SB1815 Engrossed LRB094 11152 NHT 41788 b

1     AN ACT concerning education.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 1. Short title. This Act may be cited as the
5 Lifelong Learning Act.
 
6     Section 5. Definitions. As used in this Act:
7     "Account owner" means an eligible employee for which a
8 lifelong learning account has been established under this Act.
9     "Accredited lifelong learning plan" means a lifelong
10 learning plan that has been certified by the Department.
11     "Department" means the Department of Commerce and Economic
12 Opportunity.
13     "Eligible education expense" means a payment for
14 education, including tuition and fees and similar payments,
15 books, supplies, equipment, and tools or supplies that may be
16 retained by the employee after completion of a course of
17 instruction. "Eligible education expense" does not include any
18 expense for (i) meals, lodging, or transportation or (ii) any
19 course or other education involving sports, games, or hobbies.
20     "Eligible employee" means the following:
21         (1) a full-time employee of a participating employer;
22     or
23         (2) A part-time employee of a participating employer,
24     if the part-time employee's principal place of employment
25     is with a participating employer located in Illinois and if
26     the participating employer elects to include part-time
27     employees in the participating employer's plan.
28     "Full-time employee" means an individual who:
29         (1) is employed for consideration for at least 35 hours
30     each week or who renders any other standard of service
31     generally accepted by custom or specified by contract as
32     full-time employment; and

 

 

SB1815 Engrossed - 2 - LRB094 11152 NHT 41788 b

1         (2) has the individual's principal place of employment
2     in Illinois with a participating employer.
3     "Participating employer" means a person who (i) employs at
4 least one eligible employee and (ii) has established an
5 accredited lifelong learning plan.
 
6     Section 10. Powers of the Department. The Department, in
7 addition to those powers granted under the Civil Administrative
8 Code of Illinois, is granted and has all the powers necessary
9 or convenient to carry out and effectuate the purposes and
10 provisions of this Act, including, but not limited to, the
11 power and authority to:
12         (i) adopt rules that are necessary and appropriate for
13     the administration of the tax credit program established
14     under Section 30; establish forms for applications,
15     notifications, contracts, or any other agreements; and
16     accept applications at any time during the year;
17         (ii) assist applicants under the provisions of this Act
18     to promote, foster, and support lifelong learning within
19     the State;
20         (iii) gather information and conduct inquiries, in the
21     manner and by the methods as it deems desirable, including,
22     without limitation, gathering information with respect to
23     applicants for the purpose of making any necessary or
24     desirable designations or certifications or to gather
25     information to assist the Department with any
26     recommendation or guidance in the furtherance of the
27     purposes of this Act;
28         (iv) provide for sufficient personnel to permit
29     administration, staffing, operation, and related support
30     required to adequately discharge its duties and
31     responsibilities described in this Act from funds as may be
32     appropriated by the General Assembly for the
33     administration of this Act;
34         (v) require applicants, upon written request, to issue
35     any necessary authorization to the appropriate federal,

 

 

SB1815 Engrossed - 3 - LRB094 11152 NHT 41788 b

1     state, or local authority for the release of information
2     concerning a project being considered under the provisions
3     of this Act, including, but not limited to, financial
4     reports, returns, or records relating to the applicant; and
5         (vi) require that an applicant must at all times keep
6     proper books of record and account in accordance with
7     generally accepted accounting principles consistently
8     applied, with the books, records, or papers related to the
9     accredited production in the custody or control of the
10     taxpayer open for reasonable Department inspection and
11     audits, and including, without limitation, the making of
12     copies of the books, records, or papers, and the inspection
13     or appraisal of any of the assets of the applicant.
 
14     Section 15. Application for certification of accredited
15 plan. Any employer located in Illinois, proposing to establish
16 a lifelong learning plan under this Act may request an
17 accredited plan certificate by formal application to the
18 Department.
 
19     Section 20. Review of application for accredited plan
20 certificate.
21     (a) In determining whether to issue an accredited plan
22 certificate, the Department must determine that all of the
23 following conditions exist:
24         (1) The plan is in writing.
25         (2) The plan covers at least all full-time employees of
26     the employer and, if the employer elects to cover part-time
27     employees under the plan, all part-time employees. The plan
28     may require that employees have been employed by the
29     employer for a set amount of time, up to 6 months, in order
30     to be eligible for an account.
31         (3) The plan provides for the establishment of a
32     lifelong learning account, as provided under Section 5, for
33     each eligible employee to which:
34             (A) an eligible employee makes contributions for

 

 

SB1815 Engrossed - 4 - LRB094 11152 NHT 41788 b

1         the payment of eligible education expenses; and
2             (B) the employer makes matching contributions on a
3         dollar for dollar basis for the purpose of paying
4         eligible education expenses. However, the plan may
5         limit the maximum amount that the employer must match.
6         The limitation must uniformly apply to all full-time
7         employees of the employer. If the employer elects to
8         have part-time employees participate in the plan, the
9         employer may impose a different uniform limitation for
10         part-time employees.
11         (4) The plan provides, subject to Section 25, that the
12     lifelong learning account may be used only to pay eligible
13     education expenses incurred by or on behalf of an eligible
14     employee for education selected at the sole discretion of
15     the eligible employee.
16         (5) The plan provides that the availability of the plan
17     does not reduce or substitute for any other education
18     program provided by the employer, including the provision,
19     by an employer, of courses of instruction for the
20     employer's eligible employees (including books, supplies,
21     and equipment).
22         (6) The plan sets forth procedures for the
23     dissemination of information about the plan, including the
24     federal and State income tax consequences of the plan.
25         (7) The plan sets forth procedures for submitting any
26     required reports or returns to the Department of Revenue.
27         (8) The plan sets forth procedures for the allocation
28     of credits by the Department for the employer's eligible
29     employees among those eligible employees.
30     (b) Upon satisfactory review of the application, the
31 Department shall issue an Accredited Lifelong Learning Plan
32 Certificate.
33     (c) No later than January 31 of each year after the
34 Department has issued an Accredited Lifelong Learning Plan
35 Certificate to an employer, the employer shall file with the
36 Department a report for its Lifelong Learning Plan, containing

 

 

SB1815 Engrossed - 5 - LRB094 11152 NHT 41788 b

1 the following information on a form prescribed by the
2 Department:
3         (1) the number of eligible employees of the employer
4     during the previous calendar year;
5         (2) the name of each employee participating in the
6     Lifelong Learning Plan during the previous calendar year;
7         (3) the amounts contributed during the previous
8     calendar year by the employer to the account of each
9     participating employee;
10         (4) the earnings of the Lifelong Learning Plan
11     allocated to each account for the previous calendar year;
12         (5) the total amount withdrawn from each account during
13     the previous calendar year;
14         (6) the total amount of nonqualified withdrawals under
15     Section 25(c) of this Act from each account during the
16     previous calendar year;
17         (7) the amount of penalties withheld under Section
18     25(c) of this Act from nonqualified withdrawals during the
19     previous calendar year;
20         (8) the name and address of the trustee of the Lifelong
21     Learning Plan;
22         (9) the fees and other amounts paid to the trustee or
23     withheld by the trustee from earnings during the previous
24     calendar year with respect to the Lifelong Learning Plan;
25     and
26         (10) such other information as the Department may
27     reasonably require.
28     (d) The Department may revoke the Accredited Lifelong
29 Learning Plan Certificate issued to any plan if:
30         (1) less than one-half of the eligible employees of the
31     employer participated in the Accredited Lifelong Learning
32     Plan during the previous calendar year;
33         (2) more than one-half of participating employees made
34     nonqualified withdrawals under Section 25(c) of this Act;
35         (3) the report required under subsection (c) of this
36     Section is not timely filed;

 

 

SB1815 Engrossed - 6 - LRB094 11152 NHT 41788 b

1         (4) the report required under this subsection (c) of
2     this Section is not substantially complete; or
3         (5) less than the full amount of penalties required to
4     be withheld from nonqualified withdrawals during the
5     previous calendar year were withheld.
6     (e) If an Accredited Lifelong Learning Plan Certificate is
7 revoked, the Department shall send the employer a notice of
8 revocation by registered or certified mail addressed to the
9 employer at its last known address, and shall send a copy of
10 the notice of revocation to the Department of Revenue.
11     (f) If an Accredited Lifelong Learning Plan Certificate is
12 revoked under subsection (d) of this Section, the lifelong
13 learning account contributions credit otherwise allowable to
14 the employer for contributions made to the Accredited Lifelong
15 Learning Plan during the calendar year in which the notice of
16 revocation is issued under subsection (e) of this Section and
17 during the preceding calendar year shall be disallowed. If a
18 credit disallowed under this subsection (f) of this Section had
19 been claimed on an Illinois income tax return filed by the
20 employer before the notice of revocation is issued, the amount
21 of such credit shall be a debt to the State of Illinois due and
22 payable immediately, and may be collected by the Department of
23 Revenue in the same manner as an underpayment of income tax
24 that has been assessed.
 
25     Section 25. Lifelong learning accounts.
26     (a) To qualify as a lifelong learning account under this
27 Act, an account must meet all the following criteria:
28         (1) The account must be established and administered in
29     accordance with a lifelong learning plan, as set forth
30     under Section 20.
31         (2) Except as otherwise provided in this Section, the
32     account may be used only to pay eligible education expenses
33     incurred by or on behalf of the account owner for education
34     selected at the sole discretion of the account owner.
35         (3) The account must be held by a trustee, custodian,

 

 

SB1815 Engrossed - 7 - LRB094 11152 NHT 41788 b

1     or fiduciary approved by the Department. The trustee,
2     custodian, or fiduciary may be a bank, trust company,
3     national banking association, credit union, savings and
4     loan association, insurance company, or other financial
5     institution as determined by the Department.
6     (b) Moneys in a lifelong learning account that are
7 contributed by an account owner must be held in trust for the
8 account owner. An account owner may withdraw the amount of his
9 or her contribution to the account at any time for any purpose.
10 A withdrawal from a lifelong learning account is a qualified
11 withdrawal and may be made without penalty if the withdrawal is
12 made by the account owner or his or her designee and if the
13 withdrawal is made: (i) for the purpose of paying the qualified
14 higher education expenses of the account owner; (ii) as a
15 result of the death or disability of the account owner; or
16 (iii) as a result of a rollover to the account of another
17 participating employer, in accordance with rules adopted by the
18 Department.
19     (c) Withdrawals that do not meet the requirements of
20 subsection (b) are nonqualified withdrawals and are subject to
21 the provisions of this subsection (c). In the case of any
22 nonqualified withdrawal from a lifelong learning account, an
23 amount of 15% of the withdrawal shall be withheld as a penalty
24 and paid to the Department for use in operating and marketing
25 the program. The Department may establish the percentage rate
26 of the penalty or change the basis of the penalty if the
27 Department determines that it is necessary to do so in order to
28 discourage nonqualified withdrawals. If an account owner makes
29 a nonqualified withdrawal and no penalty amount is withheld
30 under this Section or, if the amount withheld is less than the
31 amount required to be withheld by the Department, then the
32 account owner shall pay the unpaid portion of the penalty to
33 the Department on or before April 15 of the following tax year.
34     (d) A lifelong learning account may contain gifts to the
35 account in addition to contributions by the account owner or a
36 participating employer. A gift to an account may be used only

 

 

SB1815 Engrossed - 8 - LRB094 11152 NHT 41788 b

1 to pay eligible education expenses.
 
