Rep. Barbara Flynn Currie

Filed: 5/29/2009

 

 


 

 


 
09600SB2252ham004 LRB096 10038 RCE 27736 a

1
AMENDMENT TO SENATE BILL 2252

2     AMENDMENT NO. ______. Amend Senate Bill 2252, AS AMENDED,
3 by replacing everything after the enacting clause with the
4 following:
 
5     "Section 5. The Illinois Income Tax Act is amended by
6 changing Sections 201, 203, 212, and 804 and by adding Sections
7 202.5 and 202.6 as follows:
 
8     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
9     Sec. 201. Tax Imposed.
10     (a) In general. A tax measured by net income is hereby
11 imposed on every individual, corporation, trust and estate for
12 each taxable year ending after July 31, 1969 on the privilege
13 of earning or receiving income in or as a resident of this
14 State. Such tax shall be in addition to all other occupation or
15 privilege taxes imposed by this State or by any municipal
16 corporation or political subdivision thereof.

 

 

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1     (b) Rates. The tax imposed by subsection (a) of this
2 Section shall be determined as follows, except as adjusted by
3 subsection (d-1):
4         (1) In the case of an individual, trust or estate, for
5     taxable years ending prior to July 1, 1989, an amount equal
6     to 2 1/2% of the taxpayer's net income for the taxable
7     year.
8         (2) In the case of an individual, trust or estate, for
9     taxable years beginning prior to July 1, 1989 and ending
10     after June 30, 1989, an amount equal to the sum of (i) 2
11     1/2% of the taxpayer's net income for the period prior to
12     July 1, 1989, as calculated under Section 202.3, and (ii)
13     3% of the taxpayer's net income for the period after June
14     30, 1989, as calculated under Section 202.3.
15         (3) In the case of an individual, trust or estate, for
16     taxable years beginning after June 30, 1989, and ending
17     prior to July 1, 2009, and for taxable years beginning
18     after June 30, 2011, an amount equal to 3% of the
19     taxpayer's net income for the taxable year.
20         (4) In the case of an individual, trust, or estate, for
21     taxable years beginning prior to July 1, 2009 and ending
22     after June 30, 2009, an amount equal to the sum of (i) 3%
23     of the taxpayer's net income for the period prior to July
24     1, 2009, as calculated under Section 202.5, and (ii) 4.5%
25     of the taxpayer's net income for the period after June 30,
26     2009, as calculated under Section 202.5. (Blank).

 

 

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1         (5) In the case of an individual, trust, or estate, for
2     taxable years beginning after June 30, 2009, and ending
3     prior to July 1, 2011, an amount equal to 4.5% of the
4     taxpayer's net income for the taxable year. (Blank).
5         (5.5) In the case of an individual, trust, or estate,
6     for taxable years beginning prior to July 1, 2011, and
7     ending after June 30, 2011, an amount equal to the sum of
8     (i) 4.5% of the taxpayer's net income for the period prior
9     to July 1, 2011, as calculated under Section 202.6, and
10     (ii) 3% of the taxpayer's net income for the period after
11     June 30, 2011, as calculated under Section 202.6.
12         (6) In the case of a corporation, for taxable years
13     ending prior to July 1, 1989, an amount equal to 4% of the
14     taxpayer's net income for the taxable year.
15         (7) In the case of a corporation, for taxable years
16     beginning prior to July 1, 1989 and ending after June 30,
17     1989, an amount equal to the sum of (i) 4% of the
18     taxpayer's net income for the period prior to July 1, 1989,
19     as calculated under Section 202.3, and (ii) 4.8% of the
20     taxpayer's net income for the period after June 30, 1989,
21     as calculated under Section 202.3.
22         (8) In the case of a corporation, for taxable years
23     beginning after June 30, 1989, and ending prior to July 1,
24     2009, and for taxable years beginning after June 30, 2011,
25     an amount equal to 4.8% of the taxpayer's net income for
26     the taxable year.

 

 

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1         (9) In the case of a corporation, for taxable years
2     beginning prior to July 1, 2009 and ending after June 30,
3     2009, an amount equal to the sum of (i) 4.8% of the
4     taxpayer's net income for the period prior to July 1, 2009,
5     as calculated under Section 202.5, and (ii) 7.2% of the
6     taxpayer's net income for the period after June 30, 2009,
7     as calculated under Section 202.5.
8         (10) In the case of a corporation, for taxable years
9     beginning after June 30, 2009, and ending prior to July 1,
10     2011, an amount equal to 7.2% of the taxpayer's net income
11     for the taxable year.
12         (10.5) In the case of a corporation, for taxable years
13     beginning prior to June 30, 2011 and ending after July 1,
14     2011, an amount equal to the sum of (i) 7.2% of the
15     taxpayer's net income for the period prior to July 1, 2011,
16     as calculated under Section 202.6, and (ii) 4.8% of the
17     taxpayer's net income for the period after June 30, 2011,
18     as calculated under Section 202.6.
19     (c) Personal Property Tax Replacement Income Tax.
20 Beginning on July 1, 1979 and thereafter, in addition to such
21 income tax, there is also hereby imposed the Personal Property
22 Tax Replacement Income Tax measured by net income on every
23 corporation (including Subchapter S corporations), partnership
24 and trust, for each taxable year ending after June 30, 1979.
25 Such taxes are imposed on the privilege of earning or receiving
26 income in or as a resident of this State. The Personal Property

