Sen. Win Stoller

Filed: 4/5/2021

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2531

2    AMENDMENT NO. ______. Amend Senate Bill 2531 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Sections 201, 203, 502, 601, 709.5, and 1501 as
6follows:
 
7    (35 ILCS 5/201)
8    (Text of Section without the changes made by P.A. 101-8,
9which did not take effect (see Section 99 of P.A. 101-8))
10    Sec. 201. Tax imposed.
11    (a) In general. A tax measured by net income is hereby
12imposed on every individual, corporation, trust and estate for
13each taxable year ending after July 31, 1969 on the privilege
14of earning or receiving income in or as a resident of this
15State. Such tax shall be in addition to all other occupation or
16privilege taxes imposed by this State or by any municipal

 

 

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1corporation or political subdivision thereof.
2    (b) Rates. The tax imposed by subsection (a) of this
3Section shall be determined as follows, except as adjusted by
4subsection (d-1):
5        (1) In the case of an individual, trust or estate, for
6    taxable years ending prior to July 1, 1989, an amount
7    equal to 2 1/2% of the taxpayer's net income for the
8    taxable year.
9        (2) In the case of an individual, trust or estate, for
10    taxable years beginning prior to July 1, 1989 and ending
11    after June 30, 1989, an amount equal to the sum of (i) 2
12    1/2% of the taxpayer's net income for the period prior to
13    July 1, 1989, as calculated under Section 202.3, and (ii)
14    3% of the taxpayer's net income for the period after June
15    30, 1989, as calculated under Section 202.3.
16        (3) In the case of an individual, trust or estate, for
17    taxable years beginning after June 30, 1989, and ending
18    prior to January 1, 2011, an amount equal to 3% of the
19    taxpayer's net income for the taxable year.
20        (4) In the case of an individual, trust, or estate,
21    for taxable years beginning prior to January 1, 2011, and
22    ending after December 31, 2010, an amount equal to the sum
23    of (i) 3% of the taxpayer's net income for the period prior
24    to January 1, 2011, as calculated under Section 202.5, and
25    (ii) 5% of the taxpayer's net income for the period after
26    December 31, 2010, as calculated under Section 202.5.

 

 

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1        (5) In the case of an individual, trust, or estate,
2    for taxable years beginning on or after January 1, 2011,
3    and ending prior to January 1, 2015, an amount equal to 5%
4    of the taxpayer's net income for the taxable year.
5        (5.1) In the case of an individual, trust, or estate,
6    for taxable years beginning prior to January 1, 2015, and
7    ending after December 31, 2014, an amount equal to the sum
8    of (i) 5% of the taxpayer's net income for the period prior
9    to January 1, 2015, as calculated under Section 202.5, and
10    (ii) 3.75% of the taxpayer's net income for the period
11    after December 31, 2014, as calculated under Section
12    202.5.
13        (5.2) In the case of an individual, trust, or estate,
14    for taxable years beginning on or after January 1, 2015,
15    and ending prior to July 1, 2017, an amount equal to 3.75%
16    of the taxpayer's net income for the taxable year.
17        (5.3) In the case of an individual, trust, or estate,
18    for taxable years beginning prior to July 1, 2017, and
19    ending after June 30, 2017, an amount equal to the sum of
20    (i) 3.75% of the taxpayer's net income for the period
21    prior to July 1, 2017, as calculated under Section 202.5,
22    and (ii) 4.95% of the taxpayer's net income for the period
23    after June 30, 2017, as calculated under Section 202.5.
24        (5.4) In the case of an individual, trust, or estate,
25    for taxable years beginning on or after July 1, 2017, an
26    amount equal to 4.95% of the taxpayer's net income for the

 

 

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

 

 

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1        (11) In the case of a corporation, for taxable years
2    beginning prior to January 1, 2015, and ending after
3    December 31, 2014, an amount equal to the sum of (i) 7% of
4    the taxpayer's net income for the period prior to January
5    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
6    of the taxpayer's net income for the period after December
7    31, 2014, as calculated under Section 202.5.
8        (12) In the case of a corporation, for taxable years
9    beginning on or after January 1, 2015, and ending prior to
10    July 1, 2017, an amount equal to 5.25% of the taxpayer's
11    net income for the taxable year.
12        (13) In the case of a corporation, for taxable years
13    beginning prior to July 1, 2017, and ending after June 30,
14    2017, an amount equal to the sum of (i) 5.25% of the
15    taxpayer's net income for the period prior to July 1,
16    2017, as calculated under Section 202.5, and (ii) 7% of
17    the taxpayer's net income for the period after June 30,
18    2017, as calculated under Section 202.5.
19        (14) In the case of a corporation, for taxable years
20    beginning on or after July 1, 2017, an amount equal to 7%
21    of the taxpayer's net income for the taxable year.
22    The rates under this subsection (b) are subject to the
23provisions of Section 201.5.
24    (b-5) Surcharge; sale or exchange of assets, properties,
25and intangibles of organization gaming licensees. For each of
26taxable years 2019 through 2027, a surcharge is imposed on all

 

 

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1taxpayers on income arising from the sale or exchange of
2capital assets, depreciable business property, real property
3used in the trade or business, and Section 197 intangibles (i)
4of an organization licensee under the Illinois Horse Racing
5Act of 1975 and (ii) of an organization gaming licensee under
6the Illinois Gambling Act. The amount of the surcharge is
7equal to the amount of federal income tax liability for the
8taxable year attributable to those sales and exchanges. The
9surcharge imposed shall not apply if:
10        (1) the organization gaming license, organization
11    license, or racetrack property is transferred as a result
12    of any of the following:
13            (A) bankruptcy, a receivership, or a debt
14        adjustment initiated by or against the initial
15        licensee or the substantial owners of the initial
16        licensee;
17            (B) cancellation, revocation, or termination of
18        any such license by the Illinois Gaming Board or the
19        Illinois Racing Board;
20            (C) a determination by the Illinois Gaming Board
21        that transfer of the license is in the best interests
22        of Illinois gaming;
23            (D) the death of an owner of the equity interest in
24        a licensee;
25            (E) the acquisition of a controlling interest in
26        the stock or substantially all of the assets of a

 

 

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1        publicly traded company;
2            (F) a transfer by a parent company to a wholly
3        owned subsidiary; or
4            (G) the transfer or sale to or by one person to
5        another person where both persons were initial owners
6        of the license when the license was issued; or
7        (2) the controlling interest in the organization
8    gaming license, organization license, or racetrack
9    property is transferred in a transaction to lineal
10    descendants in which no gain or loss is recognized or as a
11    result of a transaction in accordance with Section 351 of
12    the Internal Revenue Code in which no gain or loss is
13    recognized; or
14        (3) live horse racing was not conducted in 2010 at a
15    racetrack located within 3 miles of the Mississippi River
16    under a license issued pursuant to the Illinois Horse
17    Racing Act of 1975.
18    The transfer of an organization gaming license,
19organization license, or racetrack property by a person other
20than the initial licensee to receive the organization gaming
21license is not subject to a surcharge. The Department shall
22adopt rules necessary to implement and administer this
23subsection.
24    (c) Personal Property Tax Replacement Income Tax.
25Beginning on July 1, 1979 and thereafter, in addition to such
26income tax, there is also hereby imposed the Personal Property

 

 

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1Tax Replacement Income Tax measured by net income on every
2corporation (including Subchapter S corporations), partnership
3and trust, for each taxable year ending after June 30, 1979.
4Such taxes are imposed on the privilege of earning or
5receiving income in or as a resident of this State. The
6Personal Property Tax Replacement Income Tax shall be in
7addition to the income tax imposed by subsections (a) and (b)
8of this Section and in addition to all other occupation or
9privilege taxes imposed by this State or by any municipal
10corporation or political subdivision thereof.
11    (d) Additional Personal Property Tax Replacement Income
12Tax Rates. The personal property tax replacement income tax
13imposed by this subsection and subsection (c) of this Section
14in the case of a corporation, other than a Subchapter S
15corporation and except as adjusted by subsection (d-1), shall
16be an additional amount equal to 2.85% of such taxpayer's net
17income for the taxable year, except that beginning on January
181, 1981, and thereafter, the rate of 2.85% specified in this
19subsection shall be reduced to 2.5%, and in the case of a
20partnership, trust or a Subchapter S corporation shall be an
21additional amount equal to 1.5% of such taxpayer's net income
22for the taxable year.
23    (d-1) Rate reduction for certain foreign insurers. In the
24case of a foreign insurer, as defined by Section 35A-5 of the
25Illinois Insurance Code, whose state or country of domicile
26imposes on insurers domiciled in Illinois a retaliatory tax

 

 

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1(excluding any insurer whose premiums from reinsurance assumed
2are 50% or more of its total insurance premiums as determined
3under paragraph (2) of subsection (b) of Section 304, except
4that for purposes of this determination premiums from
5reinsurance do not include premiums from inter-affiliate
6reinsurance arrangements), beginning with taxable years ending
7on or after December 31, 1999, the sum of the rates of tax
8imposed by subsections (b) and (d) shall be reduced (but not
9increased) to the rate at which the total amount of tax imposed
10under this Act, net of all credits allowed under this Act,
11shall equal (i) the total amount of tax that would be imposed
12on the foreign insurer's net income allocable to Illinois for
13the taxable year by such foreign insurer's state or country of
14domicile if that net income were subject to all income taxes
15and taxes measured by net income imposed by such foreign
16insurer's state or country of domicile, net of all credits
17allowed or (ii) a rate of zero if no such tax is imposed on
18such income by the foreign insurer's state of domicile. For
19the purposes of this subsection (d-1), an inter-affiliate
20includes a mutual insurer under common management.
21        (1) For the purposes of subsection (d-1), in no event
22    shall the sum of the rates of tax imposed by subsections
23    (b) and (d) be reduced below the rate at which the sum of:
24            (A) the total amount of tax imposed on such
25        foreign insurer under this Act for a taxable year, net
26        of all credits allowed under this Act, plus

 

 

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1            (B) the privilege tax imposed by Section 409 of
2        the Illinois Insurance Code, the fire insurance
3        company tax imposed by Section 12 of the Fire
4        Investigation Act, and the fire department taxes
5        imposed under Section 11-10-1 of the Illinois
6        Municipal Code,
7    equals 1.25% for taxable years ending prior to December
8    31, 2003, or 1.75% for taxable years ending on or after
9    December 31, 2003, of the net taxable premiums written for
10    the taxable year, as described by subsection (1) of
11    Section 409 of the Illinois Insurance Code. This paragraph
12    will in no event increase the rates imposed under
13    subsections (b) and (d).
14        (2) Any reduction in the rates of tax imposed by this
15    subsection shall be applied first against the rates
16    imposed by subsection (b) and only after the tax imposed
17    by subsection (a) net of all credits allowed under this
18    Section other than the credit allowed under subsection (i)
19    has been reduced to zero, against the rates imposed by
20    subsection (d).
21    This subsection (d-1) is exempt from the provisions of
22Section 250.
23    (d-2) For taxable years beginning on or after January 1,
242021, a partnership or Subchapter S corporation may elect to
25pay a tax that is imposed on the partnership or Subchapter S
26corporation. This tax is computed by multiplying each

 

 

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1pass-through owner's share of business income apportionable to
2Illinois and nonbusiness income allocated to Illinois under
3Section 303 of this Act, if this share is not a net loss, by
4the applicable rates of tax for that pass-through owner under
5subsections (a) through (d) of this Section, and taking the
6sum of these amounts. This election shall be made on the
7partnership's or Subchapter S corporation's return filed under
8Section 502 in such manner as the Department may prescribe.
9    (e) Investment credit. A taxpayer shall be allowed a
10credit against the Personal Property Tax Replacement Income
11Tax for investment in qualified property.
12        (1) A taxpayer shall be allowed a credit equal to .5%
13    of the basis of qualified property placed in service
14    during the taxable year, provided such property is placed
15    in service on or after July 1, 1984. There shall be allowed
16    an additional credit equal to .5% of the basis of
17    qualified property placed in service during the taxable
18    year, provided such property is placed in service on or
19    after July 1, 1986, and the taxpayer's base employment
20    within Illinois has increased by 1% or more over the
21    preceding year as determined by the taxpayer's employment
22    records filed with the Illinois Department of Employment
23    Security. Taxpayers who are new to Illinois shall be
24    deemed to have met the 1% growth in base employment for the
25    first year in which they file employment records with the
26    Illinois Department of Employment Security. The provisions

 

 

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1    added to this Section by Public Act 85-1200 (and restored
2    by Public Act 87-895) shall be construed as declaratory of
3    existing law and not as a new enactment. If, in any year,
4    the increase in base employment within Illinois over the
5    preceding year is less than 1%, the additional credit
6    shall be limited to that percentage times a fraction, the
7    numerator of which is .5% and the denominator of which is
8    1%, but shall not exceed .5%. The investment credit shall
9    not be allowed to the extent that it would reduce a
10    taxpayer's liability in any tax year below zero, nor may
11    any credit for qualified property be allowed for any year
12    other than the year in which the property was placed in
13    service in Illinois. For tax years ending on or after
14    December 31, 1987, and on or before December 31, 1988, the
15    credit shall be allowed for the tax year in which the
16    property is placed in service, or, if the amount of the
17    credit exceeds the tax liability for that year, whether it
18    exceeds the original liability or the liability as later
19    amended, such excess may be carried forward and applied to
20    the tax liability of the 5 taxable years following the
21    excess credit years if the taxpayer (i) makes investments
22    which cause the creation of a minimum of 2,000 full-time
23    equivalent jobs in Illinois, (ii) is located in an
24    enterprise zone established pursuant to the Illinois
25    Enterprise Zone Act and (iii) is certified by the
26    Department of Commerce and Community Affairs (now

 

 

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1    Department of Commerce and Economic Opportunity) as
2    complying with the requirements specified in clause (i)
3    and (ii) by July 1, 1986. The Department of Commerce and
4    Community Affairs (now Department of Commerce and Economic
5    Opportunity) shall notify the Department of Revenue of all
6    such certifications immediately. For tax years ending
7    after December 31, 1988, the credit shall be allowed for
8    the tax year in which the property is placed in service,
9    or, if the amount of the credit exceeds the tax liability
10    for that year, whether it exceeds the original liability
11    or the liability as later amended, such excess may be
12    carried forward and applied to the tax liability of the 5
13    taxable years following the excess credit years. The
14    credit shall be applied to the earliest year for which
15    there is a liability. If there is credit from more than one
16    tax year that is available to offset a liability, earlier
17    credit shall be applied first.
18        (2) The term "qualified property" means property
19    which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings and
22        signs that are real property, but not including land
23        or improvements to real property that are not a
24        structural component of a building such as
25        landscaping, sewer lines, local access roads, fencing,
26        parking lots, and other appurtenances;

 

 

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1            (B) is depreciable pursuant to Section 167 of the
2        Internal Revenue Code, except that "3-year property"
3        as defined in Section 168(c)(2)(A) of that Code is not
4        eligible for the credit provided by this subsection
5        (e);
6            (C) is acquired by purchase as defined in Section
7        179(d) of the Internal Revenue Code;
8            (D) is used in Illinois by a taxpayer who is
9        primarily engaged in manufacturing, or in mining coal
10        or fluorite, or in retailing, or was placed in service
11        on or after July 1, 2006 in a River Edge Redevelopment
12        Zone established pursuant to the River Edge
13        Redevelopment Zone Act; and
14            (E) has not previously been used in Illinois in
15        such a manner and by such a person as would qualify for
16        the credit provided by this subsection (e) or
17        subsection (f).
18        (3) For purposes of this subsection (e),
19    "manufacturing" means the material staging and production
20    of tangible personal property by procedures commonly
21    regarded as manufacturing, processing, fabrication, or
22    assembling which changes some existing material into new
23    shapes, new qualities, or new combinations. For purposes
24    of this subsection (e) the term "mining" shall have the
25    same meaning as the term "mining" in Section 613(c) of the
26    Internal Revenue Code. For purposes of this subsection

 

 

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1    (e), the term "retailing" means the sale of tangible
2    personal property for use or consumption and not for
3    resale, or services rendered in conjunction with the sale
4    of tangible personal property for use or consumption and
5    not for resale. For purposes of this subsection (e),
6    "tangible personal property" has the same meaning as when
7    that term is used in the Retailers' Occupation Tax Act,
8    and, for taxable years ending after December 31, 2008,
9    does not include the generation, transmission, or
10    distribution of electricity.
11        (4) The basis of qualified property shall be the basis
12    used to compute the depreciation deduction for federal
13    income tax purposes.
14        (5) If the basis of the property for federal income
15    tax depreciation purposes is increased after it has been
16    placed in service in Illinois by the taxpayer, the amount
17    of such increase shall be deemed property placed in
18    service on the date of such increase in basis.
19        (6) The term "placed in service" shall have the same
20    meaning as under Section 46 of the Internal Revenue Code.
21        (7) If during any taxable year, any property ceases to
22    be qualified property in the hands of the taxpayer within
23    48 months after being placed in service, or the situs of
24    any qualified property is moved outside Illinois within 48
25    months after being placed in service, the Personal
26    Property Tax Replacement Income Tax for such taxable year

 

 

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

 

 

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1    and the rules promulgated under that Section, and the
2    allocated amount of the credits shall be allowed to the
3    partners for that taxable year. The partnership shall make
4    this election on its Personal Property Tax Replacement
5    Income Tax return for that taxable year. The election to
6    pass through the credits shall be irrevocable.
7        For taxable years ending on or after December 31,
8    2000, a partner that qualifies its partnership for a
9    subtraction under subparagraph (I) of paragraph (2) of
10    subsection (d) of Section 203 or a shareholder that
11    qualifies a Subchapter S corporation for a subtraction
12    under subparagraph (S) of paragraph (2) of subsection (b)
13    of Section 203 shall be allowed a credit under this
14    subsection (e) equal to its share of the credit earned
15    under this subsection (e) during the taxable year by the
16    partnership or Subchapter S corporation, determined in
17    accordance with the determination of income and
18    distributive share of income under Sections 702 and 704
19    and Subchapter S of the Internal Revenue Code. This
20    paragraph is exempt from the provisions of Section 250.
21    (f) Investment credit; Enterprise Zone; River Edge
22Redevelopment Zone.
23        (1) A taxpayer shall be allowed a credit against the
24    tax imposed by subsections (a) and (b) of this Section for
25    investment in qualified property which is placed in
26    service in an Enterprise Zone created pursuant to the

 

 

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1    Illinois Enterprise Zone Act or, for property placed in
2    service on or after July 1, 2006, a River Edge
3    Redevelopment Zone established pursuant to the River Edge
4    Redevelopment Zone Act. For partners, shareholders of
5    Subchapter S corporations, and owners of limited liability
6    companies, if the liability company is treated as a
7    partnership for purposes of federal and State income
8    taxation, there shall be allowed a credit under this
9    subsection (f) to be determined in accordance with the
10    determination of income and distributive share of income
11    under Sections 702 and 704 and Subchapter S of the
12    Internal Revenue Code. The credit shall be .5% of the
13    basis for such property. The credit shall be available
14    only in the taxable year in which the property is placed in
15    service in the Enterprise Zone or River Edge Redevelopment
16    Zone and shall not be allowed to the extent that it would
17    reduce a taxpayer's liability for the tax imposed by
18    subsections (a) and (b) of this Section to below zero. For
19    tax years ending on or after December 31, 1985, the credit
20    shall be allowed for the tax year in which the property is
21    placed in service, or, if the amount of the credit exceeds
22    the tax liability for that year, whether it exceeds the
23    original liability or the liability as later amended, such
24    excess may be carried forward and applied to the tax
25    liability of the 5 taxable years following the excess
26    credit year. The credit shall be applied to the earliest

 

 

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1    year for which there is a liability. If there is credit
2    from more than one tax year that is available to offset a
3    liability, the credit accruing first in time shall be
4    applied first.
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        (f);
13            (C) is acquired by purchase as defined in Section
14        179(d) of the Internal Revenue Code;
15            (D) is used in the Enterprise Zone or River Edge
16        Redevelopment Zone by the taxpayer; and
17            (E) has not been previously used in Illinois in
18        such a manner and by such a person as would qualify for
19        the credit provided by this subsection (f) or
20        subsection (e).
21        (3) The basis of qualified property shall be the basis
22    used to compute the depreciation deduction for federal
23    income tax purposes.
24        (4) If the basis of the property for federal income
25    tax depreciation purposes is increased after it has been
26    placed in service in the Enterprise Zone or River Edge

 

 

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1    Redevelopment Zone by the taxpayer, the amount of such
2    increase shall be deemed property placed in service on the
3    date of such increase in basis.
4        (5) The term "placed in service" shall have the same
5    meaning as under Section 46 of the Internal Revenue Code.
6        (6) If during any taxable year, any property ceases to
7    be qualified property in the hands of the taxpayer within
8    48 months after being placed in service, or the situs of
9    any qualified property is moved outside the Enterprise
10    Zone or River Edge Redevelopment Zone within 48 months
11    after being placed in service, the tax imposed under
12    subsections (a) and (b) of this Section for such taxable
13    year shall be increased. Such increase shall be determined
14    by (i) recomputing the investment credit which would have
15    been allowed for the year in which credit for such
16    property was originally allowed by eliminating such
17    property from such computation, and (ii) subtracting such
18    recomputed credit from the amount of credit previously
19    allowed. For the purposes of this paragraph (6), a
20    reduction of the basis of qualified property resulting
21    from a redetermination of the purchase price shall be
22    deemed a disposition of qualified property to the extent
23    of such reduction.
24        (7) There shall be allowed an additional credit equal
25    to 0.5% of the basis of qualified property placed in
26    service during the taxable year in a River Edge

 

 

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1    Redevelopment Zone, provided such property is placed in
2    service on or after July 1, 2006, and the taxpayer's base
3    employment within Illinois has increased by 1% or more
4    over the preceding year as determined by the taxpayer's
5    employment records filed with the Illinois Department of
6    Employment Security. Taxpayers who are new to Illinois
7    shall be deemed to have met the 1% growth in base
8    employment for the first year in which they file
9    employment records with the Illinois Department of
10    Employment Security. If, in any year, the increase in base
11    employment within Illinois over the preceding year is less
12    than 1%, the additional credit shall be limited to that
13    percentage times a fraction, the numerator of which is
14    0.5% and the denominator of which is 1%, but shall not
15    exceed 0.5%.
16        (8) For taxable years beginning on or after January 1,
17    2021, there shall be allowed an Enterprise Zone
18    construction jobs credit against the taxes imposed under
19    subsections (a) and (b) of this Section as provided in
20    Section 13 of the Illinois Enterprise Zone Act.
21        The credit or credits may not reduce the taxpayer's
22    liability to less than zero. If the amount of the credit or
23    credits exceeds the taxpayer's liability, the excess may
24    be carried forward and applied against the taxpayer's
25    liability in succeeding calendar years in the same manner
26    provided under paragraph (4) of Section 211 of this Act.

 

 

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1    The credit or credits shall be applied to the earliest
2    year for which there is a tax liability. If there are
3    credits from more than one taxable year that are available
4    to offset a liability, the earlier credit shall be applied
5    first.
6        For partners, shareholders of Subchapter S
7    corporations, and owners of limited liability companies,
8    if the liability company is treated as a partnership for
9    the purposes of federal and State income taxation, there
10    shall be allowed a credit under this Section to be
11    determined in accordance with the determination of income
12    and distributive share of income under Sections 702 and
13    704 and Subchapter S of the Internal Revenue Code.
14        The total aggregate amount of credits awarded under
15    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
16    this amendatory Act of the 101st General Assembly) shall
17    not exceed $20,000,000 in any State fiscal year.
18        This paragraph (8) is exempt from the provisions of
19    Section 250.
20    (g) (Blank).
21    (h) Investment credit; High Impact Business.
22        (1) Subject to subsections (b) and (b-5) of Section
23    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
24    be allowed a credit against the tax imposed by subsections
25    (a) and (b) of this Section for investment in qualified
26    property which is placed in service by a Department of

 

 

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1    Commerce and Economic Opportunity designated High Impact
2    Business. The credit shall be .5% of the basis for such
3    property. The credit shall not be available (i) until the
4    minimum investments in qualified property set forth in
5    subdivision (a)(3)(A) of Section 5.5 of the Illinois
6    Enterprise Zone Act have been satisfied or (ii) until the
7    time authorized in subsection (b-5) of the Illinois
8    Enterprise Zone Act for entities designated as High Impact
9    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
10    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
11    Act, and shall not be allowed to the extent that it would
12    reduce a taxpayer's liability for the tax imposed by
13    subsections (a) and (b) of this Section to below zero. The
14    credit applicable to such investments shall be taken in
15    the taxable year in which such investments have been
16    completed. The credit for additional investments beyond
17    the minimum investment by a designated high impact
18    business authorized under subdivision (a)(3)(A) of Section
19    5.5 of the Illinois Enterprise Zone Act shall be available
20    only in the taxable year in which the property is placed in
21    service and shall not be allowed to the extent that it
22    would reduce a taxpayer's liability for the tax imposed by
23    subsections (a) and (b) of this Section to below zero. For
24    tax years ending on or after December 31, 1987, the credit
25    shall be allowed for the tax year in which the property is
26    placed in service, or, if the amount of the credit exceeds

 

 

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1    the tax liability for that year, whether it exceeds the
2    original liability or the liability as later amended, such
3    excess may be carried forward and applied to the tax
4    liability of the 5 taxable years following the excess
5    credit year. The credit shall be applied to the earliest
6    year for which there is a liability. If there is credit
7    from more than one tax year that is available to offset a
8    liability, the credit accruing first in time shall be
9    applied first.
10        Changes made in this subdivision (h)(1) by Public Act
11    88-670 restore changes made by Public Act 85-1182 and
12    reflect existing law.
13        (2) The term qualified property means property which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings;
16            (B) is depreciable pursuant to Section 167 of the
17        Internal Revenue Code, except that "3-year property"
18        as defined in Section 168(c)(2)(A) of that Code is not
19        eligible for the credit provided by this subsection
20        (h);
21            (C) is acquired by purchase as defined in Section
22        179(d) of the Internal Revenue Code; and
23            (D) is not eligible for the Enterprise Zone
24        Investment Credit provided by subsection (f) of this
25        Section.
26        (3) The basis of qualified property shall be the basis

 

 

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1    used to compute the depreciation deduction for federal
2    income tax purposes.
3        (4) If the basis of the property for federal income
4    tax depreciation purposes is increased after it has been
5    placed in service in a federally designated Foreign Trade
6    Zone or Sub-Zone located in Illinois by the taxpayer, the
7    amount of such increase shall be deemed property placed in
8    service on the date of such increase in basis.
9        (5) The term "placed in service" shall have the same
10    meaning as under Section 46 of the Internal Revenue Code.
11        (6) If during any taxable year ending on or before
12    December 31, 1996, any property ceases to be qualified
13    property in the hands of the taxpayer within 48 months
14    after being placed in service, or the situs of any
15    qualified property is moved outside Illinois within 48
16    months after being placed in service, the tax imposed
17    under subsections (a) and (b) of this Section for such
18    taxable year shall be increased. Such increase shall be
19    determined by (i) recomputing the investment credit which
20    would have been allowed for the year in which credit for
21    such 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 (6), a
25    reduction of the basis of qualified property resulting
26    from a redetermination of the purchase price shall be

 

 

