Sen. Mike Simmons

Filed: 5/14/2024

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 648

2    AMENDMENT NO. ______. Amend Senate Bill 648 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1. Short title. This Act may be cited as the
5Medical Debt Relief Act.
 
6    Section 5. Findings. The General Assembly finds that:
7    (a) People with medical debt often forgo needed medical
8care, have difficulty meeting basic needs, and face an
9increased risk of bankruptcy.
10    (b) Of the estimated 1,900,000 Illinois residents with
11medical debt in collections, 1,700,000 live at or below 400%
12of the federal poverty guidelines updated periodically in the
13Federal Register by the U.S. Department of Health and Human
14Services. The average medical debt per individual is
15approximately $2,300, and of the total estimated
16$4,370,000,000 in medical debt that is in collections in

 

 

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1Illinois, roughly $4,000,000,000 is acquirable, erasable
2medical debt carried by low-income Americans.
3    (c) Medical debt impacts communities throughout the State.
4There are at least 12 counties in Illinois in which 20% to 30%
5of residents are living with medical debt in collections:
6Alexander, Coles, Grundy, Jefferson, Macon, Marion, Massac,
7Randolph, Schuyler, Shelby, Vermilion, and Warren counties.
8These 12 counties have approximately 475,000 residents, about
9112,000 of whom have medical debt in collections. 13% of Cook
10County residents have medical debt in collections, and their
11medical debts comprise more than a quarter of the statewide
12total.
13    (d) While any person can accumulate medical debt, people
14of color are disproportionately affected. Nationally, 13% of
15the population has medical debt in collections, but 15% of
16people in communities of color have medical debt in
17collections. In Illinois, 14% of the population has medical
18debt in collections, but 20% of the population in communities
19of color have medical debt in collections.
20    (e) The medical debt disparity reinforces racial inequity
21and exacerbates disparities in health outcomes. Structural
22barriers, including housing, credit, and employment
23opportunities, further increase financial vulnerability for
24communities of color, making it more difficult to pay medical
25bills on time.
26    (f) Since medical debt can be difficult for hospital

 

 

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1systems to collect, they will often settle debt obligations
2for a fraction of the total amount owed.
3    (g) Cook County launched a successful effort to erase
4medical debt obligations for Cook County residents in
5partnership with a national nonprofit organization. Accounting
6for Cook County's investment, an additional commitment of
7approximately $24,500,000 would eliminate all current medical
8debt for Illinois residents living at or below 400% of the
9federal poverty guidelines.
10    (h) Illinois can accelerate health equity for residents
11across the State by establishing a Medical Debt Relief Pilot
12Program to provide grant funding to a nonprofit medical debt
13relief coordinator to relieve thousands of families from the
14crushing burden of medical debt.
 
15    Section 10. Definitions. As used in this Act:
16    "Eligible resident" means an individual who:
17        (1) is a resident of the State of Illinois; and
18        (2) has a household income at or below 400% of the
19    federal poverty guidelines or who has medical debt equal
20    to 5% or more of the individual's household income.
21    "Department" means the Department of Healthcare and Family
22Services.
23    "Medical debt" means an obligation to pay money arising
24from the receipt of health care services.
25    "Medical debt relief" means the discharge of a patient's

 

 

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1medical debt, including debt that is not in collections.
2    "Nonprofit medical debt relief coordinator" means a
3nonprofit organization that is experienced in locating,
4acquiring, and relieving medical debt for individuals and that
5is able to discharge medical debt of an eligible resident in a
6manner that does not result in a taxable event for the
7resident.
8    "Pilot program" means the Medical Debt Relief Pilot
9Program.
 
10    Section 15. Medical Debt Relief Pilot Program.
11    (a) Subject to appropriation, the Department of Healthcare
12and Family Services shall establish a Medical Debt Relief
13Pilot Program to discharge the medical debt of eligible
14residents.
15    (b) Under the pilot program, the Department shall provide
16grant funding to a nonprofit medical debt relief coordinator
17to use the grant funds and any other private funds available to
18negotiate and settle, to the extent possible, the medical debt
19of eligible residents owed to hospitals and other health care
20providers and entities. The hospitals and other health care
21providers and entities may be located outside of the State of
22Illinois, so long as the negotiation and settlement of medical
23debt is on behalf of an eligible resident.
24    (c) The Department shall establish the pilot program no
25later than January 1, 2025. The Department shall administer

 

 

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1the pilot program consistent with the requirements of the
2Grant Accountability and Transparency Act to determine which
3nonprofit medical debt relief coordinator to use, unless the
4Department and the State's Grant Accountability and
5Transparency Unit determine that only a single nonprofit
6medical debt relief coordinator has the capacity and
7willingness to carry out the duties specified in this Act. The
8Department shall publish on its website any agreement,
9including amendments and attachments, entered into with a debt
10relief coordinator within 5 business days after the agreement
11or amendment was entered into by the Department.
12    (d) The nonprofit medical debt relief coordinator shall:
13        (1) Identify eligible residents who qualify for the
14    pilot program.
15        (2) Review the medical debt accounts of each
16    commercial debt collection agency or health care provider
17    willing to sell medical debt accounts of eligible
18    residents.
19        (3) Conduct an outreach pilot program with hospitals,
20    hospital systems, and other providers and entities about
21    the benefits of the Medical Debt Relief Pilot Program.
22    Such outreach shall first be initiated with safety-net
23    hospitals.
24        (4) Negotiate and acquire medical debt of eligible
25    residents from health care providers and medical debt
26    collection agencies.