 

 

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1 Tax Replacement Income Tax shall be in addition to the income
2 tax imposed by subsections (a) and (b) of this Section and in
3 addition to all other occupation or privilege taxes imposed by
4 this State or by any municipal corporation or political
5 subdivision thereof.
6     (d) Additional Personal Property Tax Replacement Income
7 Tax Rates. The personal property tax replacement income tax
8 imposed by this subsection and subsection (c) of this Section
9 in the case of a corporation, other than a Subchapter S
10 corporation and except as adjusted by subsection (d-1), shall
11 be an additional amount equal to 2.85% of such taxpayer's net
12 income for the taxable year, except that beginning on January
13 1, 1981, and thereafter, the rate of 2.85% specified in this
14 subsection shall be reduced to 2.5%, and in the case of a
15 partnership, trust or a Subchapter S corporation shall be an
16 additional amount equal to 1.5% of such taxpayer's net income
17 for the taxable year.
18     (d-1) Rate reduction for certain foreign insurers. In the
19 case of a foreign insurer, as defined by Section 35A-5 of the
20 Illinois Insurance Code, whose state or country of domicile
21 imposes on insurers domiciled in Illinois a retaliatory tax
22 (excluding any insurer whose premiums from reinsurance assumed
23 are 50% or more of its total insurance premiums as determined
24 under paragraph (2) of subsection (b) of Section 304, except
25 that for purposes of this determination premiums from
26 reinsurance do not include premiums from inter-affiliate

 

 

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1 reinsurance arrangements), beginning with taxable years ending
2 on or after December 31, 1999, the sum of the rates of tax
3 imposed by subsections (b) and (d) shall be reduced (but not
4 increased) to the rate at which the total amount of tax imposed
5 under this Act, net of all credits allowed under this Act,
6 shall equal (i) the total amount of tax that would be imposed
7 on the foreign insurer's net income allocable to Illinois for
8 the taxable year by such foreign insurer's state or country of
9 domicile if that net income were subject to all income taxes
10 and taxes measured by net income imposed by such foreign
11 insurer's state or country of domicile, net of all credits
12 allowed or (ii) a rate of zero if no such tax is imposed on such
13 income by the foreign insurer's state of domicile. For the
14 purposes of this subsection (d-1), an inter-affiliate includes
15 a mutual insurer under common management.
16         (1) For the purposes of subsection (d-1), in no event
17     shall the sum of the rates of tax imposed by subsections
18     (b) and (d) be reduced below the rate at which the sum of:
19             (A) the total amount of tax imposed on such foreign
20         insurer under this Act for a taxable year, net of all
21         credits allowed under this Act, plus
22             (B) the privilege tax imposed by Section 409 of the
23         Illinois Insurance Code, the fire insurance company
24         tax imposed by Section 12 of the Fire Investigation
25         Act, and the fire department taxes imposed under
26         Section 11-10-1 of the Illinois Municipal Code,

 

 

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1     equals 1.25% for taxable years ending prior to December 31,
2     2003, or 1.75% for taxable years ending on or after
3     December 31, 2003, of the net taxable premiums written for
4     the taxable year, as described by subsection (1) of Section
5     409 of the Illinois Insurance Code. This paragraph will in
6     no event increase the rates imposed under subsections (b)
7     and (d).
8         (2) Any reduction in the rates of tax imposed by this
9     subsection shall be applied first against the rates imposed
10     by subsection (b) and only after the tax imposed by
11     subsection (a) net of all credits allowed under this
12     Section other than the credit allowed under subsection (i)
13     has been reduced to zero, against the rates imposed by
14     subsection (d).
15     This subsection (d-1) is exempt from the provisions of
16 Section 250.
17     (e) Investment credit. A taxpayer shall be allowed a credit
18 against the Personal Property Tax Replacement Income Tax for
19 investment in qualified property.
20         (1) A taxpayer shall be allowed a credit equal to .5%
21     of the basis of qualified property placed in service during
22     the taxable year, provided such property is placed in
23     service on or after July 1, 1984. There shall be allowed an
24     additional credit equal to .5% of the basis of qualified
25     property placed in service during the taxable year,
26     provided such property is placed in service on or after

 

 

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1     July 1, 1986, and the taxpayer's base employment within
2     Illinois has increased by 1% or more over the preceding
3     year as determined by the taxpayer's employment records
4     filed with the Illinois Department of Employment Security.
5     Taxpayers who are new to Illinois shall be deemed to have
6     met the 1% growth in base employment for the first year in
7     which they file employment records with the Illinois
8     Department of Employment Security. The provisions added to
9     this Section by Public Act 85-1200 (and restored by Public
10     Act 87-895) shall be construed as declaratory of existing
11     law and not as a new enactment. If, in any year, the
12     increase in base employment within Illinois over the
13     preceding year is less than 1%, the additional credit shall
14     be limited to that percentage times a fraction, the
15     numerator of which is .5% and the denominator of which is
16     1%, but shall not exceed .5%. The investment credit shall
17     not be allowed to the extent that it would reduce a
18     taxpayer's liability in any tax year below zero, nor may
19     any credit for qualified property be allowed for any year
20     other than the year in which the property was placed in
21     service in Illinois. For tax years ending on or after
22     December 31, 1987, and on or before December 31, 1988, the
23     credit shall be allowed for the tax year in which the
24     property is placed in service, or, if the amount of the
25     credit exceeds the tax liability for that year, whether it
26     exceeds the original liability or the liability as later

