96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB0452

 

Introduced 2/4/2009, by Rep. LaShawn K. Ford

 

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

    Amends the Illinois Income Tax Act. Provides that individual taxpayers are entitled to a deduction for (i) work-related mass transit expenses and (ii) school-related mass transit expenses for the taxpayer's minor children. Provides that neither deduction may exceed $500 per year.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         inform financial intermediaries distributing the
2         program to inform in-state residents of the existence
3         of in-state qualified tuition programs at least
4         annually, an amount equal to the amount excluded from
5         gross income under Section 529(c)(3)(B).
6             For the purposes of this subparagraph (D-20), a
7         qualified tuition program has made reasonable efforts
8         if it makes disclosures (which may use the term
9         "in-state program" or "in-state plan" and need not
10         specifically refer to Illinois or its qualified
11         programs by name) (i) directly to prospective
12         participants in its offering materials or makes a
13         public disclosure, such as a website posting; and (ii)
14         where applicable, to intermediaries selling the
15         out-of-state program in the same manner that the
16         out-of-state program distributes its offering
17         materials;
18                 (D-21) For taxable years beginning on or after
19         January 1, 2007, in the case of transfer of moneys from
20         a qualified tuition program under Section 529 of the
21         Internal Revenue Code that is administered by the State
22         to an out-of-state program, an amount equal to the
23         amount of moneys previously deducted from base income
24         under subsection (a)(2)(Y) of this Section.
25     and by deducting from the total so obtained the sum of the
26     following amounts:

 

 

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

 

 

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1         being a member of the Illinois National Guard or,
2         beginning with taxable years ending on or after
3         December 31, 2007, the National Guard of any other
4         state. The provisions of this amendatory Act of the
5         92nd General Assembly are exempt from the provisions of
6         Section 250;
7             (F) An amount equal to all amounts included in such
8         total pursuant to the provisions of Sections 402(a),
9         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
10         Internal Revenue Code, or included in such total as
11         distributions under the provisions of any retirement
12         or disability plan for employees of any governmental
13         agency or unit, or retirement payments to retired
14         partners, which payments are excluded in computing net
15         earnings from self employment by Section 1402 of the
16         Internal Revenue Code and regulations adopted pursuant
17         thereto;
18             (G) The valuation limitation amount;
19             (H) An amount equal to the amount of any tax
20         imposed by this Act which was refunded to the taxpayer
21         and included in such total for the taxable year;
22             (I) An amount equal to all amounts included in such
23         total pursuant to the provisions of Section 111 of the
24         Internal Revenue Code as a recovery of items previously
25         deducted from adjusted gross income in the computation
26         of taxable income;

 

 

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

 

 

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

 

 

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1         right for the taxable year pursuant to Section 1341 of
2         the Internal Revenue Code of 1986;
3             (Q) An amount equal to any amounts included in such
4         total, received by the taxpayer as an acceleration in
5         the payment of life, endowment or annuity benefits in
6         advance of the time they would otherwise be payable as
7         an indemnity for a terminal illness;
8             (R) An amount equal to the amount of any federal or
9         State bonus paid to veterans of the Persian Gulf War;
10             (S) An amount, to the extent included in adjusted
11         gross income, equal to the amount of a contribution
12         made in the taxable year on behalf of the taxpayer to a
13         medical care savings account established under the
14         Medical Care Savings Account Act or the Medical Care
15         Savings Account Act of 2000 to the extent the
16         contribution is accepted by the account administrator
17         as provided in that Act;
18             (T) An amount, to the extent included in adjusted
19         gross income, equal to the amount of interest earned in
20         the taxable year on a medical care savings account
21         established under the Medical Care Savings Account Act
22         or the Medical Care Savings Account Act of 2000 on
23         behalf of the taxpayer, other than interest added
24         pursuant to item (D-5) of this paragraph (2);
25             (U) For one taxable year beginning on or after
26         January 1, 1994, an amount equal to the total amount of

 

 