 

 

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1        (5) Within 60 days of the acquisition of an eligible
2    resident's medical debt, notify all eligible residents
3    whose medical debt has been discharged under the pilot
4    program, in a manner approved by the Department, that they
5    no longer have specified medical debt owed to the relevant
6    health care provider or commercial debt collection agency.
7        (6) Not attempt to seek payment from an eligible
8    resident for medical debt purchased by the nonprofit
9    medical debt relief coordinator.
10        (7) To the extent possible, give priority to hospitals
11    and providers who serve a high percentage of volume of
12    Medicaid customers and providers located in
13    disproportionately impacted area zip codes.
14    (e) The Department shall provide an annual report to the
15Governor and General Assembly that includes, but is not
16limited to:
17        (1) The amount of medical debt purchased and
18    discharged under the pilot program.
19        (2) The number of eligible residents who received
20    medical debt relief under the pilot program.
21        (3) The demographic characteristics of the eligible
22    residents, including, but not limited to, race, ethnicity,
23    income level, zip code, and insurance status.
24        (4) The number and characteristics of health care
25    providers from whom medical debt was purchased and
26    discharged, including, but not limited to, geography and

 

 

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1    payor mix.
2    (f) The Department shall adopt any rules necessary to
3implement this Act.
 
4    Section 20. Repealer. The Act is repealed on July 1, 2029.
 
5    Section 100. The State Finance Act is amended by adding
6Sections 5.1015 and 6z-140 as follows:
 
7    (30 ILCS 105/5.1015 new)
8    Sec. 5.1015. The Medical Debt Relief Pilot Program Fund.
 
9    (30 ILCS 105/6z-140 new)
10    Sec. 6z-140. Medical Debt Relief Pilot Program Fund. The
11Medical Debt Relief Pilot Program Fund is created as a special
12fund in the State treasury. All moneys in the Fund shall be
13appropriated to the Department of Healthcare and Family
14Services and expended exclusively for the Medical Debt Relief
15Pilot Program to provide grant funding to a nonprofit medical
16debt relief coordinator to be used to discharge the medical
17debt of eligible residents as defined in the Medical Debt
18Relief Act. Based on a budget approved by the Department, the
19grant funding may also be used for any administrative services
20provided by the nonprofit medical debt relief coordinator to
21discharge the medical debt of eligible residents.
 

 

 

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1    Section 105. The Illinois Income Tax Act is amended by
2changing Section 203 as follows:
 
3    (35 ILCS 5/203)
4    Sec. 203. Base income defined.
5    (a) Individuals.
6        (1) In general. In the case of an individual, base
7    income means an amount equal to the taxpayer's adjusted
8    gross income for the taxable year as modified by paragraph
9    (2).
10        (2) Modifications. The adjusted gross income referred
11    to in paragraph (1) shall be modified by adding thereto
12    the sum of the following amounts:
13            (A) An amount equal to all amounts paid or accrued
14        to the taxpayer as interest or dividends during the
15        taxable year to the extent excluded from gross income
16        in the computation of adjusted gross income, except
17        stock dividends of qualified public utilities
18        described in Section 305(e) of the Internal Revenue
19        Code;
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 adjusted gross income for the
23        taxable year;
24            (C) An amount equal to the amount received during
25        the taxable year as a recovery or refund of real

 

 

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1        property taxes paid with respect to the taxpayer's
2        principal residence under the Revenue Act of 1939 and
3        for which a deduction was previously taken under
4        subparagraph (L) of this paragraph (2) prior to July
5        1, 1991, the retrospective application date of Article
6        4 of Public Act 87-17. In the case of multi-unit or
7        multi-use structures and farm dwellings, the taxes on
8        the taxpayer's principal residence shall be that
9        portion of the total taxes for the entire property
10        which is attributable to such principal residence;
11            (D) 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 adjusted gross income;
15            (D-5) An amount, to the extent not included in
16        adjusted gross income, equal to the amount of money
17        withdrawn by the taxpayer in the taxable year from a
18        medical care savings account and the interest earned
19        on the account in the taxable year of a withdrawal
20        pursuant to subsection (b) of Section 20 of the
21        Medical Care Savings Account Act or subsection (b) of
22        Section 20 of the Medical Care Savings Account Act of
23        2000;
24            (D-10) For taxable years ending after December 31,
25        1997, an amount equal to any eligible remediation
26        costs that the individual deducted in computing

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
2        Act;
3            (D-20) For taxable years beginning on or after
4        January 1, 2002 and ending on or before December 31,
5        2006, in the case of a distribution from a qualified
6        tuition program under Section 529 of the Internal
7        Revenue Code, other than (i) a distribution from a
8        College Savings Pool created under Section 16.5 of the
9        State Treasurer Act or (ii) a distribution from the
10        Illinois Prepaid Tuition Trust Fund, an amount equal
11        to the amount excluded from gross income under Section
12        529(c)(3)(B). For taxable years beginning on or after
13        January 1, 2007, in the case of a distribution from a
14        qualified tuition program under Section 529 of the
15        Internal Revenue Code, other than (i) a distribution
16        from a College Savings Pool created under Section 16.5
17        of the State Treasurer Act, (ii) a distribution from
18        the Illinois Prepaid Tuition Trust Fund, or (iii) a
19        distribution from a qualified tuition program under
20        Section 529 of the Internal Revenue Code that (I)
21        adopts and determines that its offering materials
22        comply with the College Savings Plans Network's
23        disclosure principles and (II) has made reasonable
24        efforts to inform in-state residents of the existence
25        of in-state qualified tuition programs by informing
26        Illinois residents directly and, where applicable, to

