103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3088

 

Introduced 2/17/2023, by Rep. Abdelnasser Rashid

 

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

    Amends the Illinois Income Tax Act. Creates an income tax deduction for premiums paid by the taxpayer during the taxable year under an individual health insurance plan covering the taxpayer or the taxpayer's dependents.


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PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3088LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3088- 19 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 20 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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

 

 

HB3088- 23 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

HB3088- 25 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 26 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 27 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 28 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 29 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 30 -LRB103 05738 HLH 50758 b

1        (GG), the insurer to which the premiums were paid must
2        add back to income the amount subtracted by the
3        taxpayer pursuant to this subparagraph (GG). This
4        subparagraph (GG) is exempt from the provisions of
5        Section 250;
6            (HH) For taxable years beginning on or after
7        January 1, 2018 and prior to January 1, 2028, a maximum
8        of $10,000 contributed in the taxable year to a
9        qualified ABLE account under Section 16.6 of the State
10        Treasurer Act, except that amounts excluded from gross
11        income under Section 529(c)(3)(C)(i) or Section
12        529A(c)(1)(C) of the Internal Revenue Code shall not
13        be considered moneys contributed under this
14        subparagraph (HH). For purposes of this subparagraph
15        (HH), contributions made by an employer on behalf of
16        an employee, or matching contributions made by an
17        employee, shall be treated as made by the employee;
18        and
19            (II) For taxable years that begin on or after
20        January 1, 2021 and begin before January 1, 2026, the
21        amount that is included in the taxpayer's federal
22        adjusted gross income pursuant to Section 61 of the
23        Internal Revenue Code as discharge of indebtedness
24        attributable to student loan forgiveness and that is
25        not excluded from the taxpayer's federal adjusted
26        gross income pursuant to paragraph (5) of subsection

 

 

HB3088- 31 -LRB103 05738 HLH 50758 b

1        (f) of Section 108 of the Internal Revenue Code; and .
2            (JJ) For taxable years that begin on or after
3        January 1, 2024, an amount equal to the premiums paid
4        by the taxpayer during the taxable year under an
5        individual health insurance plan covering the taxpayer
6        or the taxpayer's dependents; this subparagraph (JJ)
7        is exempt from the provisions of Section 250;
 
8    (b) Corporations.
9        (1) In general. In the case of a corporation, 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 and all distributions
17        received from regulated investment companies during
18        the taxable year to the extent excluded from gross
19        income in the computation of taxable income;
20            (B) An amount equal to the amount of tax imposed by
21        this Act to the extent deducted from gross income in
22        the computation of taxable income for the taxable
23        year;
24            (C) In the case of a regulated investment company,
25        an amount equal to the excess of (i) the net long-term

 

 

HB3088- 32 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 33 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 34 -LRB103 05738 HLH 50758 b

1            (E-11) 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 (E-10), then
5        an amount equal to the aggregate amount of the
6        deductions taken in all taxable years under
7        subparagraph (T) with respect to that property.
8            If the taxpayer continues to own property through
9        the last day of the last tax year for which a
10        subtraction is allowed with respect to that property
11        under subparagraph (T) and for which the taxpayer was
12        allowed in any taxable year to make a subtraction
13        modification under subparagraph (T), then an amount
14        equal to that subtraction modification.
15            The taxpayer is required to make the addition
16        modification under this subparagraph only once with
17        respect to any one piece of property;
18            (E-12) An amount equal to the amount otherwise
19        allowed as a deduction in computing base income for
20        interest paid, accrued, or incurred, directly or
21        indirectly, (i) for taxable years ending on or after
22        December 31, 2004, to a foreign person who would be a
23        member of the same unitary business group but for the
24        fact the foreign person's business activity outside
25        the United States is 80% or more of the foreign
26        person's total business activity and (ii) for taxable

 

 

HB3088- 35 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 36 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 37 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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

 

 

