall not apply to the following: | ||||||
6 | (i) any item of intangible expenses or costs | ||||||
7 | paid, accrued, or incurred, directly or | ||||||
8 | indirectly, from a transaction with 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 item; or | ||||||
13 | (ii) any item of intangible expense or cost | ||||||
14 | paid, accrued, or incurred, directly or | ||||||
15 | indirectly, if the taxpayer can establish, based | ||||||
16 | on a 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 | intangible expense or cost to a person that is | ||||||
21 | not a related member, and | ||||||
22 | (b) the transaction giving rise to the | ||||||
23 | intangible expense or cost between the | ||||||
24 | taxpayer and the foreign person did not have as | ||||||
25 | a principal purpose the avoidance of Illinois | ||||||
26 | income tax, and is paid pursuant to a contract |
| |||||||
| |||||||
1 | or agreement that reflects arm's-length terms; | ||||||
2 | or | ||||||
3 | (iii) any item of intangible expense or cost | ||||||
4 | paid, accrued, or incurred, directly or | ||||||
5 | indirectly, from a transaction with a foreign | ||||||
6 | person if the taxpayer establishes by clear and | ||||||
7 | convincing evidence, that the adjustments are | ||||||
8 | unreasonable; or if the taxpayer and the Director | ||||||
9 | agree in writing to the application or use of an | ||||||
10 | alternative method of apportionment under Section | ||||||
11 | 304(f);
| ||||||
12 | Nothing in this subsection shall preclude the | ||||||
13 | Director from making any other adjustment | ||||||
14 | otherwise allowed under Section 404 of this Act for | ||||||
15 | any tax year beginning after the effective date of | ||||||
16 | this amendment provided such adjustment is made | ||||||
17 | pursuant to regulation adopted by the Department | ||||||
18 | and such regulations provide methods and standards | ||||||
19 | by which the Department will utilize its authority | ||||||
20 | under Section 404 of this Act;
| ||||||
21 | and by deducting from the total so obtained the sum of the | ||||||
22 | following
amounts:
| ||||||
23 | (H) An amount equal to all amounts included in such | ||||||
24 | total pursuant
to the provisions of Sections 402(a), | ||||||
25 | 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | ||||||
26 | Internal Revenue Code or included in such total as
|
| |||||||
| |||||||
1 | distributions under the provisions of any retirement | ||||||
2 | or disability plan for
employees of any governmental | ||||||
3 | agency or unit, or retirement payments to
retired | ||||||
4 | partners, which payments are excluded in computing net | ||||||
5 | earnings
from self employment by Section 1402 of the | ||||||
6 | Internal Revenue Code and
regulations adopted pursuant | ||||||
7 | thereto;
| ||||||
8 | (I) The valuation limitation amount;
| ||||||
9 | (J) An amount equal to the amount of any tax | ||||||
10 | imposed by this Act
which was refunded to the taxpayer | ||||||
11 | and included in such total for the
taxable year;
| ||||||
12 | (K) An amount equal to all amounts included in | ||||||
13 | taxable income as
modified by subparagraphs (A), (B), | ||||||
14 | (C), (D), (E), (F) and (G) which
are exempt from | ||||||
15 | taxation by this State either by reason of its statutes | ||||||
16 | or
Constitution
or by reason of the Constitution, | ||||||
17 | treaties or statutes of the United States;
provided | ||||||
18 | that, in the case of any statute of this State that | ||||||
19 | exempts income
derived from bonds or other obligations | ||||||
20 | from the tax imposed under this Act,
the amount | ||||||
21 | exempted shall be the interest net of bond premium | ||||||
22 | amortization;
| ||||||
23 | (L) With the exception of any amounts subtracted | ||||||
24 | under subparagraph
(K),
an amount equal to the sum of | ||||||
25 | all amounts disallowed as
deductions by (i) Sections | ||||||
26 | 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, |
| |||||||
| |||||||
1 | as now or hereafter amended, and all amounts of | ||||||
2 | expenses allocable
to interest and disallowed as | ||||||
3 | deductions by Section 265(1) of the Internal
Revenue | ||||||
4 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
5 | taxable years
ending on or after August 13, 1999, | ||||||
6 | Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | ||||||
7 | the Internal Revenue Code; the provisions of this
| ||||||
8 | subparagraph are exempt from the provisions of Section | ||||||
9 | 250;
| ||||||
10 | (M) An amount equal to those dividends included in | ||||||
11 | such total
which were paid by a corporation which | ||||||
12 | conducts business operations in an
Enterprise Zone or | ||||||
13 | zones created under the Illinois Enterprise Zone Act or | ||||||
14 | a River Edge Redevelopment Zone or zones created under | ||||||
15 | the River Edge Redevelopment Zone Act and
conducts | ||||||
16 | substantially all of its operations in an Enterprise | ||||||
17 | Zone or Zones or a River Edge Redevelopment Zone or | ||||||
18 | zones. This subparagraph (M) is exempt from the | ||||||
19 | provisions of Section 250;
| ||||||
20 | (N) An amount equal to any contribution made to a | ||||||
21 | job training
project established pursuant to the Tax | ||||||
22 | Increment Allocation
Redevelopment Act;
| ||||||