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1    deemed a disposition of qualified property to the extent
2    of such reduction.
3        (7) Beginning with tax years ending after December 31,
4    1996, if a taxpayer qualifies for the credit under this
5    subsection (h) and thereby is granted a tax abatement and
6    the taxpayer relocates its entire facility in violation of
7    the explicit terms and length of the contract under
8    Section 18-183 of the Property Tax Code, the tax imposed
9    under subsections (a) and (b) of this Section shall be
10    increased for the taxable year in which the taxpayer
11    relocated its facility by an amount equal to the amount of
12    credit received by the taxpayer under this subsection (h).
13    (h-5) High Impact Business construction constructions jobs
14credit. For taxable years beginning on or after January 1,
152021, there shall also be allowed a High Impact Business
16construction jobs credit against the tax imposed under
17subsections (a) and (b) of this Section as provided in
18subsections (i) and (j) of Section 5.5 of the Illinois
19Enterprise Zone Act.
20    The credit or credits may not reduce the taxpayer's
21liability to less than zero. If the amount of the credit or
22credits exceeds the taxpayer's liability, the excess may be
23carried forward and applied against the taxpayer's liability
24in succeeding calendar years in the manner provided under
25paragraph (4) of Section 211 of this Act. The credit or credits
26shall be applied to the earliest year for which there is a tax

 

 

10200SB2531sam001- 27 -LRB102 15312 HLH 24505 a

1liability. If there are credits from more than one taxable
2year that are available to offset a liability, the earlier
3credit shall be applied first.
4    For partners, shareholders of Subchapter S corporations,
5and owners of limited liability companies, if the liability
6company is treated as a partnership for the purposes of
7federal and State income taxation, there shall be allowed a
8credit under this Section to be determined in accordance with
9the determination of income and distributive share of income
10under Sections 702 and 704 and Subchapter S of the Internal
11Revenue Code.
12    The total aggregate amount of credits awarded under the
13Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
14amendatory Act of the 101st General Assembly) shall not exceed
15$20,000,000 in any State fiscal year.
16    This subsection (h-5) is exempt from the provisions of
17Section 250.
18    (i) Credit for Personal Property Tax Replacement Income
19Tax. For tax years ending prior to December 31, 2003, a credit
20shall be allowed against the tax imposed by subsections (a)
21and (b) of this Section for the tax imposed by subsections (c)
22and (d) of this Section. This credit shall be computed by
23multiplying the tax imposed by subsections (c) and (d) of this
24Section by a fraction, the numerator of which is base income
25allocable to Illinois and the denominator of which is Illinois
26base income, and further multiplying the product by the tax

 

 

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1rate imposed by subsections (a) and (b) of this Section.
2    Any credit earned on or after December 31, 1986 under this
3subsection which is unused in the year the credit is computed
4because it exceeds the tax liability imposed by subsections
5(a) and (b) for that year (whether it exceeds the original
6liability or the liability as later amended) may be carried
7forward and applied to the tax liability imposed by
8subsections (a) and (b) of the 5 taxable years following the
9excess credit year, provided that no credit may be carried
10forward to any year ending on or after December 31, 2003. This
11credit shall be applied first to the earliest year for which
12there is a liability. If there is a credit under this
13subsection from more than one tax year that is available to
14offset a liability the earliest credit arising under this
15subsection shall be applied first.
16    If, during any taxable year ending on or after December
1731, 1986, the tax imposed by subsections (c) and (d) of this
18Section for which a taxpayer has claimed a credit under this
19subsection (i) is reduced, the amount of credit for such tax
20shall also be reduced. Such reduction shall be determined by
21recomputing the credit to take into account the reduced tax
22imposed by subsections (c) and (d). If any portion of the
23reduced amount of credit has been carried to a different
24taxable year, an amended return shall be filed for such
25taxable year to reduce the amount of credit claimed.
26    (j) Training expense credit. Beginning with tax years

 

 

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1ending on or after December 31, 1986 and prior to December 31,
22003, a taxpayer shall be allowed a credit against the tax
3imposed by subsections (a) and (b) under this Section for all
4amounts paid or accrued, on behalf of all persons employed by
5the taxpayer in Illinois or Illinois residents employed
6outside of Illinois by a taxpayer, for educational or
7vocational training in semi-technical or technical fields or
8semi-skilled or skilled fields, which were deducted from gross
9income in the computation of taxable income. The credit
10against the tax imposed by subsections (a) and (b) shall be
111.6% of such training expenses. For partners, shareholders of
12subchapter S corporations, and owners of limited liability
13companies, if the liability company is treated as a
14partnership for purposes of federal and State income taxation,
15there shall be allowed a credit under this subsection (j) to be
16determined in accordance with the determination of income and
17distributive share of income under Sections 702 and 704 and
18subchapter S of the Internal Revenue Code.
19    Any credit allowed under this subsection which is unused
20in the year the credit is earned may be carried forward to each
21of the 5 taxable years following the year for which the credit
22is first computed until it is used. This credit shall be
23applied first to the earliest year for which there is a
24liability. If there is a credit under this subsection from
25more than one tax year that is available to offset a liability,
26the earliest credit arising under this subsection shall be

 

 

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1applied first. No carryforward credit may be claimed in any
2tax year ending on or after December 31, 2003.
3    (k) Research and development credit. For tax years ending
4after July 1, 1990 and prior to December 31, 2003, and
5beginning again for tax years ending on or after December 31,
62004, and ending prior to January 1, 2027, a taxpayer shall be
7allowed a credit against the tax imposed by subsections (a)
8and (b) of this Section for increasing research activities in
9this State. The credit allowed against the tax imposed by
10subsections (a) and (b) shall be equal to 6 1/2% of the
11qualifying expenditures for increasing research activities in
12this State. For partners, shareholders of subchapter S
13corporations, and owners of limited liability companies, if
14the liability company is treated as a partnership for purposes
15of federal and State income taxation, there shall be allowed a
16credit under this subsection to be determined in accordance
17with the determination of income and distributive share of
18income under Sections 702 and 704 and subchapter S of the
19Internal Revenue Code.
20    For purposes of this subsection, "qualifying expenditures"
21means the qualifying expenditures as defined for the federal
22credit for increasing research activities which would be
23allowable under Section 41 of the Internal Revenue Code and
24which are conducted in this State, "qualifying expenditures
25for increasing research activities in this State" means the
26excess of qualifying expenditures for the taxable year in

 

 

10200SB2531sam001- 31 -LRB102 15312 HLH 24505 a

1which incurred over qualifying expenditures for the base
2period, "qualifying expenditures for the base period" means
3the average of the qualifying expenditures for each year in
4the base period, and "base period" means the 3 taxable years
5immediately preceding the taxable year for which the
6determination is being made.
7    Any credit in excess of the tax liability for the taxable
8year may be carried forward. A taxpayer may elect to have the
9unused credit shown on its final completed return carried over
10as a credit against the tax liability for the following 5
11taxable years or until it has been fully used, whichever
12occurs first; provided that no credit earned in a tax year
13ending prior to December 31, 2003 may be carried forward to any
14year ending on or after December 31, 2003.
15    If an unused credit is carried forward to a given year from
162 or more earlier years, that credit arising in the earliest
17year will be applied first against the tax liability for the
18given year. If a tax liability for the given year still
19remains, the credit from the next earliest year will then be
20applied, and so on, until all credits have been used or no tax
21liability for the given year remains. Any remaining unused
22credit or credits then will be carried forward to the next
23following year in which a tax liability is incurred, except
24that no credit can be carried forward to a year which is more
25than 5 years after the year in which the expense for which the
26credit is given was incurred.

 

 

10200SB2531sam001- 32 -LRB102 15312 HLH 24505 a

1    No inference shall be drawn from Public Act 91-644 this
2amendatory Act of the 91st General Assembly in construing this
3Section for taxable years beginning before January 1, 1999.
4    It is the intent of the General Assembly that the research
5and development credit under this subsection (k) shall apply
6continuously for all tax years ending on or after December 31,
72004 and ending prior to January 1, 2027, including, but not
8limited to, the period beginning on January 1, 2016 and ending
9on July 6, 2017 (the effective date of Public Act 100-22) this
10amendatory Act of the 100th General Assembly. All actions
11taken in reliance on the continuation of the credit under this
12subsection (k) by any taxpayer are hereby validated.
13    (l) Environmental Remediation Tax Credit.
14        (i) For tax years ending after December 31, 1997 and
15    on or before December 31, 2001, a taxpayer shall be
16    allowed a credit against the tax imposed by subsections
17    (a) and (b) of this Section for certain amounts paid for
18    unreimbursed eligible remediation costs, as specified in
19    this subsection. For purposes of this Section,
20    "unreimbursed eligible remediation costs" means costs
21    approved by the Illinois Environmental Protection Agency
22    ("Agency") under Section 58.14 of the Environmental
23    Protection Act that were paid in performing environmental
24    remediation at a site for which a No Further Remediation
25    Letter was issued by the Agency and recorded under Section
26    58.10 of the Environmental Protection Act. The credit must

 

 

10200SB2531sam001- 33 -LRB102 15312 HLH 24505 a

1    be claimed for the taxable year in which Agency approval
2    of the eligible remediation costs is granted. The credit
3    is not available to any taxpayer if the taxpayer or any
4    related party caused or contributed to, in any material
5    respect, a release of regulated substances on, in, or
6    under the site that was identified and addressed by the
7    remedial action pursuant to the Site Remediation Program
8    of the Environmental Protection Act. After the Pollution
9    Control Board rules are adopted pursuant to the Illinois
10    Administrative Procedure Act for the administration and
11    enforcement of Section 58.9 of the Environmental
12    Protection Act, determinations as to credit availability
13    for purposes of this Section shall be made consistent with
14    those rules. For purposes of this Section, "taxpayer"
15    includes a person whose tax attributes the taxpayer has
16    succeeded to under Section 381 of the Internal Revenue
17    Code and "related party" includes the persons disallowed a
18    deduction for losses by paragraphs (b), (c), and (f)(1) of
19    Section 267 of the Internal Revenue Code by virtue of
20    being a related taxpayer, as well as any of its partners.
21    The credit allowed against the tax imposed by subsections
22    (a) and (b) shall be equal to 25% of the unreimbursed
23    eligible remediation costs in excess of $100,000 per site,
24    except that the $100,000 threshold shall not apply to any
25    site contained in an enterprise zone as determined by the
26    Department of Commerce and Community Affairs (now

 

 

10200SB2531sam001- 34 -LRB102 15312 HLH 24505 a

1    Department of Commerce and Economic Opportunity). The
2    total credit allowed shall not exceed $40,000 per year
3    with a maximum total of $150,000 per site. For partners
4    and shareholders of subchapter S corporations, there shall
5    be allowed a credit under this subsection to be determined
6    in accordance with the determination of income and
7    distributive share of income under Sections 702 and 704
8    and subchapter S of the Internal Revenue Code.
9        (ii) A credit allowed under this subsection that is
10    unused in the year the credit is earned may be carried
11    forward to each of the 5 taxable years following the year
12    for which the credit is first earned until it is used. The
13    term "unused credit" does not include any amounts of
14    unreimbursed eligible remediation costs in excess of the
15    maximum credit per site authorized under paragraph (i).
16    This credit shall be applied first to the earliest year
17    for which there is a liability. If there is a credit under
18    this subsection from more than one tax year that is
19    available to offset a liability, the earliest credit
20    arising under this subsection shall be applied first. A
21    credit allowed under this subsection may be sold to a
22    buyer as part of a sale of all or part of the remediation
23    site for which the credit was granted. The purchaser of a
24    remediation site and the tax credit shall succeed to the
25    unused credit and remaining carry-forward period of the
26    seller. To perfect the transfer, the assignor shall record

 

 

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1    the transfer in the chain of title for the site and provide
2    written notice to the Director of the Illinois Department
3    of Revenue of the assignor's intent to sell the
4    remediation site and the amount of the tax credit to be
5    transferred as a portion of the sale. In no event may a
6    credit be transferred to any taxpayer if the taxpayer or a
7    related party would not be eligible under the provisions
8    of subsection (i).
9        (iii) For purposes of this Section, the term "site"
10    shall have the same meaning as under Section 58.2 of the
11    Environmental Protection Act.
12    (m) Education expense credit. Beginning with tax years
13ending after December 31, 1999, a taxpayer who is the
14custodian of one or more qualifying pupils shall be allowed a
15credit against the tax imposed by subsections (a) and (b) of
16this Section for qualified education expenses incurred on
17behalf of the qualifying pupils. The credit shall be equal to
1825% of qualified education expenses, but in no event may the
19total credit under this subsection claimed by a family that is
20the custodian of qualifying pupils exceed (i) $500 for tax
21years ending prior to December 31, 2017, and (ii) $750 for tax
22years ending on or after December 31, 2017. In no event shall a
23credit under this subsection reduce the taxpayer's liability
24under this Act to less than zero. Notwithstanding any other
25provision of law, for taxable years beginning on or after
26January 1, 2017, no taxpayer may claim a credit under this

 

 

10200SB2531sam001- 36 -LRB102 15312 HLH 24505 a

1subsection (m) if the taxpayer's adjusted gross income for the
2taxable year exceeds (i) $500,000, in the case of spouses
3filing a joint federal tax return or (ii) $250,000, in the case
4of all other taxpayers. This subsection is exempt from the
5provisions of Section 250 of this Act.
6    For purposes of this subsection:
7    "Qualifying pupils" means individuals who (i) are
8residents of the State of Illinois, (ii) are under the age of
921 at the close of the school year for which a credit is
10sought, and (iii) during the school year for which a credit is
11sought were full-time pupils enrolled in a kindergarten
12through twelfth grade education program at any school, as
13defined in this subsection.
14    "Qualified education expense" means the amount incurred on
15behalf of a qualifying pupil in excess of $250 for tuition,
16book fees, and lab fees at the school in which the pupil is
17enrolled during the regular school year.
18    "School" means any public or nonpublic elementary or
19secondary school in Illinois that is in compliance with Title
20VI of the Civil Rights Act of 1964 and attendance at which
21satisfies the requirements of Section 26-1 of the School Code,
22except that nothing shall be construed to require a child to
23attend any particular public or nonpublic school to qualify
24for the credit under this Section.
25    "Custodian" means, with respect to qualifying pupils, an
26Illinois resident who is a parent, the parents, a legal

 

 

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1guardian, or the legal guardians of the qualifying pupils.
2    (n) River Edge Redevelopment Zone site remediation tax
3credit.
4        (i) For tax years ending on or after December 31,
5    2006, a taxpayer shall be allowed a credit against the tax
6    imposed by subsections (a) and (b) of this Section for
7    certain amounts paid for unreimbursed eligible remediation
8    costs, as specified in this subsection. For purposes of
9    this Section, "unreimbursed eligible remediation costs"
10    means costs approved by the Illinois Environmental
11    Protection Agency ("Agency") under Section 58.14a of the
12    Environmental Protection Act that were paid in performing
13    environmental remediation at a site within a River Edge
14    Redevelopment Zone for which a No Further Remediation
15    Letter was issued by the Agency and recorded under Section
16    58.10 of the Environmental Protection Act. The credit must
17    be claimed for the taxable year in which Agency approval
18    of the eligible remediation costs is granted. The credit
19    is not available to any taxpayer if the taxpayer or any
20    related party caused or contributed to, in any material
21    respect, a release of regulated substances on, in, or
22    under the site that was identified and addressed by the
23    remedial action pursuant to the Site Remediation Program
24    of the Environmental Protection Act. Determinations as to
25    credit availability for purposes of this Section shall be
26    made consistent with rules adopted by the Pollution

 

 

10200SB2531sam001- 38 -LRB102 15312 HLH 24505 a

1    Control Board pursuant to the Illinois Administrative
2    Procedure Act for the administration and enforcement of
3    Section 58.9 of the Environmental Protection Act. For
4    purposes of this Section, "taxpayer" includes a person
5    whose tax attributes the taxpayer has succeeded to under
6    Section 381 of the Internal Revenue Code and "related
7    party" includes the persons disallowed a deduction for
8    losses by paragraphs (b), (c), and (f)(1) of Section 267
9    of the Internal Revenue Code by virtue of being a related
10    taxpayer, as well as any of its partners. The credit
11    allowed against the tax imposed by subsections (a) and (b)
12    shall be equal to 25% of the unreimbursed eligible
13    remediation costs in excess of $100,000 per site.
14        (ii) A credit allowed under this subsection that is
15    unused in the year the credit is earned may be carried
16    forward to each of the 5 taxable years following the year
17    for which the credit is first earned until it is used. This
18    credit shall be applied first to the earliest year for
19    which there is a liability. If there is a credit under this
20    subsection from more than one tax year that is available
21    to offset a liability, the earliest credit arising under
22    this subsection shall be applied first. A credit allowed
23    under this subsection may be sold to a buyer as part of a
24    sale of all or part of the remediation site for which the
25    credit was granted. The purchaser of a remediation site
26    and the tax credit shall succeed to the unused credit and

 

 

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1    remaining carry-forward period of the seller. To perfect
2    the transfer, the assignor shall record the transfer in
3    the chain of title for the site and provide written notice
4    to the Director of the Illinois Department of Revenue of
5    the assignor's intent to sell the remediation site and the
6    amount of the tax credit to be transferred as a portion of
7    the sale. In no event may a credit be transferred to any
8    taxpayer if the taxpayer or a related party would not be
9    eligible under the provisions of subsection (i).
10        (iii) For purposes of this Section, the term "site"
11    shall have the same meaning as under Section 58.2 of the
12    Environmental Protection Act.
13    (o) For each of taxable years during the Compassionate Use
14of Medical Cannabis Program, a surcharge is imposed on all
15taxpayers on income arising from the sale or exchange of
16capital assets, depreciable business property, real property
17used in the trade or business, and Section 197 intangibles of
18an organization registrant under the Compassionate Use of
19Medical Cannabis Program Act. The amount of the surcharge is
20equal to the amount of federal income tax liability for the
21taxable year attributable to those sales and exchanges. The
22surcharge imposed does not apply if:
23        (1) the medical cannabis cultivation center
24    registration, medical cannabis dispensary registration, or
25    the property of a registration is transferred as a result
26    of any of the following:

 

 

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1            (A) bankruptcy, a receivership, or a debt
2        adjustment initiated by or against the initial
3        registration or the substantial owners of the initial
4        registration;
5            (B) cancellation, revocation, or termination of
6        any registration by the Illinois Department of Public
7        Health;
8            (C) a determination by the Illinois Department of
9        Public Health that transfer of the registration is in
10        the best interests of Illinois qualifying patients as
11        defined by the Compassionate Use of Medical Cannabis
12        Program Act;
13            (D) the death of an owner of the equity interest in
14        a registrant;
15            (E) the acquisition of a controlling interest in
16        the stock or substantially all of the assets of a
17        publicly traded company;
18            (F) a transfer by a parent company to a wholly
19        owned subsidiary; or
20            (G) the transfer or sale to or by one person to
21        another person where both persons were initial owners
22        of the registration when the registration was issued;
23        or
24        (2) the cannabis cultivation center registration,
25    medical cannabis dispensary registration, or the
26    controlling interest in a registrant's property is

 

 

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1    transferred in a transaction to lineal descendants in
2    which no gain or loss is recognized or as a result of a
3    transaction in accordance with Section 351 of the Internal
4    Revenue Code in which no gain or loss is recognized.
5(Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31,
6eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19;
7revised 11-18-20.)
 
8    (Text of Section with the changes made by P.A. 101-8,
9which did not take effect (see Section 99 of P.A. 101-8))
10    Sec. 201. Tax imposed.
11    (a) In general. A tax measured by net income is hereby
12imposed on every individual, corporation, trust and estate for
13each taxable year ending after July 31, 1969 on the privilege
14of earning or receiving income in or as a resident of this
15State. Such tax shall be in addition to all other occupation or
16privilege taxes imposed by this State or by any municipal
17corporation or political subdivision thereof.
18    (b) Rates. The tax imposed by subsection (a) of this
19Section shall be determined as follows, except as adjusted by
20subsection (d-1):
21        (1) In the case of an individual, trust or estate, for
22    taxable years ending prior to July 1, 1989, an amount
23    equal to 2 1/2% of the taxpayer's net income for the
24    taxable year.
25        (2) In the case of an individual, trust or estate, for

 

 

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

 

 

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1    (ii) 3.75% of the taxpayer's net income for the period
2    after December 31, 2014, as calculated under Section
3    202.5.
4        (5.2) In the case of an individual, trust, or estate,
5    for taxable years beginning on or after January 1, 2015,
6    and ending prior to July 1, 2017, an amount equal to 3.75%
7    of the taxpayer's net income for the taxable year.
8        (5.3) In the case of an individual, trust, or estate,
9    for taxable years beginning prior to July 1, 2017, and
10    ending after June 30, 2017, an amount equal to the sum of
11    (i) 3.75% of the taxpayer's net income for the period
12    prior to July 1, 2017, as calculated under Section 202.5,
13    and (ii) 4.95% of the taxpayer's net income for the period
14    after June 30, 2017, as calculated under Section 202.5.
15        (5.4) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after July 1, 2017 and
17    beginning prior to January 1, 2021, an amount equal to
18    4.95% of the taxpayer's net income for the taxable year.
19        (5.5) In the case of an individual, trust, or estate,
20    for taxable years beginning on or after January 1, 2021,
21    an amount calculated under the rate structure set forth in
22    Section 201.1.
23        (6) In the case of a corporation, for taxable years
24    ending prior to July 1, 1989, an amount equal to 4% of the
25    taxpayer's net income for the taxable year.
26        (7) In the case of a corporation, for taxable years

 

 

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

 

 

10200SB2531sam001- 45 -LRB102 15312 HLH 24505 a

1    of the taxpayer's net income for the period after December
2    31, 2014, as calculated under Section 202.5.
3        (12) In the case of a corporation, for taxable years
4    beginning on or after January 1, 2015, and ending prior to
5    July 1, 2017, an amount equal to 5.25% of the taxpayer's
6    net income for the taxable year.
7        (13) In the case of a corporation, for taxable years
8    beginning prior to July 1, 2017, and ending after June 30,
9    2017, an amount equal to the sum of (i) 5.25% of the
10    taxpayer's net income for the period prior to July 1,
11    2017, as calculated under Section 202.5, and (ii) 7% of
12    the taxpayer's net income for the period after June 30,
13    2017, as calculated under Section 202.5.
14        (14) In the case of a corporation, for taxable years
15    beginning on or after July 1, 2017 and beginning prior to
16    January 1, 2021, an amount equal to 7% of the taxpayer's
17    net income for the taxable year.
18        (15) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2021, an amount equal to
20    7.99% of the taxpayer's net income for the taxable year.
21    The rates under this subsection (b) are subject to the
22provisions of Section 201.5.
23    (b-5) Surcharge; sale or exchange of assets, properties,
24and intangibles of organization gaming licensees. For each of
25taxable years 2019 through 2027, a surcharge is imposed on all
26taxpayers on income arising from the sale or exchange of

 

 

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1capital assets, depreciable business property, real property
2used in the trade or business, and Section 197 intangibles (i)
3of an organization licensee under the Illinois Horse Racing
4Act of 1975 and (ii) of an organization gaming licensee under
5the Illinois Gambling Act. The amount of the surcharge is
6equal to the amount of federal income tax liability for the
7taxable year attributable to those sales and exchanges. The
8surcharge imposed shall not apply if:
9        (1) the organization gaming license, organization
10    license, or racetrack property is transferred as a result
11    of any of the following:
12            (A) bankruptcy, a receivership, or a debt
13        adjustment initiated by or against the initial
14        licensee or the substantial owners of the initial
15        licensee;
16            (B) cancellation, revocation, or termination of
17        any such license by the Illinois Gaming Board or the
18        Illinois Racing Board;
19            (C) a determination by the Illinois Gaming Board
20        that transfer of the license is in the best interests
21        of Illinois gaming;
22            (D) the death of an owner of the equity interest in
23        a licensee;
24            (E) the acquisition of a controlling interest in
25        the stock or substantially all of the assets of a
26        publicly traded company;

 

 

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1            (F) a transfer by a parent company to a wholly
2        owned subsidiary; or
3            (G) the transfer or sale to or by one person to
4        another person where both persons were initial owners
5        of the license when the license was issued; or
6        (2) the controlling interest in the organization
7    gaming license, organization license, or racetrack
8    property is transferred in a transaction to lineal
9    descendants in which no gain or loss is recognized or as a
10    result of a transaction in accordance with Section 351 of
11    the Internal Revenue Code in which no gain or loss is
12    recognized; or
13        (3) live horse racing was not conducted in 2010 at a
14    racetrack located within 3 miles of the Mississippi River
15    under a license issued pursuant to the Illinois Horse
16    Racing Act of 1975.
17    The transfer of an organization gaming license,
18organization license, or racetrack property by a person other
19than the initial licensee to receive the organization gaming
20license is not subject to a surcharge. The Department shall
21adopt rules necessary to implement and administer this
22subsection.
23    (c) Personal Property Tax Replacement Income Tax.
24Beginning on July 1, 1979 and thereafter, in addition to such
25income tax, there is also hereby imposed the Personal Property
26Tax Replacement Income Tax measured by net income on every

 

 

10200SB2531sam001- 48 -LRB102 15312 HLH 24505 a

1corporation (including Subchapter S corporations), partnership
2and trust, for each taxable year ending after June 30, 1979.
3Such taxes are imposed on the privilege of earning or
4receiving income in or as a resident of this State. The
5Personal Property Tax Replacement Income Tax shall be in
6addition to the income tax imposed by subsections (a) and (b)
7of this Section and in addition to all other occupation or
8privilege taxes imposed by this State or by any municipal
9corporation or political subdivision thereof.
10    (d) Additional Personal Property Tax Replacement Income
11Tax Rates. The personal property tax replacement income tax
12imposed by this subsection and subsection (c) of this Section
13in the case of a corporation, other than a Subchapter S
14corporation and except as adjusted by subsection (d-1), shall
15be an additional amount equal to 2.85% of such taxpayer's net
16income for the taxable year, except that beginning on January
171, 1981, and thereafter, the rate of 2.85% specified in this
18subsection shall be reduced to 2.5%, and in the case of a
19partnership, trust or a Subchapter S corporation shall be an
20additional amount equal to 1.5% of such taxpayer's net income
21for the taxable year.
22    (d-1) Rate reduction for certain foreign insurers. In the
23case of a foreign insurer, as defined by Section 35A-5 of the
24Illinois Insurance Code, whose state or country of domicile
25imposes on insurers domiciled in Illinois a retaliatory tax
26(excluding any insurer whose premiums from reinsurance assumed

 

 

10200SB2531sam001- 49 -LRB102 15312 HLH 24505 a

1are 50% or more of its total insurance premiums as determined
2under paragraph (2) of subsection (b) of Section 304, except
3that for purposes of this determination premiums from
4reinsurance do not include premiums from inter-affiliate
5reinsurance arrangements), beginning with taxable years ending
6on or after December 31, 1999, the sum of the rates of tax
7imposed by subsections (b) and (d) shall be reduced (but not
8increased) to the rate at which the total amount of tax imposed
9under this Act, net of all credits allowed under this Act,
10shall equal (i) the total amount of tax that would be imposed
11on the foreign insurer's net income allocable to Illinois for
12the taxable year by such foreign insurer's state or country of
13domicile if that net income were subject to all income taxes
14and taxes measured by net income imposed by such foreign
15insurer's state or country of domicile, net of all credits
16allowed or (ii) a rate of zero if no such tax is imposed on
17such income by the foreign insurer's state of domicile. For
18the purposes of this subsection (d-1), an inter-affiliate
19includes a mutual insurer under common management.
20        (1) For the purposes of subsection (d-1), in no event
21    shall the sum of the rates of tax imposed by subsections
22    (b) and (d) be reduced below the rate at which the sum of:
23            (A) the total amount of tax imposed on such
24        foreign insurer under this Act for a taxable year, net
25        of all credits allowed under this Act, plus
26            (B) the privilege tax imposed by Section 409 of

 

 

