103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB0998

 

Introduced 1/12/2023, by Rep. La Shawn K. Ford

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203

    Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to Section 280E of the Internal Revenue Code related to the production and distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back when computing the taxpayer's base income. Effective immediately.


LRB103 03557 HLH 48563 b

 

 

A BILL FOR

 

HB0998LRB103 03557 HLH 48563 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 203 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto
15    the sum of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest or dividends during the
18        taxable year to the extent excluded from gross income
19        in the computation of adjusted gross income, except
20        stock dividends of qualified public utilities
21        described in Section 305(e) of the Internal Revenue
22        Code;
23            (B) An amount equal to the amount of tax imposed by

 

 

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1        this Act to the extent deducted from gross income in
2        the computation of adjusted gross income for the
3        taxable year;
4            (C) An amount equal to the amount received during
5        the taxable year as a recovery or refund of real
6        property taxes paid with respect to the taxpayer's
7        principal residence under the Revenue Act of 1939 and
8        for which a deduction was previously taken under
9        subparagraph (L) of this paragraph (2) prior to July
10        1, 1991, the retrospective application date of Article
11        4 of Public Act 87-17. In the case of multi-unit or
12        multi-use structures and farm dwellings, the taxes on
13        the taxpayer's principal residence shall be that
14        portion of the total taxes for the entire property
15        which is attributable to such principal residence;
16            (D) An amount equal to the amount of the capital
17        gain deduction allowable under the Internal Revenue
18        Code, to the extent deducted from gross income in the
19        computation of adjusted gross income;
20            (D-5) An amount, to the extent not included in
21        adjusted gross income, equal to the amount of money
22        withdrawn by the taxpayer in the taxable year from a
23        medical care savings account and the interest earned
24        on the account in the taxable year of a withdrawal
25        pursuant to subsection (b) of Section 20 of the
26        Medical Care Savings Account Act or subsection (b) of

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        incurred, directly or indirectly, (i) for taxable
2        years ending on or after December 31, 2004, to a
3        foreign person who would be a member of the same
4        unitary business group but for the fact that the
5        foreign person's business activity outside the United
6        States is 80% or more of that person's total business
7        activity and (ii) for taxable years ending on or after
8        December 31, 2008, to a person who would be a member of
9        the same unitary business group but for the fact that
10        the person is prohibited under Section 1501(a)(27)
11        from being included in the unitary business group
12        because he or she is ordinarily required to apportion
13        business income under different subsections of Section
14        304. The addition modification required by this
15        subparagraph shall be reduced to the extent that
16        dividends were included in base income of the unitary
17        group for the same taxable year and received by the
18        taxpayer or by a member of the taxpayer's unitary
19        business group (including amounts included in gross
20        income under Sections 951 through 964 of the Internal
21        Revenue Code and amounts included in gross income
22        under Section 78 of the Internal Revenue Code) with
23        respect to the stock of the same person to whom the
24        intangible expenses and costs were directly or
25        indirectly paid, incurred, or accrued. The preceding
26        sentence does not apply to the extent that the same

 

 

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

 

 

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1            indirectly, if the taxpayer can establish, based
2            on a preponderance of the evidence, both of the
3            following:
4                    (a) the person during the same taxable
5                year paid, accrued, or incurred, the
6                intangible expense or cost to a person that is
7                not a related member, and
8                    (b) the transaction giving rise to the
9                intangible expense or cost between the
10                taxpayer and the person did not have as a
11                principal purpose the avoidance of Illinois
12                income tax, and is paid pursuant to a contract
13                or agreement that reflects arm's-length terms;
14                or
15                (iii) any item of intangible expense or cost
16            paid, accrued, or incurred, directly or
17            indirectly, from a transaction with a person if
18            the taxpayer establishes by clear and convincing
19            evidence, that the adjustments are unreasonable;
20            or if the taxpayer and the Director agree in
21            writing to the application or use of an
22            alternative method of apportionment under Section
23            304(f);
24                Nothing in this subsection shall preclude the
25            Director from making any other adjustment
26            otherwise allowed under Section 404 of this Act

 

 

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1            for any tax year beginning after the effective
2            date of this amendment provided such adjustment is
3            made pursuant to regulation adopted by the
4            Department and such regulations provide methods
5            and standards by which the Department will utilize
6            its authority under Section 404 of this Act;
7            (D-19) For taxable years ending on or after
8        December 31, 2008, an amount equal to the amount of
9        insurance premium expenses and costs otherwise allowed
10        as a deduction in computing base income, and that were
11        paid, accrued, or incurred, directly or indirectly, to
12        a person who would be a member of the same unitary
13        business group but for the fact that the person is
14        prohibited under Section 1501(a)(27) from being
15        included in the unitary business group because he or
16        she is ordinarily required to apportion business
17        income under different subsections of Section 304. The
18        addition modification required by this subparagraph
19        shall be reduced to the extent that dividends were
20        included in base income of the unitary group for the
21        same taxable year and received by the taxpayer or by a
22        member of the taxpayer's unitary business group
23        (including amounts included in gross income under
24        Sections 951 through 964 of the Internal Revenue Code
25        and amounts included in gross income under Section 78
26        of the Internal Revenue Code) with respect to the

 

 

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

 

 

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

 

 

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1        a qualified ABLE program created under Section 16.6 of
2        the State Treasurer Act, an amount equal to the amount
3        excluded from gross income under Section 529A(c)(1)(B)
4        of the Internal Revenue Code;
5            (D-21) For taxable years beginning on or after
6        January 1, 2007, in the case of transfer of moneys from
7        a qualified tuition program under Section 529 of the
8        Internal Revenue Code that is administered by the
9        State to an out-of-state program, an amount equal to
10        the amount of moneys previously deducted from base
11        income under subsection (a)(2)(Y) of this Section;
12            (D-21.5) For taxable years beginning on or after
13        January 1, 2018, in the case of the transfer of moneys
14        from a qualified tuition program under Section 529 or
15        a qualified ABLE program under Section 529A of the
16        Internal Revenue Code that is administered by this
17        State to an ABLE account established under an
18        out-of-state ABLE account program, an amount equal to
19        the contribution component of the transferred amount
20        that was previously deducted from base income under
21        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
22        Section;
23            (D-22) For taxable years beginning on or after
24        January 1, 2009, and prior to January 1, 2018, in the
25        case of a nonqualified withdrawal or refund of moneys
26        from a qualified tuition program under Section 529 of

 

 

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1        the Internal Revenue Code administered by the State
2        that is not used for qualified expenses at an eligible
3        education institution, an amount equal to the
4        contribution component of the nonqualified withdrawal
5        or refund that was previously deducted from base
6        income under subsection (a)(2)(y) of this Section,
7        provided that the withdrawal or refund did not result
8        from the beneficiary's death or disability. For
9        taxable years beginning on or after January 1, 2018:
10        (1) in the case of a nonqualified withdrawal or
11        refund, as defined under Section 16.5 of the State
12        Treasurer Act, of moneys from a qualified tuition
13        program under Section 529 of the Internal Revenue Code
14        administered by the State, an amount equal to the
15        contribution component of the nonqualified withdrawal
16        or refund that was previously deducted from base
17        income under subsection (a)(2)(Y) of this Section, and
18        (2) in the case of a nonqualified withdrawal or refund
19        from a qualified ABLE program under Section 529A of
20        the Internal Revenue Code administered by the State
21        that is not used for qualified disability expenses, an
22        amount equal to the contribution component of the
23        nonqualified withdrawal or refund that was previously
24        deducted from base income under subsection (a)(2)(HH)
25        of this Section;
26            (D-23) An amount equal to the credit allowable to

 

 