 

 

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1     amended, such excess may be carried forward and applied to
2     the tax liability of the 5 taxable years following the
3     excess credit years if the taxpayer (i) makes investments
4     which cause the creation of a minimum of 2,000 full-time
5     equivalent jobs in Illinois, (ii) is located in an
6     enterprise zone established pursuant to the Illinois
7     Enterprise Zone Act and (iii) is certified by the
8     Department of Commerce and Community Affairs (now
9     Department of Commerce and Economic Opportunity) as
10     complying with the requirements specified in clause (i) and
11     (ii) by July 1, 1986. The Department of Commerce and
12     Community Affairs (now Department of Commerce and Economic
13     Opportunity) shall notify the Department of Revenue of all
14     such certifications immediately. For tax years ending
15     after December 31, 1988, the credit shall be allowed for
16     the tax year in which the property is placed in service,
17     or, if the amount of the credit exceeds the tax liability
18     for that year, whether it exceeds the original liability or
19     the liability as later amended, such excess may be carried
20     forward and applied to the tax liability of the 5 taxable
21     years following the excess credit years. The credit shall
22     be applied to the earliest year for which there is a
23     liability. If there is credit from more than one tax year
24     that is available to offset a liability, earlier credit
25     shall be applied first.
26         (2) The term "qualified property" means property

 

 

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1     which:
2             (A) is tangible, whether new or used, including
3         buildings and structural components of buildings and
4         signs that are real property, but not including land or
5         improvements to real property that are not a structural
6         component of a building such as landscaping, sewer
7         lines, local access roads, fencing, parking lots, and
8         other appurtenances;
9             (B) is depreciable pursuant to Section 167 of the
10         Internal Revenue Code, except that "3-year property"
11         as defined in Section 168(c)(2)(A) of that Code is not
12         eligible for the credit provided by this subsection
13         (e);
14             (C) is acquired by purchase as defined in Section
15         179(d) of the Internal Revenue Code;
16             (D) is used in Illinois by a taxpayer who is
17         primarily engaged in manufacturing, or in mining coal
18         or fluorite, or in retailing, or was placed in service
19         on or after July 1, 2006 in a River Edge Redevelopment
20         Zone established pursuant to the River Edge
21         Redevelopment Zone Act; and
22             (E) has not previously been used in Illinois in
23         such a manner and by such a person as would qualify for
24         the credit provided by this subsection (e) or
25         subsection (f).
26         (3) For purposes of this subsection (e),

 

 

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1     "manufacturing" means the material staging and production
2     of tangible personal property by procedures commonly
3     regarded as manufacturing, processing, fabrication, or
4     assembling which changes some existing material into new
5     shapes, new qualities, or new combinations. For purposes of
6     this subsection (e) the term "mining" shall have the same
7     meaning as the term "mining" in Section 613(c) of the
8     Internal Revenue Code. For purposes of this subsection (e),
9     the term "retailing" means the sale of tangible personal
10     property or services rendered in conjunction with the sale
11     of tangible consumer goods or commodities.
12         (4) The basis of qualified property shall be the basis
13     used to compute the depreciation deduction for federal
14     income tax purposes.
15         (5) If the basis of the property for federal income tax
16     depreciation purposes is increased after it has been placed
17     in service in Illinois by the taxpayer, the amount of such
18     increase shall be deemed property placed in service on the
19     date of such increase in basis.
20         (6) The term "placed in service" shall have the same
21     meaning as under Section 46 of the Internal Revenue Code.
22         (7) If during any taxable year, any property ceases to
23     be qualified property in the hands of the taxpayer within
24     48 months after being placed in service, or the situs of
25     any qualified property is moved outside Illinois within 48
26     months after being placed in service, the Personal Property

 

 

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1     Tax Replacement Income Tax for such taxable year shall be
2     increased. Such increase shall be determined by (i)
3     recomputing the investment credit which would have been
4     allowed for the year in which credit for such property was
5     originally allowed by eliminating such property from such
6     computation and, (ii) subtracting such recomputed credit
7     from the amount of credit previously allowed. For the
8     purposes of this paragraph (7), a reduction of the basis of
9     qualified property resulting from a redetermination of the
10     purchase price shall be deemed a disposition of qualified
11     property to the extent of such reduction.
12         (8) Unless the investment credit is extended by law,
13     the basis of qualified property shall not include costs
14     incurred after December 31, 2008, except for costs incurred
15     pursuant to a binding contract entered into on or before
16     December 31, 2008.
17         (9) Each taxable year ending before December 31, 2000,
18     a partnership may elect to pass through to its partners the
19     credits to which the partnership is entitled under this
20     subsection (e) for the taxable year. A partner may use the
21     credit allocated to him or her under this paragraph only
22     against the tax imposed in subsections (c) and (d) of this
23     Section. If the partnership makes that election, those
24     credits shall be allocated among the partners in the
25     partnership in accordance with the rules set forth in
26     Section 704(b) of the Internal Revenue Code, and the rules