 

 

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

 

 

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1        January 1, 2007, in the case of transfer of moneys from
2        a qualified tuition program under Section 529 of the
3        Internal Revenue Code that is administered by the
4        State to an out-of-state program, an amount equal to
5        the amount of moneys previously deducted from base
6        income under subsection (a)(2)(Y) of this Section;
7            (D-21.5) For taxable years beginning on or after
8        January 1, 2018, in the case of the transfer of moneys
9        from a qualified tuition program under Section 529 or
10        a qualified ABLE program under Section 529A of the
11        Internal Revenue Code that is administered by this
12        State to an ABLE account established under an
13        out-of-state ABLE account program, an amount equal to
14        the contribution component of the transferred amount
15        that was previously deducted from base income under
16        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
17        Section;
18            (D-22) For taxable years beginning on or after
19        January 1, 2009, and prior to January 1, 2018, in the
20        case of a nonqualified withdrawal or refund of moneys
21        from a qualified tuition program under Section 529 of
22        the Internal Revenue Code administered by the State
23        that is not used for qualified expenses at an eligible
24        education institution, an amount equal to the
25        contribution component of the nonqualified withdrawal
26        or refund that was previously deducted from base

 

 

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1        income under subsection (a)(2)(y) of this Section,
2        provided that the withdrawal or refund did not result
3        from the beneficiary's death or disability. For
4        taxable years beginning on or after January 1, 2018:
5        (1) in the case of a nonqualified withdrawal or
6        refund, as defined under Section 16.5 of the State
7        Treasurer Act, of moneys from a qualified tuition
8        program under Section 529 of the Internal Revenue Code
9        administered by the State, an amount equal to the
10        contribution component of the nonqualified withdrawal
11        or refund that was previously deducted from base
12        income under subsection (a)(2)(Y) of this Section, and
13        (2) in the case of a nonqualified withdrawal or refund
14        from a qualified ABLE program under Section 529A of
15        the Internal Revenue Code administered by the State
16        that is not used for qualified disability expenses, an
17        amount equal to the contribution component of the
18        nonqualified withdrawal or refund that was previously
19        deducted from base income under subsection (a)(2)(HH)
20        of this Section;
21            (D-23) 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            (D-24) For taxable years ending on or after
26        December 31, 2017, an amount equal to the deduction

 

 

10300SB0648sam001- 22 -LRB103 03101 KTG 73406 a

1        allowed under Section 199 of the Internal Revenue Code
2        for the taxable year;
3            (D-25) In the case of a resident, an amount equal
4        to the amount of tax for which a credit is allowed
5        pursuant to Section 201(p)(7) of this Act;
6    and by deducting from the total so obtained the sum of the
7    following amounts:
8            (E) For taxable years ending before December 31,
9        2001, any amount included in such total in respect of
10        any compensation (including but not limited to any
11        compensation paid or accrued to a serviceman while a
12        prisoner of war or missing in action) paid to a
13        resident by reason of being on active duty in the Armed
14        Forces of the United States and in respect of any
15        compensation paid or accrued to a resident who as a
16        governmental employee was a prisoner of war or missing
17        in action, and in respect of any compensation paid to a
18        resident in 1971 or thereafter for annual training
19        performed pursuant to Sections 502 and 503, Title 32,
20        United States Code as a member of the Illinois
21        National Guard or, beginning with taxable years ending
22        on or after December 31, 2007, the National Guard of
23        any other state. For taxable years ending on or after
24        December 31, 2001, any amount included in such total
25        in respect of any compensation (including but not
26        limited to any compensation paid or accrued to a

 

 

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

 

 

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

 

 

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1        and railroad retirement benefits included in such
2        total pursuant to Sections 72(r) and 86 of the
3        Internal Revenue Code;
4            (M) With the exception of any amounts subtracted
5        under subparagraph (N), an amount equal to the sum of
6        all amounts disallowed as deductions by (i) Sections
7        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
8        and all amounts of expenses allocable to interest and
9        disallowed as deductions by Section 265(a)(1) of the
10        Internal Revenue Code; and (ii) for taxable years
11        ending on or after August 13, 1999, Sections
12        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
13        Internal Revenue Code, plus, for taxable years ending
14        on or after December 31, 2011, Section 45G(e)(3) of
15        the Internal Revenue Code and, for taxable years
16        ending on or after December 31, 2008, any amount
17        included in gross income under Section 87 of the
18        Internal Revenue Code; the provisions of this
19        subparagraph are exempt from the provisions of Section
20        250;
21            (N) An amount equal to all amounts included in
22        such total which are exempt from taxation by this
23        State either by reason of its statutes or Constitution
24        or by reason of the Constitution, treaties or statutes
25        of the United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

10300SB0648sam001- 26 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 27 -LRB103 03101 KTG 73406 a

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

 

 

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

 

 

10300SB0648sam001- 29 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 30 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 31 -LRB103 03101 KTG 73406 a