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1        the taxpayer under Section 218(a) of this Act,
2        determined without regard to Section 218(c) of this
3        Act;
4            (D-24) For taxable years ending on or after
5        December 31, 2017, an amount equal to the deduction
6        allowed under Section 199 of the Internal Revenue Code
7        for the taxable year;
8            (D-25) In the case of a resident, an amount equal
9        to the amount of tax for which a credit is allowed
10        pursuant to Section 201(p)(7) of this Act;
11    and by deducting from the total so obtained the sum of the
12    following amounts:
13            (E) For taxable years ending before December 31,
14        2001, any amount included in such total in respect of
15        any compensation (including but not limited to any
16        compensation paid or accrued to a serviceman while a
17        prisoner of war or missing in action) paid to a
18        resident by reason of being on active duty in the Armed
19        Forces of the United States and in respect of any
20        compensation paid or accrued to a resident who as a
21        governmental employee was a prisoner of war or missing
22        in action, and in respect of any compensation paid to a
23        resident in 1971 or thereafter for annual training
24        performed pursuant to Sections 502 and 503, Title 32,
25        United States Code as a member of the Illinois
26        National Guard or, beginning with taxable years ending

 

 

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

 

 

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

 

 

HB0998- 18 -LRB103 03557 HLH 48563 b

1        subparagraph (J) of paragraph (2) of this subsection
2        shall not be eligible for the deduction provided under
3        this subparagraph (K);
4            (L) For taxable years ending after December 31,
5        1983, an amount equal to all social security benefits
6        and railroad retirement benefits included in such
7        total pursuant to Sections 72(r) and 86 of the
8        Internal Revenue Code;
9            (M) With the exception of any amounts subtracted
10        under subparagraph (N), an amount equal to the sum of
11        all amounts disallowed as deductions by (i) Sections
12        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
13        and all amounts of expenses allocable to interest and
14        disallowed as deductions by Section 265(a)(1) of the
15        Internal Revenue Code; and (ii) for taxable years
16        ending on or after August 13, 1999, Sections
17        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
18        Internal Revenue Code, plus, for taxable years ending
19        on or after December 31, 2011, Section 45G(e)(3) of
20        the Internal Revenue Code and, for taxable years
21        ending on or after December 31, 2008, any amount
22        included in gross income under Section 87 of the
23        Internal Revenue Code; the provisions of this
24        subparagraph are exempt from the provisions of Section
25        250;
26            (N) An amount equal to all amounts included in

 

 

HB0998- 19 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 20 -LRB103 03557 HLH 48563 b

1        State bonus paid to veterans of the Persian Gulf War;
2            (S) An amount, to the extent included in adjusted
3        gross income, equal to the amount of a contribution
4        made in the taxable year on behalf of the taxpayer to a
5        medical care savings account established under the
6        Medical Care Savings Account Act or the Medical Care
7        Savings Account Act of 2000 to the extent the
8        contribution is accepted by the account administrator
9        as provided in that Act;
10            (T) An amount, to the extent included in adjusted
11        gross income, equal to the amount of interest earned
12        in the taxable year on a medical care savings account
13        established under the Medical Care Savings Account Act
14        or the Medical Care Savings Account Act of 2000 on
15        behalf of the taxpayer, other than interest added
16        pursuant to item (D-5) of this paragraph (2);
17            (U) For one taxable year beginning on or after
18        January 1, 1994, an amount equal to the total amount of
19        tax imposed and paid under subsections (a) and (b) of
20        Section 201 of this Act on grant amounts received by
21        the taxpayer under the Nursing Home Grant Assistance
22        Act during the taxpayer's taxable years 1992 and 1993;
23            (V) Beginning with tax years ending on or after
24        December 31, 1995 and ending with tax years ending on
25        or before December 31, 2004, an amount equal to the
26        amount paid by a taxpayer who is a self-employed

 

 

HB0998- 21 -LRB103 03557 HLH 48563 b

1        taxpayer, a partner of a partnership, or a shareholder
2        in a Subchapter S corporation for health insurance or
3        long-term care insurance for that taxpayer or that
4        taxpayer's spouse or dependents, to the extent that
5        the amount paid for that health insurance or long-term
6        care insurance may be deducted under Section 213 of
7        the Internal Revenue Code, has not been deducted on
8        the federal income tax return of the taxpayer, and
9        does not exceed the taxable income attributable to
10        that taxpayer's income, self-employment income, or
11        Subchapter S corporation income; except that no
12        deduction shall be allowed under this item (V) if the
13        taxpayer is eligible to participate in any health
14        insurance or long-term care insurance plan of an
15        employer of the taxpayer or the taxpayer's spouse. The
16        amount of the health insurance and long-term care
17        insurance subtracted under this item (V) shall be
18        determined by multiplying total health insurance and
19        long-term care insurance premiums paid by the taxpayer
20        times a number that represents the fractional
21        percentage of eligible medical expenses under Section
22        213 of the Internal Revenue Code of 1986 not actually
23        deducted on the taxpayer's federal income tax return;
24            (W) For taxable years beginning on or after
25        January 1, 1998, all amounts included in the
26        taxpayer's federal gross income in the taxable year

 

 

HB0998- 22 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 23 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 24 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 25 -LRB103 03557 HLH 48563 b

1                basis was taken, "x" equals "y" multiplied by
2                30 and then divided by 70 (or "y" multiplied
3                by 0.429);
4                    (ii) for property on which a bonus
5                depreciation deduction of 50% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                1.0;
8                    (iii) for property on which a bonus
9                depreciation deduction of 100% of the adjusted
10                basis was taken in a taxable year ending on or
11                after December 31, 2021, "x" equals the
12                depreciation deduction that would be allowed
13                on that property if the taxpayer had made the
14                election under Section 168(k)(7) of the
15                Internal Revenue Code to not claim bonus
16                depreciation on that property; and
17                    (iv) for property on which a bonus
18                depreciation deduction of a percentage other
19                than 30%, 50% or 100% of the adjusted basis
20                was taken in a taxable year ending on or after
21                December 31, 2021, "x" equals "y" multiplied
22                by 100 times the percentage bonus depreciation
23                on the property (that is, 100(bonus%)) and
24                then divided by 100 times 1 minus the
25                percentage bonus depreciation on the property
26                (that is, 100(1–bonus%)).

 

 

HB0998- 26 -LRB103 03557 HLH 48563 b

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 (Z) is exempt from the provisions of
8        Section 250;
9            (AA) If the taxpayer sells, transfers, abandons,
10        or otherwise disposes of property for which the
11        taxpayer was required in any taxable year to make an
12        addition modification under subparagraph (D-15), then
13        an amount 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 a
16        subtraction is allowed with respect to that property
17        under subparagraph (Z) and for which the taxpayer was
18        required in any taxable year to make an addition
19        modification under subparagraph (D-15), 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 (AA) is exempt from the
25        provisions of Section 250;
26            (BB) Any amount included in adjusted gross income,

 

 

HB0998- 27 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 28 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 29 -LRB103 03557 HLH 48563 b

1        included in the unitary business group because he or
2        she is ordinarily required to apportion business
3        income under different subsections of Section 304, but
4        not to exceed the addition modification required to be
5        made for the same taxable year under Section
6        203(a)(2)(D-18) for intangible expenses and costs
7        paid, accrued, or incurred, directly or indirectly, to
8        the same foreign person. This subparagraph (EE) is
9        exempt from the provisions of Section 250;
10            (FF) An amount equal to any amount awarded to the
11        taxpayer during the taxable year by the Court of
12        Claims under subsection (c) of Section 8 of the Court
13        of Claims Act for time unjustly served in a State
14        prison. This subparagraph (FF) is exempt from the
15        provisions of Section 250;
16            (GG) For taxable years ending on or after December
17        31, 2011, in the case of a taxpayer who was required to
18        add back any insurance premiums under Section
19        203(a)(2)(D-19), such taxpayer may elect to subtract
20        that part of a reimbursement received from the
21        insurance company equal to the amount of the expense
22        or loss (including expenses incurred by the insurance
23        company) that would have been taken into account as a
24        deduction for federal income tax purposes if the
25        expense or loss had been uninsured. If a taxpayer
26        makes the election provided for by this subparagraph

 

 

