Rep. Margaret Croke

Filed: 2/20/2024

 

 


 

 


 
10300HB1241ham002LRB103 25002 HLH 69731 a

1
AMENDMENT TO HOUSE BILL 1241

2    AMENDMENT NO. ______. Amend House Bill 1241, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 1. Short title. This Act may be cited as the
6Illinois Gives Tax Credit Act.
 
7    Section 5. Definitions. As used in this Act:
8    "Business entity" means a corporation (including a
9Subchapter S corporation), trust, estate, partnership, limited
10liability company, or sole proprietorship.
11    "Credit-eligible endowment gift" means an endowment gift
12for which a taxpayer intends to apply for an income tax credit
13under this Act.
14    "Department" means the Department of Revenue.
15    "Donor advised fund" has the meaning given to that term in
16subsection (d) of Section 4966 of the Internal Revenue Code of

 

 

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11986.
2    "Endowment gift" means an irrevocable contribution to a
3permanent endowment fund held by a qualified community
4foundation.
5    "Permanent endowment fund" means a fund that (i) is held
6by a qualified community foundation, (ii) provides charitable
7grants exclusively for the benefit of residents of the State
8or charities and charitable projects located in the State,
9(iii) is intended to exist in perpetuity, (iv) has an annual
10spending rate based on the foundation spending policy, but not
11to exceed 7%, and (v) is not a donor advised fund.
12    "Qualified community foundation" means a community
13foundation or similar publicly supported organization
14described in Section 170 (b)(1)(A)(vi) of the Internal Revenue
15Code of 1986 that is organized or operating in this State and
16that substantially complies with the national standards for
17U.S. community foundations established by the National Council
18on Foundations, as determined by the Department.
19    "Taxpayer" means any individual who is subject to the tax
20imposed under subsections (a) and (b) of Section 201 of the
21Illinois Income Tax Act or any business entity that is subject
22to the tax imposed under subsections (a) and (b) of Section 201
23of the Illinois Income Tax Act.
 
24    Section 10. Tax credit awards; limitations.
25    (a) For taxable years ending on or after December 31, 2025

 

 

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1and ending before January 1, 2030, the Department shall award,
2in accordance with this Act, income tax credits to taxpayers
3who provide an endowment gift to a permanent endowment fund
4during the taxable year and receive a certificate of receipt
5under Section 15 for that gift. Subject to the limitations in
6this Section, the amount of the credit that may be awarded to a
7taxpayer by the Department under this Act is an amount equal to
825% of the endowment gift.
9    (b) The aggregate amount of all Illinois Gives tax credits
10awarded by the Department under this Act in any calendar year
11may not exceed $5,000,000.
12    (c) The aggregate amount of all Illinois Gives tax credits
13that the Department may award to any taxpayer under this Act in
14any calendar year may not exceed $100,000.
15    (d) The aggregate amount of all credits that the
16Department may authorize in any calendar year based on
17endowment gifts to any specific qualified community foundation
18may not exceed 15% of the aggregate amount of all Illinois
19Gives tax credits authorized by the Department under this Act
20in that calendar year.
21    (e) Of the annual amount available for tax credits, 25%
22must be reserved for endowment gifts that do not exceed the
23small gift maximum set forth in this subsection. The small
24gift maximum is $25,000.
25    (f) For the purpose of this Section, a credit is
26considered to be awarded on the date the Department issues an

 

 

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1approved contribution authorization certificate under Section
215.
 
3    Section 15. Applications for tax credits.
4    (a) The taxpayer shall apply to the Department, in the
5form and manner prescribed by the Department, for a
6contribution authorization certificate. A taxpayer who makes
7more than one credit-eligible endowment gift must make a
8separate application for each contribution authorization
9certificate. Applications under this subsection shall be
10reviewed by the Department and shall either be approved or
11denied. Each approved contribution authorization certificate
12shall be sent to the taxpayer within 3 business days after the
13certificate is approved. The Department shall maintain on its
14website a running total of: (i) the total amount of credits
15remaining under this Act for which taxpayers may apply for a
16contribution authorization certificate issued in the calendar
17year; (ii) the total amount of credits allocated during the
18calendar year for each specific community foundation; and
19(iii) the total amount remaining for the calendar year under
20the small gift maximum set forth in Section 10. Those running
21totals shall be updated every business day.
22    (b) The taxpayer shall make the endowment gift to the
23permanent endowment fund either prior to or within 60 days
24after the taxpayer receives the approved contribution
25authorization certificate under subsection (a). The qualified

 

 

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1community foundation shall, within 30 days after receipt of an
2endowment gift for which a contribution authorization
3certificate has been approved by the Department under
4subsection (a), issue to the taxpayer a written certificate of
5receipt, which shall contain the information required by the
6Department by rule. No receipt shall be issued for amounts
7that are not actually received by the qualified community
8foundation within 60 days after the taxpayer receives the
9approved contribution authorization certificate.
 
10    Section 20. Annual report. By March 31, 2026, and by March
1131 of each subsequent year, the Department must submit an
12annual report to the Governor and the General Assembly
13concerning the activities conducted under this Act during the
14previous calendar year. The report must include a detailed
15listing of tax credits authorized under this Act by the
16Department. The report may not disclose any information if the
17disclosure would violate Section 917 of the Illinois Income
18Tax Act.
 
19    Section 25. Rulemaking. The Department may adopt rules for
20the implementation of this Act.
 
21    Section 900. The Illinois Income Tax Act is amended by
22changing Section 203 and by adding Section 241 as follows:
 

 

 

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1    (35 ILCS 5/203)
2    Sec. 203. Base income defined.
3    (a) Individuals.
4        (1) In general. In the case of an individual, base
5    income means an amount equal to the taxpayer's adjusted
6    gross income for the taxable year as modified by paragraph
7    (2).
8        (2) Modifications. The adjusted gross income referred
9    to in paragraph (1) shall be modified by adding thereto
10    the sum of the following amounts:
11            (A) An amount equal to all amounts paid or accrued
12        to the taxpayer as interest or dividends during the
13        taxable year to the extent excluded from gross income
14        in the computation of adjusted gross income, except
15        stock dividends of qualified public utilities
16        described in Section 305(e) of the Internal Revenue
17        Code;
18            (B) An amount equal to the amount of tax imposed by
19        this Act to the extent deducted from gross income in
20        the computation of adjusted gross income for the
21        taxable year;
22            (C) An amount equal to the amount received during
23        the taxable year as a recovery or refund of real
24        property taxes paid with respect to the taxpayer's
25        principal residence under the Revenue Act of 1939 and
26        for which a deduction was previously taken under

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        insurance premium expenses and costs otherwise allowed
2        as a deduction in computing base income, and that were
3        paid, accrued, or incurred, directly or indirectly, 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. The
10        addition modification required by this subparagraph
11        shall be reduced to the extent that dividends were
12        included in base income of the unitary group for the
13        same taxable year and received by the taxpayer or by a
14        member of the taxpayer's unitary business group
15        (including amounts included in gross income under
16        Sections 951 through 964 of the Internal Revenue Code
17        and amounts included in gross income under Section 78
18        of the Internal Revenue Code) with respect to the
19        stock of the same person to whom the premiums and costs
20        were directly or indirectly paid, incurred, or
21        accrued. The preceding sentence does not apply to the
22        extent that the same dividends caused a reduction to
23        the addition modification required under Section
24        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
25        Act;
26            (D-20) For taxable years beginning on or after