 

 

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1     promulgated under that Section, and the allocated amount of
2     the credits shall be allowed to the partners for that
3     taxable year. The partnership shall make this election on
4     its Personal Property Tax Replacement Income Tax return for
5     that taxable year. The election to pass through the credits
6     shall be irrevocable.
7         For taxable years ending on or after December 31, 2000,
8     a partner that qualifies its partnership for a subtraction
9     under subparagraph (I) of paragraph (2) of subsection (d)
10     of Section 203 or a shareholder that qualifies a Subchapter
11     S corporation for a subtraction under subparagraph (S) of
12     paragraph (2) of subsection (b) of Section 203 shall be
13     allowed a credit under this subsection (e) equal to its
14     share of the credit earned under this subsection (e) during
15     the taxable year by the partnership or Subchapter S
16     corporation, determined in accordance with the
17     determination of income and distributive share of income
18     under Sections 702 and 704 and Subchapter S of the Internal
19     Revenue Code. This paragraph is exempt from the provisions
20     of Section 250.
21     (f) Investment credit; Enterprise Zone; River Edge
22 Redevelopment Zone.
23         (1) A taxpayer shall be allowed a credit against the
24     tax imposed by subsections (a) and (b) of this Section for
25     investment in qualified property which is placed in service
26     in an Enterprise Zone created pursuant to the Illinois

 

 

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1     Enterprise Zone Act or, for property placed in service on
2     or after July 1, 2006, a River Edge Redevelopment Zone
3     established pursuant to the River Edge Redevelopment Zone
4     Act. For partners, shareholders of Subchapter S
5     corporations, and owners of limited liability companies,
6     if the liability company is treated as a partnership for
7     purposes of federal and State income taxation, there shall
8     be allowed a credit under this subsection (f) to be
9     determined in accordance with the determination of income
10     and distributive share of income under Sections 702 and 704
11     and Subchapter S of the Internal Revenue Code. The credit
12     shall be .5% of the basis for such property. The credit
13     shall be available only in the taxable year in which the
14     property is placed in service in the Enterprise Zone or
15     River Edge Redevelopment Zone and shall not be allowed to
16     the extent that it would reduce a taxpayer's liability for
17     the tax imposed by subsections (a) and (b) of this Section
18     to below zero. For tax years ending on or after December
19     31, 1985, the credit shall be allowed for the tax year in
20     which the property is placed in service, or, if the amount
21     of the credit exceeds the tax liability for that year,
22     whether it exceeds the original liability or the liability
23     as later amended, such excess may be carried forward and
24     applied to the tax liability of the 5 taxable years
25     following the excess credit year. The credit shall be
26     applied to the earliest year for which there is a

 

 

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1     liability. If there is credit from more than one tax year
2     that is available to offset a liability, the credit
3     accruing first in time shall be applied first.
4         (2) The term qualified property means property which:
5             (A) is tangible, whether new or used, including
6         buildings and structural components of buildings;
7             (B) is depreciable pursuant to Section 167 of the
8         Internal Revenue Code, except that "3-year property"
9         as defined in Section 168(c)(2)(A) of that Code is not
10         eligible for the credit provided by this subsection
11         (f);
12             (C) is acquired by purchase as defined in Section
13         179(d) of the Internal Revenue Code;
14             (D) is used in the Enterprise Zone or River Edge
15         Redevelopment Zone by the taxpayer; and
16             (E) has not been previously used in Illinois in
17         such a manner and by such a person as would qualify for
18         the credit provided by this subsection (f) or
19         subsection (e).
20         (3) The basis of qualified property shall be the basis
21     used to compute the depreciation deduction for federal
22     income tax purposes.
23         (4) If the basis of the property for federal income tax
24     depreciation purposes is increased after it has been placed
25     in service in the Enterprise Zone or River Edge
26     Redevelopment Zone by the taxpayer, the amount of such

 

 

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1     increase shall be deemed property placed in service on the
2     date of such increase in basis.
3         (5) The term "placed in service" shall have the same
4     meaning as under Section 46 of the Internal Revenue Code.
5         (6) If during any taxable year, any property ceases to
6     be qualified property in the hands of the taxpayer within
7     48 months after being placed in service, or the situs of
8     any qualified property is moved outside the Enterprise Zone
9     or River Edge Redevelopment Zone within 48 months after
10     being placed in service, the tax imposed under subsections
11     (a) and (b) of this Section for such taxable year shall be
12     increased. Such increase shall be determined by (i)
13     recomputing the investment credit which would have been
14     allowed for the year in which credit for such property was
15     originally allowed by eliminating such property from such
16     computation, and (ii) subtracting such recomputed credit
17     from the amount of credit previously allowed. For the
18     purposes of this paragraph (6), a reduction of the basis of
19     qualified property resulting from a redetermination of the
20     purchase price shall be deemed a disposition of qualified
21     property to the extent of such reduction.
22         (7) There shall be allowed an additional credit equal
23     to 0.5% of the basis of qualified property placed in
24     service during the taxable year in a River Edge
25     Redevelopment Zone, provided such property is placed in
26     service on or after July 1, 2006, and the taxpayer's base