HB0998- 30 -LRB103 03557 HLH 48563 b

1        (GG), the insurer to which the premiums were paid must
2        add back to income the amount subtracted by the
3        taxpayer pursuant to this subparagraph (GG). This
4        subparagraph (GG) is exempt from the provisions of
5        Section 250; and
6            (HH) For taxable years beginning on or after
7        January 1, 2018 and prior to January 1, 2023, a maximum
8        of $10,000 contributed in the taxable year to a
9        qualified ABLE account under Section 16.6 of the State
10        Treasurer Act, except that amounts excluded from gross
11        income under Section 529(c)(3)(C)(i) or Section
12        529A(c)(1)(C) of the Internal Revenue Code shall not
13        be considered moneys contributed under this
14        subparagraph (HH). For purposes of this subparagraph
15        (HH), contributions made by an employer on behalf of
16        an employee, or matching contributions made by an
17        employee, shall be treated as made by the employee;
18        and .
19            (II) For taxable years beginning on or after
20        January 1, 2024, the amount of any federal deduction
21        disallowed pursuant to Section 280E of the Internal
22        Revenue Code related to the production and
23        distribution of adult-use cannabis products by an
24        entity licensed under the Cannabis Regulation and Tax
25        Act, if those amounts are not used as the basis for any
26        other tax deduction, exemption, or credit and not

 

 

HB0998- 31 -LRB103 03557 HLH 48563 b

1        otherwise required to be added back when computing the
2        taxpayer's base income under this Section. This
3        subparagraph (II) is exempt from the provisions of
4        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

 

 

HB0998- 32 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 33 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 34 -LRB103 03557 HLH 48563 b

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 a
7        subtraction is allowed with respect to that property
8        under subparagraph (T) and for which the taxpayer was
9        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

 

 

HB0998- 35 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 36 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 37 -LRB103 03557 HLH 48563 b

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

 

 

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

 

 

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1            paid, accrued, or incurred, directly or
2            indirectly, from a transaction with a person if
3            the taxpayer establishes by clear and convincing
4            evidence, that the adjustments are unreasonable;
5            or if the taxpayer and the Director agree in
6            writing to the application or use of an
7            alternative method of apportionment under Section
8            304(f);
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act
12            for any tax year beginning after the effective
13            date of this amendment provided such adjustment is
14            made pursuant to regulation adopted by the
15            Department and such regulations provide methods
16            and standards by which the Department will utilize
17            its authority under Section 404 of this Act;
18            (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

 

 

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

 

 

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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            (E-19) for taxable years ending on or after June
12        30, 2021, an amount equal to the deduction allowed
13        under Section 250(a)(1)(B)(i) of the Internal Revenue
14        Code for the taxable year;
15            (E-20) for taxable years ending on or after June
16        30, 2021, an amount equal to the deduction allowed
17        under Sections 243(e) and 245A(a) of the Internal
18        Revenue Code for the taxable year.
19    and by deducting from the total so obtained the sum of the
20    following amounts:
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 any amount included in such
25        total under Section 78 of the Internal Revenue Code;
26            (H) In the case of a regulated investment company,

 

 

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1        an amount equal to the amount of exempt interest
2        dividends as defined in subsection (b)(5) of Section
3        852 of the Internal Revenue Code, paid to shareholders
4        for the taxable year;
5            (I) With the exception of any amounts subtracted
6        under subparagraph (J), an amount equal to the sum of
7        all amounts disallowed as deductions by (i) Sections
8        171(a)(2) and 265(a)(2) and amounts disallowed as
9        interest expense by Section 291(a)(3) of the Internal
10        Revenue Code, and all amounts of expenses allocable to
11        interest and disallowed as deductions by Section
12        265(a)(1) of the Internal Revenue Code; and (ii) for
13        taxable years ending on or after August 13, 1999,
14        Sections 171(a)(2), 265, 280C, 291(a)(3), and
15        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
16        for tax years ending on or after December 31, 2011,
17        amounts disallowed as deductions by Section 45G(e)(3)
18        of the Internal Revenue Code and, for taxable years
19        ending on or after December 31, 2008, any amount
20        included in gross income under Section 87 of the
21        Internal Revenue Code and the policyholders' share of
22        tax-exempt interest of a life insurance company under
23        Section 807(a)(2)(B) of the Internal Revenue Code (in
24        the case of a life insurance company with gross income
25        from a decrease in reserves for the tax year) or
26        Section 807(b)(1)(B) of the Internal Revenue Code (in

 

 

HB0998- 44 -LRB103 03557 HLH 48563 b

1        the case of a life insurance company allowed a
2        deduction for an increase in reserves for the tax
3        year); the provisions of this subparagraph are exempt
4        from the provisions of Section 250;
5            (J) An amount equal to all amounts included in
6        such total which are exempt from taxation by this
7        State either by reason of its statutes or Constitution
8        or by reason of the Constitution, treaties or statutes
9        of the United States; provided that, in the case of any
10        statute of this State that exempts income derived from
11        bonds or other obligations from the tax imposed under
12        this Act, the amount exempted shall be the interest
13        net of bond premium amortization;
14            (K) An amount equal to those dividends included in
15        such total which were paid by a corporation which
16        conducts business operations in a River Edge
17        Redevelopment Zone or zones created under the River
18        Edge Redevelopment Zone Act and conducts substantially
19        all of its operations in a River Edge Redevelopment
20        Zone or zones. This subparagraph (K) is exempt from
21        the provisions of Section 250;
22            (L) An amount equal to those dividends included in
23        such total that were paid by a corporation that
24        conducts business operations in a federally designated
25        Foreign Trade Zone or Sub-Zone and that is designated
26        a High Impact Business located in Illinois; provided

 

 

HB0998- 45 -LRB103 03557 HLH 48563 b

1        that dividends eligible for the deduction provided in
2        subparagraph (K) of paragraph 2 of this subsection
3        shall not be eligible for the deduction provided under
4        this subparagraph (L);
5            (M) For any taxpayer that is a financial
6        organization within the meaning of Section 304(c) of
7        this Act, an amount included in such total as interest
8        income from a loan or loans made by such taxpayer to a
9        borrower, to the extent that such a loan is secured by
10        property which is eligible for the River Edge
11        Redevelopment Zone Investment Credit. To determine the
12        portion of a loan or loans that is secured by property
13        eligible for a Section 201(f) investment credit to the
14        borrower, the entire principal amount of the loan or
15        loans between the taxpayer and the borrower should be
16        divided into the basis of the Section 201(f)
17        investment credit property which secures the loan or
18        loans, using for this purpose the original basis of
19        such property on the date that it was placed in service
20        in the River Edge Redevelopment Zone. The subtraction
21        modification available to the taxpayer in any year
22        under this subsection shall be that portion of the
23        total interest paid by the borrower with respect to
24        such loan attributable to the eligible property as
25        calculated under the previous sentence. This
26        subparagraph (M) is exempt from the provisions of

 

 

HB0998- 46 -LRB103 03557 HLH 48563 b

1        Section 250;
2            (M-1) For any taxpayer that is a financial
3        organization within the meaning of Section 304(c) of
4        this Act, an amount included in such total as interest
5        income from a loan or loans made by such taxpayer to a
6        borrower, to the extent that such a loan is secured by
7        property which is eligible for the High Impact
8        Business Investment Credit. To determine the portion
9        of a loan or loans that is secured by property eligible
10        for a Section 201(h) investment credit to the
11        borrower, the entire principal amount of the loan or
12        loans between the taxpayer and the borrower should be
13        divided into the basis of the Section 201(h)
14        investment credit property which secures the loan or
15        loans, using for this purpose the original basis of
16        such property on the date that it was placed in service
17        in a federally designated Foreign Trade Zone or
18        Sub-Zone located in Illinois. No taxpayer that is
19        eligible for the deduction provided in subparagraph
20        (M) of paragraph (2) of this subsection shall be
21        eligible for the deduction provided under this
22        subparagraph (M-1). The subtraction modification
23        available to taxpayers in any year under this
24        subsection shall be that portion of the total interest
25        paid by the borrower with respect to such loan
26        attributable to the eligible property as calculated

 

 