 

 

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1        January 1, 2002 and ending on or before December 31,
2        2006, in the case of a distribution from a qualified
3        tuition program under Section 529 of the Internal
4        Revenue Code, other than (i) a distribution from a
5        College Savings Pool created under Section 16.5 of the
6        State Treasurer Act or (ii) a distribution from the
7        Illinois Prepaid Tuition Trust Fund, an amount equal
8        to the amount excluded from gross income under Section
9        529(c)(3)(B). For taxable years beginning on or after
10        January 1, 2007, in the case of a distribution from a
11        qualified tuition program under Section 529 of the
12        Internal Revenue Code, other than (i) a distribution
13        from a College Savings Pool created under Section 16.5
14        of the State Treasurer Act, (ii) a distribution from
15        the Illinois Prepaid Tuition Trust Fund, or (iii) a
16        distribution from a qualified tuition program under
17        Section 529 of the Internal Revenue Code that (I)
18        adopts and determines that its offering materials
19        comply with the College Savings Plans Network's
20        disclosure principles and (II) has made reasonable
21        efforts to inform in-state residents of the existence
22        of in-state qualified tuition programs by informing
23        Illinois residents directly and, where applicable, to
24        inform financial intermediaries distributing the
25        program to inform in-state residents of the existence
26        of in-state qualified tuition programs at least

 

 

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

 

 

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

 

 

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1        taxable years beginning on or after January 1, 2018:
2        (1) in the case of a nonqualified withdrawal or
3        refund, as defined under Section 16.5 of the State
4        Treasurer Act, of moneys from a qualified tuition
5        program under Section 529 of the Internal Revenue Code
6        administered by the State, an amount equal to the
7        contribution component of the nonqualified withdrawal
8        or refund that was previously deducted from base
9        income under subsection (a)(2)(Y) of this Section, and
10        (2) in the case of a nonqualified withdrawal or refund
11        from a qualified ABLE program under Section 529A of
12        the Internal Revenue Code administered by the State
13        that is not used for qualified disability expenses, an
14        amount equal to the contribution component of the
15        nonqualified withdrawal or refund that was previously
16        deducted from base income under subsection (a)(2)(HH)
17        of this Section;
18            (D-23) An amount equal to the credit allowable to
19        the taxpayer under Section 218(a) of this Act,
20        determined without regard to Section 218(c) of this
21        Act;
22            (D-24) For taxable years ending on or after
23        December 31, 2017, an amount equal to the deduction
24        allowed under Section 199 of the Internal Revenue Code
25        for the taxable year;
26            (D-25) In the case of a resident, an amount equal

 

 

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1        to the amount of tax for which a credit is allowed
2        pursuant to Section 201(p)(7) of this Act;
3    and by deducting from the total so obtained the sum of the
4    following amounts:
5            (E) For taxable years ending before December 31,
6        2001, any amount included in such total in respect of
7        any compensation (including but not limited to any
8        compensation paid or accrued to a serviceman while a
9        prisoner of war or missing in action) paid to a
10        resident by reason of being on active duty in the Armed
11        Forces of the United States and in respect of any
12        compensation paid or accrued to a resident who as a
13        governmental employee was a prisoner of war or missing
14        in action, and in respect of any compensation paid to a
15        resident in 1971 or thereafter for annual training
16        performed pursuant to Sections 502 and 503, Title 32,
17        United States Code as a member of the Illinois
18        National Guard or, beginning with taxable years ending
19        on or after December 31, 2007, the National Guard of
20        any other state. For taxable years ending on or after
21        December 31, 2001, any amount included in such total
22        in respect of any compensation (including but not
23        limited to any compensation paid or accrued to a
24        serviceman while a prisoner of war or missing in
25        action) paid to a resident by reason of being a member
26        of any component of the Armed Forces of the United

 

 

10300HB1241ham002- 21 -LRB103 25002 HLH 69731 a

1        States and in respect of any compensation paid or
2        accrued to a resident who as a governmental employee
3        was a prisoner of war or missing in action, and in
4        respect of any compensation paid to a resident in 2001
5        or thereafter by reason of being a member of the
6        Illinois National Guard or, beginning with taxable
7        years ending on or after December 31, 2007, the
8        National Guard of any other state. The provisions of
9        this subparagraph (E) are exempt from the provisions
10        of Section 250;
11            (F) An amount equal to all amounts included in
12        such total pursuant to the provisions of Sections
13        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
14        408 of the Internal Revenue Code, or included in such
15        total as distributions under the provisions of any
16        retirement or disability plan for employees of any
17        governmental agency or unit, or retirement payments to
18        retired partners, which payments are excluded in
19        computing net earnings from self employment by Section
20        1402 of the Internal Revenue Code and regulations
21        adopted pursuant thereto;
22            (G) The valuation limitation amount;
23            (H) An amount equal to the amount of any tax
24        imposed by this Act which was refunded to the taxpayer
25        and included in such total for the taxable year;
26            (I) An amount equal to all amounts included in

 

 

10300HB1241ham002- 22 -LRB103 25002 HLH 69731 a

1        such total pursuant to the provisions of Section 111
2        of the Internal Revenue Code as a recovery of items
3        previously deducted from adjusted gross income in the
4        computation of taxable income;
5            (J) 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
10        substantially all of its operations in a River Edge
11        Redevelopment Zone or zones. This subparagraph (J) is
12        exempt from the provisions of Section 250;
13            (K) An amount equal to those dividends included in
14        such total that were paid by a corporation that
15        conducts business operations in a federally designated
16        Foreign Trade Zone or Sub-Zone and that is designated
17        a High Impact Business located in Illinois; provided
18        that dividends eligible for the deduction provided in
19        subparagraph (J) of paragraph (2) of this subsection
20        shall not be eligible for the deduction provided under
21        this subparagraph (K);
22            (L) For taxable years ending after December 31,
23        1983, an amount equal to all social security benefits
24        and railroad retirement benefits included in such
25        total pursuant to Sections 72(r) and 86 of the
26        Internal Revenue Code;

 

 

10300HB1241ham002- 23 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 24 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 25 -LRB103 25002 HLH 69731 a

1        as provided in that Act;
2            (T) An amount, to the extent included in adjusted
3        gross income, equal to the amount of interest earned
4        in the taxable year on a medical care savings account
5        established under the Medical Care Savings Account Act
6        or the Medical Care Savings Account Act of 2000 on
7        behalf of the taxpayer, other than interest added
8        pursuant to item (D-5) of this paragraph (2);
9            (U) For one taxable year beginning on or after
10        January 1, 1994, an amount equal to the total amount of
11        tax imposed and paid under subsections (a) and (b) of
12        Section 201 of this Act on grant amounts received by
13        the taxpayer under the Nursing Home Grant Assistance
14        Act during the taxpayer's taxable years 1992 and 1993;
15            (V) Beginning with tax years ending on or after
16        December 31, 1995 and ending with tax years ending on
17        or before December 31, 2004, an amount equal to the
18        amount paid by a taxpayer who is a self-employed
19        taxpayer, a partner of a partnership, or a shareholder
20        in a Subchapter S corporation for health insurance or
21        long-term care insurance for that taxpayer or that
22        taxpayer's spouse or dependents, to the extent that
23        the amount paid for that health insurance or long-term
24        care insurance may be deducted under Section 213 of
25        the Internal Revenue Code, has not been deducted on
26        the federal income tax return of the taxpayer, and