23 | (O) An amount equal to those dividends included in | ||||||
24 | such total
that were paid by a corporation that | ||||||
25 | conducts business operations in a
federally designated | ||||||
26 | Foreign Trade Zone or Sub-Zone and that is designated
a |
| |||||||
| |||||||
1 | High Impact Business located in Illinois; provided | ||||||
2 | that dividends eligible
for the deduction provided in | ||||||
3 | subparagraph (M) of paragraph (2) of this
subsection | ||||||
4 | shall not be eligible for the deduction provided under | ||||||
5 | this
subparagraph (O);
| ||||||
6 | (P) An amount equal to the amount of the deduction | ||||||
7 | used to compute the
federal income tax credit for | ||||||
8 | restoration of substantial amounts held under
claim of | ||||||
9 | right for the taxable year pursuant to Section 1341 of | ||||||
10 | the
Internal Revenue Code of 1986;
| ||||||
11 | (Q) For taxable year 1999 and thereafter, an amount | ||||||
12 | equal to the
amount of any
(i) distributions, to the | ||||||
13 | extent includible in gross income for
federal income | ||||||
14 | tax purposes, made to the taxpayer because of
his or | ||||||
15 | her status as a victim of
persecution for racial or | ||||||
16 | religious reasons by Nazi Germany or any other Axis
| ||||||
17 | regime or as an heir of the victim and (ii) items
of | ||||||
18 | income, to the extent
includible in gross income for | ||||||
19 | federal income tax purposes, attributable to,
derived | ||||||
20 | from or in any way related to assets stolen from, | ||||||
21 | hidden from, or
otherwise lost to a victim of
| ||||||
22 | persecution for racial or religious reasons by Nazi
| ||||||
23 | Germany or any other Axis regime
immediately prior to, | ||||||
24 | during, and immediately after World War II, including,
| ||||||
25 | but
not limited to, interest on the proceeds receivable | ||||||
26 | as insurance
under policies issued to a victim of |
| |||||||
| |||||||
1 | persecution for racial or religious
reasons by Nazi | ||||||
2 | Germany or any other Axis regime by European insurance
| ||||||
3 | companies
immediately prior to and during World War II;
| ||||||
4 | provided, however, this subtraction from federal | ||||||
5 | adjusted gross income does not
apply to assets acquired | ||||||
6 | with such assets or with the proceeds from the sale of
| ||||||
7 | such assets; provided, further, this paragraph shall | ||||||
8 | only apply to a taxpayer
who was the first recipient of | ||||||
9 | such assets after their recovery and who is a
victim of
| ||||||
10 | persecution for racial or religious reasons
by Nazi | ||||||
11 | Germany or any other Axis regime or as an heir of the | ||||||
12 | victim. The
amount of and the eligibility for any | ||||||
13 | public assistance, benefit, or
similar entitlement is | ||||||
14 | not affected by the inclusion of items (i) and (ii) of
| ||||||
15 | this paragraph in gross income for federal income tax | ||||||
16 | purposes.
This paragraph is exempt from the provisions | ||||||
17 | of Section 250;
| ||||||
18 | (R) For taxable years 2001 and thereafter, for the | ||||||
19 | taxable year in
which the bonus depreciation deduction
| ||||||
20 | is taken on the taxpayer's federal income tax return | ||||||
21 | under
subsection (k) of Section 168 of the Internal | ||||||
22 | Revenue Code and for each
applicable taxable year | ||||||
23 | thereafter, an amount equal to "x", where:
| ||||||
24 | (1) "y" equals the amount of the depreciation | ||||||
25 | deduction taken for the
taxable year
on the | ||||||
26 | taxpayer's federal income tax return on property |
| |||||||
| |||||||
1 | for which the bonus
depreciation deduction
was | ||||||
2 | taken in any year under subsection (k) of Section | ||||||
3 | 168 of the Internal
Revenue Code, but not including | ||||||
4 | the bonus depreciation deduction;
| ||||||
5 | (2) for taxable years ending on or before | ||||||
6 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
7 | and then divided by 70 (or "y"
multiplied by | ||||||
8 | 0.429); and | ||||||
9 | (3) for taxable years ending after December | ||||||
10 | 31, 2005: | ||||||
11 | (i) for property on which a bonus | ||||||
12 | depreciation deduction of 30% of the adjusted | ||||||
13 | basis was taken, "x" equals "y" multiplied by | ||||||
14 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
15 | 0.429); and | ||||||
16 | (ii) for property on which a bonus | ||||||
17 | depreciation deduction of 50% of the adjusted | ||||||
18 | basis was taken, "x" equals "y" multiplied by | ||||||
19 | 1.0.
| ||||||
20 | The aggregate amount deducted under this | ||||||
21 | subparagraph in all taxable
years for any one piece of | ||||||
22 | property may not exceed the amount of the bonus
| ||||||
23 | depreciation deduction
taken on that property on the | ||||||
24 | taxpayer's federal income tax return under
subsection | ||||||
25 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
26 | subparagraph (R) is exempt from the provisions of |
| |||||||
| |||||||
1 | Section 250;
| ||||||
2 | (S) If the taxpayer sells, transfers, abandons, or | ||||||
3 | otherwise disposes of
property for which the taxpayer | ||||||
4 | was required in any taxable year to make an
addition | ||||||
5 | modification under subparagraph (G-10), then an amount | ||||||
6 | equal to that
addition modification.