HB0998- 47 -LRB103 03557 HLH 48563 b

1        under the previous sentence;
2            (N) Two times any contribution made during the
3        taxable year to a designated zone organization to the
4        extent that the contribution (i) qualifies as a
5        charitable contribution under subsection (c) of
6        Section 170 of the Internal Revenue Code and (ii)
7        must, by its terms, be used for a project approved by
8        the Department of Commerce and Economic Opportunity
9        under Section 11 of the Illinois Enterprise Zone Act
10        or under Section 10-10 of the River Edge Redevelopment
11        Zone Act. This subparagraph (N) is exempt from the
12        provisions of Section 250;
13            (O) An amount equal to: (i) 85% for taxable years
14        ending on or before December 31, 1992, or, a
15        percentage equal to the percentage allowable under
16        Section 243(a)(1) of the Internal Revenue Code of 1986
17        for taxable years ending after December 31, 1992, of
18        the amount by which dividends included in taxable
19        income and received from a corporation that is not
20        created or organized under the laws of the United
21        States or any state or political subdivision thereof,
22        including, for taxable years ending on or after
23        December 31, 1988, dividends received or deemed
24        received or paid or deemed paid under Sections 951
25        through 965 of the Internal Revenue Code, exceed the
26        amount of the modification provided under subparagraph

 

 

HB0998- 48 -LRB103 03557 HLH 48563 b

1        (G) of paragraph (2) of this subsection (b) which is
2        related to such dividends, and including, for taxable
3        years ending on or after December 31, 2008, dividends
4        received from a captive real estate investment trust;
5        plus (ii) 100% of the amount by which dividends,
6        included in taxable income and received, including,
7        for taxable years ending on or after December 31,
8        1988, dividends received or deemed received or paid or
9        deemed paid under Sections 951 through 964 of the
10        Internal Revenue Code and including, for taxable years
11        ending on or after December 31, 2008, dividends
12        received from a captive real estate investment trust,
13        from any such corporation specified in clause (i) that
14        would but for the provisions of Section 1504(b)(3) of
15        the Internal Revenue Code be treated as a member of the
16        affiliated group which includes the dividend
17        recipient, exceed the amount of the modification
18        provided under subparagraph (G) of paragraph (2) of
19        this subsection (b) which is related to such
20        dividends. For taxable years ending on or after June
21        30, 2021, (i) for purposes of this subparagraph, the
22        term "dividend" does not include any amount treated as
23        a dividend under Section 1248 of the Internal Revenue
24        Code, and (ii) this subparagraph shall not apply to
25        dividends for which a deduction is allowed under
26        Section 245(a) of the Internal Revenue Code. This

 

 

HB0998- 49 -LRB103 03557 HLH 48563 b

1        subparagraph (O) is exempt from the provisions of
2        Section 250 of this Act;
3            (P) An amount equal to any contribution made to a
4        job training project established pursuant to the Tax
5        Increment Allocation Redevelopment Act;
6            (Q) An amount equal to the amount of the deduction
7        used to compute the federal income tax credit for
8        restoration of substantial amounts held under claim of
9        right for the taxable year pursuant to Section 1341 of
10        the Internal Revenue Code;
11            (R) On and after July 20, 1999, in the case of an
12        attorney-in-fact with respect to whom an interinsurer
13        or a reciprocal insurer has made the election under
14        Section 835 of the Internal Revenue Code, 26 U.S.C.
15        835, an amount equal to the excess, if any, of the
16        amounts paid or incurred by that interinsurer or
17        reciprocal insurer in the taxable year to the
18        attorney-in-fact over the deduction allowed to that
19        interinsurer or reciprocal insurer with respect to the
20        attorney-in-fact under Section 835(b) of the Internal
21        Revenue Code for the taxable year; the provisions of
22        this subparagraph are exempt from the provisions of
23        Section 250;
24            (S) For taxable years ending on or after December
25        31, 1997, in the case of a Subchapter S corporation, an
26        amount equal to all amounts of income allocable to a

 

 

HB0998- 50 -LRB103 03557 HLH 48563 b

1        shareholder subject to the Personal Property Tax
2        Replacement Income Tax imposed by subsections (c) and
3        (d) of Section 201 of this Act, including amounts
4        allocable to organizations exempt from federal income
5        tax by reason of Section 501(a) of the Internal
6        Revenue Code. This subparagraph (S) is exempt from the
7        provisions of Section 250;
8            (T) For taxable years 2001 and thereafter, for the
9        taxable year in which the bonus depreciation deduction
10        is taken on the taxpayer's federal income tax return
11        under subsection (k) of Section 168 of the Internal
12        Revenue Code and for each applicable taxable year
13        thereafter, an amount equal to "x", where:
14                (1) "y" equals the amount of the depreciation
15            deduction taken for the taxable year on the
16            taxpayer's federal income tax return on property
17            for which the bonus depreciation deduction was
18            taken in any year under subsection (k) of Section
19            168 of the Internal Revenue Code, but not
20            including the bonus depreciation deduction;
21                (2) for taxable years ending on or before
22            December 31, 2005, "x" equals "y" multiplied by 30
23            and then divided by 70 (or "y" multiplied by
24            0.429); and
25                (3) for taxable years ending after December
26            31, 2005:

 

 

HB0998- 51 -LRB103 03557 HLH 48563 b

1                    (i) for property on which a bonus
2                depreciation deduction of 30% of the adjusted
3                basis was taken, "x" equals "y" multiplied by
4                30 and then divided by 70 (or "y" multiplied
5                by 0.429);
6                    (ii) for property on which a bonus
7                depreciation deduction of 50% of the adjusted
8                basis was taken, "x" equals "y" multiplied by
9                1.0;
10                    (iii) for property on which a bonus
11                depreciation deduction of 100% of the adjusted
12                basis was taken in a taxable year ending on or
13                after December 31, 2021, "x" equals the
14                depreciation deduction that would be allowed
15                on that property if the taxpayer had made the
16                election under Section 168(k)(7) of the
17                Internal Revenue Code to not claim bonus
18                depreciation on that property; and
19                    (iv) for property on which a bonus
20                depreciation deduction of a percentage other
21                than 30%, 50% or 100% of the adjusted basis
22                was taken in a taxable year ending on or after
23                December 31, 2021, "x" equals "y" multiplied
24                by 100 times the percentage bonus depreciation
25                on the property (that is, 100(bonus%)) and
26                then divided by 100 times 1 minus the

 

 

HB0998- 52 -LRB103 03557 HLH 48563 b

1                percentage bonus depreciation on the property
2                (that is, 100(1–bonus%)).
3            The aggregate amount deducted under this
4        subparagraph in all taxable years for any one piece of
5        property may not exceed the amount of the bonus
6        depreciation deduction taken on that property on the
7        taxpayer's federal income tax return under subsection
8        (k) of Section 168 of the Internal Revenue Code. This
9        subparagraph (T) is exempt from the provisions of
10        Section 250;
11            (U) If the taxpayer sells, transfers, abandons, or
12        otherwise disposes of property for which the taxpayer
13        was required in any taxable year to make an addition
14        modification under subparagraph (E-10), then an amount
15        equal to that addition modification.
16            If the taxpayer continues to own property through
17        the last day of the last tax year for which a
18        subtraction is allowed with respect to that property
19        under subparagraph (T) and for which the taxpayer was
20        required in any taxable year to make an addition
21        modification under subparagraph (E-10), then an amount
22        equal to that addition modification.
23            The taxpayer is allowed to take the deduction
24        under this subparagraph only once with respect to any
25        one piece of property.
26            This subparagraph (U) is exempt from the

 

 

HB0998- 53 -LRB103 03557 HLH 48563 b

1        provisions of Section 250;
2            (V) The amount of: (i) any interest income (net of
3        the deductions allocable thereto) taken into account
4        for the taxable year with respect to a transaction
5        with a taxpayer that is required to make an addition
6        modification with respect to such transaction under
7        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
8        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
9        the amount of such addition modification, (ii) any
10        income from intangible property (net of the deductions
11        allocable thereto) taken into account for the taxable
12        year with respect to a transaction with a taxpayer
13        that is required to make an addition modification with
14        respect to such transaction under Section
15        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
16        203(d)(2)(D-8), but not to exceed the amount of such
17        addition modification, and (iii) any insurance premium
18        income (net of deductions allocable thereto) taken
19        into account for the taxable year with respect to a
20        transaction with a taxpayer that is required to make
21        an addition modification with respect to such
22        transaction under Section 203(a)(2)(D-19), Section
23        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
24        203(d)(2)(D-9), but not to exceed the amount of that
25        addition modification. This subparagraph (V) is exempt
26        from the provisions of Section 250;