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1        the Illinois Insurance Code, the fire insurance
2        company tax imposed by Section 12 of the Fire
3        Investigation Act, and the fire department taxes
4        imposed under Section 11-10-1 of the Illinois
5        Municipal Code,
6    equals 1.25% for taxable years ending prior to December
7    31, 2003, or 1.75% for taxable years ending on or after
8    December 31, 2003, of the net taxable premiums written for
9    the taxable year, as described by subsection (1) of
10    Section 409 of the Illinois Insurance Code. This paragraph
11    will in no event increase the rates imposed under
12    subsections (b) and (d).
13        (2) Any reduction in the rates of tax imposed by this
14    subsection shall be applied first against the rates
15    imposed by subsection (b) and only after the tax imposed
16    by subsection (a) net of all credits allowed under this
17    Section other than the credit allowed under subsection (i)
18    has been reduced to zero, against the rates imposed by
19    subsection (d).
20    This subsection (d-1) is exempt from the provisions of
21Section 250.
22    (d-2) For taxable years beginning on or after January 1,
232021, a partnership or Subchapter S corporation may elect to
24pay a tax that is imposed on the partnership or Subchapter S
25corporation. This tax is computed by multiplying each
26pass-through owner's share of business income apportionable to

 

 

10200SB2531sam001- 51 -LRB102 15312 HLH 24505 a

1Illinois and nonbusiness income allocated to Illinois under
2Section 303 of this Act, if this share is not a net loss, by
3the applicable rates of tax for that pass-through owner under
4subsections (a) through (d) of this Section, and taking the
5sum of these amounts. This election shall be made on the
6partnership's or Subchapter S corporation's return filed under
7Section 502 in such manner as the Department may prescribe.
8    (e) Investment credit. A taxpayer shall be allowed a
9credit against the Personal Property Tax Replacement Income
10Tax for investment in qualified property.
11        (1) A taxpayer shall be allowed a credit equal to .5%
12    of the basis of qualified property placed in service
13    during the taxable year, provided such property is placed
14    in service on or after July 1, 1984. There shall be allowed
15    an additional credit equal to .5% of the basis of
16    qualified property placed in service during the taxable
17    year, provided such property is placed in service on or
18    after July 1, 1986, and the taxpayer's base employment
19    within Illinois has increased by 1% or more over the
20    preceding year as determined by the taxpayer's employment
21    records filed with the Illinois Department of Employment
22    Security. Taxpayers who are new to Illinois shall be
23    deemed to have met the 1% growth in base employment for the
24    first year in which they file employment records with the
25    Illinois Department of Employment Security. The provisions
26    added to this Section by Public Act 85-1200 (and restored

 

 

10200SB2531sam001- 52 -LRB102 15312 HLH 24505 a

1    by Public Act 87-895) shall be construed as declaratory of
2    existing law and not as a new enactment. If, in any year,
3    the increase in base employment within Illinois over the
4    preceding year is less than 1%, the additional credit
5    shall be limited to that percentage times a fraction, the
6    numerator of which is .5% and the denominator of which is
7    1%, but shall not exceed .5%. The investment credit shall
8    not be allowed to the extent that it would reduce a
9    taxpayer's liability in any tax year below zero, nor may
10    any credit for qualified property be allowed for any year
11    other than the year in which the property was placed in
12    service in Illinois. For tax years ending on or after
13    December 31, 1987, and on or before December 31, 1988, the
14    credit shall be allowed for the tax year in which the
15    property is placed in service, or, if the amount of the
16    credit exceeds the tax liability for that year, whether it
17    exceeds the original liability or the liability as later
18    amended, such excess may be carried forward and applied to
19    the tax liability of the 5 taxable years following the
20    excess credit years if the taxpayer (i) makes investments
21    which cause the creation of a minimum of 2,000 full-time
22    equivalent jobs in Illinois, (ii) is located in an
23    enterprise zone established pursuant to the Illinois
24    Enterprise Zone Act and (iii) is certified by the
25    Department of Commerce and Community Affairs (now
26    Department of Commerce and Economic Opportunity) as

 

 

10200SB2531sam001- 53 -LRB102 15312 HLH 24505 a

1    complying with the requirements specified in clause (i)
2    and (ii) by July 1, 1986. The Department of Commerce and
3    Community Affairs (now Department of Commerce and Economic
4    Opportunity) shall notify the Department of Revenue of all
5    such certifications immediately. For tax years ending
6    after December 31, 1988, the credit shall be allowed for
7    the tax year in which the property is placed in service,
8    or, if the amount of the credit exceeds the tax liability
9    for that year, whether it exceeds the original liability
10    or the liability as later amended, such excess may be
11    carried forward and applied to the tax liability of the 5
12    taxable years following the excess credit years. The
13    credit shall be applied to the earliest year for which
14    there is a liability. If there is credit from more than one
15    tax year that is available to offset a liability, earlier
16    credit shall be applied first.
17        (2) The term "qualified property" means property
18    which:
19            (A) is tangible, whether new or used, including
20        buildings and structural components of buildings and
21        signs that are real property, but not including land
22        or improvements to real property that are not a
23        structural component of a building such as
24        landscaping, sewer lines, local access roads, fencing,
25        parking lots, and other appurtenances;
26            (B) is depreciable pursuant to Section 167 of the

 

 

10200SB2531sam001- 54 -LRB102 15312 HLH 24505 a

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        (e);
5            (C) is acquired by purchase as defined in Section
6        179(d) of the Internal Revenue Code;
7            (D) is used in Illinois by a taxpayer who is
8        primarily engaged in manufacturing, or in mining coal
9        or fluorite, or in retailing, or was placed in service
10        on or after July 1, 2006 in a River Edge Redevelopment
11        Zone established pursuant to the River Edge
12        Redevelopment Zone Act; and
13            (E) has not previously been used in Illinois in
14        such a manner and by such a person as would qualify for
15        the credit provided by this subsection (e) or
16        subsection (f).
17        (3) For purposes of this subsection (e),
18    "manufacturing" means the material staging and production
19    of tangible personal property by procedures commonly
20    regarded as manufacturing, processing, fabrication, or
21    assembling which changes some existing material into new
22    shapes, new qualities, or new combinations. For purposes
23    of this subsection (e) the term "mining" shall have the
24    same meaning as the term "mining" in Section 613(c) of the
25    Internal Revenue Code. For purposes of this subsection
26    (e), the term "retailing" means the sale of tangible

 

 

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1    personal property for use or consumption and not for
2    resale, or services rendered in conjunction with the sale
3    of tangible personal property for use or consumption and
4    not for resale. For purposes of this subsection (e),
5    "tangible personal property" has the same meaning as when
6    that term is used in the Retailers' Occupation Tax Act,
7    and, for taxable years ending after December 31, 2008,
8    does not include the generation, transmission, or
9    distribution of electricity.
10        (4) The basis of qualified property shall be the basis
11    used to compute the depreciation deduction for federal
12    income tax purposes.
13        (5) If the basis of the property for federal income
14    tax depreciation purposes is increased after it has been
15    placed in service in Illinois by the taxpayer, the amount
16    of such increase shall be deemed property placed in
17    service on the date of such increase in basis.
18        (6) The term "placed in service" shall have the same
19    meaning as under Section 46 of the Internal Revenue Code.
20        (7) If during any taxable year, any property ceases to
21    be qualified property in the hands of the taxpayer within
22    48 months after being placed in service, or the situs of
23    any qualified property is moved outside Illinois within 48
24    months after being placed in service, the Personal
25    Property Tax Replacement Income Tax for such taxable year
26    shall be increased. Such increase shall be determined by

 

 

10200SB2531sam001- 56 -LRB102 15312 HLH 24505 a

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

 

 

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1    allocated amount of the credits shall be allowed to the
2    partners for that taxable year. The partnership shall make
3    this election on its Personal Property Tax Replacement
4    Income Tax return for that taxable year. The election to
5    pass through the credits shall be irrevocable.
6        For taxable years ending on or after December 31,
7    2000, a partner that qualifies its partnership for a
8    subtraction under subparagraph (I) of paragraph (2) of
9    subsection (d) of Section 203 or a shareholder that
10    qualifies a Subchapter S corporation for a subtraction
11    under subparagraph (S) of paragraph (2) of subsection (b)
12    of Section 203 shall be allowed a credit under this
13    subsection (e) equal to its share of the credit earned
14    under this subsection (e) during the taxable year by the
15    partnership or Subchapter S corporation, determined in
16    accordance with the determination of income and
17    distributive share of income under Sections 702 and 704
18    and Subchapter S of the Internal Revenue Code. This
19    paragraph is exempt from the provisions of Section 250.
20    (f) Investment credit; Enterprise Zone; River Edge
21Redevelopment Zone.
22        (1) A taxpayer shall be allowed a credit against the
23    tax imposed by subsections (a) and (b) of this Section for
24    investment in qualified property which is placed in
25    service in an Enterprise Zone created pursuant to the
26    Illinois Enterprise Zone Act or, for property placed in

 

 

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1    service on or after July 1, 2006, a River Edge
2    Redevelopment Zone established pursuant to the River Edge
3    Redevelopment Zone Act. For partners, shareholders of
4    Subchapter S corporations, and owners of limited liability
5    companies, if the liability company is treated as a
6    partnership for purposes of federal and State income
7    taxation, there shall be allowed a credit under this
8    subsection (f) to be determined in accordance with the
9    determination of income and distributive share of income
10    under Sections 702 and 704 and Subchapter S of the
11    Internal Revenue Code. The credit shall be .5% of the
12    basis for such property. The credit shall be available
13    only in the taxable year in which the property is placed in
14    service in the Enterprise Zone or River Edge Redevelopment
15    Zone and shall not be allowed to the extent that it would
16    reduce a taxpayer's liability for the tax imposed by
17    subsections (a) and (b) of this Section to below zero. For
18    tax years ending on or after December 31, 1985, the credit
19    shall be allowed for the tax year in which the property is
20    placed in service, or, if the amount of the credit exceeds
21    the tax liability for that year, whether it exceeds the
22    original liability or the liability as later amended, such
23    excess may be carried forward and applied to the tax
24    liability of the 5 taxable years following the excess
25    credit year. The credit shall be applied to the earliest
26    year for which there is a liability. If there is credit

 

 

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1    from more than one tax year that is available to offset a
2    liability, the credit accruing first in time shall be
3    applied first.
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        (f);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code;
14            (D) is used in the Enterprise Zone or River Edge
15        Redevelopment Zone by the taxpayer; and
16            (E) has not been previously used in Illinois in
17        such a manner and by such a person as would qualify for
18        the credit provided by this subsection (f) or
19        subsection (e).
20        (3) The basis of qualified property shall be the basis
21    used to compute the depreciation deduction for federal
22    income tax purposes.
23        (4) If the basis of the property for federal income
24    tax depreciation purposes is increased after it has been
25    placed in service in the Enterprise Zone or River Edge
26    Redevelopment Zone by the taxpayer, the amount of such

 

 

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1    increase shall be deemed property placed in service on the
2    date of such increase in basis.
3        (5) The term "placed in service" shall have the same
4    meaning as under Section 46 of the Internal Revenue Code.
5        (6) If during any taxable year, any property ceases to
6    be qualified property in the hands of the taxpayer within
7    48 months after being placed in service, or the situs of
8    any qualified property is moved outside the Enterprise
9    Zone or River Edge Redevelopment Zone within 48 months
10    after being placed in service, the tax imposed under
11    subsections (a) and (b) of this Section for such taxable
12    year shall be increased. Such increase shall be determined
13    by (i) recomputing the investment credit which would have
14    been allowed for the year in which credit for such
15    property was originally allowed by eliminating such
16    property from such computation, and (ii) subtracting such
17    recomputed credit from the amount of credit previously
18    allowed. For the purposes of this paragraph (6), a
19    reduction of the basis of qualified property resulting
20    from a redetermination of the purchase price shall be
21    deemed a disposition of qualified property to the extent
22    of such reduction.
23        (7) There shall be allowed an additional credit equal
24    to 0.5% of the basis of qualified property placed in
25    service during the taxable year in a River Edge
26    Redevelopment Zone, provided such property is placed in

 

 

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1    service on or after July 1, 2006, and the taxpayer's base
2    employment within Illinois has increased by 1% or more
3    over the preceding year as determined by the taxpayer's
4    employment records filed with the Illinois Department of
5    Employment Security. Taxpayers who are new to Illinois
6    shall be deemed to have met the 1% growth in base
7    employment for the first year in which they file
8    employment records with the Illinois Department of
9    Employment Security. If, in any year, the increase in base
10    employment within Illinois over the preceding year is less
11    than 1%, the additional credit shall be limited to that
12    percentage times a fraction, the numerator of which is
13    0.5% and the denominator of which is 1%, but shall not
14    exceed 0.5%.
15        (8) For taxable years beginning on or after January 1,
16    2021, there shall be allowed an Enterprise Zone
17    construction jobs credit against the taxes imposed under
18    subsections (a) and (b) of this Section as provided in
19    Section 13 of the Illinois Enterprise Zone Act.
20        The credit or credits may not reduce the taxpayer's
21    liability to less than zero. If the amount of the credit or
22    credits exceeds the taxpayer's liability, the excess may
23    be carried forward and applied against the taxpayer's
24    liability in succeeding calendar years in the same manner
25    provided under paragraph (4) of Section 211 of this Act.
26    The credit or credits shall be applied to the earliest

 

 

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1    year for which there is a tax liability. If there are
2    credits from more than one taxable year that are available
3    to offset a liability, the earlier credit shall be applied
4    first.
5        For partners, shareholders of Subchapter S
6    corporations, and owners of limited liability companies,
7    if the liability company is treated as a partnership for
8    the purposes of federal and State income taxation, there
9    shall be allowed a credit under this Section to be
10    determined in accordance with the determination of income
11    and distributive share of income under Sections 702 and
12    704 and Subchapter S of the Internal Revenue Code.
13        The total aggregate amount of credits awarded under
14    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
15    this amendatory Act of the 101st General Assembly) shall
16    not exceed $20,000,000 in any State fiscal year.
17        This paragraph (8) is exempt from the provisions of
18    Section 250.
19    (g) (Blank).
20    (h) Investment credit; High Impact Business.
21        (1) Subject to subsections (b) and (b-5) of Section
22    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
23    be allowed a credit against the tax imposed by subsections
24    (a) and (b) of this Section for investment in qualified
25    property which is placed in service by a Department of
26    Commerce and Economic Opportunity designated High Impact

 

 

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1    Business. The credit shall be .5% of the basis for such
2    property. The credit shall not be available (i) until the
3    minimum investments in qualified property set forth in
4    subdivision (a)(3)(A) of Section 5.5 of the Illinois
5    Enterprise Zone Act have been satisfied or (ii) until the
6    time authorized in subsection (b-5) of the Illinois
7    Enterprise Zone Act for entities designated as High Impact
8    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
9    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
10    Act, and shall not be allowed to the extent that it would
11    reduce a taxpayer's liability for the tax imposed by
12    subsections (a) and (b) of this Section to below zero. The
13    credit applicable to such investments shall be taken in
14    the taxable year in which such investments have been
15    completed. The credit for additional investments beyond
16    the minimum investment by a designated high impact
17    business authorized under subdivision (a)(3)(A) of Section
18    5.5 of the Illinois Enterprise Zone Act shall be available
19    only in the taxable year in which the property is placed in
20    service and shall not be allowed to the extent that it
21    would reduce a taxpayer's liability for the tax imposed by
22    subsections (a) and (b) of this Section to below zero. For
23    tax years ending on or after December 31, 1987, the credit
24    shall be allowed for the tax year in which the property is
25    placed in service, or, if the amount of the credit exceeds
26    the tax liability for that year, whether it exceeds the

 

 

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1    original liability or the liability as later amended, such
2    excess may be carried forward and applied to the tax
3    liability of the 5 taxable years following the excess
4    credit year. The credit shall be applied to the earliest
5    year for which there is a liability. If there is credit
6    from more than one tax year that is available to offset a
7    liability, the credit accruing first in time shall be
8    applied first.
9        Changes made in this subdivision (h)(1) by Public Act
10    88-670 restore changes made by Public Act 85-1182 and
11    reflect existing law.
12        (2) The term qualified property means property which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings;
15            (B) is depreciable pursuant to Section 167 of the
16        Internal Revenue Code, except that "3-year property"
17        as defined in Section 168(c)(2)(A) of that Code is not
18        eligible for the credit provided by this subsection
19        (h);
20            (C) is acquired by purchase as defined in Section
21        179(d) of the Internal Revenue Code; and
22            (D) is not eligible for the Enterprise Zone
23        Investment Credit provided by subsection (f) of this
24        Section.
25        (3) The basis of qualified property shall be the basis
26    used to compute the depreciation deduction for federal

 

 

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1    income tax purposes.
2        (4) If the basis of the property for federal income
3    tax depreciation purposes is increased after it has been
4    placed in service in a federally designated Foreign Trade
5    Zone or Sub-Zone located in Illinois by the taxpayer, the
6    amount of such increase shall be deemed property placed in
7    service on the date of such increase in basis.
8        (5) The term "placed in service" shall have the same
9    meaning as under Section 46 of the Internal Revenue Code.
10        (6) If during any taxable year ending on or before
11    December 31, 1996, any property ceases to be qualified
12    property in the hands of the taxpayer within 48 months
13    after being placed in service, or the situs of any
14    qualified property is moved outside Illinois within 48
15    months after being placed in service, the tax imposed
16    under subsections (a) and (b) of this Section for such
17    taxable year shall be increased. Such increase shall be
18    determined by (i) recomputing the investment credit which
19    would have been allowed for the year in which credit for
20    such property was originally allowed by eliminating such
21    property from such computation, and (ii) subtracting such
22    recomputed credit from the amount of credit previously
23    allowed. For the purposes of this paragraph (6), a
24    reduction of the basis of qualified property resulting
25    from a redetermination of the purchase price shall be
26    deemed a disposition of qualified property to the extent

 

 

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1    of such reduction.
2        (7) Beginning with tax years ending after December 31,
3    1996, if a taxpayer qualifies for the credit under this
4    subsection (h) and thereby is granted a tax abatement and
5    the taxpayer relocates its entire facility in violation of
6    the explicit terms and length of the contract under
7    Section 18-183 of the Property Tax Code, the tax imposed
8    under subsections (a) and (b) of this Section shall be
9    increased for the taxable year in which the taxpayer
10    relocated its facility by an amount equal to the amount of
11    credit received by the taxpayer under this subsection (h).
12    (h-5) High Impact Business construction constructions jobs
13credit. For taxable years beginning on or after January 1,
142021, there shall also be allowed a High Impact Business
15construction jobs credit against the tax imposed under
16subsections (a) and (b) of this Section as provided in
17subsections (i) and (j) of Section 5.5 of the Illinois
18Enterprise Zone Act.
19    The credit or credits may not reduce the taxpayer's
20liability to less than zero. If the amount of the credit or
21credits exceeds the taxpayer's liability, the excess may be
22carried forward and applied against the taxpayer's liability
23in succeeding calendar years in the manner provided under
24paragraph (4) of Section 211 of this Act. The credit or credits
25shall be applied to the earliest year for which there is a tax
26liability. If there are credits from more than one taxable

 

 

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1year that are available to offset a liability, the earlier
2credit shall be applied first.
3    For partners, shareholders of Subchapter S corporations,
4and owners of limited liability companies, if the liability
5company is treated as a partnership for the purposes of
6federal and State income taxation, there shall be allowed a
7credit under this Section to be determined in accordance with
8the determination of income and distributive share of income
9under Sections 702 and 704 and Subchapter S of the Internal
10Revenue Code.
11    The total aggregate amount of credits awarded under the
12Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
13amendatory Act of the 101st General Assembly) shall not exceed
14$20,000,000 in any State fiscal year.
15    This subsection (h-5) is exempt from the provisions of
16Section 250.
17    (i) Credit for Personal Property Tax Replacement Income
18Tax. For tax years ending prior to December 31, 2003, a credit
19shall be allowed against the tax imposed by subsections (a)
20and (b) of this Section for the tax imposed by subsections (c)
21and (d) of this Section. This credit shall be computed by
22multiplying the tax imposed by subsections (c) and (d) of this
23Section by a fraction, the numerator of which is base income
24allocable to Illinois and the denominator of which is Illinois
25base income, and further multiplying the product by the tax
26rate imposed by subsections (a) and (b) of this Section.

 

 

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1    Any credit earned on or after December 31, 1986 under this
2subsection which is unused in the year the credit is computed
3because it exceeds the tax liability imposed by subsections
4(a) and (b) for that year (whether it exceeds the original
5liability or the liability as later amended) may be carried
6forward and applied to the tax liability imposed by
7subsections (a) and (b) of the 5 taxable years following the
8excess credit year, provided that no credit may be carried
9forward to any year ending on or after December 31, 2003. This
10credit shall be applied first to the earliest year for which
11there is a liability. If there is a credit under this
12subsection from more than one tax year that is available to
13offset a liability the earliest credit arising under this
14subsection shall be applied first.
15    If, during any taxable year ending on or after December
1631, 1986, the tax imposed by subsections (c) and (d) of this
17Section for which a taxpayer has claimed a credit under this
18subsection (i) is reduced, the amount of credit for such tax
19shall also be reduced. Such reduction shall be determined by
20recomputing the credit to take into account the reduced tax
21imposed by subsections (c) and (d). If any portion of the
22reduced amount of credit has been carried to a different
23taxable year, an amended return shall be filed for such
24taxable year to reduce the amount of credit claimed.
25    (j) Training expense credit. Beginning with tax years
26ending on or after December 31, 1986 and prior to December 31,

 

 

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12003, a taxpayer shall be allowed a credit against the tax
2imposed by subsections (a) and (b) under this Section for all
3amounts paid or accrued, on behalf of all persons employed by
4the taxpayer in Illinois or Illinois residents employed
5outside of Illinois by a taxpayer, for educational or
6vocational training in semi-technical or technical fields or
7semi-skilled or skilled fields, which were deducted from gross
8income in the computation of taxable income. The credit
9against the tax imposed by subsections (a) and (b) shall be
101.6% of such training expenses. For partners, shareholders of
11subchapter S corporations, and owners of limited liability
12companies, if the liability company is treated as a
13partnership for purposes of federal and State income taxation,
14there shall be allowed a credit under this subsection (j) to be
15determined in accordance with the determination of income and
16distributive share of income under Sections 702 and 704 and
17subchapter S of the Internal Revenue Code.
18    Any credit allowed under this subsection which is unused
19in the year the credit is earned may be carried forward to each
20of the 5 taxable years following the year for which the credit
21is first computed until it is used. This credit shall be
22applied first to the earliest year for which there is a
23liability. If there is a credit under this subsection from
24more than one tax year that is available to offset a liability,
25the earliest credit arising under this subsection shall be
26applied first. No carryforward credit may be claimed in any

 

 

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1tax year ending on or after December 31, 2003.
2    (k) Research and development credit. For tax years ending
3after July 1, 1990 and prior to December 31, 2003, and
4beginning again for tax years ending on or after December 31,
52004, and ending prior to January 1, 2027, a taxpayer shall be
6allowed a credit against the tax imposed by subsections (a)
7and (b) of this Section for increasing research activities in
8this State. The credit allowed against the tax imposed by
9subsections (a) and (b) shall be equal to 6 1/2% of the
10qualifying expenditures for increasing research activities in
11this State. For partners, shareholders of subchapter S
12corporations, and owners of limited liability companies, if
13the liability company is treated as a partnership for purposes
14of federal and State income taxation, there shall be allowed a
15credit under this subsection to be determined in accordance
16with the determination of income and distributive share of
17income under Sections 702 and 704 and subchapter S of the
18Internal Revenue Code.
19    For purposes of this subsection, "qualifying expenditures"
20means the qualifying expenditures as defined for the federal
21credit for increasing research activities which would be
22allowable under Section 41 of the Internal Revenue Code and
23which are conducted in this State, "qualifying expenditures
24for increasing research activities in this State" means the
25excess of qualifying expenditures for the taxable year in
26which incurred over qualifying expenditures for the base

 

 

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1period, "qualifying expenditures for the base period" means
2the average of the qualifying expenditures for each year in
3the base period, and "base period" means the 3 taxable years
4immediately preceding the taxable year for which the
5determination is being made.
6    Any credit in excess of the tax liability for the taxable
7year may be carried forward. A taxpayer may elect to have the
8unused credit shown on its final completed return carried over
9as a credit against the tax liability for the following 5
10taxable years or until it has been fully used, whichever
11occurs first; provided that no credit earned in a tax year
12ending prior to December 31, 2003 may be carried forward to any
13year ending on or after December 31, 2003.
14    If an unused credit is carried forward to a given year from
152 or more earlier years, that credit arising in the earliest
16year will be applied first against the tax liability for the
17given year. If a tax liability for the given year still
18remains, the credit from the next earliest year will then be
19applied, and so on, until all credits have been used or no tax
20liability for the given year remains. Any remaining unused
21credit or credits then will be carried forward to the next
22following year in which a tax liability is incurred, except
23that no credit can be carried forward to a year which is more
24than 5 years after the year in which the expense for which the
25credit is given was incurred.
26    No inference shall be drawn from Public Act 91-644 this

 

 

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1amendatory Act of the 91st General Assembly in construing this
2Section for taxable years beginning before January 1, 1999.
3    It is the intent of the General Assembly that the research
4and development credit under this subsection (k) shall apply
5continuously for all tax years ending on or after December 31,
62004 and ending prior to January 1, 2027, including, but not
7limited to, the period beginning on January 1, 2016 and ending
8on July 6, 2017 (the effective date of Public Act 100-22) this
9amendatory Act of the 100th General Assembly. All actions
10taken in reliance on the continuation of the credit under this
11subsection (k) by any taxpayer are hereby validated.
12    (l) Environmental Remediation Tax Credit.
13        (i) For tax years ending after December 31, 1997 and
14    on or before December 31, 2001, a taxpayer shall be
15    allowed a credit against the tax imposed by subsections
16    (a) and (b) of this Section for certain amounts paid for
17    unreimbursed eligible remediation costs, as specified in
18    this subsection. For purposes of this Section,
19    "unreimbursed eligible remediation costs" means costs
20    approved by the Illinois Environmental Protection Agency
21    ("Agency") under Section 58.14 of the Environmental
22    Protection Act that were paid in performing environmental
23    remediation at a site for which a No Further Remediation
24    Letter was issued by the Agency and recorded under Section
25    58.10 of the Environmental Protection Act. The credit must
26    be claimed for the taxable year in which Agency approval

 

 

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1    of the eligible remediation costs is granted. The credit
2    is not available to any taxpayer if the taxpayer or any
3    related party caused or contributed to, in any material
4    respect, a release of regulated substances on, in, or
5    under the site that was identified and addressed by the
6    remedial action pursuant to the Site Remediation Program
7    of the Environmental Protection Act. After the Pollution
8    Control Board rules are adopted pursuant to the Illinois
9    Administrative Procedure Act for the administration and
10    enforcement of Section 58.9 of the Environmental
11    Protection Act, determinations as to credit availability
12    for purposes of this Section shall be made consistent with
13    those rules. For purposes of this Section, "taxpayer"
14    includes a person whose tax attributes the taxpayer has
15    succeeded to under Section 381 of the Internal Revenue
16    Code and "related party" includes the persons disallowed a
17    deduction for losses by paragraphs (b), (c), and (f)(1) of
18    Section 267 of the Internal Revenue Code by virtue of
19    being a related taxpayer, as well as any of its partners.
20    The credit allowed against the tax imposed by subsections
21    (a) and (b) shall be equal to 25% of the unreimbursed
22    eligible remediation costs in excess of $100,000 per site,
23    except that the $100,000 threshold shall not apply to any
24    site contained in an enterprise zone as determined by the
25    Department of Commerce and Community Affairs (now
26    Department of Commerce and Economic Opportunity). The

 

 

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1    total credit allowed shall not exceed $40,000 per year
2    with a maximum total of $150,000 per site. For partners
3    and shareholders of subchapter S corporations, there shall
4    be allowed a credit under this subsection to be determined
5    in accordance with the determination of income and
6    distributive share of income under Sections 702 and 704
7    and subchapter S of the Internal Revenue Code.
8        (ii) A credit allowed under this subsection that is
9    unused in the year the credit is earned may be carried
10    forward to each of the 5 taxable years following the year
11    for which the credit is first earned until it is used. The
12    term "unused credit" does not include any amounts of
13    unreimbursed eligible remediation costs in excess of the
14    maximum credit per site authorized under paragraph (i).
15    This credit shall be applied first to the earliest year
16    for which there is a liability. If there is a credit under
17    this subsection from more than one tax year that is
18    available to offset a liability, the earliest credit
19    arising under this subsection shall be applied first. A
20    credit allowed under this subsection may be sold to a
21    buyer as part of a sale of all or part of the remediation
22    site for which the credit was granted. The purchaser of a
23    remediation site and the tax credit shall succeed to the
24    unused credit and remaining carry-forward period of the
25    seller. To perfect the transfer, the assignor shall record
26    the transfer in the chain of title for the site and provide

 

 

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1    written notice to the Director of the Illinois Department
2    of Revenue of the assignor's intent to sell the
3    remediation site and the amount of the tax credit to be
4    transferred as a portion of the sale. In no event may a
5    credit be transferred to any taxpayer if the taxpayer or a
6    related party would not be eligible under the provisions
7    of subsection (i).
8        (iii) For purposes of this Section, the term "site"
9    shall have the same meaning as under Section 58.2 of the
10    Environmental Protection Act.
11    (m) Education expense credit. Beginning with tax years
12ending after December 31, 1999, a taxpayer who is the
13custodian of one or more qualifying pupils shall be allowed a
14credit against the tax imposed by subsections (a) and (b) of
15this Section for qualified education expenses incurred on
16behalf of the qualifying pupils. The credit shall be equal to
1725% of qualified education expenses, but in no event may the
18total credit under this subsection claimed by a family that is
19the custodian of qualifying pupils exceed (i) $500 for tax
20years ending prior to December 31, 2017, and (ii) $750 for tax
21years ending on or after December 31, 2017. In no event shall a
22credit under this subsection reduce the taxpayer's liability
23under this Act to less than zero. Notwithstanding any other
24provision of law, for taxable years beginning on or after
25January 1, 2017, no taxpayer may claim a credit under this
26subsection (m) if the taxpayer's adjusted gross income for the

 

 

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1taxable year exceeds (i) $500,000, in the case of spouses
2filing a joint federal tax return or (ii) $250,000, in the case
3of all other taxpayers. This subsection is exempt from the
4provisions of Section 250 of this Act.
5    For purposes of this subsection:
6    "Qualifying pupils" means individuals who (i) are
7residents of the State of Illinois, (ii) are under the age of
821 at the close of the school year for which a credit is
9sought, and (iii) during the school year for which a credit is
10sought were full-time pupils enrolled in a kindergarten
11through twelfth grade education program at any school, as
12defined in this subsection.
13    "Qualified education expense" means the amount incurred on
14behalf of a qualifying pupil in excess of $250 for tuition,
15book fees, and lab fees at the school in which the pupil is
16enrolled during the regular school year.
17    "School" means any public or nonpublic elementary or
18secondary school in Illinois that is in compliance with Title
19VI of the Civil Rights Act of 1964 and attendance at which
20satisfies the requirements of Section 26-1 of the School Code,
21except that nothing shall be construed to require a child to
22attend any particular public or nonpublic school to qualify
23for the credit under this Section.
24    "Custodian" means, with respect to qualifying pupils, an
25Illinois resident who is a parent, the parents, a legal
26guardian, or the legal guardians of the qualifying pupils.