| ||||||
7 | If the taxpayer continues to own property through | ||||||
8 | the last day of the last tax year for which the | ||||||
9 | taxpayer may claim a depreciation deduction for | ||||||
10 | federal income tax purposes and 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 | The taxpayer is allowed to take the deduction under | ||||||
15 | this subparagraph
only once with respect to any one | ||||||
16 | piece of property. | ||||||
17 | This subparagraph (S) is exempt from the | ||||||
18 | provisions of Section 250;
| ||||||
19 | (T) The amount of (i) any interest income (net of | ||||||
20 | the deductions allocable thereto) taken into account | ||||||
21 | for the taxable year with respect to a transaction with | ||||||
22 | a taxpayer that is required to make an addition | ||||||
23 | modification with respect to such transaction under | ||||||
24 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
25 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
26 | the amount of such addition modification and
(ii) any |
| |||||||
| |||||||
1 | income from intangible property (net of the deductions | ||||||
2 | allocable thereto) taken into account for the taxable | ||||||
3 | year with respect to a transaction with a taxpayer that | ||||||
4 | is required to make an addition modification with | ||||||
5 | respect to such transaction under Section | ||||||
6 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
7 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
8 | addition modification;
| ||||||
9 | (U) An amount equal to the interest income taken | ||||||
10 | into account for the taxable year (net of the | ||||||
11 | deductions allocable thereto) with respect to | ||||||
12 | transactions with a foreign person who would be a | ||||||
13 | member of the taxpayer's unitary business group but for | ||||||
14 | the fact the foreign person's business activity | ||||||
15 | outside the United States is 80% or more of that | ||||||
16 | person's total business activity, but not to exceed the | ||||||
17 | addition modification required to be made for the same | ||||||
18 | taxable year under Section 203(c)(2)(G-12) for | ||||||
19 | interest paid, accrued, or incurred, directly or | ||||||
20 | indirectly, to the same foreign person; and
| ||||||
21 | (V) An amount equal to the income from intangible | ||||||
22 | property taken into account for the taxable year (net | ||||||
23 | of the deductions allocable thereto) with respect to | ||||||
24 | transactions with a foreign person who would be a | ||||||
25 | member of the taxpayer's unitary business group but for | ||||||
26 | the fact that the foreign person's business activity |
| |||||||
| |||||||
1 | outside the United States is 80% or more of that | ||||||
2 | person's total business activity, but not to exceed the | ||||||
3 | addition modification required to be made for the same | ||||||
4 | taxable year under Section 203(c)(2)(G-13) for | ||||||
5 | intangible expenses and costs paid, accrued, or | ||||||
6 | incurred, directly or indirectly, to the same foreign | ||||||
7 | person.
| ||||||
8 | (3) Limitation. The amount of any modification | ||||||
9 | otherwise required
under this subsection shall, under | ||||||
10 | regulations prescribed by the
Department, be adjusted by | ||||||
11 | any amounts included therein which were
properly paid, | ||||||
12 | credited, or required to be distributed, or permanently set
| ||||||
13 | aside for charitable purposes pursuant to Internal Revenue | ||||||
14 | Code Section
642(c) during the taxable year.
| ||||||
15 | (d) Partnerships.
| ||||||
16 | (1) In general. In the case of a partnership, base | ||||||
17 | income means an
amount equal to the taxpayer's taxable | ||||||
18 | income for the taxable year as
modified by paragraph (2).
| ||||||
19 | (2) Modifications. The taxable income referred to in | ||||||
20 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
21 | of the following amounts:
| ||||||
22 | (A) An amount equal to all amounts paid or accrued | ||||||
23 | to the taxpayer as
interest or dividends during the | ||||||
24 | taxable year to the extent excluded from
gross income | ||||||
25 | in the computation of taxable income;
|
| |||||||
| |||||||
1 | (B) An amount equal to the amount of tax imposed by | ||||||
2 | this Act to the
extent deducted from gross income for | ||||||
3 | the taxable year;
| ||||||
4 | (C) The amount of deductions allowed to the | ||||||
5 | partnership pursuant to
Section 707 (c) of the Internal | ||||||
6 | Revenue Code in calculating its taxable income;
| ||||||
7 | (D) 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 | (D-5) For taxable years 2001 and thereafter, an | ||||||
12 | amount equal to the
bonus depreciation deduction taken | ||||||
13 | on the taxpayer's federal income tax return for the | ||||||
14 | taxable
year under subsection (k) of Section 168 of the | ||||||
15 | Internal Revenue Code;
| ||||||
16 | (D-6) If the taxpayer sells, transfers, abandons, | ||||||
17 | or otherwise disposes of
property for which the | ||||||
18 | taxpayer was required in any taxable year to make an
| ||||||
19 | addition modification under subparagraph (D-5), then | ||||||
20 | an amount equal to the
aggregate amount of the | ||||||
21 | deductions taken in all taxable years
under | ||||||
22 | subparagraph (O) with respect to that property.
| ||||||
23 | If the taxpayer continues to own property through | ||||||
24 | the last day of the last tax year for which the | ||||||
25 | taxpayer may claim a depreciation deduction for | ||||||
26 | federal income tax purposes and for which the taxpayer |
| |||||||
| |||||||
1 | was allowed in any taxable year to make a subtraction | ||||||
2 | modification under subparagraph (O), then an amount | ||||||
3 | equal to that subtraction modification.
| ||||||
4 | The taxpayer is required to make the addition | ||||||
5 | modification under this
subparagraph
only once with | ||||||
6 | respect to any one piece of property;
| ||||||
7 | (D-7) For taxable years ending on or after December | ||||||
8 | 31, 2004, an amount equal to the amount otherwise | ||||||
9 | allowed as a deduction in computing base income for | ||||||
10 | interest paid, accrued, or incurred, directly or | ||||||
11 | indirectly, to a foreign person who would be a member | ||||||
12 | of the same unitary business group but for the fact the | ||||||
13 | foreign person's business activity outside the United | ||||||
14 | States is 80% or more of the foreign person's total | ||||||
15 | business activity. The addition modification required | ||||||
16 | by this subparagraph shall be reduced to the extent | ||||||
17 | that dividends were included in base income of the | ||||||
18 | unitary group for the same taxable year and received by | ||||||
19 | the taxpayer or by a member of the taxpayer's unitary | ||||||
20 | business group (including amounts included in gross | ||||||
21 | income pursuant to Sections 951 through 964 of the | ||||||
22 | Internal Revenue Code and amounts included in gross | ||||||
23 | income under Section 78 of the Internal Revenue Code) | ||||||
24 | with respect to the stock of the same person to whom | ||||||
25 | the interest was paid, accrued, or incurred.