 

 

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1     employment within Illinois has increased by 1% or more over
2     the preceding year as determined by the taxpayer's
3     employment records filed with the Illinois Department of
4     Employment Security. Taxpayers who are new to Illinois
5     shall be deemed to have met the 1% growth in base
6     employment for the first year in which they file employment
7     records with the Illinois Department of Employment
8     Security. If, in any year, the increase in base employment
9     within Illinois over the preceding year is less than 1%,
10     the additional credit shall be limited to that percentage
11     times a fraction, the numerator of which is 0.5% and the
12     denominator of which is 1%, but shall not exceed 0.5%.
13     (g) Jobs Tax Credit; Enterprise Zone, River Edge
14 Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
15         (1) A taxpayer conducting a trade or business in an
16     enterprise zone or a High Impact Business designated by the
17     Department of Commerce and Economic Opportunity or for
18     taxable years ending on or after December 31, 2006, in a
19     River Edge Redevelopment Zone conducting a trade or
20     business in a federally designated Foreign Trade Zone or
21     Sub-Zone shall be allowed a credit against the tax imposed
22     by subsections (a) and (b) of this Section in the amount of
23     $500 per eligible employee hired to work in the zone during
24     the taxable year.
25         (2) To qualify for the credit:
26             (A) the taxpayer must hire 5 or more eligible

 

 

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1         employees to work in an enterprise zone, River Edge
2         Redevelopment Zone, or federally designated Foreign
3         Trade Zone or Sub-Zone during the taxable year;
4             (B) the taxpayer's total employment within the
5         enterprise zone, River Edge Redevelopment Zone, or
6         federally designated Foreign Trade Zone or Sub-Zone
7         must increase by 5 or more full-time employees beyond
8         the total employed in that zone at the end of the
9         previous tax year for which a jobs tax credit under
10         this Section was taken, or beyond the total employed by
11         the taxpayer as of December 31, 1985, whichever is
12         later; and
13             (C) the eligible employees must be employed 180
14         consecutive days in order to be deemed hired for
15         purposes of this subsection.
16         (3) An "eligible employee" means an employee who is:
17             (A) Certified by the Department of Commerce and
18         Economic Opportunity as "eligible for services"
19         pursuant to regulations promulgated in accordance with
20         Title II of the Job Training Partnership Act, Training
21         Services for the Disadvantaged or Title III of the Job
22         Training Partnership Act, Employment and Training
23         Assistance for Dislocated Workers Program.
24             (B) Hired after the enterprise zone, River Edge
25         Redevelopment Zone, or federally designated Foreign
26         Trade Zone or Sub-Zone was designated or the trade or

 

 

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1         business was located in that zone, whichever is later.
2             (C) Employed in the enterprise zone, River Edge
3         Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
4         An employee is employed in an enterprise zone or
5         federally designated Foreign Trade Zone or Sub-Zone if
6         his services are rendered there or it is the base of
7         operations for the services performed.
8             (D) A full-time employee working 30 or more hours
9         per week.
10         (4) For tax years ending on or after December 31, 1985
11     and prior to December 31, 1988, the credit shall be allowed
12     for the tax year in which the eligible employees are hired.
13     For tax years ending on or after December 31, 1988, the
14     credit shall be allowed for the tax year immediately
15     following the tax year in which the eligible employees are
16     hired. If the amount of the credit exceeds the tax
17     liability for that year, whether it exceeds the original
18     liability or the liability as later amended, such excess
19     may be carried forward and applied to the tax liability of
20     the 5 taxable years following the excess credit year. The
21     credit shall be applied to the earliest year for which
22     there is a liability. If there is credit from more than one
23     tax year that is available to offset a liability, earlier
24     credit shall be applied first.
25         (5) The Department of Revenue shall promulgate such
26     rules and regulations as may be deemed necessary to carry

 

 

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1     out the purposes of this subsection (g).
2         (6) The credit shall be available for eligible
3     employees hired on or after January 1, 1986.
4     (h) Investment credit; High Impact Business.
5         (1) Subject to subsections (b) and (b-5) of Section 5.5
6     of the Illinois Enterprise Zone Act, a taxpayer shall be
7     allowed a credit against the tax imposed by subsections (a)
8     and (b) of this Section for investment in qualified
9     property which is placed in service by a Department of
10     Commerce and Economic Opportunity designated High Impact
11     Business. The credit shall be .5% of the basis for such
12     property. The credit shall not be available (i) until the
13     minimum investments in qualified property set forth in
14     subdivision (a)(3)(A) of Section 5.5 of the Illinois
15     Enterprise Zone Act have been satisfied or (ii) until the
16     time authorized in subsection (b-5) of the Illinois
17     Enterprise Zone Act for entities designated as High Impact
18     Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
19     (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
20     Act, and shall not be allowed to the extent that it would
21     reduce a taxpayer's liability for the tax imposed by
22     subsections (a) and (b) of this Section to below zero. The
23     credit applicable to such investments shall be taken in the
24     taxable year in which such investments have been completed.
25     The credit for additional investments beyond the minimum
26     investment by a designated high impact business authorized