 

 

HB0998- 54 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 55 -LRB103 03557 HLH 48563 b

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

 

 

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1        makes the election provided for by this subparagraph
2        (Y), the insurer to which the premiums were paid must
3        add back to income the amount subtracted by the
4        taxpayer pursuant to this subparagraph (Y). This
5        subparagraph (Y) is exempt from the provisions of
6        Section 250; and
7            (Z) The difference between the nondeductible
8        controlled foreign corporation dividends under Section
9        965(e)(3) of the Internal Revenue Code over the
10        taxable income of the taxpayer, computed without
11        regard to Section 965(e)(2)(A) of the Internal Revenue
12        Code, and without regard to any net operating loss
13        deduction. This subparagraph (Z) is exempt from the
14        provisions of Section 250; and .
15            (AA) For taxable years beginning on or after
16        January 1, 2024, the amount of any federal deduction
17        disallowed pursuant to Section 280E of the Internal
18        Revenue Code related to the production and
19        distribution of adult-use cannabis products by an
20        entity licensed under the Cannabis Regulation and Tax
21        Act, if those amounts are not used as the basis for any
22        other tax deduction, exemption, or credit and not
23        otherwise required to be added back when computing the
24        taxpayer's base income under this Section. This
25        subparagraph (AA) is exempt from the provisions of
26        Section 250.

 

 

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1        (3) Special rule. For purposes of paragraph (2)(A),
2    "gross income" in the case of a life insurance company,
3    for tax years ending on and after December 31, 1994, and
4    prior to December 31, 2011, shall mean the gross
5    investment income for the taxable year and, for tax years
6    ending on or after December 31, 2011, shall mean all
7    amounts included in life insurance gross income under
8    Section 803(a)(3) of the Internal Revenue Code.
 
9    (c) Trusts and estates.
10        (1) In general. In the case of a trust or estate, base
11    income means an amount equal to the taxpayer's taxable
12    income for the taxable year as modified by paragraph (2).
13        (2) Modifications. Subject to the provisions of
14    paragraph (3), the taxable income referred to in paragraph
15    (1) shall be modified by adding thereto the sum of the
16    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 taxable income;
21            (B) In the case of (i) an estate, $600; (ii) a
22        trust which, under its governing instrument, is
23        required to distribute all of its income currently,
24        $300; and (iii) any other trust, $100, but in each such
25        case, only to the extent such amount was deducted in

 

 

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1        the computation of taxable income;
2            (C) An amount equal to the amount of tax imposed by
3        this Act to the extent deducted from gross income in
4        the computation of taxable income for the taxable
5        year;
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 taxable year, with
18        the following limitations applied in the order that
19        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            (F) For taxable years ending on or after January
15        1, 1989, an amount equal to the tax deducted pursuant
16        to Section 164 of the Internal Revenue Code if the
17        trust or estate is claiming the same tax for purposes
18        of the Illinois foreign tax credit under Section 601
19        of this Act;
20            (G) An amount equal to the amount of the capital
21        gain deduction allowable under the Internal Revenue
22        Code, to the extent deducted from gross income in the
23        computation of taxable income;
24            (G-5) For taxable years ending after December 31,
25        1997, an amount equal to any eligible remediation
26        costs that the trust or estate deducted in computing

 

 

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1        adjusted gross income and for which the trust or
2        estate claims a credit under subsection (l) of Section
3        201;
4            (G-10) For taxable years 2001 and thereafter, an
5        amount equal to the bonus depreciation deduction taken
6        on the taxpayer's federal income tax return for the
7        taxable year under subsection (k) of Section 168 of
8        the Internal Revenue Code; and
9            (G-11) If the taxpayer sells, transfers, abandons,
10        or otherwise disposes of property for which the
11        taxpayer was required in any taxable year to make an
12        addition modification under subparagraph (G-10), then
13        an amount equal to the aggregate amount of the
14        deductions taken in all taxable years under
15        subparagraph (R) with respect to that property.
16            If the taxpayer continues to own property through
17        the last day of the last tax year for which a
18        subtraction is allowed with respect to that property
19        under subparagraph (R) and for which the taxpayer was
20        allowed in any taxable year to make a subtraction
21        modification under subparagraph (R), then an amount
22        equal to that subtraction modification.
23            The taxpayer is required to make the addition
24        modification under this subparagraph only once with
25        respect to any one piece of property;
26            (G-12) An amount equal to the amount otherwise

 

 

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

 

 

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

 

 

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1            and terms and the principal purpose for the
2            payment is not federal or Illinois tax avoidance;
3            or
4                (iv) an item of interest paid, accrued, or
5            incurred, directly or indirectly, to a person if
6            the taxpayer establishes by clear and convincing
7            evidence that the adjustments are unreasonable; or
8            if the taxpayer and the Director agree in writing
9            to the application or use of an alternative method
10            of apportionment under Section 304(f).
11                Nothing in this subsection shall preclude the
12            Director from making any other adjustment
13            otherwise allowed under Section 404 of this Act
14            for any tax year beginning after the effective
15            date of this amendment provided such adjustment is
16            made pursuant to regulation adopted by the
17            Department and such regulations provide methods
18            and standards by which the Department will utilize
19            its authority under Section 404 of this Act;
20            (G-13) An amount equal to the amount of intangible
21        expenses and costs otherwise allowed as a deduction in
22        computing base income, and that were paid, accrued, or
23        incurred, directly or indirectly, (i) for taxable
24        years ending on or after December 31, 2004, to a
25        foreign person who would be a member of the same
26        unitary business group but for the fact that the

 

 

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1        foreign person's business activity outside the United
2        States is 80% or more of that person's total business
3        activity and (ii) for taxable years ending on or after
4        December 31, 2008, to a person who would be a member of
5        the same unitary business group but for the fact that
6        the person is prohibited under Section 1501(a)(27)
7        from being included in the unitary business group
8        because he or she is ordinarily required to apportion
9        business income under different subsections of Section
10        304. The addition modification required by this
11        subparagraph shall be reduced to the extent that
12        dividends were included in base income of the unitary
13        group for the same taxable year and received by the
14        taxpayer or by a member of the taxpayer's unitary
15        business group (including amounts included in gross
16        income pursuant to Sections 951 through 964 of the
17        Internal Revenue Code and amounts included in gross
18        income under Section 78 of the Internal Revenue Code)
19        with respect to the stock of the same person to whom
20        the intangible expenses and costs were directly or
21        indirectly paid, incurred, or accrued. The preceding
22        sentence shall not apply to the extent that the same
23        dividends caused a reduction to the addition
24        modification required under Section 203(c)(2)(G-12) of
25        this Act. As used in this subparagraph, the term
26        "intangible expenses and costs" includes: (1)

 

 

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

 

 

HB0998- 66 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 67 -LRB103 03557 HLH 48563 b

1            and standards by which the Department will utilize
2            its authority under Section 404 of this Act;
3            (G-14) For taxable years ending on or after
4        December 31, 2008, an amount equal to the amount of
5        insurance premium expenses and costs otherwise allowed
6        as a deduction in computing base income, and that were
7        paid, accrued, or incurred, directly or indirectly, 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. The
14        addition modification required by this subparagraph
15        shall be reduced to the extent that dividends were
16        included in base income of the unitary group for the
17        same taxable year and received by the taxpayer or by a
18        member of the taxpayer's unitary business group
19        (including amounts included in gross income under
20        Sections 951 through 964 of the Internal Revenue Code
21        and amounts included in gross income under Section 78
22        of the Internal Revenue Code) with respect to the
23        stock of the same person to whom the premiums and costs
24        were directly or indirectly paid, incurred, or
25        accrued. The preceding sentence does not apply to the
26        extent that the same dividends caused a reduction to