2     Section 30. Tax credit awards. Subject to the provisions
3 of Section 216 of the Illinois Income Tax Act, a participating
4 employer is entitled to an income tax credit of up to $500 per
5 taxable year per participating employee for contributions made
6 to a lifelong learning account established under the employer's
7 accredited lifelong learning plan.
 
8     Section 35. Implementation and evaluation of the Act. The
9 Department, subject to appropriation, may implement this Act.
10 No later than January 30, 2007, the Department may evaluate the
11 lifelong learning account program established under this Act.
12 The evaluation may include an assessment of the effectiveness
13 of the program in meeting the educational needs of the citizens
14 of and employers in Illinois and of the revenue impact of the
15 program, and may include a review of the practices and
16 experiences of other states or nations with similar programs.
17 Upon completion of this evaluation, the Department may
18 determine the overall success of the program and may make a
19 recommendation to extend, modify, or not extend the program
20 based on this evaluation.
 
21     Section 40. The Department may not accredit any lifelong
22 learning plan after December 31, 2008. No participating
23 employer may receive a tax credit for contributions made to a
24 lifelong learning account after December 31, 2008. The
25 Department may not accredit more than 10,000 life long learning
26 plans before December 31, 2008.
 
27     Section 900. The Illinois Income Tax Act is amended by
28 changing Section 203 and by adding Section 216 as follows:
 
29     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
30     Sec. 203. Base income defined.
31     (a) Individuals.

 

 

SB1815 Engrossed - 9 - LRB094 11152 NHT 41788 b

1         (1) In general. In the case of an individual, base
2     income means an amount equal to the taxpayer's adjusted
3     gross income for the taxable year as modified by paragraph
4     (2).
5         (2) Modifications. The adjusted gross income referred
6     to in paragraph (1) shall be modified by adding thereto the
7     sum of the following amounts:
8             (A) An amount equal to all amounts paid or accrued
9         to the taxpayer as interest or dividends during the
10         taxable year to the extent excluded from gross income
11         in the computation of adjusted gross income, except
12         stock dividends of qualified public utilities
13         described in Section 305(e) of the Internal Revenue
14         Code;
15             (B) An amount equal to the amount of tax imposed by
16         this Act to the extent deducted from gross income in
17         the computation of adjusted gross income for the
18         taxable year;
19             (C) An amount equal to the amount received during
20         the taxable year as a recovery or refund of real
21         property taxes paid with respect to the taxpayer's
22         principal residence under the Revenue Act of 1939 and
23         for which a deduction was previously taken under
24         subparagraph (L) of this paragraph (2) prior to July 1,
25         1991, the retrospective application date of Article 4
26         of Public Act 87-17. In the case of multi-unit or
27         multi-use structures and farm dwellings, the taxes on
28         the taxpayer's principal residence shall be that
29         portion of the total taxes for the entire property
30         which is attributable to such principal residence;
31             (D) An amount equal to the amount of the capital
32         gain deduction allowable under the Internal Revenue
33         Code, to the extent deducted from gross income in the
34         computation of adjusted gross income;
35             (D-5) An amount, to the extent not included in
36         adjusted gross income, equal to the amount of money

 

 

SB1815 Engrossed - 10 - LRB094 11152 NHT 41788 b

1         withdrawn by the taxpayer in the taxable year from a
2         medical care savings account and the interest earned on
3         the account in the taxable year of a withdrawal
4         pursuant to subsection (b) of Section 20 of the Medical
5         Care Savings Account Act or subsection (b) of Section
6         20 of the Medical Care Savings Account Act of 2000;
7             (D-10) For taxable years ending after December 31,
8         1997, an amount equal to any eligible remediation costs
9         that the individual deducted in computing adjusted
10         gross income and for which the individual claims a
11         credit under subsection (l) of Section 201;
12             (D-15) For taxable years 2001 and thereafter, an
13         amount equal to the bonus depreciation deduction (30%
14         of the adjusted basis of the qualified property) taken
15         on the taxpayer's federal income tax return for the
16         taxable year under subsection (k) of Section 168 of the
17         Internal Revenue Code;
18             (D-16) If the taxpayer reports a capital gain or
19         loss on the taxpayer's federal income tax return for
20         the taxable year based on a sale or transfer of
21         property for which the taxpayer was required in any
22         taxable year to make an addition modification under
23         subparagraph (D-15), then an amount equal to the
24         aggregate amount of the deductions taken in all taxable
25         years under subparagraph (Z) with respect to that
26         property.
27             The taxpayer is required to make the addition
28         modification under this subparagraph only once with
29         respect to any one piece of property;
30             (D-17) For taxable years ending on or after
31         December 31, 2004, an amount equal to the amount
32         otherwise allowed as a deduction in computing base
33         income for interest paid, accrued, or incurred,
34         directly or indirectly, to a foreign person who would
35         be a member of the same unitary business group but for
36         the fact that foreign person's business activity

 

 

SB1815 Engrossed - 11 - LRB094 11152 NHT 41788 b

1         outside the United States is 80% or more of the foreign
2         person's total business activity. The addition
3         modification required by this subparagraph shall be
4         reduced to the extent that dividends were included in
5         base income of the unitary group for the same taxable
6         year and received by the taxpayer or by a member of the
7         taxpayer's unitary business group (including amounts
8         included in gross income under Sections 951 through 964
9         of the Internal Revenue Code and amounts included in
10         gross income under Section 78 of the Internal Revenue
11         Code) with respect to the stock of the same person to
12         whom the interest was paid, accrued, or incurred.
13             This paragraph shall not apply to the following:
14                 (i) an item of interest paid, accrued, or
15             incurred, directly or indirectly, to a foreign
16             person who is subject in a foreign country or
17             state, other than a state which requires mandatory
18             unitary reporting, to a tax on or measured by net
19             income with respect to such interest; or
20                 (ii) an item of interest paid, accrued, or
21             incurred, directly or indirectly, to a foreign
22             person if the taxpayer can establish, based on a
23             preponderance of the evidence, both of the
24             following:
25                     (a) the foreign person, during the same
26                 taxable year, paid, accrued, or incurred, the
27                 interest to a person that is not a related
28                 member, and
29                     (b) the transaction giving rise to the
30                 interest expense between the taxpayer and the
31                 foreign person did not have as a principal
32                 purpose the avoidance of Illinois income tax,
33                 and is paid pursuant to a contract or agreement
34                 that reflects an arm's-length interest rate
35                 and terms; or
36                 (iii) the taxpayer can establish, based on

 

 

SB1815 Engrossed - 12 - LRB094 11152 NHT 41788 b

1             clear and convincing evidence, that the interest
2             paid, accrued, or incurred relates to a contract or
3             agreement entered into at arm's-length rates and
4             terms and the principal purpose for the payment is
5             not federal or Illinois tax avoidance; or
6                 (iv) an item of interest paid, accrued, or
7             incurred, directly or indirectly, to a foreign
8             person if the taxpayer establishes by clear and
9             convincing evidence that the adjustments are
10             unreasonable; or if the taxpayer and the Director
11             agree in writing to the application or use of an
12             alternative method of apportionment under Section
13             304(f).
14                 Nothing in this subsection shall preclude the
15             Director from making any other adjustment
16             otherwise allowed under Section 404 of this Act for
17             any tax year beginning after the effective date of
18             this amendment provided such adjustment is made
19             pursuant to regulation adopted by the Department
20             and such regulations provide methods and standards
21             by which the Department will utilize its authority
22             under Section 404 of this Act;
23             (D-18) For taxable years ending on or after
24         December 31, 2004, an amount equal to the amount of
25         intangible expenses and costs otherwise allowed as a
26         deduction in computing base income, and that were paid,
27         accrued, or incurred, directly or indirectly, to a
28         foreign person who would be a member of the same
29         unitary business group but for the fact that the
30         foreign person's business activity outside the United
31         States is 80% or more of that person's total business
32         activity. The addition modification required by this
33         subparagraph shall be reduced to the extent that
34         dividends were included in base income of the unitary
35         group for the same taxable year and received by the
36         taxpayer or by a member of the taxpayer's unitary

 

 

SB1815 Engrossed - 13 - LRB094 11152 NHT 41788 b

1         business group (including amounts included in gross
2         income under Sections 951 through 964 of the Internal
3         Revenue Code and amounts included in gross income under
4         Section 78 of the Internal Revenue Code) with respect
5         to the stock of the same person to whom the intangible
6         expenses and costs were directly or indirectly paid,
7         incurred, or accrued. The preceding sentence does not
8         apply to the extent that the same dividends caused a
9         reduction to the addition modification required under
10         Section 203(a)(2)(D-17) of this Act. As used in this
11         subparagraph, the term "intangible expenses and costs"
12         includes (1) expenses, losses, and costs for, or
13         related to, the direct or indirect acquisition, use,
14         maintenance or management, ownership, sale, exchange,
15         or any other disposition of intangible property; (2)
16         losses incurred, directly or indirectly, from
17         factoring transactions or discounting transactions;
18         (3) royalty, patent, technical, and copyright fees;
19         (4) licensing fees; and (5) other similar expenses and
20         costs. For purposes of this subparagraph, "intangible
21         property" includes patents, patent applications, trade
22         names, trademarks, service marks, copyrights, mask
23         works, trade secrets, and similar types of intangible
24         assets.
25             This paragraph shall not apply to the following:
26                 (i) any item of intangible expenses or costs
27             paid, accrued, or incurred, directly or
28             indirectly, from a transaction with a foreign
29             person who is subject in a foreign country or
30             state, other than a state which requires mandatory
31             unitary reporting, to a tax on or measured by net
32             income with respect to such item; or
33                 (ii) any item of intangible expense or cost
34             paid, accrued, or incurred, directly or
35             indirectly, if the taxpayer can establish, based
36             on a preponderance of the evidence, both of the

 

 

SB1815 Engrossed - 14 - LRB094 11152 NHT 41788 b

1             following:
2                     (a) the foreign person during the same
3                 taxable 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 foreign person did not have as
9                 a 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 foreign
16             person if the taxpayer establishes by clear and
17             convincing evidence, that the adjustments are
18             unreasonable; or if the taxpayer and the Director
19             agree in 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 for
25             any tax year beginning after the effective date of
26             this amendment provided such adjustment is made
27             pursuant to regulation adopted by the Department
28             and such regulations provide methods and standards
29             by which the Department will utilize its authority
30             under Section 404 of this Act;
31             (D-20) For taxable years beginning on or after
32         January 1, 2002, in the case of a distribution from a
33         qualified tuition program under Section 529 of the
34         Internal Revenue Code, other than (i) a distribution
35         from a College Savings Pool created under Section 16.5
36         of the State Treasurer Act or (ii) a distribution from

 

 