| ||||||
26 | This paragraph shall not apply to the following:
|
| |||||||
| |||||||
1 | (i) an item of interest paid, accrued, or | ||||||
2 | incurred, directly or indirectly, to a foreign | ||||||
3 | person who is subject in a foreign country or | ||||||
4 | state, other than a state which requires mandatory | ||||||
5 | unitary reporting, to a tax on or measured by net | ||||||
6 | income with respect to such interest; or | ||||||
7 | (ii) an item of interest paid, accrued, or | ||||||
8 | incurred, directly or indirectly, to a foreign | ||||||
9 | person if the taxpayer can establish, based on a | ||||||
10 | preponderance of the evidence, both of the | ||||||
11 | following: | ||||||
12 | (a) the foreign person, during the same | ||||||
13 | taxable year, paid, accrued, or incurred, the | ||||||
14 | interest to a person that is not a related | ||||||
15 | member, and | ||||||
16 | (b) the transaction giving rise to the | ||||||
17 | interest expense between the taxpayer and the | ||||||
18 | foreign person did not have as a principal | ||||||
19 | purpose the avoidance of Illinois income tax, | ||||||
20 | and is paid pursuant to a contract or agreement | ||||||
21 | that reflects an arm's-length interest rate | ||||||
22 | and terms; or
| ||||||
23 | (iii) the taxpayer can establish, based on | ||||||
24 | clear and convincing evidence, that the interest | ||||||
25 | paid, accrued, or incurred relates to a contract or | ||||||
26 | agreement entered into at arm's-length rates and |
| |||||||
| |||||||
1 | terms and the principal purpose for the payment is | ||||||
2 | not federal or Illinois tax avoidance; or
| ||||||
3 | (iv) an item of interest paid, accrued, or | ||||||
4 | incurred, directly or indirectly, to a foreign | ||||||
5 | person if the taxpayer establishes by clear and | ||||||
6 | convincing evidence that the adjustments are | ||||||
7 | unreasonable; or if the taxpayer and the Director | ||||||
8 | agree in writing to the application or use of an | ||||||
9 | alternative method of apportionment under Section | ||||||
10 | 304(f).
| ||||||
11 | Nothing in this subsection shall preclude the | ||||||
12 | Director from making any other adjustment | ||||||
13 | otherwise allowed under Section 404 of this Act for | ||||||
14 | any tax year beginning after the effective date of | ||||||
15 | this amendment provided such adjustment is made | ||||||
16 | pursuant to regulation adopted by the Department | ||||||
17 | and such regulations provide methods and standards | ||||||
18 | by which the Department will utilize its authority | ||||||
19 | under Section 404 of this Act; and
| ||||||
20 | (D-8) For taxable years ending on or after December | ||||||
21 | 31, 2004, an amount equal to the amount of intangible | ||||||
22 | expenses and costs otherwise allowed as a deduction in | ||||||
23 | computing base income, and that were paid, accrued, or | ||||||
24 | incurred, directly or indirectly, to a foreign person | ||||||
25 | who would be a member of the same unitary business | ||||||
26 | group but for the fact that the foreign person's |
| |||||||
| |||||||
1 | business activity outside the United States is 80% or | ||||||
2 | more of that person's total business activity. The | ||||||
3 | addition modification required by this subparagraph | ||||||
4 | shall be reduced to the extent that dividends were | ||||||
5 | included in base income of the unitary group for the | ||||||
6 | same taxable year and received by the taxpayer or by a | ||||||
7 | member of the taxpayer's unitary business group | ||||||
8 | (including amounts included in gross income pursuant | ||||||
9 | to Sections 951 through 964 of the Internal Revenue | ||||||
10 | Code and amounts included in gross income under Section | ||||||
11 | 78 of the Internal Revenue Code) with respect to the | ||||||
12 | stock of the same person to whom the intangible | ||||||
13 | expenses and costs were directly or indirectly paid, | ||||||
14 | incurred or accrued. The preceding sentence shall not | ||||||
15 | apply to the extent that the same dividends caused a | ||||||
16 | reduction to the addition modification required under | ||||||
17 | Section 203(d)(2)(D-7) of this Act. As used in this | ||||||
18 | subparagraph, the term "intangible expenses and costs" | ||||||
19 | includes (1) expenses, losses, and costs for, or | ||||||
20 | related to, the direct or indirect acquisition, use, | ||||||
21 | maintenance or management, ownership, sale, exchange, | ||||||
22 | or any other disposition of intangible property; (2) | ||||||
23 | losses incurred, directly or indirectly, from | ||||||
24 | factoring transactions or discounting transactions; | ||||||
25 | (3) royalty, patent, technical, and copyright fees; | ||||||
26 | (4) licensing fees; and (5) other similar expenses and |
| |||||||
| |||||||
1 | costs. For purposes of this subparagraph, "intangible | ||||||
2 | property" includes patents, patent applications, trade | ||||||
3 | names, trademarks, service marks, copyrights, mask | ||||||
4 | works, trade secrets, and similar types of intangible | ||||||
5 | assets; | ||||||
6 | This paragraph shall not apply to the following: | ||||||
7 | (i) any item of intangible expenses or costs | ||||||
8 | paid, accrued, or incurred, directly or | ||||||
9 | indirectly, from a transaction with 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 item; or | ||||||
14 | (ii) any item of intangible expense or cost | ||||||
15 | paid, accrued, or incurred, directly or | ||||||
16 | indirectly, if the taxpayer can establish, based | ||||||
17 | on a 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 | intangible expense or cost to a person that is | ||||||