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1                or agreement that reflects arm's-length terms;
2                or
3                (iii) any item of intangible expense or cost
4            paid, accrued, or incurred, directly or
5            indirectly, from a transaction with a person if
6            the taxpayer establishes by clear and convincing
7            evidence, that the adjustments are unreasonable;
8            or if the taxpayer and the Director agree in
9            writing to the application or use of an
10            alternative method of apportionment under Section
11            304(f);
12                Nothing in this subsection shall preclude the
13            Director from making any other adjustment
14            otherwise allowed under Section 404 of this Act
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;
21            (E-14) For taxable years ending on or after
22        December 31, 2008, an amount equal to the amount of
23        insurance premium expenses and costs otherwise allowed
24        as a deduction in computing base income, and that were
25        paid, accrued, or incurred, directly or indirectly, to
26        a person who would be a member of the same unitary

 

 

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1        business group but for the fact that the person is
2        prohibited under Section 1501(a)(27) from being
3        included in the unitary business group because he or
4        she is ordinarily required to apportion business
5        income under different subsections of Section 304. The
6        addition modification required by this subparagraph
7        shall be reduced to the extent that dividends were
8        included in base income of the unitary group for the
9        same taxable year and received by the taxpayer or by a
10        member of the taxpayer's unitary business group
11        (including amounts included in gross income under
12        Sections 951 through 964 of the Internal Revenue Code
13        and amounts included in gross income under Section 78
14        of the Internal Revenue Code) with respect to the
15        stock of the same person to whom the premiums and costs
16        were directly or indirectly paid, incurred, or
17        accrued. The preceding sentence does not apply to the
18        extent that the same dividends caused a reduction to
19        the addition modification required under Section
20        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
21        Act;
22            (E-15) For taxable years beginning after December
23        31, 2008, any deduction for dividends paid by a
24        captive real estate investment trust that is allowed
25        to a real estate investment trust under Section
26        857(b)(2)(B) of the Internal Revenue Code for

 

 

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1        dividends paid;
2            (E-16) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6            (E-17) For taxable years ending on or after
7        December 31, 2017, an amount equal to the deduction
8        allowed under Section 199 of the Internal Revenue Code
9        for the taxable year;
10            (E-18) for taxable years beginning after December
11        31, 2018, an amount equal to the deduction allowed
12        under Section 250(a)(1)(A) of the Internal Revenue
13        Code for the taxable year;
14            (E-19) for taxable years ending on or after June
15        30, 2021, an amount equal to the deduction allowed
16        under Section 250(a)(1)(B)(i) of the Internal Revenue
17        Code for the taxable year;
18            (E-20) for taxable years ending on or after June
19        30, 2021, an amount equal to the deduction allowed
20        under Sections 243(e) and 245A(a) of the Internal
21        Revenue Code for the taxable year.
22    and by deducting from the total so obtained the sum of the
23    following amounts:
24            (F) An amount equal to the amount of any tax
25        imposed by this Act which was refunded to the taxpayer
26        and included in such total for the taxable year;

 

 