SB1815 Engrossed - 15 - LRB094 11152 NHT 41788 b

1         the Illinois Prepaid Tuition Trust Fund, an amount
2         equal to the amount excluded from gross income under
3         Section 529(c)(3)(B);
4             (D-21) For taxable years beginning on or after
5         January 1, 2006, an amount equal to the amount of money
6         withdrawn by the taxpayer in the taxable year from a
7         lifelong learning account established under the
8         Lifelong Learning Act;
9     and by deducting from the total so obtained the sum of the
10     following amounts:
11             (E) For taxable years ending before December 31,
12         2001, any amount included in such total in respect of
13         any compensation (including but not limited to any
14         compensation paid or accrued to a serviceman while a
15         prisoner of war or missing in action) paid to a
16         resident by reason of being on active duty in the Armed
17         Forces of the United States and in respect of any
18         compensation paid or accrued to a resident who as a
19         governmental employee was a prisoner of war or missing
20         in action, and in respect of any compensation paid to a
21         resident in 1971 or thereafter for annual training
22         performed pursuant to Sections 502 and 503, Title 32,
23         United States Code as a member of the Illinois National
24         Guard. For taxable years ending on or after December
25         31, 2001, any amount included in such total in respect
26         of any compensation (including but not limited to any
27         compensation paid or accrued to a serviceman while a
28         prisoner of war or missing in action) paid to a
29         resident by reason of being a member of any component
30         of the Armed Forces of the United States and in respect
31         of any compensation paid or accrued to a resident who
32         as a governmental employee was a prisoner of war or
33         missing in action, and in respect of any compensation
34         paid to a resident in 2001 or thereafter by reason of
35         being a member of the Illinois National Guard. The
36         provisions of this amendatory Act of the 92nd General

 

 

SB1815 Engrossed - 16 - LRB094 11152 NHT 41788 b

1         Assembly are exempt from the provisions of Section 250;
2             (F) An amount equal to all amounts included in such
3         total pursuant to the provisions of Sections 402(a),
4         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
5         Internal Revenue Code, or included in such total as
6         distributions under the provisions of any retirement
7         or disability plan for employees of any governmental
8         agency or unit, or retirement payments to retired
9         partners, which payments are excluded in computing net
10         earnings from self employment by Section 1402 of the
11         Internal Revenue Code and regulations adopted pursuant
12         thereto;
13             (G) The valuation limitation amount;
14             (H) An amount equal to the amount of any tax
15         imposed by this Act which was refunded to the taxpayer
16         and included in such total for the taxable year;
17             (I) An amount equal to all amounts included in such
18         total pursuant to the provisions of Section 111 of the
19         Internal Revenue Code as a recovery of items previously
20         deducted from adjusted gross income in the computation
21         of taxable income;
22             (J) An amount equal to those dividends included in
23         such total which were paid by a corporation which
24         conducts business operations in an Enterprise Zone or
25         zones created under the Illinois Enterprise Zone Act,
26         and conducts substantially all of its operations in an
27         Enterprise Zone or zones;
28             (K) An amount equal to those dividends included in
29         such total that were paid by a corporation that
30         conducts business operations in a federally designated
31         Foreign Trade Zone or Sub-Zone and that is designated a
32         High Impact Business located in Illinois; provided
33         that dividends eligible for the deduction provided in
34         subparagraph (J) of paragraph (2) of this subsection
35         shall not be eligible for the deduction provided under
36         this subparagraph (K);

 

 

SB1815 Engrossed - 17 - LRB094 11152 NHT 41788 b

1             (L) For taxable years ending after December 31,
2         1983, an amount equal to all social security benefits
3         and railroad retirement benefits included in such
4         total pursuant to Sections 72(r) and 86 of the Internal
5         Revenue Code;
6             (M) With the exception of any amounts subtracted
7         under subparagraph (N), an amount equal to the sum of
8         all amounts disallowed as deductions by (i) Sections
9         171(a) (2), and 265(2) of the Internal Revenue Code of
10         1954, as now or hereafter amended, and all amounts of
11         expenses allocable to interest and disallowed as
12         deductions by Section 265(1) of the Internal Revenue
13         Code of 1954, as now or hereafter amended; and (ii) for
14         taxable years ending on or after August 13, 1999,
15         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
16         the Internal Revenue Code; the provisions of this
17         subparagraph are exempt from the provisions of Section
18         250;
19             (N) An amount equal to all amounts included in such
20         total which are exempt from taxation by this State
21         either by reason of its statutes or Constitution or by
22         reason of the Constitution, treaties or statutes of the
23         United States; provided that, in the case of any
24         statute of this State that exempts income derived from
25         bonds or other obligations from the tax imposed under
26         this Act, the amount exempted shall be the interest net
27         of bond premium amortization;
28             (O) An amount equal to any contribution made to a
29         job training project established pursuant to the Tax
30         Increment Allocation Redevelopment Act;
31             (P) An amount equal to the amount of the deduction
32         used to compute the federal income tax credit for
33         restoration of substantial amounts held under claim of
34         right for the taxable year pursuant to Section 1341 of
35         the Internal Revenue Code of 1986;
36             (Q) An amount equal to any amounts included in such

 

 

SB1815 Engrossed - 18 - LRB094 11152 NHT 41788 b

1         total, received by the taxpayer as an acceleration in
2         the payment of life, endowment or annuity benefits in
3         advance of the time they would otherwise be payable as
4         an indemnity for a terminal illness;
5             (R) An amount equal to the amount of any federal or
6         State bonus paid to veterans of the Persian Gulf War;
7             (S) An amount, to the extent included in adjusted
8         gross income, equal to the amount of a contribution
9         made in the taxable year on behalf of the taxpayer to a
10         medical care savings account established under the
11         Medical Care Savings Account Act or the Medical Care
12         Savings Account Act of 2000 to the extent the
13         contribution is accepted by the account administrator
14         as provided in that Act;
15             (T) An amount, to the extent included in adjusted
16         gross income, equal to the amount of interest earned in
17         the taxable year on a medical care savings account
18         established under the Medical Care Savings Account Act
19         or the Medical Care Savings Account Act of 2000 on
20         behalf of the taxpayer, other than interest added
21         pursuant to item (D-5) of this paragraph (2);
22             (U) For one taxable year beginning on or after
23         January 1, 1994, an amount equal to the total amount of
24         tax imposed and paid under subsections (a) and (b) of
25         Section 201 of this Act on grant amounts received by
26         the taxpayer under the Nursing Home Grant Assistance
27         Act during the taxpayer's taxable years 1992 and 1993;
28             (V) Beginning with tax years ending on or after
29         December 31, 1995 and ending with tax years ending on
30         or before December 31, 2004, an amount equal to the
31         amount paid by a taxpayer who is a self-employed
32         taxpayer, a partner of a partnership, or a shareholder
33         in a Subchapter S corporation for health insurance or
34         long-term care insurance for that taxpayer or that
35         taxpayer's spouse or dependents, to the extent that the
36         amount paid for that health insurance or long-term care

 

 

SB1815 Engrossed - 19 - LRB094 11152 NHT 41788 b

1         insurance may be deducted under Section 213 of the
2         Internal Revenue Code of 1986, has not been deducted on
3         the federal income tax return of the taxpayer, and does
4         not exceed the taxable income attributable to that
5         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 January
20         1, 1998, all amounts included in the taxpayer's federal
21         gross income in the taxable year from amounts converted
22         from a regular IRA to a Roth IRA. This paragraph is
23         exempt from the provisions of Section 250;
24             (X) For taxable year 1999 and thereafter, an amount
25         equal to the amount of any (i) distributions, to the
26         extent includible in gross income for federal income
27         tax purposes, made to the taxpayer because of his or
28         her status as a victim of persecution for racial or
29         religious reasons by Nazi Germany or any other Axis
30         regime or as an heir of the victim and (ii) items of
31         income, to the extent includible in gross income for
32         federal income tax purposes, attributable to, derived
33         from or in any way related to assets stolen from,
34         hidden from, or otherwise lost to a victim of
35         persecution for racial or religious reasons by Nazi
36         Germany or any other Axis regime immediately prior to,

 

 

SB1815 Engrossed - 20 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 21 - LRB094 11152 NHT 41788 b

1         subparagraph (Y) is exempt from the provisions of
2         Section 250;
3             (Z) For taxable years 2001 and thereafter, for the
4         taxable year in which the bonus depreciation deduction
5         (30% of the adjusted basis of the qualified property)
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 (30% of
14             the adjusted basis of the qualified property) was
15             taken in any year under subsection (k) of Section
16             168 of the Internal Revenue Code, but not including
17             the bonus depreciation deduction; and
18                 (2) "x" equals "y" multiplied by 30 and then
19             divided by 70 (or "y" multiplied by 0.429).
20             The aggregate amount deducted under this
21         subparagraph in all taxable years for any one piece of
22         property may not exceed the amount of the bonus
23         depreciation deduction (30% of the adjusted basis of
24         the qualified property) taken on that property on the
25         taxpayer's federal income tax return under subsection
26         (k) of Section 168 of the Internal Revenue Code;
27             (AA) If the taxpayer reports a capital gain or loss
28         on the taxpayer's federal income tax return for the
29         taxable year based on a sale or transfer of property
30         for which the taxpayer was required in any taxable year
31         to make an addition modification under subparagraph
32         (D-15), then an amount equal to that addition
33         modification.
34             The taxpayer is allowed to take the deduction under
35         this subparagraph only once with respect to any one
36         piece of property;

 

 

SB1815 Engrossed - 22 - LRB094 11152 NHT 41788 b

1             (BB) Any amount included in adjusted gross income,
2         other than salary, received by a driver in a
3         ridesharing arrangement using a motor vehicle;
4             (CC) The amount of (i) any interest income (net of
5         the deductions allocable thereto) taken into account
6         for the taxable year with respect to a transaction with
7         a taxpayer that is required to make an addition
8         modification with respect to such transaction under
9         Section 203(a)(2)(D-17), 203(b)(2)(E-13),
10         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
11         the amount of that addition modification, and (ii) any
12         income from intangible property (net of the deductions
13         allocable thereto) taken into account for the taxable
14         year with respect to a transaction with a taxpayer that
15         is required to make an addition modification with
16         respect to such transaction under Section
17         203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or
18         203(d)(2)(D-8), but not to exceed the amount of that
19         addition modification;
20             (DD) An amount equal to the interest income taken
21         into account for the taxable year (net of the
22         deductions allocable thereto) with respect to
23         transactions with a foreign person who would be a
24         member of the taxpayer's unitary business group but for
25         the fact that the foreign person's business activity
26         outside the United States is 80% or more of that
27         person's total business activity, but not to exceed the
28         addition modification required to be made for the same
29         taxable year under Section 203(a)(2)(D-17) for
30         interest paid, accrued, or incurred, directly or
31         indirectly, to the same foreign person; and
32             (EE) An amount equal to the income from intangible
33         property taken into account for the taxable year (net
34         of the deductions allocable thereto) with respect to
35         transactions with a foreign person who would be a
36         member of the taxpayer's unitary business group but for

 

 

SB1815 Engrossed - 23 - LRB094 11152 NHT 41788 b

1         the fact that the foreign person's business activity
2         outside the United States is 80% or more of that
3         person's total business activity, but not to exceed the
4         addition modification required to be made for the same
5         taxable year under Section 203(a)(2)(D-18) for
6         intangible expenses and costs paid, accrued, or
7         incurred, directly or indirectly, to the same foreign
8         person; and .
9             (FF) For taxable years beginning on or after
10         January 1, 2006, an amount equal to the amount of money
11         deposited by the taxpayer in the taxable year into a
12         lifelong learning account established under the
13         Lifelong Learning Act of which the taxpayer is a
14         beneficiary. This paragraph is exempt from the
15         provisions of Section 250.
 