 

 

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1    (n) River Edge Redevelopment Zone site remediation tax
2credit.
3        (i) For tax years ending on or after December 31,
4    2006, a taxpayer shall be allowed a credit against the tax
5    imposed by subsections (a) and (b) of this Section for
6    certain amounts paid for unreimbursed eligible remediation
7    costs, as specified in this subsection. For purposes of
8    this Section, "unreimbursed eligible remediation costs"
9    means costs approved by the Illinois Environmental
10    Protection Agency ("Agency") under Section 58.14a of the
11    Environmental Protection Act that were paid in performing
12    environmental remediation at a site within a River Edge
13    Redevelopment Zone for which a No Further Remediation
14    Letter was issued by the Agency and recorded under Section
15    58.10 of the Environmental Protection Act. The credit must
16    be claimed for the taxable year in which Agency approval
17    of the eligible remediation costs is granted. The credit
18    is not available to any taxpayer if the taxpayer or any
19    related party caused or contributed to, in any material
20    respect, a release of regulated substances on, in, or
21    under the site that was identified and addressed by the
22    remedial action pursuant to the Site Remediation Program
23    of the Environmental Protection Act. Determinations as to
24    credit availability for purposes of this Section shall be
25    made consistent with rules adopted by the Pollution
26    Control Board pursuant to the Illinois Administrative

 

 

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1    Procedure Act for the administration and enforcement of
2    Section 58.9 of the Environmental Protection Act. For
3    purposes of this Section, "taxpayer" includes a person
4    whose tax attributes the taxpayer has succeeded to under
5    Section 381 of the Internal Revenue Code and "related
6    party" includes the persons disallowed a deduction for
7    losses by paragraphs (b), (c), and (f)(1) of Section 267
8    of the Internal Revenue Code by virtue of being a related
9    taxpayer, as well as any of its partners. The credit
10    allowed against the tax imposed by subsections (a) and (b)
11    shall be equal to 25% of the unreimbursed eligible
12    remediation costs in excess of $100,000 per site.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. This
17    credit shall be applied first to the earliest year for
18    which there is a liability. If there is a credit under this
19    subsection from more than one tax year that is available
20    to offset a liability, the earliest credit arising under
21    this subsection shall be applied first. A credit allowed
22    under this subsection may be sold to a buyer as part of a
23    sale of all or part of the remediation site for which the
24    credit was granted. The purchaser of a remediation site
25    and the tax credit shall succeed to the unused credit and
26    remaining carry-forward period of the seller. To perfect

 

 

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1    the transfer, the assignor shall record the transfer in
2    the chain of title for the site and provide written notice
3    to the Director of the Illinois Department of Revenue of
4    the assignor's intent to sell the remediation site and the
5    amount of the tax credit to be transferred as a portion of
6    the sale. In no event may a credit be transferred to any
7    taxpayer if the taxpayer or a related party would not be
8    eligible under the provisions of subsection (i).
9        (iii) For purposes of this Section, the term "site"
10    shall have the same meaning as under Section 58.2 of the
11    Environmental Protection Act.
12    (o) For each of taxable years during the Compassionate Use
13of Medical Cannabis Program, a surcharge is imposed on all
14taxpayers on income arising from the sale or exchange of
15capital assets, depreciable business property, real property
16used in the trade or business, and Section 197 intangibles of
17an organization registrant under the Compassionate Use of
18Medical Cannabis Program Act. The amount of the surcharge is
19equal to the amount of federal income tax liability for the
20taxable year attributable to those sales and exchanges. The
21surcharge imposed does not apply if:
22        (1) the medical cannabis cultivation center
23    registration, medical cannabis dispensary registration, or
24    the property of a registration is transferred as a result
25    of any of the following:
26            (A) bankruptcy, a receivership, or a debt

 

 

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1        adjustment initiated by or against the initial
2        registration or the substantial owners of the initial
3        registration;
4            (B) cancellation, revocation, or termination of
5        any registration by the Illinois Department of Public
6        Health;
7            (C) a determination by the Illinois Department of
8        Public Health that transfer of the registration is in
9        the best interests of Illinois qualifying patients as
10        defined by the Compassionate Use of Medical Cannabis
11        Program Act;
12            (D) the death of an owner of the equity interest in
13        a registrant;
14            (E) the acquisition of a controlling interest in
15        the stock or substantially all of the assets of a
16        publicly traded company;
17            (F) a transfer by a parent company to a wholly
18        owned subsidiary; or
19            (G) the transfer or sale to or by one person to
20        another person where both persons were initial owners
21        of the registration when the registration was issued;
22        or
23        (2) the cannabis cultivation center registration,
24    medical cannabis dispensary registration, or the
25    controlling interest in a registrant's property is
26    transferred in a transaction to lineal descendants in

 

 

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1    which no gain or loss is recognized or as a result of a
2    transaction in accordance with Section 351 of the Internal
3    Revenue Code in which no gain or loss is recognized.
4(Source: P.A. 100-22, eff. 7-6-17; 101-8, see Section 99 for
5effective date; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
6101-207, eff. 8-2-19; 101-363, eff. 8-9-19; revised 11-18-20.)
 
7    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
8    Sec. 203. Base income defined.
9    (a) Individuals.
10        (1) In general. In the case of an individual, base
11    income means an amount equal to the taxpayer's adjusted
12    gross income for the taxable year as modified by paragraph
13    (2).
14        (2) Modifications. The adjusted gross income referred
15    to in paragraph (1) shall be modified by adding thereto
16    the sum of the following amounts:
17            (A) An amount equal to all amounts paid or accrued
18        to the taxpayer as interest or dividends during the
19        taxable year to the extent excluded from gross income
20        in the computation of adjusted gross income, except
21        stock dividends of qualified public utilities
22        described in Section 305(e) of the Internal Revenue
23        Code;
24            (B) An amount equal to the amount of tax imposed by
25        this Act to the extent deducted from gross income in

 

 

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1        the computation of adjusted gross income for the
2        taxable year;
3            (B-1) For Illinois residents, an amount equal to
4        the amount of tax imposed by other state and local
5        jurisdictions on partnerships or Subchapter S
6        corporations in which the resident is a direct or
7        indirect owner to the extent deducted from gross
8        income in the resident's computation of adjusted gross
9        income for the taxable year;
10            (C) An amount equal to the amount received during
11        the taxable year as a recovery or refund of real
12        property taxes paid with respect to the taxpayer's
13        principal residence under the Revenue Act of 1939 and
14        for which a deduction was previously taken under
15        subparagraph (L) of this paragraph (2) prior to July
16        1, 1991, the retrospective application date of Article
17        4 of Public Act 87-17. In the case of multi-unit or
18        multi-use structures and farm dwellings, the taxes on
19        the taxpayer's principal residence shall be that
20        portion of the total taxes for the entire property
21        which is attributable to such principal residence;
22            (D) An amount equal to the amount of the capital
23        gain deduction allowable under the Internal Revenue
24        Code, to the extent deducted from gross income in the
25        computation of adjusted gross income;
26            (D-5) An amount, to the extent not included in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

10200SB2531sam001- 87 -LRB102 15312 HLH 24505 a

1            Department and such regulations provide methods
2            and standards by which the Department will utilize
3            its authority under Section 404 of this Act;
4            (D-18) An amount equal to the amount of intangible
5        expenses and costs otherwise allowed as a deduction in
6        computing base income, and that were paid, accrued, or
7        incurred, directly or indirectly, (i) for taxable
8        years ending on or after December 31, 2004, to a
9        foreign person who would be a member of the same
10        unitary business group but for the fact that the
11        foreign person's business activity outside the United
12        States is 80% or more of that person's total business
13        activity and (ii) for taxable years ending on or after
14        December 31, 2008, to a person who would be a member of
15        the same unitary business group but for the fact that
16        the person is prohibited under Section 1501(a)(27)
17        from being included in the unitary business group
18        because he or she is ordinarily required to apportion
19        business income under different subsections of Section
20        304. The addition modification required by this
21        subparagraph shall be reduced to the extent that
22        dividends were included in base income of the unitary
23        group for the same taxable year and received by the
24        taxpayer or by a member of the taxpayer's unitary
25        business group (including amounts included in gross
26        income under Sections 951 through 964 of the Internal

 

 

10200SB2531sam001- 88 -LRB102 15312 HLH 24505 a

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

 

 

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

 

 

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

 

 

10200SB2531sam001- 91 -LRB102 15312 HLH 24505 a

1        same taxable year and received by the taxpayer or by a
2        member of the taxpayer's unitary business group
3        (including amounts included in gross income under
4        Sections 951 through 964 of the Internal Revenue Code
5        and amounts included in gross income under Section 78
6        of the Internal Revenue Code) with respect to the
7        stock of the same person to whom the premiums and costs
8        were directly or indirectly paid, incurred, or
9        accrued. The preceding sentence does not apply to the
10        extent that the same dividends caused a reduction to
11        the addition modification required under Section
12        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
13        Act; .
14            (D-20) For taxable years beginning on or after
15        January 1, 2002 and ending on or before December 31,
16        2006, in the case of a distribution from a qualified
17        tuition program under Section 529 of the Internal
18        Revenue Code, other than (i) a distribution from a
19        College Savings Pool created under Section 16.5 of the
20        State Treasurer Act or (ii) a distribution from the
21        Illinois Prepaid Tuition Trust Fund, an amount equal
22        to the amount excluded from gross income under Section
23        529(c)(3)(B). For taxable years beginning on or after
24        January 1, 2007, in the case of a distribution from a
25        qualified tuition program under Section 529 of the
26        Internal Revenue Code, other than (i) a distribution

 

 

10200SB2531sam001- 92 -LRB102 15312 HLH 24505 a

1        from a College Savings Pool created under Section 16.5
2        of the State Treasurer Act, (ii) a distribution from
3        the Illinois Prepaid Tuition Trust Fund, or (iii) a
4        distribution from a qualified tuition program under
5        Section 529 of the Internal Revenue Code that (I)
6        adopts and determines that its offering materials
7        comply with the College Savings Plans Network's
8        disclosure principles and (II) has made reasonable
9        efforts to inform in-state residents of the existence
10        of in-state qualified tuition programs by informing
11        Illinois residents directly and, where applicable, to
12        inform financial intermediaries distributing the
13        program to inform in-state residents of the existence
14        of in-state qualified tuition programs at least
15        annually, an amount equal to the amount excluded from
16        gross income under Section 529(c)(3)(B).
17            For the purposes of this subparagraph (D-20), a
18        qualified tuition program has made reasonable efforts
19        if it makes disclosures (which may use the term
20        "in-state program" or "in-state plan" and need not
21        specifically refer to Illinois or its qualified
22        programs by name) (i) directly to prospective
23        participants in its offering materials or makes a
24        public disclosure, such as a website posting; and (ii)
25        where applicable, to intermediaries selling the
26        out-of-state program in the same manner that the

 

 

10200SB2531sam001- 93 -LRB102 15312 HLH 24505 a

1        out-of-state program distributes its offering
2        materials;
3            (D-20.5) For taxable years beginning on or after
4        January 1, 2018, in the case of a distribution from a
5        qualified ABLE program under Section 529A of the
6        Internal Revenue Code, other than a distribution from
7        a qualified ABLE program created under Section 16.6 of
8        the State Treasurer Act, an amount equal to the amount
9        excluded from gross income under Section 529A(c)(1)(B)
10        of the Internal Revenue Code;
11            (D-21) For taxable years beginning on or after
12        January 1, 2007, in the case of transfer of moneys from
13        a qualified tuition program under Section 529 of the
14        Internal Revenue Code that is administered by the
15        State to an out-of-state program, an amount equal to
16        the amount of moneys previously deducted from base
17        income under subsection (a)(2)(Y) of this Section;
18            (D-21.5) For taxable years beginning on or after
19        January 1, 2018, in the case of the transfer of moneys
20        from a qualified tuition program under Section 529 or
21        a qualified ABLE program under Section 529A of the
22        Internal Revenue Code that is administered by this
23        State to an ABLE account established under an
24        out-of-state ABLE account program, an amount equal to
25        the contribution component of the transferred amount
26        that was previously deducted from base income under

 

 

10200SB2531sam001- 94 -LRB102 15312 HLH 24505 a

1        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
2        Section;
3            (D-22) For taxable years beginning on or after
4        January 1, 2009, and prior to January 1, 2018, in the
5        case of a nonqualified withdrawal or refund of moneys
6        from a qualified tuition program under Section 529 of
7        the Internal Revenue Code administered by the State
8        that is not used for qualified expenses at an eligible
9        education institution, an amount equal to the
10        contribution component of the nonqualified withdrawal
11        or refund that was previously deducted from base
12        income under subsection (a)(2)(y) of this Section,
13        provided that the withdrawal or refund did not result
14        from the beneficiary's death or disability. For
15        taxable years beginning on or after January 1, 2018:
16        (1) in the case of a nonqualified withdrawal or
17        refund, as defined under Section 16.5 of the State
18        Treasurer Act, of moneys from a qualified tuition
19        program under Section 529 of the Internal Revenue Code
20        administered by the State, 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, and
24        (2) in the case of a nonqualified withdrawal or refund
25        from a qualified ABLE program under Section 529A of
26        the Internal Revenue Code administered by the State

 

 

10200SB2531sam001- 95 -LRB102 15312 HLH 24505 a

1        that is not used for qualified disability expenses, an
2        amount equal to the contribution component of the
3        nonqualified withdrawal or refund that was previously
4        deducted from base income under subsection (a)(2)(HH)
5        of this Section;
6            (D-23) An amount equal to the credit allowable to
7        the taxpayer under Section 218(a) of this Act,
8        determined without regard to Section 218(c) of this
9        Act;
10            (D-24) For taxable years ending on or after
11        December 31, 2017, an amount equal to the deduction
12        allowed under Section 199 of the Internal Revenue Code
13        for the taxable year;
14    and by deducting from the total so obtained the sum of the
15    following amounts:
16            (E) For taxable years ending before December 31,
17        2001, any amount included in such total in respect of
18        any compensation (including but not limited to any
19        compensation paid or accrued to a serviceman while a
20        prisoner of war or missing in action) paid to a
21        resident by reason of being on active duty in the Armed
22        Forces of the United States and in respect of any
23        compensation paid or accrued to a resident who as a
24        governmental employee was a prisoner of war or missing
25        in action, and in respect of any compensation paid to a
26        resident in 1971 or thereafter for annual training

 

 

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1        performed pursuant to Sections 502 and 503, Title 32,
2        United States Code as a member of the Illinois
3        National Guard or, beginning with taxable years ending
4        on or after December 31, 2007, the National Guard of
5        any other state. For taxable years ending on or after
6        December 31, 2001, any amount included in such total
7        in respect of any compensation (including but not
8        limited to any compensation paid or accrued to a
9        serviceman while a prisoner of war or missing in
10        action) paid to a resident by reason of being a member
11        of any component of the Armed Forces of the United
12        States and in respect of any compensation paid or
13        accrued to a resident who as a governmental employee
14        was a prisoner of war or missing in action, and in
15        respect of any compensation paid to a resident in 2001
16        or thereafter by reason of being a member of the
17        Illinois National Guard or, beginning with taxable
18        years ending on or after December 31, 2007, the
19        National Guard of any other state. The provisions of
20        this subparagraph (E) are exempt from the provisions
21        of Section 250;
22            (F) An amount equal to all amounts included in
23        such total pursuant to the provisions of Sections
24        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
25        408 of the Internal Revenue Code, or included in such
26        total as distributions under the provisions of any

 

 

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1        retirement or disability plan for employees of any
2        governmental agency or unit, or retirement payments to
3        retired partners, which payments are excluded in
4        computing net earnings from self employment by Section
5        1402 of the Internal Revenue Code and regulations
6        adopted pursuant thereto;
7            (G) The valuation limitation amount;
8            (H) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (I) An amount equal to all amounts included in
12        such total pursuant to the provisions of Section 111
13        of the Internal Revenue Code as a recovery of items
14        previously deducted from adjusted gross income in the
15        computation of taxable income;
16            (J) An amount equal to those dividends included in
17        such total which were paid by a corporation which
18        conducts business operations in a River Edge
19        Redevelopment Zone or zones created under the River
20        Edge Redevelopment Zone Act, and conducts
21        substantially all of its operations in a River Edge
22        Redevelopment Zone or zones. This subparagraph (J) is
23        exempt from the provisions of Section 250;
24            (K) An amount equal to those dividends included in
25        such total that were paid by a corporation that
26        conducts business operations in a federally designated

 

 

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1        Foreign Trade Zone or Sub-Zone and that is designated
2        a High Impact Business located in Illinois; provided
3        that dividends eligible for the deduction provided in
4        subparagraph (J) of paragraph (2) of this subsection
5        shall not be eligible for the deduction provided under
6        this subparagraph (K);
7            (L) For taxable years ending after December 31,
8        1983, an amount equal to all social security benefits
9        and railroad retirement benefits included in such
10        total pursuant to Sections 72(r) and 86 of the
11        Internal Revenue Code;
12            (M) With the exception of any amounts subtracted
13        under subparagraph (N), an amount equal to the sum of
14        all amounts disallowed as deductions by (i) Sections
15        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
16        and all amounts of expenses allocable to interest and
17        disallowed as deductions by Section 265(a)(1) of the
18        Internal Revenue Code; and (ii) for taxable years
19        ending on or after August 13, 1999, Sections
20        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
21        Internal Revenue Code, plus, for taxable years ending
22        on or after December 31, 2011, Section 45G(e)(3) of
23        the Internal Revenue Code and, for taxable years
24        ending on or after December 31, 2008, any amount
25        included in gross income under Section 87 of the
26        Internal Revenue Code; the provisions of this

 

 

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1        subparagraph are exempt from the provisions of Section
2        250;
3            (N) An amount equal to all amounts included in
4        such total which are exempt from taxation by this
5        State either by reason of its statutes or Constitution
6        or by reason of the Constitution, treaties or statutes
7        of the United States; provided that, in the case of any
8        statute of this State that exempts income derived from
9        bonds or other obligations from the tax imposed under
10        this Act, the amount exempted shall be the interest
11        net of bond premium amortization;
12            (O) An amount equal to any contribution made to a
13        job training project established pursuant to the Tax
14        Increment Allocation Redevelopment Act;
15            (P) An amount equal to the amount of the deduction
16        used to compute the federal income tax credit for
17        restoration of substantial amounts held under claim of
18        right for the taxable year pursuant to Section 1341 of
19        the Internal Revenue Code or of any itemized deduction
20        taken from adjusted gross income in the computation of
21        taxable income for restoration of substantial amounts
22        held under claim of right for the taxable year;
23            (Q) An amount equal to any amounts included in
24        such total, received by the taxpayer as an
25        acceleration in the payment of life, endowment or
26        annuity benefits in advance of the time they would

 

 

10200SB2531sam001- 100 -LRB102 15312 HLH 24505 a

1        otherwise be payable as an indemnity for a terminal
2        illness;
3            (R) An amount equal to the amount of any federal or
4        State bonus paid to veterans of the Persian Gulf War;
5            (S) An amount, to the extent included in adjusted
6        gross income, equal to the amount of a contribution
7        made in the taxable year on behalf of the taxpayer to a
8        medical care savings account established under the
9        Medical Care Savings Account Act or the Medical Care
10        Savings Account Act of 2000 to the extent the
11        contribution is accepted by the account administrator
12        as provided in that Act;
13            (T) An amount, to the extent included in adjusted
14        gross income, equal to the amount of interest earned
15        in the taxable year on a medical care savings account
16        established under the Medical Care Savings Account Act
17        or the Medical Care Savings Account Act of 2000 on
18        behalf of the taxpayer, other than interest added
19        pursuant to item (D-5) of this paragraph (2);
20            (U) For one taxable year beginning on or after
21        January 1, 1994, an amount equal to the total amount of
22        tax imposed and paid under subsections (a) and (b) of
23        Section 201 of this Act on grant amounts received by
24        the taxpayer under the Nursing Home Grant Assistance
25        Act during the taxpayer's taxable years 1992 and 1993;
26            (V) Beginning with tax years ending on or after

 

 

10200SB2531sam001- 101 -LRB102 15312 HLH 24505 a

1        December 31, 1995 and ending with tax years ending on
2        or before December 31, 2004, an amount equal to the
3        amount paid by a taxpayer who is a self-employed
4        taxpayer, a partner of a partnership, or a shareholder
5        in a Subchapter S corporation for health insurance or
6        long-term care insurance for that taxpayer or that
7        taxpayer's spouse or dependents, to the extent that
8        the amount paid for that health insurance or long-term
9        care insurance may be deducted under Section 213 of
10        the Internal Revenue Code, has not been deducted on
11        the federal income tax return of the taxpayer, and
12        does not exceed the taxable income attributable to
13        that taxpayer's income, self-employment income, or
14        Subchapter S corporation income; except that no
15        deduction shall be allowed under this item (V) if the
16        taxpayer is eligible to participate in any health
17        insurance or long-term care insurance plan of an
18        employer of the taxpayer or the taxpayer's spouse. The
19        amount of the health insurance and long-term care
20        insurance subtracted under this item (V) shall be
21        determined by multiplying total health insurance and
22        long-term care insurance premiums paid by the taxpayer
23        times a number that represents the fractional
24        percentage of eligible medical expenses under Section
25        213 of the Internal Revenue Code of 1986 not actually
26        deducted on the taxpayer's federal income tax return;

 

 

10200SB2531sam001- 102 -LRB102 15312 HLH 24505 a

1            (W) For taxable years beginning on or after
2        January 1, 1998, all amounts included in the
3        taxpayer's federal gross income in the taxable year
4        from amounts converted from a regular IRA to a Roth
5        IRA. This paragraph is exempt from the provisions of
6        Section 250;
7            (X) For taxable year 1999 and thereafter, an
8        amount equal to the amount of any (i) distributions,
9        to the extent includible in gross income for federal
10        income tax purposes, made to the taxpayer because of
11        his or her status as a victim of persecution for racial
12        or religious reasons by Nazi Germany or any other Axis
13        regime or as an heir of the victim and (ii) items of
14        income, to the extent includible in gross income for
15        federal income tax purposes, attributable to, derived
16        from or in any way related to assets stolen from,
17        hidden from, or otherwise lost to a victim of
18        persecution for racial or religious reasons by Nazi
19        Germany or any other Axis regime immediately prior to,
20        during, and immediately after World War II, including,
21        but not limited to, interest on the proceeds
22        receivable as insurance under policies issued to a
23        victim of persecution for racial or religious reasons
24        by Nazi Germany or any other Axis regime by European
25        insurance companies immediately prior to and during
26        World War II; provided, however, this subtraction from

 

 

10200SB2531sam001- 103 -LRB102 15312 HLH 24505 a

1        federal adjusted gross income does not apply to assets
2        acquired with such assets or with the proceeds from
3        the sale of such assets; provided, further, this
4        paragraph shall only apply to a taxpayer who was the
5        first recipient of such assets after their recovery
6        and who is a victim of persecution for racial or
7        religious reasons by Nazi Germany or any other Axis
8        regime or as an heir of the victim. The amount of and
9        the eligibility for any public assistance, benefit, or
10        similar entitlement is not affected by the inclusion
11        of items (i) and (ii) of this paragraph in gross income
12        for federal income tax purposes. This paragraph is
13        exempt from the provisions of Section 250;
14            (Y) For taxable years beginning on or after
15        January 1, 2002 and ending on or before December 31,
16        2004, moneys contributed in the taxable year to a
17        College Savings Pool account under Section 16.5 of the
18        State Treasurer Act, except that amounts excluded from
19        gross income under Section 529(c)(3)(C)(i) of the
20        Internal Revenue Code shall not be considered moneys
21        contributed under this subparagraph (Y). For taxable
22        years beginning on or after January 1, 2005, a maximum
23        of $10,000 contributed in the taxable year to (i) a
24        College Savings Pool account under Section 16.5 of the
25        State Treasurer Act or (ii) the Illinois Prepaid
26        Tuition Trust Fund, except that amounts excluded from

 

 

10200SB2531sam001- 104 -LRB102 15312 HLH 24505 a

1        gross income under Section 529(c)(3)(C)(i) of the
2        Internal Revenue Code shall not be considered moneys
3        contributed under this subparagraph (Y). For purposes
4        of this subparagraph, contributions made by an
5        employer on behalf of an employee, or matching
6        contributions made by an employee, shall be treated as
7        made by the employee. This subparagraph (Y) is exempt
8        from the provisions of Section 250;
9            (Z) For taxable years 2001 and thereafter, for the
10        taxable year in which the bonus depreciation deduction
11        is taken on the taxpayer's federal income tax return
12        under subsection (k) of Section 168 of the Internal
13        Revenue Code and for each applicable taxable year
14        thereafter, an amount equal to "x", where:
15                (1) "y" equals the amount of the depreciation
16            deduction taken for the taxable year on the
17            taxpayer's federal income tax return on property
18            for which the bonus depreciation deduction was
19            taken in any year under subsection (k) of Section
20            168 of the Internal Revenue Code, but not
21            including the bonus depreciation deduction;
22                (2) for taxable years ending on or before
23            December 31, 2005, "x" equals "y" multiplied by 30
24            and then divided by 70 (or "y" multiplied by
25            0.429); and
26                (3) for taxable years ending after December

 

 

10200SB2531sam001- 105 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 106 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 107 -LRB102 15312 HLH 24505 a

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

 

 

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

 

 

10200SB2531sam001- 109 -LRB102 15312 HLH 24505 a

1        31, 2011, in the case of a taxpayer who was required to
2        add back any insurance premiums under Section
3        203(a)(2)(D-19), such taxpayer may elect to subtract
4        that part of a reimbursement received from the
5        insurance company equal to the amount of the expense
6        or loss (including expenses incurred by the insurance
7        company) that would have been taken into account as a
8        deduction for federal income tax purposes if the
9        expense or loss had been uninsured. If a taxpayer
10        makes the election provided for by this subparagraph
11        (GG), the insurer to which the premiums were paid must
12        add back to income the amount subtracted by the
13        taxpayer pursuant to this subparagraph (GG). This
14        subparagraph (GG) is exempt from the provisions of
15        Section 250; and
16            (HH) For taxable years beginning on or after
17        January 1, 2018 and prior to January 1, 2023, a maximum
18        of $10,000 contributed in the taxable year to a
19        qualified ABLE account under Section 16.6 of the State
20        Treasurer Act, except that amounts excluded from gross
21        income under Section 529(c)(3)(C)(i) or Section
22        529A(c)(1)(C) of the Internal Revenue Code shall not
23        be considered moneys contributed under this
24        subparagraph (HH). For purposes of this subparagraph
25        (HH), contributions made by an employer on behalf of
26        an employee, or matching contributions made by an

 

 

10200SB2531sam001- 110 -LRB102 15312 HLH 24505 a

1        employee, shall be treated as made by the employee; .
2            (II) An amount equal to a pass-through owner's
3        direct share of business income apportionable to
4        Illinois and nonbusiness income allocated to Illinois
5        under Section 303 of this Act that was included by a
6        partnership or Subchapter S corporation in its
7        computation of the elective tax under subsection (d-2)
8        of Section 201. This subparagraph (II) is exempt from
9        the provisions of Section 250; and
10            (JJ) An amount equal to an individual's indirect
11        share of business income apportionable to Illinois and
12        nonbusiness income allocated to Illinois under Section
13        303 of this Act that was included by a partnership or
14        Subchapter S corporation in its computation of the
15        elective tax under subsection (d-2) of Section 201,
16        multiplied by: (i) 30.3% if the individual is a direct
17        shareholder in a Subchapter S corporation that is a
18        direct partner in a partnership that elected tax under
19        subsection (d-2) of Section 201; (ii) 100% if the
20        individual is a beneficiary of a trust that is a direct
21        owner in an entity that elected tax under subsection
22        (d-2) of Section 201, to the extent income is
23        distributed by the trust to the beneficiary; or (iii)
24        30.3% if the individual is a beneficiary of a trust
25        that is a direct shareholder in a Subchapter S
26        corporation that is a direct partner in a partnership

 

 

10200SB2531sam001- 111 -LRB102 15312 HLH 24505 a

1        that elected tax under subsection (d-2) of Section
2        201, to the extent income is distributed by the trust
3        to the beneficiary. This subparagraph (JJ) is exempt
4        from the provisions of Section 250.
 