 

 

10300HB1241ham002- 26 -LRB103 25002 HLH 69731 a

1        does not exceed the taxable income attributable to
2        that taxpayer's income, self-employment income, or
3        Subchapter S corporation income; except that no
4        deduction shall be allowed under this item (V) if the
5        taxpayer is eligible to participate in any health
6        insurance or long-term care insurance plan of an
7        employer of the taxpayer or the taxpayer's spouse. The
8        amount of the health insurance and long-term care
9        insurance subtracted under this item (V) shall be
10        determined by multiplying total health insurance and
11        long-term care insurance premiums paid by the taxpayer
12        times a number that represents the fractional
13        percentage of eligible medical expenses under Section
14        213 of the Internal Revenue Code of 1986 not actually
15        deducted on the taxpayer's federal income tax return;
16            (W) For taxable years beginning on or after
17        January 1, 1998, all amounts included in the
18        taxpayer's federal gross income in the taxable year
19        from amounts converted from a regular IRA to a Roth
20        IRA. This paragraph is exempt from the provisions of
21        Section 250;
22            (X) For taxable year 1999 and thereafter, an
23        amount equal to the amount of any (i) distributions,
24        to the extent includible in gross income for federal
25        income tax purposes, made to the taxpayer because of
26        his or her status as a victim of persecution for racial

 

 

10300HB1241ham002- 27 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 28 -LRB103 25002 HLH 69731 a

1        for federal income tax purposes. This paragraph is
2        exempt from the provisions of Section 250;
3            (Y) For taxable years beginning on or after
4        January 1, 2002 and ending on or before December 31,
5        2004, moneys contributed in the taxable year to a
6        College Savings Pool account under Section 16.5 of the
7        State Treasurer Act, except that amounts excluded from
8        gross income under Section 529(c)(3)(C)(i) of the
9        Internal Revenue Code shall not be considered moneys
10        contributed under this subparagraph (Y). For taxable
11        years beginning on or after January 1, 2005, a maximum
12        of $10,000 contributed in the taxable year to (i) a
13        College Savings Pool account under Section 16.5 of the
14        State Treasurer Act or (ii) the Illinois Prepaid
15        Tuition Trust Fund, 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 purposes
19        of this subparagraph, contributions made by an
20        employer on behalf of an employee, or matching
21        contributions made by an employee, shall be treated as
22        made by the employee. This subparagraph (Y) is exempt
23        from the provisions of Section 250;
24            (Z) For taxable years 2001 and thereafter, for the
25        taxable year in which the bonus depreciation deduction
26        is taken on the taxpayer's federal income tax return

 

 

10300HB1241ham002- 29 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 30 -LRB103 25002 HLH 69731 a

1                depreciation deduction of 100% of the adjusted
2                basis was taken in a taxable year ending on or
3                after December 31, 2021, "x" equals the
4                depreciation deduction that would be allowed
5                on that property if the taxpayer had made the
6                election under Section 168(k)(7) of the
7                Internal Revenue Code to not claim bonus
8                depreciation on that property; and
9                    (iv) for property on which a bonus
10                depreciation deduction of a percentage other
11                than 30%, 50% or 100% of the adjusted basis
12                was taken in a taxable year ending on or after
13                December 31, 2021, "x" equals "y" multiplied
14                by 100 times the percentage bonus depreciation
15                on the property (that is, 100(bonus%)) and
16                then divided by 100 times 1 minus the
17                percentage bonus depreciation on the property
18                (that is, 100(1-bonus%)).
19            The aggregate amount deducted under this
20        subparagraph in all taxable years for any one piece of
21        property may not exceed the amount of the bonus
22        depreciation deduction taken on that property on the
23        taxpayer's federal income tax return under subsection
24        (k) of Section 168 of the Internal Revenue Code. This
25        subparagraph (Z) is exempt from the provisions of
26        Section 250;

 

 

10300HB1241ham002- 31 -LRB103 25002 HLH 69731 a

1            (AA) If the taxpayer sells, transfers, abandons,
2        or otherwise disposes of property for which the
3        taxpayer was required in any taxable year to make an
4        addition modification under subparagraph (D-15), then
5        an amount equal to that addition modification.
6            If the taxpayer continues to own property through
7        the last day of the last tax year for which a
8        subtraction is allowed with respect to that property
9        under subparagraph (Z) and for which the taxpayer was
10        required in any taxable year to make an addition
11        modification under subparagraph (D-15), then an amount
12        equal to that addition modification.
13            The taxpayer is allowed to take the deduction
14        under this subparagraph only once with respect to any
15        one piece of property.
16            This subparagraph (AA) is exempt from the
17        provisions of Section 250;
18            (BB) Any amount included in adjusted gross income,
19        other than salary, received by a driver in a
20        ridesharing arrangement using a motor vehicle;
21            (CC) The amount of (i) any interest income (net of
22        the deductions allocable thereto) taken into account
23        for the taxable year with respect to a transaction
24        with a taxpayer that is required to make an addition
25        modification with respect to such transaction under
26        Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

10300HB1241ham002- 32 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 33 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 34 -LRB103 25002 HLH 69731 a

1        exempt from the provisions of Section 250;
2            (FF) An amount equal to any amount awarded to the
3        taxpayer during the taxable year by the Court of
4        Claims under subsection (c) of Section 8 of the Court
5        of Claims Act for time unjustly served in a State
6        prison. This subparagraph (FF) is exempt from the
7        provisions of Section 250;
8            (GG) For taxable years ending on or after December
9        31, 2011, in the case of a taxpayer who was required to
10        add back any insurance premiums under Section
11        203(a)(2)(D-19), such taxpayer may elect to subtract
12        that part of a reimbursement received from the
13        insurance company equal to the amount of the expense
14        or loss (including expenses incurred by the insurance
15        company) that would have been taken into account as a
16        deduction for federal income tax purposes if the
17        expense or loss had been uninsured. If a taxpayer
18        makes the election provided for by this subparagraph
19        (GG), the insurer to which the premiums were paid must
20        add back to income the amount subtracted by the
21        taxpayer pursuant to this subparagraph (GG). This
22        subparagraph (GG) is exempt from the provisions of
23        Section 250;
24            (HH) For taxable years beginning on or after
25        January 1, 2018 and prior to January 1, 2028, a maximum
26        of $10,000 contributed in the taxable year to a

 

 