1            (Z) For taxable years 2001 and thereafter, for the
2        taxable year in which the bonus depreciation deduction
3        is taken on the taxpayer's federal income tax return
4        under subsection (k) of Section 168 of the Internal
5        Revenue Code and for each applicable taxable year
6        thereafter, an amount equal to "x", where:
7                (1) "y" equals the amount of the depreciation
8            deduction taken for the taxable year on the
9            taxpayer's federal income tax return on property
10            for which the bonus depreciation deduction was
11            taken in any year under subsection (k) of Section
12            168 of the Internal Revenue Code, but not
13            including the bonus depreciation deduction;
14                (2) for taxable years ending on or before
15            December 31, 2005, "x" equals "y" multiplied by 30
16            and then divided by 70 (or "y" multiplied by
17            0.429); and
18                (3) for taxable years ending after December
19            31, 2005:
20                    (i) for property on which a bonus
21                depreciation deduction of 30% of the adjusted
22                basis was taken, "x" equals "y" multiplied by
23                30 and then divided by 70 (or "y" multiplied
24                by 0.429);
25                    (ii) for property on which a bonus
26                depreciation deduction of 50% of the adjusted

 

 

10300SB0648sam001- 32 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 33 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 34 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 35 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 36 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 37 -LRB103 03101 KTG 73406 a

1            (HH) For taxable years beginning on or after
2        January 1, 2018 and prior to January 1, 2028, a maximum
3        of $10,000 contributed in the taxable year to a
4        qualified ABLE account under Section 16.6 of the State
5        Treasurer Act, except that amounts excluded from gross
6        income under Section 529(c)(3)(C)(i) or Section
7        529A(c)(1)(C) of the Internal Revenue Code shall not
8        be considered moneys contributed under this
9        subparagraph (HH). For purposes of this subparagraph
10        (HH), contributions made by an employer on behalf of
11        an employee, or matching contributions made by an
12        employee, shall be treated as made by the employee;
13            (II) For taxable years that begin on or after
14        January 1, 2021 and begin before January 1, 2026, the
15        amount that is included in the taxpayer's federal
16        adjusted gross income pursuant to Section 61 of the
17        Internal Revenue Code as discharge of indebtedness
18        attributable to student loan forgiveness and that is
19        not excluded from the taxpayer's federal adjusted
20        gross income pursuant to paragraph (5) of subsection
21        (f) of Section 108 of the Internal Revenue Code; and
22            (JJ) For taxable years beginning on or after
23        January 1, 2023, for any cannabis establishment
24        operating in this State and licensed under the
25        Cannabis Regulation and Tax Act or any cannabis
26        cultivation center or medical cannabis dispensing

 

 

10300SB0648sam001- 38 -LRB103 03101 KTG 73406 a

1        organization operating in this State and licensed
2        under the Compassionate Use of Medical Cannabis
3        Program Act, an amount equal to the deductions that
4        were disallowed under Section 280E of the Internal
5        Revenue Code for the taxable year and that would not be
6        added back under this subsection. The provisions of
7        this subparagraph (JJ) are exempt from the provisions
8        of Section 250; and .
9            (KK) (JJ) To the extent includible in gross income
10        for federal income tax purposes, any amount awarded or
11        paid to the taxpayer as a result of a judgment or
12        settlement for fertility fraud as provided in Section
13        15 of the Illinois Fertility Fraud Act, donor
14        fertility fraud as provided in Section 20 of the
15        Illinois Fertility Fraud Act, or similar action in
16        another state.
17            (LL) For taxable years beginning on or after
18        January 1, 2025, if the taxpayer is an eligible
19        resident as defined in the Medical Debt Relief Act, an
20        amount equal to the amount included in the taxpayer's
21        federal adjusted gross income that is attributable to
22        medical debt relief received by the taxpayer during
23        the taxable year from a nonprofit medical debt relief
24        coordinator under the provisions of the Medical Debt
25        Relief Act. This subparagraph (LL) is exempt from the
26        provisions of Section 250.
 

 

 

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1    (b) Corporations.
2        (1) In general. In the case of a corporation, 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. The taxable income referred to in
6    paragraph (1) shall be modified by adding thereto the sum
7    of the following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest and all distributions
10        received from regulated investment companies during
11        the taxable year to the extent excluded from gross
12        income in the computation of taxable income;
13            (B) An amount equal to the amount of tax imposed by
14        this Act to the extent deducted from gross income in
15        the computation of taxable income for the taxable
16        year;
17            (C) In the case of a regulated investment company,
18        an amount equal to the excess of (i) the net long-term
19        capital gain for the taxable year, over (ii) the
20        amount of the capital gain dividends designated as
21        such in accordance with Section 852(b)(3)(C) of the
22        Internal Revenue Code and any amount designated under
23        Section 852(b)(3)(D) of the Internal Revenue Code,
24        attributable to the taxable year (this amendatory Act
25        of 1995 (Public Act 89-89) is declarative of existing

 

 

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

 

 

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

 

 