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1            (G) An amount equal to any amount included in such
2        total under Section 78 of the Internal Revenue Code;
3            (H) In the case of a regulated investment company,
4        an amount equal to the amount of exempt interest
5        dividends as defined in subsection (b)(5) of Section
6        852 of the Internal Revenue Code, paid to shareholders
7        for the taxable year;
8            (I) With the exception of any amounts subtracted
9        under subparagraph (J), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a)(2) and 265(a)(2) and amounts disallowed as
12        interest expense by Section 291(a)(3) of the Internal
13        Revenue Code, and all amounts of expenses allocable to
14        interest and disallowed as deductions by Section
15        265(a)(1) of the Internal Revenue Code; and (ii) for
16        taxable years ending on or after August 13, 1999,
17        Sections 171(a)(2), 265, 280C, 291(a)(3), and
18        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
19        for tax years ending on or after December 31, 2011,
20        amounts disallowed as deductions by Section 45G(e)(3)
21        of the Internal Revenue Code and, for taxable years
22        ending on or after December 31, 2008, any amount
23        included in gross income under Section 87 of the
24        Internal Revenue Code and the policyholders' share of
25        tax-exempt interest of a life insurance company under
26        Section 807(a)(2)(B) of the Internal Revenue Code (in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        received or paid or deemed paid under Sections 951
2        through 965 of the Internal Revenue Code, exceed the
3        amount of the modification provided under subparagraph
4        (G) of paragraph (2) of this subsection (b) which is
5        related to such dividends, and including, for taxable
6        years ending on or after December 31, 2008, dividends
7        received from a captive real estate investment trust;
8        plus (ii) 100% of the amount by which dividends,
9        included in taxable income and received, including,
10        for taxable years ending on or after December 31,
11        1988, dividends received or deemed received or paid or
12        deemed paid under Sections 951 through 964 of the
13        Internal Revenue Code and including, for taxable years
14        ending on or after December 31, 2008, dividends
15        received from a captive real estate investment trust,
16        from any such corporation specified in clause (i) that
17        would but for the provisions of Section 1504(b)(3) of
18        the Internal Revenue Code be treated as a member of the
19        affiliated group which includes the dividend
20        recipient, exceed the amount of the modification
21        provided under subparagraph (G) of paragraph (2) of
22        this subsection (b) which is related to such
23        dividends. For taxable years ending on or after June
24        30, 2021, (i) for purposes of this subparagraph, the
25        term "dividend" does not include any amount treated as
26        a dividend under Section 1248 of the Internal Revenue

 

 

HB3088- 49 -LRB103 05738 HLH 50758 b

1        Code, and (ii) this subparagraph shall not apply to
2        dividends for which a deduction is allowed under
3        Section 245(a) of the Internal Revenue Code. This
4        subparagraph (O) is exempt from the provisions of
5        Section 250 of this Act;
6            (P) An amount equal to any contribution made to a
7        job training project established pursuant to the Tax
8        Increment Allocation Redevelopment Act;
9            (Q) An amount equal to the amount of the deduction
10        used to compute the federal income tax credit for
11        restoration of substantial amounts held under claim of
12        right for the taxable year pursuant to Section 1341 of
13        the Internal Revenue Code;
14            (R) On and after July 20, 1999, in the case of an
15        attorney-in-fact with respect to whom an interinsurer
16        or a reciprocal insurer has made the election under
17        Section 835 of the Internal Revenue Code, 26 U.S.C.
18        835, an amount equal to the excess, if any, of the
19        amounts paid or incurred by that interinsurer or
20        reciprocal insurer in the taxable year to the
21        attorney-in-fact over the deduction allowed to that
22        interinsurer or reciprocal insurer with respect to the
23        attorney-in-fact under Section 835(b) of the Internal
24        Revenue Code for the taxable year; the provisions of
25        this subparagraph are exempt from the provisions of
26        Section 250;

 

 

HB3088- 50 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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

 

 

HB3088- 53 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 54 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 55 -LRB103 05738 HLH 50758 b

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

 

 

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1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer
4        makes the election provided for by this subparagraph
5        (Y), the insurer to which the premiums were paid must
6        add back to income the amount subtracted by the
7        taxpayer pursuant to this subparagraph (Y). This
8        subparagraph (Y) is exempt from the provisions of
9        Section 250; and
10            (Z) The difference between the nondeductible
11        controlled foreign corporation dividends under Section
12        965(e)(3) of the Internal Revenue Code over the
13        taxable income of the taxpayer, computed without
14        regard to Section 965(e)(2)(A) of the Internal Revenue
15        Code, and without regard to any net operating loss
16        deduction. This subparagraph (Z) is exempt from the
17        provisions of Section 250.
18        (3) Special rule. For purposes of paragraph (2)(A),
19    "gross income" in the case of a life insurance company,
20    for tax years ending on and after December 31, 1994, and
21    prior to December 31, 2011, shall mean the gross
22    investment income for the taxable year and, for tax years
23    ending on or after December 31, 2011, shall mean all
24    amounts included in life insurance gross income under
25    Section 803(a)(3) of the Internal Revenue Code.
 

