102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2531

 

Introduced 2/26/2021, by Sen. Win Stoller

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 5/601  from Ch. 120, par. 6-601
35 ILCS 5/709.5
35 ILCS 5/1501  from Ch. 120, par. 15-1501

    Amends the Illinois Income Tax Act. Provides that a partnership or Subchapter S corporation may elect to pay a tax computed by multiplying the share of business income apportionable to Illinois and nonbusiness income allocated to Illinois that is distributable to each partner or shareholder and multiplied by the applicable rates of tax for that partner or shareholder. Creates a deduction in an amount equal to those amounts. Effective immediately.


LRB102 15312 HLH 20668 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2531LRB102 15312 HLH 20668 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Sections 201, 203, 601, 709.5, and 1501 as follows:
 
6    (35 ILCS 5/201)
7    (Text of Section without the changes made by P.A. 101-8,
8which did not take effect (see Section 99 of P.A. 101-8))
9    Sec. 201. Tax imposed.
10    (a) In general. A tax measured by net income is hereby
11imposed on every individual, corporation, trust and estate for
12each taxable year ending after July 31, 1969 on the privilege
13of earning or receiving income in or as a resident of this
14State. Such tax shall be in addition to all other occupation or
15privilege taxes imposed by this State or by any municipal
16corporation or political subdivision thereof.
17    (b) Rates. The tax imposed by subsection (a) of this
18Section shall be determined as follows, except as adjusted by
19subsection (d-1):
20        (1) In the case of an individual, trust or estate, for
21    taxable years ending prior to July 1, 1989, an amount
22    equal to 2 1/2% of the taxpayer's net income for the
23    taxable year.

 

 

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1        (2) In the case of an individual, trust or estate, for
2    taxable years beginning prior to July 1, 1989 and ending
3    after June 30, 1989, an amount equal to the sum of (i) 2
4    1/2% of the taxpayer's net income for the period prior to
5    July 1, 1989, as calculated under Section 202.3, and (ii)
6    3% of the taxpayer's net income for the period after June
7    30, 1989, as calculated under Section 202.3.
8        (3) In the case of an individual, trust or estate, for
9    taxable years beginning after June 30, 1989, and ending
10    prior to January 1, 2011, an amount equal to 3% of the
11    taxpayer's net income for the taxable year.
12        (4) In the case of an individual, trust, or estate,
13    for taxable years beginning prior to January 1, 2011, and
14    ending after December 31, 2010, an amount equal to the sum
15    of (i) 3% of the taxpayer's net income for the period prior
16    to January 1, 2011, as calculated under Section 202.5, and
17    (ii) 5% of the taxpayer's net income for the period after
18    December 31, 2010, as calculated under Section 202.5.
19        (5) In the case of an individual, trust, or estate,
20    for taxable years beginning on or after January 1, 2011,
21    and ending prior to January 1, 2015, an amount equal to 5%
22    of the taxpayer's net income for the taxable year.
23        (5.1) In the case of an individual, trust, or estate,
24    for taxable years beginning prior to January 1, 2015, and
25    ending after December 31, 2014, an amount equal to the sum
26    of (i) 5% of the taxpayer's net income for the period prior

 

 

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1    to January 1, 2015, as calculated under Section 202.5, and
2    (ii) 3.75% of the taxpayer's net income for the period
3    after December 31, 2014, as calculated under Section
4    202.5.
5        (5.2) In the case of an individual, trust, or estate,
6    for taxable years beginning on or after January 1, 2015,
7    and ending prior to July 1, 2017, an amount equal to 3.75%
8    of the taxpayer's net income for the taxable year.
9        (5.3) In the case of an individual, trust, or estate,
10    for taxable years beginning prior to July 1, 2017, and
11    ending after June 30, 2017, an amount equal to the sum of
12    (i) 3.75% of the taxpayer's net income for the period
13    prior to July 1, 2017, as calculated under Section 202.5,
14    and (ii) 4.95% of the taxpayer's net income for the period
15    after June 30, 2017, as calculated under Section 202.5.
16        (5.4) In the case of an individual, trust, or estate,
17    for taxable years beginning on or after July 1, 2017, an
18    amount equal to 4.95% of the taxpayer's net income for the
19    taxable year.
20        (6) In the case of a corporation, for taxable years
21    ending prior to July 1, 1989, an amount equal to 4% of the
22    taxpayer's net income for the taxable year.
23        (7) In the case of a corporation, for taxable years
24    beginning prior to July 1, 1989 and ending after June 30,
25    1989, an amount equal to the sum of (i) 4% of the
26    taxpayer's net income for the period prior to July 1,

 

 

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1    1989, as calculated under Section 202.3, and (ii) 4.8% of
2    the taxpayer's net income for the period after June 30,
3    1989, as calculated under Section 202.3.
4        (8) In the case of a corporation, for taxable years
5    beginning after June 30, 1989, and ending prior to January
6    1, 2011, an amount equal to 4.8% of the taxpayer's net
7    income for the taxable year.
8        (9) In the case of a corporation, for taxable years
9    beginning prior to January 1, 2011, and ending after
10    December 31, 2010, an amount equal to the sum of (i) 4.8%
11    of the taxpayer's net income for the period prior to
12    January 1, 2011, as calculated under Section 202.5, and
13    (ii) 7% of the taxpayer's net income for the period after
14    December 31, 2010, as calculated under Section 202.5.
15        (10) In the case of a corporation, for taxable years
16    beginning on or after January 1, 2011, and ending prior to
17    January 1, 2015, an amount equal to 7% of the taxpayer's
18    net income for the taxable year.
19        (11) In the case of a corporation, for taxable years
20    beginning prior to January 1, 2015, and ending after
21    December 31, 2014, an amount equal to the sum of (i) 7% of
22    the taxpayer's net income for the period prior to January
23    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
24    of the taxpayer's net income for the period after December
25    31, 2014, as calculated under Section 202.5.
26        (12) In the case of a corporation, for taxable years

 

 

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1    beginning on or after January 1, 2015, and ending prior to
2    July 1, 2017, an amount equal to 5.25% of the taxpayer's
3    net income for the taxable year.
4        (13) In the case of a corporation, for taxable years
5    beginning prior to July 1, 2017, and ending after June 30,
6    2017, an amount equal to the sum of (i) 5.25% of the
7    taxpayer's net income for the period prior to July 1,
8    2017, as calculated under Section 202.5, and (ii) 7% of
9    the taxpayer's net income for the period after June 30,
10    2017, as calculated under Section 202.5.
11        (14) In the case of a corporation, for taxable years
12    beginning on or after July 1, 2017, an amount equal to 7%
13    of the taxpayer's net income for the taxable year.
14    The rates under this subsection (b) are subject to the
15provisions of Section 201.5.
16    (b-5) Surcharge; sale or exchange of assets, properties,
17and intangibles of organization gaming licensees. For each of
18taxable years 2019 through 2027, a surcharge is imposed on all
19taxpayers on income arising from the sale or exchange of
20capital assets, depreciable business property, real property
21used in the trade or business, and Section 197 intangibles (i)
22of an organization licensee under the Illinois Horse Racing
23Act of 1975 and (ii) of an organization gaming licensee under
24the Illinois Gambling Act. The amount of the surcharge is
25equal to the amount of federal income tax liability for the
26taxable year attributable to those sales and exchanges. The

 

 

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1surcharge imposed shall not apply if:
2        (1) the organization gaming license, organization
3    license, or racetrack property is transferred as a result
4    of any of the following:
5            (A) bankruptcy, a receivership, or a debt
6        adjustment initiated by or against the initial
7        licensee or the substantial owners of the initial
8        licensee;
9            (B) cancellation, revocation, or termination of
10        any such license by the Illinois Gaming Board or the
11        Illinois Racing Board;
12            (C) a determination by the Illinois Gaming Board
13        that transfer of the license is in the best interests
14        of Illinois gaming;
15            (D) the death of an owner of the equity interest in
16        a licensee;
17            (E) the acquisition of a controlling interest in
18        the stock or substantially all of the assets of a
19        publicly traded company;
20            (F) a transfer by a parent company to a wholly
21        owned subsidiary; or
22            (G) the transfer or sale to or by one person to
23        another person where both persons were initial owners
24        of the license when the license was issued; or
25        (2) the controlling interest in the organization
26    gaming license, organization license, or racetrack

 

 

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1    property is transferred in a transaction to lineal
2    descendants in which no gain or loss is recognized or as a
3    result of a transaction in accordance with Section 351 of
4    the Internal Revenue Code in which no gain or loss is
5    recognized; or
6        (3) live horse racing was not conducted in 2010 at a
7    racetrack located within 3 miles of the Mississippi River
8    under a license issued pursuant to the Illinois Horse
9    Racing Act of 1975.
10    The transfer of an organization gaming license,
11organization license, or racetrack property by a person other
12than the initial licensee to receive the organization gaming
13license is not subject to a surcharge. The Department shall
14adopt rules necessary to implement and administer this
15subsection.
16    (c) Personal Property Tax Replacement Income Tax.
17Beginning on July 1, 1979 and thereafter, in addition to such
18income tax, there is also hereby imposed the Personal Property
19Tax Replacement Income Tax measured by net income on every
20corporation (including Subchapter S corporations), partnership
21and trust, for each taxable year ending after June 30, 1979.
22Such taxes are imposed on the privilege of earning or
23receiving income in or as a resident of this State. The
24Personal Property Tax Replacement Income Tax shall be in
25addition to the income tax imposed by subsections (a) and (b)
26of this Section and in addition to all other occupation or

 

 

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1privilege taxes imposed by this State or by any municipal
2corporation or political subdivision thereof.
3    (d) Additional Personal Property Tax Replacement Income
4Tax Rates. The personal property tax replacement income tax
5imposed by this subsection and subsection (c) of this Section
6in the case of a corporation, other than a Subchapter S
7corporation and except as adjusted by subsection (d-1), shall
8be an additional amount equal to 2.85% of such taxpayer's net
9income for the taxable year, except that beginning on January
101, 1981, and thereafter, the rate of 2.85% specified in this
11subsection shall be reduced to 2.5%, and in the case of a
12partnership, trust or a Subchapter S corporation shall be an
13additional amount equal to 1.5% of such taxpayer's net income
14for the taxable year.
15    (d-1) Rate reduction for certain foreign insurers. In the
16case of a foreign insurer, as defined by Section 35A-5 of the
17Illinois Insurance Code, whose state or country of domicile
18imposes on insurers domiciled in Illinois a retaliatory tax
19(excluding any insurer whose premiums from reinsurance assumed
20are 50% or more of its total insurance premiums as determined
21under paragraph (2) of subsection (b) of Section 304, except
22that for purposes of this determination premiums from
23reinsurance do not include premiums from inter-affiliate
24reinsurance arrangements), beginning with taxable years ending
25on or after December 31, 1999, the sum of the rates of tax
26imposed by subsections (b) and (d) shall be reduced (but not

 

 

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1increased) to the rate at which the total amount of tax imposed
2under this Act, net of all credits allowed under this Act,
3shall equal (i) the total amount of tax that would be imposed
4on the foreign insurer's net income allocable to Illinois for
5the taxable year by such foreign insurer's state or country of
6domicile if that net income were subject to all income taxes
7and taxes measured by net income imposed by such foreign
8insurer's state or country of domicile, net of all credits
9allowed or (ii) a rate of zero if no such tax is imposed on
10such income by the foreign insurer's state of domicile. For
11the purposes of this subsection (d-1), an inter-affiliate
12includes a mutual insurer under common management.
13        (1) For the purposes of subsection (d-1), in no event
14    shall the sum of the rates of tax imposed by subsections
15    (b) and (d) be reduced below the rate at which the sum of:
16            (A) the total amount of tax imposed on such
17        foreign insurer under this Act for a taxable year, net
18        of all credits allowed under this Act, plus
19            (B) the privilege tax imposed by Section 409 of
20        the Illinois Insurance Code, the fire insurance
21        company tax imposed by Section 12 of the Fire
22        Investigation Act, and the fire department taxes
23        imposed under Section 11-10-1 of the Illinois
24        Municipal Code,
25    equals 1.25% for taxable years ending prior to December
26    31, 2003, or 1.75% for taxable years ending on or after

 

 

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1    December 31, 2003, of the net taxable premiums written for
2    the taxable year, as described by subsection (1) of
3    Section 409 of the Illinois Insurance Code. This paragraph
4    will in no event increase the rates imposed under
5    subsections (b) and (d).
6        (2) Any reduction in the rates of tax imposed by this
7    subsection shall be applied first against the rates
8    imposed by subsection (b) and only after the tax imposed
9    by subsection (a) net of all credits allowed under this
10    Section other than the credit allowed under subsection (i)
11    has been reduced to zero, against the rates imposed by
12    subsection (d).
13    This subsection (d-1) is exempt from the provisions of
14Section 250.
15    (d-2) A partnership or Subchapter S corporation may elect
16to pay a tax that is imposed on the partnership or Subchapter S
17corporation. This tax is computed by multiplying the share of
18business income apportionable to Illinois and nonbusiness
19income allocated to Illinois under Section 303 of this Act, if
20this share is not a net loss, that is distributable to each
21partner or shareholder as multiplied by the applicable rates
22of tax for that partner or shareholder under subsections (a)
23through (d) of Section 201 of this Act, and taking the sum of
24these amounts. This election shall be made on the
25partnership's or Subchapter S corporation's return filed under
26Section 502 in such manner as the Department may prescribe.

 

 

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1    (e) Investment credit. A taxpayer shall be allowed a
2credit against the Personal Property Tax Replacement Income
3Tax for investment in qualified property.
4        (1) A taxpayer shall be allowed a credit equal to .5%
5    of the basis of qualified property placed in service
6    during the taxable year, provided such property is placed
7    in service on or after July 1, 1984. There shall be allowed
8    an additional credit equal to .5% of the basis of
9    qualified property placed in service during the taxable
10    year, provided such property is placed in service on or
11    after July 1, 1986, and the taxpayer's base employment
12    within Illinois has increased by 1% or more over the
13    preceding year as determined by the taxpayer's employment
14    records filed with the Illinois Department of Employment
15    Security. Taxpayers who are new to Illinois shall be
16    deemed to have met the 1% growth in base employment for the
17    first year in which they file employment records with the
18    Illinois Department of Employment Security. The provisions
19    added to this Section by Public Act 85-1200 (and restored
20    by Public Act 87-895) shall be construed as declaratory of
21    existing law and not as a new enactment. If, in any year,
22    the increase in base employment within Illinois over the
23    preceding year is less than 1%, the additional credit
24    shall be limited to that percentage times a fraction, the
25    numerator of which is .5% and the denominator of which is
26    1%, but shall not exceed .5%. The investment credit shall

 

 

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1    not be allowed to the extent that it would reduce a
2    taxpayer's liability in any tax year below zero, nor may
3    any credit for qualified property be allowed for any year
4    other than the year in which the property was placed in
5    service in Illinois. For tax years ending on or after
6    December 31, 1987, and on or before December 31, 1988, the
7    credit shall be allowed for the tax year in which the
8    property is placed in service, or, if the amount of the
9    credit exceeds the tax liability for that year, whether it
10    exceeds the original liability or the liability as later
11    amended, such excess may be carried forward and applied to
12    the tax liability of the 5 taxable years following the
13    excess credit years if the taxpayer (i) makes investments
14    which cause the creation of a minimum of 2,000 full-time
15    equivalent jobs in Illinois, (ii) is located in an
16    enterprise zone established pursuant to the Illinois
17    Enterprise Zone Act and (iii) is certified by the
18    Department of Commerce and Community Affairs (now
19    Department of Commerce and Economic Opportunity) as
20    complying with the requirements specified in clause (i)
21    and (ii) by July 1, 1986. The Department of Commerce and
22    Community Affairs (now Department of Commerce and Economic
23    Opportunity) shall notify the Department of Revenue of all
24    such certifications immediately. For tax years ending
25    after December 31, 1988, the credit shall be allowed for
26    the tax year in which the property is placed in service,

 

 

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1    or, if the amount of the credit exceeds the tax liability
2    for that year, whether it exceeds the original liability
3    or the liability as later amended, such excess may be
4    carried forward and applied to the tax liability of the 5
5    taxable years following the excess credit years. The
6    credit shall be applied to the earliest year for which
7    there is a liability. If there is credit from more than one
8    tax year that is available to offset a liability, earlier
9    credit shall be applied first.
10        (2) The term "qualified property" means property
11    which:
12            (A) is tangible, whether new or used, including
13        buildings and structural components of buildings and
14        signs that are real property, but not including land
15        or improvements to real property that are not a
16        structural component of a building such as
17        landscaping, sewer lines, local access roads, fencing,
18        parking lots, and other appurtenances;
19            (B) is depreciable pursuant to Section 167 of the
20        Internal Revenue Code, except that "3-year property"
21        as defined in Section 168(c)(2)(A) of that Code is not
22        eligible for the credit provided by this subsection
23        (e);
24            (C) is acquired by purchase as defined in Section
25        179(d) of the Internal Revenue Code;
26            (D) is used in Illinois by a taxpayer who is

 

 

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1        primarily engaged in manufacturing, or in mining coal
2        or fluorite, or in retailing, or was placed in service
3        on or after July 1, 2006 in a River Edge Redevelopment
4        Zone established pursuant to the River Edge
5        Redevelopment Zone Act; and
6            (E) has not previously been used in Illinois in
7        such a manner and by such a person as would qualify for
8        the credit provided by this subsection (e) or
9        subsection (f).
10        (3) For purposes of this subsection (e),
11    "manufacturing" means the material staging and production
12    of tangible personal property by procedures commonly
13    regarded as manufacturing, processing, fabrication, or
14    assembling which changes some existing material into new
15    shapes, new qualities, or new combinations. For purposes
16    of this subsection (e) the term "mining" shall have the
17    same meaning as the term "mining" in Section 613(c) of the
18    Internal Revenue Code. For purposes of this subsection
19    (e), the term "retailing" means the sale of tangible
20    personal property for use or consumption and not for
21    resale, or services rendered in conjunction with the sale
22    of tangible personal property for use or consumption and
23    not for resale. For purposes of this subsection (e),
24    "tangible personal property" has the same meaning as when
25    that term is used in the Retailers' Occupation Tax Act,
26    and, for taxable years ending after December 31, 2008,

 

 

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1    does not include the generation, transmission, or
2    distribution of electricity.
3        (4) The basis of qualified property shall be the basis
4    used to compute the depreciation deduction for federal
5    income tax purposes.
6        (5) If the basis of the property for federal income
7    tax depreciation purposes is increased after it has been
8    placed in service in Illinois by the taxpayer, the amount
9    of such increase shall be deemed property placed in
10    service on the date of such increase in basis.
11        (6) The term "placed in service" shall have the same
12    meaning as under Section 46 of the Internal Revenue Code.
13        (7) If during any taxable year, any property ceases to
14    be qualified property in the hands of the taxpayer within
15    48 months after being placed in service, or the situs of
16    any qualified property is moved outside Illinois within 48
17    months after being placed in service, the Personal
18    Property Tax Replacement Income Tax for such taxable year
19    shall be increased. Such increase shall be determined by
20    (i) recomputing the investment credit which would have
21    been allowed for the year in which credit for such
22    property was originally allowed by eliminating such
23    property from such computation and, (ii) subtracting such
24    recomputed credit from the amount of credit previously
25    allowed. For the purposes of this paragraph (7), a
26    reduction of the basis of qualified property resulting

 

 

SB2531- 16 -LRB102 15312 HLH 20668 b

1    from a redetermination of the purchase price shall be
2    deemed a disposition of qualified property to the extent
3    of such reduction.
4        (8) Unless the investment credit is extended by law,
5    the basis of qualified property shall not include costs
6    incurred after December 31, 2018, except for costs
7    incurred pursuant to a binding contract entered into on or
8    before December 31, 2018.
9        (9) Each taxable year ending before December 31, 2000,
10    a partnership may elect to pass through to its partners
11    the credits to which the partnership is entitled under
12    this subsection (e) for the taxable year. A partner may
13    use the credit allocated to him or her under this
14    paragraph only against the tax imposed in subsections (c)
15    and (d) of this Section. If the partnership makes that
16    election, those credits shall be allocated among the
17    partners in the partnership in accordance with the rules
18    set forth in Section 704(b) of the Internal Revenue Code,
19    and the rules promulgated under that Section, and the
20    allocated amount of the credits shall be allowed to the
21    partners for that taxable year. The partnership shall make
22    this election on its Personal Property Tax Replacement
23    Income Tax return for that taxable year. The election to
24    pass through the credits shall be irrevocable.
25        For taxable years ending on or after December 31,
26    2000, a partner that qualifies its partnership for a

 

 