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1         tax imposed and paid under subsections (a) and (b) of
2         Section 201 of this Act on grant amounts received by
3         the taxpayer under the Nursing Home Grant Assistance
4         Act during the taxpayer's taxable years 1992 and 1993;
5             (V) Beginning with tax years ending on or after
6         December 31, 1995 and ending with tax years ending on
7         or before December 31, 2004, an amount equal to the
8         amount paid by a taxpayer who is a self-employed
9         taxpayer, a partner of a partnership, or a shareholder
10         in a Subchapter S corporation for health insurance or
11         long-term care insurance for that taxpayer or that
12         taxpayer's spouse or dependents, to the extent that the
13         amount paid for that health insurance or long-term care
14         insurance may be deducted under Section 213 of the
15         Internal Revenue Code of 1986, has not been deducted on
16         the federal income tax return of the taxpayer, and does
17         not exceed the taxable income attributable to that
18         taxpayer's income, self-employment income, or
19         Subchapter S corporation income; except that no
20         deduction shall be allowed under this item (V) if the
21         taxpayer is eligible to participate in any health
22         insurance or long-term care insurance plan of an
23         employer of the taxpayer or the taxpayer's spouse. The
24         amount of the health insurance and long-term care
25         insurance subtracted under this item (V) shall be
26         determined by multiplying total health insurance and

 

 

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1         long-term care insurance premiums paid by the taxpayer
2         times a number that represents the fractional
3         percentage of eligible medical expenses under Section
4         213 of the Internal Revenue Code of 1986 not actually
5         deducted on the taxpayer's federal income tax return;
6             (W) For taxable years beginning on or after January
7         1, 1998, all amounts included in the taxpayer's federal
8         gross income in the taxable year from amounts converted
9         from a regular IRA to a Roth IRA. This paragraph is
10         exempt from the provisions of Section 250;
11             (X) For taxable year 1999 and thereafter, an amount
12         equal to the amount of any (i) distributions, to the
13         extent includible in gross income for federal income
14         tax purposes, made to the taxpayer because of his or
15         her status as a victim of persecution for racial or
16         religious reasons by Nazi Germany or any other Axis
17         regime or as an heir of the victim and (ii) items of
18         income, to the extent includible in gross income for
19         federal income tax purposes, attributable to, derived
20         from or in any way related to assets stolen from,
21         hidden from, or otherwise lost to a victim of
22         persecution for racial or religious reasons by Nazi
23         Germany or any other Axis regime immediately prior to,
24         during, and immediately after World War II, including,
25         but not limited to, interest on the proceeds receivable
26         as insurance under policies issued to a victim of

 

 

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

 

 

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1         of $10,000 contributed in the taxable year to (i) a
2         College Savings Pool account under Section 16.5 of the
3         State Treasurer Act or (ii) the Illinois Prepaid
4         Tuition Trust Fund, except that amounts excluded from
5         gross income under Section 529(c)(3)(C)(i) of the
6         Internal Revenue Code shall not be considered moneys
7         contributed under this subparagraph (Y). This
8         subparagraph (Y) is exempt from the provisions of
9         Section 250;
10             (Z) For taxable years 2001 and thereafter, for the
11         taxable year in which the bonus depreciation deduction
12         is taken on the taxpayer's federal income tax return
13         under subsection (k) of Section 168 of the Internal
14         Revenue Code and for each applicable taxable year
15         thereafter, an amount equal to "x", where:
16                 (1) "y" equals the amount of the depreciation
17             deduction taken for the taxable year on the
18             taxpayer's federal income tax return on property
19             for which the bonus depreciation deduction was
20             taken in any year under subsection (k) of Section
21             168 of the Internal Revenue Code, but not including
22             the bonus depreciation deduction;
23                 (2) for taxable years ending on or before
24             December 31, 2005, "x" equals "y" multiplied by 30
25             and then divided by 70 (or "y" multiplied by
26             0.429); and

 

 

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1                 (3) for taxable years ending after December
2             31, 2005:
3                     (i) for property on which a bonus
4                 depreciation deduction of 30% of the adjusted
5                 basis was taken, "x" equals "y" multiplied by
6                 30 and then divided by 70 (or "y" multiplied by
7                 0.429); and
8                     (ii) for property on which a bonus
9                 depreciation deduction of 50% of the adjusted
10                 basis was taken, "x" equals "y" multiplied by
11                 1.0.
12             The aggregate amount deducted under this
13         subparagraph in all taxable years for any one piece of
14         property may not exceed the amount of the bonus
15         depreciation deduction taken on that property on the
16         taxpayer's federal income tax return under subsection
17         (k) of Section 168 of the Internal Revenue Code. This
18         subparagraph (Z) is exempt from the provisions of
19         Section 250;
20             (AA) If the taxpayer sells, transfers, abandons,
21         or otherwise disposes of property for which the
22         taxpayer was required in any taxable year to make an
23         addition modification under subparagraph (D-15), then
24         an amount equal to that addition modification.
25             If the taxpayer continues to own property through
26         the last day of the last tax year for which the