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1            If the taxpayer continues to own property through
2        the last day of the last tax year for which a
3        subtraction is allowed with respect to that property
4        under subparagraph (T) and for which the taxpayer was
5        allowed in any taxable year to make a subtraction
6        modification under subparagraph (T), then an amount
7        equal to that subtraction modification.
8            The taxpayer is required to make the addition
9        modification under this subparagraph only once with
10        respect to any one piece of property;
11            (E-12) An amount equal to the amount otherwise
12        allowed as a deduction in computing base income for
13        interest paid, accrued, or incurred, directly or
14        indirectly, (i) for taxable years ending on or after
15        December 31, 2004, to a foreign person who would be a
16        member of the same unitary business group but for the
17        fact the foreign person's business activity outside
18        the United States is 80% or more of the foreign
19        person's total business activity and (ii) for taxable
20        years ending on or after December 31, 2008, to a person
21        who would be a member of the same unitary business
22        group but for the fact that the person is prohibited
23        under Section 1501(a)(27) from being included in the
24        unitary business group because he or she is ordinarily
25        required to apportion business income under different
26        subsections of Section 304. The addition modification

 

 

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

 

 

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

 

 

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

 

 

10300SB0648sam001- 46 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 47 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 48 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 49 -LRB103 03101 KTG 73406 a

1        included in base income of the unitary group for the
2        same taxable year and received by the taxpayer or by a
3        member of the taxpayer's unitary business group
4        (including amounts included in gross income under
5        Sections 951 through 964 of the Internal Revenue Code
6        and amounts included in gross income under Section 78
7        of the Internal Revenue Code) with respect to the
8        stock of the same person to whom the premiums and costs
9        were directly or indirectly paid, incurred, or
10        accrued. The preceding sentence does not apply to the
11        extent that the same dividends caused a reduction to
12        the addition modification required under Section
13        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
14        Act;
15            (E-15) For taxable years beginning after December
16        31, 2008, any deduction for dividends paid by a
17        captive real estate investment trust that is allowed
18        to a real estate investment trust under Section
19        857(b)(2)(B) of the Internal Revenue Code for
20        dividends paid;
21            (E-16) 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            (E-17) For taxable years ending on or after
26        December 31, 2017, an amount equal to the deduction

 

 

10300SB0648sam001- 50 -LRB103 03101 KTG 73406 a

1        allowed under Section 199 of the Internal Revenue Code
2        for the taxable year;
3            (E-18) for taxable years beginning after December
4        31, 2018, an amount equal to the deduction allowed
5        under Section 250(a)(1)(A) of the Internal Revenue
6        Code for the taxable year;
7            (E-19) for taxable years ending on or after June
8        30, 2021, an amount equal to the deduction allowed
9        under Section 250(a)(1)(B)(i) of the Internal Revenue
10        Code for the taxable year;
11            (E-20) for taxable years ending on or after June
12        30, 2021, an amount equal to the deduction allowed
13        under Sections 243(e) and 245A(a) of the Internal
14        Revenue Code for the taxable year.
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (F) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (G) An amount equal to any amount included in such
21        total under Section 78 of the Internal Revenue Code;
22            (H) In the case of a regulated investment company,
23        an amount equal to the amount of exempt interest
24        dividends as defined in subsection (b)(5) of Section
25        852 of the Internal Revenue Code, paid to shareholders
26        for the taxable year;

 

 

10300SB0648sam001- 51 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 52 -LRB103 03101 KTG 73406 a

1            (J) An amount equal to all amounts included in
2        such total 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            (K) An amount equal to those dividends included in
11        such total which were paid by a corporation which
12        conducts business operations in a River Edge
13        Redevelopment Zone or zones created under the River
14        Edge Redevelopment Zone Act and conducts substantially
15        all of its operations in a River Edge Redevelopment
16        Zone or zones. This subparagraph (K) is exempt from
17        the provisions of Section 250;
18            (L) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated
22        a High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (K) of paragraph 2 of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (L);

 

 

10300SB0648sam001- 53 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 54 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 55 -LRB103 03101 KTG 73406 a

1        charitable contribution under subsection (c) of
2        Section 170 of the Internal Revenue Code and (ii)
3        must, by its terms, be used for a project approved by
4        the Department of Commerce and Economic Opportunity
5        under Section 11 of the Illinois Enterprise Zone Act
6        or under Section 10-10 of the River Edge Redevelopment
7        Zone Act. This subparagraph (N) is exempt from the
8        provisions of Section 250;
9            (O) An amount equal to: (i) 85% for taxable years
10        ending on or before December 31, 1992, or, a
11        percentage equal to the percentage allowable under
12        Section 243(a)(1) of the Internal Revenue Code of 1986
13        for taxable years ending after December 31, 1992, of
14        the amount by which dividends included in taxable
15        income and received from a corporation that is not
16        created or organized under the laws of the United
17        States or any state or political subdivision thereof,
18        including, for taxable years ending on or after
19        December 31, 1988, dividends received or deemed
20        received or paid or deemed paid under Sections 951
21        through 965 of the Internal Revenue Code, exceed the
22        amount of the modification provided under subparagraph
23        (G) of paragraph (2) of this subsection (b) which is
24        related to such dividends, and including, for taxable
25        years ending on or after December 31, 2008, dividends
26        received from a captive real estate investment trust;

 

 