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1    subtraction under subparagraph (I) of paragraph (2) of
2    subsection (d) of Section 203 or a shareholder that
3    qualifies a Subchapter S corporation for a subtraction
4    under subparagraph (S) of paragraph (2) of subsection (b)
5    of Section 203 shall be allowed a credit under this
6    subsection (e) equal to its share of the credit earned
7    under this subsection (e) during the taxable year by the
8    partnership or Subchapter S corporation, determined in
9    accordance with the determination of income and
10    distributive share of income under Sections 702 and 704
11    and Subchapter S of the Internal Revenue Code. This
12    paragraph is exempt from the provisions of Section 250.
13    (f) Investment credit; Enterprise Zone; River Edge
14Redevelopment Zone.
15        (1) A taxpayer shall be allowed a credit against the
16    tax imposed by subsections (a) and (b) of this Section for
17    investment in qualified property which is placed in
18    service in an Enterprise Zone created pursuant to the
19    Illinois Enterprise Zone Act or, for property placed in
20    service on or after July 1, 2006, a River Edge
21    Redevelopment Zone established pursuant to the River Edge
22    Redevelopment Zone Act. For partners, shareholders of
23    Subchapter S corporations, and owners of limited liability
24    companies, if the liability company is treated as a
25    partnership for purposes of federal and State income
26    taxation, there shall be allowed a credit under this

 

 

SB2531- 18 -LRB102 15312 HLH 20668 b

1    subsection (f) to be determined in accordance with the
2    determination of income and distributive share of income
3    under Sections 702 and 704 and Subchapter S of the
4    Internal Revenue Code. The credit shall be .5% of the
5    basis for such property. The credit shall be available
6    only in the taxable year in which the property is placed in
7    service in the Enterprise Zone or River Edge Redevelopment
8    Zone and shall not be allowed to the extent that it would
9    reduce a taxpayer's liability for the tax imposed by
10    subsections (a) and (b) of this Section to below zero. For
11    tax years ending on or after December 31, 1985, the credit
12    shall be allowed for the tax year in which the property is
13    placed in service, or, if the amount of the credit exceeds
14    the tax liability for that year, whether it exceeds the
15    original liability or the liability as later amended, such
16    excess may be carried forward and applied to the tax
17    liability of the 5 taxable years following the excess
18    credit year. The credit shall be applied to the earliest
19    year for which there is a liability. If there is credit
20    from more than one tax year that is available to offset a
21    liability, the credit accruing first in time shall be
22    applied first.
23        (2) The term qualified property means property which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings;
26            (B) is depreciable pursuant to Section 167 of the

 

 

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1        Internal Revenue Code, except that "3-year property"
2        as defined in Section 168(c)(2)(A) of that Code is not
3        eligible for the credit provided by this subsection
4        (f);
5            (C) is acquired by purchase as defined in Section
6        179(d) of the Internal Revenue Code;
7            (D) is used in the Enterprise Zone or River Edge
8        Redevelopment Zone by the taxpayer; and
9            (E) has not been previously used in Illinois in
10        such a manner and by such a person as would qualify for
11        the credit provided by this subsection (f) or
12        subsection (e).
13        (3) The basis of qualified property shall be the basis
14    used to compute the depreciation deduction for federal
15    income tax purposes.
16        (4) If the basis of the property for federal income
17    tax depreciation purposes is increased after it has been
18    placed in service in the Enterprise Zone or River Edge
19    Redevelopment Zone by the taxpayer, the amount of such
20    increase shall be deemed property placed in service on the
21    date of such increase in basis.
22        (5) The term "placed in service" shall have the same
23    meaning as under Section 46 of the Internal Revenue Code.
24        (6) If during any taxable year, any property ceases to
25    be qualified property in the hands of the taxpayer within
26    48 months after being placed in service, or the situs of

 

 

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1    any qualified property is moved outside the Enterprise
2    Zone or River Edge Redevelopment Zone within 48 months
3    after being placed in service, the tax imposed under
4    subsections (a) and (b) of this Section for such taxable
5    year shall be increased. Such increase shall be determined
6    by (i) recomputing the investment credit which would have
7    been allowed for the year in which credit for such
8    property was originally allowed by eliminating such
9    property from such computation, and (ii) subtracting such
10    recomputed credit from the amount of credit previously
11    allowed. For the purposes of this paragraph (6), a
12    reduction of the basis of qualified property resulting
13    from a redetermination of the purchase price shall be
14    deemed a disposition of qualified property to the extent
15    of such reduction.
16        (7) There shall be allowed an additional credit equal
17    to 0.5% of the basis of qualified property placed in
18    service during the taxable year in a River Edge
19    Redevelopment Zone, provided such property is placed in
20    service on or after July 1, 2006, and the taxpayer's base
21    employment within Illinois has increased by 1% or more
22    over the preceding year as determined by the taxpayer's
23    employment records filed with the Illinois Department of
24    Employment Security. Taxpayers who are new to Illinois
25    shall be deemed to have met the 1% growth in base
26    employment for the first year in which they file

 

 

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1    employment records with the Illinois Department of
2    Employment Security. If, in any year, the increase in base
3    employment within Illinois over the preceding year is less
4    than 1%, the additional credit shall be limited to that
5    percentage times a fraction, the numerator of which is
6    0.5% and the denominator of which is 1%, but shall not
7    exceed 0.5%.
8        (8) For taxable years beginning on or after January 1,
9    2021, there shall be allowed an Enterprise Zone
10    construction jobs credit against the taxes imposed under
11    subsections (a) and (b) of this Section as provided in
12    Section 13 of the Illinois Enterprise Zone Act.
13        The credit or credits may not reduce the taxpayer's
14    liability to less than zero. If the amount of the credit or
15    credits exceeds the taxpayer's liability, the excess may
16    be carried forward and applied against the taxpayer's
17    liability in succeeding calendar years in the same manner
18    provided under paragraph (4) of Section 211 of this Act.
19    The credit or credits shall be applied to the earliest
20    year for which there is a tax liability. If there are
21    credits from more than one taxable year that are available
22    to offset a liability, the earlier credit shall be applied
23    first.
24        For partners, shareholders of Subchapter S
25    corporations, and owners of limited liability companies,
26    if the liability company is treated as a partnership for

 

 

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1    the purposes of federal and State income taxation, there
2    shall be allowed a credit under this Section to be
3    determined in accordance with the determination of income
4    and distributive share of income under Sections 702 and
5    704 and Subchapter S of the Internal Revenue Code.
6        The total aggregate amount of credits awarded under
7    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
8    this amendatory Act of the 101st General Assembly) shall
9    not exceed $20,000,000 in any State fiscal year.
10        This paragraph (8) is exempt from the provisions of
11    Section 250.
12    (g) (Blank).
13    (h) Investment credit; High Impact Business.
14        (1) Subject to subsections (b) and (b-5) of Section
15    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
16    be allowed a credit against the tax imposed by subsections
17    (a) and (b) of this Section for investment in qualified
18    property which is placed in service by a Department of
19    Commerce and Economic Opportunity designated High Impact
20    Business. The credit shall be .5% of the basis for such
21    property. The credit shall not be available (i) until the
22    minimum investments in qualified property set forth in
23    subdivision (a)(3)(A) of Section 5.5 of the Illinois
24    Enterprise Zone Act have been satisfied or (ii) until the
25    time authorized in subsection (b-5) of the Illinois
26    Enterprise Zone Act for entities designated as High Impact

 

 

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1    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
2    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
3    Act, and shall not be allowed to the extent that it would
4    reduce a taxpayer's liability for the tax imposed by
5    subsections (a) and (b) of this Section to below zero. The
6    credit applicable to such investments shall be taken in
7    the taxable year in which such investments have been
8    completed. The credit for additional investments beyond
9    the minimum investment by a designated high impact
10    business authorized under subdivision (a)(3)(A) of Section
11    5.5 of the Illinois Enterprise Zone Act shall be available
12    only in the taxable year in which the property is placed in
13    service and shall not be allowed to the extent that it
14    would reduce a taxpayer's liability for the tax imposed by
15    subsections (a) and (b) of this Section to below zero. For
16    tax years ending on or after December 31, 1987, the credit
17    shall be allowed for the tax year in which the property is
18    placed in service, or, if the amount of the credit exceeds
19    the tax liability for that year, whether it exceeds the
20    original liability or the liability as later amended, such
21    excess may be carried forward and applied to the tax
22    liability of the 5 taxable years following the excess
23    credit year. The credit shall be applied to the earliest
24    year for which there is a liability. If there is credit
25    from more than one tax year that is available to offset a
26    liability, the credit accruing first in time shall be

 

 

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1    applied first.
2        Changes made in this subdivision (h)(1) by Public Act
3    88-670 restore changes made by Public Act 85-1182 and
4    reflect existing law.
5        (2) The term qualified property means property which:
6            (A) is tangible, whether new or used, including
7        buildings and structural components of buildings;
8            (B) is depreciable pursuant to Section 167 of the
9        Internal Revenue Code, except that "3-year property"
10        as defined in Section 168(c)(2)(A) of that Code is not
11        eligible for the credit provided by this subsection
12        (h);
13            (C) is acquired by purchase as defined in Section
14        179(d) of the Internal Revenue Code; and
15            (D) is not eligible for the Enterprise Zone
16        Investment Credit provided by subsection (f) of this
17        Section.
18        (3) The basis of qualified property shall be the basis
19    used to compute the depreciation deduction for federal
20    income tax purposes.
21        (4) If the basis of the property for federal income
22    tax depreciation purposes is increased after it has been
23    placed in service in a federally designated Foreign Trade
24    Zone or Sub-Zone located in Illinois by the taxpayer, the
25    amount of such increase shall be deemed property placed in
26    service on the date of such increase in basis.

 

 

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1        (5) The term "placed in service" shall have the same
2    meaning as under Section 46 of the Internal Revenue Code.
3        (6) If during any taxable year ending on or before
4    December 31, 1996, any property ceases to be qualified
5    property in the hands of the taxpayer within 48 months
6    after being placed in service, or the situs of any
7    qualified property is moved outside Illinois within 48
8    months after being placed in service, the tax imposed
9    under subsections (a) and (b) of this Section for such
10    taxable year shall be increased. Such increase shall be
11    determined by (i) recomputing the investment credit which
12    would have been allowed for the year in which credit for
13    such property was originally allowed by eliminating such
14    property from such computation, and (ii) subtracting such
15    recomputed credit from the amount of credit previously
16    allowed. For the purposes of this paragraph (6), a
17    reduction of the basis of qualified property resulting
18    from a redetermination of the purchase price shall be
19    deemed a disposition of qualified property to the extent
20    of such reduction.
21        (7) Beginning with tax years ending after December 31,
22    1996, if a taxpayer qualifies for the credit under this
23    subsection (h) and thereby is granted a tax abatement and
24    the taxpayer relocates its entire facility in violation of
25    the explicit terms and length of the contract under
26    Section 18-183 of the Property Tax Code, the tax imposed

 

 

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1    under subsections (a) and (b) of this Section shall be
2    increased for the taxable year in which the taxpayer
3    relocated its facility by an amount equal to the amount of
4    credit received by the taxpayer under this subsection (h).
5    (h-5) High Impact Business construction constructions jobs
6credit. For taxable years beginning on or after January 1,
72021, there shall also be allowed a High Impact Business
8construction jobs credit against the tax imposed under
9subsections (a) and (b) of this Section as provided in
10subsections (i) and (j) of Section 5.5 of the Illinois
11Enterprise Zone Act.
12    The credit or credits may not reduce the taxpayer's
13liability to less than zero. If the amount of the credit or
14credits exceeds the taxpayer's liability, the excess may be
15carried forward and applied against the taxpayer's liability
16in succeeding calendar years in the manner provided under
17paragraph (4) of Section 211 of this Act. The credit or credits
18shall be applied to the earliest year for which there is a tax
19liability. If there are credits from more than one taxable
20year that are available to offset a liability, the earlier
21credit shall be applied first.
22    For partners, shareholders of Subchapter S corporations,
23and owners of limited liability companies, if the liability
24company is treated as a partnership for the purposes of
25federal and State income taxation, there shall be allowed a
26credit under this Section to be determined in accordance with

 

 

SB2531- 27 -LRB102 15312 HLH 20668 b

1the determination of income and distributive share of income
2under Sections 702 and 704 and Subchapter S of the Internal
3Revenue Code.
4    The total aggregate amount of credits awarded under the
5Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
6amendatory Act of the 101st General Assembly) shall not exceed
7$20,000,000 in any State fiscal year.
8    This subsection (h-5) is exempt from the provisions of
9Section 250.
10    (i) Credit for Personal Property Tax Replacement Income
11Tax. For tax years ending prior to December 31, 2003, a credit
12shall be allowed against the tax imposed by subsections (a)
13and (b) of this Section for the tax imposed by subsections (c)
14and (d) of this Section. This credit shall be computed by
15multiplying the tax imposed by subsections (c) and (d) of this
16Section by a fraction, the numerator of which is base income
17allocable to Illinois and the denominator of which is Illinois
18base income, and further multiplying the product by the tax
19rate imposed by subsections (a) and (b) of this Section.
20    Any credit earned on or after December 31, 1986 under this
21subsection which is unused in the year the credit is computed
22because it exceeds the tax liability imposed by subsections
23(a) and (b) for that year (whether it exceeds the original
24liability or the liability as later amended) may be carried
25forward and applied to the tax liability imposed by
26subsections (a) and (b) of the 5 taxable years following the

 

 

SB2531- 28 -LRB102 15312 HLH 20668 b

1excess credit year, provided that no credit may be carried
2forward to any year ending on or after December 31, 2003. This
3credit shall be applied first to the earliest year for which
4there is a liability. If there is a credit under this
5subsection from more than one tax year that is available to
6offset a liability the earliest credit arising under this
7subsection shall be applied first.
8    If, during any taxable year ending on or after December
931, 1986, the tax imposed by subsections (c) and (d) of this
10Section for which a taxpayer has claimed a credit under this
11subsection (i) is reduced, the amount of credit for such tax
12shall also be reduced. Such reduction shall be determined by
13recomputing the credit to take into account the reduced tax
14imposed by subsections (c) and (d). If any portion of the
15reduced amount of credit has been carried to a different
16taxable year, an amended return shall be filed for such
17taxable year to reduce the amount of credit claimed.
18    (j) Training expense credit. Beginning with tax years
19ending on or after December 31, 1986 and prior to December 31,
202003, a taxpayer shall be allowed a credit against the tax
21imposed by subsections (a) and (b) under this Section for all
22amounts paid or accrued, on behalf of all persons employed by
23the taxpayer in Illinois or Illinois residents employed
24outside of Illinois by a taxpayer, for educational or
25vocational training in semi-technical or technical fields or
26semi-skilled or skilled fields, which were deducted from gross

 

 

SB2531- 29 -LRB102 15312 HLH 20668 b

1income in the computation of taxable income. The credit
2against the tax imposed by subsections (a) and (b) shall be
31.6% of such training expenses. For partners, shareholders of
4subchapter S corporations, and owners of limited liability
5companies, if the liability company is treated as a
6partnership for purposes of federal and State income taxation,
7there shall be allowed a credit under this subsection (j) to be
8determined in accordance with the determination of income and
9distributive share of income under Sections 702 and 704 and
10subchapter S of the Internal Revenue Code.
11    Any credit allowed under this subsection which is unused
12in the year the credit is earned may be carried forward to each
13of the 5 taxable years following the year for which the credit
14is first computed until it is used. This credit shall be
15applied first to the earliest year for which there is a
16liability. If there is a credit under this subsection from
17more than one tax year that is available to offset a liability,
18the earliest credit arising under this subsection shall be
19applied first. No carryforward credit may be claimed in any
20tax year ending on or after December 31, 2003.
21    (k) Research and development credit. For tax years ending
22after July 1, 1990 and prior to December 31, 2003, and
23beginning again for tax years ending on or after December 31,
242004, and ending prior to January 1, 2027, a taxpayer shall be
25allowed a credit against the tax imposed by subsections (a)
26and (b) of this Section for increasing research activities in

 

 

SB2531- 30 -LRB102 15312 HLH 20668 b

1this State. The credit allowed against the tax imposed by
2subsections (a) and (b) shall be equal to 6 1/2% of the
3qualifying expenditures for increasing research activities in
4this State. For partners, shareholders of subchapter S
5corporations, and owners of limited liability companies, if
6the liability company is treated as a partnership for purposes
7of federal and State income taxation, there shall be allowed a
8credit under this subsection to be determined in accordance
9with the determination of income and distributive share of
10income under Sections 702 and 704 and subchapter S of the
11Internal Revenue Code.
12    For purposes of this subsection, "qualifying expenditures"
13means the qualifying expenditures as defined for the federal
14credit for increasing research activities which would be
15allowable under Section 41 of the Internal Revenue Code and
16which are conducted in this State, "qualifying expenditures
17for increasing research activities in this State" means the
18excess of qualifying expenditures for the taxable year in
19which incurred over qualifying expenditures for the base
20period, "qualifying expenditures for the base period" means
21the average of the qualifying expenditures for each year in
22the base period, and "base period" means the 3 taxable years
23immediately preceding the taxable year for which the
24determination is being made.
25    Any credit in excess of the tax liability for the taxable
26year may be carried forward. A taxpayer may elect to have the

 

 

SB2531- 31 -LRB102 15312 HLH 20668 b

1unused credit shown on its final completed return carried over
2as a credit against the tax liability for the following 5
3taxable years or until it has been fully used, whichever
4occurs first; provided that no credit earned in a tax year
5ending prior to December 31, 2003 may be carried forward to any
6year ending on or after December 31, 2003.
7    If an unused credit is carried forward to a given year from
82 or more earlier years, that credit arising in the earliest
9year will be applied first against the tax liability for the
10given year. If a tax liability for the given year still
11remains, the credit from the next earliest year will then be
12applied, and so on, until all credits have been used or no tax
13liability for the given year remains. Any remaining unused
14credit or credits then will be carried forward to the next
15following year in which a tax liability is incurred, except
16that no credit can be carried forward to a year which is more
17than 5 years after the year in which the expense for which the
18credit is given was incurred.
19    No inference shall be drawn from Public Act 91-644 this
20amendatory Act of the 91st General Assembly in construing this
21Section for taxable years beginning before January 1, 1999.
22    It is the intent of the General Assembly that the research
23and development credit under this subsection (k) shall apply
24continuously for all tax years ending on or after December 31,
252004 and ending prior to January 1, 2027, including, but not
26limited to, the period beginning on January 1, 2016 and ending

 

 

SB2531- 32 -LRB102 15312 HLH 20668 b

1on July 6, 2017 (the effective date of Public Act 100-22) this
2amendatory Act of the 100th General Assembly. All actions
3taken in reliance on the continuation of the credit under this
4subsection (k) by any taxpayer are hereby validated.
5    (l) Environmental Remediation Tax Credit.
6        (i) For tax years ending after December 31, 1997 and
7    on or before December 31, 2001, a taxpayer shall be
8    allowed a credit against the tax imposed by subsections
9    (a) and (b) of this Section for certain amounts paid for
10    unreimbursed eligible remediation costs, as specified in
11    this subsection. For purposes of this Section,
12    "unreimbursed eligible remediation costs" means costs
13    approved by the Illinois Environmental Protection Agency
14    ("Agency") under Section 58.14 of the Environmental
15    Protection Act that were paid in performing environmental
16    remediation at a site for which a No Further Remediation
17    Letter was issued by the Agency and recorded under Section
18    58.10 of the Environmental Protection Act. The credit must
19    be claimed for the taxable year in which Agency approval
20    of the eligible remediation costs is granted. The credit
21    is not available to any taxpayer if the taxpayer or any
22    related party caused or contributed to, in any material
23    respect, a release of regulated substances on, in, or
24    under the site that was identified and addressed by the
25    remedial action pursuant to the Site Remediation Program
26    of the Environmental Protection Act. After the Pollution

 

 

SB2531- 33 -LRB102 15312 HLH 20668 b

1    Control Board rules are adopted pursuant to the Illinois
2    Administrative Procedure Act for the administration and
3    enforcement of Section 58.9 of the Environmental
4    Protection Act, determinations as to credit availability
5    for purposes of this Section shall be made consistent with
6    those rules. For purposes of this Section, "taxpayer"
7    includes a person whose tax attributes the taxpayer has
8    succeeded to under Section 381 of the Internal Revenue
9    Code and "related party" includes the persons disallowed a
10    deduction for losses by paragraphs (b), (c), and (f)(1) of
11    Section 267 of the Internal Revenue Code by virtue of
12    being a related taxpayer, as well as any of its partners.
13    The credit allowed against the tax imposed by subsections
14    (a) and (b) shall be equal to 25% of the unreimbursed
15    eligible remediation costs in excess of $100,000 per site,
16    except that the $100,000 threshold shall not apply to any
17    site contained in an enterprise zone as determined by the
18    Department of Commerce and Community Affairs (now
19    Department of Commerce and Economic Opportunity). The
20    total credit allowed shall not exceed $40,000 per year
21    with a maximum total of $150,000 per site. For partners
22    and shareholders of subchapter S corporations, there shall
23    be allowed a credit under this subsection to be determined
24    in accordance with the determination of income and
25    distributive share of income under Sections 702 and 704
26    and subchapter S of the Internal Revenue Code.