10300HB1241ham002- 35 -LRB103 25002 HLH 69731 a

1        qualified ABLE account under Section 16.6 of the State
2        Treasurer Act, except that amounts excluded from gross
3        income under Section 529(c)(3)(C)(i) or Section
4        529A(c)(1)(C) of the Internal Revenue Code shall not
5        be considered moneys contributed under this
6        subparagraph (HH). For purposes of this subparagraph
7        (HH), contributions made by an employer on behalf of
8        an employee, or matching contributions made by an
9        employee, shall be treated as made by the employee;
10            (II) For taxable years that begin on or after
11        January 1, 2021 and begin before January 1, 2026, the
12        amount that is included in the taxpayer's federal
13        adjusted gross income pursuant to Section 61 of the
14        Internal Revenue Code as discharge of indebtedness
15        attributable to student loan forgiveness and that is
16        not excluded from the taxpayer's federal adjusted
17        gross income pursuant to paragraph (5) of subsection
18        (f) of Section 108 of the Internal Revenue Code; and
19            (JJ) For taxable years beginning on or after
20        January 1, 2023, for any cannabis establishment
21        operating in this State and licensed under the
22        Cannabis Regulation and Tax Act or any cannabis
23        cultivation center or medical cannabis dispensing
24        organization operating in this State and licensed
25        under the Compassionate Use of Medical Cannabis
26        Program Act, an amount equal to the deductions that

 

 

10300HB1241ham002- 36 -LRB103 25002 HLH 69731 a

1        were disallowed under Section 280E of the Internal
2        Revenue Code for the taxable year and that would not be
3        added back under this subsection. The provisions of
4        this subparagraph (JJ) are exempt from the provisions
5        of Section 250; and .
6            (KK) (JJ) To the extent includible in gross income
7        for federal income tax purposes, any amount awarded or
8        paid to the taxpayer as a result of a judgment or
9        settlement for fertility fraud as provided in Section
10        15 of the Illinois Fertility Fraud Act, donor
11        fertility fraud as provided in Section 20 of the
12        Illinois Fertility Fraud Act, or similar action in
13        another state.
 
14    (b) Corporations.
15        (1) In general. In the case of a corporation, base
16    income means an amount equal to the taxpayer's taxable
17    income for the taxable year as modified by paragraph (2).
18        (2) Modifications. The taxable income referred to in
19    paragraph (1) shall be modified by adding thereto the sum
20    of the following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest and all distributions
23        received from regulated investment companies during
24        the taxable year to the extent excluded from gross
25        income in the computation of taxable income;

 

 

10300HB1241ham002- 37 -LRB103 25002 HLH 69731 a

1            (B) An amount equal to the amount of tax imposed by
2        this Act to the extent deducted from gross income in
3        the computation of taxable income for the taxable
4        year;
5            (C) In the case of a regulated investment company,
6        an amount equal to the excess of (i) the net long-term
7        capital gain for the taxable year, over (ii) the
8        amount of the capital gain dividends designated as
9        such in accordance with Section 852(b)(3)(C) of the
10        Internal Revenue Code and any amount designated under
11        Section 852(b)(3)(D) of the Internal Revenue Code,
12        attributable to the taxable year (this amendatory Act
13        of 1995 (Public Act 89-89) is declarative of existing
14        law and is not a new enactment);
15            (D) The amount of any net operating loss deduction
16        taken in arriving at taxable income, other than a net
17        operating loss carried forward from a taxable year
18        ending prior to December 31, 1986;
19            (E) For taxable years in which a net operating
20        loss carryback or carryforward from a taxable year
21        ending prior to December 31, 1986 is an element of
22        taxable income under paragraph (1) of subsection (e)
23        or subparagraph (E) of paragraph (2) of subsection
24        (e), the amount by which addition modifications other
25        than those provided by this subparagraph (E) exceeded
26        subtraction modifications in such earlier taxable

 

 

10300HB1241ham002- 38 -LRB103 25002 HLH 69731 a

1        year, with the following limitations applied in the
2        order that they are listed:
3                (i) the addition modification relating to the
4            net operating loss carried back or forward to the
5            taxable year from any taxable year ending prior to
6            December 31, 1986 shall be reduced by the amount
7            of addition modification under this subparagraph
8            (E) which related to that net operating loss and
9            which was taken into account in calculating the
10            base income of an earlier taxable year, and
11                (ii) the addition modification relating to the
12            net operating loss carried back or forward to the
13            taxable year from any taxable year ending prior to
14            December 31, 1986 shall not exceed the amount of
15            such carryback or carryforward;
16            For taxable years in which there is a net
17        operating loss carryback or carryforward from more
18        than one other taxable year ending prior to December
19        31, 1986, the addition modification provided in this
20        subparagraph (E) shall be the sum of the amounts
21        computed independently under the preceding provisions
22        of this subparagraph (E) for each such taxable year;
23            (E-5) For taxable years ending after December 31,
24        1997, an amount equal to any eligible remediation
25        costs that the corporation deducted in computing
26        adjusted gross income and for which the corporation

 

 

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1        claims a credit under subsection (l) of Section 201;
2            (E-10) For taxable years 2001 and thereafter, an
3        amount equal to the bonus depreciation deduction taken
4        on the taxpayer's federal income tax return for the
5        taxable year under subsection (k) of Section 168 of
6        the Internal Revenue Code;
7            (E-11) If the taxpayer sells, transfers, abandons,
8        or otherwise disposes of property for which the
9        taxpayer was required in any taxable year to make an
10        addition modification under subparagraph (E-10), then
11        an amount equal to the aggregate amount of the
12        deductions taken in all taxable years under
13        subparagraph (T) with respect to that property.
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 (T) and for which the taxpayer was
18        allowed in any taxable year to make a subtraction
19        modification under subparagraph (T), then an amount
20        equal to that subtraction modification.
21            The taxpayer is required to make the addition
22        modification under this subparagraph only once with
23        respect to any one piece of property;
24            (E-12) An amount equal to the amount otherwise
25        allowed as a deduction in computing base income for
26        interest paid, accrued, or incurred, directly or

 

 

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

 

 

10300HB1241ham002- 41 -LRB103 25002 HLH 69731 a

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

 

 

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1            or
2                (iv) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer establishes by clear and convincing
5            evidence that the adjustments are unreasonable; or
6            if the taxpayer and the Director agree in writing
7            to the application or use of an alternative method
8            of apportionment under Section 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-13) An amount equal to the amount of intangible
19        expenses and costs otherwise allowed as a deduction in
20        computing base income, and that were paid, accrued, or
21        incurred, directly or indirectly, (i) for taxable
22        years ending on or after December 31, 2004, to a
23        foreign person who would be a member of the same
24        unitary business group but for the fact that the
25        foreign person's business activity outside the United
26        States is 80% or more of that person's total business

 

 

10300HB1241ham002- 43 -LRB103 25002 HLH 69731 a

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

 

 

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

 

 

10300HB1241ham002- 45 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 46 -LRB103 25002 HLH 69731 a

1            (E-14) For taxable years ending on or after
2        December 31, 2008, an amount equal to the amount of
3        insurance premium expenses and costs otherwise allowed
4        as a deduction in computing base income, and that were
5        paid, accrued, or incurred, directly or indirectly, to
6        a person who would be a member of the same unitary
7        business group but for the fact that the person is
8        prohibited under Section 1501(a)(27) from being
9        included in the unitary business group because he or
10        she is ordinarily required to apportion business
11        income under different subsections of Section 304. The
12        addition modification required by this subparagraph
13        shall be reduced to the extent that dividends were
14        included in base income of the unitary group for the
15        same taxable year and received by the taxpayer or by a
16        member of the taxpayer's unitary business group
17        (including amounts included in gross income under
18        Sections 951 through 964 of the Internal Revenue Code
19        and amounts included in gross income under Section 78
20        of the Internal Revenue Code) with respect to the
21        stock of the same person to whom the premiums and costs
22        were directly or indirectly paid, incurred, or
23        accrued. The preceding sentence does not apply to the
24        extent that the same dividends caused a reduction to
25        the addition modification required under Section
26        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this