16     (b) Corporations.
17         (1) In general. In the case of a corporation, base
18     income means an amount equal to the taxpayer's taxable
19     income for the taxable year as modified by paragraph (2).
20         (2) Modifications. The taxable income referred to in
21     paragraph (1) shall be modified by adding thereto the sum
22     of the following amounts:
23             (A) An amount equal to all amounts paid or accrued
24         to the taxpayer as interest and all distributions
25         received from regulated investment companies during
26         the taxable year to the extent excluded from gross
27         income in the computation of taxable income;
28             (B) An amount equal to the amount of tax imposed by
29         this Act to the extent deducted from gross income in
30         the computation of taxable income for the taxable year;
31             (C) In the case of a regulated investment company,
32         an amount equal to the excess of (i) the net long-term
33         capital gain for the taxable year, over (ii) the amount
34         of the capital gain dividends designated as such in
35         accordance with Section 852(b)(3)(C) of the Internal

 

 

SB1815 Engrossed - 24 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 25 - LRB094 11152 NHT 41788 b

1         (E) shall be the sum of the amounts computed
2         independently under the preceding provisions of this
3         subparagraph (E) for each such taxable year;
4             (E-5) For taxable years ending after December 31,
5         1997, an amount equal to any eligible remediation costs
6         that the corporation deducted in computing adjusted
7         gross income and for which the corporation claims a
8         credit under subsection (l) of Section 201;
9             (E-10) For taxable years 2001 and thereafter, an
10         amount equal to the bonus depreciation deduction (30%
11         of the adjusted basis of the qualified property) taken
12         on the taxpayer's federal income tax return for the
13         taxable year under subsection (k) of Section 168 of the
14         Internal Revenue Code; and
15             (E-11) If the taxpayer reports a capital gain or
16         loss on the taxpayer's federal income tax return for
17         the taxable year based on a sale or transfer of
18         property for which the taxpayer was required in any
19         taxable year to make an addition modification under
20         subparagraph (E-10), then an amount equal to the
21         aggregate amount of the deductions taken in all taxable
22         years under subparagraph (T) with respect to that
23         property.
24             The taxpayer is required to make the addition
25         modification under this subparagraph only once with
26         respect to any one piece of property;
27             (E-12) For taxable years ending on or after
28         December 31, 2004, an amount equal to the amount
29         otherwise allowed as a deduction in computing base
30         income for interest paid, accrued, or incurred,
31         directly or indirectly, to a foreign person who would
32         be a member of the same unitary business group but for
33         the fact the foreign person's business activity
34         outside the United States is 80% or more of the foreign
35         person's total business activity. The addition
36         modification required by this subparagraph shall be

 

 

SB1815 Engrossed - 26 - LRB094 11152 NHT 41788 b

1         reduced to the extent that dividends were included in
2         base income of the unitary group for the same taxable
3         year and received by the taxpayer or by a member of the
4         taxpayer's unitary business group (including amounts
5         included in gross income pursuant to Sections 951
6         through 964 of the Internal Revenue Code and amounts
7         included in gross income under Section 78 of the
8         Internal Revenue Code) with respect to the stock of the
9         same person to whom the interest was paid, accrued, or
10         incurred.
11             This paragraph shall not apply to the following:
12                 (i) an item of interest paid, accrued, or
13             incurred, directly or indirectly, to a foreign
14             person who is subject in a foreign country or
15             state, other than a state which requires mandatory
16             unitary reporting, to a tax on or measured by net
17             income with respect to such interest; or
18                 (ii) an item of interest paid, accrued, or
19             incurred, directly or indirectly, to a foreign
20             person if the taxpayer can establish, based on a
21             preponderance of the evidence, both of the
22             following:
23                     (a) the foreign person, during the same
24                 taxable year, paid, accrued, or incurred, the
25                 interest to a person that is not a related
26                 member, and
27                     (b) the transaction giving rise to the
28                 interest expense between the taxpayer and the
29                 foreign person did not have as a principal
30                 purpose the avoidance of Illinois income tax,
31                 and is paid pursuant to a contract or agreement
32                 that reflects an arm's-length interest rate
33                 and terms; or
34                 (iii) the taxpayer can establish, based on
35             clear and convincing evidence, that the interest
36             paid, accrued, or incurred relates to a contract or

 

 

SB1815 Engrossed - 27 - LRB094 11152 NHT 41788 b

1             agreement entered into at arm's-length rates and
2             terms and the principal purpose for the payment is
3             not federal or Illinois tax avoidance; or
4                 (iv) an item of interest paid, accrued, or
5             incurred, directly or indirectly, to a foreign
6             person if the taxpayer establishes by clear and
7             convincing evidence that the adjustments are
8             unreasonable; or if the taxpayer and the Director
9             agree in writing to the application or use of an
10             alternative method of apportionment under Section
11             304(f).
12                 Nothing in this subsection shall preclude the
13             Director from making any other adjustment
14             otherwise allowed under Section 404 of this Act for
15             any tax year beginning after the effective date of
16             this amendment provided such adjustment is made
17             pursuant to regulation adopted by the Department
18             and such regulations provide methods and standards
19             by which the Department will utilize its authority
20             under Section 404 of this Act;
21             (E-13) For taxable years ending on or after
22         December 31, 2004, an amount equal to the amount of
23         intangible expenses and costs otherwise allowed as a
24         deduction in computing base income, and that were paid,
25         accrued, or incurred, directly or indirectly, to a
26         foreign person who would be a member of the same
27         unitary business group but for the fact that the
28         foreign person's business activity outside the United
29         States is 80% or more of that person's total business
30         activity. The addition modification required by this
31         subparagraph shall be reduced to the extent that
32         dividends were included in base income of the unitary
33         group for the same taxable year and received by the
34         taxpayer or by a member of the taxpayer's unitary
35         business group (including amounts included in gross
36         income pursuant to Sections 951 through 964 of the

 

 

SB1815 Engrossed - 28 - LRB094 11152 NHT 41788 b

1         Internal Revenue Code and amounts included in gross
2         income under Section 78 of the Internal Revenue Code)
3         with respect to the stock of the same person to whom
4         the intangible expenses and costs were directly or
5         indirectly paid, incurred, or accrued. The preceding
6         sentence shall not apply to the extent that the same
7         dividends caused a reduction to the addition
8         modification required under Section 203(b)(2)(E-12) of
9         this Act. As used in this subparagraph, the term
10         "intangible expenses and costs" includes (1) expenses,
11         losses, and costs for, or related to, the direct or
12         indirect acquisition, use, maintenance or management,
13         ownership, sale, exchange, or any other disposition of
14         intangible property; (2) losses incurred, directly or
15         indirectly, from factoring transactions or discounting
16         transactions; (3) royalty, patent, technical, and
17         copyright fees; (4) licensing fees; and (5) other
18         similar expenses and costs. For purposes of this
19         subparagraph, "intangible property" includes patents,
20         patent applications, trade names, trademarks, service
21         marks, copyrights, mask works, trade secrets, and
22         similar types of intangible assets.
23             This paragraph shall not apply to the following:
24                 (i) any item of intangible expenses or costs
25             paid, accrued, or incurred, directly or
26             indirectly, from a transaction with a foreign
27             person who is subject in a foreign country or
28             state, other than a state which requires mandatory
29             unitary reporting, to a tax on or measured by net
30             income with respect to such item; or
31                 (ii) any item of intangible expense or cost
32             paid, accrued, or incurred, directly or
33             indirectly, if the taxpayer can establish, based
34             on a preponderance of the evidence, both of the
35             following:
36                     (a) the foreign person during the same

 

 

SB1815 Engrossed - 29 - LRB094 11152 NHT 41788 b

1                 taxable year paid, accrued, or incurred, the
2                 intangible expense or cost to a person that is
3                 not a related member, and
4                     (b) the transaction giving rise to the
5                 intangible expense or cost between the
6                 taxpayer and the foreign person did not have as
7                 a principal purpose the avoidance of Illinois
8                 income tax, and is paid pursuant to a contract
9                 or agreement that reflects arm's-length terms;
10                 or
11                 (iii) any item of intangible expense or cost
12             paid, accrued, or incurred, directly or
13             indirectly, from a transaction with a foreign
14             person if the taxpayer establishes by clear and
15             convincing evidence, that the adjustments are
16             unreasonable; or if the taxpayer and the Director
17             agree in writing to the application or use of an
18             alternative method of apportionment under Section
19             304(f);
20                 Nothing in this subsection shall preclude the
21             Director from making any other adjustment
22             otherwise allowed under Section 404 of this Act for
23             any tax year beginning after the effective date of
24             this amendment provided such adjustment is made
25             pursuant to regulation adopted by the Department
26             and such regulations provide methods and standards
27             by which the Department will utilize its authority
28             under Section 404 of this Act;
29     and by deducting from the total so obtained the sum of the
30     following amounts:
31             (F) An amount equal to the amount of any tax
32         imposed by this Act which was refunded to the taxpayer
33         and included in such total for the taxable year;
34             (G) An amount equal to any amount included in such
35         total under Section 78 of the Internal Revenue Code;
36             (H) In the case of a regulated investment company,

 

 

SB1815 Engrossed - 30 - LRB094 11152 NHT 41788 b

1         an amount equal to the amount of exempt interest
2         dividends as defined in subsection (b) (5) of Section
3         852 of the Internal Revenue Code, paid to shareholders
4         for the taxable year;
5             (I) With the exception of any amounts subtracted
6         under subparagraph (J), an amount equal to the sum of
7         all amounts disallowed as deductions by (i) Sections
8         171(a) (2), and 265(a)(2) and amounts disallowed as
9         interest expense by Section 291(a)(3) of the Internal
10         Revenue Code, as now or hereafter amended, and all
11         amounts of expenses allocable to interest and
12         disallowed as deductions by Section 265(a)(1) of the
13         Internal Revenue Code, as now or hereafter amended; and
14         (ii) for taxable years ending on or after August 13,
15         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
16         832(b)(5)(B)(i) of the Internal Revenue Code; the
17         provisions of this subparagraph are exempt from the
18         provisions of Section 250;
19             (J) An amount equal to all amounts included in such
20         total which are exempt from taxation by this State
21         either by reason of its statutes or Constitution or by
22         reason of the Constitution, treaties or statutes of the
23         United States; provided that, in the case of any
24         statute of this State that exempts income derived from
25         bonds or other obligations from the tax imposed under
26         this Act, the amount exempted shall be the interest net
27         of bond premium amortization;
28             (K) An amount equal to those dividends included in
29         such total which were paid by a corporation which
30         conducts business operations in an Enterprise Zone or
31         zones created under the Illinois Enterprise Zone Act
32         and conducts substantially all of its operations in an
33         Enterprise Zone or zones;
34             (L) An amount equal to those dividends included in
35         such total that were paid by a corporation that
36         conducts business operations in a federally designated

 

 

SB1815 Engrossed - 31 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 32 - LRB094 11152 NHT 41788 b