5    (b) Corporations.
6        (1) In general. In the case of a corporation, base
7    income means an amount equal to the taxpayer's taxable
8    income for the taxable year as modified by paragraph (2).
9        (2) Modifications. The taxable income referred to in
10    paragraph (1) shall be modified by adding thereto the sum
11    of the following amounts:
12            (A) An amount equal to all amounts paid or accrued
13        to the taxpayer as interest and all distributions
14        received from regulated investment companies during
15        the taxable year to the extent excluded from gross
16        income in the computation of taxable income;
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 taxable income for the taxable
20        year;
21            (C) In the case of a regulated investment company,
22        an amount equal to the excess of (i) the net long-term
23        capital gain for the taxable year, over (ii) the
24        amount of the capital gain dividends designated as
25        such in accordance with Section 852(b)(3)(C) of the

 

 

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1        Internal Revenue Code and any amount designated under
2        Section 852(b)(3)(D) of the Internal Revenue Code,
3        attributable to the taxable year (this amendatory Act
4        of 1995 (Public Act 89-89) is declarative of existing
5        law and is not a new enactment);
6            (D) The amount of any net operating loss deduction
7        taken in arriving at taxable income, other than a net
8        operating loss carried forward from a taxable year
9        ending prior to December 31, 1986;
10            (E) For taxable years in which a net operating
11        loss carryback or carryforward from a taxable year
12        ending prior to December 31, 1986 is an element of
13        taxable income under paragraph (1) of subsection (e)
14        or subparagraph (E) of paragraph (2) of subsection
15        (e), the amount by which addition modifications other
16        than those provided by this subparagraph (E) exceeded
17        subtraction modifications in such earlier taxable
18        year, with the following limitations applied in the
19        order that they are listed:
20                (i) the addition modification relating to the
21            net operating loss carried back or forward to the
22            taxable year from any taxable year ending prior to
23            December 31, 1986 shall be reduced by the amount
24            of addition modification under this subparagraph
25            (E) which related to that net operating loss and
26            which was taken into account in calculating the

 

 

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1            base income of an earlier taxable year, and
2                (ii) the addition modification relating to the
3            net operating loss carried back or forward to the
4            taxable year from any taxable year ending prior to
5            December 31, 1986 shall not exceed the amount of
6            such carryback or carryforward;
7            For taxable years in which there is a net
8        operating loss carryback or carryforward from more
9        than one other taxable year ending prior to December
10        31, 1986, the addition modification provided in this
11        subparagraph (E) shall be the sum of the amounts
12        computed independently under the preceding provisions
13        of this subparagraph (E) for each such taxable year;
14            (E-5) For taxable years ending after December 31,
15        1997, an amount equal to any eligible remediation
16        costs that the corporation deducted in computing
17        adjusted gross income and for which the corporation
18        claims a credit under subsection (l) of Section 201;
19            (E-10) For taxable years 2001 and thereafter, an
20        amount equal to the bonus depreciation deduction taken
21        on the taxpayer's federal income tax return for the
22        taxable year under subsection (k) of Section 168 of
23        the Internal Revenue Code;
24            (E-11) If the taxpayer sells, transfers, abandons,
25        or otherwise disposes of property for which the
26        taxpayer was required in any taxable year to make an

 

 

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1        addition modification under subparagraph (E-10), then
2        an amount equal to the aggregate amount of the
3        deductions taken in all taxable years under
4        subparagraph (T) with respect to that property.
5            If the taxpayer continues to own property through
6        the last day of the last tax year for which the
7        taxpayer may claim a depreciation deduction for
8        federal income tax purposes and for which the taxpayer
9        was allowed in any taxable year to make a subtraction
10        modification under subparagraph (T), then an amount
11        equal to that subtraction modification.
12            The taxpayer is required to make the addition
13        modification under this subparagraph only once with
14        respect to any one piece of property;
15            (E-12) 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;
9            (E-13) 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(b)(2)(E-12) 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

 

 

10200SB2531sam001- 119 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 120 -LRB102 15312 HLH 24505 a

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            (E-14) 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

 

 

10200SB2531sam001- 121 -LRB102 15312 HLH 24505 a

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(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
18        Act;
19            (E-15) For taxable years beginning after December
20        31, 2008, any deduction for dividends paid by a
21        captive real estate investment trust that is allowed
22        to a real estate investment trust under Section
23        857(b)(2)(B) of the Internal Revenue Code for
24        dividends paid;
25            (E-16) An amount equal to the credit allowable to
26        the taxpayer under Section 218(a) of this Act,

 

 

10200SB2531sam001- 122 -LRB102 15312 HLH 24505 a

1        determined without regard to Section 218(c) of this
2        Act;
3            (E-17) For taxable years ending on or after
4        December 31, 2017, an amount equal to the deduction
5        allowed under Section 199 of the Internal Revenue Code
6        for the taxable year;
7            (E-18) for taxable years beginning after December
8        31, 2018, an amount equal to the deduction allowed
9        under Section 250(a)(1)(A) of the Internal Revenue
10        Code for the taxable year.
11    and by deducting from the total so obtained the sum of the
12    following amounts:
13            (F) An amount equal to the amount of any tax
14        imposed by this Act which was refunded to the taxpayer
15        and included in such total for the taxable year;
16            (G) An amount equal to any amount included in such
17        total under Section 78 of the Internal Revenue Code;
18            (H) In the case of a regulated investment company,
19        an amount equal to the amount of exempt interest
20        dividends as defined in subsection (b)(5) of Section
21        852 of the Internal Revenue Code, paid to shareholders
22        for the taxable year;
23            (I) With the exception of any amounts subtracted
24        under subparagraph (J), an amount equal to the sum of
25        all amounts disallowed as deductions by (i) Sections
26        171(a)(2), and 265(a)(2) and amounts disallowed as

 

 

10200SB2531sam001- 123 -LRB102 15312 HLH 24505 a

1        interest expense by Section 291(a)(3) of the Internal
2        Revenue Code, and all amounts of expenses allocable to
3        interest and disallowed as deductions by Section
4        265(a)(1) of the Internal Revenue Code; and (ii) for
5        taxable years ending on or after August 13, 1999,
6        Sections 171(a)(2), 265, 280C, 291(a)(3), and
7        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
8        for tax years ending on or after December 31, 2011,
9        amounts disallowed as deductions by Section 45G(e)(3)
10        of the Internal Revenue Code and, for taxable years
11        ending on or after December 31, 2008, any amount
12        included in gross income under Section 87 of the
13        Internal Revenue Code and the policyholders' share of
14        tax-exempt interest of a life insurance company under
15        Section 807(a)(2)(B) of the Internal Revenue Code (in
16        the case of a life insurance company with gross income
17        from a decrease in reserves for the tax year) or
18        Section 807(b)(1)(B) of the Internal Revenue Code (in
19        the case of a life insurance company allowed a
20        deduction for an increase in reserves for the tax
21        year); the provisions of this subparagraph are exempt
22        from the provisions of Section 250;
23            (J) An amount equal to all amounts included in
24        such total which are exempt from taxation by this
25        State either by reason of its statutes or Constitution
26        or by reason of the Constitution, treaties or statutes

 

 

10200SB2531sam001- 124 -LRB102 15312 HLH 24505 a

1        of the United States; provided that, in the case of any
2        statute of this State that exempts income derived from
3        bonds or other obligations from the tax imposed under
4        this Act, the amount exempted shall be the interest
5        net of bond premium amortization;
6            (K) An amount equal to those dividends included in
7        such total which were paid by a corporation which
8        conducts business operations in a River Edge
9        Redevelopment Zone or zones created under the River
10        Edge Redevelopment Zone Act and conducts substantially
11        all of its operations in a River Edge Redevelopment
12        Zone or zones. This subparagraph (K) is exempt from
13        the provisions of Section 250;
14            (L) An amount equal to those dividends included in
15        such total that were paid by a corporation that
16        conducts business operations in a federally designated
17        Foreign Trade Zone or Sub-Zone and that is designated
18        a High Impact Business located in Illinois; provided
19        that dividends eligible for the deduction provided in
20        subparagraph (K) of paragraph 2 of this subsection
21        shall not be eligible for the deduction provided under
22        this subparagraph (L);
23            (M) For any taxpayer that is a financial
24        organization within the meaning of Section 304(c) of
25        this Act, an amount included in such total as interest
26        income from a loan or loans made by such taxpayer to a

 

 

10200SB2531sam001- 125 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 126 -LRB102 15312 HLH 24505 a

1        of a loan or loans that is secured by property eligible
2        for a Section 201(h) investment credit to the
3        borrower, the entire principal amount of the loan or
4        loans between the taxpayer and the borrower should be
5        divided into the basis of the Section 201(h)
6        investment credit property which secures the loan or
7        loans, using for this purpose the original basis of
8        such property on the date that it was placed in service
9        in a federally designated Foreign Trade Zone or
10        Sub-Zone located in Illinois. No taxpayer that is
11        eligible for the deduction provided in subparagraph
12        (M) of paragraph (2) of this subsection shall be
13        eligible for the deduction provided under this
14        subparagraph (M-1). The subtraction modification
15        available to taxpayers in any year under this
16        subsection shall be that portion of the total interest
17        paid by the borrower with respect to such loan
18        attributable to the eligible property as calculated
19        under the previous sentence;
20            (N) Two times any contribution made during the
21        taxable year to a designated zone organization to the
22        extent that the contribution (i) qualifies as a
23        charitable contribution under subsection (c) of
24        Section 170 of the Internal Revenue Code and (ii)
25        must, by its terms, be used for a project approved by
26        the Department of Commerce and Economic Opportunity

 

 

10200SB2531sam001- 127 -LRB102 15312 HLH 24505 a

1        under Section 11 of the Illinois Enterprise Zone Act
2        or under Section 10-10 of the River Edge Redevelopment
3        Zone Act. This subparagraph (N) is exempt from the
4        provisions of Section 250;
5            (O) An amount equal to: (i) 85% for taxable years
6        ending on or before December 31, 1992, or, a
7        percentage equal to the percentage allowable under
8        Section 243(a)(1) of the Internal Revenue Code of 1986
9        for taxable years ending after December 31, 1992, of
10        the amount by which dividends included in taxable
11        income and received from a corporation that is not
12        created or organized under the laws of the United
13        States or any state or political subdivision thereof,
14        including, for taxable years ending on or after
15        December 31, 1988, dividends received or deemed
16        received or paid or deemed paid under Sections 951
17        through 965 of the Internal Revenue Code, exceed the
18        amount of the modification provided under subparagraph
19        (G) of paragraph (2) of this subsection (b) which is
20        related to such dividends, and including, for taxable
21        years ending on or after December 31, 2008, dividends
22        received from a captive real estate investment trust;
23        plus (ii) 100% of the amount by which dividends,
24        included in taxable income and received, including,
25        for taxable years ending on or after December 31,
26        1988, dividends received or deemed received or paid or

 

 

10200SB2531sam001- 128 -LRB102 15312 HLH 24505 a

1        deemed paid under Sections 951 through 964 of the
2        Internal Revenue Code and including, for taxable years
3        ending on or after December 31, 2008, dividends
4        received from a captive real estate investment trust,
5        from any such corporation specified in clause (i) that
6        would but for the provisions of Section 1504(b)(3) of
7        the Internal Revenue Code be treated as a member of the
8        affiliated group which includes the dividend
9        recipient, exceed the amount of the modification
10        provided under subparagraph (G) of paragraph (2) of
11        this subsection (b) which is related to such
12        dividends. This subparagraph (O) is exempt from the
13        provisions of Section 250 of this Act;
14            (P) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (Q) 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            (R) On and after July 20, 1999, in the case of an
23        attorney-in-fact with respect to whom an interinsurer
24        or a reciprocal insurer has made the election under
25        Section 835 of the Internal Revenue Code, 26 U.S.C.
26        835, an amount equal to the excess, if any, of the

 

 

10200SB2531sam001- 129 -LRB102 15312 HLH 24505 a

1        amounts paid or incurred by that interinsurer or
2        reciprocal insurer in the taxable year to the
3        attorney-in-fact over the deduction allowed to that
4        interinsurer or reciprocal insurer with respect to the
5        attorney-in-fact under Section 835(b) of the Internal
6        Revenue Code for the taxable year; the provisions of
7        this subparagraph are exempt from the provisions of
8        Section 250;
9            (S) For taxable years ending on or after December
10        31, 1997, in the case of a Subchapter S corporation, an
11        amount equal to all amounts of income allocable to a
12        shareholder subject to the Personal Property Tax
13        Replacement Income Tax imposed by subsections (c) and
14        (d) of Section 201 of this Act, including amounts
15        allocable to organizations exempt from federal income
16        tax by reason of Section 501(a) of the Internal
17        Revenue Code. This subparagraph (S) is exempt from the
18        provisions of Section 250;
19            (T) For taxable years 2001 and thereafter, for the
20        taxable year in which the bonus depreciation deduction
21        is taken on the taxpayer's federal income tax return
22        under subsection (k) of Section 168 of the Internal
23        Revenue Code and for each applicable taxable year
24        thereafter, an amount equal to "x", where:
25                (1) "y" equals the amount of the depreciation
26            deduction taken for the taxable year on the

 

 

10200SB2531sam001- 130 -LRB102 15312 HLH 24505 a

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

 

 

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

 

 

10200SB2531sam001- 132 -LRB102 15312 HLH 24505 a

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

 

 

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1        taxable years ending on or after December 31, 2008, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304, but
8        not to exceed the addition modification required to be
9        made for the same taxable year under Section
10        203(b)(2)(E-12) for interest paid, accrued, or
11        incurred, directly or indirectly, to the same person.
12        This subparagraph (W) is exempt from the provisions of
13        Section 250;
14            (X) An amount equal to the income from intangible
15        property taken into account for the taxable year (net
16        of the 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

 

 

10200SB2531sam001- 134 -LRB102 15312 HLH 24505 a

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(b)(2)(E-13) for intangible expenses and costs
6        paid, accrued, or incurred, directly or indirectly, to
7        the same foreign person. This subparagraph (X) is
8        exempt from the provisions of Section 250;
9            (Y) For taxable years ending on or after December
10        31, 2011, in the case of a taxpayer who was required to
11        add back any insurance premiums under Section
12        203(b)(2)(E-14), such taxpayer may elect to subtract
13        that part of a reimbursement received from the
14        insurance company equal to the amount of the expense
15        or loss (including expenses incurred by the insurance
16        company) that would have been taken into account as a
17        deduction for federal income tax purposes if the
18        expense or loss had been uninsured. If a taxpayer
19        makes the election provided for by this subparagraph
20        (Y), the insurer to which the premiums were paid must
21        add back to income the amount subtracted by the
22        taxpayer pursuant to this subparagraph (Y). This
23        subparagraph (Y) is exempt from the provisions of
24        Section 250; and
25            (Z) The difference between the nondeductible
26        controlled foreign corporation dividends under Section

 

 

10200SB2531sam001- 135 -LRB102 15312 HLH 24505 a

1        965(e)(3) of the Internal Revenue Code over the
2        taxable income of the taxpayer, computed without
3        regard to Section 965(e)(2)(A) of the Internal Revenue
4        Code, and without regard to any net operating loss
5        deduction. This subparagraph (Z) is exempt from the
6        provisions of Section 250; and .
7            (AA) An amount equal to a pass-through owner's
8        direct share of business income apportionable to
9        Illinois and nonbusiness income allocated to Illinois
10        under Section 303 of this Act that was included by a
11        partnership or Subchapter S corporation in its
12        computation of the elective tax under subsection (d-2)
13        of Section 201. This subparagraph (AA) is exempt from
14        the provisions of Section 250.
15        (3) Special rule. For purposes of paragraph (2)(A),
16    "gross income" in the case of a life insurance company,
17    for tax years ending on and after December 31, 1994, and
18    prior to December 31, 2011, shall mean the gross
19    investment income for the taxable year and, for tax years
20    ending on or after December 31, 2011, shall mean all
21    amounts included in life insurance gross income under
22    Section 803(a)(3) of the Internal Revenue Code.
 
23    (c) Trusts and estates.
24        (1) In general. In the case of a trust or estate, base
25    income means an amount equal to the taxpayer's taxable

 

 

10200SB2531sam001- 136 -LRB102 15312 HLH 24505 a

1    income for the taxable year as modified by paragraph (2).
2        (2) Modifications. Subject to the provisions of
3    paragraph (3), the taxable income referred to in paragraph
4    (1) shall be modified by adding thereto the sum of the
5    following amounts:
6            (A) An amount equal to all amounts paid or accrued
7        to the taxpayer as interest or dividends during the
8        taxable year to the extent excluded from gross income
9        in the computation of taxable income;
10            (B) In the case of (i) an estate, $600; (ii) a
11        trust which, under its governing instrument, is
12        required to distribute all of its income currently,
13        $300; and (iii) any other trust, $100, but in each such
14        case, only to the extent such amount was deducted in
15        the computation of taxable income;
16            (C) An amount equal to the amount of tax imposed by
17        this Act to the extent deducted from gross income in
18        the computation of taxable income for the taxable
19        year;
20            (D) The amount of any net operating loss deduction
21        taken in arriving at taxable income, other than a net
22        operating loss carried forward from a taxable year
23        ending prior to December 31, 1986;
24            (E) For taxable years in which a net operating
25        loss carryback or carryforward from a taxable year
26        ending prior to December 31, 1986 is an element of

 

 

10200SB2531sam001- 137 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 138 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 139 -LRB102 15312 HLH 24505 a

1        an amount equal to the aggregate amount of the
2        deductions taken in all taxable years under
3        subparagraph (R) with respect to that property.
4            If the taxpayer continues to own property through
5        the last day of the last tax year for which the
6        taxpayer may claim a depreciation deduction for
7        federal income tax purposes and for which the taxpayer
8        was allowed in any taxable year to make a subtraction
9        modification under subparagraph (R), then an amount
10        equal to that subtraction modification.
11            The taxpayer is required to make the addition
12        modification under this subparagraph only once with
13        respect to any one piece of property;
14            (G-12) An amount equal to the amount otherwise
15        allowed as a deduction in computing base income for
16        interest paid, accrued, or incurred, directly or
17        indirectly, (i) for taxable years ending on or after
18        December 31, 2004, to a foreign person who would be a
19        member of the same unitary business group but for the
20        fact that the foreign person's business activity
21        outside the United States is 80% or more of the foreign
22        person's total business activity and (ii) for taxable
23        years ending on or after December 31, 2008, to a person
24        who would be a member of the same unitary business
25        group but for the fact that the person is prohibited
26        under Section 1501(a)(27) from being included in the

 

 

10200SB2531sam001- 140 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 141 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 142 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 143 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 144 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 145 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 146 -LRB102 15312 HLH 24505 a

1        income under different subsections of Section 304. The
2        addition modification required by this subparagraph
3        shall be reduced to the extent that dividends were
4        included in base income of the unitary group for the
5        same taxable year and received by the taxpayer or by a
6        member of the taxpayer's unitary business group
7        (including amounts included in gross income under
8        Sections 951 through 964 of the Internal Revenue Code
9        and amounts included in gross income under Section 78
10        of the Internal Revenue Code) with respect to the
11        stock of the same person to whom the premiums and costs
12        were directly or indirectly paid, incurred, or
13        accrued. The preceding sentence does not apply to the
14        extent that the same dividends caused a reduction to
15        the addition modification required under Section
16        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
17        Act;
18            (G-15) 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            (G-16) 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 sum of the

 

 

10200SB2531sam001- 147 -LRB102 15312 HLH 24505 a

1    following amounts:
2            (H) An amount equal to all amounts included in
3        such total pursuant to the provisions of Sections
4        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
5        of the Internal Revenue Code or included in such total
6        as distributions under the provisions of any
7        retirement or disability plan for employees of any
8        governmental agency or unit, or retirement payments to
9        retired partners, which payments are excluded in
10        computing net earnings from self employment by Section
11        1402 of the Internal Revenue Code and regulations
12        adopted pursuant thereto;
13            (I) The valuation limitation amount;
14            (J) An amount equal to the amount of any tax
15        imposed by this Act which was refunded to the taxpayer
16        and included in such total for the taxable year;
17            (K) An amount equal to all amounts included in
18        taxable income as modified by subparagraphs (A), (B),
19        (C), (D), (E), (F) and (G) which are exempt from
20        taxation by this State either by reason of its
21        statutes or Constitution or by reason of the
22        Constitution, treaties or statutes of the United
23        States; provided that, in the case of any statute of
24        this State that exempts income derived from bonds or
25        other obligations from the tax imposed under this Act,
26        the amount exempted shall be the interest net of bond

 

 

10200SB2531sam001- 148 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 149 -LRB102 15312 HLH 24505 a

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

 

 

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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            (R) For taxable years 2001 and thereafter, for the
26        taxable year in which the bonus depreciation deduction

 

 

10200SB2531sam001- 151 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 152 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 153 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 154 -LRB102 15312 HLH 24505 a

1        group but for the fact that the person is prohibited
2        under Section 1501(a)(27) from being included in the
3        unitary business group because he or she is ordinarily
4        required to apportion business income under different
5        subsections of Section 304, but not to exceed the
6        addition modification required to be made for the same
7        taxable year under Section 203(c)(2)(G-12) for
8        interest paid, accrued, or incurred, directly or
9        indirectly, to the same person. This subparagraph (U)
10        is exempt from the provisions of Section 250;
11            (V) An amount equal to the income from intangible
12        property taken into account for the taxable year (net
13        of the deductions allocable thereto) with respect to
14        transactions with (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

 

 

10200SB2531sam001- 155 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 156 -LRB102 15312 HLH 24505 a

1        expense or loss had been uninsured. If a taxpayer
2        makes the election provided for by this subparagraph
3        (Y), the insurer to which the premiums were paid must
4        add back to income the amount subtracted by the
5        taxpayer pursuant to this subparagraph (Y). This
6        subparagraph (Y) is exempt from the provisions of
7        Section 250; and
8            (Z) For taxable years beginning after December 31,
9        2018 and before January 1, 2026, the amount of excess
10        business loss of the taxpayer disallowed as a
11        deduction by Section 461(l)(1)(B) of the Internal
12        Revenue Code; .
13            (AA) An amount equal to a pass-through owner's
14        direct share of business income apportionable to
15        Illinois and nonbusiness income allocated to Illinois
16        under Section 303 of this Act that was included by a
17        partnership or Subchapter S corporation in its
18        computation of the elective tax under subsection (d-2)
19        of Section 201. This subparagraph (AA) is exempt from
20        the provisions of Section 250; and
21            (BB) An amount equal to a trust's indirect share
22        of business income apportionable to Illinois and
23        nonbusiness income allocated to Illinois under Section
24        303 of this Act that was included by a partnership in
25        its computation of the elective tax under subsection
26        (d-2) of Section 201, multiplied by 23.26% if the

 

 

10200SB2531sam001- 157 -LRB102 15312 HLH 24505 a

1        trust is a direct shareholder in a Subchapter S
2        corporation that is a direct partner in a partnership
3        that elected tax under subsection (d-2) of Section
4        201, to the extent income is not distributed by the
5        trust to its beneficiaries. This subparagraph (BB) is
6        exempt from the provisions of Section 250.
7        (3) Limitation. The amount of any modification
8    otherwise required under this subsection shall, under
9    regulations prescribed by the Department, be adjusted by
10    any amounts included therein which were properly paid,
11    credited, or required to be distributed, or permanently
12    set aside for charitable purposes pursuant to Internal
13    Revenue Code Section 642(c) during the taxable year.
 