 

 

SB2531- 34 -LRB102 15312 HLH 20668 b

1        (ii) A credit allowed under this subsection that is
2    unused in the year the credit is earned may be carried
3    forward to each of the 5 taxable years following the year
4    for which the credit is first earned until it is used. The
5    term "unused credit" does not include any amounts of
6    unreimbursed eligible remediation costs in excess of the
7    maximum credit per site authorized under paragraph (i).
8    This credit shall be applied first to the earliest year
9    for which there is a liability. If there is a credit under
10    this subsection from more than one tax year that is
11    available to offset a liability, the earliest credit
12    arising under this subsection shall be applied first. A
13    credit allowed under this subsection may be sold to a
14    buyer as part of a sale of all or part of the remediation
15    site for which the credit was granted. The purchaser of a
16    remediation site and the tax credit shall succeed to the
17    unused credit and remaining carry-forward period of the
18    seller. To perfect the transfer, the assignor shall record
19    the transfer in the chain of title for the site and provide
20    written notice to the Director of the Illinois Department
21    of Revenue of the assignor's intent to sell the
22    remediation site and the amount of the tax credit to be
23    transferred as a portion of the sale. In no event may a
24    credit be transferred to any taxpayer if the taxpayer or a
25    related party would not be eligible under the provisions
26    of subsection (i).

 

 

SB2531- 35 -LRB102 15312 HLH 20668 b

1        (iii) For purposes of this Section, the term "site"
2    shall have the same meaning as under Section 58.2 of the
3    Environmental Protection Act.
4    (m) Education expense credit. Beginning with tax years
5ending after December 31, 1999, a taxpayer who is the
6custodian of one or more qualifying pupils shall be allowed a
7credit against the tax imposed by subsections (a) and (b) of
8this Section for qualified education expenses incurred on
9behalf of the qualifying pupils. The credit shall be equal to
1025% of qualified education expenses, but in no event may the
11total credit under this subsection claimed by a family that is
12the custodian of qualifying pupils exceed (i) $500 for tax
13years ending prior to December 31, 2017, and (ii) $750 for tax
14years ending on or after December 31, 2017. In no event shall a
15credit under this subsection reduce the taxpayer's liability
16under this Act to less than zero. Notwithstanding any other
17provision of law, for taxable years beginning on or after
18January 1, 2017, no taxpayer may claim a credit under this
19subsection (m) if the taxpayer's adjusted gross income for the
20taxable year exceeds (i) $500,000, in the case of spouses
21filing a joint federal tax return or (ii) $250,000, in the case
22of all other taxpayers. This subsection is exempt from the
23provisions of Section 250 of this Act.
24    For purposes of this subsection:
25    "Qualifying pupils" means individuals who (i) are
26residents of the State of Illinois, (ii) are under the age of

 

 

SB2531- 36 -LRB102 15312 HLH 20668 b

121 at the close of the school year for which a credit is
2sought, and (iii) during the school year for which a credit is
3sought were full-time pupils enrolled in a kindergarten
4through twelfth grade education program at any school, as
5defined in this subsection.
6    "Qualified education expense" means the amount incurred on
7behalf of a qualifying pupil in excess of $250 for tuition,
8book fees, and lab fees at the school in which the pupil is
9enrolled during the regular school year.
10    "School" means any public or nonpublic elementary or
11secondary school in Illinois that is in compliance with Title
12VI of the Civil Rights Act of 1964 and attendance at which
13satisfies the requirements of Section 26-1 of the School Code,
14except that nothing shall be construed to require a child to
15attend any particular public or nonpublic school to qualify
16for the credit under this Section.
17    "Custodian" means, with respect to qualifying pupils, an
18Illinois resident who is a parent, the parents, a legal
19guardian, or the legal guardians of the qualifying pupils.
20    (n) River Edge Redevelopment Zone site remediation tax
21credit.
22        (i) For tax years ending on or after December 31,
23    2006, a taxpayer shall be allowed a credit against the tax
24    imposed by subsections (a) and (b) of this Section for
25    certain amounts paid for unreimbursed eligible remediation
26    costs, as specified in this subsection. For purposes of

 

 

SB2531- 37 -LRB102 15312 HLH 20668 b

1    this Section, "unreimbursed eligible remediation costs"
2    means costs approved by the Illinois Environmental
3    Protection Agency ("Agency") under Section 58.14a of the
4    Environmental Protection Act that were paid in performing
5    environmental remediation at a site within a River Edge
6    Redevelopment Zone for which a No Further Remediation
7    Letter was issued by the Agency and recorded under Section
8    58.10 of the Environmental Protection Act. The credit must
9    be claimed for the taxable year in which Agency approval
10    of the eligible remediation costs is granted. The credit
11    is not available to any taxpayer if the taxpayer or any
12    related party caused or contributed to, in any material
13    respect, a release of regulated substances on, in, or
14    under the site that was identified and addressed by the
15    remedial action pursuant to the Site Remediation Program
16    of the Environmental Protection Act. Determinations as to
17    credit availability for purposes of this Section shall be
18    made consistent with rules adopted by the Pollution
19    Control Board pursuant to the Illinois Administrative
20    Procedure Act for the administration and enforcement of
21    Section 58.9 of the Environmental Protection Act. For
22    purposes of this Section, "taxpayer" includes a person
23    whose tax attributes the taxpayer has succeeded to under
24    Section 381 of the Internal Revenue Code and "related
25    party" includes the persons disallowed a deduction for
26    losses by paragraphs (b), (c), and (f)(1) of Section 267

 

 

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1    of the Internal Revenue Code by virtue of being a related
2    taxpayer, as well as any of its partners. The credit
3    allowed against the tax imposed by subsections (a) and (b)
4    shall be equal to 25% of the unreimbursed eligible
5    remediation costs in excess of $100,000 per site.
6        (ii) A credit allowed under this subsection that is
7    unused in the year the credit is earned may be carried
8    forward to each of the 5 taxable years following the year
9    for which the credit is first earned until it is used. This
10    credit shall be applied first to the earliest year for
11    which there is a liability. If there is a credit under this
12    subsection from more than one tax year that is available
13    to offset a liability, the earliest credit arising under
14    this subsection shall be applied first. A credit allowed
15    under this subsection may be sold to a buyer as part of a
16    sale of all or part of the remediation site for which the
17    credit was granted. The purchaser of a remediation site
18    and the tax credit shall succeed to the unused credit and
19    remaining carry-forward period of the seller. To perfect
20    the transfer, the assignor shall record the transfer in
21    the chain of title for the site and provide written notice
22    to the Director of the Illinois Department of Revenue of
23    the assignor's intent to sell the remediation site and the
24    amount of the tax credit to be transferred as a portion of
25    the sale. In no event may a credit be transferred to any
26    taxpayer if the taxpayer or a related party would not be

 

 

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1    eligible under the provisions of subsection (i).
2        (iii) For purposes of this Section, the term "site"
3    shall have the same meaning as under Section 58.2 of the
4    Environmental Protection Act.
5    (o) For each of taxable years during the Compassionate Use
6of Medical Cannabis Program, a surcharge is imposed on all
7taxpayers on income arising from the sale or exchange of
8capital assets, depreciable business property, real property
9used in the trade or business, and Section 197 intangibles of
10an organization registrant under the Compassionate Use of
11Medical Cannabis Program Act. The amount of the surcharge is
12equal to the amount of federal income tax liability for the
13taxable year attributable to those sales and exchanges. The
14surcharge imposed does not apply if:
15        (1) the medical cannabis cultivation center
16    registration, medical cannabis dispensary registration, or
17    the property of a registration is transferred as a result
18    of any of the following:
19            (A) bankruptcy, a receivership, or a debt
20        adjustment initiated by or against the initial
21        registration or the substantial owners of the initial
22        registration;
23            (B) cancellation, revocation, or termination of
24        any registration by the Illinois Department of Public
25        Health;
26            (C) a determination by the Illinois Department of

 

 

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1        Public Health that transfer of the registration is in
2        the best interests of Illinois qualifying patients as
3        defined by the Compassionate Use of Medical Cannabis
4        Program Act;
5            (D) the death of an owner of the equity interest in
6        a registrant;
7            (E) the acquisition of a controlling interest in
8        the stock or substantially all of the assets of a
9        publicly traded company;
10            (F) a transfer by a parent company to a wholly
11        owned subsidiary; or
12            (G) the transfer or sale to or by one person to
13        another person where both persons were initial owners
14        of the registration when the registration was issued;
15        or
16        (2) the cannabis cultivation center registration,
17    medical cannabis dispensary registration, or the
18    controlling interest in a registrant's property is
19    transferred in a transaction to lineal descendants in
20    which no gain or loss is recognized or as a result of a
21    transaction in accordance with Section 351 of the Internal
22    Revenue Code in which no gain or loss is recognized.
23(Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31,
24eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19;
25revised 11-18-20.)
 

 

 

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1    (Text of Section with the changes made by P.A. 101-8,
2which did not take effect (see Section 99 of P.A. 101-8))
3    Sec. 201. Tax imposed.
4    (a) In general. A tax measured by net income is hereby
5imposed on every individual, corporation, trust and estate for
6each taxable year ending after July 31, 1969 on the privilege
7of earning or receiving income in or as a resident of this
8State. Such tax shall be in addition to all other occupation or
9privilege taxes imposed by this State or by any municipal
10corporation or political subdivision thereof.
11    (b) Rates. The tax imposed by subsection (a) of this
12Section shall be determined as follows, except as adjusted by
13subsection (d-1):
14        (1) In the case of an individual, trust or estate, for
15    taxable years ending prior to July 1, 1989, an amount
16    equal to 2 1/2% of the taxpayer's net income for the
17    taxable year.
18        (2) In the case of an individual, trust or estate, for
19    taxable years beginning prior to July 1, 1989 and ending
20    after June 30, 1989, an amount equal to the sum of (i) 2
21    1/2% of the taxpayer's net income for the period prior to
22    July 1, 1989, as calculated under Section 202.3, and (ii)
23    3% of the taxpayer's net income for the period after June
24    30, 1989, as calculated under Section 202.3.
25        (3) In the case of an individual, trust or estate, for
26    taxable years beginning after June 30, 1989, and ending

 

 

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1    prior to January 1, 2011, an amount equal to 3% of the
2    taxpayer's net income for the taxable year.
3        (4) In the case of an individual, trust, or estate,
4    for taxable years beginning prior to January 1, 2011, and
5    ending after December 31, 2010, an amount equal to the sum
6    of (i) 3% of the taxpayer's net income for the period prior
7    to January 1, 2011, as calculated under Section 202.5, and
8    (ii) 5% of the taxpayer's net income for the period after
9    December 31, 2010, as calculated under Section 202.5.
10        (5) In the case of an individual, trust, or estate,
11    for taxable years beginning on or after January 1, 2011,
12    and ending prior to January 1, 2015, an amount equal to 5%
13    of the taxpayer's net income for the taxable year.
14        (5.1) In the case of an individual, trust, or estate,
15    for taxable years beginning prior to January 1, 2015, and
16    ending after December 31, 2014, an amount equal to the sum
17    of (i) 5% of the taxpayer's net income for the period prior
18    to January 1, 2015, as calculated under Section 202.5, and
19    (ii) 3.75% of the taxpayer's net income for the period
20    after December 31, 2014, as calculated under Section
21    202.5.
22        (5.2) In the case of an individual, trust, or estate,
23    for taxable years beginning on or after January 1, 2015,
24    and ending prior to July 1, 2017, an amount equal to 3.75%
25    of the taxpayer's net income for the taxable year.
26        (5.3) In the case of an individual, trust, or estate,

 

 

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1    for taxable years beginning prior to July 1, 2017, and
2    ending after June 30, 2017, an amount equal to the sum of
3    (i) 3.75% of the taxpayer's net income for the period
4    prior to July 1, 2017, as calculated under Section 202.5,
5    and (ii) 4.95% of the taxpayer's net income for the period
6    after June 30, 2017, as calculated under Section 202.5.
7        (5.4) In the case of an individual, trust, or estate,
8    for taxable years beginning on or after July 1, 2017 and
9    beginning prior to January 1, 2021, an amount equal to
10    4.95% of the taxpayer's net income for the taxable year.
11        (5.5) In the case of an individual, trust, or estate,
12    for taxable years beginning on or after January 1, 2021,
13    an amount calculated under the rate structure set forth in
14    Section 201.1.
15        (6) In the case of a corporation, for taxable years
16    ending prior to July 1, 1989, an amount equal to 4% of the
17    taxpayer's net income for the taxable year.
18        (7) In the case of a corporation, for taxable years
19    beginning prior to July 1, 1989 and ending after June 30,
20    1989, an amount equal to the sum of (i) 4% of the
21    taxpayer's net income for the period prior to July 1,
22    1989, as calculated under Section 202.3, and (ii) 4.8% of
23    the taxpayer's net income for the period after June 30,
24    1989, as calculated under Section 202.3.
25        (8) In the case of a corporation, for taxable years
26    beginning after June 30, 1989, and ending prior to January

 

 

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1    1, 2011, an amount equal to 4.8% of the taxpayer's net
2    income for the taxable year.
3        (9) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2011, and ending after
5    December 31, 2010, an amount equal to the sum of (i) 4.8%
6    of the taxpayer's net income for the period prior to
7    January 1, 2011, as calculated under Section 202.5, and
8    (ii) 7% of the taxpayer's net income for the period after
9    December 31, 2010, as calculated under Section 202.5.
10        (10) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2011, and ending prior to
12    January 1, 2015, an amount equal to 7% of the taxpayer's
13    net income for the taxable year.
14        (11) In the case of a corporation, for taxable years
15    beginning prior to January 1, 2015, and ending after
16    December 31, 2014, an amount equal to the sum of (i) 7% of
17    the taxpayer's net income for the period prior to January
18    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
19    of the taxpayer's net income for the period after December
20    31, 2014, as calculated under Section 202.5.
21        (12) In the case of a corporation, for taxable years
22    beginning on or after January 1, 2015, and ending prior to
23    July 1, 2017, an amount equal to 5.25% of the taxpayer's
24    net income for the taxable year.
25        (13) In the case of a corporation, for taxable years
26    beginning prior to July 1, 2017, and ending after June 30,

 

 

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1    2017, an amount equal to the sum of (i) 5.25% of the
2    taxpayer's net income for the period prior to July 1,
3    2017, as calculated under Section 202.5, and (ii) 7% of
4    the taxpayer's net income for the period after June 30,
5    2017, as calculated under Section 202.5.
6        (14) In the case of a corporation, for taxable years
7    beginning on or after July 1, 2017 and beginning prior to
8    January 1, 2021, an amount equal to 7% of the taxpayer's
9    net income for the taxable year.
10        (15) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2021, an amount equal to
12    7.99% of the taxpayer's net income for the taxable year.
13    The rates under this subsection (b) are subject to the
14provisions of Section 201.5.
15    (b-5) Surcharge; sale or exchange of assets, properties,
16and intangibles of organization gaming licensees. For each of
17taxable years 2019 through 2027, a surcharge is imposed on all
18taxpayers on income arising from the sale or exchange of
19capital assets, depreciable business property, real property
20used in the trade or business, and Section 197 intangibles (i)
21of an organization licensee under the Illinois Horse Racing
22Act of 1975 and (ii) of an organization gaming licensee under
23the Illinois Gambling Act. The amount of the surcharge is
24equal to the amount of federal income tax liability for the
25taxable year attributable to those sales and exchanges. The
26surcharge imposed shall not apply if:

 

 

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1        (1) the organization gaming license, organization
2    license, or racetrack property is transferred as a result
3    of any of the following:
4            (A) bankruptcy, a receivership, or a debt
5        adjustment initiated by or against the initial
6        licensee or the substantial owners of the initial
7        licensee;
8            (B) cancellation, revocation, or termination of
9        any such license by the Illinois Gaming Board or the
10        Illinois Racing Board;
11            (C) a determination by the Illinois Gaming Board
12        that transfer of the license is in the best interests
13        of Illinois gaming;
14            (D) the death of an owner of the equity interest in
15        a licensee;
16            (E) the acquisition of a controlling interest in
17        the stock or substantially all of the assets of a
18        publicly traded company;
19            (F) a transfer by a parent company to a wholly
20        owned subsidiary; or
21            (G) the transfer or sale to or by one person to
22        another person where both persons were initial owners
23        of the license when the license was issued; or
24        (2) the controlling interest in the organization
25    gaming license, organization license, or racetrack
26    property is transferred in a transaction to lineal

 

 

SB2531- 47 -LRB102 15312 HLH 20668 b

1    descendants in which no gain or loss is recognized or as a
2    result of a transaction in accordance with Section 351 of
3    the Internal Revenue Code in which no gain or loss is
4    recognized; or
5        (3) live horse racing was not conducted in 2010 at a
6    racetrack located within 3 miles of the Mississippi River
7    under a license issued pursuant to the Illinois Horse
8    Racing Act of 1975.
9    The transfer of an organization gaming license,
10organization license, or racetrack property by a person other
11than the initial licensee to receive the organization gaming
12license is not subject to a surcharge. The Department shall
13adopt rules necessary to implement and administer this
14subsection.
15    (c) Personal Property Tax Replacement Income Tax.
16Beginning on July 1, 1979 and thereafter, in addition to such
17income tax, there is also hereby imposed the Personal Property
18Tax Replacement Income Tax measured by net income on every
19corporation (including Subchapter S corporations), partnership
20and trust, for each taxable year ending after June 30, 1979.
21Such taxes are imposed on the privilege of earning or
22receiving income in or as a resident of this State. The
23Personal Property Tax Replacement Income Tax shall be in
24addition to the income tax imposed by subsections (a) and (b)
25of this Section and in addition to all other occupation or
26privilege taxes imposed by this State or by any municipal

 

 

SB2531- 48 -LRB102 15312 HLH 20668 b

1corporation or political subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

SB2531- 49 -LRB102 15312 HLH 20668 b

1under this Act, net of all credits allowed under this Act,
2shall equal (i) the total amount of tax that would be imposed
3on the foreign insurer's net income allocable to Illinois for
4the taxable year by such foreign insurer's state or country of
5domicile if that net income were subject to all income taxes
6and taxes measured by net income imposed by such foreign
7insurer's state or country of domicile, net of all credits
8allowed or (ii) a rate of zero if no such tax is imposed on
9such income by the foreign insurer's state of domicile. For
10the purposes of this subsection (d-1), an inter-affiliate
11includes a mutual insurer under common management.
12        (1) For the purposes of subsection (d-1), in no event
13    shall the sum of the rates of tax imposed by subsections
14    (b) and (d) be reduced below the rate at which the sum of:
15            (A) the total amount of tax imposed on such
16        foreign insurer under this Act for a taxable year, net
17        of all credits allowed under this Act, plus
18            (B) the privilege tax imposed by Section 409 of
19        the Illinois Insurance Code, the fire insurance
20        company tax imposed by Section 12 of the Fire
21        Investigation Act, and the fire department taxes
22        imposed under Section 11-10-1 of the Illinois
23        Municipal Code,
24    equals 1.25% for taxable years ending prior to December
25    31, 2003, or 1.75% for taxable years ending on or after
26    December 31, 2003, of the net taxable premiums written for

 

 

SB2531- 50 -LRB102 15312 HLH 20668 b

1    the taxable year, as described by subsection (1) of
2    Section 409 of the Illinois Insurance Code. This paragraph
3    will in no event increase the rates imposed under
4    subsections (b) and (d).
5        (2) Any reduction in the rates of tax imposed by this
6    subsection shall be applied first against the rates
7    imposed by subsection (b) and only after the tax imposed
8    by subsection (a) net of all credits allowed under this
9    Section other than the credit allowed under subsection (i)
10    has been reduced to zero, against the rates imposed by
11    subsection (d).
12    This subsection (d-1) is exempt from the provisions of
13Section 250.
14    (d-2) A partnership or Subchapter S corporation may elect
15to pay a tax that is imposed on the partnership or Subchapter S
16corporation. This tax is computed by multiplying the share of
17business income apportionable to Illinois and nonbusiness
18income allocated to Illinois under Section 303 of this Act, if
19this share is not a net loss, that is distributable to each
20partner or shareholder as multiplied by the applicable rates
21of tax for that partner or shareholder under subsections (a)
22through (d) of Section 201 of this Act, and taking the sum of
23these amounts. This election shall be made on the
24partnership's or Subchapter S corporation's return filed under
25Section 502 in such manner as the Department may prescribe.
26    (e) Investment credit. A taxpayer shall be allowed a