1         the taxpayer and the borrower should be divided into
2         the basis of the Section 201(h) investment credit
3         property which secures the loan or loans, using for
4         this purpose the original basis of such property on the
5         date that it was placed in service in a federally
6         designated Foreign Trade Zone or Sub-Zone located in
7         Illinois. No taxpayer that is eligible for the
8         deduction provided in subparagraph (M) of paragraph
9         (2) of this subsection shall be eligible for the
10         deduction provided under this subparagraph (M-1). The
11         subtraction modification available to taxpayers in any
12         year under this subsection shall be that portion of the
13         total interest paid by the borrower with respect to
14         such loan attributable to the eligible property as
15         calculated under the previous sentence;
16             (N) Two times any contribution made during the
17         taxable year to a designated zone organization to the
18         extent that the contribution (i) qualifies as a
19         charitable contribution under subsection (c) of
20         Section 170 of the Internal Revenue Code and (ii) must,
21         by its terms, be used for a project approved by the
22         Department of Commerce and Economic Opportunity under
23         Section 11 of the Illinois Enterprise Zone Act;
24             (O) An amount equal to: (i) 85% for taxable years
25         ending on or before December 31, 1992, or, a percentage
26         equal to the percentage allowable under Section
27         243(a)(1) of the Internal Revenue Code of 1986 for
28         taxable years ending after December 31, 1992, of the
29         amount by which dividends included in taxable income
30         and received from a corporation that is not created or
31         organized under the laws of the United States or any
32         state or political subdivision thereof, including, for
33         taxable years ending on or after December 31, 1988,
34         dividends received or deemed received or paid or deemed
35         paid under Sections 951 through 964 of the Internal
36         Revenue Code, exceed the amount of the modification

 

 

SB1815 Engrossed - 33 - LRB094 11152 NHT 41788 b

1         provided under subparagraph (G) of paragraph (2) of
2         this subsection (b) which is related to such dividends;
3         plus (ii) 100% of the amount by which dividends,
4         included in taxable income and received, including,
5         for taxable years ending on or after December 31, 1988,
6         dividends received or deemed received or paid or deemed
7         paid under Sections 951 through 964 of the Internal
8         Revenue Code, from any such corporation specified in
9         clause (i) that would but for the provisions of Section
10         1504 (b) (3) of the Internal Revenue Code be treated as
11         a member of the affiliated group which includes the
12         dividend recipient, exceed the amount of the
13         modification provided under subparagraph (G) of
14         paragraph (2) of this subsection (b) which is related
15         to such dividends;
16             (P) An amount equal to any contribution made to a
17         job training project established pursuant to the Tax
18         Increment Allocation Redevelopment Act;
19             (Q) An amount equal to the amount of the deduction
20         used to compute the federal income tax credit for
21         restoration of substantial amounts held under claim of
22         right for the taxable year pursuant to Section 1341 of
23         the Internal Revenue Code of 1986;
24             (R) In the case of an attorney-in-fact with respect
25         to whom an interinsurer or a reciprocal insurer has
26         made the election under Section 835 of the Internal
27         Revenue Code, 26 U.S.C. 835, an amount equal to the
28         excess, if any, of the amounts paid or incurred by that
29         interinsurer or reciprocal insurer in the taxable year
30         to the attorney-in-fact over the deduction allowed to
31         that interinsurer or reciprocal insurer with respect
32         to the attorney-in-fact under Section 835(b) of the
33         Internal Revenue Code for the taxable year;
34             (S) For taxable years ending on or after December
35         31, 1997, in the case of a Subchapter S corporation, an
36         amount equal to all amounts of income allocable to a

 

 

SB1815 Engrossed - 34 - LRB094 11152 NHT 41788 b

1         shareholder subject to the Personal Property Tax
2         Replacement Income Tax imposed by subsections (c) and
3         (d) of Section 201 of this Act, including amounts
4         allocable to organizations exempt from federal income
5         tax by reason of Section 501(a) of the Internal Revenue
6         Code. This subparagraph (S) is exempt from the
7         provisions of Section 250;
8             (T) For taxable years 2001 and thereafter, for the
9         taxable year in which the bonus depreciation deduction
10         (30% of the adjusted basis of the qualified property)
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 (30% of
19             the adjusted basis of the qualified property) was
20             taken in any year under subsection (k) of Section
21             168 of the Internal Revenue Code, but not including
22             the bonus depreciation deduction; and
23                 (2) "x" equals "y" multiplied by 30 and then
24             divided by 70 (or "y" multiplied by 0.429).
25             The aggregate amount deducted under this
26         subparagraph in all taxable years for any one piece of
27         property may not exceed the amount of the bonus
28         depreciation deduction (30% of the adjusted basis of
29         the qualified property) taken on that property on the
30         taxpayer's federal income tax return under subsection
31         (k) of Section 168 of the Internal Revenue Code;
32             (U) If the taxpayer reports a capital gain or loss
33         on the taxpayer's federal income tax return for the
34         taxable year based on a sale or transfer of property
35         for which the taxpayer was required in any taxable year
36         to make an addition modification under subparagraph

 

 

SB1815 Engrossed - 35 - LRB094 11152 NHT 41788 b

1         (E-10), then an amount equal to that addition
2         modification.
3             The taxpayer is allowed to take the deduction under
4         this subparagraph only once with respect to any one
5         piece of property;
6             (V) The amount of: (i) any interest income (net of
7         the deductions allocable thereto) taken into account
8         for the taxable year with respect to a transaction with
9         a taxpayer that is required to make an addition
10         modification with respect to such transaction under
11         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
12         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
13         the amount of such addition modification and (ii) any
14         income from intangible property (net of the deductions
15         allocable thereto) taken into account for the taxable
16         year with respect to a transaction with a taxpayer that
17         is required to make an addition modification with
18         respect to such transaction under Section
19         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
20         203(d)(2)(D-8), but not to exceed the amount of such
21         addition modification;
22             (W) An amount equal to the interest income taken
23         into account for the taxable year (net of the
24         deductions allocable thereto) with respect to
25         transactions with a foreign person who would be a
26         member of the taxpayer's unitary business group but for
27         the fact that the foreign person's business activity
28         outside the United States is 80% or more of that
29         person's total business activity, but not to exceed the
30         addition modification required to be made for the same
31         taxable year under Section 203(b)(2)(E-12) for
32         interest paid, accrued, or incurred, directly or
33         indirectly, to the same foreign person; and
34             (X) An amount equal to the income from intangible
35         property taken into account for the taxable year (net
36         of the deductions allocable thereto) with respect to

 

 

SB1815 Engrossed - 36 - LRB094 11152 NHT 41788 b

1         transactions with a foreign person who would be a
2         member of the taxpayer's unitary business group but for
3         the fact that the foreign person's business activity
4         outside the United States is 80% or more of that
5         person's total business activity, but not to exceed the
6         addition modification required to be made for the same
7         taxable year under Section 203(b)(2)(E-13) for
8         intangible expenses and costs paid, accrued, or
9         incurred, directly or indirectly, to the same foreign
10         person.
11         (3) Special rule. For purposes of paragraph (2) (A),
12     "gross income" in the case of a life insurance company, for
13     tax years ending on and after December 31, 1994, shall mean
14     the gross investment income for the taxable year.
 
15     (c) Trusts and estates.
16         (1) In general. In the case of a trust or estate, base
17     income means an amount equal to the taxpayer's taxable
18     income for the taxable year as modified by paragraph (2).
19         (2) Modifications. Subject to the provisions of
20     paragraph (3), the taxable income referred to in paragraph
21     (1) shall be modified by adding thereto the sum of the
22     following amounts:
23             (A) An amount equal to all amounts paid or accrued
24         to the taxpayer as interest or dividends during the
25         taxable year to the extent excluded from gross income
26         in the computation of taxable income;
27             (B) In the case of (i) an estate, $600; (ii) a
28         trust which, under its governing instrument, is
29         required to distribute all of its income currently,
30         $300; and (iii) any other trust, $100, but in each such
31         case, only to the extent such amount was deducted in
32         the computation of taxable income;
33             (C) An amount equal to the amount of tax imposed by
34         this Act to the extent deducted from gross income in
35         the computation of taxable income for the taxable year;

 

 

SB1815 Engrossed - 37 - LRB094 11152 NHT 41788 b

1             (D) The amount of any net operating loss deduction
2         taken in arriving at taxable income, other than a net
3         operating loss carried forward from a taxable year
4         ending prior to December 31, 1986;
5             (E) For taxable years in which a net operating loss
6         carryback or carryforward from a taxable year ending
7         prior to December 31, 1986 is an element of taxable
8         income under paragraph (1) of subsection (e) or
9         subparagraph (E) of paragraph (2) of subsection (e),
10         the amount by which addition modifications other than
11         those provided by this subparagraph (E) exceeded
12         subtraction modifications in such taxable year, with
13         the following limitations applied in the order that
14         they are listed:
15                 (i) the addition modification relating to the
16             net operating loss carried back or forward to the
17             taxable year from any taxable year ending prior to
18             December 31, 1986 shall be reduced by the amount of
19             addition modification under this subparagraph (E)
20             which related to that net operating loss and which
21             was taken into account in calculating the base
22             income of an earlier taxable year, and
23                 (ii) the addition modification relating to the
24             net operating loss carried back or forward to the
25             taxable year from any taxable year ending prior to
26             December 31, 1986 shall not exceed the amount of
27             such carryback or carryforward;
28             For taxable years in which there is a net operating
29         loss carryback or carryforward from more than one other
30         taxable year ending prior to December 31, 1986, the
31         addition modification provided in this subparagraph
32         (E) shall be the sum of the amounts computed
33         independently under the preceding provisions of this
34         subparagraph (E) for each such taxable year;
35             (F) For taxable years ending on or after January 1,
36         1989, an amount equal to the tax deducted pursuant to

 

 

SB1815 Engrossed - 38 - LRB094 11152 NHT 41788 b

1         Section 164 of the Internal Revenue Code if the trust
2         or estate is claiming the same tax for purposes of the
3         Illinois foreign tax credit under Section 601 of this
4         Act;
5             (G) An amount equal to the amount of the capital
6         gain deduction allowable under the Internal Revenue
7         Code, to the extent deducted from gross income in the
8         computation of taxable income;
9             (G-5) For taxable years ending after December 31,
10         1997, an amount equal to any eligible remediation costs
11         that the trust or estate deducted in computing adjusted
12         gross income and for which the trust or estate claims a
13         credit under subsection (l) of Section 201;
14             (G-10) For taxable years 2001 and thereafter, an
15         amount equal to the bonus depreciation deduction (30%
16         of the adjusted basis of the qualified property) taken
17         on the taxpayer's federal income tax return for the
18         taxable year under subsection (k) of Section 168 of the
19         Internal Revenue Code; and
20             (G-11) If the taxpayer reports a capital gain or
21         loss on the taxpayer's federal income tax return for
22         the taxable year based on a sale or transfer of
23         property for which the taxpayer was required in any
24         taxable year to make an addition modification under
25         subparagraph (G-10), then an amount equal to the
26         aggregate amount of the deductions taken in all taxable
27         years under subparagraph (R) with respect to that
28         property.
29             The taxpayer is required to make the addition
30         modification under this subparagraph only once with
31         respect to any one piece of property;
32             (G-12) For taxable years ending on or after
33         December 31, 2004, an amount equal to the amount
34         otherwise allowed as a deduction in computing base
35         income for interest paid, accrued, or incurred,
36         directly or indirectly, to a foreign person who would