10300SB0648sam001- 56 -LRB103 03101 KTG 73406 a

1        plus (ii) 100% of the amount by which dividends,
2        included in taxable income and received, including,
3        for taxable years ending on or after December 31,
4        1988, dividends received or deemed received or paid or
5        deemed paid under Sections 951 through 964 of the
6        Internal Revenue Code and including, for taxable years
7        ending on or after December 31, 2008, dividends
8        received from a captive real estate investment trust,
9        from any such corporation specified in clause (i) that
10        would but for the provisions of Section 1504(b)(3) of
11        the Internal Revenue Code be treated as a member of the
12        affiliated group which includes the dividend
13        recipient, exceed the amount of the modification
14        provided under subparagraph (G) of paragraph (2) of
15        this subsection (b) which is related to such
16        dividends. For taxable years ending on or after June
17        30, 2021, (i) for purposes of this subparagraph, the
18        term "dividend" does not include any amount treated as
19        a dividend under Section 1248 of the Internal Revenue
20        Code, and (ii) this subparagraph shall not apply to
21        dividends for which a deduction is allowed under
22        Section 245(a) of the Internal Revenue Code. This
23        subparagraph (O) is exempt from the provisions of
24        Section 250 of this Act;
25            (P) An amount equal to any contribution made to a
26        job training project established pursuant to the Tax

 

 

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1        Increment Allocation Redevelopment Act;
2            (Q) An amount equal to the amount of the deduction
3        used to compute the federal income tax credit for
4        restoration of substantial amounts held under claim of
5        right for the taxable year pursuant to Section 1341 of
6        the Internal Revenue Code;
7            (R) On and after July 20, 1999, in the case of an
8        attorney-in-fact with respect to whom an interinsurer
9        or a reciprocal insurer has made the election under
10        Section 835 of the Internal Revenue Code, 26 U.S.C.
11        835, an amount equal to the excess, if any, of the
12        amounts paid or incurred by that interinsurer or
13        reciprocal insurer in the taxable year to the
14        attorney-in-fact over the deduction allowed to that
15        interinsurer or reciprocal insurer with respect to the
16        attorney-in-fact under Section 835(b) of the Internal
17        Revenue Code for the taxable year; the provisions of
18        this subparagraph are exempt from the provisions of
19        Section 250;
20            (S) For taxable years ending on or after December
21        31, 1997, in the case of a Subchapter S corporation, an
22        amount equal to all amounts of income allocable to a
23        shareholder subject to the Personal Property Tax
24        Replacement Income Tax imposed by subsections (c) and
25        (d) of Section 201 of this Act, including amounts
26        allocable to organizations exempt from federal income

 

 

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

 

 

10300SB0648sam001- 59 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 60 -LRB103 03101 KTG 73406 a

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

 

 

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

 

 

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

 

 

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

 

 

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1        subparagraph (Y) is exempt from the provisions of
2        Section 250;
3            (Z) The difference between the nondeductible
4        controlled foreign corporation dividends under Section
5        965(e)(3) of the Internal Revenue Code over the
6        taxable income of the taxpayer, computed without
7        regard to Section 965(e)(2)(A) of the Internal Revenue
8        Code, and without regard to any net operating loss
9        deduction. This subparagraph (Z) is exempt from the
10        provisions of Section 250; and
11            (AA) For taxable years beginning on or after
12        January 1, 2023, for any cannabis establishment
13        operating in this State and licensed under the
14        Cannabis Regulation and Tax Act or any cannabis
15        cultivation center or medical cannabis dispensing
16        organization operating in this State and licensed
17        under the Compassionate Use of Medical Cannabis
18        Program Act, an amount equal to the deductions that
19        were disallowed under Section 280E of the Internal
20        Revenue Code for the taxable year and that would not be
21        added back under this subsection. The provisions of
22        this subparagraph (AA) are exempt from the provisions
23        of Section 250.
24        (3) Special rule. For purposes of paragraph (2)(A),
25    "gross income" in the case of a life insurance company,
26    for tax years ending on and after December 31, 1994, and

 

 

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

 

 

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1        the computation of taxable income for the taxable
2        year;
3            (D) The amount of any net operating loss deduction
4        taken in arriving at taxable income, other than a net
5        operating loss carried forward from a taxable year
6        ending prior to December 31, 1986;
7            (E) For taxable years in which a net operating
8        loss carryback or carryforward from a taxable year
9        ending prior to December 31, 1986 is an element of
10        taxable income under paragraph (1) of subsection (e)
11        or subparagraph (E) of paragraph (2) of subsection
12        (e), the amount by which addition modifications other
13        than those provided by this subparagraph (E) exceeded
14        subtraction modifications in such taxable year, with
15        the following limitations applied in the order that
16        they are listed:
17                (i) the addition modification relating to the
18            net operating loss carried back or forward to the
19            taxable year from any taxable year ending prior to
20            December 31, 1986 shall be reduced by the amount
21            of addition modification under this subparagraph
22            (E) which related to that net operating loss and
23            which was taken into account in calculating the
24            base income of an earlier taxable year, and
25                (ii) the addition modification relating to the
26            net operating loss carried back or forward to the

 

 

10300SB0648sam001- 67 -LRB103 03101 KTG 73406 a

1            taxable year from any taxable year ending prior to
2            December 31, 1986 shall not exceed the amount of
3            such carryback or carryforward;
4            For taxable years in which there is a net
5        operating loss carryback or carryforward from more
6        than one other taxable year ending prior to December
7        31, 1986, the addition modification provided in this
8        subparagraph (E) shall be the sum of the amounts
9        computed independently under the preceding provisions
10        of this subparagraph (E) for each such taxable year;
11            (F) For taxable years ending on or after January
12        1, 1989, an amount equal to the tax deducted pursuant
13        to Section 164 of the Internal Revenue Code if the
14        trust or estate is claiming the same tax for purposes
15        of the Illinois foreign tax credit under Section 601
16        of this Act;
17            (G) An amount equal to the amount of the capital
18        gain deduction allowable under the Internal Revenue
19        Code, to the extent deducted from gross income in the
20        computation of taxable income;
21            (G-5) For taxable years ending after December 31,
22        1997, an amount equal to any eligible remediation
23        costs that the trust or estate deducted in computing
24        adjusted gross income and for which the trust or
25        estate claims a credit under subsection (l) of Section
26        201;