 

 

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1         taxpayer may claim a depreciation deduction for
2         federal income tax purposes and for which the taxpayer
3         was required in any taxable year to make an addition
4         modification under subparagraph (D-15), then an amount
5         equal to that addition modification.
6             The taxpayer is allowed to take the deduction under
7         this subparagraph only once with respect to any one
8         piece of property.
9             This subparagraph (AA) is exempt from the
10         provisions of Section 250;
11             (BB) Any amount included in adjusted gross income,
12         other than salary, received by a driver in a
13         ridesharing arrangement using a motor vehicle;
14             (CC) The amount of (i) any interest income (net of
15         the deductions allocable thereto) taken into account
16         for the taxable year with respect to a transaction with
17         a taxpayer that is required to make an addition
18         modification with respect to such transaction under
19         Section 203(a)(2)(D-17), 203(b)(2)(E-12),
20         203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
21         the amount of that addition modification, and (ii) any
22         income from intangible property (net of the deductions
23         allocable thereto) taken into account for the taxable
24         year with respect to a transaction with a taxpayer that
25         is required to make an addition modification with
26         respect to such transaction under Section

 

 

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

 

 

HB0452 - 25 - LRB096 03511 HLH 13536 b

1         of the deductions allocable thereto) with respect to
2         transactions with (i) a foreign person who would be a
3         member of the taxpayer's unitary business group but for
4         the fact that the foreign person's business activity
5         outside the United States is 80% or more of that
6         person's total business activity and (ii) for taxable
7         years ending on or after December 31, 2008, to a person
8         who would be a member of the same unitary business
9         group but for the fact that the person is prohibited
10         under Section 1501(a)(27) from being included in the
11         unitary business group because he or she is ordinarily
12         required to apportion business income under different
13         subsections of Section 304, but not to exceed the
14         addition modification required to be made for the same
15         taxable year under Section 203(a)(2)(D-18) for
16         intangible expenses and costs paid, accrued, or
17         incurred, directly or indirectly, to the same foreign
18         person. This subparagraph (EE) is exempt from the
19         provisions of Section 250; .
20             (FF) For taxable years beginning on or after
21         January 1, 2009, an amount equal to the taxpayer's
22         work-related mass transit expenses during the taxable
23         year, not to exceed $500 per year. This subparagraph
24         (FF) is exempt from the provisions of Section 250; and
25             (GG) For taxable years beginning on or after
26         January 1, 2009, an amount equal to the school-related

 

 

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1         mass transit expenses for that taxable year for any
2         minor child who is claimed as a dependent on the
3         taxpayer's federal income tax return under the
4         Internal Revenue Code of 1986, not to exceed $500 per
5         year. This subparagraph (GG) is exempt from the
6         provisions of Section 250.
 
7     (b) Corporations.
8         (1) In general. In the case of a corporation, base
9     income means an amount equal to the taxpayer's taxable
10     income for the taxable year as modified by paragraph (2).
11         (2) Modifications. The taxable income referred to in
12     paragraph (1) shall be modified by adding thereto the sum
13     of the following amounts:
14             (A) An amount equal to all amounts paid or accrued
15         to the taxpayer as interest and all distributions
16         received from regulated investment companies during
17         the taxable year to the extent excluded from gross
18         income in the computation of taxable income;
19             (B) An amount equal to the amount of tax imposed by
20         this Act to the extent deducted from gross income in
21         the computation of taxable income for the taxable year;
22             (C) In the case of a regulated investment company,
23         an amount equal to the excess of (i) the net long-term
24         capital gain for the taxable year, over (ii) the amount
25         of the capital gain dividends designated as such in

 

 

HB0452 - 27 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 28 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 29 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 30 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 31 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 32 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 33 - LRB096 03511 HLH 13536 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(b)(2)(E-12) of
14         this Act. As used in this subparagraph, the term
15         "intangible expenses and costs" includes (1) expenses,
16         losses, and costs for, or related to, the direct or
17         indirect acquisition, use, maintenance or management,
18         ownership, sale, exchange, or any other disposition of
19         intangible property; (2) losses incurred, directly or
20         indirectly, from factoring transactions or discounting
21         transactions; (3) royalty, patent, technical, and
22         copyright fees; (4) licensing fees; and (5) other
23         similar expenses and costs. For purposes of this
24         subparagraph, "intangible property" includes patents,
25         patent applications, trade names, trademarks, service
26         marks, copyrights, mask works, trade secrets, and