 

 

SB1815 Engrossed - 39 - LRB094 11152 NHT 41788 b

1         be a member of the same unitary business group but for
2         the fact that the foreign person's business activity
3         outside the United States is 80% or more of the foreign
4         person's total business activity. The addition
5         modification required by this subparagraph shall be
6         reduced to the extent that dividends were included in
7         base income of the unitary group for the same taxable
8         year and received by the taxpayer or by a member of the
9         taxpayer's unitary business group (including amounts
10         included in gross income pursuant to Sections 951
11         through 964 of the Internal Revenue Code and amounts
12         included in gross income under Section 78 of the
13         Internal Revenue Code) with respect to the stock of the
14         same person to whom the interest was paid, accrued, or
15         incurred.
16             This paragraph shall not apply to the following:
17                 (i) an item of interest paid, accrued, or
18             incurred, directly or indirectly, to a foreign
19             person who is subject in a foreign country or
20             state, other than a state which requires mandatory
21             unitary reporting, to a tax on or measured by net
22             income with respect to such interest; or
23                 (ii) an item of interest paid, accrued, or
24             incurred, directly or indirectly, to a foreign
25             person if the taxpayer can establish, based on a
26             preponderance of the evidence, both of the
27             following:
28                     (a) the foreign person, during the same
29                 taxable year, paid, accrued, or incurred, the
30                 interest to a person that is not a related
31                 member, and
32                     (b) the transaction giving rise to the
33                 interest expense between the taxpayer and the
34                 foreign person did not have as a principal
35                 purpose the avoidance of Illinois income tax,
36                 and is paid pursuant to a contract or agreement

 

 

SB1815 Engrossed - 40 - LRB094 11152 NHT 41788 b

1                 that reflects an arm's-length interest rate
2                 and terms; or
3                 (iii) the taxpayer can establish, based on
4             clear and convincing evidence, that the interest
5             paid, accrued, or incurred relates to a contract or
6             agreement entered into at arm's-length rates and
7             terms and the principal purpose for the payment is
8             not federal or Illinois tax avoidance; or
9                 (iv) an item of interest paid, accrued, or
10             incurred, directly or indirectly, to a foreign
11             person if the taxpayer establishes by clear and
12             convincing evidence that the adjustments are
13             unreasonable; or if the taxpayer and the Director
14             agree in 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 for
20             any tax year beginning after the effective date of
21             this amendment provided such adjustment is made
22             pursuant to regulation adopted by the Department
23             and such regulations provide methods and standards
24             by which the Department will utilize its authority
25             under Section 404 of this Act;
26             (G-13) For taxable years ending on or after
27         December 31, 2004, an amount equal to the amount of
28         intangible expenses and costs otherwise allowed as a
29         deduction in computing base income, and that were paid,
30         accrued, or incurred, directly or indirectly, to a
31         foreign person who would be a member of the same
32         unitary business group but for the fact that the
33         foreign person's business activity outside the United
34         States is 80% or more of that person's total business
35         activity. The addition modification required by this
36         subparagraph shall be reduced to the extent that

 

 

SB1815 Engrossed - 41 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 42 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 43 - LRB094 11152 NHT 41788 b

1         total pursuant to the provisions of Sections 402(a),
2         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
3         Internal Revenue Code or included in such total as
4         distributions under the provisions of any retirement
5         or disability plan for employees of any governmental
6         agency or unit, or retirement payments to retired
7         partners, which payments are excluded in computing net
8         earnings from self employment by Section 1402 of the
9         Internal Revenue Code and regulations adopted pursuant
10         thereto;
11             (I) The valuation limitation amount;
12             (J) An amount equal to the amount of any tax
13         imposed by this Act which was refunded to the taxpayer
14         and included in such total for the taxable year;
15             (K) An amount equal to all amounts included in
16         taxable income as modified by subparagraphs (A), (B),
17         (C), (D), (E), (F) and (G) which are exempt from
18         taxation by this State either by reason of its statutes
19         or Constitution or by reason of the Constitution,
20         treaties or statutes of the United States; provided
21         that, in the case of any statute of this State that
22         exempts income derived from bonds or other obligations
23         from the tax imposed under this Act, the amount
24         exempted shall be the interest net of bond premium
25         amortization;
26             (L) With the exception of any amounts subtracted
27         under subparagraph (K), an amount equal to the sum of
28         all amounts disallowed as deductions by (i) Sections
29         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
30         as now or hereafter amended, and all amounts of
31         expenses allocable to interest and disallowed as
32         deductions by Section 265(1) of the Internal Revenue
33         Code of 1954, as now or hereafter amended; and (ii) for
34         taxable years ending on or after August 13, 1999,
35         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
36         the Internal Revenue Code; the provisions of this

 

 

SB1815 Engrossed - 44 - LRB094 11152 NHT 41788 b

1         subparagraph are exempt from the provisions of Section
2         250;
3             (M) An amount equal to those dividends included in
4         such total which were paid by a corporation which
5         conducts business operations in an Enterprise Zone or
6         zones created under the Illinois Enterprise Zone Act
7         and conducts substantially all of its operations in an
8         Enterprise Zone or Zones;
9             (N) An amount equal to any contribution made to a
10         job training project established pursuant to the Tax
11         Increment Allocation Redevelopment Act;
12             (O) An amount equal to those dividends included in
13         such total that were paid by a corporation that
14         conducts business operations in a federally designated
15         Foreign Trade Zone or Sub-Zone and that is designated a
16         High Impact Business located in Illinois; provided
17         that dividends eligible for the deduction provided in
18         subparagraph (M) of paragraph (2) of this subsection
19         shall not be eligible for the deduction provided under
20         this subparagraph (O);
21             (P) An amount equal to the amount of the deduction
22         used to compute the federal income tax credit for
23         restoration of substantial amounts held under claim of
24         right for the taxable year pursuant to Section 1341 of
25         the Internal Revenue Code of 1986;
26             (Q) For taxable year 1999 and thereafter, an amount
27         equal to the amount of any (i) distributions, to the
28         extent includible in gross income for federal income
29         tax purposes, made to the taxpayer because of his or
30         her status as a victim of persecution for racial or
31         religious reasons by Nazi Germany or any other Axis
32         regime or as an heir of the victim and (ii) items of
33         income, to the extent includible in gross income for
34         federal income tax purposes, attributable to, derived
35         from or in any way related to assets stolen from,
36         hidden from, or otherwise lost to a victim of

 

 

SB1815 Engrossed - 45 - LRB094 11152 NHT 41788 b

1         persecution for racial or religious reasons by Nazi
2         Germany or any other Axis regime immediately prior to,
3         during, and immediately after World War II, including,
4         but not limited to, interest on the proceeds receivable
5         as insurance under policies issued to a victim of
6         persecution for racial or religious reasons by Nazi
7         Germany or any other Axis regime by European insurance
8         companies immediately prior to and during World War II;
9         provided, however, this subtraction from federal
10         adjusted gross income does not apply to assets acquired
11         with such assets or with the proceeds from the sale of
12         such assets; provided, further, this paragraph shall
13         only apply to a taxpayer who was the first recipient of
14         such assets after their recovery and who is a victim of
15         persecution for racial or religious reasons by Nazi
16         Germany or any other Axis regime or as an heir of the
17         victim. The amount of and the eligibility for any
18         public assistance, benefit, or similar entitlement is
19         not affected by the inclusion of items (i) and (ii) of
20         this paragraph in gross income for federal income tax
21         purposes. This paragraph is exempt from the provisions
22         of Section 250;
23             (R) For taxable years 2001 and thereafter, for the
24         taxable year in which the bonus depreciation deduction
25         (30% of the adjusted basis of the qualified property)
26         is taken on the taxpayer's federal income tax return
27         under subsection (k) of Section 168 of the Internal
28         Revenue Code and for each applicable taxable year
29         thereafter, an amount equal to "x", where:
30                 (1) "y" equals the amount of the depreciation
31             deduction taken for the taxable year on the
32             taxpayer's federal income tax return on property
33             for which the bonus depreciation deduction (30% of
34             the adjusted basis of the qualified property) was
35             taken in any year under subsection (k) of Section
36             168 of the Internal Revenue Code, but not including

 

 

SB1815 Engrossed - 46 - LRB094 11152 NHT 41788 b

1             the bonus depreciation deduction; and
2                 (2) "x" equals "y" multiplied by 30 and then
3             divided by 70 (or "y" multiplied by 0.429).
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 (30% of the adjusted basis of
8         the qualified property) taken on that property on the
9         taxpayer's federal income tax return under subsection
10         (k) of Section 168 of the Internal Revenue Code;
11             (S) If the taxpayer reports a capital gain or loss
12         on the taxpayer's federal income tax return for the
13         taxable year based on a sale or transfer of property
14         for which the taxpayer was required in any taxable year
15         to make an addition modification under subparagraph
16         (G-10), then an amount equal to that addition
17         modification.
18             The taxpayer is allowed to take the deduction under
19         this subparagraph only once with respect to any one
20         piece of property;
21             (T) The amount of (i) any interest income (net of
22         the deductions allocable thereto) taken into account
23         for the taxable year with respect to a transaction with
24         a taxpayer that is required to make an addition
25         modification with respect to such transaction under
26         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
27         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
28         the amount of such addition modification and (ii) any
29         income from intangible property (net of the deductions
30         allocable thereto) taken into account for the taxable
31         year with respect to a transaction with a taxpayer that
32         is required to make an addition modification with
33         respect to such transaction under Section
34         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
35         203(d)(2)(D-8), but not to exceed the amount of such
36         addition modification;

 

 

SB1815 Engrossed - 47 - LRB094 11152 NHT 41788 b

1             (U) An amount equal to the interest income taken
2         into account for the taxable year (net of the
3         deductions allocable thereto) with respect to
4         transactions with a foreign person who would be a
5         member of the taxpayer's unitary business group but for
6         the fact the foreign person's business activity
7         outside the United States is 80% or more of that
8         person's total business activity, but not to exceed the
9         addition modification required to be made for the same
10         taxable year under Section 203(c)(2)(G-12) for
11         interest paid, accrued, or incurred, directly or
12         indirectly, to the same foreign person; and
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 a foreign person who would be a
17         member of the taxpayer's unitary business group but for
18         the fact that the foreign person's business activity
19         outside the United States is 80% or more of that
20         person's total business activity, but not to exceed the
21         addition modification required to be made for the same
22         taxable year under Section 203(c)(2)(G-13) for
23         intangible expenses and costs paid, accrued, or
24         incurred, directly or indirectly, to the same foreign
25         person.
26         (3) Limitation. The amount of any modification
27     otherwise required under this subsection shall, under
28     regulations prescribed by the Department, be adjusted by
29     any amounts included therein which were properly paid,
30     credited, or required to be distributed, or permanently set
31     aside for charitable purposes pursuant to Internal Revenue
32     Code Section 642(c) during the taxable year.
 