 

 

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1        Act;
2            (E-15) For taxable years beginning after December
3        31, 2008, any deduction for dividends paid by a
4        captive real estate investment trust that is allowed
5        to a real estate investment trust under Section
6        857(b)(2)(B) of the Internal Revenue Code for
7        dividends paid;
8            (E-16) An amount equal to the credit allowable to
9        the taxpayer under Section 218(a) of this Act,
10        determined without regard to Section 218(c) of this
11        Act;
12            (E-17) For taxable years ending on or after
13        December 31, 2017, an amount equal to the deduction
14        allowed under Section 199 of the Internal Revenue Code
15        for the taxable year;
16            (E-18) for taxable years beginning after December
17        31, 2018, an amount equal to the deduction allowed
18        under Section 250(a)(1)(A) of the Internal Revenue
19        Code for the taxable year;
20            (E-19) for taxable years ending on or after June
21        30, 2021, an amount equal to the deduction allowed
22        under Section 250(a)(1)(B)(i) of the Internal Revenue
23        Code for the taxable year;
24            (E-20) for taxable years ending on or after June
25        30, 2021, an amount equal to the deduction allowed
26        under Sections 243(e) and 245A(a) of the Internal

 

 

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1        Revenue Code for the taxable year; .
2            (E-21) the amount that is claimed as a federal
3        deduction when computing the taxpayer's federal
4        taxable income for the taxable year and that is
5        attributable to an endowment gift for which the
6        taxpayer receives a credit under the Illinois Gives
7        Tax Credit Act;
8    and by deducting from the total so obtained the sum of the
9    following amounts:
10            (F) An amount equal to the amount of any tax
11        imposed by this Act which was refunded to the taxpayer
12        and included in such total for the taxable year;
13            (G) An amount equal to any amount included in such
14        total under Section 78 of the Internal Revenue Code;
15            (H) In the case of a regulated investment company,
16        an amount equal to the amount of exempt interest
17        dividends as defined in subsection (b)(5) of Section
18        852 of the Internal Revenue Code, paid to shareholders
19        for the taxable year;
20            (I) With the exception of any amounts subtracted
21        under subparagraph (J), an amount equal to the sum of
22        all amounts disallowed as deductions by (i) Sections
23        171(a)(2) and 265(a)(2) and amounts disallowed as
24        interest expense by Section 291(a)(3) of the Internal
25        Revenue Code, and all amounts of expenses allocable to
26        interest and disallowed as deductions by Section

 

 

10300HB1241ham002- 49 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 50 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 51 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 52 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 53 -LRB103 25002 HLH 69731 a

1        provisions of Section 250;
2            (O) An amount equal to: (i) 85% for taxable years
3        ending on or before December 31, 1992, or, a
4        percentage equal to the percentage allowable under
5        Section 243(a)(1) of the Internal Revenue Code of 1986
6        for taxable years ending after December 31, 1992, of
7        the amount by which dividends included in taxable
8        income and received from a corporation that is not
9        created or organized under the laws of the United
10        States or any state or political subdivision thereof,
11        including, for taxable years ending on or after
12        December 31, 1988, dividends received or deemed
13        received or paid or deemed paid under Sections 951
14        through 965 of the Internal Revenue Code, exceed the
15        amount of the modification provided under subparagraph
16        (G) of paragraph (2) of this subsection (b) which is
17        related to such dividends, and including, for taxable
18        years ending on or after December 31, 2008, dividends
19        received from a captive real estate investment trust;
20        plus (ii) 100% of the amount by which dividends,
21        included in taxable income and received, including,
22        for taxable years ending on or after December 31,
23        1988, dividends received or deemed received or paid or
24        deemed paid under Sections 951 through 964 of the
25        Internal Revenue Code and including, for taxable years
26        ending on or after December 31, 2008, dividends

 

 

10300HB1241ham002- 54 -LRB103 25002 HLH 69731 a

1        received from a captive real estate investment trust,
2        from any such corporation specified in clause (i) that
3        would but for the provisions of Section 1504(b)(3) of
4        the Internal Revenue Code be treated as a member of the
5        affiliated group which includes the dividend
6        recipient, exceed the amount of the modification
7        provided under subparagraph (G) of paragraph (2) of
8        this subsection (b) which is related to such
9        dividends. For taxable years ending on or after June
10        30, 2021, (i) for purposes of this subparagraph, the
11        term "dividend" does not include any amount treated as
12        a dividend under Section 1248 of the Internal Revenue
13        Code, and (ii) this subparagraph shall not apply to
14        dividends for which a deduction is allowed under
15        Section 245(a) of the Internal Revenue Code. This
16        subparagraph (O) is exempt from the provisions of
17        Section 250 of this Act;
18            (P) An amount equal to any contribution made to a
19        job training project established pursuant to the Tax
20        Increment Allocation Redevelopment Act;
21            (Q) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code;
26            (R) On and after July 20, 1999, in the case of an

 

 

10300HB1241ham002- 55 -LRB103 25002 HLH 69731 a

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

 

 

10300HB1241ham002- 56 -LRB103 25002 HLH 69731 a

1        Revenue Code and for each applicable taxable year
2        thereafter, an amount equal to "x", where:
3                (1) "y" equals the amount of the depreciation
4            deduction taken for the taxable year on the
5            taxpayer's federal income tax return on property
6            for which the bonus depreciation deduction was
7            taken in any year under subsection (k) of Section
8            168 of the Internal Revenue Code, but not
9            including the bonus depreciation deduction;
10                (2) for taxable years ending on or before
11            December 31, 2005, "x" equals "y" multiplied by 30
12            and then divided by 70 (or "y" multiplied by
13            0.429); and
14                (3) for taxable years ending after December
15            31, 2005:
16                    (i) for property on which a bonus
17                depreciation deduction of 30% of the adjusted
18                basis was taken, "x" equals "y" multiplied by
19                30 and then divided by 70 (or "y" multiplied
20                by 0.429);
21                    (ii) for property on which a bonus
22                depreciation deduction of 50% of the adjusted
23                basis was taken, "x" equals "y" multiplied by
24                1.0;
25                    (iii) for property on which a bonus
26                depreciation deduction of 100% of the adjusted

 

 