14    (d) Partnerships.
15        (1) In general. In the case of a partnership, base
16    income means an amount equal to the taxpayer's taxable
17    income for the taxable year as modified by paragraph (2).
18        (2) Modifications. The taxable income referred to in
19    paragraph (1) shall be modified by adding thereto the sum
20    of the following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest or dividends during the
23        taxable year to the extent excluded from gross income
24        in the computation of taxable income;
25            (B) An amount equal to the amount of tax imposed by

 

 

10200SB2531sam001- 158 -LRB102 15312 HLH 24505 a

1        this Act to the extent deducted from gross income for
2        the taxable year;
3            (C) The amount of deductions allowed to the
4        partnership pursuant to Section 707 (c) of the
5        Internal Revenue Code in calculating its taxable
6        income;
7            (D) An amount equal to the amount of the capital
8        gain deduction allowable under the Internal Revenue
9        Code, to the extent deducted from gross income in the
10        computation of taxable income;
11            (D-5) For taxable years 2001 and thereafter, an
12        amount equal to the bonus depreciation deduction taken
13        on the taxpayer's federal income tax return for the
14        taxable year under subsection (k) of Section 168 of
15        the Internal Revenue Code;
16            (D-6) If the taxpayer sells, transfers, abandons,
17        or otherwise disposes of property for which the
18        taxpayer was required in any taxable year to make an
19        addition modification under subparagraph (D-5), then
20        an amount equal to the aggregate amount of the
21        deductions taken in all taxable years under
22        subparagraph (O) with respect to that property.
23            If the taxpayer continues to own property through
24        the last day of the last tax year for which the
25        taxpayer may claim a depreciation deduction for
26        federal income tax purposes and for which the taxpayer

 

 

10200SB2531sam001- 159 -LRB102 15312 HLH 24505 a

1        was allowed in any taxable year to make a subtraction
2        modification under subparagraph (O), then an amount
3        equal to that subtraction modification.
4            The taxpayer is required to make the addition
5        modification under this subparagraph only once with
6        respect to any one piece of property;
7            (D-7) 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

 

 

10200SB2531sam001- 160 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 161 -LRB102 15312 HLH 24505 a

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; and

 

 

10200SB2531sam001- 162 -LRB102 15312 HLH 24505 a

1            (D-8) 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

 

 

10200SB2531sam001- 163 -LRB102 15312 HLH 24505 a

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(d)(2)(D-7) 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

 

 

10200SB2531sam001- 164 -LRB102 15312 HLH 24505 a

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);

 

 

10200SB2531sam001- 165 -LRB102 15312 HLH 24505 a

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            (D-9) 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

 

 

10200SB2531sam001- 166 -LRB102 15312 HLH 24505 a

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(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
10            (D-10) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14            (D-11) For taxable years ending on or after
15        December 31, 2017, an amount equal to the deduction
16        allowed under Section 199 of the Internal Revenue Code
17        for the taxable year;
18    and by deducting from the total so obtained the following
19    amounts:
20            (E) The valuation limitation amount;
21            (F) An amount equal to the amount of any tax
22        imposed by this Act which was refunded to the taxpayer
23        and included in such total for the taxable year;
24            (G) An amount equal to all amounts included in
25        taxable income as modified by subparagraphs (A), (B),
26        (C) and (D) which are exempt from taxation by this

 

 

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1        State either by reason of its statutes or Constitution
2        or by reason of the Constitution, treaties or statutes
3        of the United States; provided that, in the case of any
4        statute of this State that exempts income derived from
5        bonds or other obligations from the tax imposed under
6        this Act, the amount exempted shall be the interest
7        net of bond premium amortization;
8            (H) Any income of the partnership which
9        constitutes personal service income as defined in
10        Section 1348(b)(1) of the Internal Revenue Code (as in
11        effect December 31, 1981) or a reasonable allowance
12        for compensation paid or accrued for services rendered
13        by partners to the partnership, whichever is greater;
14        this subparagraph (H) is exempt from the provisions of
15        Section 250;
16            (I) An amount equal to all amounts of income
17        distributable to an entity subject to the Personal
18        Property Tax Replacement Income Tax imposed by
19        subsections (c) and (d) of Section 201 of this Act
20        including amounts distributable to organizations
21        exempt from federal income tax by reason of Section
22        501(a) of the Internal Revenue Code; this subparagraph
23        (I) is exempt from the provisions of Section 250;
24            (J) With the exception of any amounts subtracted
25        under subparagraph (G), an amount equal to the sum of
26        all amounts disallowed as deductions by (i) Sections

 

 

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1        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
2        and all amounts of expenses allocable to interest and
3        disallowed as deductions by Section 265(a)(1) of the
4        Internal Revenue Code; and (ii) for taxable years
5        ending on or after August 13, 1999, Sections
6        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
7        Internal Revenue Code, plus, (iii) for taxable years
8        ending on or after December 31, 2011, Section
9        45G(e)(3) of the Internal Revenue Code and, for
10        taxable years ending on or after December 31, 2008,
11        any amount included in gross income under Section 87
12        of the Internal Revenue Code; the provisions of this
13        subparagraph are exempt from the provisions of Section
14        250;
15            (K) An amount equal to those dividends included in
16        such total which were paid by a corporation which
17        conducts business operations in a River Edge
18        Redevelopment Zone or zones created under the River
19        Edge Redevelopment Zone Act and conducts substantially
20        all of its operations from a River Edge Redevelopment
21        Zone or zones. This subparagraph (K) is exempt from
22        the provisions of Section 250;
23            (L) An amount equal to any contribution made to a
24        job training project established pursuant to the Real
25        Property Tax Increment Allocation Redevelopment Act;
26            (M) An amount equal to those dividends included in

 

 

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

 

 

10200SB2531sam001- 170 -LRB102 15312 HLH 24505 a

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

 

 

10200SB2531sam001- 171 -LRB102 15312 HLH 24505 a

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

 

 

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1        respect to such transaction under Section
2        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
3        203(d)(2)(D-8), but not to exceed the amount of such
4        addition modification. This subparagraph (Q) is exempt
5        from Section 250;
6            (R) An amount equal to the interest income taken
7        into account for the taxable year (net of the
8        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(d)(2)(D-7) for interest paid, accrued, or
24        incurred, directly or indirectly, to the same person.
25        This subparagraph (R) is exempt from Section 250;
26            (S) An amount equal to the income from intangible

 

 

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1        property taken into account for the taxable year (net
2        of the deductions allocable thereto) with respect to
3        transactions with (i) a foreign person who would be a
4        member of the taxpayer's unitary business group but
5        for the fact that the foreign person's business
6        activity outside the United States is 80% or more of
7        that person's total business activity and (ii) for
8        taxable years ending on or after December 31, 2008, to
9        a person who would be a member of the same unitary
10        business group but for the fact that the person is
11        prohibited under Section 1501(a)(27) from being
12        included in the unitary business group because he or
13        she is ordinarily required to apportion business
14        income under different subsections of Section 304, but
15        not to exceed the addition modification required to be
16        made for the same taxable year under Section
17        203(d)(2)(D-8) for intangible expenses and costs paid,
18        accrued, or incurred, directly or indirectly, to the
19        same person. This subparagraph (S) is exempt from
20        Section 250; and
21            (T) For taxable years ending on or after December
22        31, 2011, in the case of a taxpayer who was required to
23        add back any insurance premiums under Section
24        203(d)(2)(D-9), such taxpayer may elect to subtract
25        that part of a reimbursement received from the
26        insurance company equal to the amount of the expense

 

 

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1        or loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer
5        makes the election provided for by this subparagraph
6        (T), the insurer to which the premiums were paid must
7        add back to income the amount subtracted by the
8        taxpayer pursuant to this subparagraph (T). This
9        subparagraph (T) is exempt from the provisions of
10        Section 250.
 
11    (e) Gross income; adjusted gross income; taxable income.
12        (1) In general. Subject to the provisions of paragraph
13    (2) and subsection (b)(3), for purposes of this Section
14    and Section 803(e), a taxpayer's gross income, adjusted
15    gross income, or taxable income for the taxable year shall
16    mean the amount of gross income, adjusted gross income or
17    taxable income properly reportable for federal income tax
18    purposes for the taxable year under the provisions of the
19    Internal Revenue Code. Taxable income may be less than
20    zero. However, for taxable years ending on or after
21    December 31, 1986, net operating loss carryforwards from
22    taxable years ending prior to December 31, 1986, may not
23    exceed the sum of federal taxable income for the taxable
24    year before net operating loss deduction, plus the excess
25    of addition modifications over subtraction modifications

 

 

10200SB2531sam001- 175 -LRB102 15312 HLH 24505 a

1    for the taxable year. For taxable years ending prior to
2    December 31, 1986, taxable income may never be an amount
3    in excess of the net operating loss for the taxable year as
4    defined in subsections (c) and (d) of Section 172 of the
5    Internal Revenue Code, provided that when taxable income
6    of a corporation (other than a Subchapter S corporation),
7    trust, or estate is less than zero and addition
8    modifications, other than those provided by subparagraph
9    (E) of paragraph (2) of subsection (b) for corporations or
10    subparagraph (E) of paragraph (2) of subsection (c) for
11    trusts and estates, exceed subtraction modifications, an
12    addition modification must be made under those
13    subparagraphs for any other taxable year to which the
14    taxable income less than zero (net operating loss) is
15    applied under Section 172 of the Internal Revenue Code or
16    under subparagraph (E) of paragraph (2) of this subsection
17    (e) applied in conjunction with Section 172 of the
18    Internal Revenue Code.
19        (2) Special rule. For purposes of paragraph (1) of
20    this subsection, the taxable income properly reportable
21    for federal income tax purposes shall mean:
22            (A) Certain life insurance companies. In the case
23        of a life insurance company subject to the tax imposed
24        by Section 801 of the Internal Revenue Code, life
25        insurance company taxable income, plus the amount of
26        distribution from pre-1984 policyholder surplus

 

 

10200SB2531sam001- 176 -LRB102 15312 HLH 24505 a

1        accounts as calculated under Section 815a of the
2        Internal Revenue Code;
3            (B) Certain other insurance companies. In the case
4        of mutual insurance companies subject to the tax
5        imposed by Section 831 of the Internal Revenue Code,
6        insurance company taxable income;
7            (C) Regulated investment companies. In the case of
8        a regulated investment company subject to the tax
9        imposed by Section 852 of the Internal Revenue Code,
10        investment company taxable income;
11            (D) Real estate investment trusts. In the case of
12        a real estate investment trust subject to the tax
13        imposed by Section 857 of the Internal Revenue Code,
14        real estate investment trust taxable income;
15            (E) Consolidated corporations. In the case of a
16        corporation which is a member of an affiliated group
17        of corporations filing a consolidated income tax
18        return for the taxable year for federal income tax
19        purposes, taxable income determined as if such
20        corporation had filed a separate return for federal
21        income tax purposes for the taxable year and each
22        preceding taxable year for which it was a member of an
23        affiliated group. For purposes of this subparagraph,
24        the taxpayer's separate taxable income shall be
25        determined as if the election provided by Section
26        243(b)(2) of the Internal Revenue Code had been in

 

 

10200SB2531sam001- 177 -LRB102 15312 HLH 24505 a

1        effect for all such years;
2            (F) Cooperatives. In the case of a cooperative
3        corporation or association, the taxable income of such
4        organization determined in accordance with the
5        provisions of Section 1381 through 1388 of the
6        Internal Revenue Code, but without regard to the
7        prohibition against offsetting losses from patronage
8        activities against income from nonpatronage
9        activities; except that a cooperative corporation or
10        association may make an election to follow its federal
11        income tax treatment of patronage losses and
12        nonpatronage losses. In the event such election is
13        made, such losses shall be computed and carried over
14        in a manner consistent with subsection (a) of Section
15        207 of this Act and apportioned by the apportionment
16        factor reported by the cooperative on its Illinois
17        income tax return filed for the taxable year in which
18        the losses are incurred. The election shall be
19        effective for all taxable years with original returns
20        due on or after the date of the election. In addition,
21        the cooperative may file an amended return or returns,
22        as allowed under this Act, to provide that the
23        election shall be effective for losses incurred or
24        carried forward for taxable years occurring prior to
25        the date of the election. Once made, the election may
26        only be revoked upon approval of the Director. The

 

 

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1        Department shall adopt rules setting forth
2        requirements for documenting the elections and any
3        resulting Illinois net loss and the standards to be
4        used by the Director in evaluating requests to revoke
5        elections. Public Act 96-932 is declaratory of
6        existing law;
7            (G) Subchapter S corporations. In the case of: (i)
8        a Subchapter S corporation for which there is in
9        effect an election for the taxable year under Section
10        1362 of the Internal Revenue Code, the taxable income
11        of such corporation determined in accordance with
12        Section 1363(b) of the Internal Revenue Code, except
13        that taxable income shall take into account those
14        items which are required by Section 1363(b)(1) of the
15        Internal Revenue Code to be separately stated; and
16        (ii) a Subchapter S corporation for which there is in
17        effect a federal election to opt out of the provisions
18        of the Subchapter S Revision Act of 1982 and have
19        applied instead the prior federal Subchapter S rules
20        as in effect on July 1, 1982, the taxable income of
21        such corporation determined in accordance with the
22        federal Subchapter S rules as in effect on July 1,
23        1982; and
24            (H) Partnerships. In the case of a partnership,
25        taxable income determined in accordance with Section
26        703 of the Internal Revenue Code, except that taxable

 

 

10200SB2531sam001- 179 -LRB102 15312 HLH 24505 a

1        income shall take into account those items which are
2        required by Section 703(a)(1) to be separately stated
3        but which would be taken into account by an individual
4        in calculating his taxable income.
5        (3) Recapture of business expenses on disposition of
6    asset or business. Notwithstanding any other law to the
7    contrary, if in prior years income from an asset or
8    business has been classified as business income and in a
9    later year is demonstrated to be non-business income, then
10    all expenses, without limitation, deducted in such later
11    year and in the 2 immediately preceding taxable years
12    related to that asset or business that generated the
13    non-business income shall be added back and recaptured as
14    business income in the year of the disposition of the
15    asset or business. Such amount shall be apportioned to
16    Illinois using the greater of the apportionment fraction
17    computed for the business under Section 304 of this Act
18    for the taxable year or the average of the apportionment
19    fractions computed for the business under Section 304 of
20    this Act for the taxable year and for the 2 immediately
21    preceding taxable years.
 
22    (f) Valuation limitation amount.
23        (1) In general. The valuation limitation amount
24    referred to in subsections (a)(2)(G), (c)(2)(I) and
25    (d)(2)(E) is an amount equal to:

 

 

10200SB2531sam001- 180 -LRB102 15312 HLH 24505 a

1            (A) The sum of the pre-August 1, 1969 appreciation
2        amounts (to the extent consisting of gain reportable
3        under the provisions of Section 1245 or 1250 of the
4        Internal Revenue Code) for all property in respect of
5        which such gain was reported for the taxable year;
6        plus
7            (B) The lesser of (i) the sum of the pre-August 1,
8        1969 appreciation amounts (to the extent consisting of
9        capital gain) for all property in respect of which
10        such gain was reported for federal income tax purposes
11        for the taxable year, or (ii) the net capital gain for
12        the taxable year, reduced in either case by any amount
13        of such gain included in the amount determined under
14        subsection (a)(2)(F) or (c)(2)(H).
15        (2) Pre-August 1, 1969 appreciation amount.
16            (A) If the fair market value of property referred
17        to in paragraph (1) was readily ascertainable on
18        August 1, 1969, the pre-August 1, 1969 appreciation
19        amount for such property is the lesser of (i) the
20        excess of such fair market value over the taxpayer's
21        basis (for determining gain) for such property on that
22        date (determined under the Internal Revenue Code as in
23        effect on that date), or (ii) the total gain realized
24        and reportable for federal income tax purposes in
25        respect of the sale, exchange or other disposition of
26        such property.

 

 

10200SB2531sam001- 181 -LRB102 15312 HLH 24505 a

1            (B) If the fair market value of property referred
2        to in paragraph (1) was not readily ascertainable on
3        August 1, 1969, the pre-August 1, 1969 appreciation
4        amount for such property is that amount which bears
5        the same ratio to the total gain reported in respect of
6        the property for federal income tax purposes for the
7        taxable year, as the number of full calendar months in
8        that part of the taxpayer's holding period for the
9        property ending July 31, 1969 bears to the number of
10        full calendar months in the taxpayer's entire holding
11        period for the property.
12            (C) The Department shall prescribe such
13        regulations as may be necessary to carry out the
14        purposes of this paragraph.
 
15    (g) Double deductions. Unless specifically provided
16otherwise, nothing in this Section shall permit the same item
17to be deducted more than once.
 
18    (h) Legislative intention. Except as expressly provided by
19this Section there shall be no modifications or limitations on
20the amounts of income, gain, loss or deduction taken into
21account in determining gross income, adjusted gross income or
22taxable income for federal income tax purposes for the taxable
23year, or in the amount of such items entering into the
24computation of base income and net income under this Act for

 

 

10200SB2531sam001- 182 -LRB102 15312 HLH 24505 a

1such taxable year, whether in respect of property values as of
2August 1, 1969 or otherwise.
3(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
4101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
5    (35 ILCS 5/502)  (from Ch. 120, par. 5-502)
6    (Text of Section without the changes made by P.A. 101-8,
7which did not take effect (see Section 99 of P.A. 101-8))
8    Sec. 502. Returns and notices.
9    (a) In general. A return with respect to the taxes imposed
10by this Act shall be made by every person for any taxable year:
11        (1) for which such person is liable for a tax imposed
12    by this Act, or
13        (2) in the case of a resident or in the case of a
14    corporation which is qualified to do business in this
15    State, for which such person is required to make a federal
16    income tax return, regardless of whether such person is
17    liable for a tax imposed by this Act. However, this
18    paragraph shall not require a resident to make a return if
19    such person has an Illinois base income of the basic
20    amount in Section 204(b) or less and is either claimed as a
21    dependent on another person's tax return under the
22    Internal Revenue Code, or is claimed as a dependent on
23    another person's tax return under this Act.
24    Notwithstanding the provisions of paragraph (1), a
25nonresident (other than, for taxable years ending on or after

 

 

10200SB2531sam001- 183 -LRB102 15312 HLH 24505 a

1December 31, 2011, a nonresident required to withhold tax
2under Section 709.5) whose Illinois income tax liability under
3subsections (a), (b), (c), and (d) of Section 201 of this Act
4is paid in full after taking into account the credits allowed
5under subsection (f) of this Section or allowed under Section
6709.5 of this Act shall not be required to file a return under
7this subsection (a). In addition, a nonresident individual
8with no Illinois income tax liability under subsections (a),
9(b), (c), and (d) of Section 201 of this Act after taking into
10account the modifications in subsections (a)(2)(II) and
11(a)(2)(JJ) of Section 203 shall not be required to file a
12return under this subsection (a).
13    (b) Fiduciaries and receivers.
14        (1) Decedents. If an individual is deceased, any
15    return or notice required of such individual under this
16    Act shall be made by his executor, administrator, or other
17    person charged with the property of such decedent.
18        (2) Individuals under a disability. If an individual
19    is unable to make a return or notice required under this
20    Act, the return or notice required of such individual
21    shall be made by his duly authorized agent, guardian,
22    fiduciary or other person charged with the care of the
23    person or property of such individual.
24        (3) Estates and trusts. Returns or notices required of
25    an estate or a trust shall be made by the fiduciary
26    thereof.

 

 

10200SB2531sam001- 184 -LRB102 15312 HLH 24505 a

1        (4) Receivers, trustees and assignees for
2    corporations. In a case where a receiver, trustee in
3    bankruptcy, or assignee, by order of a court of competent
4    jurisdiction, by operation of law, or otherwise, has
5    possession of or holds title to all or substantially all
6    the property or business of a corporation, whether or not
7    such property or business is being operated, such
8    receiver, trustee, or assignee shall make the returns and
9    notices required of such corporation in the same manner
10    and form as corporations are required to make such returns
11    and notices.
12    (c) Joint returns by husband and wife.
13        (1) Except as provided in paragraph (3):
14            (A) if a husband and wife file a joint federal
15        income tax return for a taxable year ending before
16        December 31, 2009, they shall file a joint return
17        under this Act for such taxable year and their
18        liabilities shall be joint and several;
19            (B) if a husband and wife file a joint federal
20        income tax return for a taxable year ending on or after
21        December 31, 2009, they may elect to file separate
22        returns under this Act for such taxable year. The
23        election under this paragraph must be made on or
24        before the due date (including extensions) of the
25        return and, once made, shall be irrevocable. If no
26        election is timely made under this paragraph for a

 

 

10200SB2531sam001- 185 -LRB102 15312 HLH 24505 a

1        taxable year:
2                (i) the couple must file a joint return under
3            this Act for such taxable year,
4                (ii) their liabilities shall be joint and
5            several, and
6                (iii) any overpayment for that taxable year
7            may be withheld under Section 909 of this Act or
8            under Section 2505-275 of the Civil Administrative
9            Code of Illinois and applied against a debt of
10            either spouse without regard to the amount of the
11            overpayment attributable to the other spouse; and
12            (C) if the federal income tax liability of either
13        spouse is determined on a separate federal income tax
14        return, they shall file separate returns under this
15        Act.
16        (2) If neither spouse is required to file a federal
17    income tax return and either or both are required to file a
18    return under this Act, they may elect to file separate or
19    joint returns and pursuant to such election their
20    liabilities shall be separate or joint and several.
21        (3) If either husband or wife is a resident and the
22    other is a nonresident, they shall file separate returns
23    in this State on such forms as may be required by the
24    Department in which event their tax liabilities shall be
25    separate; but if they file a joint federal income tax
26    return for a taxable year, they may elect to determine

 

 

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1    their joint net income and file a joint return for that
2    taxable year under the provisions of paragraph (1) of this
3    subsection as if both were residents and in such case,
4    their liabilities shall be joint and several.
5        (4) Innocent spouses.
6            (A) However, for tax liabilities arising and paid
7        prior to August 13, 1999, an innocent spouse shall be
8        relieved of liability for tax (including interest and
9        penalties) for any taxable year for which a joint
10        return has been made, upon submission of proof that
11        the Internal Revenue Service has made a determination
12        under Section 6013(e) of the Internal Revenue Code,
13        for the same taxable year, which determination
14        relieved the spouse from liability for federal income
15        taxes. If there is no federal income tax liability at
16        issue for the same taxable year, the Department shall
17        rely on the provisions of Section 6013(e) to determine
18        whether the person requesting innocent spouse
19        abatement of tax, penalty, and interest is entitled to
20        that relief.
21            (B) For tax liabilities arising on and after
22        August 13, 1999 or which arose prior to that date, but
23        remain unpaid as of that date, if an individual who
24        filed a joint return for any taxable year has made an
25        election under this paragraph, the individual's
26        liability for any tax shown on the joint return shall

 

 

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1        not exceed the individual's separate return amount and
2        the individual's liability for any deficiency assessed
3        for that taxable year shall not exceed the portion of
4        the deficiency properly allocable to the individual.
5        For purposes of this paragraph:
6                (i) An election properly made pursuant to
7            Section 6015 of the Internal Revenue Code shall
8            constitute an election under this paragraph,
9            provided that the election shall not be effective
10            until the individual has notified the Department
11            of the election in the form and manner prescribed
12            by the Department.
13                (ii) If no election has been made under
14            Section 6015, the individual may make an election
15            under this paragraph in the form and manner
16            prescribed by the Department, provided that no
17            election may be made if the Department finds that
18            assets were transferred between individuals filing
19            a joint return as part of a scheme by such
20            individuals to avoid payment of Illinois income
21            tax and the election shall not eliminate the
22            individual's liability for any portion of a
23            deficiency attributable to an error on the return
24            of which the individual had actual knowledge as of
25            the date of filing.
26                (iii) In determining the separate return

 

 

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1            amount or portion of any deficiency attributable
2            to an individual, the Department shall follow the
3            provisions in subsections (c) and (d) of Section
4            6015 of the Internal Revenue Code.
5                (iv) In determining the validity of an
6            individual's election under subparagraph (ii) and
7            in determining an electing individual's separate
8            return amount or portion of any deficiency under
9            subparagraph (iii), any determination made by the
10            Secretary of the Treasury, by the United States
11            Tax Court on petition for review of a
12            determination by the Secretary of the Treasury, or
13            on appeal from the United States Tax Court under
14            Section 6015 of the Internal Revenue Code
15            regarding criteria for eligibility or under
16            subsection (d) of Section 6015 of the Internal
17            Revenue Code regarding the allocation of any item
18            of income, deduction, payment, or credit between
19            an individual making the federal election and that
20            individual's spouse shall be conclusively presumed
21            to be correct. With respect to any item that is not
22            the subject of a determination by the Secretary of
23            the Treasury or the federal courts, in any
24            proceeding involving this subsection, the
25            individual making the election shall have the
26            burden of proof with respect to any item except

 

 

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1            that the Department shall have the burden of proof
2            with respect to items in subdivision (ii).
3                (v) Any election made by an individual under
4            this subsection shall apply to all years for which
5            that individual and the spouse named in the
6            election have filed a joint return.
7                (vi) After receiving a notice that the federal
8            election has been made or after receiving an
9            election under subdivision (ii), the Department
10            shall take no collection action against the
11            electing individual for any liability arising from
12            a joint return covered by the election until the
13            Department has notified the electing individual in
14            writing that the election is invalid or of the
15            portion of the liability the Department has
16            allocated to the electing individual. Within 60
17            days (150 days if the individual is outside the
18            United States) after the issuance of such
19            notification, the individual may file a written
20            protest of the denial of the election or of the
21            Department's determination of the liability
22            allocated to him or her and shall be granted a
23            hearing within the Department under the provisions
24            of Section 908. If a protest is filed, the
25            Department shall take no collection action against
26            the electing individual until the decision

 

 

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1            regarding the protest has become final under
2            subsection (d) of Section 908 or, if
3            administrative review of the Department's decision
4            is requested under Section 1201, until the
5            decision of the court becomes final.
6    (d) Partnerships. Every partnership having any base income
7allocable to this State in accordance with section 305(c)
8shall retain information concerning all items of income, gain,
9loss and deduction; the names and addresses of all of the
10partners, or names and addresses of members of a limited
11liability company, or other persons who would be entitled to
12share in the base income of the partnership if distributed;
13the amount of the distributive share of each; and such other
14pertinent information as the Department may by forms or
15regulations prescribe. The partnership shall make that
16information available to the Department when requested by the
17Department.
18    (e) For taxable years ending on or after December 31,
191985, and before December 31, 1993, taxpayers that are
20corporations (other than Subchapter S corporations) having the
21same taxable year and that are members of the same unitary
22business group may elect to be treated as one taxpayer for
23purposes of any original return, amended return which includes
24the same taxpayers of the unitary group which joined in the
25election to file the original return, extension, claim for
26refund, assessment, collection and payment and determination

 

 

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1of the group's tax liability under this Act. This subsection
2(e) does not permit the election to be made for some, but not
3all, of the purposes enumerated above. For taxable years
4ending on or after December 31, 1987, corporate members (other
5than Subchapter S corporations) of the same unitary business
6group making this subsection (e) election are not required to
7have the same taxable year.
8    For taxable years ending on or after December 31, 1993,
9taxpayers that are corporations (other than Subchapter S
10corporations) and that are members of the same unitary
11business group shall be treated as one taxpayer for purposes
12of any original return, amended return which includes the same
13taxpayers of the unitary group which joined in filing the
14original return, extension, claim for refund, assessment,
15collection and payment and determination of the group's tax
16liability under this Act.
17    (f) For taxable years ending prior to December 31, 2014,
18the Department may promulgate regulations to permit
19nonresident individual partners of the same partnership,
20nonresident Subchapter S corporation shareholders of the same
21Subchapter S corporation, and nonresident individuals
22transacting an insurance business in Illinois under a Lloyds
23plan of operation, and nonresident individual members of the
24same limited liability company that is treated as a
25partnership under Section 1501 (a)(16) of this Act, to file
26composite individual income tax returns reflecting the

 

 

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1composite income of such individuals allocable to Illinois and
2to make composite individual income tax payments. For taxable
3years ending prior to December 31, 2014, the Department may by
4regulation also permit such composite returns to include the
5income tax owed by Illinois residents attributable to their
6income from partnerships, Subchapter S corporations, insurance
7businesses organized under a Lloyds plan of operation, or
8limited liability companies that are treated as partnership
9under Section 1501(a)(16) of this Act, in which case such
10Illinois residents will be permitted to claim credits on their
11individual returns for their shares of the composite tax
12payments. This paragraph of subsection (f) applies to taxable
13years ending on or after December 31, 1987 and ending prior to
14December 31, 2014.
15    For taxable years ending on or after December 31, 1999,
16the Department may, by regulation, permit any persons
17transacting an insurance business organized under a Lloyds
18plan of operation to file composite returns reflecting the
19income of such persons allocable to Illinois and the tax rates
20applicable to such persons under Section 201 and to make
21composite tax payments and shall, by regulation, also provide
22that the income and apportionment factors attributable to the
23transaction of an insurance business organized under a Lloyds
24plan of operation by any person joining in the filing of a
25composite return shall, for purposes of allocating and
26apportioning income under Article 3 of this Act and computing

 

 

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1net income under Section 202 of this Act, be excluded from any
2other income and apportionment factors of that person or of
3any unitary business group, as defined in subdivision (a)(27)
4of Section 1501, to which that person may belong.
5    For taxable years ending on or after December 31, 2008,
6every nonresident shall be allowed a credit against his or her
7liability under subsections (a) and (b) of Section 201 for any
8amount of tax reported on a composite return and paid on his or
9her behalf under this subsection (f). Residents (other than
10persons transacting an insurance business organized under a
11Lloyds plan of operation) may claim a credit for taxes
12reported on a composite return and paid on their behalf under
13this subsection (f) only as permitted by the Department by
14rule.
15    (f-5) For taxable years ending on or after December 31,
162008, the Department may adopt rules to provide that, when a
17partnership or Subchapter S corporation has made an error in
18determining the amount of any item of income, deduction,
19addition, subtraction, or credit required to be reported on
20its return that affects the liability imposed under this Act
21on a partner or shareholder, the partnership or Subchapter S
22corporation may report the changes in liabilities of its
23partners or shareholders and claim a refund of the resulting
24overpayments, or pay the resulting underpayments, on behalf of
25its partners and shareholders.
26    (g) The Department may adopt rules to authorize the

 

 

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1electronic filing of any return required to be filed under
2this Section.
3(Source: P.A. 97-507, eff. 8-23-11; 98-478, eff. 1-1-14.)
 