 

 

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

 

 

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

 

 

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1        31, 1986, the addition modification provided in this
2        subparagraph (E) shall be the sum of the amounts
3        computed independently under the preceding provisions
4        of this subparagraph (E) for each such taxable year;
5            (F) For taxable years ending on or after January
6        1, 1989, an amount equal to the tax deducted pursuant
7        to Section 164 of the Internal Revenue Code if the
8        trust or estate is claiming the same tax for purposes
9        of the Illinois foreign tax credit under Section 601
10        of this Act;
11            (G) An amount equal to the amount of the capital
12        gain deduction allowable under the Internal Revenue
13        Code, to the extent deducted from gross income in the
14        computation of taxable income;
15            (G-5) For taxable years ending after December 31,
16        1997, an amount equal to any eligible remediation
17        costs that the trust or estate deducted in computing
18        adjusted gross income and for which the trust or
19        estate claims a credit under subsection (l) of Section
20        201;
21            (G-10) For taxable years 2001 and thereafter, an
22        amount equal to the bonus depreciation deduction taken
23        on the taxpayer's federal income tax return for the
24        taxable year under subsection (k) of Section 168 of
25        the Internal Revenue Code; and
26            (G-11) If the taxpayer sells, transfers, abandons,

 

 

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1        or otherwise disposes of property for which the
2        taxpayer was required in any taxable year to make an
3        addition modification under subparagraph (G-10), then
4        an amount equal to the aggregate amount of the
5        deductions taken in all taxable years under
6        subparagraph (R) with respect to that property.
7            If the taxpayer continues to own property through
8        the last day of the last tax year for which a
9        subtraction is allowed with respect to that property
10        under subparagraph (R) and for which the taxpayer was
11        allowed in any taxable year to make a subtraction
12        modification under subparagraph (R), then an amount
13        equal to that subtraction modification.
14            The taxpayer is required to make the addition
15        modification under this subparagraph only once with
16        respect to any one piece of property;
17            (G-12) An amount equal to the amount otherwise
18        allowed as a deduction in computing base income for
19        interest paid, accrued, or incurred, directly or
20        indirectly, (i) for taxable years ending on or after
21        December 31, 2004, to a foreign person who would be a
22        member of the same unitary business group but for the
23        fact that the foreign person's business activity
24        outside the United States is 80% or more of the foreign
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. The addition modification
7        required by this subparagraph shall be reduced to the
8        extent that dividends were included in base income of
9        the unitary group for the same taxable year and
10        received by the taxpayer or by a member of the
11        taxpayer's unitary business group (including amounts
12        included in gross income pursuant to Sections 951
13        through 964 of the Internal Revenue Code and amounts
14        included in gross income under Section 78 of the
15        Internal Revenue Code) with respect to the stock of
16        the same person to whom the interest was paid,
17        accrued, or incurred.
18            This paragraph shall not apply to the following:
19                (i) an item of interest paid, accrued, or
20            incurred, directly or indirectly, to a person who
21            is subject in a foreign country or state, other
22            than a state which requires mandatory unitary
23            reporting, to a tax on or measured by net income
24            with respect to such interest; or
25                (ii) an item of interest paid, accrued, or
26            incurred, directly or indirectly, to a person if

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        allowed under Section 199 of the Internal Revenue Code
2        for the taxable year;
3    and by deducting from the total so obtained the sum of the
4    following amounts:
5            (H) An amount equal to all amounts included in
6        such total pursuant to the provisions of Sections
7        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
8        of the Internal Revenue Code or included in such total
9        as distributions under the provisions of any
10        retirement or disability plan for employees of any
11        governmental agency or unit, or retirement payments to
12        retired partners, which payments are excluded in
13        computing net earnings from self employment by Section
14        1402 of the Internal Revenue Code and regulations
15        adopted pursuant thereto;
16            (I) The valuation limitation amount;
17            (J) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (K) An amount equal to all amounts included in
21        taxable income as modified by subparagraphs (A), (B),
22        (C), (D), (E), (F) and (G) which are exempt from
23        taxation by this State either by reason of its
24        statutes or Constitution or by reason of the
25        Constitution, treaties or statutes of the United
26        States; provided that, in the case of any statute of