 

 

SB2531- 51 -LRB102 15312 HLH 20668 b

1credit against the Personal Property Tax Replacement Income
2Tax for investment in qualified property.
3        (1) A taxpayer shall be allowed a credit equal to .5%
4    of the basis of qualified property placed in service
5    during the taxable year, provided such property is placed
6    in service on or after July 1, 1984. There shall be allowed
7    an additional credit equal to .5% of the basis of
8    qualified property placed in service during the taxable
9    year, provided such property is placed in service on or
10    after July 1, 1986, and the taxpayer's base employment
11    within Illinois has increased by 1% or more over the
12    preceding year as determined by the taxpayer's employment
13    records filed with the Illinois Department of Employment
14    Security. Taxpayers who are new to Illinois shall be
15    deemed to have met the 1% growth in base employment for the
16    first year in which they file employment records with the
17    Illinois Department of Employment Security. The provisions
18    added to this Section by Public Act 85-1200 (and restored
19    by Public Act 87-895) shall be construed as declaratory of
20    existing law and not as a new enactment. If, in any year,
21    the increase in base employment within Illinois over the
22    preceding year is less than 1%, the additional credit
23    shall be limited to that percentage times a fraction, the
24    numerator of which is .5% and the denominator of which is
25    1%, but shall not exceed .5%. The investment credit shall
26    not be allowed to the extent that it would reduce a

 

 

SB2531- 52 -LRB102 15312 HLH 20668 b

1    taxpayer's liability in any tax year below zero, nor may
2    any credit for qualified property be allowed for any year
3    other than the year in which the property was placed in
4    service in Illinois. For tax years ending on or after
5    December 31, 1987, and on or before December 31, 1988, the
6    credit shall be allowed for the tax year in which the
7    property is placed in service, or, if the amount of the
8    credit exceeds the tax liability for that year, whether it
9    exceeds the original liability or the liability as later
10    amended, such excess may be carried forward and applied to
11    the tax liability of the 5 taxable years following the
12    excess credit years if the taxpayer (i) makes investments
13    which cause the creation of a minimum of 2,000 full-time
14    equivalent jobs in Illinois, (ii) is located in an
15    enterprise zone established pursuant to the Illinois
16    Enterprise Zone Act and (iii) is certified by the
17    Department of Commerce and Community Affairs (now
18    Department of Commerce and Economic Opportunity) as
19    complying with the requirements specified in clause (i)
20    and (ii) by July 1, 1986. The Department of Commerce and
21    Community Affairs (now Department of Commerce and Economic
22    Opportunity) shall notify the Department of Revenue of all
23    such certifications immediately. For tax years ending
24    after December 31, 1988, the credit shall be allowed for
25    the tax year in which the property is placed in service,
26    or, if the amount of the credit exceeds the tax liability

 

 

SB2531- 53 -LRB102 15312 HLH 20668 b

1    for that year, whether it exceeds the original liability
2    or the liability as later amended, such excess may be
3    carried forward and applied to the tax liability of the 5
4    taxable years following the excess credit years. The
5    credit shall be applied to the earliest year for which
6    there is a liability. If there is credit from more than one
7    tax year that is available to offset a liability, earlier
8    credit shall be applied first.
9        (2) The term "qualified property" means property
10    which:
11            (A) is tangible, whether new or used, including
12        buildings and structural components of buildings and
13        signs that are real property, but not including land
14        or improvements to real property that are not a
15        structural component of a building such as
16        landscaping, sewer lines, local access roads, fencing,
17        parking lots, and other appurtenances;
18            (B) is depreciable pursuant to Section 167 of the
19        Internal Revenue Code, except that "3-year property"
20        as defined in Section 168(c)(2)(A) of that Code is not
21        eligible for the credit provided by this subsection
22        (e);
23            (C) is acquired by purchase as defined in Section
24        179(d) of the Internal Revenue Code;
25            (D) is used in Illinois by a taxpayer who is
26        primarily engaged in manufacturing, or in mining coal

 

 

SB2531- 54 -LRB102 15312 HLH 20668 b

1        or fluorite, or in retailing, or was placed in service
2        on or after July 1, 2006 in a River Edge Redevelopment
3        Zone established pursuant to the River Edge
4        Redevelopment Zone Act; and
5            (E) has not previously been used in Illinois in
6        such a manner and by such a person as would qualify for
7        the credit provided by this subsection (e) or
8        subsection (f).
9        (3) For purposes of this subsection (e),
10    "manufacturing" means the material staging and production
11    of tangible personal property by procedures commonly
12    regarded as manufacturing, processing, fabrication, or
13    assembling which changes some existing material into new
14    shapes, new qualities, or new combinations. For purposes
15    of this subsection (e) the term "mining" shall have the
16    same meaning as the term "mining" in Section 613(c) of the
17    Internal Revenue Code. For purposes of this subsection
18    (e), the term "retailing" means the sale of tangible
19    personal property for use or consumption and not for
20    resale, or services rendered in conjunction with the sale
21    of tangible personal property for use or consumption and
22    not for resale. For purposes of this subsection (e),
23    "tangible personal property" has the same meaning as when
24    that term is used in the Retailers' Occupation Tax Act,
25    and, for taxable years ending after December 31, 2008,
26    does not include the generation, transmission, or

 

 

SB2531- 55 -LRB102 15312 HLH 20668 b

1    distribution of electricity.
2        (4) The basis of qualified property shall be the basis
3    used to compute the depreciation deduction for federal
4    income tax purposes.
5        (5) If the basis of the property for federal income
6    tax depreciation purposes is increased after it has been
7    placed in service in Illinois by the taxpayer, the amount
8    of such increase shall be deemed property placed in
9    service on the date of such increase in basis.
10        (6) The term "placed in service" shall have the same
11    meaning as under Section 46 of the Internal Revenue Code.
12        (7) If during any taxable year, any property ceases to
13    be qualified property in the hands of the taxpayer within
14    48 months after being placed in service, or the situs of
15    any qualified property is moved outside Illinois within 48
16    months after being placed in service, the Personal
17    Property Tax Replacement Income Tax for such taxable year
18    shall be increased. Such increase shall be determined by
19    (i) recomputing the investment credit which would have
20    been allowed for the year in which credit for such
21    property was originally allowed by eliminating such
22    property from such computation and, (ii) subtracting such
23    recomputed credit from the amount of credit previously
24    allowed. For the purposes of this paragraph (7), a
25    reduction of the basis of qualified property resulting
26    from a redetermination of the purchase price shall be

 

 

SB2531- 56 -LRB102 15312 HLH 20668 b

1    deemed a disposition of qualified property to the extent
2    of such reduction.
3        (8) Unless the investment credit is extended by law,
4    the basis of qualified property shall not include costs
5    incurred after December 31, 2018, except for costs
6    incurred pursuant to a binding contract entered into on or
7    before December 31, 2018.
8        (9) Each taxable year ending before December 31, 2000,
9    a partnership may elect to pass through to its partners
10    the credits to which the partnership is entitled under
11    this subsection (e) for the taxable year. A partner may
12    use the credit allocated to him or her under this
13    paragraph only against the tax imposed in subsections (c)
14    and (d) of this Section. If the partnership makes that
15    election, those credits shall be allocated among the
16    partners in the partnership in accordance with the rules
17    set forth in Section 704(b) of the Internal Revenue Code,
18    and the rules promulgated under that Section, and the
19    allocated amount of the credits shall be allowed to the
20    partners for that taxable year. The partnership shall make
21    this election on its Personal Property Tax Replacement
22    Income Tax return for that taxable year. The election to
23    pass through the credits shall be irrevocable.
24        For taxable years ending on or after December 31,
25    2000, a partner that qualifies its partnership for a
26    subtraction under subparagraph (I) of paragraph (2) of

 

 

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1    subsection (d) of Section 203 or a shareholder that
2    qualifies a Subchapter S corporation for a subtraction
3    under subparagraph (S) of paragraph (2) of subsection (b)
4    of Section 203 shall be allowed a credit under this
5    subsection (e) equal to its share of the credit earned
6    under this subsection (e) during the taxable year by the
7    partnership or Subchapter S corporation, determined in
8    accordance with the determination of income and
9    distributive share of income under Sections 702 and 704
10    and Subchapter S of the Internal Revenue Code. This
11    paragraph is exempt from the provisions of Section 250.
12    (f) Investment credit; Enterprise Zone; River Edge
13Redevelopment Zone.
14        (1) A taxpayer shall be allowed a credit against the
15    tax imposed by subsections (a) and (b) of this Section for
16    investment in qualified property which is placed in
17    service in an Enterprise Zone created pursuant to the
18    Illinois Enterprise Zone Act or, for property placed in
19    service on or after July 1, 2006, a River Edge
20    Redevelopment Zone established pursuant to the River Edge
21    Redevelopment Zone Act. For partners, shareholders of
22    Subchapter S corporations, and owners of limited liability
23    companies, if the liability company is treated as a
24    partnership for purposes of federal and State income
25    taxation, there shall be allowed a credit under this
26    subsection (f) to be determined in accordance with the

 

 

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1    determination of income and distributive share of income
2    under Sections 702 and 704 and Subchapter S of the
3    Internal Revenue Code. The credit shall be .5% of the
4    basis for such property. The credit shall be available
5    only in the taxable year in which the property is placed in
6    service in the Enterprise Zone or River Edge Redevelopment
7    Zone and shall not be allowed to the extent that it would
8    reduce a taxpayer's liability for the tax imposed by
9    subsections (a) and (b) of this Section to below zero. For
10    tax years ending on or after December 31, 1985, the credit
11    shall be allowed for the tax year in which the property is
12    placed in service, or, if the amount of the credit exceeds
13    the tax liability for that year, whether it exceeds the
14    original liability or the liability as later amended, such
15    excess may be carried forward and applied to the tax
16    liability of the 5 taxable years following the excess
17    credit year. The credit shall be applied to the earliest
18    year for which there is a liability. If there is credit
19    from more than one tax year that is available to offset a
20    liability, the credit accruing first in time shall be
21    applied first.
22        (2) The term qualified property means property which:
23            (A) is tangible, whether new or used, including
24        buildings and structural components of buildings;
25            (B) is depreciable pursuant to Section 167 of the
26        Internal Revenue Code, except that "3-year property"

 

 

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1        as defined in Section 168(c)(2)(A) of that Code is not
2        eligible for the credit provided by this subsection
3        (f);
4            (C) is acquired by purchase as defined in Section
5        179(d) of the Internal Revenue Code;
6            (D) is used in the Enterprise Zone or River Edge
7        Redevelopment Zone by the taxpayer; and
8            (E) has not been previously used in Illinois in
9        such a manner and by such a person as would qualify for
10        the credit provided by this subsection (f) or
11        subsection (e).
12        (3) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (4) If the basis of the property for federal income
16    tax depreciation purposes is increased after it has been
17    placed in service in the Enterprise Zone or River Edge
18    Redevelopment Zone by the taxpayer, the amount of such
19    increase shall be deemed property placed in service on the
20    date of such increase in basis.
21        (5) The term "placed in service" shall have the same
22    meaning as under Section 46 of the Internal Revenue Code.
23        (6) If during any taxable year, any property ceases to
24    be qualified property in the hands of the taxpayer within
25    48 months after being placed in service, or the situs of
26    any qualified property is moved outside the Enterprise

 

 

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1    Zone or River Edge Redevelopment Zone within 48 months
2    after being placed in service, the tax imposed under
3    subsections (a) and (b) of this Section for such taxable
4    year shall be increased. Such increase shall be determined
5    by (i) recomputing the investment credit which would have
6    been allowed for the year in which credit for such
7    property was originally allowed by eliminating such
8    property from such computation, and (ii) subtracting such
9    recomputed credit from the amount of credit previously
10    allowed. For the purposes of this paragraph (6), a
11    reduction of the basis of qualified property resulting
12    from a redetermination of the purchase price shall be
13    deemed a disposition of qualified property to the extent
14    of such reduction.
15        (7) There shall be allowed an additional credit equal
16    to 0.5% of the basis of qualified property placed in
17    service during the taxable year in a River Edge
18    Redevelopment Zone, provided such property is placed in
19    service on or after July 1, 2006, and the taxpayer's base
20    employment within Illinois has increased by 1% or more
21    over the preceding year as determined by the taxpayer's
22    employment records filed with the Illinois Department of
23    Employment Security. Taxpayers who are new to Illinois
24    shall be deemed to have met the 1% growth in base
25    employment for the first year in which they file
26    employment records with the Illinois Department of

 

 

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1    Employment Security. If, in any year, the increase in base
2    employment within Illinois over the preceding year is less
3    than 1%, the additional credit shall be limited to that
4    percentage times a fraction, the numerator of which is
5    0.5% and the denominator of which is 1%, but shall not
6    exceed 0.5%.
7        (8) For taxable years beginning on or after January 1,
8    2021, there shall be allowed an Enterprise Zone
9    construction jobs credit against the taxes imposed under
10    subsections (a) and (b) of this Section as provided in
11    Section 13 of the Illinois Enterprise Zone Act.
12        The credit or credits may not reduce the taxpayer's
13    liability to less than zero. If the amount of the credit or
14    credits exceeds the taxpayer's liability, the excess may
15    be carried forward and applied against the taxpayer's
16    liability in succeeding calendar years in the same manner
17    provided under paragraph (4) of Section 211 of this Act.
18    The credit or credits shall be applied to the earliest
19    year for which there is a tax liability. If there are
20    credits from more than one taxable year that are available
21    to offset a liability, the earlier credit shall be applied
22    first.
23        For partners, shareholders of Subchapter S
24    corporations, and owners of limited liability companies,
25    if the liability company is treated as a partnership for
26    the purposes of federal and State income taxation, there

 

 

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1    shall be allowed a credit under this Section to be
2    determined in accordance with the determination of income
3    and distributive share of income under Sections 702 and
4    704 and Subchapter S of the Internal Revenue Code.
5        The total aggregate amount of credits awarded under
6    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
7    this amendatory Act of the 101st General Assembly) shall
8    not exceed $20,000,000 in any State fiscal year.
9        This paragraph (8) is exempt from the provisions of
10    Section 250.
11    (g) (Blank).
12    (h) Investment credit; High Impact Business.
13        (1) Subject to subsections (b) and (b-5) of Section
14    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
15    be allowed a credit against the tax imposed by subsections
16    (a) and (b) of this Section for investment in qualified
17    property which is placed in service by a Department of
18    Commerce and Economic Opportunity designated High Impact
19    Business. The credit shall be .5% of the basis for such
20    property. The credit shall not be available (i) until the
21    minimum investments in qualified property set forth in
22    subdivision (a)(3)(A) of Section 5.5 of the Illinois
23    Enterprise Zone Act have been satisfied or (ii) until the
24    time authorized in subsection (b-5) of the Illinois
25    Enterprise Zone Act for entities designated as High Impact
26    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and

 

 

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1    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
2    Act, and shall not be allowed to the extent that it would
3    reduce a taxpayer's liability for the tax imposed by
4    subsections (a) and (b) of this Section to below zero. The
5    credit applicable to such investments shall be taken in
6    the taxable year in which such investments have been
7    completed. The credit for additional investments beyond
8    the minimum investment by a designated high impact
9    business authorized under subdivision (a)(3)(A) of Section
10    5.5 of the Illinois Enterprise Zone Act shall be available
11    only in the taxable year in which the property is placed in
12    service and shall not be allowed to the extent that it
13    would reduce a taxpayer's liability for the tax imposed by
14    subsections (a) and (b) of this Section to below zero. For
15    tax years ending on or after December 31, 1987, the credit
16    shall be allowed for the tax year in which the property is
17    placed in service, or, if the amount of the credit exceeds
18    the tax liability for that year, whether it exceeds the
19    original liability or the liability as later amended, such
20    excess may be carried forward and applied to the tax
21    liability of the 5 taxable years following the excess
22    credit year. The credit shall be applied to the earliest
23    year for which there is a liability. If there is credit
24    from more than one tax year that is available to offset a
25    liability, the credit accruing first in time shall be
26    applied first.

 

 

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1        Changes made in this subdivision (h)(1) by Public Act
2    88-670 restore changes made by Public Act 85-1182 and
3    reflect existing law.
4        (2) The term qualified property means property which:
5            (A) is tangible, whether new or used, including
6        buildings and structural components of buildings;
7            (B) is depreciable pursuant to Section 167 of the
8        Internal Revenue Code, except that "3-year property"
9        as defined in Section 168(c)(2)(A) of that Code is not
10        eligible for the credit provided by this subsection
11        (h);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code; and
14            (D) is not eligible for the Enterprise Zone
15        Investment Credit provided by subsection (f) of this
16        Section.
17        (3) The basis of qualified property shall be the basis
18    used to compute the depreciation deduction for federal
19    income tax purposes.
20        (4) If the basis of the property for federal income
21    tax depreciation purposes is increased after it has been
22    placed in service in a federally designated Foreign Trade
23    Zone or Sub-Zone located in Illinois by the taxpayer, the
24    amount of such increase shall be deemed property placed in
25    service on the date of such increase in basis.
26        (5) The term "placed in service" shall have the same

 

 

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1    meaning as under Section 46 of the Internal Revenue Code.
2        (6) If during any taxable year ending on or before
3    December 31, 1996, any property ceases to be qualified
4    property in the hands of the taxpayer within 48 months
5    after being placed in service, or the situs of any
6    qualified property is moved outside Illinois within 48
7    months after being placed in service, the tax imposed
8    under subsections (a) and (b) of this Section for such
9    taxable year shall be increased. Such increase shall be
10    determined by (i) recomputing the investment credit which
11    would have been allowed for the year in which credit for
12    such property was originally allowed by eliminating such
13    property from such computation, and (ii) subtracting such
14    recomputed credit from the amount of credit previously
15    allowed. For the purposes of this paragraph (6), a
16    reduction of the basis of qualified property resulting
17    from a redetermination of the purchase price shall be
18    deemed a disposition of qualified property to the extent
19    of such reduction.
20        (7) Beginning with tax years ending after December 31,
21    1996, if a taxpayer qualifies for the credit under this
22    subsection (h) and thereby is granted a tax abatement and
23    the taxpayer relocates its entire facility in violation of
24    the explicit terms and length of the contract under
25    Section 18-183 of the Property Tax Code, the tax imposed
26    under subsections (a) and (b) of this Section shall be

 

 

SB2531- 66 -LRB102 15312 HLH 20668 b

1    increased for the taxable year in which the taxpayer
2    relocated its facility by an amount equal to the amount of
3    credit received by the taxpayer under this subsection (h).
4    (h-5) High Impact Business construction constructions jobs
5credit. For taxable years beginning on or after January 1,
62021, there shall also be allowed a High Impact Business
7construction jobs credit against the tax imposed under
8subsections (a) and (b) of this Section as provided in
9subsections (i) and (j) of Section 5.5 of the Illinois
10Enterprise Zone Act.
11    The credit or credits may not reduce the taxpayer's
12liability to less than zero. If the amount of the credit or
13credits exceeds the taxpayer's liability, the excess may be
14carried forward and applied against the taxpayer's liability
15in succeeding calendar years in the manner provided under
16paragraph (4) of Section 211 of this Act. The credit or credits
17shall be applied to the earliest year for which there is a tax
18liability. If there are credits from more than one taxable
19year that are available to offset a liability, the earlier
20credit shall be applied first.
21    For partners, shareholders of Subchapter S corporations,
22and owners of limited liability companies, if the liability
23company is treated as a partnership for the purposes of
24federal and State income taxation, there shall be allowed a
25credit under this Section to be determined in accordance with
26the determination of income and distributive share of income

 

 

SB2531- 67 -LRB102 15312 HLH 20668 b

1under Sections 702 and 704 and Subchapter S of the Internal
2Revenue Code.
3    The total aggregate amount of credits awarded under the
4Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
5amendatory Act of the 101st General Assembly) shall not exceed
6$20,000,000 in any State fiscal year.
7    This subsection (h-5) is exempt from the provisions of
8Section 250.
9    (i) Credit for Personal Property Tax Replacement Income
10Tax. For tax years ending prior to December 31, 2003, a credit
11shall be allowed against the tax imposed by subsections (a)
12and (b) of this Section for the tax imposed by subsections (c)
13and (d) of this Section. This credit shall be computed by
14multiplying the tax imposed by subsections (c) and (d) of this
15Section by a fraction, the numerator of which is base income
16allocable to Illinois and the denominator of which is Illinois
17base income, and further multiplying the product by the tax
18rate imposed by subsections (a) and (b) of this Section.
19    Any credit earned on or after December 31, 1986 under this
20subsection which is unused in the year the credit is computed
21because it exceeds the tax liability imposed by subsections
22(a) and (b) for that year (whether it exceeds the original
23liability or the liability as later amended) may be carried
24forward and applied to the tax liability imposed by
25subsections (a) and (b) of the 5 taxable years following the
26excess credit year, provided that no credit may be carried