22 | not a related member, and | ||||||
23 | (b) the transaction giving rise to the | ||||||
24 | intangible expense or cost between the | ||||||
25 | taxpayer and the foreign person did not have as | ||||||
26 | a principal purpose the avoidance of Illinois |
| |||||||
| |||||||
1 | income tax, and is paid pursuant to a contract | ||||||
2 | or agreement that reflects arm's-length terms; | ||||||
3 | or | ||||||
4 | (iii) any item of intangible expense or cost | ||||||
5 | paid, accrued, or incurred, directly or | ||||||
6 | indirectly, from a transaction with a foreign | ||||||
7 | person if the taxpayer establishes by clear and | ||||||
8 | convincing evidence, that the adjustments are | ||||||
9 | unreasonable; or if the taxpayer and the Director | ||||||
10 | agree in writing to the application or use of an | ||||||
11 | alternative method of apportionment under Section | ||||||
12 | 304(f);
| ||||||
13 | Nothing in this subsection shall preclude the | ||||||
14 | Director from making any other adjustment | ||||||
15 | otherwise allowed under Section 404 of this Act for | ||||||
16 | any tax year beginning after the effective date of | ||||||
17 | this amendment provided such adjustment is made | ||||||
18 | pursuant to regulation adopted by the Department | ||||||
19 | and such regulations provide methods and standards | ||||||
20 | by which the Department will utilize its authority | ||||||
21 | under Section 404 of this Act;
| ||||||
22 | and by deducting from the total so obtained the following | ||||||
23 | amounts:
| ||||||
24 | (E) The valuation limitation amount;
| ||||||
25 | (F) An amount equal to the amount of any tax | ||||||
26 | imposed by this Act which
was refunded to the taxpayer |
| |||||||
| |||||||
1 | and included in such total for the taxable year;
| ||||||
2 | (G) An amount equal to all amounts included in | ||||||
3 | taxable income as
modified by subparagraphs (A), (B), | ||||||
4 | (C) and (D) which are exempt from
taxation by this | ||||||
5 | State either by reason of its statutes or Constitution | ||||||
6 | or
by reason of
the Constitution, treaties or statutes | ||||||
7 | of the United States;
provided that, in the case of any | ||||||
8 | statute of this State that exempts income
derived from | ||||||
9 | bonds or other obligations from the tax imposed under | ||||||
10 | this Act,
the amount exempted shall be the interest net | ||||||
11 | of bond premium amortization;
| ||||||
12 | (H) Any income of the partnership which | ||||||
13 | constitutes personal service
income as defined in | ||||||
14 | Section 1348 (b) (1) of the Internal Revenue Code (as
| ||||||
15 | in effect December 31, 1981) or a reasonable allowance | ||||||
16 | for compensation
paid or accrued for services rendered | ||||||
17 | by partners to the partnership,
whichever is greater;
| ||||||
18 | (I) An amount equal to all amounts of income | ||||||
19 | distributable to an entity
subject to the Personal | ||||||
20 | Property Tax Replacement Income Tax imposed by
| ||||||
21 | subsections (c) and (d) of Section 201 of this Act | ||||||
22 | including amounts
distributable to organizations | ||||||
23 | exempt from federal income tax by reason of
Section | ||||||
24 | 501(a) of the Internal Revenue Code;
| ||||||
25 | (J) With the exception of any amounts subtracted | ||||||
26 | under subparagraph
(G),
an amount equal to the sum of |
| |||||||
| |||||||
1 | all amounts disallowed as deductions
by (i) Sections | ||||||
2 | 171(a) (2), and 265(2) of the Internal Revenue Code of | ||||||
3 | 1954,
as now or hereafter amended, and all amounts of | ||||||
4 | expenses allocable to
interest and disallowed as | ||||||
5 | deductions by Section 265(1) of the Internal
Revenue | ||||||
6 | Code, as now or hereafter amended;
and (ii) for taxable | ||||||
7 | years
ending on or after August 13, 1999, Sections
| ||||||
8 | 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | ||||||
9 | Internal Revenue Code; the provisions of this
| ||||||
10 | subparagraph are exempt from the provisions of Section | ||||||
11 | 250;
| ||||||
12 | (K) An amount equal to those dividends included in | ||||||
13 | such total which were
paid by a corporation which | ||||||
14 | conducts business operations in an Enterprise
Zone or | ||||||
15 | zones created under the Illinois Enterprise Zone Act, | ||||||
16 | enacted by
the 82nd General Assembly, or a River Edge | ||||||
17 | Redevelopment Zone or zones created under the River | ||||||
18 | Edge Redevelopment Zone Act and
conducts substantially | ||||||
19 | all of its operations
in an Enterprise Zone or Zones or | ||||||
20 | from a River Edge Redevelopment Zone or zones. This | ||||||
21 | subparagraph (K) is exempt from the provisions of | ||||||
22 | Section 250;
| ||||||
23 | (L) An amount equal to any contribution made to a | ||||||
24 | job training project
established pursuant to the Real | ||||||
25 | Property Tax Increment Allocation
Redevelopment Act;
| ||||||
26 | (M) An amount equal to those dividends included in |
| |||||||
| |||||||
1 | such total
that were paid by a corporation that | ||||||
2 | conducts business operations in a
federally designated | ||||||
3 | Foreign Trade Zone or Sub-Zone and that is designated a
| ||||||
4 | High Impact Business located in Illinois; provided | ||||||
5 | that dividends eligible
for the deduction provided in | ||||||
6 | subparagraph (K) of paragraph (2) of this
subsection | ||||||
7 | shall not be eligible for the deduction provided under | ||||||
8 | this
subparagraph (M);
| ||||||
9 | (N) An amount equal to the amount of the deduction | ||||||
10 | used to compute the
federal income tax credit for | ||||||