 

 

HB3088- 69 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 70 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

HB3088- 72 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

HB3088- 74 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(c)(2)(G-12) for
4        interest paid, accrued, or incurred, directly or
5        indirectly, to the same person. This subparagraph (U)
6        is exempt from the provisions of Section 250;
7            (V) 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(c)(2)(G-13) for intangible expenses and costs
25        paid, accrued, or incurred, directly or indirectly, to
26        the same foreign person. This subparagraph (V) is

 

 

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1        exempt from the provisions of Section 250;
2            (W) in the case of an estate, an amount equal to
3        all amounts included in such total pursuant to the
4        provisions of Section 111 of the Internal Revenue Code
5        as a recovery of items previously deducted by the
6        decedent from adjusted gross income in the computation
7        of taxable income. This subparagraph (W) is exempt
8        from Section 250;
9            (X) an amount equal to the refund included in such
10        total of any tax deducted for federal income tax
11        purposes, to the extent that deduction was added back
12        under subparagraph (F). This subparagraph (X) is
13        exempt from the provisions of Section 250;
14            (Y) 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(c)(2)(G-14), 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        (Y), 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 (Y). This
2        subparagraph (Y) is exempt from the provisions of
3        Section 250; and
4            (Z) For taxable years beginning after December 31,
5        2018 and before January 1, 2026, the amount of excess
6        business loss of the taxpayer disallowed as a
7        deduction by Section 461(l)(1)(B) of the Internal
8        Revenue Code.
9        (3) Limitation. The amount of any modification
10    otherwise required under this subsection shall, under
11    regulations prescribed by the Department, be adjusted by
12    any amounts included therein which were properly paid,
13    credited, or required to be distributed, or permanently
14    set aside for charitable purposes pursuant to Internal
15    Revenue Code Section 642(c) during the taxable year.
 
16    (d) Partnerships.
17        (1) In general. In the case of a partnership, base
18    income means an amount equal to the taxpayer's taxable
19    income for the taxable year as modified by paragraph (2).
20        (2) Modifications. The taxable income referred to in
21    paragraph (1) shall be modified by adding thereto the sum
22    of the following amounts:
23            (A) An amount equal to all amounts paid or accrued
24        to the taxpayer as interest or dividends during the
25        taxable year to the extent excluded from gross income

 

 

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

 

 

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

 

 

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1        the unitary group for the same taxable year and
2        received by the taxpayer or by a member of the
3        taxpayer's unitary business group (including amounts
4        included in gross income pursuant to Sections 951
5        through 964 of the Internal Revenue Code and amounts
6        included in gross income under Section 78 of the
7        Internal Revenue Code) with respect to the stock of
8        the same person to whom the interest was paid,
9        accrued, or incurred.
10            This paragraph shall not apply to the following:
11                (i) an item of interest paid, accrued, or
12            incurred, directly or indirectly, to 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 interest; or
17                (ii) an item of interest paid, accrued, or
18            incurred, directly or indirectly, to a person if
19            the taxpayer can establish, based on a
20            preponderance of the evidence, both of the
21            following:
22                    (a) the person, during the same taxable
23                year, paid, accrued, or incurred, the interest
24                to a person that is not a related member, and
25                    (b) the transaction giving rise to the
26                interest expense between the taxpayer and the

 

 

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

 

 

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

 

 