33     (d) Partnerships.
34         (1) In general. In the case of a partnership, base
35     income means an amount equal to the taxpayer's taxable

 

 

SB1815 Engrossed - 48 - LRB094 11152 NHT 41788 b

1     income for the taxable year as modified by paragraph (2).
2         (2) Modifications. The taxable income referred to in
3     paragraph (1) shall be modified by adding thereto the sum
4     of the following amounts:
5             (A) An amount equal to all amounts paid or accrued
6         to the taxpayer as interest or dividends during the
7         taxable year to the extent excluded from gross income
8         in the computation of taxable income;
9             (B) An amount equal to the amount of tax imposed by
10         this Act to the extent deducted from gross income for
11         the taxable year;
12             (C) The amount of deductions allowed to the
13         partnership pursuant to Section 707 (c) of the Internal
14         Revenue Code in calculating its taxable income;
15             (D) An amount equal to the amount of the capital
16         gain deduction allowable under the Internal Revenue
17         Code, to the extent deducted from gross income in the
18         computation of taxable income;
19             (D-5) For taxable years 2001 and thereafter, an
20         amount equal to the bonus depreciation deduction (30%
21         of the adjusted basis of the qualified property) taken
22         on the taxpayer's federal income tax return for the
23         taxable year under subsection (k) of Section 168 of the
24         Internal Revenue Code;
25             (D-6) If the taxpayer reports a capital gain or
26         loss on the taxpayer's federal income tax return for
27         the taxable year based on a sale or transfer of
28         property for which the taxpayer was required in any
29         taxable year to make an addition modification under
30         subparagraph (D-5), then an amount equal to the
31         aggregate amount of the deductions taken in all taxable
32         years under subparagraph (O) with respect to that
33         property.
34             The taxpayer is required to make the addition
35         modification under this subparagraph only once with
36         respect to any one piece of property;

 

 

SB1815 Engrossed - 49 - LRB094 11152 NHT 41788 b

1             (D-7) For taxable years ending on or after December
2         31, 2004, 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, to a foreign person who would be a member
6         of the same unitary business group but for the fact the
7         foreign person's business activity outside the United
8         States is 80% or more of the foreign person's total
9         business activity. The addition modification required
10         by this subparagraph shall be reduced to the extent
11         that dividends were included in base income of the
12         unitary group for the same taxable year and received by
13         the taxpayer or by a member of the taxpayer's unitary
14         business group (including amounts included in gross
15         income pursuant to Sections 951 through 964 of the
16         Internal Revenue Code and amounts included in gross
17         income under Section 78 of the Internal Revenue Code)
18         with respect to the stock of the same person to whom
19         the interest was paid, accrued, or incurred.
20             This paragraph shall not apply to the following:
21                 (i) an item of interest paid, accrued, or
22             incurred, directly or indirectly, to a foreign
23             person who is subject in a foreign country or
24             state, other than a state which requires mandatory
25             unitary reporting, to a tax on or measured by net
26             income with respect to such interest; or
27                 (ii) an item of interest paid, accrued, or
28             incurred, directly or indirectly, to a foreign
29             person if the taxpayer can establish, based on a
30             preponderance of the evidence, both of the
31             following:
32                     (a) the foreign person, during the same
33                 taxable year, paid, accrued, or incurred, the
34                 interest to a person that is not a related
35                 member, and
36                     (b) the transaction giving rise to the

 

 

SB1815 Engrossed - 50 - LRB094 11152 NHT 41788 b

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

 

 

SB1815 Engrossed - 51 - LRB094 11152 NHT 41788 b

1         business activity outside the United States is 80% or
2         more of that person's total business activity. The
3         addition modification required by this subparagraph
4         shall be reduced to the extent that dividends were
5         included in base income of the unitary group for the
6         same taxable year and received by the taxpayer or by a
7         member of the taxpayer's unitary business group
8         (including amounts included in gross income pursuant
9         to Sections 951 through 964 of the Internal Revenue
10         Code and amounts included in gross income under Section
11         78 of the Internal Revenue Code) with respect to the
12         stock of the same person to whom the intangible
13         expenses and costs were directly or indirectly paid,
14         incurred or accrued. The preceding sentence shall not
15         apply to the extent that the same dividends caused a
16         reduction to the addition modification required under
17         Section 203(d)(2)(D-7) of this Act. As used in this
18         subparagraph, the term "intangible expenses and costs"
19         includes (1) expenses, losses, and costs for, or
20         related to, the direct or indirect acquisition, use,
21         maintenance or management, ownership, sale, exchange,
22         or any other disposition of intangible property; (2)
23         losses incurred, directly or indirectly, from
24         factoring transactions or discounting transactions;
25         (3) royalty, patent, technical, and copyright fees;
26         (4) licensing fees; and (5) other similar expenses and
27         costs. For purposes of this subparagraph, "intangible
28         property" includes patents, patent applications, trade
29         names, trademarks, service marks, copyrights, mask
30         works, trade secrets, and similar types of intangible
31         assets;
32             This paragraph shall not apply to the following:
33                 (i) any item of intangible expenses or costs
34             paid, accrued, or incurred, directly or
35             indirectly, from a transaction with a foreign
36             person who is subject in a foreign country or

 

 

SB1815 Engrossed - 52 - LRB094 11152 NHT 41788 b

1             state, other than a state which requires mandatory
2             unitary reporting, to a tax on or measured by net
3             income with respect to such item; or
4                 (ii) any item of intangible expense or cost
5             paid, accrued, or incurred, directly or
6             indirectly, if the taxpayer can establish, based
7             on a preponderance of the evidence, both of the
8             following:
9                     (a) the foreign person during the same
10                 taxable year paid, accrued, or incurred, the
11                 intangible expense or cost to a person that is
12                 not a related member, and
13                     (b) the transaction giving rise to the
14                 intangible expense or cost between the
15                 taxpayer and the foreign person did not have as
16                 a principal purpose the avoidance of Illinois
17                 income tax, and is paid pursuant to a contract
18                 or agreement that reflects arm's-length terms;
19                 or
20                 (iii) any item of intangible expense or cost
21             paid, accrued, or incurred, directly or
22             indirectly, from a transaction with a foreign
23             person if the taxpayer establishes by clear and
24             convincing evidence, that the adjustments are
25             unreasonable; or if the taxpayer and the Director
26             agree in writing to the application or use of an
27             alternative method of apportionment under Section
28             304(f);
29                 Nothing in this subsection shall preclude the
30             Director from making any other adjustment
31             otherwise allowed under Section 404 of this Act for
32             any tax year beginning after the effective date of
33             this amendment provided such adjustment is made
34             pursuant to regulation adopted by the Department
35             and such regulations provide methods and standards
36             by which the Department will utilize its authority

 

 

SB1815 Engrossed - 53 - LRB094 11152 NHT 41788 b

1             under Section 404 of this Act;
2     and by deducting from the total so obtained the following
3     amounts:
4             (E) The valuation limitation amount;
5             (F) An amount equal to the amount of any tax
6         imposed by this Act which was refunded to the taxpayer
7         and included in such total for the taxable year;
8             (G) An amount equal to all amounts included in
9         taxable income as modified by subparagraphs (A), (B),
10         (C) and (D) which are exempt from taxation by this
11         State either by reason of its statutes or Constitution
12         or by reason of the Constitution, treaties or statutes
13         of the United States; provided that, in the case of any
14         statute of this State that exempts income derived from
15         bonds or other obligations from the tax imposed under
16         this Act, the amount exempted shall be the interest net
17         of bond premium amortization;
18             (H) Any income of the partnership which
19         constitutes personal service income as defined in
20         Section 1348 (b) (1) of the Internal Revenue Code (as
21         in effect December 31, 1981) or a reasonable allowance
22         for compensation paid or accrued for services rendered
23         by partners to the partnership, whichever is greater;
24             (I) An amount equal to all amounts of income
25         distributable to an entity subject to the Personal
26         Property Tax Replacement Income Tax imposed by
27         subsections (c) and (d) of Section 201 of this Act
28         including amounts distributable to organizations
29         exempt from federal income tax by reason of Section
30         501(a) of the Internal Revenue Code;
31             (J) With the exception of any amounts subtracted
32         under subparagraph (G), an amount equal to the sum of
33         all amounts disallowed as deductions by (i) Sections
34         171(a) (2), and 265(2) of the Internal Revenue Code of
35         1954, as now or hereafter amended, and all amounts of
36         expenses allocable to interest and disallowed as

 

 

SB1815 Engrossed - 54 - LRB094 11152 NHT 41788 b

1         deductions by Section 265(1) of the Internal Revenue
2         Code, as now or hereafter amended; and (ii) for taxable
3         years ending on or after August 13, 1999, Sections
4         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
5         Internal Revenue Code; the provisions of this
6         subparagraph are exempt from the provisions of Section
7         250;
8             (K) An amount equal to those dividends included in
9         such total which were paid by a corporation which
10         conducts business operations in an Enterprise Zone or
11         zones created under the Illinois Enterprise Zone Act,
12         enacted by the 82nd General Assembly, and conducts
13         substantially all of its operations in an Enterprise
14         Zone or Zones;
15             (L) An amount equal to any contribution made to a
16         job training project established pursuant to the Real
17         Property Tax Increment Allocation Redevelopment Act;
18             (M) 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 a
22         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 (M);
27             (N) An amount equal to the amount of the deduction
28         used to compute the federal income tax credit for
29         restoration of substantial amounts held under claim of
30         right for the taxable year pursuant to Section 1341 of
31         the Internal Revenue Code of 1986;
32             (O) For taxable years 2001 and thereafter, for the
33         taxable year in which the bonus depreciation deduction
34         (30% of the adjusted basis of the qualified property)
35         is taken on the taxpayer's federal income tax return
36         under subsection (k) of Section 168 of the Internal

 

 

SB1815 Engrossed - 55 - LRB094 11152 NHT 41788 b

1         Revenue Code and for each applicable taxable year
2         thereafter, an amount equal to "x", where:
3                 (1) "y" equals the amount of the depreciation
4             deduction taken for the taxable year on the
5             taxpayer's federal income tax return on property
6             for which the bonus depreciation deduction (30% of
7             the adjusted basis of the qualified property) was
8             taken in any year under subsection (k) of Section
9             168 of the Internal Revenue Code, but not including
10             the bonus depreciation deduction; and
11                 (2) "x" equals "y" multiplied by 30 and then
12             divided by 70 (or "y" multiplied by 0.429).
13             The aggregate amount deducted under this
14         subparagraph in all taxable years for any one piece of
15         property may not exceed the amount of the bonus
16         depreciation deduction (30% of the adjusted basis of
17         the qualified property) taken on that property on the
18         taxpayer's federal income tax return under subsection
19         (k) of Section 168 of the Internal Revenue Code;
20             (P) If the taxpayer reports a capital gain or loss
21         on the taxpayer's federal income tax return for the
22         taxable year based on a sale or transfer of property
23         for which the taxpayer was required in any taxable year
24         to make an addition modification under subparagraph
25         (D-5), then an amount equal to that addition
26         modification.
27             The taxpayer is allowed to take the deduction under
28         this subparagraph only once with respect to any one
29         piece of property;
30             (Q) The amount of (i) any interest income (net of
31         the deductions allocable thereto) taken into account
32         for the taxable year with respect to a transaction with
33         a taxpayer that is required to make an addition
34         modification with respect to such transaction under
35         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
36         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

 

 

SB1815 Engrossed - 56 - LRB094 11152 NHT 41788 b

1         the amount of such addition modification and (ii) any
2         income from intangible property (net of the deductions
3         allocable thereto) taken into account for the taxable
4         year with respect to a transaction with a taxpayer that
5         is required to make an addition modification with
6         respect to such transaction under Section
7         203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
8         203(d)(2)(D-8), but not to exceed the amount of such
9         addition modification;
10             (R) An amount equal to the interest income taken
11         into account for the taxable year (net of the
12         deductions allocable thereto) with respect to
13         transactions with a foreign person who would be a
14         member of the taxpayer's unitary business group but for
15         the fact that the foreign person's business activity
16         outside the United States is 80% or more of that
17         person's total business activity, but not to exceed the
18         addition modification required to be made for the same
19         taxable year under Section 203(d)(2)(D-7) for interest
20         paid, accrued, or incurred, directly or indirectly, to
21         the same foreign person; and
22             (S) An amount equal to the income from intangible
23         property taken into account for the taxable year (net
24         of the deductions allocable thereto) with respect to
25         transactions with a foreign person who would be a
26         member of the taxpayer's unitary business group but for
27         the fact that the foreign person's business activity
28         outside the United States is 80% or more of that
29         person's total business activity, but not to exceed the
30         addition modification required to be made for the same
31         taxable year under Section 203(d)(2)(D-8) for
32         intangible expenses and costs paid, accrued, or
33         incurred, directly or indirectly, to the same foreign
34         person.
 