11 | restoration of substantial amounts held under
claim of | ||||||
12 | right for the taxable year pursuant to Section 1341 of | ||||||
13 | the
Internal Revenue Code of 1986;
| ||||||
14 | (O) For taxable years 2001 and thereafter, for the | ||||||
15 | taxable year in
which the bonus depreciation deduction
| ||||||
16 | is taken on the taxpayer's federal income tax return | ||||||
17 | under
subsection (k) of Section 168 of the Internal | ||||||
18 | Revenue Code and for each
applicable taxable year | ||||||
19 | thereafter, an amount equal to "x", where:
| ||||||
20 | (1) "y" equals the amount of the depreciation | ||||||
21 | deduction taken for the
taxable year
on the | ||||||
22 | taxpayer's federal income tax return on property | ||||||
23 | for which the bonus
depreciation deduction
was | ||||||
24 | taken in any year under subsection (k) of Section | ||||||
25 | 168 of the Internal
Revenue Code, but not including | ||||||
26 | the bonus depreciation deduction;
|
| |||||||
| |||||||
1 | (2) for taxable years ending on or before | ||||||
2 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
3 | and then divided by 70 (or "y"
multiplied by | ||||||
4 | 0.429); and | ||||||
5 | (3) for taxable years ending after December | ||||||
6 | 31, 2005: | ||||||
7 | (i) for property on which a bonus | ||||||
8 | depreciation deduction of 30% of the adjusted | ||||||
9 | basis was taken, "x" equals "y" multiplied by | ||||||
10 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
11 | 0.429); and | ||||||
12 | (ii) for property on which a bonus | ||||||
13 | depreciation deduction of 50% of the adjusted | ||||||
14 | basis was taken, "x" equals "y" multiplied by | ||||||
15 | 1.0.
| ||||||
16 | The aggregate amount deducted under this | ||||||
17 | subparagraph in all taxable
years for any one piece of | ||||||
18 | property may not exceed the amount of the bonus
| ||||||
19 | depreciation deduction
taken on that property on the | ||||||
20 | taxpayer's federal income tax return under
subsection | ||||||
21 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
22 | subparagraph (O) is exempt from the provisions of | ||||||
23 | Section 250;
| ||||||
24 | (P) If the taxpayer sells, transfers, abandons, or | ||||||
25 | otherwise disposes of
property for which the taxpayer | ||||||
26 | was required in any taxable year to make an
addition |
| |||||||
| |||||||
1 | modification under subparagraph (D-5), then an amount | ||||||
2 | equal to that
addition modification.
| ||||||
3 | If the taxpayer continues to own property through | ||||||
4 | the last day of the last tax year for which the | ||||||
5 | taxpayer may claim a depreciation deduction for | ||||||
6 | federal income tax purposes and for which the taxpayer | ||||||
7 | was 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 | The taxpayer is allowed to take the deduction under | ||||||
11 | this subparagraph
only once with respect to any one | ||||||
12 | piece of property. | ||||||
13 | This subparagraph (P) is exempt from the | ||||||
14 | provisions of Section 250;
| ||||||
15 | (Q) The amount of (i) any interest income (net of | ||||||
16 | the deductions allocable thereto) taken into account | ||||||
17 | for the taxable year with respect to a transaction with | ||||||
18 | a taxpayer that is required to make an addition | ||||||
19 | modification with respect to such transaction under | ||||||
20 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
21 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
22 | the amount of such addition modification and
(ii) any | ||||||
23 | income from intangible property (net of the deductions | ||||||
24 | allocable thereto) taken into account for the taxable | ||||||
25 | year with respect to a transaction with a taxpayer that | ||||||
26 | is required to make an addition modification with |
| |||||||
| |||||||
1 | respect to such transaction under Section | ||||||
2 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
3 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
4 | addition modification;
| ||||||
5 | (R) An amount equal to the interest income taken | ||||||
6 | into account for the taxable year (net of the | ||||||
7 | deductions allocable thereto) with respect to | ||||||
8 | transactions with a foreign person who would be a | ||||||
9 | member of the taxpayer's unitary business group but for | ||||||
10 | the fact that the foreign person's business activity | ||||||
11 | outside the United States is 80% or more of that | ||||||
12 | person's total business activity, but not to exceed the | ||||||
13 | addition modification required to be made for the same | ||||||
14 | taxable year under Section 203(d)(2)(D-7) for interest | ||||||
15 | paid, accrued, or incurred, directly or indirectly, to | ||||||
16 | the same foreign person; and
| ||||||
17 | (S) An amount equal to the income from intangible | ||||||
18 | property taken into account for the taxable year (net | ||||||
19 | of the deductions allocable thereto) with respect to | ||||||
20 | transactions with a foreign person who would be a | ||||||
21 | member of the taxpayer's unitary business group but for | ||||||
22 | the fact that the foreign person's business activity | ||||||
23 | outside the United States is 80% or more of that | ||||||
24 | person's total business activity, but not to exceed the | ||||||
25 | addition modification required to be made for the same | ||||||
26 | taxable year under Section 203(d)(2)(D-8) for |
| |||||||
| |||||||
1 | intangible expenses and costs paid, accrued, or | ||||||
2 | incurred, directly or indirectly, to the same foreign | ||||||
3 | person.
| ||||||
4 | (e) Gross income; adjusted gross income; taxable income.