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1        income under Section 78 of the Internal Revenue Code)
2        with respect to the stock of the same person to whom
3        the intangible expenses and costs were directly or
4        indirectly paid, incurred or accrued. The preceding
5        sentence shall not apply to the extent that the same
6        dividends caused a reduction to the addition
7        modification required under Section 203(d)(2)(D-7) of
8        this Act. As used in this subparagraph, the term
9        "intangible expenses and costs" includes (1) expenses,
10        losses, and costs for, or related to, the direct or
11        indirect acquisition, use, maintenance or management,
12        ownership, sale, exchange, or any other disposition of
13        intangible property; (2) losses incurred, directly or
14        indirectly, from factoring transactions or discounting
15        transactions; (3) royalty, patent, technical, and
16        copyright fees; (4) licensing fees; and (5) other
17        similar expenses and costs. For purposes of this
18        subparagraph, "intangible property" includes patents,
19        patent applications, trade names, trademarks, service
20        marks, copyrights, mask works, trade secrets, and
21        similar types of intangible assets;
22            This paragraph shall not apply to the following:
23                (i) any item of intangible expenses or costs
24            paid, accrued, or incurred, directly or
25            indirectly, from a transaction with 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 item; or
4                (ii) any item of intangible expense or cost
5            paid, accrued, or incurred, directly or
6            indirectly, if the taxpayer can establish, based
7            on a preponderance of the evidence, both of the
8            following:
9                    (a) the person during the same taxable
10                year paid, accrued, or incurred, the
11                intangible expense or cost to a person that is
12                not a related member, and
13                    (b) the transaction giving rise to the
14                intangible expense or cost between the
15                taxpayer and the person did not have as a
16                principal purpose the avoidance of Illinois
17                income tax, and is paid pursuant to a contract
18                or agreement that reflects arm's-length terms;
19                or
20                (iii) any item of intangible expense or cost
21            paid, accrued, or incurred, directly or
22            indirectly, from a transaction with a person if
23            the taxpayer establishes by clear and convincing
24            evidence, that the adjustments are unreasonable;
25            or if the taxpayer and the Director agree in
26            writing to the application or use of an

 

 

HB3088- 86 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 87 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 88 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 89 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 90 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 91 -LRB103 05738 HLH 50758 b

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

 

 

HB3088- 92 -LRB103 05738 HLH 50758 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        insurance company taxable income;
2            (C) Regulated investment companies. In the case of
3        a regulated investment company subject to the tax
4        imposed by Section 852 of the Internal Revenue Code,
5        investment company taxable income;
6            (D) Real estate investment trusts. In the case of
7        a real estate investment trust subject to the tax
8        imposed by Section 857 of the Internal Revenue Code,
9        real estate investment trust taxable income;
10            (E) Consolidated corporations. In the case of a
11        corporation which is a member of an affiliated group
12        of corporations filing a consolidated income tax
13        return for the taxable year for federal income tax
14        purposes, taxable income determined as if such
15        corporation had filed a separate return for federal
16        income tax purposes for the taxable year and each
17        preceding taxable year for which it was a member of an
18        affiliated group. For purposes of this subparagraph,
19        the taxpayer's separate taxable income shall be
20        determined as if the election provided by Section
21        243(b)(2) of the Internal Revenue Code had been in
22        effect for all such years;
23            (F) Cooperatives. In the case of a cooperative
24        corporation or association, the taxable income of such
25        organization determined in accordance with the
26        provisions of Section 1381 through 1388 of the

 

 

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1        Internal Revenue Code, but without regard to the
2        prohibition against offsetting losses from patronage
3        activities against income from nonpatronage
4        activities; except that a cooperative corporation or
5        association may make an election to follow its federal
6        income tax treatment of patronage losses and
7        nonpatronage losses. In the event such election is
8        made, such losses shall be computed and carried over
9        in a manner consistent with subsection (a) of Section
10        207 of this Act and apportioned by the apportionment
11        factor reported by the cooperative on its Illinois
12        income tax return filed for the taxable year in which
13        the losses are incurred. The election shall be
14        effective for all taxable years with original returns
15        due on or after the date of the election. In addition,
16        the cooperative may file an amended return or returns,
17        as allowed under this Act, to provide that the
18        election shall be effective for losses incurred or
19        carried forward for taxable years occurring prior to
20        the date of the election. Once made, the election may
21        only be revoked upon approval of the Director. The
22        Department shall adopt rules setting forth
23        requirements for documenting the elections and any
24        resulting Illinois net loss and the standards to be
25        used by the Director in evaluating requests to revoke
26        elections. Public Act 96-932 is declaratory of