 

 

10300SB0648sam001- 68 -LRB103 03101 KTG 73406 a

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

 

 

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

 

 

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

 

 

10300SB0648sam001- 71 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 72 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 73 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 74 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 75 -LRB103 03101 KTG 73406 a

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        income under different subsections of Section 304, but
2        not to exceed the addition modification required to be
3        made for the same taxable year under Section
4        203(c)(2)(G-13) for intangible expenses and costs
5        paid, accrued, or incurred, directly or indirectly, to
6        the same foreign person. This subparagraph (V) is
7        exempt from the provisions of Section 250;
8            (W) in the case of an estate, an amount equal to
9        all amounts included in such total pursuant to the
10        provisions of Section 111 of the Internal Revenue Code
11        as a recovery of items previously deducted by the
12        decedent from adjusted gross income in the computation
13        of taxable income. This subparagraph (W) is exempt
14        from Section 250;
15            (X) an amount equal to the refund included in such
16        total of any tax deducted for federal income tax
17        purposes, to the extent that deduction was added back
18        under subparagraph (F). 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(c)(2)(G-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;
10            (Z) For taxable years beginning after December 31,
11        2018 and before January 1, 2026, the amount of excess
12        business loss of the taxpayer disallowed as a
13        deduction by Section 461(l)(1)(B) of the Internal
14        Revenue Code; and
15            (AA) For taxable years beginning on or after
16        January 1, 2023, for any cannabis establishment
17        operating in this State and licensed under the
18        Cannabis Regulation and Tax Act or any cannabis
19        cultivation center or medical cannabis dispensing
20        organization operating in this State and licensed
21        under the Compassionate Use of Medical Cannabis
22        Program Act, an amount equal to the deductions that
23        were disallowed under Section 280E of the Internal
24        Revenue Code for the taxable year and that would not be
25        added back under this subsection. The provisions of
26        this subparagraph (AA) are exempt from the provisions

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        accrued. The preceding sentence does not apply to the
2        extent that the same dividends caused a reduction to
3        the addition modification required under Section
4        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
5            (D-10) An amount equal to the credit allowable to
6        the taxpayer under Section 218(a) of this Act,
7        determined without regard to Section 218(c) of this
8        Act;
9            (D-11) For taxable years ending on or after
10        December 31, 2017, an amount equal to the deduction
11        allowed under Section 199 of the Internal Revenue Code
12        for the taxable year;
13    and by deducting from the total so obtained the following
14    amounts:
15            (E) The valuation limitation amount;
16            (F) An amount equal to the amount of any tax
17        imposed by this Act which was refunded to the taxpayer
18        and included in such total for the taxable year;
19            (G) An amount equal to all amounts included in
20        taxable income as modified by subparagraphs (A), (B),
21        (C) and (D) which are exempt from taxation by this
22        State either by reason of its statutes or Constitution
23        or by reason of the Constitution, treaties or statutes
24        of the United States; provided that, in the case of any
25        statute of this State that exempts income derived from
26        bonds or other obligations from the tax imposed under

 

 

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1        this Act, the amount exempted shall be the interest
2        net of bond premium amortization;
3            (H) Any income of the partnership which
4        constitutes personal service income as defined in
5        Section 1348(b)(1) of the Internal Revenue Code (as in
6        effect December 31, 1981) or a reasonable allowance
7        for compensation paid or accrued for services rendered
8        by partners to the partnership, whichever is greater;
9        this subparagraph (H) is exempt from the provisions of
10        Section 250;
11            (I) An amount equal to all amounts of income
12        distributable to an entity subject to the Personal
13        Property Tax Replacement Income Tax imposed by
14        subsections (c) and (d) of Section 201 of this Act
15        including amounts distributable to organizations
16        exempt from federal income tax by reason of Section
17        501(a) of the Internal Revenue Code; this subparagraph
18        (I) is exempt from the provisions of Section 250;
19            (J) With the exception of any amounts subtracted
20        under subparagraph (G), an amount equal to the sum of
21        all amounts disallowed as deductions by (i) Sections
22        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
23        and all amounts of expenses allocable to interest and
24        disallowed as deductions by Section 265(a)(1) of the
25        Internal Revenue Code; and (ii) for taxable years
26        ending on or after August 13, 1999, Sections

 

 