| ||||||
5 | (1) In general. Subject to the provisions of paragraph | ||||||
6 | (2) and
subsection (b) (3), for purposes of this Section | ||||||
7 | and Section 803(e), a
taxpayer's gross income, adjusted | ||||||
8 | gross income, or taxable income for
the taxable year shall | ||||||
9 | mean the amount of gross income, adjusted gross
income or | ||||||
10 | taxable income properly reportable for federal income tax
| ||||||
11 | purposes for the taxable year under the provisions of the | ||||||
12 | Internal
Revenue Code. Taxable income may be less than | ||||||
13 | zero. However, for taxable
years ending on or after | ||||||
14 | December 31, 1986, net operating loss
carryforwards from | ||||||
15 | taxable years ending prior to December 31, 1986, may not
| ||||||
16 | exceed the sum of federal taxable income for the taxable | ||||||
17 | year before net
operating loss deduction, plus the excess | ||||||
18 | of addition modifications over
subtraction modifications | ||||||
19 | for the taxable year. For taxable years ending
prior to | ||||||
20 | December 31, 1986, taxable income may never be an amount in | ||||||
21 | excess
of the net operating loss for the taxable year as | ||||||
22 | defined in subsections
(c) and (d) of Section 172 of the | ||||||
23 | Internal Revenue Code, provided that when
taxable income of | ||||||
24 | a corporation (other than a Subchapter S corporation),
| ||||||
25 | trust, or estate is less than zero and addition |
| |||||||
| |||||||
1 | modifications, other than
those provided by subparagraph | ||||||
2 | (E) of paragraph (2) of subsection (b) for
corporations or | ||||||
3 | subparagraph (E) of paragraph (2) of subsection (c) for
| ||||||
4 | trusts and estates, exceed subtraction modifications, an | ||||||
5 | addition
modification must be made under those | ||||||
6 | subparagraphs for any other taxable
year to which the | ||||||
7 | taxable income less than zero (net operating loss) is
| ||||||
8 | applied under Section 172 of the Internal Revenue Code or | ||||||
9 | under
subparagraph (E) of paragraph (2) of this subsection | ||||||
10 | (e) applied in
conjunction with Section 172 of the Internal | ||||||
11 | Revenue Code.
| ||||||
12 | (2) Special rule. For purposes of paragraph (1) of this | ||||||
13 | subsection,
the taxable income properly reportable for | ||||||
14 | federal income tax purposes
shall mean:
| ||||||
15 | (A) Certain life insurance companies. In the case | ||||||
16 | of a life
insurance company subject to the tax imposed | ||||||
17 | by Section 801 of the
Internal Revenue Code, life | ||||||
18 | insurance company taxable income, plus the
amount of | ||||||
19 | distribution from pre-1984 policyholder surplus | ||||||
20 | accounts as
calculated under Section 815a of the | ||||||
21 | Internal Revenue Code;
| ||||||
22 | (B) Certain other insurance companies. In the case | ||||||
23 | of mutual
insurance companies subject to the tax | ||||||
24 | imposed by Section 831 of the
Internal Revenue Code, | ||||||
25 | insurance company taxable income;
| ||||||
26 | (C) Regulated investment companies. In the case of |
| |||||||
| |||||||
1 | a regulated
investment company subject to the tax | ||||||
2 | imposed by Section 852 of the
Internal Revenue Code, | ||||||
3 | investment company taxable income;
| ||||||
4 | (D) Real estate investment trusts. In the case of a | ||||||
5 | real estate
investment trust subject to the tax imposed | ||||||
6 | by Section 857 of the
Internal Revenue Code, real | ||||||
7 | estate investment trust taxable income;
| ||||||
8 | (E) Consolidated corporations. In the case of a | ||||||
9 | corporation which
is a member of an affiliated group of | ||||||
10 | corporations filing a consolidated
income tax return | ||||||
11 | for the taxable year for federal income tax purposes,
| ||||||
12 | taxable income determined as if such corporation had | ||||||
13 | filed a separate
return for federal income tax purposes | ||||||
14 | for the taxable year and each
preceding taxable year | ||||||
15 | for which it was a member of an affiliated group.
For | ||||||
16 | purposes of this subparagraph, the taxpayer's separate | ||||||
17 | taxable
income shall be determined as if the election | ||||||
18 | provided by Section
243(b) (2) of the Internal Revenue | ||||||
19 | Code had been in effect for all such years;
| ||||||
20 | (F) Cooperatives. In the case of a cooperative | ||||||
21 | corporation or
association, the taxable income of such | ||||||
22 | organization determined in
accordance with the | ||||||
23 | provisions of Section 1381 through 1388 of the
Internal | ||||||
24 | Revenue Code;
| ||||||
25 | (G) Subchapter S corporations. In the case of: (i) | ||||||
26 | a Subchapter S
corporation for which there is in effect |
| |||||||
| |||||||
1 | an election for the taxable year
under Section 1362 of | ||||||
2 | the Internal Revenue Code, the taxable income of such
| ||||||
3 | corporation determined in accordance with Section | ||||||
4 | 1363(b) of the Internal
Revenue Code, except that | ||||||
5 | taxable income shall take into
account those items | ||||||
6 | which are required by Section 1363(b)(1) of the
| ||||||
7 | Internal Revenue Code to be separately stated; and (ii) | ||||||
8 | a Subchapter
S corporation for which there is in effect | ||||||
9 | a federal election to opt out of
the provisions of the | ||||||
10 | Subchapter S Revision Act of 1982 and have applied
| ||||||
11 | instead the prior federal Subchapter S rules as in | ||||||
12 | effect on July 1, 1982,
the taxable income of such | ||||||
13 | corporation determined in accordance with the
federal | ||||||
14 | Subchapter S rules as in effect on July 1, 1982; and
| ||||||
15 | (H) Partnerships. In the case of a partnership, | ||||||
16 | taxable income
determined in accordance with Section | ||||||
17 | 703 of the Internal Revenue Code,
except that taxable | ||||||
18 | income shall take into account those items which are
| ||||||
19 | required by Section 703(a)(1) to be separately stated | ||||||
20 | but which would be
taken into account by an individual | ||||||
21 | in calculating his taxable income.