 

 

HB0452 - 34 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 35 - LRB096 03511 HLH 13536 b

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

 

 

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

 

 

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1             (G) An amount equal to any amount included in such
2         total under Section 78 of the Internal Revenue Code;
3             (H) In the case of a regulated investment company,
4         an amount equal to the amount of exempt interest
5         dividends as defined in subsection (b) (5) of Section
6         852 of the Internal Revenue Code, paid to shareholders
7         for the taxable year;
8             (I) With the exception of any amounts subtracted
9         under subparagraph (J), an amount equal to the sum of
10         all amounts disallowed as deductions by (i) Sections
11         171(a) (2), and 265(a)(2) and amounts disallowed as
12         interest expense by Section 291(a)(3) of the Internal
13         Revenue Code, as now or hereafter amended, and all
14         amounts of expenses allocable to interest and
15         disallowed as deductions by Section 265(a)(1) of the
16         Internal Revenue Code, as now or hereafter amended; and
17         (ii) for taxable years ending on or after August 13,
18         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
19         832(b)(5)(B)(i) of the Internal Revenue Code; the
20         provisions of this subparagraph are exempt from the
21         provisions of Section 250;
22             (J) An amount equal to all amounts included in such
23         total which are exempt from taxation by this State
24         either by reason of its statutes or Constitution or by
25         reason of the Constitution, treaties or statutes of the
26         United States; provided that, in the case of any

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         received or paid or deemed paid under Sections 951
2         through 964 of the Internal Revenue Code and including,
3         for taxable years ending on or after December 31, 2008,
4         dividends received from a captive real estate
5         investment trust, from any such corporation specified
6         in clause (i) that would but for the provisions of
7         Section 1504 (b) (3) of the Internal Revenue Code be
8         treated as a member of the affiliated group which
9         includes the dividend recipient, exceed the amount of
10         the modification provided under subparagraph (G) of
11         paragraph (2) of this subsection (b) which is related
12         to such dividends. This subparagraph (O) is exempt from
13         the provisions of Section 250 of this Act;
14             (P) An amount equal to any contribution made to a
15         job training project established pursuant to the Tax
16         Increment Allocation Redevelopment Act;
17             (Q) An amount equal to the amount of the deduction
18         used to compute the federal income tax credit for
19         restoration of substantial amounts held under claim of
20         right for the taxable year pursuant to Section 1341 of
21         the Internal Revenue Code of 1986;
22             (R) On and after July 20, 1999, in the case of an
23         attorney-in-fact with respect to whom an interinsurer
24         or a reciprocal insurer has made the election under
25         Section 835 of the Internal Revenue Code, 26 U.S.C.
26         835, an amount equal to the excess, if any, of the

 

 

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

 

 

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

 

 

HB0452 - 45 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 46 - LRB096 03511 HLH 13536 b

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

 

 

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

 

 

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1         subsections of Section 304, but not to exceed the
2         addition modification required to be made for the same
3         taxable year under Section 203(b)(2)(E-13) for
4         intangible expenses and costs paid, accrued, or
5         incurred, directly or indirectly, to the same foreign
6         person. This subparagraph (X) is exempt from the
7         provisions of Section 250. (Y)
8         (3) Special rule. For purposes of paragraph (2) (A),
9     "gross income" in the case of a life insurance company, for
10     tax years ending on and after December 31, 1994, shall mean
11     the gross investment income for the taxable year.
 
12     (c) Trusts and estates.
13         (1) In general. In the case of a trust or estate, base
14     income means an amount equal to the taxpayer's taxable
15     income for the taxable year as modified by paragraph (2).
16         (2) Modifications. Subject to the provisions of
17     paragraph (3), the taxable income referred to in paragraph
18     (1) shall be modified by adding thereto the sum of the
19     following amounts:
20             (A) An amount equal to all amounts paid or accrued
21         to the taxpayer as interest or dividends during the
22         taxable year to the extent excluded from gross income
23         in the computation of taxable income;
24             (B) In the case of (i) an estate, $600; (ii) a
25         trust which, under its governing instrument, is

 

 