 

 

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1     under subdivision (a)(3)(A) of Section 5.5 of the Illinois
2     Enterprise Zone Act shall be available only in the taxable
3     year in which the property is placed in service and shall
4     not be allowed to the extent that it would reduce a
5     taxpayer's liability for the tax imposed by subsections (a)
6     and (b) of this Section to below zero. For tax years ending
7     on or after December 31, 1987, the credit shall be allowed
8     for the tax year in which the property is placed in
9     service, or, if the amount of the credit exceeds the tax
10     liability for that year, whether it exceeds the original
11     liability or the liability as later amended, such excess
12     may be carried forward and applied to the tax liability of
13     the 5 taxable years following the excess credit year. The
14     credit shall be applied to the earliest year for which
15     there is a liability. If there is credit from more than one
16     tax year that is available to offset a liability, the
17     credit accruing first in time shall be applied first.
18         Changes made in this subdivision (h)(1) by Public Act
19     88-670 restore changes made by Public Act 85-1182 and
20     reflect existing law.
21         (2) The term qualified property means property which:
22             (A) is tangible, whether new or used, including
23         buildings and structural components of buildings;
24             (B) is depreciable pursuant to Section 167 of the
25         Internal Revenue Code, except that "3-year property"
26         as defined in Section 168(c)(2)(A) of that Code is not

 

 

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1         eligible for the credit provided by this subsection
2         (h);
3             (C) is acquired by purchase as defined in Section
4         179(d) of the Internal Revenue Code; and
5             (D) is not eligible for the Enterprise Zone
6         Investment Credit provided by subsection (f) of this
7         Section.
8         (3) The basis of qualified property shall be the basis
9     used to compute the depreciation deduction for federal
10     income tax purposes.
11         (4) If the basis of the property for federal income tax
12     depreciation purposes is increased after it has been placed
13     in service in a federally designated Foreign Trade Zone or
14     Sub-Zone located in Illinois by the taxpayer, the amount of
15     such increase shall be deemed property placed in service on
16     the date of such increase in basis.
17         (5) The term "placed in service" shall have the same
18     meaning as under Section 46 of the Internal Revenue Code.
19         (6) If during any taxable year ending on or before
20     December 31, 1996, any property ceases to be qualified
21     property in the hands of the taxpayer within 48 months
22     after being placed in service, or the situs of any
23     qualified property is moved outside Illinois within 48
24     months after being placed in service, the tax imposed under
25     subsections (a) and (b) of this Section for such taxable
26     year shall be increased. Such increase shall be determined

 

 

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1     by (i) recomputing the investment credit which would have
2     been allowed for the year in which credit for such property
3     was originally allowed by eliminating such property from
4     such computation, and (ii) subtracting such recomputed
5     credit from the amount of credit previously allowed. For
6     the purposes of this paragraph (6), a reduction of the
7     basis of qualified property resulting from a
8     redetermination of the purchase price shall be deemed a
9     disposition of qualified property to the extent of such
10     reduction.
11         (7) Beginning with tax years ending after December 31,
12     1996, if a taxpayer qualifies for the credit under this
13     subsection (h) and thereby is granted a tax abatement and
14     the taxpayer relocates its entire facility in violation of
15     the explicit terms and length of the contract under Section
16     18-183 of the Property Tax Code, the tax imposed under
17     subsections (a) and (b) of this Section shall be increased
18     for the taxable year in which the taxpayer relocated its
19     facility by an amount equal to the amount of credit
20     received by the taxpayer under this subsection (h).
21     (i) Credit for Personal Property Tax Replacement Income
22 Tax. For tax years ending prior to December 31, 2003, a credit
23 shall be allowed against the tax imposed by subsections (a) and
24 (b) of this Section for the tax imposed by subsections (c) and
25 (d) of this Section. This credit shall be computed by
26 multiplying the tax imposed by subsections (c) and (d) of this

 

 

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1 Section by a fraction, the numerator of which is base income
2 allocable to Illinois and the denominator of which is Illinois
3 base income, and further multiplying the product by the tax
4 rate imposed by subsections (a) and (b) of this Section.
5     Any credit earned on or after December 31, 1986 under this
6 subsection which is unused in the year the credit is computed
7 because it exceeds the tax liability imposed by subsections (a)
8 and (b) for that year (whether it exceeds the original
9 liability or the liability as later amended) may be carried
10 forward and applied to the tax liability imposed by subsections
11 (a) and (b) of the 5 taxable years following the excess credit
12 year, provided that no credit may be carried forward to any
13 year ending on or after December 31, 2003. This credit shall be
14 applied first to the earliest year for which there is a
15 liability. If there is a credit under this subsection from more
16 than one tax year that is available to offset a liability the
17 earliest credit arising under this subsection shall be applied
18 first.
19     If, during any taxable year ending on or after December 31,
20 1986, the tax imposed by subsections (c) and (d) of this
21 Section for which a taxpayer has claimed a credit under this
22 subsection (i) is reduced, the amount of credit for such tax
23 shall also be reduced. Such reduction shall be determined by
24 recomputing the credit to take into account the reduced tax
25 imposed by subsections (c) and (d). If any portion of the
26 reduced amount of credit has been carried to a different