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1                basis was taken in a taxable year ending on or
2                after December 31, 2021, "x" equals the
3                depreciation deduction that would be allowed
4                on that property if the taxpayer had made the
5                election under Section 168(k)(7) of the
6                Internal Revenue Code to not claim bonus
7                depreciation on that property; and
8                    (iv) for property on which a bonus
9                depreciation deduction of a percentage other
10                than 30%, 50% or 100% of the adjusted basis
11                was taken in a taxable year ending on or after
12                December 31, 2021, "x" equals "y" multiplied
13                by 100 times the percentage bonus depreciation
14                on the property (that is, 100(bonus%)) and
15                then divided by 100 times 1 minus the
16                percentage bonus depreciation on the property
17                (that is, 100(1-bonus%)).
18            The aggregate amount deducted under this
19        subparagraph in all taxable years for any one piece of
20        property may not exceed the amount of the bonus
21        depreciation deduction taken on that property on the
22        taxpayer's federal income tax return under subsection
23        (k) of Section 168 of the Internal Revenue Code. This
24        subparagraph (T) is exempt from the provisions of
25        Section 250;
26            (U) If the taxpayer sells, transfers, abandons, or

 

 

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

 

 

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

 

 

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

 

 

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1        Code, and without regard to any net operating loss
2        deduction. This subparagraph (Z) is exempt from the
3        provisions of Section 250; and
4            (AA) For taxable years beginning on or after
5        January 1, 2023, for any cannabis establishment
6        operating in this State and licensed under the
7        Cannabis Regulation and Tax Act or any cannabis
8        cultivation center or medical cannabis dispensing
9        organization operating in this State and licensed
10        under the Compassionate Use of Medical Cannabis
11        Program Act, an amount equal to the deductions that
12        were disallowed under Section 280E of the Internal
13        Revenue Code for the taxable year and that would not be
14        added back under this subsection. The provisions of
15        this subparagraph (AA) are exempt from the provisions
16        of Section 250.
17        (3) Special rule. For purposes of paragraph (2)(A),
18    "gross income" in the case of a life insurance company,
19    for tax years ending on and after December 31, 1994, and
20    prior to December 31, 2011, shall mean the gross
21    investment income for the taxable year and, for tax years
22    ending on or after December 31, 2011, shall mean all
23    amounts included in life insurance gross income under
24    Section 803(a)(3) of the Internal Revenue Code.
 
25    (c) Trusts and estates.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                Nothing in this subsection shall preclude the
2            Director from making any other adjustment
3            otherwise allowed under Section 404 of this Act
4            for any tax year beginning after the effective
5            date of this amendment provided such adjustment is
6            made pursuant to regulation adopted by the
7            Department and such regulations provide methods
8            and standards by which the Department will utilize
9            its authority under Section 404 of this Act;
10            (G-13) An amount equal to the amount of intangible
11        expenses and costs otherwise allowed as a deduction in
12        computing base income, and that were paid, accrued, or
13        incurred, directly or indirectly, (i) for taxable
14        years ending on or after December 31, 2004, to a
15        foreign person who would be a member of the same
16        unitary business group but for the fact that the
17        foreign person's business activity outside the United
18        States is 80% or more of that person's total business
19        activity and (ii) for taxable years ending on or after
20        December 31, 2008, to a person who would be a member of
21        the same unitary business group but for the fact that
22        the person is prohibited under Section 1501(a)(27)
23        from being included in the unitary business group
24        because he or she is ordinarily required to apportion
25        business income under different subsections of Section
26        304. The addition modification required by this

 

 

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

 

 

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1        trademarks, service marks, copyrights, mask works,
2        trade secrets, and similar types of intangible assets.
3            This paragraph shall not apply to the following:
4                (i) any item of intangible expenses or costs
5            paid, accrued, or incurred, directly or
6            indirectly, from a transaction with 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 item; or
11                (ii) any item of intangible expense or cost
12            paid, accrued, or incurred, directly or
13            indirectly, if the taxpayer can establish, based
14            on a preponderance of the evidence, both of the
15            following:
16                    (a) the person during the same taxable
17                year paid, accrued, or incurred, the
18                intangible expense or cost to a person that is
19                not a related member, and
20                    (b) the transaction giving rise to the
21                intangible expense or cost between the
22                taxpayer and the person did not have as a
23                principal purpose the avoidance of Illinois
24                income tax, and is paid pursuant to a contract
25                or agreement that reflects arm's-length terms;
26                or

 

 

10300HB1241ham002- 72 -LRB103 25002 HLH 69731 a

1                (iii) any item of intangible expense or cost
2            paid, accrued, or incurred, directly or
3            indirectly, from a transaction with a person if
4            the taxpayer establishes by clear and convincing
5            evidence, that the adjustments are unreasonable;
6            or if the taxpayer and the Director agree in
7            writing to the application or use of an
8            alternative method of apportionment under Section
9            304(f);
10                Nothing in this subsection shall preclude the
11            Director from making any other adjustment
12            otherwise allowed under Section 404 of this Act
13            for any tax year beginning after the effective
14            date of this amendment provided such adjustment is
15            made pursuant to regulation adopted by the
16            Department and such regulations provide methods
17            and standards by which the Department will utilize
18            its authority under Section 404 of this Act;
19            (G-14) For taxable years ending on or after
20        December 31, 2008, an amount equal to the amount of
21        insurance premium expenses and costs otherwise allowed
22        as a deduction in computing base income, and that were
23        paid, accrued, or incurred, directly or indirectly, 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. The
4        addition modification required by this subparagraph
5        shall be reduced to the extent that dividends were
6        included in base income of the unitary group for the
7        same taxable year and received by the taxpayer or by a
8        member of the taxpayer's unitary business group
9        (including amounts included in gross income under
10        Sections 951 through 964 of the Internal Revenue Code
11        and amounts included in gross income under Section 78
12        of the Internal Revenue Code) with respect to the
13        stock of the same person to whom the premiums and costs
14        were directly or indirectly paid, incurred, or
15        accrued. The preceding sentence does not apply to the
16        extent that the same dividends caused a reduction to
17        the addition modification required under Section
18        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
19        Act;
20            (G-15) An amount equal to the credit allowable to
21        the taxpayer under Section 218(a) of this Act,
22        determined without regard to Section 218(c) of this
23        Act;
24            (G-16) For taxable years ending on or after
25        December 31, 2017, an amount equal to the deduction
26        allowed under Section 199 of the Internal Revenue Code

 

 

10300HB1241ham002- 74 -LRB103 25002 HLH 69731 a

1        for the taxable year;
2            (G-17) the amount that is claimed as a federal
3        deduction when computing the taxpayer's federal
4        taxable income for the taxable year and that is
5        attributable to an endowment gift for which the
6        taxpayer receives a credit under the Illinois Gives
7        Tax Credit Act;
8    and by deducting from the total so obtained the sum of the
9    following amounts:
10            (H) An amount equal to all amounts included in
11        such total pursuant to the provisions of Sections
12        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
13        of the Internal Revenue Code or included in such total
14        as distributions under the provisions of any
15        retirement or disability plan for employees of any
16        governmental agency or unit, or retirement payments to
17        retired partners, which payments are excluded in
18        computing net earnings from self employment by Section
19        1402 of the Internal Revenue Code and regulations
20        adopted pursuant thereto;
21            (I) The valuation limitation amount;
22            (J) An amount equal to the amount of any tax
23        imposed by this Act which was refunded to the taxpayer
24        and included in such total for the taxable year;
25            (K) An amount equal to all amounts included in
26        taxable income as modified by subparagraphs (A), (B),

 

 

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

 

 