HB0452 - 49 - LRB096 03511 HLH 13536 b

1         required to distribute all of its income currently,
2         $300; and (iii) any other trust, $100, but in each such
3         case, only to the extent such amount was deducted in
4         the computation of taxable income;
5             (C) An amount equal to the amount of tax imposed by
6         this Act to the extent deducted from gross income in
7         the computation of taxable income for the taxable year;
8             (D) The amount of any net operating loss deduction
9         taken in arriving at taxable income, other than a net
10         operating loss carried forward from a taxable year
11         ending prior to December 31, 1986;
12             (E) For taxable years in which a net operating loss
13         carryback or carryforward from a taxable year ending
14         prior to December 31, 1986 is an element of taxable
15         income under paragraph (1) of subsection (e) or
16         subparagraph (E) of paragraph (2) of subsection (e),
17         the amount by which addition modifications other than
18         those provided by this subparagraph (E) exceeded
19         subtraction modifications in such taxable year, with
20         the following limitations applied in the order that
21         they are listed:
22                 (i) the addition modification relating to the
23             net operating loss carried back or forward to the
24             taxable year from any taxable year ending prior to
25             December 31, 1986 shall be reduced by the amount of
26             addition modification under this subparagraph (E)

 

 

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

 

 

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

 

 

HB0452 - 52 - LRB096 03511 HLH 13536 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1             under Section 404 of this Act;
2             (G-14) For taxable years ending on or after
3         December 31, 2008, an amount equal to the amount of
4         insurance premium expenses and costs otherwise allowed
5         as a deduction in computing base income, and that were
6         paid, accrued, or incurred, directly or indirectly, to
7         a person who would be a member of the same unitary
8         business group but for the fact that the person is
9         prohibited under Section 1501(a)(27) from being
10         included in the unitary business group because he or
11         she is ordinarily required to apportion business
12         income under different subsections of Section 304. The
13         addition modification required by this subparagraph
14         shall be reduced to the extent that dividends were
15         included in base income of the unitary group for the
16         same taxable year and received by the taxpayer or by a
17         member of the taxpayer's unitary business group
18         (including amounts included in gross income under
19         Sections 951 through 964 of the Internal Revenue Code
20         and amounts included in gross income under Section 78
21         of the Internal Revenue Code) with respect to the stock
22         of the same person to whom the premiums and costs were
23         directly or indirectly paid, incurred, or accrued. The
24         preceding sentence does not apply to the extent that
25         the same dividends caused a reduction to the addition
26         modification required under Section 203(c)(2)(G-12) or

 

 

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1         Section 203(c)(2)(G-13) of this Act.
2     and by deducting from the total so obtained the sum of the
3     following amounts:
4             (H) An amount equal to all amounts included in such
5         total pursuant to the provisions of Sections 402(a),
6         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
7         Internal Revenue Code or included in such total as
8         distributions under the provisions of any retirement
9         or disability plan for employees of any governmental
10         agency or unit, or retirement payments to retired
11         partners, which payments are excluded in computing net
12         earnings from self employment by Section 1402 of the
13         Internal Revenue Code and regulations adopted pursuant
14         thereto;
15             (I) The valuation limitation amount;
16             (J) An amount equal to the amount of any tax
17         imposed by this Act which was refunded to the taxpayer
18         and included in such total for the taxable year;
19             (K) An amount equal to all amounts included in
20         taxable income as modified by subparagraphs (A), (B),
21         (C), (D), (E), (F) and (G) which are exempt from
22         taxation by this State either by reason of its statutes
23         or Constitution or by reason of the Constitution,
24         treaties or statutes of the United States; provided
25         that, in the case of any statute of this State that
26         exempts income derived from bonds or other obligations

 

 

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1         from the tax imposed under this Act, the amount
2         exempted shall be the interest net of bond premium
3         amortization;
4             (L) With the exception of any amounts subtracted
5         under subparagraph (K), an amount equal to the sum of
6         all amounts disallowed as deductions by (i) Sections
7         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
8         as now or hereafter amended, and all amounts of
9         expenses allocable to interest and disallowed as
10         deductions by Section 265(1) of the Internal Revenue
11         Code of 1954, as now or hereafter amended; and (ii) for
12         taxable years ending on or after August 13, 1999,
13         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
14         the Internal Revenue Code; the provisions of this
15         subparagraph are exempt from the provisions of Section
16         250;
17             (M) An amount equal to those dividends included in
18         such total which were paid by a corporation which
19         conducts business operations in an Enterprise Zone or
20         zones created under the Illinois Enterprise Zone Act or
21         a River Edge Redevelopment Zone or zones created under
22         the River Edge Redevelopment Zone Act and conducts
23         substantially all of its operations in an Enterprise
24         Zone or Zones or a River Edge Redevelopment Zone or
25         zones. This subparagraph (M) is exempt from the
26         provisions of Section 250;