 

 

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1        existing law;
2            (G) Subchapter S corporations. In the case of: (i)
3        a Subchapter S corporation for which there is in
4        effect an election for the taxable year under Section
5        1362 of the Internal Revenue Code, the taxable income
6        of such corporation determined in accordance with
7        Section 1363(b) of the Internal Revenue Code, except
8        that taxable income shall take into account those
9        items which are required by Section 1363(b)(1) of the
10        Internal Revenue Code to be separately stated; and
11        (ii) a Subchapter S corporation for which there is in
12        effect a federal election to opt out of the provisions
13        of the Subchapter S Revision Act of 1982 and have
14        applied instead the prior federal Subchapter S rules
15        as in effect on July 1, 1982, the taxable income of
16        such corporation determined in accordance with the
17        federal Subchapter S rules as in effect on July 1,
18        1982; and
19            (H) Partnerships. In the case of a partnership,
20        taxable income determined in accordance with Section
21        703 of the Internal Revenue Code, except that taxable
22        income shall take into account those items which are
23        required by Section 703(a)(1) to be separately stated
24        but which would be taken into account by an individual
25        in calculating his taxable income.
26        (3) Recapture of business expenses on disposition of

 

 

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1    asset or business. Notwithstanding any other law to the
2    contrary, if in prior years income from an asset or
3    business has been classified as business income and in a
4    later year is demonstrated to be non-business income, then
5    all expenses, without limitation, deducted in such later
6    year and in the 2 immediately preceding taxable years
7    related to that asset or business that generated the
8    non-business income shall be added back and recaptured as
9    business income in the year of the disposition of the
10    asset or business. Such amount shall be apportioned to
11    Illinois using the greater of the apportionment fraction
12    computed for the business under Section 304 of this Act
13    for the taxable year or the average of the apportionment
14    fractions computed for the business under Section 304 of
15    this Act for the taxable year and for the 2 immediately
16    preceding taxable years.
 
17    (f) Valuation limitation amount.
18        (1) In general. The valuation limitation amount
19    referred to in subsections (a)(2)(G), (c)(2)(I) and
20    (d)(2)(E) is an amount equal to:
21            (A) The sum of the pre-August 1, 1969 appreciation
22        amounts (to the extent consisting of gain reportable
23        under the provisions of Section 1245 or 1250 of the
24        Internal Revenue Code) for all property in respect of
25        which such gain was reported for the taxable year;

 

 

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

 

 

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1        the property for federal income tax purposes for the
2        taxable year, as the number of full calendar months in
3        that part of the taxpayer's holding period for the
4        property ending July 31, 1969 bears to the number of
5        full calendar months in the taxpayer's entire holding
6        period for the property.
7            (C) The Department shall prescribe such
8        regulations as may be necessary to carry out the
9        purposes of this paragraph.
 
10    (g) Double deductions. Unless specifically provided
11otherwise, nothing in this Section shall permit the same item
12to be deducted more than once.
 
13    (h) Legislative intention. Except as expressly provided by
14this Section there shall be no modifications or limitations on
15the amounts of income, gain, loss or deduction taken into
16account in determining gross income, adjusted gross income or
17taxable income for federal income tax purposes for the taxable
18year, or in the amount of such items entering into the
19computation of base income and net income under this Act for
20such taxable year, whether in respect of property values as of
21August 1, 1969 or otherwise.
22(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
23102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
248-27-21; 102-813, eff. 5-13-22; 102-1112, eff. 12-21-22.)