 

 

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1 taxable year, an amended return shall be filed for such taxable
2 year to reduce the amount of credit claimed.
3     (j) Training expense credit. Beginning with tax years
4 ending on or after December 31, 1986 and prior to December 31,
5 2003, a taxpayer shall be allowed a credit against the tax
6 imposed by subsections (a) and (b) under this Section for all
7 amounts paid or accrued, on behalf of all persons employed by
8 the taxpayer in Illinois or Illinois residents employed outside
9 of Illinois by a taxpayer, for educational or vocational
10 training in semi-technical or technical fields or semi-skilled
11 or skilled fields, which were deducted from gross income in the
12 computation of taxable income. The credit against the tax
13 imposed by subsections (a) and (b) shall be 1.6% of such
14 training expenses. For partners, shareholders of subchapter S
15 corporations, and owners of limited liability companies, if the
16 liability company is treated as a partnership for purposes of
17 federal and State income taxation, there shall be allowed a
18 credit under this subsection (j) to be determined in accordance
19 with the determination of income and distributive share of
20 income under Sections 702 and 704 and subchapter S of the
21 Internal Revenue Code.
22     Any credit allowed under this subsection which is unused in
23 the year the credit is earned may be carried forward to each of
24 the 5 taxable years following the year for which the credit is
25 first computed until it is used. This credit shall be applied
26 first to the earliest year for which there is a liability. If

 

 

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1 there is a credit under this subsection from more than one tax
2 year that is available to offset a liability the earliest
3 credit arising under this subsection shall be applied first. No
4 carryforward credit may be claimed in any tax year ending on or
5 after December 31, 2003.
6     (k) Research and development credit.
7     For tax years ending after July 1, 1990 and prior to
8 December 31, 2003, and beginning again for tax years ending on
9 or after December 31, 2004, a taxpayer shall be allowed a
10 credit against the tax imposed by subsections (a) and (b) of
11 this Section for increasing research activities in this State.
12 The credit allowed against the tax imposed by subsections (a)
13 and (b) shall be equal to 6 1/2% of the qualifying expenditures
14 for increasing research activities in this State. For partners,
15 shareholders of subchapter S corporations, and owners of
16 limited liability companies, if the liability company is
17 treated as a partnership for purposes of federal and State
18 income taxation, there shall be allowed a credit under this
19 subsection to be determined in accordance with the
20 determination of income and distributive share of income under
21 Sections 702 and 704 and subchapter S of the Internal Revenue
22 Code.
23     For purposes of this subsection, "qualifying expenditures"
24 means the qualifying expenditures as defined for the federal
25 credit for increasing research activities which would be
26 allowable under Section 41 of the Internal Revenue Code and

 

 

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1 which are conducted in this State, "qualifying expenditures for
2 increasing research activities in this State" means the excess
3 of qualifying expenditures for the taxable year in which
4 incurred over qualifying expenditures for the base period,
5 "qualifying expenditures for the base period" means the average
6 of the qualifying expenditures for each year in the base
7 period, and "base period" means the 3 taxable years immediately
8 preceding the taxable year for which the determination is being
9 made.
10     Any credit in excess of the tax liability for the taxable
11 year may be carried forward. A taxpayer may elect to have the
12 unused credit shown on its final completed return carried over
13 as a credit against the tax liability for the following 5
14 taxable years or until it has been fully used, whichever occurs
15 first; provided that no credit earned in a tax year ending
16 prior to December 31, 2003 may be carried forward to any year
17 ending on or after December 31, 2003.
18     If an unused credit is carried forward to a given year from
19 2 or more earlier years, that credit arising in the earliest
20 year will be applied first against the tax liability for the
21 given year. If a tax liability for the given year still
22 remains, the credit from the next earliest year will then be
23 applied, and so on, until all credits have been used or no tax
24 liability for the given year remains. Any remaining unused
25 credit or credits then will be carried forward to the next
26 following year in which a tax liability is incurred, except

 

 

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1 that no credit can be carried forward to a year which is more
2 than 5 years after the year in which the expense for which the
3 credit is given was incurred.
4     No inference shall be drawn from this amendatory Act of the
5 91st General Assembly in construing this Section for taxable
6 years beginning before January 1, 1999.
7     (l) Environmental Remediation Tax Credit.
8         (i) For tax years ending after December 31, 1997 and on
9     or before December 31, 2001, a taxpayer shall be allowed a
10     credit against the tax imposed by subsections (a) and (b)
11     of this Section for certain amounts paid for unreimbursed
12     eligible remediation costs, as specified in this
13     subsection. For purposes of this Section, "unreimbursed
14     eligible remediation costs" means costs approved by the
15     Illinois Environmental Protection Agency ("Agency") under
16     Section 58.14 of the Environmental Protection Act that were
17     paid in performing environmental remediation at a site for
18     which a No Further Remediation Letter was issued by the
19     Agency and recorded under Section 58.10 of the
20     Environmental Protection Act. The credit must be claimed
21     for the taxable year in which Agency approval of the
22     eligible remediation costs is granted. The credit is not
23     available to any taxpayer if the taxpayer or any related
24     party caused or contributed to, in any material respect, a
25     release of regulated substances on, in, or under the site
26     that was identified and addressed by the remedial action