 

 

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

 

 

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1         from or in any way related to assets stolen from,
2         hidden from, or otherwise lost to a victim of
3         persecution for racial or religious reasons by Nazi
4         Germany or any other Axis regime immediately prior to,
5         during, and immediately after World War II, including,
6         but not limited to, interest on the proceeds receivable
7         as insurance under policies issued to a victim of
8         persecution for racial or religious reasons by Nazi
9         Germany or any other Axis regime by European insurance
10         companies immediately prior to and during World War II;
11         provided, however, this subtraction from federal
12         adjusted gross income does not apply to assets acquired
13         with such assets or with the proceeds from the sale of
14         such assets; provided, further, this paragraph shall
15         only apply to a taxpayer who was the first recipient of
16         such assets after their recovery and who is a victim of
17         persecution for racial or religious reasons by Nazi
18         Germany or any other Axis regime or as an heir of the
19         victim. The amount of and the eligibility for any
20         public assistance, benefit, or similar entitlement is
21         not affected by the inclusion of items (i) and (ii) of
22         this paragraph in gross income for federal income tax
23         purposes. This paragraph is exempt from the provisions
24         of Section 250;
25             (R) For taxable years 2001 and thereafter, for the
26         taxable year in which the bonus depreciation deduction

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         taxable year under Section 203(c)(2)(G-13) for
2         intangible expenses and costs paid, accrued, or
3         incurred, directly or indirectly, to the same foreign
4         person. This subparagraph (V) is exempt from the
5         provisions of Section 250. (W)
6         (3) Limitation. The amount of any modification
7     otherwise required under this subsection shall, under
8     regulations prescribed by the Department, be adjusted by
9     any amounts included therein which were properly paid,
10     credited, or required to be distributed, or permanently set
11     aside for charitable purposes pursuant to Internal Revenue
12     Code Section 642(c) during the taxable year.
 
13     (d) Partnerships.
14         (1) In general. In the case of a partnership, base
15     income means an amount equal to the taxpayer's taxable
16     income for the taxable year as modified by paragraph (2).
17         (2) Modifications. The taxable income referred to in
18     paragraph (1) shall be modified by adding thereto the sum
19     of the following amounts:
20             (A) An amount equal to all amounts paid or accrued
21         to the taxpayer as interest or dividends during the
22         taxable year to the extent excluded from gross income
23         in the computation of taxable income;
24             (B) An amount equal to the amount of tax imposed by
25         this Act to the extent deducted from gross income for

 

 

HB0452 - 68 - LRB096 03511 HLH 13536 b

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

 

 

HB0452 - 69 - LRB096 03511 HLH 13536 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         directly or indirectly paid, incurred, or accrued. The
2         preceding sentence does not apply to the extent that
3         the same dividends caused a reduction to the addition
4         modification required under Section 203(d)(2)(D-7) or
5         Section 203(d)(2)(D-8) of this Act.
6     and by deducting from the total so obtained the following
7     amounts:
8             (E) The valuation limitation amount;
9             (F) An amount equal to the amount of any tax
10         imposed by this Act which was refunded to the taxpayer
11         and included in such total for the taxable year;
12             (G) An amount equal to all amounts included in
13         taxable income as modified by subparagraphs (A), (B),
14         (C) and (D) which are exempt from taxation by this
15         State either by reason of its statutes or Constitution
16         or by reason of the Constitution, treaties or statutes
17         of the United States; provided that, in the case of any
18         statute of this State that exempts income derived from
19         bonds or other obligations from the tax imposed under
20         this Act, the amount exempted shall be the interest net
21         of bond premium amortization;
22             (H) Any income of the partnership which
23         constitutes personal service income as defined in
24         Section 1348 (b) (1) of the Internal Revenue Code (as
25         in effect December 31, 1981) or a reasonable allowance
26         for compensation paid or accrued for services rendered

 

 