| ||||||
22 | (3) Recapture of business expenses on disposition of | ||||||
23 | asset or business. Notwithstanding any other law to the | ||||||
24 | contrary, if in prior years income from an asset or | ||||||
25 | business has been classified as business income and in a | ||||||
26 | later year is demonstrated to be non-business income, then |
| |||||||
| |||||||
1 | all expenses, without limitation, deducted in such later | ||||||
2 | year and in the 2 immediately preceding taxable years | ||||||
3 | related to that asset or business that generated the | ||||||
4 | non-business income shall be added back and recaptured as | ||||||
5 | business income in the year of the disposition of the asset | ||||||
6 | or business. Such amount shall be apportioned to Illinois | ||||||
7 | using the greater of the apportionment fraction computed | ||||||
8 | for the business under Section 304 of this Act for the | ||||||
9 | taxable year or the average of the apportionment fractions | ||||||
10 | computed for the business under Section 304 of this Act for | ||||||
11 | the taxable year and for the 2 immediately preceding | ||||||
12 | taxable years.
| ||||||
13 | (f) Valuation limitation amount.
| ||||||
14 | (1) In general. The valuation limitation amount | ||||||
15 | referred to in
subsections (a) (2) (G), (c) (2) (I) and | ||||||
16 | (d)(2) (E) is an amount equal to:
| ||||||
17 | (A) The sum of the pre-August 1, 1969 appreciation | ||||||
18 | amounts (to the
extent consisting of gain reportable | ||||||
19 | under the provisions of Section
1245 or 1250 of the | ||||||
20 | Internal Revenue Code) for all property in respect
of | ||||||
21 | which such gain was reported for the taxable year; plus
| ||||||
22 | (B) The lesser of (i) the sum of the pre-August 1, | ||||||
23 | 1969 appreciation
amounts (to the extent consisting of | ||||||
24 | capital gain) for all property in
respect of which such | ||||||
25 | gain was reported for federal income tax purposes
for | ||||||
26 | the taxable year, or (ii) the net capital gain for the |
| |||||||
| |||||||
1 | taxable year,
reduced in either case by any amount of | ||||||
2 | such gain included in the amount
determined under | ||||||
3 | subsection (a) (2) (F) or (c) (2) (H).
| ||||||
4 | (2) Pre-August 1, 1969 appreciation amount.
| ||||||
5 | (A) If the fair market value of property referred | ||||||
6 | to in paragraph
(1) was readily ascertainable on August | ||||||
7 | 1, 1969, the pre-August 1, 1969
appreciation amount for | ||||||
8 | such property is the lesser of (i) the excess of
such | ||||||
9 | fair market value over the taxpayer's basis (for | ||||||
10 | determining gain)
for such property on that date | ||||||
11 | (determined under the Internal Revenue
Code as in | ||||||
12 | effect on that date), or (ii) the total gain realized | ||||||
13 | and
reportable for federal income tax purposes in | ||||||
14 | respect of the sale,
exchange or other disposition of | ||||||
15 | such property.
| ||||||
16 | (B) If the fair market value of property referred | ||||||
17 | to in paragraph
(1) was not readily ascertainable on | ||||||
18 | August 1, 1969, the pre-August 1,
1969 appreciation | ||||||
19 | amount for such property is that amount which bears
the | ||||||
20 | same ratio to the total gain reported in respect of the | ||||||
21 | property for
federal income tax purposes for the | ||||||
22 | taxable year, as the number of full
calendar months in | ||||||
23 | that part of the taxpayer's holding period for the
| ||||||
24 | property ending July 31, 1969 bears to the number of | ||||||
25 | full calendar
months in the taxpayer's entire holding | ||||||
26 | period for the
property.
|
| |||||||
| |||||||
1 | (C) The Department shall prescribe such | ||||||
2 | regulations as may be
necessary to carry out the | ||||||
3 | purposes of this paragraph.
| ||||||
4 | (g) Double deductions. Unless specifically provided | ||||||
5 | otherwise, nothing
in this Section shall permit the same item | ||||||
6 | to be deducted more than once.
| ||||||
7 | (h) Legislative intention. Except as expressly provided by | ||||||
8 | this
Section there shall be no modifications or limitations on | ||||||
9 | the amounts
of income, gain, loss or deduction taken into | ||||||
10 | account in determining
gross income, adjusted gross income or | ||||||
11 | taxable income for federal income
tax purposes for the taxable | ||||||
12 | year, or in the amount of such items
entering into the | ||||||
13 | computation of base income and net income under this
Act for | ||||||
14 | such taxable year, whether in respect of property values as of
| ||||||
15 | August 1, 1969 or otherwise.
| ||||||
16 | (Source: P.A. 93-812, eff. 7-26-04; 93-840, eff. 7-30-04; | ||||||
17 | 94-776, eff. 5-19-06; 94-789, eff. 5-19-06; 94-1021, eff. | ||||||
18 | 7-12-06; 94-1074, eff. 12-26-06; revised 1-2-07.)
| ||||||
19 | Section 99. Effective date. This Act takes effect July 1, | ||||||
20 | 2007.
|