35     (e) Gross income; adjusted gross income; taxable income.

 

 

SB1815 Engrossed - 57 - LRB094 11152 NHT 41788 b

1         (1) In general. Subject to the provisions of paragraph
2     (2) and subsection (b) (3), for purposes of this Section
3     and Section 803(e), a taxpayer's gross income, adjusted
4     gross income, or taxable income for the taxable year shall
5     mean the amount of gross income, adjusted gross income or
6     taxable income properly reportable for federal income tax
7     purposes for the taxable year under the provisions of the
8     Internal Revenue Code. Taxable income may be less than
9     zero. However, for taxable years ending on or after
10     December 31, 1986, net operating loss carryforwards from
11     taxable years ending prior to December 31, 1986, may not
12     exceed the sum of federal taxable income for the taxable
13     year before net operating loss deduction, plus the excess
14     of addition modifications over subtraction modifications
15     for the taxable year. For taxable years ending prior to
16     December 31, 1986, taxable income may never be an amount in
17     excess of the net operating loss for the taxable year as
18     defined in subsections (c) and (d) of Section 172 of the
19     Internal Revenue Code, provided that when taxable income of
20     a corporation (other than a Subchapter S corporation),
21     trust, or estate is less than zero and addition
22     modifications, other than those provided by subparagraph
23     (E) of paragraph (2) of subsection (b) for corporations or
24     subparagraph (E) of paragraph (2) of subsection (c) for
25     trusts and estates, exceed subtraction modifications, an
26     addition modification must be made under those
27     subparagraphs for any other taxable year to which the
28     taxable income less than zero (net operating loss) is
29     applied under Section 172 of the Internal Revenue Code or
30     under subparagraph (E) of paragraph (2) of this subsection
31     (e) applied in conjunction with Section 172 of the Internal
32     Revenue Code.
33         (2) Special rule. For purposes of paragraph (1) of this
34     subsection, the taxable income properly reportable for
35     federal income tax purposes shall mean:
36             (A) Certain life insurance companies. In the case

 

 

SB1815 Engrossed - 58 - LRB094 11152 NHT 41788 b

1         of a life insurance company subject to the tax imposed
2         by Section 801 of the Internal Revenue Code, life
3         insurance company taxable income, plus the amount of
4         distribution from pre-1984 policyholder surplus
5         accounts as calculated under Section 815a of the
6         Internal Revenue Code;
7             (B) Certain other insurance companies. In the case
8         of mutual insurance companies subject to the tax
9         imposed by Section 831 of the Internal Revenue Code,
10         insurance company taxable income;
11             (C) Regulated investment companies. In the case of
12         a regulated investment company subject to the tax
13         imposed by Section 852 of the Internal Revenue Code,
14         investment company taxable income;
15             (D) Real estate investment trusts. In the case of a
16         real estate investment trust subject to the tax imposed
17         by Section 857 of the Internal Revenue Code, real
18         estate investment trust taxable income;
19             (E) Consolidated corporations. In the case of a
20         corporation which is a member of an affiliated group of
21         corporations filing a consolidated income tax return
22         for the taxable year for federal income tax purposes,
23         taxable income determined as if such corporation had
24         filed a separate return for federal income tax purposes
25         for the taxable year and each preceding taxable year
26         for which it was a member of an affiliated group. For
27         purposes of this subparagraph, the taxpayer's separate
28         taxable income shall be determined as if the election
29         provided by Section 243(b) (2) of the Internal Revenue
30         Code had been in effect for all such years;
31             (F) Cooperatives. In the case of a cooperative
32         corporation or association, the taxable income of such
33         organization determined in accordance with the
34         provisions of Section 1381 through 1388 of the Internal
35         Revenue Code;
36             (G) Subchapter S corporations. In the case of: (i)

 

 

SB1815 Engrossed - 59 - LRB094 11152 NHT 41788 b

1         a Subchapter S corporation for which there is in effect
2         an election for the taxable year under Section 1362 of
3         the Internal Revenue Code, the taxable income of such
4         corporation determined in accordance with Section
5         1363(b) of the Internal Revenue Code, except that
6         taxable income shall take into account those items
7         which are required by Section 1363(b)(1) of the
8         Internal Revenue Code to be separately stated; and (ii)
9         a Subchapter S corporation for which there is in effect
10         a federal election to opt out of the provisions of the
11         Subchapter S Revision Act of 1982 and have applied
12         instead the prior federal Subchapter S rules as in
13         effect on July 1, 1982, the taxable income of such
14         corporation determined in accordance with the federal
15         Subchapter S rules as in effect on July 1, 1982; and
16             (H) Partnerships. In the case of a partnership,
17         taxable income determined in accordance with Section
18         703 of the Internal Revenue Code, except that taxable
19         income shall take into account those items which are
20         required by Section 703(a)(1) to be separately stated
21         but which would be taken into account by an individual
22         in calculating his taxable income.
23         (3) Recapture of business expenses on disposition of
24     asset or business. Notwithstanding any other law to the
25     contrary, if in prior years income from an asset or
26     business has been classified as business income and in a
27     later year is demonstrated to be non-business income, then
28     all expenses, without limitation, deducted in such later
29     year and in the 2 immediately preceding taxable years
30     related to that asset or business that generated the
31     non-business income shall be added back and recaptured as
32     business income in the year of the disposition of the asset
33     or business. Such amount shall be apportioned to Illinois
34     using the greater of the apportionment fraction computed
35     for the business under Section 304 of this Act for the
36     taxable year or the average of the apportionment fractions

 

 

SB1815 Engrossed - 60 - LRB094 11152 NHT 41788 b

1     computed for the business under Section 304 of this Act for
2     the taxable year and for the 2 immediately preceding
3     taxable years.
4     (f) Valuation limitation amount.
5         (1) In general. The valuation limitation amount
6     referred to in subsections (a) (2) (G), (c) (2) (I) and
7     (d)(2) (E) is an amount equal to:
8             (A) The sum of the pre-August 1, 1969 appreciation
9         amounts (to the extent consisting of gain reportable
10         under the provisions of Section 1245 or 1250 of the
11         Internal Revenue Code) for all property in respect of
12         which such gain was reported for the taxable year; plus
13             (B) The lesser of (i) the sum of the pre-August 1,
14         1969 appreciation amounts (to the extent consisting of
15         capital gain) for all property in respect of which such
16         gain was reported for federal income tax purposes for
17         the taxable year, or (ii) the net capital gain for the
18         taxable year, reduced in either case by any amount of
19         such gain included in the amount determined under
20         subsection (a) (2) (F) or (c) (2) (H).
21         (2) Pre-August 1, 1969 appreciation amount.
22             (A) If the fair market value of property referred
23         to in paragraph (1) was readily ascertainable on August
24         1, 1969, the pre-August 1, 1969 appreciation amount for
25         such property is the lesser of (i) the excess of such
26         fair market value over the taxpayer's basis (for
27         determining gain) for such property on that date
28         (determined under the Internal Revenue Code as in
29         effect on that date), or (ii) the total gain realized
30         and reportable for federal income tax purposes in
31         respect of the sale, exchange or other disposition of
32         such property.
33             (B) If the fair market value of property referred
34         to in paragraph (1) was not readily ascertainable on
35         August 1, 1969, the pre-August 1, 1969 appreciation
36         amount for such property is that amount which bears the

 

 

SB1815 Engrossed - 61 - LRB094 11152 NHT 41788 b

1         same ratio to the total gain reported in respect of the
2         property for federal income tax purposes for the
3         taxable year, as the number of full calendar months in
4         that part of the taxpayer's holding period for the
5         property ending July 31, 1969 bears to the number of
6         full calendar months in the taxpayer's entire holding
7         period for the property.
8             (C) The Department shall prescribe such
9         regulations as may be necessary to carry out the
10         purposes of this paragraph.
 
11     (g) Double deductions. Unless specifically provided
12 otherwise, nothing in this Section shall permit the same item
13 to be deducted more than once.
 
14     (h) Legislative intention. Except as expressly provided by
15 this Section there shall be no modifications or limitations on
16 the amounts of income, gain, loss or deduction taken into
17 account in determining gross income, adjusted gross income or
18 taxable income for federal income tax purposes for the taxable
19 year, or in the amount of such items entering into the
20 computation of base income and net income under this Act for
21 such taxable year, whether in respect of property values as of
22 August 1, 1969 or otherwise.
23 (Source: P.A. 92-16, eff. 6-28-01; 92-244, eff. 8-3-01; 92-439,
24 eff. 8-17-01; 92-603, eff. 6-28-02; 92-626, eff. 7-11-02;
25 92-651, eff. 7-11-02; 92-846, eff. 8-23-02; 93-812, eff.
26 7-26-04; 93-840, eff. 7-30-04; revised 10-12-04.)
 
27     (35 ILCS 5/216 new)
28     Sec. 216. Lifelong learning account contributions credit.
29     (a) For taxable years beginning on or after January 1,
30 2006, a taxpayer who is a participating employer under the
31 Lifelong Learning Act is entitled to a credit against the taxes
32 imposed under subsections (a) and (b) of Section 201 of this
33 Act in an amount equal to the amount that the taxpayer

 

 

SB1815 Engrossed - 62 - LRB094 11152 NHT 41788 b

1 contributed to each lifelong learning account established
2 under the taxpayer's accredited lifelong learning plan, but not
3 to exceed $500 per taxable year for any one account.
4     (b) If the taxpayer is a partnership or Subchapter S
5 corporation, the credit is allowed to the partners or
6 shareholders in accordance with the determination of income and
7 distributive share of income under Sections 702 and 704 and
8 Subchapter S of the Internal Revenue Code.
9     (c) The Department, in cooperation with the Department of
10 Commerce and Economic Opportunity, must adopt rules to enforce
11 and administer the provisions of this Section.
12     (d) The credit may not be carried forward or back. In no
13 event shall a credit under this Section reduce the taxpayer's
14 liability to less than zero.
15     (e) This Section is exempt from the provisions of Section
16 250 of this Act.
 
17     Section 999. Effective date. This Act takes effect upon
18 becoming law.