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1            (M) An amount equal to those dividends included in
2        such total which were paid by a corporation which
3        conducts business operations in a River Edge
4        Redevelopment Zone or zones created under the River
5        Edge Redevelopment Zone Act and conducts substantially
6        all of its operations in a River Edge Redevelopment
7        Zone or zones. This subparagraph (M) is exempt from
8        the provisions of Section 250;
9            (N) An amount equal to any contribution made to a
10        job training project established pursuant to the Tax
11        Increment Allocation Redevelopment Act;
12            (O) An amount equal to those dividends included in
13        such total that were paid by a corporation that
14        conducts business operations in a federally designated
15        Foreign Trade Zone or Sub-Zone and that is designated
16        a High Impact Business located in Illinois; provided
17        that dividends eligible for the deduction provided in
18        subparagraph (M) of paragraph (2) of this subsection
19        shall not be eligible for the deduction provided under
20        this subparagraph (O);
21            (P) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code;
26            (Q) For taxable year 1999 and thereafter, an

 

 

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

 

 

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1        regime or as an heir of the victim. The amount of and
2        the eligibility for any public assistance, benefit, or
3        similar entitlement is not affected by the inclusion
4        of items (i) and (ii) of this paragraph in gross income
5        for federal income tax purposes. This paragraph is
6        exempt from the provisions of Section 250;
7            (R) For taxable years 2001 and thereafter, for the
8        taxable year in which the bonus depreciation deduction
9        is taken on the taxpayer's federal income tax return
10        under subsection (k) of Section 168 of the Internal
11        Revenue Code and for each applicable taxable year
12        thereafter, an amount equal to "x", where:
13                (1) "y" equals the amount of the depreciation
14            deduction taken for the taxable year on the
15            taxpayer's federal income tax return on property
16            for which the bonus depreciation deduction was
17            taken in any year under subsection (k) of Section
18            168 of the Internal Revenue Code, but not
19            including the bonus depreciation deduction;
20                (2) for taxable years ending on or before
21            December 31, 2005, "x" equals "y" multiplied by 30
22            and then divided by 70 (or "y" multiplied by
23            0.429); and
24                (3) for taxable years ending after December
25            31, 2005:
26                    (i) for property on which a bonus

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        deduction for federal income tax purposes if the
2        expense or loss had been uninsured. If a taxpayer
3        makes the election provided for by this subparagraph
4        (Y), the insurer to which the premiums were paid must
5        add back to income the amount subtracted by the
6        taxpayer pursuant to this subparagraph (Y). This
7        subparagraph (Y) is exempt from the provisions of
8        Section 250;
9            (Z) For taxable years beginning after December 31,
10        2018 and before January 1, 2026, the amount of excess
11        business loss of the taxpayer disallowed as a
12        deduction by Section 461(l)(1)(B) of the Internal
13        Revenue Code; and
14            (AA) For taxable years beginning on or after
15        January 1, 2023, for any cannabis establishment
16        operating in this State and licensed under the
17        Cannabis Regulation and Tax Act or any cannabis
18        cultivation center or medical cannabis dispensing
19        organization operating in this State and licensed
20        under the Compassionate Use of Medical Cannabis
21        Program Act, an amount equal to the deductions that
22        were disallowed under Section 280E of the Internal
23        Revenue Code for the taxable year and that would not be
24        added back under this subsection. The provisions of
25        this subparagraph (AA) are exempt from the provisions
26        of Section 250.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

10300HB1241ham002- 89 -LRB103 25002 HLH 69731 a

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

 

 

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

 

 

10300HB1241ham002- 91 -LRB103 25002 HLH 69731 a

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

 

 

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

 

 

10300HB1241ham002- 93 -LRB103 25002 HLH 69731 a

1            Department and such regulations provide methods
2            and standards by which the Department will utilize
3            its authority under Section 404 of this Act;
4            (D-9) For taxable years ending on or after
5        December 31, 2008, an amount equal to the amount of
6        insurance premium expenses and costs otherwise allowed
7        as a deduction in computing base income, and that were
8        paid, accrued, or incurred, directly or indirectly, to
9        a person who would be a member of the same unitary
10        business group but for the fact that the person is
11        prohibited under Section 1501(a)(27) from being
12        included in the unitary business group because he or
13        she is ordinarily required to apportion business
14        income under different subsections of Section 304. The
15        addition modification required by this subparagraph
16        shall be reduced to the extent that dividends were
17        included in base income of the unitary group for the
18        same taxable year and received by the taxpayer or by a
19        member of the taxpayer's unitary business group
20        (including amounts included in gross income under
21        Sections 951 through 964 of the Internal Revenue Code
22        and amounts included in gross income under Section 78
23        of the Internal Revenue Code) with respect to the
24        stock of the same person to whom the premiums and costs
25        were directly or indirectly paid, incurred, or
26        accrued. The preceding sentence does not apply to the

 

 

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1        extent that the same dividends caused a reduction to
2        the addition modification required under Section
3        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
4            (D-10) 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            (D-11) 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            (D-12) the amount that is claimed as a federal
13        deduction when computing the taxpayer's federal
14        taxable income for the taxable year and that is
15        attributable to an endowment gift for which the
16        taxpayer receives a credit under the Illinois Gives
17        Tax Credit Act;
18    and by deducting from the total so obtained the following
19    amounts:
20            (E) The valuation limitation amount;
21            (F) An amount equal to the amount of any tax
22        imposed by this Act which was refunded to the taxpayer
23        and included in such total for the taxable year;
24            (G) An amount equal to all amounts included in
25        taxable income as modified by subparagraphs (A), (B),
26        (C) and (D) which are exempt from taxation by this

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                than 30%, 50% or 100% of the adjusted basis
2                was taken in a taxable year ending on or after
3                December 31, 2021, "x" equals "y" multiplied
4                by 100 times the percentage bonus depreciation
5                on the property (that is, 100(bonus%)) and
6                then divided by 100 times 1 minus the
7                percentage bonus depreciation on the property
8                (that is, 100(1-bonus%)).
9            The aggregate amount deducted under this
10        subparagraph in all taxable years for any one piece of
11        property may not exceed the amount of the bonus
12        depreciation deduction taken on that property on the
13        taxpayer's federal income tax return under subsection
14        (k) of Section 168 of the Internal Revenue Code. This
15        subparagraph (O) is exempt from the provisions of
16        Section 250;
17            (P) If the taxpayer sells, transfers, abandons, or
18        otherwise disposes of property for which the taxpayer
19        was required in any taxable year to make an addition
20        modification under subparagraph (D-5), then an amount
21        equal to that addition modification.
22            If the taxpayer continues to own property through
23        the last day of the last tax year for which a
24        subtraction is allowed with respect to that property
25        under subparagraph (O) and for which the taxpayer was
26        required in any taxable year to make an addition

 

 

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

 

 

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

 

 

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

 

 

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1        taxpayer pursuant to this subparagraph (T). This
2        subparagraph (T) is exempt from the provisions of
3        Section 250; and
4            (U) For taxable years beginning on or after
5        January 1, 2023, for any cannabis establishment
6        operating in this State and licensed under the
7        Cannabis Regulation and Tax Act or any cannabis
8        cultivation center or medical cannabis dispensing
9        organization operating in this State and licensed
10        under the Compassionate Use of Medical Cannabis
11        Program Act, an amount equal to the deductions that
12        were disallowed under Section 280E of the Internal
13        Revenue Code for the taxable year and that would not be
14        added back under this subsection. The provisions of
15        this subparagraph (U) are exempt from the provisions
16        of Section 250.
 