4    (Text of Section with the changes made by P.A. 101-8,
5which did not take effect (see Section 99 of P.A. 101-8))
6    Sec. 502. Returns and notices.
7    (a) In general. A return with respect to the taxes imposed
8by this Act shall be made by every person for any taxable year:
9        (1) for which such person is liable for a tax imposed
10    by this Act, or
11        (2) in the case of a resident or in the case of a
12    corporation which is qualified to do business in this
13    State, for which such person is required to make a federal
14    income tax return, regardless of whether such person is
15    liable for a tax imposed by this Act. However, this
16    paragraph shall not require a resident to make a return if
17    such person has an Illinois base income of the basic
18    amount in Section 204(b) or less and is either claimed as a
19    dependent on another person's tax return under the
20    Internal Revenue Code, or is claimed as a dependent on
21    another person's tax return under this Act.
22    Notwithstanding the provisions of paragraph (1), a
23nonresident (other than, for taxable years ending on or after
24December 31, 2011, a nonresident required to withhold tax
25under Section 709.5) whose Illinois income tax liability under

 

 

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1subsections (a), (b), (c), and (d) of Section 201 of this Act
2is paid in full after taking into account the credits allowed
3under subsection (f) of this Section or allowed under Section
4709.5 of this Act shall not be required to file a return under
5this subsection (a). In addition, a nonresident individual
6with no Illinois income tax liability under subsections (a),
7(b), (c), and (d) of Section 201 of this Act after taking into
8account the modifications in subsections (a)(2)(II) and
9(a)(2)(JJ) of Section 203 shall not be required to file a
10return under this subsection (a).
11    (b) Fiduciaries and receivers.
12        (1) Decedents. If an individual is deceased, any
13    return or notice required of such individual under this
14    Act shall be made by his executor, administrator, or other
15    person charged with the property of such decedent.
16        (2) Individuals under a disability. If an individual
17    is unable to make a return or notice required under this
18    Act, the return or notice required of such individual
19    shall be made by his duly authorized agent, guardian,
20    fiduciary or other person charged with the care of the
21    person or property of such individual.
22        (3) Estates and trusts. Returns or notices required of
23    an estate or a trust shall be made by the fiduciary
24    thereof.
25        (4) Receivers, trustees and assignees for
26    corporations. In a case where a receiver, trustee in

 

 

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1    bankruptcy, or assignee, by order of a court of competent
2    jurisdiction, by operation of law, or otherwise, has
3    possession of or holds title to all or substantially all
4    the property or business of a corporation, whether or not
5    such property or business is being operated, such
6    receiver, trustee, or assignee shall make the returns and
7    notices required of such corporation in the same manner
8    and form as corporations are required to make such returns
9    and notices.
10    (c) Joint returns by husband and wife spouses.
11        (1) Except as provided in paragraph (3):
12            (A) if a husband and wife spouses file a joint
13        federal income tax return for a taxable year ending
14        before December 31, 2009 or ending on or after
15        December 31, 2021, they shall file a joint return
16        under this Act for such taxable year and their
17        liabilities shall be joint and several;
18            (B) if a husband and wife spouses file a joint
19        federal income tax return for a taxable year ending on
20        or after December 31, 2009 and ending prior to
21        December 31, 2021, they may elect to file separate
22        returns under this Act for such taxable year. The
23        election under this paragraph must be made on or
24        before the due date (including extensions) of the
25        return and, once made, shall be irrevocable. If no
26        election is timely made under this paragraph for a

 

 

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1        taxable year:
2                (i) the couple must file a joint return under
3            this Act for such taxable year,
4                (ii) their liabilities shall be joint and
5            several, and
6                (iii) any overpayment for that taxable year
7            may be withheld under Section 909 of this Act or
8            under Section 2505-275 of the Civil Administrative
9            Code of Illinois and applied against a debt of
10            either spouse without regard to the amount of the
11            overpayment attributable to the other spouse; and
12            (C) if the federal income tax liability of either
13        spouse is determined on a separate federal income tax
14        return, they shall file separate returns under this
15        Act.
16        (2) If neither spouse is required to file a federal
17    income tax return and either or both are required to file a
18    return under this Act, they may elect to file separate or
19    joint returns and pursuant to such election their
20    liabilities shall be separate or joint and several.
21        (3) If either husband or wife spouse is a resident and
22    the other is a nonresident, they shall file separate
23    returns in this State on such forms as may be required by
24    the Department in which event their tax liabilities shall
25    be separate; but if they file a joint federal income tax
26    return for a taxable year, they may elect to determine

 

 

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1    their joint net income and file a joint return for that
2    taxable year under the provisions of paragraph (1) of this
3    subsection as if both were residents and in such case,
4    their liabilities shall be joint and several.
5        (4) Innocent spouses.
6            (A) However, for tax liabilities arising and paid
7        prior to August 13, 1999, an innocent spouse shall be
8        relieved of liability for tax (including interest and
9        penalties) for any taxable year for which a joint
10        return has been made, upon submission of proof that
11        the Internal Revenue Service has made a determination
12        under Section 6013(e) of the Internal Revenue Code,
13        for the same taxable year, which determination
14        relieved the spouse from liability for federal income
15        taxes. If there is no federal income tax liability at
16        issue for the same taxable year, the Department shall
17        rely on the provisions of Section 6013(e) to determine
18        whether the person requesting innocent spouse
19        abatement of tax, penalty, and interest is entitled to
20        that relief.
21            (B) For tax liabilities arising on and after
22        August 13, 1999 or which arose prior to that date, but
23        remain unpaid as of that date, if an individual who
24        filed a joint return for any taxable year has made an
25        election under this paragraph, the individual's
26        liability for any tax shown on the joint return shall

 

 

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1        not exceed the individual's separate return amount and
2        the individual's liability for any deficiency assessed
3        for that taxable year shall not exceed the portion of
4        the deficiency properly allocable to the individual.
5        For purposes of this paragraph:
6                (i) An election properly made pursuant to
7            Section 6015 of the Internal Revenue Code shall
8            constitute an election under this paragraph,
9            provided that the election shall not be effective
10            until the individual has notified the Department
11            of the election in the form and manner prescribed
12            by the Department.
13                (ii) If no election has been made under
14            Section 6015, the individual may make an election
15            under this paragraph in the form and manner
16            prescribed by the Department, provided that no
17            election may be made if the Department finds that
18            assets were transferred between individuals filing
19            a joint return as part of a scheme by such
20            individuals to avoid payment of Illinois income
21            tax and the election shall not eliminate the
22            individual's liability for any portion of a
23            deficiency attributable to an error on the return
24            of which the individual had actual knowledge as of
25            the date of filing.
26                (iii) In determining the separate return

 

 

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1            amount or portion of any deficiency attributable
2            to an individual, the Department shall follow the
3            provisions in subsections (c) and (d) of Section
4            6015 of the Internal Revenue Code.
5                (iv) In determining the validity of an
6            individual's election under subparagraph (ii) and
7            in determining an electing individual's separate
8            return amount or portion of any deficiency under
9            subparagraph (iii), any determination made by the
10            Secretary of the Treasury, by the United States
11            Tax Court on petition for review of a
12            determination by the Secretary of the Treasury, or
13            on appeal from the United States Tax Court under
14            Section 6015 of the Internal Revenue Code
15            regarding criteria for eligibility or under
16            subsection (d) of Section 6015 of the Internal
17            Revenue Code regarding the allocation of any item
18            of income, deduction, payment, or credit between
19            an individual making the federal election and that
20            individual's spouse shall be conclusively presumed
21            to be correct. With respect to any item that is not
22            the subject of a determination by the Secretary of
23            the Treasury or the federal courts, in any
24            proceeding involving this subsection, the
25            individual making the election shall have the
26            burden of proof with respect to any item except

 

 

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1            that the Department shall have the burden of proof
2            with respect to items in subdivision (ii).
3                (v) Any election made by an individual under
4            this subsection shall apply to all years for which
5            that individual and the spouse named in the
6            election have filed a joint return.
7                (vi) After receiving a notice that the federal
8            election has been made or after receiving an
9            election under subdivision (ii), the Department
10            shall take no collection action against the
11            electing individual for any liability arising from
12            a joint return covered by the election until the
13            Department has notified the electing individual in
14            writing that the election is invalid or of the
15            portion of the liability the Department has
16            allocated to the electing individual. Within 60
17            days (150 days if the individual is outside the
18            United States) after the issuance of such
19            notification, the individual may file a written
20            protest of the denial of the election or of the
21            Department's determination of the liability
22            allocated to him or her and shall be granted a
23            hearing within the Department under the provisions
24            of Section 908. If a protest is filed, the
25            Department shall take no collection action against
26            the electing individual until the decision

 

 

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1            regarding the protest has become final under
2            subsection (d) of Section 908 or, if
3            administrative review of the Department's decision
4            is requested under Section 1201, until the
5            decision of the court becomes final.
6    (d) Partnerships. Every partnership having any base income
7allocable to this State in accordance with section 305(c)
8shall retain information concerning all items of income, gain,
9loss and deduction; the names and addresses of all of the
10partners, or names and addresses of members of a limited
11liability company, or other persons who would be entitled to
12share in the base income of the partnership if distributed;
13the amount of the distributive share of each; and such other
14pertinent information as the Department may by forms or
15regulations prescribe. The partnership shall make that
16information available to the Department when requested by the
17Department.
18    (e) For taxable years ending on or after December 31,
191985, and before December 31, 1993, taxpayers that are
20corporations (other than Subchapter S corporations) having the
21same taxable year and that are members of the same unitary
22business group may elect to be treated as one taxpayer for
23purposes of any original return, amended return which includes
24the same taxpayers of the unitary group which joined in the
25election to file the original return, extension, claim for
26refund, assessment, collection and payment and determination

 

 

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1of the group's tax liability under this Act. This subsection
2(e) does not permit the election to be made for some, but not
3all, of the purposes enumerated above. For taxable years
4ending on or after December 31, 1987, corporate members (other
5than Subchapter S corporations) of the same unitary business
6group making this subsection (e) election are not required to
7have the same taxable year.
8    For taxable years ending on or after December 31, 1993,
9taxpayers that are corporations (other than Subchapter S
10corporations) and that are members of the same unitary
11business group shall be treated as one taxpayer for purposes
12of any original return, amended return which includes the same
13taxpayers of the unitary group which joined in filing the
14original return, extension, claim for refund, assessment,
15collection and payment and determination of the group's tax
16liability under this Act.
17    (f) For taxable years ending prior to December 31, 2014,
18the Department may promulgate regulations to permit
19nonresident individual partners of the same partnership,
20nonresident Subchapter S corporation shareholders of the same
21Subchapter S corporation, and nonresident individuals
22transacting an insurance business in Illinois under a Lloyds
23plan of operation, and nonresident individual members of the
24same limited liability company that is treated as a
25partnership under Section 1501 (a)(16) of this Act, to file
26composite individual income tax returns reflecting the

 

 

10200SB2531sam001- 204 -LRB102 15312 HLH 24505 a

1composite income of such individuals allocable to Illinois and
2to make composite individual income tax payments. For taxable
3years ending prior to December 31, 2014, the Department may by
4regulation also permit such composite returns to include the
5income tax owed by Illinois residents attributable to their
6income from partnerships, Subchapter S corporations, insurance
7businesses organized under a Lloyds plan of operation, or
8limited liability companies that are treated as partnership
9under Section 1501(a)(16) of this Act, in which case such
10Illinois residents will be permitted to claim credits on their
11individual returns for their shares of the composite tax
12payments. This paragraph of subsection (f) applies to taxable
13years ending on or after December 31, 1987 and ending prior to
14December 31, 2014.
15    For taxable years ending on or after December 31, 1999,
16the Department may, by regulation, permit any persons
17transacting an insurance business organized under a Lloyds
18plan of operation to file composite returns reflecting the
19income of such persons allocable to Illinois and the tax rates
20applicable to such persons under Section 201 and to make
21composite tax payments and shall, by regulation, also provide
22that the income and apportionment factors attributable to the
23transaction of an insurance business organized under a Lloyds
24plan of operation by any person joining in the filing of a
25composite return shall, for purposes of allocating and
26apportioning income under Article 3 of this Act and computing

 

 

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1net income under Section 202 of this Act, be excluded from any
2other income and apportionment factors of that person or of
3any unitary business group, as defined in subdivision (a)(27)
4of Section 1501, to which that person may belong.
5    For taxable years ending on or after December 31, 2008,
6every nonresident shall be allowed a credit against his or her
7liability under subsections (a) and (b) of Section 201 for any
8amount of tax reported on a composite return and paid on his or
9her behalf under this subsection (f). Residents (other than
10persons transacting an insurance business organized under a
11Lloyds plan of operation) may claim a credit for taxes
12reported on a composite return and paid on their behalf under
13this subsection (f) only as permitted by the Department by
14rule.
15    (f-5) For taxable years ending on or after December 31,
162008, the Department may adopt rules to provide that, when a
17partnership or Subchapter S corporation has made an error in
18determining the amount of any item of income, deduction,
19addition, subtraction, or credit required to be reported on
20its return that affects the liability imposed under this Act
21on a partner or shareholder, the partnership or Subchapter S
22corporation may report the changes in liabilities of its
23partners or shareholders and claim a refund of the resulting
24overpayments, or pay the resulting underpayments, on behalf of
25its partners and shareholders.
26    (g) The Department may adopt rules to authorize the

 

 

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1electronic filing of any return required to be filed under
2this Section.
3(Source: P.A. 101-8, see Section 99 for effective date.)
 
4    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)
5    Sec. 601. Payment on due date of return.
6    (a) In general. Every taxpayer required to file a return
7under this Act shall, without assessment, notice or demand,
8pay any tax due thereon to the Department, at the place fixed
9for filing, on or before the date fixed for filing such return
10(determined without regard to any extension of time for filing
11the return) pursuant to regulations prescribed by the
12Department. If, however, the due date for payment of a
13taxpayer's federal income tax liability for a tax year (as
14provided in the Internal Revenue Code or by Treasury
15regulation, or as extended by the Internal Revenue Service) is
16later than the date fixed for filing the taxpayer's Illinois
17income tax return for that tax year, the Department may, by
18rule, prescribe a due date for payment that is not later than
19the due date for payment of the taxpayer's federal income tax
20liability. For purposes of the Illinois Administrative
21Procedure Act, the adoption of rules to prescribe a later due
22date for payment shall be deemed an emergency and necessary
23for the public interest, safety, and welfare.
24    (b) Amount payable. In making payment as provided in this
25section there shall remain payable only the balance of such

 

 

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1tax remaining due after giving effect to the following:
2        (1) Withheld tax. Any amount withheld during any
3    calendar year pursuant to Article 7 from compensation paid
4    to a taxpayer shall be deemed to have been paid on account
5    of any tax imposed by subsections 201(a) and (b) of this
6    Act on such taxpayer for his taxable year beginning in
7    such calendar year. If more than one taxable year begins
8    in a calendar year, such amount shall be deemed to have
9    been paid on account of such tax for the last taxable year
10    so beginning.
11        (2) Estimated and tentative tax payments. Any amount
12    of estimated tax paid by a taxpayer pursuant to Article 8
13    for a taxable year shall be deemed to have been paid on
14    account of the tax imposed by this Act for such taxable
15    year.
16        (3) Foreign tax. The aggregate amount of tax which is
17    imposed upon or measured by income and which is paid by a
18    resident for a taxable year to another state or states on
19    income which is also subject to the tax imposed by
20    subsections 201(a) and (b) of this Act shall be credited
21    against the tax imposed by subsections 201(a) and (b)
22    otherwise due under this Act for such taxable year. For
23    taxable years ending prior to December 31, 2009, the
24    aggregate credit provided under this paragraph 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

 

 

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1    this Act as the amount of the taxpayer's base income
2    subject to tax both by such other state or states and by
3    this State bears to his total base income subject to tax by
4    this State for the taxable year. For taxable years ending
5    on or after December 31, 2009, the credit provided under
6    this paragraph for tax paid to other states shall not
7    exceed that amount which bears the same ratio to the tax
8    imposed by subsections 201(a) and (b) otherwise due under
9    this Act as the amount of the taxpayer's base income that
10    would be allocated or apportioned to other states if all
11    other states had adopted the provisions in Article 3 of
12    this Act bears to the taxpayer's total base income subject
13    to tax by this State for the taxable year. This subsection
14    is exempt from the 30-day threshold set forth in
15    subparagraph (iii) of paragraph (B) of item (2) of
16    subsection (a) of Section 304. The credit provided by this
17    paragraph shall not be allowed if any creditable tax was
18    deducted in determining base income for the taxable year.
19    For taxable years beginning on or after January 1, 2021,
20    the amount of tax available for computing this credit
21    shall include a taxpayer's share as a partner and
22    Subchapter S corporation shareholder of taxes based on
23    income that are imposed on partnerships and Subchapter S
24    corporations in which the taxpayer is a direct or indirect
25    owner. Any person claiming such credit shall attach a
26    statement in support thereof and shall notify the Director

 

 

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1    of any refund or reductions in the amount of tax claimed as
2    a credit hereunder all in such manner and at such time as
3    the Department shall by regulations prescribe.
4        (4) Accumulation and capital gain distributions. If
5    the net income of a taxpayer includes amounts included in
6    his base income by reason of Section 667 of the Internal
7    Revenue Code (relating to accumulation and capital gain
8    distributions by a trust, respectively), the tax imposed
9    on such taxpayer by this Act shall be credited with his pro
10    rata portion of the taxes imposed by this Act on such trust
11    for preceding taxable years which would not have been
12    payable for such preceding years if the trust had in fact
13    made distributions to its beneficiaries at the times and
14    in the amounts specified in Sections 666 and 669 of the
15    Internal Revenue Code. The credit provided by this
16    paragraph shall not reduce the tax otherwise due from the
17    taxpayer to an amount less than that which would be due if
18    the amounts included by reason of Section 667 of the
19    Internal Revenue Code were excluded from his or her base
20    income.
21    (c) Cross reference. For application against tax due of
22overpayments of tax for a prior year, see Section 909.
23(Source: P.A. 101-585, eff. 8-26-19.)
 
24    (35 ILCS 5/709.5)
25    Sec. 709.5. Withholding by partnerships, Subchapter S

 

 

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1corporations, and trusts.
2    (a) In general. For each taxable year ending on or after
3December 31, 2008, every partnership (other than a publicly
4traded partnership under Section 7704 of the Internal Revenue
5Code or investment partnership), Subchapter S corporation, and
6trust must withhold from each nonresident partner,
7shareholder, or beneficiary (other than a partner,
8shareholder, or beneficiary who is exempt from tax under
9Section 501(a) of the Internal Revenue Code or under Section
10205 of this Act, who is included on a composite return filed by
11the partnership or Subchapter S corporation for the taxable
12year under subsection (f) of Section 502 of this Act), or who
13is a retired partner, to the extent that partner's
14distributions are exempt from tax under Section 203(a)(2)(F)
15of this Act) an amount equal to the sum of (i) the share of
16business income of the partnership, Subchapter S corporation,
17or trust apportionable to Illinois plus (ii) for taxable years
18ending on or after December 31, 2014, the share of nonbusiness
19income of the partnership, Subchapter S corporation, or trust
20allocated to Illinois under Section 303 of this Act (other
21than an amount allocated to the commercial domicile of the
22taxpayer under Section 303 of this Act) that is distributable
23to that partner, shareholder, or beneficiary under Sections
24702 and 704 and Subchapter S of the Internal Revenue Code,
25whether or not distributed, (iii) multiplied by the applicable
26rates of tax for that partner, shareholder, or beneficiary

 

 

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1under subsections (a) through (d) of Section 201 of this Act,
2and (iv) net of the share of any credit under Article 2 of this
3Act that is distributable by the partnership, Subchapter S
4corporation, or trust and allowable against the tax liability
5of that partner, shareholder, or beneficiary for a taxable
6year ending on or after December 31, 2014. This Section shall
7not apply for a partnership or Subchapter S corporation that
8has elected the tax under subsection (d-2) of Section 201,
9except a partnership that has elected the tax under subsection
10(d-2) of Section 201 must withhold under this section on
11behalf of any pass-through owner that is a partnership.
12    (b) Credit for taxes withheld. Any amount withheld under
13subsection (a) of this Section and paid to the Department
14shall be treated as a payment of the estimated tax liability or
15of the liability for withholding under this Section of the
16partner, shareholder, or beneficiary to whom the income is
17distributable for the taxable year in which that person
18incurred a liability under this Act with respect to that
19income. The Department shall adopt rules pursuant to which a
20partner, shareholder, or beneficiary may claim a credit
21against its obligation for withholding under this Section for
22amounts withheld under this Section with respect to income
23distributable to it by a partnership, Subchapter S
24corporation, or trust and allowing its partners, shareholders,
25or beneficiaries to claim a credit under this subsection (b)
26for those withheld amounts.

 

 

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1    (c) Exemption from withholding.
2        (1) A partnership, Subchapter S corporation, or trust
3    shall not be required to withhold tax under subsection (a)
4    of this Section with respect to any nonresident partner,
5    shareholder, or beneficiary (other than an individual)
6    from whom the partnership, S corporation, or trust has
7    received a certificate, completed in the form and manner
8    prescribed by the Department, stating that such
9    nonresident partner, shareholder, or beneficiary shall:
10            (A) file all returns that the partner,
11        shareholder, or beneficiary is required to file under
12        Section 502 of this Act and make timely payment of all
13        taxes imposed under Section 201 of this Act or under
14        this Section on the partner, shareholder, or
15        beneficiary with respect to income of the partnership,
16        S corporation, or trust; and
17            (B) be subject to personal jurisdiction in this
18        State for purposes of the collection of income taxes,
19        together with related interest and penalties, imposed
20        on the partner, shareholder, or beneficiary with
21        respect to the income of the partnership, S
22        corporation, or trust.
23        (2) The Department may revoke the exemption provided
24    by this subsection (c) at any time that it determines that
25    the nonresident partner, shareholder, or beneficiary is
26    not abiding by the terms of the certificate. The

 

 

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1    Department shall notify the partnership, S corporation, or
2    trust that it has revoked a certificate by notice left at
3    the usual place of business of the partnership, S
4    corporation, or trust or by mail to the last known address
5    of the partnership, S corporation, or trust.
6        (3) A partnership, S corporation, or trust that
7    receives a certificate under this subsection (c) properly
8    completed by a nonresident partner, shareholder, or
9    beneficiary shall not be required to withhold any amount
10    from that partner, shareholder, or beneficiary, the
11    payment of which would be due under Section 711(a-5) of
12    this Act after the receipt of the certificate and no
13    earlier than 60 days after the Department has notified the
14    partnership, S corporation, or trust that the certificate
15    has been revoked.
16        (4) Certificates received by a partnership, S
17    corporation, or trust under this subsection (c) must be
18    retained by the partnership, S corporation, or trust and a
19    record of such certificates must be provided to the
20    Department, in a format in which the record is available
21    for review by the Department, upon request by the
22    Department. The Department may, by rule, require the
23    record of certificates to be maintained and provided to
24    the Department electronically.
25(Source: P.A. 100-201, eff. 8-18-17.)
 