 

 

HB0998- 68 -LRB103 03557 HLH 48563 b

1        the addition modification required under Section
2        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
3        Act;
4            (G-15) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8            (G-16) For taxable years ending on or after
9        December 31, 2017, an amount equal to the deduction
10        allowed under Section 199 of the Internal Revenue Code
11        for the taxable year;
12    and by deducting from the total so obtained the sum of the
13    following amounts:
14            (H) An amount equal to all amounts included in
15        such total pursuant to the provisions of Sections
16        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
17        of the Internal Revenue Code or included in such total
18        as distributions under the provisions of any
19        retirement or disability plan for employees of any
20        governmental agency or unit, or retirement payments to
21        retired partners, which payments are excluded in
22        computing net earnings from self employment by Section
23        1402 of the Internal Revenue Code and regulations
24        adopted pursuant thereto;
25            (I) The valuation limitation amount;
26            (J) An amount equal to the amount of any tax

 

 

HB0998- 69 -LRB103 03557 HLH 48563 b

1        imposed by this Act which was refunded to the taxpayer
2        and included in such total for the taxable year;
3            (K) An amount equal to all amounts included in
4        taxable income as modified by subparagraphs (A), (B),
5        (C), (D), (E), (F) and (G) which are exempt from
6        taxation by this State either by reason of its
7        statutes or Constitution or by reason of the
8        Constitution, treaties or statutes of the United
9        States; provided that, in the case of any statute of
10        this State that exempts income derived from bonds or
11        other obligations from the tax imposed under this Act,
12        the amount exempted shall be the interest net of bond
13        premium amortization;
14            (L) With the exception of any amounts subtracted
15        under subparagraph (K), an amount equal to the sum of
16        all amounts disallowed as deductions by (i) Sections
17        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
18        and all amounts of expenses allocable to interest and
19        disallowed as deductions by Section 265(a)(1) of the
20        Internal Revenue Code; and (ii) for taxable years
21        ending on or after August 13, 1999, Sections
22        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
23        Internal Revenue Code, plus, (iii) for taxable years
24        ending on or after December 31, 2011, Section
25        45G(e)(3) of the Internal Revenue Code and, for
26        taxable years ending on or after December 31, 2008,

 

 

HB0998- 70 -LRB103 03557 HLH 48563 b

1        any amount included in gross income under Section 87
2        of the Internal Revenue Code; the provisions of this
3        subparagraph are exempt from the provisions of Section
4        250;
5            (M) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in a River Edge
8        Redevelopment Zone or zones created under the River
9        Edge Redevelopment Zone Act and conducts substantially
10        all of its operations in a River Edge Redevelopment
11        Zone or zones. This subparagraph (M) is exempt from
12        the provisions of Section 250;
13            (N) An amount equal to any contribution made to a
14        job training project established pursuant to the Tax
15        Increment Allocation Redevelopment Act;
16            (O) An amount equal to those dividends included in
17        such total that were paid by a corporation that
18        conducts business operations in a federally designated
19        Foreign Trade Zone or Sub-Zone and that is designated
20        a High Impact Business located in Illinois; provided
21        that dividends eligible for the deduction provided in
22        subparagraph (M) of paragraph (2) of this subsection
23        shall not be eligible for the deduction provided under
24        this subparagraph (O);
25            (P) An amount equal to the amount of the deduction
26        used to compute the federal income tax credit for

 

 

HB0998- 71 -LRB103 03557 HLH 48563 b

1        restoration of substantial amounts held under claim of
2        right for the taxable year pursuant to Section 1341 of
3        the Internal Revenue Code;
4            (Q) For taxable year 1999 and thereafter, an
5        amount equal to the amount of any (i) distributions,
6        to the extent includible in gross income for federal
7        income tax purposes, made to the taxpayer because of
8        his or her status as a victim of persecution for racial
9        or religious reasons by Nazi Germany or any other Axis
10        regime or as an heir of the victim and (ii) items of
11        income, to the extent includible in gross income for
12        federal income tax purposes, attributable to, derived
13        from or in any way related to assets stolen from,
14        hidden from, or otherwise lost to a victim of
15        persecution for racial or religious reasons by Nazi
16        Germany or any other Axis regime immediately prior to,
17        during, and immediately after World War II, including,
18        but not limited to, interest on the proceeds
19        receivable as insurance under policies issued to a
20        victim of persecution for racial or religious reasons
21        by Nazi Germany or any other Axis regime by European
22        insurance companies immediately prior to and during
23        World War II; provided, however, this subtraction from
24        federal adjusted gross income does not apply to assets
25        acquired with such assets or with the proceeds from
26        the sale of such assets; provided, further, this

 

 

HB0998- 72 -LRB103 03557 HLH 48563 b

1        paragraph shall only apply to a taxpayer who was the
2        first recipient of such assets after their recovery
3        and who is a victim of persecution for racial or
4        religious reasons by Nazi Germany or any other Axis
5        regime or as an heir of the victim. The amount of and
6        the eligibility for any public assistance, benefit, or
7        similar entitlement is not affected by the inclusion
8        of items (i) and (ii) of this paragraph in gross income
9        for federal income tax purposes. This paragraph is
10        exempt from the provisions of Section 250;
11            (R) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not
23            including the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

HB0998- 73 -LRB103 03557 HLH 48563 b

1            0.429); and
2                (3) for taxable years ending after December
3            31, 2005:
4                    (i) for property on which a bonus
5                depreciation deduction of 30% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                30 and then divided by 70 (or "y" multiplied
8                by 0.429);
9                    (ii) for property on which a bonus
10                depreciation deduction of 50% of the adjusted
11                basis was taken, "x" equals "y" multiplied by
12                1.0;
13                    (iii) for property on which a bonus
14                depreciation deduction of 100% of the adjusted
15                basis was taken in a taxable year ending on or
16                after December 31, 2021, "x" equals the
17                depreciation deduction that would be allowed
18                on that property if the taxpayer had made the
19                election under Section 168(k)(7) of the
20                Internal Revenue Code to not claim bonus
21                depreciation on that property; and
22                    (iv) for property on which a bonus
23                depreciation deduction of a percentage other
24                than 30%, 50% or 100% of the adjusted basis
25                was taken in a taxable year ending on or after
26                December 31, 2021, "x" equals "y" multiplied

 

 

HB0998- 74 -LRB103 03557 HLH 48563 b

1                by 100 times the percentage bonus depreciation
2                on the property (that is, 100(bonus%)) and
3                then divided by 100 times 1 minus the
4                percentage bonus depreciation on the property
5                (that is, 100(1–bonus%)).
6            The aggregate amount deducted under this
7        subparagraph in all taxable years for any one piece of
8        property may not exceed the amount of the bonus
9        depreciation deduction taken on that property on the
10        taxpayer's federal income tax return under subsection
11        (k) of Section 168 of the Internal Revenue Code. This
12        subparagraph (R) is exempt from the provisions of
13        Section 250;
14            (S) If the taxpayer sells, transfers, abandons, or
15        otherwise disposes of property for which the taxpayer
16        was required in any taxable year to make an addition
17        modification under subparagraph (G-10), then an amount
18        equal to that addition modification.
19            If the taxpayer continues to own property through
20        the last day of the last tax year for which a
21        subtraction is allowed with respect to that property
22        under subparagraph (R) and for which the taxpayer was
23        required in any taxable year to make an addition
24        modification under subparagraph (G-10), then an amount
25        equal to that addition modification.
26            The taxpayer is allowed to take the deduction

 

 

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

 

 

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

 

 