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1        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
2        Internal Revenue Code, plus, (iii) for taxable years
3        ending on or after December 31, 2011, Section
4        45G(e)(3) of the Internal Revenue Code and, for
5        taxable years ending on or after December 31, 2008,
6        any amount included in gross income under Section 87
7        of the Internal Revenue Code; the provisions of this
8        subparagraph are exempt from the provisions of Section
9        250;
10            (K) An amount equal to those dividends included in
11        such total which were paid by a corporation which
12        conducts business operations in a River Edge
13        Redevelopment Zone or zones created under the River
14        Edge Redevelopment Zone Act and conducts substantially
15        all of its operations from a River Edge Redevelopment
16        Zone or zones. This subparagraph (K) is exempt from
17        the provisions of Section 250;
18            (L) An amount equal to any contribution made to a
19        job training project established pursuant to the Real
20        Property Tax Increment Allocation Redevelopment Act;
21            (M) 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 (K) of paragraph (2) of this subsection
2        shall not be eligible for the deduction provided under
3        this subparagraph (M);
4            (N) An amount equal to the amount of the deduction
5        used to compute the federal income tax credit for
6        restoration of substantial amounts held under claim of
7        right for the taxable year pursuant to Section 1341 of
8        the Internal Revenue Code;
9            (O) For taxable years 2001 and thereafter, for the
10        taxable year in which the bonus depreciation deduction
11        is taken on the taxpayer's federal income tax return
12        under subsection (k) of Section 168 of the Internal
13        Revenue Code and for each applicable taxable year
14        thereafter, an amount equal to "x", where:
15                (1) "y" equals the amount of the depreciation
16            deduction taken for the taxable year on the
17            taxpayer's federal income tax return on property
18            for which the bonus depreciation deduction was
19            taken in any year under subsection (k) of Section
20            168 of the Internal Revenue Code, but not
21            including the bonus depreciation deduction;
22                (2) for taxable years ending on or before
23            December 31, 2005, "x" equals "y" multiplied by 30
24            and then divided by 70 (or "y" multiplied by
25            0.429); and
26                (3) for taxable years ending after December

 

 

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

 

 

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

 

 

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1            This subparagraph (P) is exempt from the
2        provisions of Section 250;
3            (Q) 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 such 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 such
18        addition modification. This subparagraph (Q) is exempt
19        from Section 250;
20            (R) 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

 

 

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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(d)(2)(D-7) for interest paid, accrued, or
12        incurred, directly or indirectly, to the same person.
13        This subparagraph (R) is exempt from Section 250;
14            (S) An amount equal to the income from intangible
15        property taken into account for the taxable year (net
16        of the deductions allocable thereto) with respect to
17        transactions with (i) a foreign person who would be a
18        member of the taxpayer's unitary business group but
19        for the fact that the foreign person's business
20        activity outside the United States is 80% or more of
21        that person's total business activity and (ii) for
22        taxable years ending on or after December 31, 2008, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

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1        she is ordinarily required to apportion business
2        income under different subsections of Section 304, but
3        not to exceed the addition modification required to be
4        made for the same taxable year under Section
5        203(d)(2)(D-8) for intangible expenses and costs paid,
6        accrued, or incurred, directly or indirectly, to the
7        same person. This subparagraph (S) is exempt from
8        Section 250;
9            (T) For taxable years ending on or after December
10        31, 2011, in the case of a taxpayer who was required to
11        add back any insurance premiums under Section
12        203(d)(2)(D-9), such taxpayer may elect to subtract
13        that part of a reimbursement received from the
14        insurance company equal to the amount of the expense
15        or loss (including expenses incurred by the insurance
16        company) that would have been taken into account as a
17        deduction for federal income tax purposes if the
18        expense or loss had been uninsured. If a taxpayer
19        makes the election provided for by this subparagraph
20        (T), the insurer to which the premiums were paid must
21        add back to income the amount subtracted by the
22        taxpayer pursuant to this subparagraph (T). This
23        subparagraph (T) is exempt from the provisions of
24        Section 250; and
25            (U) For taxable years beginning on or after
26        January 1, 2023, for any cannabis establishment

 

 

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1        operating in this State and licensed under the
2        Cannabis Regulation and Tax Act or any cannabis
3        cultivation center or medical cannabis dispensing
4        organization operating in this State and licensed
5        under the Compassionate Use of Medical Cannabis
6        Program Act, an amount equal to the deductions that
7        were disallowed under Section 280E of the Internal
8        Revenue Code for the taxable year and that would not be
9        added back under this subsection. The provisions of
10        this subparagraph (U) are exempt from the provisions
11        of Section 250.
 
12    (e) Gross income; adjusted gross income; taxable income.
13        (1) In general. Subject to the provisions of paragraph
14    (2) and subsection (b)(3), for purposes of this Section
15    and Section 803(e), a taxpayer's gross income, adjusted
16    gross income, or taxable income for the taxable year shall
17    mean the amount of gross income, adjusted gross income or
18    taxable income properly reportable for federal income tax
19    purposes for the taxable year under the provisions of the
20    Internal Revenue Code. Taxable income may be less than
21    zero. However, for taxable years ending on or after
22    December 31, 1986, net operating loss carryforwards from
23    taxable years ending prior to December 31, 1986, may not
24    exceed the sum of federal taxable income for the taxable
25    year before net operating loss deduction, plus the excess

 

 

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

 

 

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

 

 

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

 

 

10300SB0648sam001- 109 -LRB103 03101 KTG 73406 a

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

 

 

10300SB0648sam001- 110 -LRB103 03101 KTG 73406 a

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

 

 

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

 

 

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

 

 

10300SB0648sam001- 113 -LRB103 03101 KTG 73406 a

1computation of base income and net income under this Act for
2such taxable year, whether in respect of property values as of
3August 1, 1969 or otherwise.
4(Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
5102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
612-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
79-26-23.)
 
8    Section 999. Effective date. This Act takes effect upon
9becoming law.".