 

 

SB2531- 68 -LRB102 15312 HLH 20668 b

1forward to any year ending on or after December 31, 2003. This
2credit shall be applied first to the earliest year for which
3there is a liability. If there is a credit under this
4subsection from more than one tax year that is available to
5offset a liability the earliest credit arising under this
6subsection shall be applied first.
7    If, during any taxable year ending on or after December
831, 1986, the tax imposed by subsections (c) and (d) of this
9Section for which a taxpayer has claimed a credit under this
10subsection (i) is reduced, the amount of credit for such tax
11shall also be reduced. Such reduction shall be determined by
12recomputing the credit to take into account the reduced tax
13imposed by subsections (c) and (d). If any portion of the
14reduced amount of credit has been carried to a different
15taxable year, an amended return shall be filed for such
16taxable year to reduce the amount of credit claimed.
17    (j) Training expense credit. Beginning with tax years
18ending on or after December 31, 1986 and prior to December 31,
192003, a taxpayer shall be allowed a credit against the tax
20imposed by subsections (a) and (b) under this Section for all
21amounts paid or accrued, on behalf of all persons employed by
22the taxpayer in Illinois or Illinois residents employed
23outside of Illinois by a taxpayer, for educational or
24vocational training in semi-technical or technical fields or
25semi-skilled or skilled fields, which were deducted from gross
26income in the computation of taxable income. The credit

 

 

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1against the tax imposed by subsections (a) and (b) shall be
21.6% of such training expenses. For partners, shareholders of
3subchapter S corporations, and owners of limited liability
4companies, if the liability company is treated as a
5partnership for purposes of federal and State income taxation,
6there shall be allowed a credit under this subsection (j) to be
7determined in accordance with the determination of income and
8distributive share of income under Sections 702 and 704 and
9subchapter S of the Internal Revenue Code.
10    Any credit allowed under this subsection which is unused
11in the year the credit is earned may be carried forward to each
12of the 5 taxable years following the year for which the credit
13is first computed until it is used. This credit shall be
14applied first to the earliest year for which there is a
15liability. If there is a credit under this subsection from
16more than one tax year that is available to offset a liability,
17the earliest credit arising under this subsection shall be
18applied first. No carryforward credit may be claimed in any
19tax year ending on or after December 31, 2003.
20    (k) Research and development credit. For tax years ending
21after July 1, 1990 and prior to December 31, 2003, and
22beginning again for tax years ending on or after December 31,
232004, and ending prior to January 1, 2027, a taxpayer shall be
24allowed a credit against the tax imposed by subsections (a)
25and (b) of this Section for increasing research activities in
26this State. The credit allowed against the tax imposed by

 

 

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1subsections (a) and (b) shall be equal to 6 1/2% of the
2qualifying expenditures for increasing research activities in
3this State. For partners, shareholders of subchapter S
4corporations, and owners of limited liability companies, if
5the liability company is treated as a partnership for purposes
6of federal and State income taxation, there shall be allowed a
7credit under this subsection to be determined in accordance
8with the determination of income and distributive share of
9income under Sections 702 and 704 and subchapter S of the
10Internal Revenue Code.
11    For purposes of this subsection, "qualifying expenditures"
12means the qualifying expenditures as defined for the federal
13credit for increasing research activities which would be
14allowable under Section 41 of the Internal Revenue Code and
15which are conducted in this State, "qualifying expenditures
16for increasing research activities in this State" means the
17excess of qualifying expenditures for the taxable year in
18which incurred over qualifying expenditures for the base
19period, "qualifying expenditures for the base period" means
20the average of the qualifying expenditures for each year in
21the base period, and "base period" means the 3 taxable years
22immediately preceding the taxable year for which the
23determination is being made.
24    Any credit in excess of the tax liability for the taxable
25year may be carried forward. A taxpayer may elect to have the
26unused credit shown on its final completed return carried over

 

 

SB2531- 71 -LRB102 15312 HLH 20668 b

1as a credit against the tax liability for the following 5
2taxable years or until it has been fully used, whichever
3occurs first; provided that no credit earned in a tax year
4ending prior to December 31, 2003 may be carried forward to any
5year ending on or after December 31, 2003.
6    If an unused credit is carried forward to a given year from
72 or more earlier years, that credit arising in the earliest
8year will be applied first against the tax liability for the
9given year. If a tax liability for the given year still
10remains, the credit from the next earliest year will then be
11applied, and so on, until all credits have been used or no tax
12liability for the given year remains. Any remaining unused
13credit or credits then will be carried forward to the next
14following year in which a tax liability is incurred, except
15that no credit can be carried forward to a year which is more
16than 5 years after the year in which the expense for which the
17credit is given was incurred.
18    No inference shall be drawn from Public Act 91-644 this
19amendatory Act of the 91st General Assembly in construing this
20Section for taxable years beginning before January 1, 1999.
21    It is the intent of the General Assembly that the research
22and development credit under this subsection (k) shall apply
23continuously for all tax years ending on or after December 31,
242004 and ending prior to January 1, 2027, including, but not
25limited to, the period beginning on January 1, 2016 and ending
26on July 6, 2017 (the effective date of Public Act 100-22) this

 

 

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1amendatory Act of the 100th General Assembly. All actions
2taken in reliance on the continuation of the credit under this
3subsection (k) by any taxpayer are hereby validated.
4    (l) Environmental Remediation Tax Credit.
5        (i) For tax years ending after December 31, 1997 and
6    on or before December 31, 2001, a taxpayer shall be
7    allowed a credit against the tax imposed by subsections
8    (a) and (b) of this Section for certain amounts paid for
9    unreimbursed eligible remediation costs, as specified in
10    this subsection. For purposes of this Section,
11    "unreimbursed eligible remediation costs" means costs
12    approved by the Illinois Environmental Protection Agency
13    ("Agency") under Section 58.14 of the Environmental
14    Protection Act that were paid in performing environmental
15    remediation at a site for which a No Further Remediation
16    Letter was issued by the Agency and recorded under Section
17    58.10 of the Environmental Protection Act. The credit must
18    be claimed for the taxable year in which Agency approval
19    of the eligible remediation costs is granted. The credit
20    is not available to any taxpayer if the taxpayer or any
21    related party caused or contributed to, in any material
22    respect, a release of regulated substances on, in, or
23    under the site that was identified and addressed by the
24    remedial action pursuant to the Site Remediation Program
25    of the Environmental Protection Act. After the Pollution
26    Control Board rules are adopted pursuant to the Illinois

 

 

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1    Administrative Procedure Act for the administration and
2    enforcement of Section 58.9 of the Environmental
3    Protection Act, determinations as to credit availability
4    for purposes of this Section shall be made consistent with
5    those rules. For purposes of this Section, "taxpayer"
6    includes a person whose tax attributes the taxpayer has
7    succeeded to under Section 381 of the Internal Revenue
8    Code and "related party" includes the persons disallowed a
9    deduction for losses by paragraphs (b), (c), and (f)(1) of
10    Section 267 of the Internal Revenue Code by virtue of
11    being a related taxpayer, as well as any of its partners.
12    The credit allowed against the tax imposed by subsections
13    (a) and (b) shall be equal to 25% of the unreimbursed
14    eligible remediation costs in excess of $100,000 per site,
15    except that the $100,000 threshold shall not apply to any
16    site contained in an enterprise zone as determined by the
17    Department of Commerce and Community Affairs (now
18    Department of Commerce and Economic Opportunity). The
19    total credit allowed shall not exceed $40,000 per year
20    with a maximum total of $150,000 per site. For partners
21    and shareholders of subchapter S corporations, there shall
22    be allowed a credit under this subsection to be determined
23    in accordance with the determination of income and
24    distributive share of income under Sections 702 and 704
25    and subchapter S of the Internal Revenue Code.
26        (ii) A credit allowed under this subsection that is

 

 

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1    unused in the year the credit is earned may be carried
2    forward to each of the 5 taxable years following the year
3    for which the credit is first earned until it is used. The
4    term "unused credit" does not include any amounts of
5    unreimbursed eligible remediation costs in excess of the
6    maximum credit per site authorized under paragraph (i).
7    This credit shall be applied first to the earliest year
8    for which there is a liability. If there is a credit under
9    this subsection from more than one tax year that is
10    available to offset a liability, the earliest credit
11    arising under this subsection shall be applied first. A
12    credit allowed under this subsection may be sold to a
13    buyer as part of a sale of all or part of the remediation
14    site for which the credit was granted. The purchaser of a
15    remediation site and the tax credit shall succeed to the
16    unused credit and remaining carry-forward period of the
17    seller. To perfect the transfer, the assignor shall record
18    the transfer in the chain of title for the site and provide
19    written notice to the Director of the Illinois Department
20    of Revenue of the assignor's intent to sell the
21    remediation site and the amount of the tax credit to be
22    transferred as a portion of the sale. In no event may a
23    credit be transferred to any taxpayer if the taxpayer or a
24    related party would not be eligible under the provisions
25    of subsection (i).
26        (iii) For purposes of this Section, the term "site"

 

 

SB2531- 75 -LRB102 15312 HLH 20668 b

1    shall have the same meaning as under Section 58.2 of the
2    Environmental Protection Act.
3    (m) Education expense credit. Beginning with tax years
4ending after December 31, 1999, a taxpayer who is the
5custodian of one or more qualifying pupils shall be allowed a
6credit against the tax imposed by subsections (a) and (b) of
7this Section for qualified education expenses incurred on
8behalf of the qualifying pupils. The credit shall be equal to
925% of qualified education expenses, but in no event may the
10total credit under this subsection claimed by a family that is
11the custodian of qualifying pupils exceed (i) $500 for tax
12years ending prior to December 31, 2017, and (ii) $750 for tax
13years ending on or after December 31, 2017. In no event shall a
14credit under this subsection reduce the taxpayer's liability
15under this Act to less than zero. Notwithstanding any other
16provision of law, for taxable years beginning on or after
17January 1, 2017, no taxpayer may claim a credit under this
18subsection (m) if the taxpayer's adjusted gross income for the
19taxable year exceeds (i) $500,000, in the case of spouses
20filing a joint federal tax return or (ii) $250,000, in the case
21of all other taxpayers. This subsection is exempt from the
22provisions of Section 250 of this Act.
23    For purposes of this subsection:
24    "Qualifying pupils" means individuals who (i) are
25residents of the State of Illinois, (ii) are under the age of
2621 at the close of the school year for which a credit is

 

 

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1sought, and (iii) during the school year for which a credit is
2sought were full-time pupils enrolled in a kindergarten
3through twelfth grade education program at any school, as
4defined in this subsection.
5    "Qualified education expense" means the amount incurred on
6behalf of a qualifying pupil in excess of $250 for tuition,
7book fees, and lab fees at the school in which the pupil is
8enrolled during the regular school year.
9    "School" means any public or nonpublic elementary or
10secondary school in Illinois that is in compliance with Title
11VI of the Civil Rights Act of 1964 and attendance at which
12satisfies the requirements of Section 26-1 of the School Code,
13except that nothing shall be construed to require a child to
14attend any particular public or nonpublic school to qualify
15for the credit under this Section.
16    "Custodian" means, with respect to qualifying pupils, an
17Illinois resident who is a parent, the parents, a legal
18guardian, or the legal guardians of the qualifying pupils.
19    (n) River Edge Redevelopment Zone site remediation tax
20credit.
21        (i) For tax years ending on or after December 31,
22    2006, a taxpayer shall be allowed a credit against the tax
23    imposed by subsections (a) and (b) of this Section for
24    certain amounts paid for unreimbursed eligible remediation
25    costs, as specified in this subsection. For purposes of
26    this Section, "unreimbursed eligible remediation costs"

 

 

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1    means costs approved by the Illinois Environmental
2    Protection Agency ("Agency") under Section 58.14a of the
3    Environmental Protection Act that were paid in performing
4    environmental remediation at a site within a River Edge
5    Redevelopment Zone for which a No Further Remediation
6    Letter was issued by the Agency and recorded under Section
7    58.10 of the Environmental Protection Act. The credit must
8    be claimed for the taxable year in which Agency approval
9    of the eligible remediation costs is granted. The credit
10    is not available to any taxpayer if the taxpayer or any
11    related party caused or contributed to, in any material
12    respect, a release of regulated substances on, in, or
13    under the site that was identified and addressed by the
14    remedial action pursuant to the Site Remediation Program
15    of the Environmental Protection Act. Determinations as to
16    credit availability for purposes of this Section shall be
17    made consistent with rules adopted by the Pollution
18    Control Board pursuant to the Illinois Administrative
19    Procedure Act for the administration and enforcement of
20    Section 58.9 of the Environmental Protection Act. For
21    purposes of this Section, "taxpayer" includes a person
22    whose tax attributes the taxpayer has succeeded to under
23    Section 381 of the Internal Revenue Code and "related
24    party" includes the persons disallowed a deduction for
25    losses by paragraphs (b), (c), and (f)(1) of Section 267
26    of the Internal Revenue Code by virtue of being a related

 

 

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1    taxpayer, as well as any of its partners. The credit
2    allowed against the tax imposed by subsections (a) and (b)
3    shall be equal to 25% of the unreimbursed eligible
4    remediation costs in excess of $100,000 per site.
5        (ii) A credit allowed under this subsection that is
6    unused in the year the credit is earned may be carried
7    forward to each of the 5 taxable years following the year
8    for which the credit is first earned until it is used. This
9    credit shall be applied first to the earliest year for
10    which there is a liability. If there is a credit under this
11    subsection from more than one tax year that is available
12    to offset a liability, the earliest credit arising under
13    this subsection shall be applied first. A credit allowed
14    under this subsection may be sold to a buyer as part of a
15    sale of all or part of the remediation site for which the
16    credit was granted. The purchaser of a remediation site
17    and the tax credit shall succeed to the unused credit and
18    remaining carry-forward period of the seller. To perfect
19    the transfer, the assignor shall record the transfer in
20    the chain of title for the site and provide written notice
21    to the Director of the Illinois Department of Revenue of
22    the assignor's intent to sell the remediation site and the
23    amount of the tax credit to be transferred as a portion of
24    the sale. In no event may a credit be transferred to any
25    taxpayer if the taxpayer or a related party would not be
26    eligible under the provisions of subsection (i).

 

 

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1        (iii) For purposes of this Section, the term "site"
2    shall have the same meaning as under Section 58.2 of the
3    Environmental Protection Act.
4    (o) For each of taxable years during the Compassionate Use
5of Medical Cannabis Program, a surcharge is imposed on all
6taxpayers on income arising from the sale or exchange of
7capital assets, depreciable business property, real property
8used in the trade or business, and Section 197 intangibles of
9an organization registrant under the Compassionate Use of
10Medical Cannabis Program Act. The amount of the surcharge is
11equal to the amount of federal income tax liability for the
12taxable year attributable to those sales and exchanges. The
13surcharge imposed does not apply if:
14        (1) the medical cannabis cultivation center
15    registration, medical cannabis dispensary registration, or
16    the property of a registration is transferred as a result
17    of any of the following:
18            (A) bankruptcy, a receivership, or a debt
19        adjustment initiated by or against the initial
20        registration or the substantial owners of the initial
21        registration;
22            (B) cancellation, revocation, or termination of
23        any registration by the Illinois Department of Public
24        Health;
25            (C) a determination by the Illinois Department of
26        Public Health that transfer of the registration is in

 

 

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1        the best interests of Illinois qualifying patients as
2        defined by the Compassionate Use of Medical Cannabis
3        Program Act;
4            (D) the death of an owner of the equity interest in
5        a registrant;
6            (E) the acquisition of a controlling interest in
7        the stock or substantially all of the assets of a
8        publicly traded company;
9            (F) a transfer by a parent company to a wholly
10        owned subsidiary; or
11            (G) the transfer or sale to or by one person to
12        another person where both persons were initial owners
13        of the registration when the registration was issued;
14        or
15        (2) the cannabis cultivation center registration,
16    medical cannabis dispensary registration, or the
17    controlling interest in a registrant's property is
18    transferred in a transaction to lineal descendants in
19    which no gain or loss is recognized or as a result of a
20    transaction in accordance with Section 351 of the Internal
21    Revenue Code in which no gain or loss is recognized.
22(Source: P.A. 100-22, eff. 7-6-17; 101-8, see Section 99 for
23effective date; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
24101-207, eff. 8-2-19; 101-363, eff. 8-9-19; revised 11-18-20.)
 
25    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)

 

 

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1    Sec. 203. Base income defined.
2    (a) Individuals.
3        (1) In general. In the case of an individual, base
4    income means an amount equal to the taxpayer's adjusted
5    gross income for the taxable year as modified by paragraph
6    (2).
7        (2) Modifications. The adjusted gross income referred
8    to in paragraph (1) shall be modified by adding thereto
9    the sum of the following amounts:
10            (A) An amount equal to all amounts paid or accrued
11        to the taxpayer as interest or dividends during the
12        taxable year to the extent excluded from gross income
13        in the computation of adjusted gross income, except
14        stock dividends of qualified public utilities
15        described in Section 305(e) of the Internal Revenue
16        Code;
17            (B) An amount equal to the amount of tax imposed by
18        this Act to the extent deducted from gross income in
19        the computation of adjusted gross income for the
20        taxable year;
21            (C) An amount equal to the amount received during
22        the taxable year as a recovery or refund of real
23        property taxes paid with respect to the taxpayer's
24        principal residence under the Revenue Act of 1939 and
25        for which a deduction was previously taken under
26        subparagraph (L) of this paragraph (2) prior to July

 

 

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1        1, 1991, the retrospective application date of Article
2        4 of Public Act 87-17. In the case of multi-unit or
3        multi-use structures and farm dwellings, the taxes on
4        the taxpayer's principal residence shall be that
5        portion of the total taxes for the entire property
6        which is attributable to such principal residence;
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 adjusted gross income;
11            (D-5) An amount, to the extent not included in
12        adjusted gross income, equal to the amount of money
13        withdrawn by the taxpayer in the taxable year from a
14        medical care savings account and the interest earned
15        on the account in the taxable year of a withdrawal
16        pursuant to subsection (b) of Section 20 of the
17        Medical Care Savings Account Act or subsection (b) of
18        Section 20 of the Medical Care Savings Account Act of
19        2000;
20            (D-10) For taxable years ending after December 31,
21        1997, an amount equal to any eligible remediation
22        costs that the individual deducted in computing
23        adjusted gross income and for which the individual
24        claims a credit under subsection (l) of Section 201;
25            (D-15) For taxable years 2001 and thereafter, an
26        amount equal to the bonus depreciation deduction taken

 

 

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

 

 

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

 

 

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

 

 

SB2531- 86 -LRB102 15312 HLH 20668 b

1            the taxpayer establishes by clear and convincing
2            evidence that the adjustments are unreasonable; or
3            if the taxpayer and the Director agree in writing
4            to the application or use of an alternative method
5            of apportionment under Section 304(f).
6                Nothing in this subsection shall preclude the
7            Director from making any other adjustment
8            otherwise allowed under Section 404 of this Act
9            for any tax year beginning after the effective
10            date of this amendment provided such adjustment is
11            made pursuant to regulation adopted by the
12            Department and such regulations provide methods
13            and standards by which the Department will utilize
14            its authority under Section 404 of this Act;
15            (D-18) An amount equal to the amount of intangible
16        expenses and costs otherwise allowed as a deduction in
17        computing base income, and that were paid, accrued, or
18        incurred, directly or indirectly, (i) for taxable
19        years ending on or after December 31, 2004, to a
20        foreign person who would be a member of the same
21        unitary business group but for the fact that the
22        foreign person's business activity outside the United
23        States is 80% or more of that person's total business
24        activity and (ii) for taxable years ending on or after
25        December 31, 2008, to a person who would be a member of
26        the same unitary business group but for the fact that

 

 

SB2531- 87 -LRB102 15312 HLH 20668 b

1        the person is prohibited under Section 1501(a)(27)
2        from being included in the unitary business group
3        because he or she is ordinarily required to apportion
4        business income under different subsections of Section
5        304. The addition modification required by this
6        subparagraph shall be reduced to the extent that
7        dividends were included in base income of the unitary
8        group for the same taxable year and received by the
9        taxpayer or by a member of the taxpayer's unitary
10        business group (including amounts included in gross
11        income under Sections 951 through 964 of the Internal
12        Revenue Code and amounts included in gross income
13        under Section 78 of the Internal Revenue Code) with
14        respect to the stock of the same person to whom the
15        intangible expenses and costs were directly or
16        indirectly paid, incurred, or accrued. The preceding
17        sentence does not apply to the extent that the same
18        dividends caused a reduction to the addition
19        modification required under Section 203(a)(2)(D-17) of
20        this Act. As used in this subparagraph, the term
21        "intangible expenses and costs" includes (1) expenses,
22        losses, and costs for, or related to, the direct or
23        indirect acquisition, use, maintenance or management,
24        ownership, sale, exchange, or any other disposition of
25        intangible property; (2) losses incurred, directly or
26        indirectly, from factoring transactions or discounting