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1        prohibited under Section 1501(a)(27) from being
2        included in the unitary business group because he or
3        she is ordinarily required to apportion business
4        income under different subsections of Section 304, but
5        not to exceed the addition modification required to be
6        made for the same taxable year under Section
7        203(c)(2)(G-13) for intangible expenses and costs
8        paid, accrued, or incurred, directly or indirectly, to
9        the same foreign person. This subparagraph (V) is
10        exempt from the provisions of Section 250;
11            (W) in the case of an estate, an amount equal to
12        all amounts included in such total pursuant to the
13        provisions of Section 111 of the Internal Revenue Code
14        as a recovery of items previously deducted by the
15        decedent from adjusted gross income in the computation
16        of taxable income. This subparagraph (W) is exempt
17        from Section 250;
18            (X) an amount equal to the refund included in such
19        total of any tax deducted for federal income tax
20        purposes, to the extent that deduction was added back
21        under subparagraph (F). This subparagraph (X) is
22        exempt from the provisions of Section 250;
23            (Y) For taxable years ending on or after December
24        31, 2011, in the case of a taxpayer who was required to
25        add back any insurance premiums under Section
26        203(c)(2)(G-14), such taxpayer may elect to subtract

 

 

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1        that part of a reimbursement received from the
2        insurance company equal to the amount of the expense
3        or loss (including expenses incurred by the insurance
4        company) that would have been taken into account as a
5        deduction for federal income tax purposes if the
6        expense or loss had been uninsured. If a taxpayer
7        makes the election provided for by this subparagraph
8        (Y), the insurer to which the premiums were paid must
9        add back to income the amount subtracted by the
10        taxpayer pursuant to this subparagraph (Y). This
11        subparagraph (Y) is exempt from the provisions of
12        Section 250; and
13            (Z) For taxable years beginning after December 31,
14        2018 and before January 1, 2026, the amount of excess
15        business loss of the taxpayer disallowed as a
16        deduction by Section 461(l)(1)(B) of the Internal
17        Revenue Code; and .
18        (AA) For taxable years beginning on or after January
19    1, 2024, the amount of any federal deduction disallowed
20    pursuant to Section 280E of the Internal Revenue Code
21    related to the production and distribution of adult-use
22    cannabis products by an entity licensed under the Cannabis
23    Regulation and Tax Act, if those amounts are not used as
24    the basis for any other tax deduction, exemption, or
25    credit and not otherwise required to be added back when
26    computing the taxpayer's base income under this Section.

 

 

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1    This subparagraph (AA) is exempt from the provisions of
2    Section 250.
3        (3) Limitation. The amount of any modification
4    otherwise required under this subsection shall, under
5    regulations prescribed by the Department, be adjusted by
6    any amounts included therein which were properly paid,
7    credited, or required to be distributed, or permanently
8    set aside for charitable purposes pursuant to Internal
9    Revenue Code Section 642(c) during the taxable year.
 
10    (d) Partnerships.
11        (1) In general. In the case of a partnership, base
12    income means an amount equal to the taxpayer's taxable
13    income for the taxable year as modified by paragraph (2).
14        (2) Modifications. The taxable income referred to in
15    paragraph (1) shall be modified by adding thereto the sum
16    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 taxable income;
21            (B) An amount equal to the amount of tax imposed by
22        this Act to the extent deducted from gross income for
23        the taxable year;
24            (C) The amount of deductions allowed to the
25        partnership pursuant to Section 707 (c) of the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        years ending on or after December 31, 2004, to a
2        foreign person who would be a member of the same
3        unitary business group but for the fact that the
4        foreign person's business activity outside the United
5        States is 80% or more of that person's total business
6        activity and (ii) for taxable years ending on or after
7        December 31, 2008, to a person who would be a member of
8        the same unitary business group but for the fact that
9        the person is prohibited under Section 1501(a)(27)
10        from being included in the unitary business group
11        because he or she is ordinarily required to apportion
12        business income under different subsections of Section
13        304. The addition modification required by this
14        subparagraph shall be reduced to the extent that
15        dividends were included in base income of the unitary
16        group for the same taxable year and received by the
17        taxpayer or by a member of the taxpayer's unitary
18        business group (including amounts included in gross
19        income pursuant to Sections 951 through 964 of the
20        Internal Revenue Code and amounts included in gross
21        income under Section 78 of the Internal Revenue Code)
22        with respect to the stock of the same person to whom
23        the intangible expenses and costs were directly or
24        indirectly paid, incurred or accrued. The preceding
25        sentence shall not apply to the extent that the same
26        dividends caused a reduction to the addition

 

 

HB0998- 85 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 86 -LRB103 03557 HLH 48563 b

1            on a preponderance of the evidence, both of the
2            following:
3                    (a) the person during the same taxable
4                year paid, accrued, or incurred, the
5                intangible expense or cost to a person that is
6                not a related member, and
7                    (b) the transaction giving rise to the
8                intangible expense or cost between the
9                taxpayer and the person did not have as a
10                principal purpose the avoidance of Illinois
11                income tax, and is paid pursuant to a contract
12                or agreement that reflects arm's-length terms;
13                or
14                (iii) any item of intangible expense or cost
15            paid, accrued, or incurred, directly or
16            indirectly, from a transaction with a person if
17            the taxpayer establishes by clear and convincing
18            evidence, that the adjustments are unreasonable;
19            or if the taxpayer and the Director agree in
20            writing to the application or use of an
21            alternative method of apportionment under Section
22            304(f);
23                Nothing in this subsection shall preclude the
24            Director from making any other adjustment
25            otherwise allowed under Section 404 of this Act
26            for any tax year beginning after the effective

 

 

HB0998- 87 -LRB103 03557 HLH 48563 b

1            date of this amendment provided such adjustment is
2            made pursuant to regulation adopted by the
3            Department and such regulations provide methods
4            and standards by which the Department will utilize
5            its authority under Section 404 of this Act;
6            (D-9) For taxable years ending on or after
7        December 31, 2008, an amount equal to the amount of
8        insurance premium expenses and costs otherwise allowed
9        as a deduction in computing base income, and that were
10        paid, accrued, or incurred, directly or indirectly, to
11        a person who would be a member of the same unitary
12        business group but for the fact that the person is
13        prohibited under Section 1501(a)(27) from being
14        included in the unitary business group because he or
15        she is ordinarily required to apportion business
16        income under different subsections of Section 304. The
17        addition modification required by this subparagraph
18        shall be reduced to the extent that dividends were
19        included in base income of the unitary group for the
20        same taxable year and received by the taxpayer or by a
21        member of the taxpayer's unitary business group
22        (including amounts included in gross income under
23        Sections 951 through 964 of the Internal Revenue Code
24        and amounts included in gross income under Section 78
25        of the Internal Revenue Code) with respect to the
26        stock of the same person to whom the premiums and costs

 

 

HB0998- 88 -LRB103 03557 HLH 48563 b

1        were directly or indirectly paid, incurred, or
2        accrued. The preceding sentence does not apply to the
3        extent that the same dividends caused a reduction to
4        the addition modification required under Section
5        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
6            (D-10) 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-11) 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 following
15    amounts:
16            (E) The valuation limitation amount;
17            (F) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (G) An amount equal to all amounts included in
21        taxable income as modified by subparagraphs (A), (B),
22        (C) and (D) which are exempt from taxation by this
23        State either by reason of its statutes or Constitution
24        or by reason of the Constitution, treaties or statutes
25        of the United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

HB0998- 89 -LRB103 03557 HLH 48563 b

1        bonds or other obligations from the tax imposed under
2        this Act, the amount exempted shall be the interest
3        net of bond premium amortization;
4            (H) Any income of the partnership which
5        constitutes personal service income as defined in
6        Section 1348(b)(1) of the Internal Revenue Code (as in
7        effect December 31, 1981) or a reasonable allowance
8        for compensation paid or accrued for services rendered
9        by partners to the partnership, whichever is greater;
10        this subparagraph (H) is exempt from the provisions of
11        Section 250;
12            (I) An amount equal to all amounts of income
13        distributable to an entity subject to the Personal
14        Property Tax Replacement Income Tax imposed by
15        subsections (c) and (d) of Section 201 of this Act
16        including amounts distributable to organizations
17        exempt from federal income tax by reason of Section
18        501(a) of the Internal Revenue Code; this subparagraph
19        (I) is exempt from the provisions of Section 250;
20            (J) With the exception of any amounts subtracted
21        under subparagraph (G), an amount equal to the sum of
22        all amounts disallowed as deductions by (i) Sections
23        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
24        and all amounts of expenses allocable to interest and
25        disallowed as deductions by Section 265(a)(1) of the
26        Internal Revenue Code; and (ii) for taxable years