17    (e) Gross income; adjusted gross income; taxable income.
18        (1) In general. Subject to the provisions of paragraph
19    (2) and subsection (b)(3), for purposes of this Section
20    and Section 803(e), a taxpayer's gross income, adjusted
21    gross income, or taxable income for the taxable year shall
22    mean the amount of gross income, adjusted gross income or
23    taxable income properly reportable for federal income tax
24    purposes for the taxable year under the provisions of the
25    Internal Revenue Code. Taxable income may be less than

 

 

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1    zero. However, for taxable years ending on or after
2    December 31, 1986, net operating loss carryforwards from
3    taxable years ending prior to December 31, 1986, may not
4    exceed the sum of federal taxable income for the taxable
5    year before net operating loss deduction, plus the excess
6    of addition modifications over subtraction modifications
7    for the taxable year. For taxable years ending prior to
8    December 31, 1986, taxable income may never be an amount
9    in excess of the net operating loss for the taxable year as
10    defined in subsections (c) and (d) of Section 172 of the
11    Internal Revenue Code, provided that when taxable income
12    of a corporation (other than a Subchapter S corporation),
13    trust, or estate is less than zero and addition
14    modifications, other than those provided by subparagraph
15    (E) of paragraph (2) of subsection (b) for corporations or
16    subparagraph (E) of paragraph (2) of subsection (c) for
17    trusts and estates, exceed subtraction modifications, an
18    addition modification must be made under those
19    subparagraphs for any other taxable year to which the
20    taxable income less than zero (net operating loss) is
21    applied under Section 172 of the Internal Revenue Code or
22    under subparagraph (E) of paragraph (2) of this subsection
23    (e) applied in conjunction with Section 172 of the
24    Internal Revenue Code.
25        (2) Special rule. For purposes of paragraph (1) of
26    this subsection, the taxable income properly reportable

 

 

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1    for federal income tax purposes shall mean:
2            (A) Certain life insurance companies. In the case
3        of a life insurance company subject to the tax imposed
4        by Section 801 of the Internal Revenue Code, life
5        insurance company taxable income, plus the amount of
6        distribution from pre-1984 policyholder surplus
7        accounts as calculated under Section 815a of the
8        Internal Revenue Code;
9            (B) Certain other insurance companies. In the case
10        of mutual insurance companies subject to the tax
11        imposed by Section 831 of the Internal Revenue Code,
12        insurance company taxable income;
13            (C) Regulated investment companies. In the case of
14        a regulated investment company subject to the tax
15        imposed by Section 852 of the Internal Revenue Code,
16        investment company taxable income;
17            (D) Real estate investment trusts. In the case of
18        a real estate investment trust subject to the tax
19        imposed by Section 857 of the Internal Revenue Code,
20        real estate investment trust taxable income;
21            (E) Consolidated corporations. In the case of a
22        corporation which is a member of an affiliated group
23        of corporations filing a consolidated income tax
24        return for the taxable year for federal income tax
25        purposes, taxable income determined as if such
26        corporation had filed a separate return for federal

 

 

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

 

 

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

 

 

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1        such corporation determined in accordance with the
2        federal Subchapter S rules as in effect on July 1,
3        1982; and
4            (H) Partnerships. In the case of a partnership,
5        taxable income determined in accordance with Section
6        703 of the Internal Revenue Code, except that taxable
7        income shall take into account those items which are
8        required by Section 703(a)(1) to be separately stated
9        but which would be taken into account by an individual
10        in calculating his taxable income.
11        (3) Recapture of business expenses on disposition of
12    asset or business. Notwithstanding any other law to the
13    contrary, if in prior years income from an asset or
14    business has been classified as business income and in a
15    later year is demonstrated to be non-business income, then
16    all expenses, without limitation, deducted in such later
17    year and in the 2 immediately preceding taxable years
18    related to that asset or business that generated the
19    non-business income shall be added back and recaptured as
20    business income in the year of the disposition of the
21    asset or business. Such amount shall be apportioned to
22    Illinois using the greater of the apportionment fraction
23    computed for the business under Section 304 of this Act
24    for the taxable year or the average of the apportionment
25    fractions computed for the business under Section 304 of
26    this Act for the taxable year and for the 2 immediately

 

 

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

 

 

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1        basis (for determining gain) for such property on that
2        date (determined under the Internal Revenue Code as in
3        effect on that date), or (ii) the total gain realized
4        and reportable for federal income tax purposes in
5        respect of the sale, exchange or other disposition of
6        such property.
7            (B) If the fair market value of property referred
8        to in paragraph (1) was not readily ascertainable on
9        August 1, 1969, the pre-August 1, 1969 appreciation
10        amount for such property is that amount which bears
11        the same ratio to the total gain reported in respect of
12        the property for federal income tax purposes for the
13        taxable year, as the number of full calendar months in
14        that part of the taxpayer's holding period for the
15        property ending July 31, 1969 bears to the number of
16        full calendar months in the taxpayer's entire holding
17        period for the property.
18            (C) The Department shall prescribe such
19        regulations as may be necessary to carry out the
20        purposes of this paragraph.
 
21    (g) Double deductions. Unless specifically provided
22otherwise, nothing in this Section shall permit the same item
23to be deducted more than once.
 
24    (h) Legislative intention. Except as expressly provided by

 

 

10300HB1241ham002- 111 -LRB103 25002 HLH 69731 a

1this Section there shall be no modifications or limitations on
2the amounts of income, gain, loss or deduction taken into
3account in determining gross income, adjusted gross income or
4taxable income for federal income tax purposes for the taxable
5year, or in the amount of such items entering into the
6computation of base income and net income under this Act for
7such taxable year, whether in respect of property values as of
8August 1, 1969 or otherwise.
9(Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
10102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
1112-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
129-26-23.)
 
13    (35 ILCS 5/241 new)
14    Sec. 241. The Illinois Gives tax credit.
15    (a) For taxable years ending on or after December 31, 2025
16and ending before January 1, 2030, each taxpayer for whom a tax
17credit has been authorized by the Department of Revenue under
18the Illinois Gives Tax Credit Act is entitled to a credit
19against the tax imposed under subsections (a) and (b) of
20Section 201 in an amount equal to the amount authorized under
21that Act.
22    (b) For partners of partnerships and shareholders of
23Subchapter S corporations, there is allowed a credit under
24this Section to be determined in accordance with Section 251
25of this Act.

 

 

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1    (c) The credit may not be carried back and may not reduce
2the taxpayer's liability to less than zero. If the amount of
3the credit exceeds the tax liability for the year, the excess
4may be carried forward and applied to the tax liability of the
55 taxable years following the excess credit year. The tax
6credit shall be applied to the earliest year for which there is
7a tax liability. If there are credits for more than one year
8that are available to offset a liability, the earlier credit
9shall be applied first.
 
10    Section 999. Effective date. This Act takes effect upon
11becoming law.".