 

 

SB2531- 88 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 89 -LRB102 15312 HLH 20668 b

1                taxpayer and the person did not have as a
2                principal purpose the avoidance of Illinois
3                income tax, and is paid pursuant to a contract
4                or agreement that reflects arm's-length terms;
5                or
6                (iii) any item of intangible expense or cost
7            paid, accrued, or incurred, directly or
8            indirectly, from a transaction with a person if
9            the taxpayer establishes by clear and convincing
10            evidence, that the adjustments are unreasonable;
11            or if the taxpayer and the Director agree in
12            writing to the application or use of an
13            alternative method of apportionment under Section
14            304(f);
15                Nothing in this subsection shall preclude the
16            Director from making any other adjustment
17            otherwise allowed under Section 404 of this Act
18            for any tax year beginning after the effective
19            date of this amendment provided such adjustment is
20            made pursuant to regulation adopted by the
21            Department and such regulations provide methods
22            and standards by which the Department will utilize
23            its authority under Section 404 of this Act;
24            (D-19) For taxable years ending on or after
25        December 31, 2008, an amount equal to the amount of
26        insurance premium expenses and costs otherwise allowed

 

 

SB2531- 90 -LRB102 15312 HLH 20668 b

1        as a deduction in computing base income, and that were
2        paid, accrued, or incurred, directly or indirectly, to
3        a person who would be a member of the same unitary
4        business group but for the fact that the person is
5        prohibited under Section 1501(a)(27) from being
6        included in the unitary business group because he or
7        she is ordinarily required to apportion business
8        income under different subsections of Section 304. The
9        addition modification required by this subparagraph
10        shall be reduced to the extent that dividends were
11        included in base income of the unitary group for the
12        same taxable year and received by the taxpayer or by a
13        member of the taxpayer's unitary business group
14        (including amounts included in gross income under
15        Sections 951 through 964 of the Internal Revenue Code
16        and amounts included in gross income under Section 78
17        of the Internal Revenue Code) with respect to the
18        stock of the same person to whom the premiums and costs
19        were directly or indirectly paid, incurred, or
20        accrued. The preceding sentence does not apply to the
21        extent that the same dividends caused a reduction to
22        the addition modification required under Section
23        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
24        Act; .
25            (D-20) For taxable years beginning on or after
26        January 1, 2002 and ending on or before December 31,

 

 

SB2531- 91 -LRB102 15312 HLH 20668 b

1        2006, in the case of a distribution from a qualified
2        tuition program under Section 529 of the Internal
3        Revenue Code, other than (i) a distribution from a
4        College Savings Pool created under Section 16.5 of the
5        State Treasurer Act or (ii) a distribution from the
6        Illinois Prepaid Tuition Trust Fund, an amount equal
7        to the amount excluded from gross income under Section
8        529(c)(3)(B). For taxable years beginning on or after
9        January 1, 2007, in the case of a distribution from a
10        qualified tuition program under Section 529 of the
11        Internal Revenue Code, other than (i) a distribution
12        from a College Savings Pool created under Section 16.5
13        of the State Treasurer Act, (ii) a distribution from
14        the Illinois Prepaid Tuition Trust Fund, or (iii) a
15        distribution from a qualified tuition program under
16        Section 529 of the Internal Revenue Code that (I)
17        adopts and determines that its offering materials
18        comply with the College Savings Plans Network's
19        disclosure principles and (II) has made reasonable
20        efforts to inform in-state residents of the existence
21        of in-state qualified tuition programs by informing
22        Illinois residents directly and, where applicable, to
23        inform financial intermediaries distributing the
24        program to inform in-state residents of the existence
25        of in-state qualified tuition programs at least
26        annually, an amount equal to the amount excluded from

 

 

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1        gross income under Section 529(c)(3)(B).
2            For the purposes of this subparagraph (D-20), a
3        qualified tuition program has made reasonable efforts
4        if it makes disclosures (which may use the term
5        "in-state program" or "in-state plan" and need not
6        specifically refer to Illinois or its qualified
7        programs by name) (i) directly to prospective
8        participants in its offering materials or makes a
9        public disclosure, such as a website posting; and (ii)
10        where applicable, to intermediaries selling the
11        out-of-state program in the same manner that the
12        out-of-state program distributes its offering
13        materials;
14            (D-20.5) For taxable years beginning on or after
15        January 1, 2018, in the case of a distribution from a
16        qualified ABLE program under Section 529A of the
17        Internal Revenue Code, other than a distribution from
18        a qualified ABLE program created under Section 16.6 of
19        the State Treasurer Act, an amount equal to the amount
20        excluded from gross income under Section 529A(c)(1)(B)
21        of the Internal Revenue Code;
22            (D-21) For taxable years beginning on or after
23        January 1, 2007, in the case of transfer of moneys from
24        a qualified tuition program under Section 529 of the
25        Internal Revenue Code that is administered by the
26        State to an out-of-state program, an amount equal to

 

 

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1        the amount of moneys previously deducted from base
2        income under subsection (a)(2)(Y) of this Section;
3            (D-21.5) For taxable years beginning on or after
4        January 1, 2018, in the case of the transfer of moneys
5        from a qualified tuition program under Section 529 or
6        a qualified ABLE program under Section 529A of the
7        Internal Revenue Code that is administered by this
8        State to an ABLE account established under an
9        out-of-state ABLE account program, an amount equal to
10        the contribution component of the transferred amount
11        that was previously deducted from base income under
12        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
13        Section;
14            (D-22) For taxable years beginning on or after
15        January 1, 2009, and prior to January 1, 2018, in the
16        case of a nonqualified withdrawal or refund of moneys
17        from a qualified tuition program under Section 529 of
18        the Internal Revenue Code administered by the State
19        that is not used for qualified expenses at an eligible
20        education institution, an amount equal to the
21        contribution component of the nonqualified withdrawal
22        or refund that was previously deducted from base
23        income under subsection (a)(2)(y) of this Section,
24        provided that the withdrawal or refund did not result
25        from the beneficiary's death or disability. For
26        taxable years beginning on or after January 1, 2018:

 

 

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1        (1) in the case of a nonqualified withdrawal or
2        refund, as defined under Section 16.5 of the State
3        Treasurer Act, of moneys from a qualified tuition
4        program under Section 529 of the Internal Revenue Code
5        administered by the State, an amount equal to the
6        contribution component of the nonqualified withdrawal
7        or refund that was previously deducted from base
8        income under subsection (a)(2)(Y) of this Section, and
9        (2) in the case of a nonqualified withdrawal or refund
10        from a qualified ABLE program under Section 529A of
11        the Internal Revenue Code administered by the State
12        that is not used for qualified disability expenses, an
13        amount equal to the contribution component of the
14        nonqualified withdrawal or refund that was previously
15        deducted from base income under subsection (a)(2)(HH)
16        of this Section;
17            (D-23) An amount equal to the credit allowable to
18        the taxpayer under Section 218(a) of this Act,
19        determined without regard to Section 218(c) of this
20        Act;
21            (D-24) For taxable years ending on or after
22        December 31, 2017, an amount equal to the deduction
23        allowed under Section 199 of the Internal Revenue Code
24        for the taxable year;
25    and by deducting from the total so obtained the sum of the
26    following amounts:

 

 

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

 

 

SB2531- 96 -LRB102 15312 HLH 20668 b

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

 

 

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

 

 

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

 

 

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

 

 

SB2531- 100 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 101 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 102 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 103 -LRB102 15312 HLH 20668 b

1        2004, moneys contributed in the taxable year to a
2        College Savings Pool account under Section 16.5 of the
3        State Treasurer Act, except that amounts excluded from
4        gross income under Section 529(c)(3)(C)(i) of the
5        Internal Revenue Code shall not be considered moneys
6        contributed under this subparagraph (Y). For taxable
7        years beginning on or after January 1, 2005, a maximum
8        of $10,000 contributed in the taxable year to (i) a
9        College Savings Pool account under Section 16.5 of the
10        State Treasurer Act or (ii) the Illinois Prepaid
11        Tuition Trust Fund, except that amounts excluded from
12        gross income under Section 529(c)(3)(C)(i) of the
13        Internal Revenue Code shall not be considered moneys
14        contributed under this subparagraph (Y). For purposes
15        of this subparagraph, contributions made by an
16        employer on behalf of an employee, or matching
17        contributions made by an employee, shall be treated as
18        made by the employee. This subparagraph (Y) is exempt
19        from the provisions of Section 250;
20            (Z) For taxable years 2001 and thereafter, for the
21        taxable year in which the bonus depreciation deduction
22        is taken on the taxpayer's federal income tax return
23        under subsection (k) of Section 168 of the Internal
24        Revenue Code and for each applicable taxable year
25        thereafter, an amount equal to "x", where:
26                (1) "y" equals the amount of the depreciation

 

 

SB2531- 104 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 105 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 106 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 107 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 108 -LRB102 15312 HLH 20668 b

1        203(a)(2)(D-18) for intangible expenses and costs
2        paid, accrued, or incurred, directly or indirectly, to
3        the same foreign person. This subparagraph (EE) is
4        exempt from the provisions of Section 250;
5            (FF) An amount equal to any amount awarded to the
6        taxpayer during the taxable year by the Court of
7        Claims under subsection (c) of Section 8 of the Court
8        of Claims Act for time unjustly served in a State
9        prison. This subparagraph (FF) is exempt from the
10        provisions of Section 250;
11            (GG) For taxable years ending on or after December
12        31, 2011, in the case of a taxpayer who was required to
13        add back any insurance premiums under Section
14        203(a)(2)(D-19), such taxpayer may elect to subtract
15        that part of a reimbursement received from the
16        insurance company equal to the amount of the expense
17        or loss (including expenses incurred by the insurance
18        company) that would have been taken into account as a
19        deduction for federal income tax purposes if the
20        expense or loss had been uninsured. If a taxpayer
21        makes the election provided for by this subparagraph
22        (GG), the insurer to which the premiums were paid must
23        add back to income the amount subtracted by the
24        taxpayer pursuant to this subparagraph (GG). This
25        subparagraph (GG) is exempt from the provisions of
26        Section 250; and

 

 

SB2531- 109 -LRB102 15312 HLH 20668 b

1            (HH) For taxable years beginning on or after
2        January 1, 2018 and prior to January 1, 2023, a maximum
3        of $10,000 contributed in the taxable year to a
4        qualified ABLE account under Section 16.6 of the State
5        Treasurer Act, except that amounts excluded from gross
6        income under Section 529(c)(3)(C)(i) or Section
7        529A(c)(1)(C) of the Internal Revenue Code shall not
8        be considered moneys contributed under this
9        subparagraph (HH). For purposes of this subparagraph
10        (HH), contributions made by an employer on behalf of
11        an employee, or matching contributions made by an
12        employee, shall be treated as made by the employee;
13        and .
14            (II) An amount equal to a partner's or
15        shareholder's share of business income apportionable
16        to Illinois and nonbusiness income allocated to
17        Illinois under Section 303 of this Act that is
18        distributable to each partner or shareholder and which
19        was included by a partnership or Subchapter S
20        corporation in the computing the elective tax under
21        subsection (d-2) of Section 201. This subparagraph
22        (II) is exempt from the provisions of Section 250.
 
23    (b) Corporations.
24        (1) In general. In the case of a corporation, base
25    income means an amount equal to the taxpayer's taxable

 

 

SB2531- 110 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 111 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 112 -LRB102 15312 HLH 20668 b

1        than one other taxable year ending prior to December
2        31, 1986, the addition modification provided in this
3        subparagraph (E) shall be the sum of the amounts
4        computed independently under the preceding provisions
5        of this subparagraph (E) for each such taxable year;
6            (E-5) For taxable years ending after December 31,
7        1997, an amount equal to any eligible remediation
8        costs that the corporation deducted in computing
9        adjusted gross income and for which the corporation
10        claims a credit under subsection (l) of Section 201;
11            (E-10) 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
15        the Internal Revenue Code;
16            (E-11) 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 (E-10), then
20        an amount equal to the aggregate amount of the
21        deductions taken in all taxable years under
22        subparagraph (T) 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

 

 

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1        was allowed in any taxable year to make a subtraction
2        modification under subparagraph (T), 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            (E-12) An amount equal to the amount otherwise
8        allowed as a deduction in computing base income for
9        interest paid, accrued, or incurred, directly or
10        indirectly, (i) for taxable years ending on or after
11        December 31, 2004, to a foreign person who would be a
12        member of the same unitary business group but for the
13        fact the foreign person's business activity outside
14        the United States is 80% or more of the foreign
15        person's total business activity and (ii) for taxable
16        years ending on or after December 31, 2008, to a person
17        who would be a member of the same unitary business
18        group but for the fact that the person is prohibited
19        under Section 1501(a)(27) from being included in the
20        unitary business group because he or she is ordinarily
21        required to apportion business income under different
22        subsections of Section 304. The addition modification
23        required by this subparagraph shall be reduced to the
24        extent that dividends were included in base income of
25        the unitary group for the same taxable year and
26        received by the taxpayer or by a member of the

 

 

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1        taxpayer's unitary business group (including amounts
2        included in gross income pursuant to Sections 951
3        through 964 of the Internal Revenue Code and amounts
4        included in gross income under Section 78 of the
5        Internal Revenue Code) with respect to the stock of
6        the same person to whom the interest was paid,
7        accrued, or incurred.
8            This paragraph shall not apply to the following:
9                (i) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person who
11            is subject in a foreign country or state, other
12            than a state which requires mandatory unitary
13            reporting, to a tax on or measured by net income
14            with respect to such interest; or
15                (ii) an item of interest paid, accrued, or
16            incurred, directly or indirectly, to a person if
17            the taxpayer can establish, based on a
18            preponderance of the evidence, both of the
19            following:
20                    (a) the person, during the same taxable
21                year, paid, accrued, or incurred, the interest
22                to a person that is not a related member, and
23                    (b) the transaction giving rise to the
24                interest expense between the taxpayer and the
25                person did not have as a principal purpose the
26                avoidance of Illinois income tax, and is paid

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB2531- 120 -LRB102 15312 HLH 20668 b

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the
4        stock of the same person to whom the premiums and costs
5        were directly or indirectly paid, incurred, or
6        accrued. The preceding sentence does not apply to the
7        extent that the same dividends caused a reduction to
8        the addition modification required under Section
9        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
10        Act;
11            (E-15) For taxable years beginning after December
12        31, 2008, any deduction for dividends paid by a
13        captive real estate investment trust that is allowed
14        to a real estate investment trust under Section
15        857(b)(2)(B) of the Internal Revenue Code for
16        dividends paid;
17            (E-16) An amount equal to the credit allowable to
18        the taxpayer under Section 218(a) of this Act,
19        determined without regard to Section 218(c) of this
20        Act;
21            (E-17) For taxable years ending on or after
22        December 31, 2017, an amount equal to the deduction
23        allowed under Section 199 of the Internal Revenue Code
24        for the taxable year;
25            (E-18) for taxable years beginning after December
26        31, 2018, an amount equal to the deduction allowed

 

 

SB2531- 121 -LRB102 15312 HLH 20668 b

1        under Section 250(a)(1)(A) of the Internal Revenue
2        Code for the taxable year.
3    and by deducting from the total so obtained the sum of the
4    following amounts:
5            (F) An amount equal to the amount of any tax
6        imposed by this Act which was refunded to the taxpayer
7        and included in such total for the taxable year;
8            (G) An amount equal to any amount included in such
9        total under Section 78 of the Internal Revenue Code;
10            (H) In the case of a regulated investment company,
11        an amount equal to the amount of exempt interest
12        dividends as defined in subsection (b)(5) of Section
13        852 of the Internal Revenue Code, paid to shareholders
14        for the taxable year;
15            (I) With the exception of any amounts subtracted
16        under subparagraph (J), an amount equal to the sum of
17        all amounts disallowed as deductions by (i) Sections
18        171(a)(2), and 265(a)(2) and amounts disallowed as
19        interest expense by Section 291(a)(3) of the Internal
20        Revenue Code, and all amounts of expenses allocable to
21        interest and disallowed as deductions by Section
22        265(a)(1) of the Internal Revenue Code; and (ii) for
23        taxable years ending on or after August 13, 1999,
24        Sections 171(a)(2), 265, 280C, 291(a)(3), and
25        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
26        for tax years ending on or after December 31, 2011,

 

 

SB2531- 122 -LRB102 15312 HLH 20668 b

1        amounts disallowed as deductions by Section 45G(e)(3)
2        of the Internal Revenue Code and, for taxable years
3        ending on or after December 31, 2008, any amount
4        included in gross income under Section 87 of the
5        Internal Revenue Code and the policyholders' share of
6        tax-exempt interest of a life insurance company under
7        Section 807(a)(2)(B) of the Internal Revenue Code (in
8        the case of a life insurance company with gross income
9        from a decrease in reserves for the tax year) or
10        Section 807(b)(1)(B) of the Internal Revenue Code (in
11        the case of a life insurance company allowed a
12        deduction for an increase in reserves for the tax
13        year); the provisions of this subparagraph are exempt
14        from the provisions of Section 250;
15            (J) An amount equal to all amounts included in
16        such total which are exempt from taxation by this
17        State either by reason of its statutes or Constitution
18        or by reason of the Constitution, treaties or statutes
19        of the United States; provided that, in the case of any
20        statute of this State that exempts income derived from
21        bonds or other obligations from the tax imposed under
22        this Act, the amount exempted shall be the interest
23        net of bond premium amortization;
24            (K) An amount equal to those dividends included in
25        such total which were paid by a corporation which
26        conducts business operations in a River Edge

 

 

SB2531- 123 -LRB102 15312 HLH 20668 b

1        Redevelopment Zone or zones created under the River
2        Edge Redevelopment Zone Act and conducts substantially
3        all of its operations in a River Edge Redevelopment
4        Zone or zones. This subparagraph (K) is exempt from
5        the provisions of Section 250;
6            (L) An amount equal to those dividends included in
7        such total that were paid by a corporation that
8        conducts business operations in a federally designated
9        Foreign Trade Zone or Sub-Zone and that is designated
10        a High Impact Business located in Illinois; provided
11        that dividends eligible for the deduction provided in
12        subparagraph (K) of paragraph 2 of this subsection
13        shall not be eligible for the deduction provided under
14        this subparagraph (L);
15            (M) For any taxpayer that is a financial
16        organization within the meaning of Section 304(c) of
17        this Act, an amount included in such total as interest
18        income from a loan or loans made by such taxpayer to a
19        borrower, to the extent that such a loan is secured by
20        property which is eligible for the River Edge
21        Redevelopment Zone Investment Credit. To determine the
22        portion of a loan or loans that is secured by property
23        eligible for a Section 201(f) investment credit to the
24        borrower, the entire principal amount of the loan or
25        loans between the taxpayer and the borrower should be
26        divided into the basis of the Section 201(f)

 

 

SB2531- 124 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 125 -LRB102 15312 HLH 20668 b

1        in a federally designated Foreign Trade Zone or
2        Sub-Zone located in Illinois. No taxpayer that is
3        eligible for the deduction provided in subparagraph
4        (M) of paragraph (2) of this subsection shall be
5        eligible for the deduction provided under this
6        subparagraph (M-1). The subtraction modification
7        available to taxpayers in any year under this
8        subsection shall be that portion of the total interest
9        paid by the borrower with respect to such loan
10        attributable to the eligible property as calculated
11        under the previous sentence;
12            (N) Two times any contribution made during the
13        taxable year to a designated zone organization to the
14        extent that the contribution (i) qualifies as a
15        charitable contribution under subsection (c) of
16        Section 170 of the Internal Revenue Code and (ii)
17        must, by its terms, be used for a project approved by
18        the Department of Commerce and Economic Opportunity
19        under Section 11 of the Illinois Enterprise Zone Act
20        or under Section 10-10 of the River Edge Redevelopment
21        Zone Act. This subparagraph (N) is exempt from the
22        provisions of Section 250;
23            (O) An amount equal to: (i) 85% for taxable years
24        ending on or before December 31, 1992, or, a
25        percentage equal to the percentage allowable under
26        Section 243(a)(1) of the Internal Revenue Code of 1986

 

 