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1         by partners to the partnership, whichever is greater;
2             (I) An amount equal to all amounts of income
3         distributable to an entity subject to the Personal
4         Property Tax Replacement Income Tax imposed by
5         subsections (c) and (d) of Section 201 of this Act
6         including amounts distributable to organizations
7         exempt from federal income tax by reason of Section
8         501(a) of the Internal Revenue Code;
9             (J) With the exception of any amounts subtracted
10         under subparagraph (G), an amount equal to the sum of
11         all amounts disallowed as deductions by (i) Sections
12         171(a) (2), and 265(2) of the Internal Revenue Code of
13         1954, as now or hereafter amended, and all amounts of
14         expenses allocable to interest and disallowed as
15         deductions by Section 265(1) of the Internal Revenue
16         Code, as now or hereafter amended; and (ii) for taxable
17         years ending on or after August 13, 1999, Sections
18         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
19         Internal Revenue Code; the provisions of this
20         subparagraph are exempt from the provisions of Section
21         250;
22             (K) 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         enacted by the 82nd General Assembly, or a River Edge

 

 

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1         Redevelopment Zone or zones created under the River
2         Edge Redevelopment Zone Act and conducts substantially
3         all of its operations in an Enterprise Zone or Zones or
4         from a River Edge Redevelopment Zone or zones. This
5         subparagraph (K) is exempt from the provisions of
6         Section 250;
7             (L) An amount equal to any contribution made to a
8         job training project established pursuant to the Real
9         Property Tax Increment Allocation Redevelopment Act;
10             (M) An amount equal to those dividends included in
11         such total that were paid by a corporation that
12         conducts business operations in a federally designated
13         Foreign Trade Zone or Sub-Zone and that is designated a
14         High Impact Business located in Illinois; provided
15         that dividends eligible for the deduction provided in
16         subparagraph (K) of paragraph (2) of this subsection
17         shall not be eligible for the deduction provided under
18         this subparagraph (M);
19             (N) 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             (O) For taxable years 2001 and thereafter, for the
25         taxable year in which the bonus depreciation deduction
26         is taken on the taxpayer's federal income tax return

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         the taxable year, or (ii) the net capital gain for the
2         taxable year, reduced in either case by any amount of
3         such gain included in the amount determined under
4         subsection (a) (2) (F) or (c) (2) (H).
5         (2) Pre-August 1, 1969 appreciation amount.
6             (A) If the fair market value of property referred
7         to in paragraph (1) was readily ascertainable on August
8         1, 1969, the pre-August 1, 1969 appreciation amount for
9         such property is the lesser of (i) the excess of such
10         fair market value over the taxpayer's basis (for
11         determining gain) for such property on that date
12         (determined under the Internal Revenue Code as in
13         effect on that date), or (ii) the total gain realized
14         and reportable for federal income tax purposes in
15         respect of the sale, exchange or other disposition of
16         such property.
17             (B) If the fair market value of property referred
18         to in paragraph (1) was not readily ascertainable on
19         August 1, 1969, the pre-August 1, 1969 appreciation
20         amount for such property is that amount which bears the
21         same ratio to the total gain reported in respect of the
22         property for federal income tax purposes for the
23         taxable year, as the number of full calendar months in
24         that part of the taxpayer's holding period for the
25         property ending July 31, 1969 bears to the number of
26         full calendar months in the taxpayer's entire holding

 

 

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1         period for the property.
2             (C) The Department shall prescribe such
3         regulations as may be necessary to carry out the
4         purposes of this paragraph.
 
5     (g) Double deductions. Unless specifically provided
6 otherwise, nothing in this Section shall permit the same item
7 to be deducted more than once.
 
8     (h) Legislative intention. Except as expressly provided by
9 this Section there shall be no modifications or limitations on
10 the amounts of income, gain, loss or deduction taken into
11 account in determining gross income, adjusted gross income or
12 taxable income for federal income tax purposes for the taxable
13 year, or in the amount of such items entering into the
14 computation of base income and net income under this Act for
15 such taxable year, whether in respect of property values as of
16 August 1, 1969 or otherwise.
17 (Source: P.A. 94-776, eff. 5-19-06; 94-789, eff. 5-19-06;
18 94-1021, eff. 7-12-06; 94-1074, eff. 12-26-06; 95-23, eff.
19 8-3-07; 95-233, eff. 8-16-07; 95-286, eff. 8-20-07; 95-331,
20 eff. 8-21-07; 95-707, eff. 1-11-08; 95-876, eff. 8-21-08;
21 revised 10-15-08.)