 

 

HB0998- 90 -LRB103 03557 HLH 48563 b

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

 

 

HB0998- 91 -LRB103 03557 HLH 48563 b

1        that dividends eligible for the deduction provided in
2        subparagraph (K) of paragraph (2) of this subsection
3        shall not be eligible for the deduction provided under
4        this subparagraph (M);
5            (N) An amount equal to the amount of the deduction
6        used to compute the federal income tax credit for
7        restoration of substantial amounts held under claim of
8        right for the taxable year pursuant to Section 1341 of
9        the Internal Revenue Code;
10            (O) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not
22            including the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

HB0998- 92 -LRB103 03557 HLH 48563 b

1                (3) for taxable years ending after December
2            31, 2005:
3                    (i) for property on which a bonus
4                depreciation deduction of 30% of the adjusted
5                basis was taken, "x" equals "y" multiplied by
6                30 and then divided by 70 (or "y" multiplied
7                by 0.429);
8                    (ii) for property on which a bonus
9                depreciation deduction of 50% of the adjusted
10                basis was taken, "x" equals "y" multiplied by
11                1.0;
12                    (iii) for property on which a bonus
13                depreciation deduction of 100% of the adjusted
14                basis was taken in a taxable year ending on or
15                after December 31, 2021, "x" equals the
16                depreciation deduction that would be allowed
17                on that property if the taxpayer had made the
18                election under Section 168(k)(7) of the
19                Internal Revenue Code to not claim bonus
20                depreciation on that property; and
21                    (iv) for property on which a bonus
22                depreciation deduction of a percentage other
23                than 30%, 50% or 100% of the adjusted basis
24                was taken in a taxable year ending on or after
25                December 31, 2021, "x" equals "y" multiplied
26                by 100 times the percentage bonus depreciation

 

 

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1                on the property (that is, 100(bonus%)) and
2                then divided by 100 times 1 minus the
3                percentage bonus depreciation on the property
4                (that is, 100(1–bonus%)).
5            The aggregate amount deducted under this
6        subparagraph in all taxable years for any one piece of
7        property may not exceed the amount of the bonus
8        depreciation deduction taken on that property on the
9        taxpayer's federal income tax return under subsection
10        (k) of Section 168 of the Internal Revenue Code. This
11        subparagraph (O) is exempt from the provisions of
12        Section 250;
13            (P) If the taxpayer sells, transfers, abandons, or
14        otherwise disposes of property for which the taxpayer
15        was required in any taxable year to make an addition
16        modification under subparagraph (D-5), then an amount
17        equal to that addition modification.
18            If the taxpayer continues to own property through
19        the last day of the last tax year for which a
20        subtraction is allowed with respect to that property
21        under subparagraph (O) and for which the taxpayer was
22        required in any taxable year to make an addition
23        modification under subparagraph (D-5), then an amount
24        equal to that addition modification.
25            The taxpayer is allowed to take the deduction
26        under this subparagraph only once with respect to any

 

 

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

 

 

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

 

 

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1        included in the unitary business group because he or
2        she is ordinarily required to apportion business
3        income under different subsections of Section 304, but
4        not to exceed the addition modification required to be
5        made for the same taxable year under Section
6        203(d)(2)(D-8) for intangible expenses and costs paid,
7        accrued, or incurred, directly or indirectly, to the
8        same person. This subparagraph (S) is exempt from
9        Section 250; and
10            (T) For taxable years ending on or after December
11        31, 2011, in the case of a taxpayer who was required to
12        add back any insurance premiums under Section
13        203(d)(2)(D-9), such taxpayer may elect to subtract
14        that part of a reimbursement received from the
15        insurance company equal to the amount of the expense
16        or loss (including expenses incurred by the insurance
17        company) that would have been taken into account as a
18        deduction for federal income tax purposes if the
19        expense or loss had been uninsured. If a taxpayer
20        makes the election provided for by this subparagraph
21        (T), the insurer to which the premiums were paid must
22        add back to income the amount subtracted by the
23        taxpayer pursuant to this subparagraph (T). This
24        subparagraph (T) is exempt from the provisions of
25        Section 250; and .
26            (U) For taxable years beginning on or after

 

 

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1        January 1, 2024, the amount of any federal deduction
2        disallowed pursuant to Section 280E of the Internal
3        Revenue Code related to the production and
4        distribution of adult-use cannabis products by an
5        entity licensed under the Cannabis Regulation and Tax
6        Act, if those amounts are not used as the basis for any
7        other tax deduction, exemption, or credit and not
8        otherwise required to be added back when computing the
9        taxpayer's base income under this Section. This
10        subparagraph (U) is exempt from the provisions of
11        Section 250.
 
12    (e) Gross income; adjusted gross income; taxable income.
13        (1) In general. Subject to the provisions of paragraph
14    (2) and subsection (b)(3), for purposes of this Section
15    and Section 803(e), a taxpayer's gross income, adjusted
16    gross income, or taxable income for the taxable year shall
17    mean the amount of gross income, adjusted gross income or
18    taxable income properly reportable for federal income tax
19    purposes for the taxable year under the provisions of the
20    Internal Revenue Code. Taxable income may be less than
21    zero. However, for taxable years ending on or after
22    December 31, 1986, net operating loss carryforwards from
23    taxable years ending prior to December 31, 1986, may not
24    exceed the sum of federal taxable income for the taxable
25    year before net operating loss deduction, plus the excess

 

 

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

 

 

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1        distribution from pre-1984 policyholder surplus
2        accounts as calculated under Section 815a of the
3        Internal Revenue Code;
4            (B) Certain other insurance companies. In the case
5        of mutual insurance companies subject to the tax
6        imposed by Section 831 of the Internal Revenue Code,
7        insurance company taxable income;
8            (C) Regulated investment companies. In the case of
9        a regulated investment company subject to the tax
10        imposed by Section 852 of the Internal Revenue Code,
11        investment company taxable income;
12            (D) Real estate investment trusts. In the case of
13        a real estate investment trust subject to the tax
14        imposed by Section 857 of the Internal Revenue Code,
15        real estate investment trust taxable income;
16            (E) Consolidated corporations. In the case of a
17        corporation which is a member of an affiliated group
18        of corporations filing a consolidated income tax
19        return for the taxable year for federal income tax
20        purposes, taxable income determined as if such
21        corporation had filed a separate return for federal
22        income tax purposes for the taxable year and each
23        preceding taxable year for which it was a member of an
24        affiliated group. For purposes of this subparagraph,
25        the taxpayer's separate taxable income shall be
26        determined as if the election provided by Section

 

 

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1        243(b)(2) of the Internal Revenue Code had been in
2        effect for all such years;
3            (F) Cooperatives. In the case of a cooperative
4        corporation or association, the taxable income of such
5        organization determined in accordance with the
6        provisions of Section 1381 through 1388 of the
7        Internal Revenue Code, but without regard to the
8        prohibition against offsetting losses from patronage
9        activities against income from nonpatronage
10        activities; except that a cooperative corporation or
11        association may make an election to follow its federal
12        income tax treatment of patronage losses and
13        nonpatronage losses. In the event such election is
14        made, such losses shall be computed and carried over
15        in a manner consistent with subsection (a) of Section
16        207 of this Act and apportioned by the apportionment
17        factor reported by the cooperative on its Illinois
18        income tax return filed for the taxable year in which
19        the losses are incurred. The election shall be
20        effective for all taxable years with original returns
21        due on or after the date of the election. In addition,
22        the cooperative may file an amended return or returns,
23        as allowed under this Act, to provide that the
24        election shall be effective for losses incurred or
25        carried forward for taxable years occurring prior to
26        the date of the election. Once made, the election may

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB0998- 105 -LRB103 03557 HLH 48563 b

1computation of base income and net income under this Act for
2such taxable year, whether in respect of property values as of
3August 1, 1969 or otherwise.
4(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
5102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
68-27-21; 102-813, eff. 5-13-22.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.