SB2531- 126 -LRB102 15312 HLH 20668 b

1        for taxable years ending after December 31, 1992, of
2        the amount by which dividends included in taxable
3        income and received from a corporation that is not
4        created or organized under the laws of the United
5        States or any state or political subdivision thereof,
6        including, for taxable years ending on or after
7        December 31, 1988, dividends received or deemed
8        received or paid or deemed paid under Sections 951
9        through 965 of the Internal Revenue Code, exceed the
10        amount of the modification provided under subparagraph
11        (G) of paragraph (2) of this subsection (b) which is
12        related to such dividends, and including, for taxable
13        years ending on or after December 31, 2008, dividends
14        received from a captive real estate investment trust;
15        plus (ii) 100% of the amount by which dividends,
16        included in taxable income and received, including,
17        for taxable years ending on or after December 31,
18        1988, dividends received or deemed received or paid or
19        deemed paid under Sections 951 through 964 of the
20        Internal Revenue Code and including, for taxable years
21        ending on or after December 31, 2008, dividends
22        received from a captive real estate investment trust,
23        from any such corporation specified in clause (i) that
24        would but for the provisions of Section 1504(b)(3) of
25        the Internal Revenue Code be treated as a member of the
26        affiliated group which includes the dividend

 

 

SB2531- 127 -LRB102 15312 HLH 20668 b

1        recipient, exceed the amount of the modification
2        provided under subparagraph (G) of paragraph (2) of
3        this subsection (b) which is related to such
4        dividends. This subparagraph (O) is exempt from the
5        provisions of Section 250 of this Act;
6            (P) An amount equal to any contribution made to a
7        job training project established pursuant to the Tax
8        Increment Allocation Redevelopment Act;
9            (Q) An amount equal to the amount of the deduction
10        used to compute the federal income tax credit for
11        restoration of substantial amounts held under claim of
12        right for the taxable year pursuant to Section 1341 of
13        the Internal Revenue Code;
14            (R) On and after July 20, 1999, in the case of an
15        attorney-in-fact with respect to whom an interinsurer
16        or a reciprocal insurer has made the election under
17        Section 835 of the Internal Revenue Code, 26 U.S.C.
18        835, an amount equal to the excess, if any, of the
19        amounts paid or incurred by that interinsurer or
20        reciprocal insurer in the taxable year to the
21        attorney-in-fact over the deduction allowed to that
22        interinsurer or reciprocal insurer with respect to the
23        attorney-in-fact under Section 835(b) of the Internal
24        Revenue Code for the taxable year; the provisions of
25        this subparagraph are exempt from the provisions of
26        Section 250;

 

 

SB2531- 128 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 129 -LRB102 15312 HLH 20668 b

1            0.429); and
2                (3) for taxable years ending after December
3            31, 2005:
4                    (i) for property on which a bonus
5                depreciation deduction of 30% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                30 and then divided by 70 (or "y" multiplied
8                by 0.429); and
9                    (ii) for property on which a bonus
10                depreciation deduction of 50% of the adjusted
11                basis was taken, "x" equals "y" multiplied by
12                1.0.
13            The aggregate amount deducted under this
14        subparagraph in all taxable years for any one piece of
15        property may not exceed the amount of the bonus
16        depreciation deduction taken on that property on the
17        taxpayer's federal income tax return under subsection
18        (k) of Section 168 of the Internal Revenue Code. This
19        subparagraph (T) is exempt from the provisions of
20        Section 250;
21            (U) If the taxpayer sells, transfers, abandons, or
22        otherwise disposes of property for which the taxpayer
23        was required in any taxable year to make an addition
24        modification under subparagraph (E-10), then an amount
25        equal to that addition modification.
26            If the taxpayer continues to own property through

 

 

SB2531- 130 -LRB102 15312 HLH 20668 b

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

 

 

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

 

 

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

 

 

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1            (Y) For taxable years ending on or after December
2        31, 2011, in the case of a taxpayer who was required to
3        add back any insurance premiums under Section
4        203(b)(2)(E-14), such taxpayer may elect to subtract
5        that part of a reimbursement received from the
6        insurance company equal to the amount of the expense
7        or loss (including expenses incurred by the insurance
8        company) that would have been taken into account as a
9        deduction for federal income tax purposes if the
10        expense or loss had been uninsured. If a taxpayer
11        makes the election provided for by this subparagraph
12        (Y), the insurer to which the premiums were paid must
13        add back to income the amount subtracted by the
14        taxpayer pursuant to this subparagraph (Y). This
15        subparagraph (Y) is exempt from the provisions of
16        Section 250; and
17            (Z) The difference between the nondeductible
18        controlled foreign corporation dividends under Section
19        965(e)(3) of the Internal Revenue Code over the
20        taxable income of the taxpayer, computed without
21        regard to Section 965(e)(2)(A) of the Internal Revenue
22        Code, and without regard to any net operating loss
23        deduction. This subparagraph (Z) is exempt from the
24        provisions of Section 250; and .
25            (AA) An amount equal to a partner's or
26        shareholder's share of business income apportionable

 

 

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1        to Illinois and nonbusiness income allocated to
2        Illinois under Section 303 of this Act that is
3        distributable to each partner or shareholder and which
4        was included by a partnership or Subchapter S
5        corporation in the computing the elective tax under
6        subsection (d-2) of Section 201. This subparagraph
7        (AA) is exempt from the provisions of Section 250.
8        (3) Special rule. For purposes of paragraph (2)(A),
9    "gross income" in the case of a life insurance company,
10    for tax years ending on and after December 31, 1994, and
11    prior to December 31, 2011, shall mean the gross
12    investment income for the taxable year and, for tax years
13    ending on or after December 31, 2011, shall mean all
14    amounts included in life insurance gross income under
15    Section 803(a)(3) of the Internal Revenue Code.
 
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

 

 

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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
12        year;
13            (D) The amount of any net operating loss deduction
14        taken in arriving at taxable income, other than a net
15        operating loss carried forward from a taxable year
16        ending prior to December 31, 1986;
17            (E) For taxable years in which a net operating
18        loss carryback or carryforward from a taxable year
19        ending prior to December 31, 1986 is an element of
20        taxable income under paragraph (1) of subsection (e)
21        or subparagraph (E) of paragraph (2) of subsection
22        (e), the amount by which addition modifications other
23        than those provided by this subparagraph (E) exceeded
24        subtraction modifications in such taxable year, with
25        the following limitations applied in the order that
26        they are listed:

 

 

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

 

 

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1            (G) An amount equal to the amount of the capital
2        gain deduction allowable under the Internal Revenue
3        Code, to the extent deducted from gross income in the
4        computation of taxable income;
5            (G-5) For taxable years ending after December 31,
6        1997, an amount equal to any eligible remediation
7        costs that the trust or estate deducted in computing
8        adjusted gross income and for which the trust or
9        estate claims a credit under subsection (l) of Section
10        201;
11            (G-10) 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
15        the Internal Revenue Code; and
16            (G-11) 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 (G-10), then
20        an amount equal to the aggregate amount of the
21        deductions taken in all taxable years under
22        subparagraph (R) 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

 

 

SB2531- 138 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 139 -LRB102 15312 HLH 20668 b

1        taxpayer's unitary business group (including amounts
2        included in gross income pursuant to Sections 951
3        through 964 of the Internal Revenue Code and amounts
4        included in gross income under Section 78 of the
5        Internal Revenue Code) with respect to the stock of
6        the same person to whom the interest was paid,
7        accrued, or incurred.
8            This paragraph shall not apply to the following:
9                (i) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person who
11            is subject in a foreign country or state, other
12            than a state which requires mandatory unitary
13            reporting, to a tax on or measured by net income
14            with respect to such interest; or
15                (ii) an item of interest paid, accrued, or
16            incurred, directly or indirectly, to a person if
17            the taxpayer can establish, based on a
18            preponderance of the evidence, both of the
19            following:
20                    (a) the person, during the same taxable
21                year, paid, accrued, or incurred, the interest
22                to a person that is not a related member, and
23                    (b) the transaction giving rise to the
24                interest expense between the taxpayer and the
25                person did not have as a principal purpose the
26                avoidance of Illinois income tax, and is paid

 

 

SB2531- 140 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 141 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 142 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 143 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 144 -LRB102 15312 HLH 20668 b

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

 

 

SB2531- 145 -LRB102 15312 HLH 20668 b

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the
4        stock of the same person to whom the premiums and costs
5        were directly or indirectly paid, incurred, or
6        accrued. The preceding sentence does not apply to the
7        extent that the same dividends caused a reduction to
8        the addition modification required under Section
9        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
10        Act;
11            (G-15) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15            (G-16) For taxable years ending on or after
16        December 31, 2017, an amount equal to the deduction
17        allowed under Section 199 of the Internal Revenue Code
18        for the taxable year;
19    and by deducting from the total so obtained the sum of the
20    following amounts:
21            (H) An amount equal to all amounts included in
22        such total pursuant to the provisions of Sections
23        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
24        of the Internal Revenue Code or included in such total
25        as distributions under the provisions of any
26        retirement or disability plan for employees of any

 

 

SB2531- 146 -LRB102 15312 HLH 20668 b

1        governmental agency or unit, or retirement payments to
2        retired partners, which payments are excluded in
3        computing net earnings from self employment by Section
4        1402 of the Internal Revenue Code and regulations
5        adopted pursuant thereto;
6            (I) The valuation limitation amount;
7            (J) 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            (K) An amount equal to all amounts included in
11        taxable income as modified by subparagraphs (A), (B),
12        (C), (D), (E), (F) and (G) which are exempt from
13        taxation by this State either by reason of its
14        statutes or Constitution or by reason of the
15        Constitution, treaties or statutes of the United
16        States; provided that, in the case of any statute of
17        this State that exempts income derived from bonds or
18        other obligations from the tax imposed under this Act,
19        the amount exempted shall be the interest net of bond
20        premium amortization;
21            (L) With the exception of any amounts subtracted
22        under subparagraph (K), an amount equal to the sum of
23        all amounts disallowed as deductions by (i) Sections
24        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
25        and all amounts of expenses allocable to interest and
26        disallowed as deductions by Section 265(a)(1) of the

 

 

SB2531- 147 -LRB102 15312 HLH 20668 b

1        Internal Revenue Code; and (ii) for taxable years
2        ending on or after August 13, 1999, Sections
3        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
4        Internal Revenue Code, plus, (iii) for taxable years
5        ending on or after December 31, 2011, Section
6        45G(e)(3) of the Internal Revenue Code and, for
7        taxable years ending on or after December 31, 2008,
8        any amount included in gross income under Section 87
9        of the Internal Revenue Code; the provisions of this
10        subparagraph are exempt from the provisions of Section
11        250;
12            (M) An amount equal to those dividends included in
13        such total which were paid by a corporation which
14        conducts business operations in a River Edge
15        Redevelopment Zone or zones created under the River
16        Edge Redevelopment Zone Act and conducts substantially
17        all of its operations in a River Edge Redevelopment
18        Zone or zones. This subparagraph (M) is exempt from
19        the 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

 

 

SB2531- 148 -LRB102 15312 HLH 20668 b

1        a 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;
11            (Q) For taxable year 1999 and thereafter, an
12        amount equal to the amount of any (i) distributions,
13        to the extent includible in gross income for federal
14        income tax purposes, made to the taxpayer because of
15        his or her status as a victim of persecution for racial
16        or 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
26        receivable as insurance under policies issued to a

 

 

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1        victim of persecution for racial or religious reasons
2        by Nazi Germany or any other Axis regime by European
3        insurance companies immediately prior to and during
4        World War II; provided, however, this subtraction from
5        federal adjusted gross income does not apply to assets
6        acquired with such assets or with the proceeds from
7        the sale of such assets; provided, further, this
8        paragraph shall only apply to a taxpayer who was the
9        first recipient of such assets after their recovery
10        and who is a victim of persecution for racial or
11        religious reasons by Nazi Germany or any other Axis
12        regime or as an heir of the victim. The amount of and
13        the eligibility for any public assistance, benefit, or
14        similar entitlement is not affected by the inclusion
15        of items (i) and (ii) of this paragraph in gross income
16        for federal income tax purposes. This paragraph is
17        exempt from the provisions 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

 

 

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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
4            including 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
15                by 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

 

 

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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
15        under this subparagraph only once with respect to any
16        one 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
22        with 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

 

 

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

 

 

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

 

 

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1        provisions of Section 111 of the Internal Revenue Code
2        as a recovery of items previously deducted by the
3        decedent from adjusted gross income in the computation
4        of taxable income. This subparagraph (W) is exempt
5        from Section 250;
6            (X) an amount equal to the refund included in such
7        total of any tax deducted for federal income tax
8        purposes, to the extent that deduction was added back
9        under subparagraph (F). This subparagraph (X) is
10        exempt from the provisions of Section 250;
11            (Y) For taxable years ending on or after December
12        31, 2011, in the case of a taxpayer who was required to
13        add back any insurance premiums under Section
14        203(c)(2)(G-14), such taxpayer may elect to subtract
15        that part of a reimbursement received from the
16        insurance company equal to the amount of the expense
17        or loss (including expenses incurred by the insurance
18        company) that would have been taken into account as a
19        deduction for federal income tax purposes if the
20        expense or loss had been uninsured. If a taxpayer
21        makes the election provided for by this subparagraph
22        (Y), the insurer to which the premiums were paid must
23        add back to income the amount subtracted by the
24        taxpayer pursuant to this subparagraph (Y). This
25        subparagraph (Y) is exempt from the provisions of
26        Section 250; and

 

 

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1            (Z) For taxable years beginning after December 31,
2        2018 and before January 1, 2026, the amount of excess
3        business loss of the taxpayer disallowed as a
4        deduction by Section 461(l)(1)(B) of the Internal
5        Revenue Code; and .
6            (AA) An amount equal to a partner's or
7        shareholder's share of business income apportionable
8        to Illinois and nonbusiness income allocated to
9        Illinois under Section 303 of this Act that is
10        distributable to each partner or shareholder and which
11        was included by a partnership or Subchapter S
12        corporation in the computing the elective tax under
13        subsection (d-2) of Section 201. This subparagraph
14        (AA) is exempt from the provisions of Section 250.
15        (3) Limitation. The amount of any modification
16    otherwise required under this subsection shall, under
17    regulations prescribed by the Department, be adjusted by
18    any amounts included therein which were properly paid,
19    credited, or required to be distributed, or permanently
20    set aside for charitable purposes pursuant to Internal
21    Revenue Code Section 642(c) during the taxable year.
 
22    (d) Partnerships.
23        (1) In general. In the case of a partnership, base
24    income means an amount equal to the taxpayer's taxable
25    income for the taxable year as modified by paragraph (2).

 

 

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1        (2) Modifications. The taxable income referred to in
2    paragraph (1) shall be modified by adding thereto the sum
3    of the following amounts:
4            (A) An amount equal to all amounts paid or accrued
5        to the taxpayer as interest or dividends during the
6        taxable year to the extent excluded from gross income
7        in the computation of taxable income;
8            (B) An amount equal to the amount of tax imposed by
9        this Act to the extent deducted from gross income for
10        the taxable year;
11            (C) The amount of deductions allowed to the
12        partnership pursuant to Section 707 (c) of the
13        Internal Revenue Code in calculating its taxable
14        income;
15            (D) An amount equal to the amount of the capital
16        gain deduction allowable under the Internal Revenue
17        Code, to the extent deducted from gross income in the
18        computation of taxable income;
19            (D-5) 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
23        the Internal Revenue Code;
24            (D-6) 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

 

 

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1        addition modification under subparagraph (D-5), then
2        an amount equal to the aggregate amount of the
3        deductions taken in all taxable years under
4        subparagraph (O) 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 (O), 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            (D-7) An amount equal to the amount otherwise
16        allowed as a deduction in computing base income for
17        interest paid, accrued, or incurred, directly or
18        indirectly, (i) for taxable years ending on or after
19        December 31, 2004, to a foreign person who would be a
20        member of the same unitary business group but for the
21        fact the foreign person's business activity outside
22        the United States is 80% or more of the foreign
23        person's total business activity and (ii) for taxable
24        years ending on or after December 31, 2008, to a person
25        who would be a member of the same unitary business
26        group but for the fact that the person is prohibited

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        similar types of intangible 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 person who
6            is subject in a foreign country or state, other
7            than a state which requires mandatory unitary
8            reporting, to a tax on or measured by net income
9            with respect to such 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 person during the same taxable
16                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 person did not have as a
22                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

 

 

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1            paid, accrued, or incurred, directly or
2            indirectly, from a transaction with a person if
3            the taxpayer establishes by clear and convincing
4            evidence, that the adjustments are unreasonable;
5            or if the taxpayer and the Director agree in
6            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
12            for any tax year beginning after the effective
13            date of this amendment provided such adjustment is
14            made pursuant to regulation adopted by the
15            Department and such regulations provide methods
16            and standards by which the Department will utilize
17            its authority under Section 404 of this Act;
18            (D-9) For taxable years ending on or after
19        December 31, 2008, an amount equal to the amount of
20        insurance premium expenses and costs otherwise allowed
21        as a deduction in computing base income, and that were
22        paid, accrued, or incurred, directly or indirectly, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

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

 

 

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1    amounts:
2            (E) The valuation limitation amount;
3            (F) An amount equal to the amount of any tax
4        imposed by this Act which was refunded to the taxpayer
5        and included in such total for the taxable year;
6            (G) An amount equal to all amounts included in
7        taxable income as modified by subparagraphs (A), (B),
8        (C) and (D) which are exempt from taxation by this
9        State either by reason of its statutes or Constitution
10        or by reason of the Constitution, treaties or statutes
11        of the United States; provided that, in the case of any
12        statute of this State that exempts income derived from
13        bonds or other obligations from the tax imposed under
14        this Act, the amount exempted shall be the interest
15        net of bond premium amortization;
16            (H) Any income of the partnership which
17        constitutes personal service income as defined in
18        Section 1348(b)(1) of the Internal Revenue Code (as in
19        effect December 31, 1981) or a reasonable allowance
20        for compensation paid or accrued for services rendered
21        by partners to the partnership, whichever is greater;
22        this subparagraph (H) is exempt from the provisions of
23        Section 250;
24            (I) An amount equal to all amounts of income
25        distributable to an entity subject to the Personal
26        Property Tax Replacement Income Tax imposed by

 

 

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1        subsections (c) and (d) of Section 201 of this Act
2        including amounts distributable to organizations
3        exempt from federal income tax by reason of Section
4        501(a) of the Internal Revenue Code; this subparagraph
5        (I) is exempt from the provisions of Section 250;
6            (J) With the exception of any amounts subtracted
7        under subparagraph (G), an amount equal to the sum of
8        all amounts disallowed as deductions by (i) Sections
9        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
10        and all amounts of expenses allocable to interest and
11        disallowed as deductions by Section 265(a)(1) of the
12        Internal Revenue Code; and (ii) for taxable years
13        ending on or after August 13, 1999, Sections
14        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
15        Internal Revenue Code, plus, (iii) for taxable years
16        ending on or after December 31, 2011, Section
17        45G(e)(3) of the Internal Revenue Code and, for
18        taxable years ending on or after December 31, 2008,
19        any amount included in gross income under Section 87
20        of the Internal Revenue Code; the provisions of this
21        subparagraph are exempt from the provisions of Section
22        250;
23            (K) An amount equal to those dividends included in
24        such total which were paid by a corporation which
25        conducts business operations in a River Edge
26        Redevelopment Zone or zones created under the River

 

 

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1        Edge Redevelopment Zone Act and conducts substantially
2        all of its operations from a River Edge Redevelopment
3        Zone or zones. This subparagraph (K) is exempt from
4        the provisions of Section 250;
5            (L) An amount equal to any contribution made to a
6        job training project established pursuant to the Real
7        Property Tax Increment Allocation Redevelopment Act;
8            (M) An amount equal to those dividends included in
9        such total that were paid by a corporation that
10        conducts business operations in a federally designated
11        Foreign Trade Zone or Sub-Zone and that is designated
12        a High Impact Business located in Illinois; provided
13        that dividends eligible for the deduction provided in
14        subparagraph (K) of paragraph (2) of this subsection
15        shall not be eligible for the deduction provided under
16        this subparagraph (M);
17            (N) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code;
22            (O) 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

 

 

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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
8            including 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
19                by 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

 

 

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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 (O) is exempt from the provisions of
5        Section 250;
6            (P) 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 (D-5), 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 (D-5), then an amount
17        equal to that addition modification.
18            The taxpayer is allowed to take the deduction
19        under this subparagraph only once with respect to any
20        one piece of property.
21            This subparagraph (P) is exempt from the
22        provisions of Section 250;
23            (Q) The amount of (i) any interest income (net of
24        the deductions allocable thereto) taken into account
25        for the taxable year with respect to a transaction
26        with a taxpayer that is required to make an addition

 

 

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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
8        that 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. This subparagraph (Q) is exempt
13        from Section 250;
14            (R) An amount equal to the interest income taken
15        into account for the taxable year (net of the
16        deductions allocable thereto) with respect to
17        transactions with (i) a foreign person who would be a
18        member of the taxpayer's unitary business group but
19        for the fact that the foreign person's business
20        activity outside the United States is 80% or more of
21        that person's total business activity and (ii) for
22        taxable years ending on or after December 31, 2008, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

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

 

 

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1        same person. This subparagraph (S) is exempt from
2        Section 250; and
3            (T) For taxable years ending on or after December
4        31, 2011, in the case of a taxpayer who was required to
5        add back any insurance premiums under Section
6        203(d)(2)(D-9), such taxpayer may elect to subtract
7        that part of a reimbursement received from the
8        insurance company equal to the amount of the expense
9        or loss (including expenses incurred by the insurance
10        company) that would have been taken into account as a
11        deduction for federal income tax purposes if the
12        expense or loss had been uninsured. If a taxpayer
13        makes the election provided for by this subparagraph
14        (T), the insurer to which the premiums were paid must
15        add back to income the amount subtracted by the
16        taxpayer pursuant to this subparagraph (T). This
17        subparagraph (T) is exempt from the provisions of
18        Section 250; and .
19            (U) An amount equal to a partner's or
20        shareholder's share of business income apportionable
21        to Illinois and nonbusiness income allocated to
22        Illinois under Section 303 of this Act that is
23        distributable to each partner or shareholder and which
24        was included by a partnership or Subchapter S
25        corporation in the computing the elective tax under
26        subsection (d-2) of Section 201. This subparagraph (U)

 

 

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1        is exempt from the provisions of Section 250.
 