 

 

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1    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
2    Sec. 1501. Definitions.
3    (a) In general. When used in this Act, where not otherwise
4distinctly expressed or manifestly incompatible with the
5intent thereof:
6        (1) Business income. The term "business income" means
7    all income that may be treated as apportionable business
8    income under the Constitution of the United States.
9    Business income is net of the deductions allocable
10    thereto. Such term does not include compensation or the
11    deductions allocable thereto. For each taxable year
12    beginning on or after January 1, 2003, a taxpayer may
13    elect to treat all income other than compensation as
14    business income. This election shall be made in accordance
15    with rules adopted by the Department and, once made, shall
16    be irrevocable.
17        (1.5) Captive real estate investment trust:
18            (A) The term "captive real estate investment
19        trust" means a corporation, trust, or association:
20                (i) that is considered a real estate
21            investment trust for the taxable year under
22            Section 856 of the Internal Revenue Code;
23                (ii) the certificates of beneficial interest
24            or shares of which are not regularly traded on an
25            established securities market; and
26                (iii) of which more than 50% of the voting

 

 

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1            power or value of the beneficial interest or
2            shares, at any time during the last half of the
3            taxable year, is owned or controlled, directly,
4            indirectly, or constructively, by a single
5            corporation.
6            (B) The term "captive real estate investment
7        trust" does not include:
8                (i) a real estate investment trust of which
9            more than 50% of the voting power or value of the
10            beneficial interest or shares is owned or
11            controlled, directly, indirectly, or
12            constructively, by:
13                    (a) a real estate investment trust, other
14                than a captive real estate investment trust;
15                    (b) a person who is exempt from taxation
16                under Section 501 of the Internal Revenue
17                Code, and who is not required to treat income
18                received from the real estate investment trust
19                as unrelated business taxable income under
20                Section 512 of the Internal Revenue Code;
21                    (c) a listed Australian property trust, if
22                no more than 50% of the voting power or value
23                of the beneficial interest or shares of that
24                trust, at any time during the last half of the
25                taxable year, is owned or controlled, directly
26                or indirectly, by a single person;

 

 

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1                    (d) an entity organized as a trust,
2                provided a listed Australian property trust
3                described in subparagraph (c) owns or
4                controls, directly or indirectly, or
5                constructively, 75% or more of the voting
6                power or value of the beneficial interests or
7                shares of such entity; or
8                    (e) an entity that is organized outside of
9                the laws of the United States and that
10                satisfies all of the following criteria:
11                        (1) at least 75% of the entity's total
12                    asset value at the close of its taxable
13                    year is represented by real estate assets
14                    (as defined in Section 856(c)(5)(B) of the
15                    Internal Revenue Code, thereby including
16                    shares or certificates of beneficial
17                    interest in any real estate investment
18                    trust), cash and cash equivalents, and
19                    U.S. Government securities;
20                        (2) the entity is not subject to tax
21                    on amounts that are distributed to its
22                    beneficial owners or is exempt from
23                    entity-level taxation;
24                        (3) the entity distributes at least
25                    85% of its taxable income (as computed in
26                    the jurisdiction in which it is organized)

 

 

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1                    to the holders of its shares or
2                    certificates of beneficial interest on an
3                    annual basis;
4                        (4) either (i) the shares or
5                    beneficial interests of the entity are
6                    regularly traded on an established
7                    securities market or (ii) not more than
8                    10% of the voting power or value in the
9                    entity is held, directly, indirectly, or
10                    constructively, by a single entity or
11                    individual; and
12                        (5) the entity is organized in a
13                    country that has entered into a tax treaty
14                    with the United States; or
15                (ii) during its first taxable year for which
16            it elects to be treated as a real estate
17            investment trust under Section 856(c)(1) of the
18            Internal Revenue Code, a real estate investment
19            trust the certificates of beneficial interest or
20            shares of which are not regularly traded on an
21            established securities market, but only if the
22            certificates of beneficial interest or shares of
23            the real estate investment trust are regularly
24            traded on an established securities market prior
25            to the earlier of the due date (including
26            extensions) for filing its return under this Act

 

 

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1            for that first taxable year or the date it
2            actually files that return.
3            (C) For the purposes of this subsection (1.5), the
4        constructive ownership rules prescribed under Section
5        318(a) of the Internal Revenue Code, as modified by
6        Section 856(d)(5) of the Internal Revenue Code, apply
7        in determining the ownership of stock, assets, or net
8        profits of any person.
9            (D) For the purposes of this item (1.5), for
10        taxable years ending on or after August 16, 2007, the
11        voting power or value of the beneficial interest or
12        shares of a real estate investment trust does not
13        include any voting power or value of beneficial
14        interest or shares in a real estate investment trust
15        held directly or indirectly in a segregated asset
16        account by a life insurance company (as described in
17        Section 817 of the Internal Revenue Code) to the
18        extent such voting power or value is for the benefit of
19        entities or persons who are either immune from
20        taxation or exempt from taxation under subtitle A of
21        the Internal Revenue Code.
22        (2) Commercial domicile. The term "commercial
23    domicile" means the principal place from which the trade
24    or business of the taxpayer is directed or managed.
25        (3) Compensation. The term "compensation" means wages,
26    salaries, commissions and any other form of remuneration

 

 

10200SB2531sam001- 219 -LRB102 15312 HLH 24505 a

1    paid to employees for personal services.
2        (4) Corporation. The term "corporation" includes
3    associations, joint-stock companies, insurance companies
4    and cooperatives. Any entity, including a limited
5    liability company formed under the Illinois Limited
6    Liability Company Act, shall be treated as a corporation
7    if it is so classified for federal income tax purposes.
8        (5) Department. The term "Department" means the
9    Department of Revenue of this State.
10        (6) Director. The term "Director" means the Director
11    of Revenue of this State.
12        (7) Fiduciary. The term "fiduciary" means a guardian,
13    trustee, executor, administrator, receiver, or any person
14    acting in any fiduciary capacity for any person.
15        (8) Financial organization.
16            (A) The term "financial organization" means any
17        bank, bank holding company, trust company, savings
18        bank, industrial bank, land bank, safe deposit
19        company, private banker, savings and loan association,
20        building and loan association, credit union, currency
21        exchange, cooperative bank, small loan company, sales
22        finance company, investment company, or any person
23        which is owned by a bank or bank holding company. For
24        the purpose of this Section a "person" will include
25        only those persons which a bank holding company may
26        acquire and hold an interest in, directly or

 

 

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1        indirectly, under the provisions of the Bank Holding
2        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
3        where interests in any person must be disposed of
4        within certain required time limits under the Bank
5        Holding Company Act of 1956.
6            (B) For purposes of subparagraph (A) of this
7        paragraph, the term "bank" includes (i) any entity
8        that is regulated by the Comptroller of the Currency
9        under the National Bank Act, or by the Federal Reserve
10        Board, or by the Federal Deposit Insurance Corporation
11        and (ii) any federally or State chartered bank
12        operating as a credit card bank.
13            (C) For purposes of subparagraph (A) of this
14        paragraph, the term "sales finance company" has the
15        meaning provided in the following item (i) or (ii):
16                (i) A person primarily engaged in one or more
17            of the following businesses: the business of
18            purchasing customer receivables, the business of
19            making loans upon the security of customer
20            receivables, the business of making loans for the
21            express purpose of funding purchases of tangible
22            personal property or services by the borrower, or
23            the business of finance leasing. For purposes of
24            this item (i), "customer receivable" means:
25                    (a) a retail installment contract or
26                retail charge agreement within the meaning of

 

 

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1                the Sales Finance Agency Act, the Retail
2                Installment Sales Act, or the Motor Vehicle
3                Retail Installment Sales Act;
4                    (b) an installment, charge, credit, or
5                similar contract or agreement arising from the
6                sale of tangible personal property or services
7                in a transaction involving a deferred payment
8                price payable in one or more installments
9                subsequent to the sale; or
10                    (c) the outstanding balance of a contract
11                or agreement described in provisions (a) or
12                (b) of this item (i).
13                A customer receivable need not provide for
14            payment of interest on deferred payments. A sales
15            finance company may purchase a customer receivable
16            from, or make a loan secured by a customer
17            receivable to, the seller in the original
18            transaction or to a person who purchased the
19            customer receivable directly or indirectly from
20            that seller.
21                (ii) A corporation meeting each of the
22            following criteria:
23                    (a) the corporation must be a member of an
24                "affiliated group" within the meaning of
25                Section 1504(a) of the Internal Revenue Code,
26                determined without regard to Section 1504(b)

 

 

10200SB2531sam001- 222 -LRB102 15312 HLH 24505 a

1                of the Internal Revenue Code;
2                    (b) more than 50% of the gross income of
3                the corporation for the taxable year must be
4                interest income derived from qualifying loans.
5                A "qualifying loan" is a loan made to a member
6                of the corporation's affiliated group that
7                originates customer receivables (within the
8                meaning of item (i)) or to whom customer
9                receivables originated by a member of the
10                affiliated group have been transferred, to the
11                extent the average outstanding balance of
12                loans from that corporation to members of its
13                affiliated group during the taxable year do
14                not exceed the limitation amount for that
15                corporation. The "limitation amount" for a
16                corporation is the average outstanding
17                balances during the taxable year of customer
18                receivables (within the meaning of item (i))
19                originated by all members of the affiliated
20                group. If the average outstanding balances of
21                the loans made by a corporation to members of
22                its affiliated group exceed the limitation
23                amount, the interest income of that
24                corporation from qualifying loans shall be
25                equal to its interest income from loans to
26                members of its affiliated groups times a

 

 

10200SB2531sam001- 223 -LRB102 15312 HLH 24505 a

1                fraction equal to the limitation amount
2                divided by the average outstanding balances of
3                the loans made by that corporation to members
4                of its affiliated group;
5                    (c) the total of all shareholder's equity
6                (including, without limitation, paid-in
7                capital on common and preferred stock and
8                retained earnings) of the corporation plus the
9                total of all of its loans, advances, and other
10                obligations payable or owed to members of its
11                affiliated group may not exceed 20% of the
12                total assets of the corporation at any time
13                during the tax year; and
14                    (d) more than 50% of all interest-bearing
15                obligations of the affiliated group payable to
16                persons outside the group determined in
17                accordance with generally accepted accounting
18                principles must be obligations of the
19                corporation.
20            This amendatory Act of the 91st General Assembly
21        is declaratory of existing law.
22            (D) Subparagraphs (B) and (C) of this paragraph
23        are declaratory of existing law and apply
24        retroactively, for all tax years beginning on or
25        before December 31, 1996, to all original returns, to
26        all amended returns filed no later than 30 days after

 

 

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1        the effective date of this amendatory Act of 1996, and
2        to all notices issued on or before the effective date
3        of this amendatory Act of 1996 under subsection (a) of
4        Section 903, subsection (a) of Section 904, subsection
5        (e) of Section 909, or Section 912. A taxpayer that is
6        a "financial organization" that engages in any
7        transaction with an affiliate shall be a "financial
8        organization" for all purposes of this Act.
9            (E) For all tax years beginning on or before
10        December 31, 1996, a taxpayer that falls within the
11        definition of a "financial organization" under
12        subparagraphs (B) or (C) of this paragraph, but who
13        does not fall within the definition of a "financial
14        organization" under the Proposed Regulations issued by
15        the Department of Revenue on July 19, 1996, may
16        irrevocably elect to apply the Proposed Regulations
17        for all of those years as though the Proposed
18        Regulations had been lawfully promulgated, adopted,
19        and in effect for all of those years. For purposes of
20        applying subparagraphs (B) or (C) of this paragraph to
21        all of those years, the election allowed by this
22        subparagraph applies only to the taxpayer making the
23        election and to those members of the taxpayer's
24        unitary business group who are ordinarily required to
25        apportion business income under the same subsection of
26        Section 304 of this Act as the taxpayer making the

 

 

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1        election. No election allowed by this subparagraph
2        shall be made under a claim filed under subsection (d)
3        of Section 909 more than 30 days after the effective
4        date of this amendatory Act of 1996.
5            (F) Finance Leases. For purposes of this
6        subsection, a finance lease shall be treated as a loan
7        or other extension of credit, rather than as a lease,
8        regardless of how the transaction is characterized for
9        any other purpose, including the purposes of any
10        regulatory agency to which the lessor is subject. A
11        finance lease is any transaction in the form of a lease
12        in which the lessee is treated as the owner of the
13        leased asset entitled to any deduction for
14        depreciation allowed under Section 167 of the Internal
15        Revenue Code.
16        (9) Fiscal year. The term "fiscal year" means an
17    accounting period of 12 months ending on the last day of
18    any month other than December.
19        (9.5) Fixed place of business. The term "fixed place
20    of business" has the same meaning as that term is given in
21    Section 864 of the Internal Revenue Code and the related
22    Treasury regulations.
23        (10) Includes and including. The terms "includes" and
24    "including" when used in a definition contained in this
25    Act shall not be deemed to exclude other things otherwise
26    within the meaning of the term defined.

 

 

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1        (11) Internal Revenue Code. The term "Internal Revenue
2    Code" means the United States Internal Revenue Code of
3    1954 or any successor law or laws relating to federal
4    income taxes in effect for the taxable year.
5        (11.5) Investment partnership.
6            (A) The term "investment partnership" means any
7        entity that is treated as a partnership for federal
8        income tax purposes that meets the following
9        requirements:
10                (i) no less than 90% of the partnership's cost
11            of its total assets consists of qualifying
12            investment securities, deposits at banks or other
13            financial institutions, and office space and
14            equipment reasonably necessary to carry on its
15            activities as an investment partnership;
16                (ii) no less than 90% of its gross income
17            consists of interest, dividends, and gains from
18            the sale or exchange of qualifying investment
19            securities; and
20                (iii) the partnership is not a dealer in
21            qualifying investment securities.
22            (B) For purposes of this paragraph (11.5), the
23        term "qualifying investment securities" includes all
24        of the following:
25                (i) common stock, including preferred or debt
26            securities convertible into common stock, and

 

 

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1            preferred stock;
2                (ii) bonds, debentures, and other debt
3            securities;
4                (iii) foreign and domestic currency deposits
5            secured by federal, state, or local governmental
6            agencies;
7                (iv) mortgage or asset-backed securities
8            secured by federal, state, or local governmental
9            agencies;
10                (v) repurchase agreements and loan
11            participations;
12                (vi) foreign currency exchange contracts and
13            forward and futures contracts on foreign
14            currencies;
15                (vii) stock and bond index securities and
16            futures contracts and other similar financial
17            securities and futures contracts on those
18            securities;
19                (viii) options for the purchase or sale of any
20            of the securities, currencies, contracts, or
21            financial instruments described in items (i) to
22            (vii), inclusive;
23                (ix) regulated futures contracts;
24                (x) commodities (not described in Section
25            1221(a)(1) of the Internal Revenue Code) or
26            futures, forwards, and options with respect to

 

 

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1            such commodities, provided, however, that any item
2            of a physical commodity to which title is actually
3            acquired in the partnership's capacity as a dealer
4            in such commodity shall not be a qualifying
5            investment security;
6                (xi) derivatives; and
7                (xii) a partnership interest in another
8            partnership that is an investment partnership.
9        (12) Mathematical error. The term "mathematical error"
10    includes the following types of errors, omissions, or
11    defects in a return filed by a taxpayer which prevents
12    acceptance of the return as filed for processing:
13            (A) arithmetic errors or incorrect computations on
14        the return or supporting schedules;
15            (B) entries on the wrong lines;
16            (C) omission of required supporting forms or
17        schedules or the omission of the information in whole
18        or in part called for thereon; and
19            (D) an attempt to claim, exclude, deduct, or
20        improperly report, in a manner directly contrary to
21        the provisions of the Act and regulations thereunder
22        any item of income, exemption, deduction, or credit.
23        (13) Nonbusiness income. The term "nonbusiness income"
24    means all income other than business income or
25    compensation.
26        (14) Nonresident. The term "nonresident" means a

 

 

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1    person who is not a resident.
2        (15) Paid, incurred and accrued. The terms "paid",
3    "incurred" and "accrued" shall be construed according to
4    the method of accounting upon the basis of which the
5    person's base income is computed under this Act.
6        (16) Partnership and partner. The term "partnership"
7    includes a syndicate, group, pool, joint venture or other
8    unincorporated organization, through or by means of which
9    any business, financial operation, or venture is carried
10    on, and which is not, within the meaning of this Act, a
11    trust or estate or a corporation; and the term "partner"
12    includes a member in such syndicate, group, pool, joint
13    venture or organization.
14        The term "partnership" includes any entity, including
15    a limited liability company formed under the Illinois
16    Limited Liability Company Act, classified as a partnership
17    for federal income tax purposes.
18        The term "partnership" does not include a syndicate,
19    group, pool, joint venture, or other unincorporated
20    organization established for the sole purpose of playing
21    the Illinois State Lottery.
22        (17) Part-year resident. The term "part-year resident"
23    means an individual who became a resident during the
24    taxable year or ceased to be a resident during the taxable
25    year. Under Section 1501(a)(20)(A)(i) residence commences
26    with presence in this State for other than a temporary or

 

 

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1    transitory purpose and ceases with absence from this State
2    for other than a temporary or transitory purpose. Under
3    Section 1501(a)(20)(A)(ii) residence commences with the
4    establishment of domicile in this State and ceases with
5    the establishment of domicile in another State.
6        (17.5) Pass-through owner. The term "pass-through
7    owner" means any person that is a partner (other than a
8    retired partner) in a partnership or shareholder in a
9    Subchapter S corporation, except for a partner or
10    shareholder that is exempt from tax under Section 501(a)
11    of the Internal Revenue Code or under Section 205 of this
12    Act.
13        (18) Person. The term "person" shall be construed to
14    mean and include an individual, a trust, estate,
15    partnership, association, firm, company, corporation,
16    limited liability company, or fiduciary. For purposes of
17    Section 1301 and 1302 of this Act, a "person" means (i) an
18    individual, (ii) a corporation, (iii) an officer, agent,
19    or employee of a corporation, (iv) a member, agent or
20    employee of a partnership, or (v) a member, manager,
21    employee, officer, director, or agent of a limited
22    liability company who in such capacity commits an offense
23    specified in Section 1301 and 1302.
24        (18A) Records. The term "records" includes all data
25    maintained by the taxpayer, whether on paper, microfilm,
26    microfiche, or any type of machine-sensible data

 

 

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1    compilation.
2        (19) Regulations. The term "regulations" includes
3    rules promulgated and forms prescribed by the Department.
4        (20) Resident. The term "resident" means:
5            (A) an individual (i) who is in this State for
6        other than a temporary or transitory purpose during
7        the taxable year; or (ii) who is domiciled in this
8        State but is absent from the State for a temporary or
9        transitory purpose during the taxable year;
10            (B) The estate of a decedent who at his or her
11        death was domiciled in this State;
12            (C) A trust created by a will of a decedent who at
13        his death was domiciled in this State; and
14            (D) An irrevocable trust, the grantor of which was
15        domiciled in this State at the time such trust became
16        irrevocable. For purpose of this subparagraph, a trust
17        shall be considered irrevocable to the extent that the
18        grantor is not treated as the owner thereof under
19        Sections 671 through 678 of the Internal Revenue Code.
20        (21) Sales. The term "sales" means all gross receipts
21    of the taxpayer not allocated under Sections 301, 302 and
22    303.
23        (22) State. The term "state" when applied to a
24    jurisdiction other than this State means any state of the
25    United States, the District of Columbia, the Commonwealth
26    of Puerto Rico, any Territory or Possession of the United

 

 

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1    States, and any foreign country, or any political
2    subdivision of any of the foregoing. For purposes of the
3    foreign tax credit under Section 601, the term "state"
4    means any state of the United States, the District of
5    Columbia, the Commonwealth of Puerto Rico, and any
6    territory or possession of the United States, or any
7    political subdivision of any of the foregoing, effective
8    for tax years ending on or after December 31, 1989.
9        (23) Taxable year. The term "taxable year" means the
10    calendar year, or the fiscal year ending during such
11    calendar year, upon the basis of which the base income is
12    computed under this Act. "Taxable year" means, in the case
13    of a return made for a fractional part of a year under the
14    provisions of this Act, the period for which such return
15    is made.
16        (24) Taxpayer. The term "taxpayer" means any person
17    subject to the tax imposed by this Act.
18        (25) International banking facility. The term
19    international banking facility shall have the same meaning
20    as is set forth in the Illinois Banking Act or as is set
21    forth in the laws of the United States or regulations of
22    the Board of Governors of the Federal Reserve System.
23        (26) Income Tax Return Preparer.
24            (A) The term "income tax return preparer" means
25        any person who prepares for compensation, or who
26        employs one or more persons to prepare for

 

 

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1        compensation, any return of tax imposed by this Act or
2        any claim for refund of tax imposed by this Act. The
3        preparation of a substantial portion of a return or
4        claim for refund shall be treated as the preparation
5        of that return or claim for refund.
6            (B) A person is not an income tax return preparer
7        if all he or she does is
8                (i) furnish typing, reproducing, or other
9            mechanical assistance;
10                (ii) prepare returns or claims for refunds for
11            the employer by whom he or she is regularly and
12            continuously employed;
13                (iii) prepare as a fiduciary returns or claims
14            for refunds for any person; or
15                (iv) prepare claims for refunds for a taxpayer
16            in response to any notice of deficiency issued to
17            that taxpayer or in response to any waiver of
18            restriction after the commencement of an audit of
19            that taxpayer or of another taxpayer if a
20            determination in the audit of the other taxpayer
21            directly or indirectly affects the tax liability
22            of the taxpayer whose claims he or she is
23            preparing.
24        (27) Unitary business group.
25            (A) The term "unitary business group" means a
26        group of persons related through common ownership

 

 

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1        whose business activities are integrated with,
2        dependent upon and contribute to each other. The group
3        will not include those members whose business activity
4        outside the United States is 80% or more of any such
5        member's total business activity; for purposes of this
6        paragraph and clause (a)(3)(B)(ii) of Section 304,
7        business activity within the United States shall be
8        measured by means of the factors ordinarily applicable
9        under subsections (a), (b), (c), (d), or (h) of
10        Section 304 except that, in the case of members
11        ordinarily required to apportion business income by
12        means of the 3 factor formula of property, payroll and
13        sales specified in subsection (a) of Section 304,
14        including the formula as weighted in subsection (h) of
15        Section 304, such members shall not use the sales
16        factor in the computation and the results of the
17        property and payroll factor computations of subsection
18        (a) of Section 304 shall be divided by 2 (by one if
19        either the property or payroll factor has a
20        denominator of zero). The computation required by the
21        preceding sentence shall, in each case, involve the
22        division of the member's property, payroll, or revenue
23        miles in the United States, insurance premiums on
24        property or risk in the United States, or financial
25        organization business income from sources within the
26        United States, as the case may be, by the respective

 

 

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1        worldwide figures for such items. Common ownership in
2        the case of corporations is the direct or indirect
3        control or ownership of more than 50% of the
4        outstanding voting stock of the persons carrying on
5        unitary business activity. Unitary business activity
6        can ordinarily be illustrated where the activities of
7        the members are: (1) in the same general line (such as
8        manufacturing, wholesaling, retailing of tangible
9        personal property, insurance, transportation or
10        finance); or (2) are steps in a vertically structured
11        enterprise or process (such as the steps involved in
12        the production of natural resources, which might
13        include exploration, mining, refining, and marketing);
14        and, in either instance, the members are functionally
15        integrated through the exercise of strong centralized
16        management (where, for example, authority over such
17        matters as purchasing, financing, tax compliance,
18        product line, personnel, marketing and capital
19        investment is not left to each member).
20            (B) In no event, for taxable years ending prior to
21        December 31, 2017, shall any unitary business group
22        include members which are ordinarily required to
23        apportion business income under different subsections
24        of Section 304 except that for tax years ending on or
25        after December 31, 1987 this prohibition shall not
26        apply to a holding company that would otherwise be a

 

 

10200SB2531sam001- 236 -LRB102 15312 HLH 24505 a

1        member of a unitary business group with taxpayers that
2        apportion business income under any of subsections
3        (b), (c), (c-1), or (d) of Section 304. If a unitary
4        business group would, but for the preceding sentence,
5        include members that are ordinarily required to
6        apportion business income under different subsections
7        of Section 304, then for each subsection of Section
8        304 for which there are two or more members, there
9        shall be a separate unitary business group composed of
10        such members. For purposes of the preceding two
11        sentences, a member is "ordinarily required to
12        apportion business income" under a particular
13        subsection of Section 304 if it would be required to
14        use the apportionment method prescribed by such
15        subsection except for the fact that it derives
16        business income solely from Illinois. As used in this
17        paragraph, for taxable years ending before December
18        31, 2017, the phrase "United States" means only the 50
19        states and the District of Columbia, but does not
20        include any territory or possession of the United
21        States or any area over which the United States has
22        asserted jurisdiction or claimed exclusive rights with
23        respect to the exploration for or exploitation of
24        natural resources. For taxable years ending on or
25        after December 31, 2017, the phrase "United States",
26        as used in this paragraph, means only the 50 states,

 

 

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1        the District of Columbia, and any area over which the
2        United States has asserted jurisdiction or claimed
3        exclusive rights with respect to the exploration for
4        or exploitation of natural resources, but does not
5        include any territory or possession of the United
6        States.
7            (C) Holding companies.
8                (i) For purposes of this subparagraph, a
9            "holding company" is a corporation (other than a
10            corporation that is a financial organization under
11            paragraph (8) of this subsection (a) of Section
12            1501 because it is a bank holding company under
13            the provisions of the Bank Holding Company Act of
14            1956 (12 U.S.C. 1841, et seq.) or because it is
15            owned by a bank or a bank holding company) that
16            owns a controlling interest in one or more other
17            taxpayers ("controlled taxpayers"); that, during
18            the period that includes the taxable year and the
19            2 immediately preceding taxable years or, if the
20            corporation was formed during the current or
21            immediately preceding taxable year, the taxable
22            years in which the corporation has been in
23            existence, derived substantially all its gross
24            income from dividends, interest, rents, royalties,
25            fees or other charges received from controlled
26            taxpayers for the provision of services, and gains

 

 

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1            on the sale or other disposition of interests in
2            controlled taxpayers or in property leased or
3            licensed to controlled taxpayers or used by the
4            taxpayer in providing services to controlled
5            taxpayers; and that incurs no substantial expenses
6            other than expenses (including interest and other
7            costs of borrowing) incurred in connection with
8            the acquisition and holding of interests in
9            controlled taxpayers and in the provision of
10            services to controlled taxpayers or in the leasing
11            or licensing of property to controlled taxpayers.
12                (ii) The income of a holding company which is
13            a member of more than one unitary business group
14            shall be included in each unitary business group
15            of which it is a member on a pro rata basis, by
16            including in each unitary business group that
17            portion of the base income of the holding company
18            that bears the same proportion to the total base
19            income of the holding company as the gross
20            receipts of the unitary business group bears to
21            the combined gross receipts of all unitary
22            business groups (in both cases without regard to
23            the holding company) or on any other reasonable
24            basis, consistently applied.
25                (iii) A holding company shall apportion its
26            business income under the subsection of Section

 

 

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1            304 used by the other members of its unitary
2            business group. The apportionment factors of a
3            holding company which would be a member of more
4            than one unitary business group shall be included
5            with the apportionment factors of each unitary
6            business group of which it is a member on a pro
7            rata basis using the same method used in clause
8            (ii).
9                (iv) The provisions of this subparagraph (C)
10            are intended to clarify existing law.
11            (D) If including the base income and factors of a
12        holding company in more than one unitary business
13        group under subparagraph (C) does not fairly reflect
14        the degree of integration between the holding company
15        and one or more of the unitary business groups, the
16        dependence of the holding company and one or more of
17        the unitary business groups upon each other, or the
18        contributions between the holding company and one or
19        more of the unitary business groups, the holding
20        company may petition the Director, under the
21        procedures provided under Section 304(f), for
22        permission to include all base income and factors of
23        the holding company only with members of a unitary
24        business group apportioning their business income
25        under one subsection of subsections (a), (b), (c), or
26        (d) of Section 304. If the petition is granted, the

 

 

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1        holding company shall be included in a unitary
2        business group only with persons apportioning their
3        business income under the selected subsection of
4        Section 304 until the Director grants a petition of
5        the holding company either to be included in more than
6        one unitary business group under subparagraph (C) or
7        to include its base income and factors only with
8        members of a unitary business group apportioning their
9        business income under a different subsection of
10        Section 304.
11            (E) If the unitary business group members'
12        accounting periods differ, the common parent's
13        accounting period or, if there is no common parent,
14        the accounting period of the member that is expected
15        to have, on a recurring basis, the greatest Illinois
16        income tax liability must be used to determine whether
17        to use the apportionment method provided in subsection
18        (a) or subsection (h) of Section 304. The prohibition
19        against membership in a unitary business group for
20        taxpayers ordinarily required to apportion income
21        under different subsections of Section 304 does not
22        apply to taxpayers required to apportion income under
23        subsection (a) and subsection (h) of Section 304. The
24        provisions of this amendatory Act of 1998 apply to tax
25        years ending on or after December 31, 1998.
26        (28) Subchapter S corporation. The term "Subchapter S

 

 

10200SB2531sam001- 241 -LRB102 15312 HLH 24505 a

1    corporation" means a corporation for which there is in
2    effect an election under Section 1362 of the Internal
3    Revenue Code, or for which there is a federal election to
4    opt out of the provisions of the Subchapter S Revision Act
5    of 1982 and have applied instead the prior federal
6    Subchapter S rules as in effect on July 1, 1982.
7        (30) Foreign person. The term "foreign person" means
8    any person who is a nonresident alien individual and any
9    nonindividual entity, regardless of where created or
10    organized, whose business activity outside the United
11    States is 80% or more of the entity's total business
12    activity.
 
13    (b) Other definitions.
14        (1) Words denoting number, gender, and so forth, when
15    used in this Act, where not otherwise distinctly expressed
16    or manifestly incompatible with the intent thereof:
17            (A) Words importing the singular include and apply
18        to several persons, parties or things;
19            (B) Words importing the plural include the
20        singular; and
21            (C) Words importing the masculine gender include
22        the feminine as well.
23        (2) "Company" or "association" as including successors
24    and assigns. The word "company" or "association", when
25    used in reference to a corporation, shall be deemed to

 

 

10200SB2531sam001- 242 -LRB102 15312 HLH 24505 a

1    embrace the words "successors and assigns of such company
2    or association", and in like manner as if these last-named
3    words, or words of similar import, were expressed.
4        (3) Other terms. Any term used in any Section of this
5    Act with respect to the application of, or in connection
6    with, the provisions of any other Section of this Act
7    shall have the same meaning as in such other Section.
8(Source: P.A. 99-213, eff. 7-31-15; 100-22, eff. 7-6-17.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.".