2    (e) Gross income; adjusted gross income; taxable income.
3        (1) In general. Subject to the provisions of paragraph
4    (2) and subsection (b)(3), for purposes of this Section
5    and Section 803(e), a taxpayer's gross income, adjusted
6    gross income, or taxable income for the taxable year shall
7    mean the amount of gross income, adjusted gross income or
8    taxable income properly reportable for federal income tax
9    purposes for the taxable year under the provisions of the
10    Internal Revenue Code. Taxable income may be less than
11    zero. However, for taxable years ending on or after
12    December 31, 1986, net operating loss carryforwards from
13    taxable years ending prior to December 31, 1986, may not
14    exceed the sum of federal taxable income for the taxable
15    year before net operating loss deduction, plus the excess
16    of addition modifications over subtraction modifications
17    for the taxable year. For taxable years ending prior to
18    December 31, 1986, taxable income may never be an amount
19    in excess of the net operating loss for the taxable year as
20    defined in subsections (c) and (d) of Section 172 of the
21    Internal Revenue Code, provided that when taxable income
22    of a corporation (other than a Subchapter S corporation),
23    trust, or estate is less than zero and addition
24    modifications, other than those provided by subparagraph
25    (E) of paragraph (2) of subsection (b) for corporations or

 

 

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1    subparagraph (E) of paragraph (2) of subsection (c) for
2    trusts and estates, exceed subtraction modifications, an
3    addition modification must be made under those
4    subparagraphs for any other taxable year to which the
5    taxable income less than zero (net operating loss) is
6    applied under Section 172 of the Internal Revenue Code or
7    under subparagraph (E) of paragraph (2) of this subsection
8    (e) applied in conjunction with Section 172 of the
9    Internal Revenue Code.
10        (2) Special rule. For purposes of paragraph (1) of
11    this subsection, the taxable income properly reportable
12    for federal income tax purposes shall mean:
13            (A) Certain life insurance companies. In the case
14        of a life insurance company subject to the tax imposed
15        by Section 801 of the Internal Revenue Code, life
16        insurance company taxable income, plus the amount of
17        distribution from pre-1984 policyholder surplus
18        accounts as calculated under Section 815a of the
19        Internal Revenue Code;
20            (B) Certain other insurance companies. In the case
21        of mutual insurance companies subject to the tax
22        imposed by Section 831 of the Internal Revenue Code,
23        insurance company taxable income;
24            (C) Regulated investment companies. In the case of
25        a regulated investment company subject to the tax
26        imposed by Section 852 of the Internal Revenue Code,

 

 

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

 

 

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

 

 

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1        1362 of the Internal Revenue Code, the taxable income
2        of such corporation determined in accordance with
3        Section 1363(b) of the Internal Revenue Code, except
4        that taxable income shall take into account those
5        items which are required by Section 1363(b)(1) of the
6        Internal Revenue Code to be separately stated; and
7        (ii) a Subchapter S corporation for which there is in
8        effect a federal election to opt out of the provisions
9        of the Subchapter S Revision Act of 1982 and have
10        applied instead the prior federal Subchapter S rules
11        as in effect on July 1, 1982, the taxable income of
12        such corporation determined in accordance with the
13        federal Subchapter S rules as in effect on July 1,
14        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

 

 

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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
6    asset or business. Such amount shall be apportioned to
7    Illinois using the greater of the apportionment fraction
8    computed for the business under Section 304 of this Act
9    for the taxable year or the average of the apportionment
10    fractions computed for the business under Section 304 of
11    this Act for the taxable year and for the 2 immediately
12    preceding 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;
22        plus
23            (B) The lesser of (i) the sum of the pre-August 1,
24        1969 appreciation amounts (to the extent consisting of
25        capital gain) for all property in respect of which

 

 

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1        such gain was reported for federal income tax purposes
2        for the taxable year, or (ii) the net capital gain for
3        the taxable year, reduced in either case by any amount
4        of such gain included in the amount determined under
5        subsection (a)(2)(F) or (c)(2)(H).
6        (2) Pre-August 1, 1969 appreciation amount.
7            (A) If the fair market value of property referred
8        to in paragraph (1) was readily ascertainable on
9        August 1, 1969, the pre-August 1, 1969 appreciation
10        amount for such property is the lesser of (i) the
11        excess of such fair market value over the taxpayer's
12        basis (for determining gain) for such property on that
13        date (determined under the Internal Revenue Code as in
14        effect on that date), or (ii) the total gain realized
15        and reportable for federal income tax purposes in
16        respect of the sale, exchange or other disposition of
17        such property.
18            (B) If the fair market value of property referred
19        to in paragraph (1) was not readily ascertainable on
20        August 1, 1969, the pre-August 1, 1969 appreciation
21        amount for such property is that amount which bears
22        the same ratio to the total gain reported in respect of
23        the property for federal income tax purposes for the
24        taxable year, as the number of full calendar months in
25        that part of the taxpayer's holding period for the
26        property ending July 31, 1969 bears to the number of

 

 

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1        full calendar months in the taxpayer's entire holding
2        period for the property.
3            (C) The Department shall prescribe such
4        regulations as may be necessary to carry out the
5        purposes of this paragraph.
 
6    (g) Double deductions. Unless specifically provided
7otherwise, nothing in this Section shall permit the same item
8to be deducted more than once.
 
9    (h) Legislative intention. Except as expressly provided by
10this Section there shall be no modifications or limitations on
11the amounts of income, gain, loss or deduction taken into
12account in determining gross income, adjusted gross income or
13taxable income for federal income tax purposes for the taxable
14year, or in the amount of such items entering into the
15computation of base income and net income under this Act for
16such taxable year, whether in respect of property values as of
17August 1, 1969 or otherwise.
18(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
19101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
20    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)
21    Sec. 601. Payment on due date of return.
22    (a) In general. Every taxpayer required to file a return
23under this Act shall, without assessment, notice or demand,

 

 

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1pay any tax due thereon to the Department, at the place fixed
2for filing, on or before the date fixed for filing such return
3(determined without regard to any extension of time for filing
4the return) pursuant to regulations prescribed by the
5Department. If, however, the due date for payment of a
6taxpayer's federal income tax liability for a tax year (as
7provided in the Internal Revenue Code or by Treasury
8regulation, or as extended by the Internal Revenue Service) is
9later than the date fixed for filing the taxpayer's Illinois
10income tax return for that tax year, the Department may, by
11rule, prescribe a due date for payment that is not later than
12the due date for payment of the taxpayer's federal income tax
13liability. For purposes of the Illinois Administrative
14Procedure Act, the adoption of rules to prescribe a later due
15date for payment shall be deemed an emergency and necessary
16for the public interest, safety, and welfare.
17    (b) Amount payable. In making payment as provided in this
18section there shall remain payable only the balance of such
19tax remaining due after giving effect to the following:
20        (1) Withheld tax. Any amount withheld during any
21    calendar year pursuant to Article 7 from compensation paid
22    to a taxpayer shall be deemed to have been paid on account
23    of any tax imposed by subsections 201(a) and (b) of this
24    Act on such taxpayer for his taxable year beginning in
25    such calendar year. If more than one taxable year begins
26    in a calendar year, such amount shall be deemed to have

 

 

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1    been paid on account of such tax for the last taxable year
2    so beginning.
3        (2) Estimated and tentative tax payments. Any amount
4    of estimated tax paid by a taxpayer pursuant to Article 8
5    for a taxable year shall be deemed to have been paid on
6    account of the tax imposed by this Act for such taxable
7    year.
8        (3) Foreign tax. The aggregate amount of tax which is
9    imposed upon or measured by income and which is paid by a
10    resident for a taxable year to another state or states on
11    income which is also subject to the tax imposed by
12    subsections 201(a) and (b) of this Act shall be credited
13    against the tax imposed by subsections 201(a) and (b)
14    otherwise due under this Act for such taxable year. For
15    taxable years ending prior to December 31, 2009, the
16    aggregate credit provided under this paragraph shall not
17    exceed that amount which bears the same ratio to the tax
18    imposed by subsections 201(a) and (b) otherwise due under
19    this Act as the amount of the taxpayer's base income
20    subject to tax both by such other state or states and by
21    this State bears to his total base income subject to tax by
22    this State for the taxable year. For taxable years ending
23    on or after December 31, 2009, the credit provided under
24    this paragraph for tax paid to other states shall not
25    exceed that amount which bears the same ratio to the tax
26    imposed by subsections 201(a) and (b) otherwise due under

 

 

SB2531- 183 -LRB102 15312 HLH 20668 b

1    this Act as the amount of the taxpayer's base income that
2    would be allocated or apportioned to other states if all
3    other states had adopted the provisions in Article 3 of
4    this Act bears to the taxpayer's total base income subject
5    to tax by this State for the taxable year. This subsection
6    is exempt from the 30-day threshold set forth in
7    subparagraph (iii) of paragraph (B) of item (2) of
8    subsection (a) of Section 304. The credit provided by this
9    paragraph shall not be allowed if any creditable tax was
10    deducted in determining base income for the taxable year.
11    This credit shall include representation of taxes based on
12    income that are imposed on partnerships in which the
13    taxpayer is a partner and Subchapter S corporations in
14    which the taxpayer is a shareholder. Any person claiming
15    such credit shall attach a statement in support thereof
16    and shall notify the Director of any refund or reductions
17    in the amount of tax claimed as a credit hereunder all in
18    such manner and at such time as the Department shall by
19    regulations prescribe.
20        (4) Accumulation and capital gain distributions. If
21    the net income of a taxpayer includes amounts included in
22    his base income by reason of Section 667 of the Internal
23    Revenue Code (relating to accumulation and capital gain
24    distributions by a trust, respectively), the tax imposed
25    on such taxpayer by this Act shall be credited with his pro
26    rata portion of the taxes imposed by this Act on such trust

 

 

SB2531- 184 -LRB102 15312 HLH 20668 b

1    for preceding taxable years which would not have been
2    payable for such preceding years if the trust had in fact
3    made distributions to its beneficiaries at the times and
4    in the amounts specified in Sections 666 and 669 of the
5    Internal Revenue Code. The credit provided by this
6    paragraph shall not reduce the tax otherwise due from the
7    taxpayer to an amount less than that which would be due if
8    the amounts included by reason of Section 667 of the
9    Internal Revenue Code were excluded from his or her base
10    income.
11    (c) Cross reference. For application against tax due of
12overpayments of tax for a prior year, see Section 909.
13(Source: P.A. 101-585, eff. 8-26-19.)
 
14    (35 ILCS 5/709.5)
15    Sec. 709.5. Withholding by partnerships, Subchapter S
16corporations, and trusts.
17    (a) In general. Except for a partnership or Subchapter S
18corporation that has elected the tax under subsection (d-2) of
19Section 201, for For each taxable year ending on or after
20December 31, 2008, every partnership (other than a publicly
21traded partnership under Section 7704 of the Internal Revenue
22Code or investment partnership), Subchapter S corporation, and
23trust must withhold from each nonresident partner,
24shareholder, or beneficiary (other than a partner,
25shareholder, or beneficiary who is exempt from tax under

 

 

SB2531- 185 -LRB102 15312 HLH 20668 b

1Section 501(a) of the Internal Revenue Code or under Section
2205 of this Act, who is included on a composite return filed by
3the partnership or Subchapter S corporation for the taxable
4year under subsection (f) of Section 502 of this Act), or who
5is a retired partner, to the extent that partner's
6distributions are exempt from tax under Section 203(a)(2)(F)
7of this Act) an amount equal to the sum of (i) the share of
8business income of the partnership, Subchapter S corporation,
9or trust apportionable to Illinois plus (ii) for taxable years
10ending on or after December 31, 2014, the share of nonbusiness
11income of the partnership, Subchapter S corporation, or trust
12allocated to Illinois under Section 303 of this Act (other
13than an amount allocated to the commercial domicile of the
14taxpayer under Section 303 of this Act) that is distributable
15to that partner, shareholder, or beneficiary under Sections
16702 and 704 and Subchapter S of the Internal Revenue Code,
17whether or not distributed, (iii) multiplied by the applicable
18rates of tax for that partner, shareholder, or beneficiary
19under subsections (a) through (d) of Section 201 of this Act,
20and (iv) net of the share of any credit under Article 2 of this
21Act that is distributable by the partnership, Subchapter S
22corporation, or trust and allowable against the tax liability
23of that partner, shareholder, or beneficiary for a taxable
24year ending on or after December 31, 2014.
25    (b) Credit for taxes withheld. Any amount withheld under
26subsection (a) of this Section and paid to the Department

 

 

SB2531- 186 -LRB102 15312 HLH 20668 b

1shall be treated as a payment of the estimated tax liability or
2of the liability for withholding under this Section of the
3partner, shareholder, or beneficiary to whom the income is
4distributable for the taxable year in which that person
5incurred a liability under this Act with respect to that
6income. The Department shall adopt rules pursuant to which a
7partner, shareholder, or beneficiary may claim a credit
8against its obligation for withholding under this Section for
9amounts withheld under this Section with respect to income
10distributable to it by a partnership, Subchapter S
11corporation, or trust and allowing its partners, shareholders,
12or beneficiaries to claim a credit under this subsection (b)
13for those withheld amounts.
14    (c) Exemption from withholding.
15        (1) A partnership, Subchapter S corporation, or trust
16    shall not be required to withhold tax under subsection (a)
17    of this Section with respect to any nonresident partner,
18    shareholder, or beneficiary (other than an individual)
19    from whom the partnership, S corporation, or trust has
20    received a certificate, completed in the form and manner
21    prescribed by the Department, stating that such
22    nonresident partner, shareholder, or beneficiary shall:
23            (A) file all returns that the partner,
24        shareholder, or beneficiary is required to file under
25        Section 502 of this Act and make timely payment of all
26        taxes imposed under Section 201 of this Act or under

 

 

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1        this Section on the partner, shareholder, or
2        beneficiary with respect to income of the partnership,
3        S corporation, or trust; and
4            (B) be subject to personal jurisdiction in this
5        State for purposes of the collection of income taxes,
6        together with related interest and penalties, imposed
7        on the partner, shareholder, or beneficiary with
8        respect to the income of the partnership, S
9        corporation, or trust.
10        (2) The Department may revoke the exemption provided
11    by this subsection (c) at any time that it determines that
12    the nonresident partner, shareholder, or beneficiary is
13    not abiding by the terms of the certificate. The
14    Department shall notify the partnership, S corporation, or
15    trust that it has revoked a certificate by notice left at
16    the usual place of business of the partnership, S
17    corporation, or trust or by mail to the last known address
18    of the partnership, S corporation, or trust.
19        (3) A partnership, S corporation, or trust that
20    receives a certificate under this subsection (c) properly
21    completed by a nonresident partner, shareholder, or
22    beneficiary shall not be required to withhold any amount
23    from that partner, shareholder, or beneficiary, the
24    payment of which would be due under Section 711(a-5) of
25    this Act after the receipt of the certificate and no
26    earlier than 60 days after the Department has notified the

 

 

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1    partnership, S corporation, or trust that the certificate
2    has been revoked.
3        (4) Certificates received by a partnership, S
4    corporation, or trust under this subsection (c) must be
5    retained by the partnership, S corporation, or trust and a
6    record of such certificates must be provided to the
7    Department, in a format in which the record is available
8    for review by the Department, upon request by the
9    Department. The Department may, by rule, require the
10    record of certificates to be maintained and provided to
11    the Department electronically.
12(Source: P.A. 100-201, eff. 8-18-17.)
 
13    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
14    Sec. 1501. Definitions.
15    (a) In general. When used in this Act, where not otherwise
16distinctly expressed or manifestly incompatible with the
17intent thereof:
18        (1) Business income. The term "business income" means
19    all income that may be treated as apportionable business
20    income under the Constitution of the United States.
21    Business income is net of the deductions allocable
22    thereto. Such term does not include compensation or the
23    deductions allocable thereto. For each taxable year
24    beginning on or after January 1, 2003, a taxpayer may
25    elect to treat all income other than compensation as

 

 

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1    business income. This election shall be made in accordance
2    with rules adopted by the Department and, once made, shall
3    be irrevocable.
4        (1.5) Captive real estate investment trust:
5            (A) The term "captive real estate investment
6        trust" means a corporation, trust, or association:
7                (i) that is considered a real estate
8            investment trust for the taxable year under
9            Section 856 of the Internal Revenue Code;
10                (ii) the certificates of beneficial interest
11            or shares of which are not regularly traded on an
12            established securities market; and
13                (iii) of which more than 50% of the voting
14            power or value of the beneficial interest or
15            shares, at any time during the last half of the
16            taxable year, is owned or controlled, directly,
17            indirectly, or constructively, by a single
18            corporation.
19            (B) The term "captive real estate investment
20        trust" does not include:
21                (i) a real estate investment trust of which
22            more than 50% of the voting power or value of the
23            beneficial interest or shares is owned or
24            controlled, directly, indirectly, or
25            constructively, by:
26                    (a) a real estate investment trust, other

 

 

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1                than a captive real estate investment trust;
2                    (b) a person who is exempt from taxation
3                under Section 501 of the Internal Revenue
4                Code, and who is not required to treat income
5                received from the real estate investment trust
6                as unrelated business taxable income under
7                Section 512 of the Internal Revenue Code;
8                    (c) a listed Australian property trust, if
9                no more than 50% of the voting power or value
10                of the beneficial interest or shares of that
11                trust, at any time during the last half of the
12                taxable year, is owned or controlled, directly
13                or indirectly, by a single person;
14                    (d) an entity organized as a trust,
15                provided a listed Australian property trust
16                described in subparagraph (c) owns or
17                controls, directly or indirectly, or
18                constructively, 75% or more of the voting
19                power or value of the beneficial interests or
20                shares of such entity; or
21                    (e) an entity that is organized outside of
22                the laws of the United States and that
23                satisfies all of the following criteria:
24                        (1) at least 75% of the entity's total
25                    asset value at the close of its taxable
26                    year is represented by real estate assets

 

 

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1                    (as defined in Section 856(c)(5)(B) of the
2                    Internal Revenue Code, thereby including
3                    shares or certificates of beneficial
4                    interest in any real estate investment
5                    trust), cash and cash equivalents, and
6                    U.S. Government securities;
7                        (2) the entity is not subject to tax
8                    on amounts that are distributed to its
9                    beneficial owners or is exempt from
10                    entity-level taxation;
11                        (3) the entity distributes at least
12                    85% of its taxable income (as computed in
13                    the jurisdiction in which it is organized)
14                    to the holders of its shares or
15                    certificates of beneficial interest on an
16                    annual basis;
17                        (4) either (i) the shares or
18                    beneficial interests of the entity are
19                    regularly traded on an established
20                    securities market or (ii) not more than
21                    10% of the voting power or value in the
22                    entity is held, directly, indirectly, or
23                    constructively, by a single entity or
24                    individual; and
25                        (5) the entity is organized in a
26                    country that has entered into a tax treaty

 

 

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1                    with the United States; or
2                (ii) during its first taxable year for which
3            it elects to be treated as a real estate
4            investment trust under Section 856(c)(1) of the
5            Internal Revenue Code, a real estate investment
6            trust the certificates of beneficial interest or
7