 

 

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1     pursuant to the Site Remediation Program of the
2     Environmental Protection Act. After the Pollution Control
3     Board rules are adopted pursuant to the Illinois
4     Administrative Procedure Act for the administration and
5     enforcement of Section 58.9 of the Environmental
6     Protection Act, determinations as to credit availability
7     for purposes of this Section shall be made consistent with
8     those rules. For purposes of this Section, "taxpayer"
9     includes a person whose tax attributes the taxpayer has
10     succeeded to under Section 381 of the Internal Revenue Code
11     and "related party" includes the persons disallowed a
12     deduction for losses by paragraphs (b), (c), and (f)(1) of
13     Section 267 of the Internal Revenue Code by virtue of being
14     a related taxpayer, as well as any of its partners. The
15     credit allowed against the tax imposed by subsections (a)
16     and (b) shall be equal to 25% of the unreimbursed eligible
17     remediation costs in excess of $100,000 per site, except
18     that the $100,000 threshold shall not apply to any site
19     contained in an enterprise zone as determined by the
20     Department of Commerce and Community Affairs (now
21     Department of Commerce and Economic Opportunity). The
22     total credit allowed shall not exceed $40,000 per year with
23     a maximum total of $150,000 per site. For partners and
24     shareholders of subchapter S corporations, there shall be
25     allowed a credit under this subsection to be determined in
26     accordance with the determination of income and

 

 

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1     distributive share of income under Sections 702 and 704 and
2     subchapter S of the Internal Revenue Code.
3         (ii) A credit allowed under this subsection that is
4     unused in the year the credit is earned may be carried
5     forward to each of the 5 taxable years following the year
6     for which the credit is first earned until it is used. The
7     term "unused credit" does not include any amounts of
8     unreimbursed eligible remediation costs in excess of the
9     maximum credit per site authorized under paragraph (i).
10     This credit shall be applied first to the earliest year for
11     which there is a liability. If there is a credit under this
12     subsection from more than one tax year that is available to
13     offset a liability, the earliest credit arising under this
14     subsection shall be applied first. A credit allowed under
15     this subsection may be sold to a buyer as part of a sale of
16     all or part of the remediation site for which the credit
17     was granted. The purchaser of a remediation site and the
18     tax credit shall succeed to the unused credit and remaining
19     carry-forward period of the seller. To perfect the
20     transfer, the assignor shall record the transfer in the
21     chain of title for the site and provide written notice to
22     the Director of the Illinois Department of Revenue of the
23     assignor's intent to sell the remediation site and the
24     amount of the tax credit to be transferred as a portion of
25     the sale. In no event may a credit be transferred to any
26     taxpayer if the taxpayer or a related party would not be

 

 

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1     eligible under the provisions of subsection (i).
2         (iii) For purposes of this Section, the term "site"
3     shall have the same meaning as under Section 58.2 of the
4     Environmental Protection Act.
5     (m) Education expense credit. Beginning with tax years
6 ending after December 31, 1999, a taxpayer who is the custodian
7 of one or more qualifying pupils shall be allowed a credit
8 against the tax imposed by subsections (a) and (b) of this
9 Section for qualified education expenses incurred on behalf of
10 the qualifying pupils. The credit shall be equal to 25% of
11 qualified education expenses, but in no event may the total
12 credit under this subsection claimed by a family that is the
13 custodian of qualifying pupils exceed $500. In no event shall a
14 credit under this subsection reduce the taxpayer's liability
15 under this Act to less than zero. This subsection is exempt
16 from the provisions of Section 250 of this Act.
17     For purposes of this subsection:
18     "Qualifying pupils" means individuals who (i) are
19 residents of the State of Illinois, (ii) are under the age of
20 21 at the close of the school year for which a credit is
21 sought, and (iii) during the school year for which a credit is
22 sought were full-time pupils enrolled in a kindergarten through
23 twelfth grade education program at any school, as defined in
24 this subsection.
25     "Qualified education expense" means the amount incurred on
26 behalf of a qualifying pupil in excess of $250 for tuition,

 

 

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1 book fees, and lab fees at the school in which the pupil is
2 enrolled during the regular school year.
3     "School" means any public or nonpublic elementary or
4 secondary school in Illinois that is in compliance with Title
5 VI of the Civil Rights Act of 1964 and attendance at which
6 satisfies the requirements of Section 26-1 of the School Code,
7 except that nothing shall be construed to require a child to
8 attend any particular public or nonpublic school to qualify for
9 the credit under this Section.
10     "Custodian" means, with respect to qualifying pupils, an
11 Illinois resident who is a parent, the parents, a legal
12 guardian, or the legal guardians of the qualifying pupils.
13     (n) River Edge Redevelopment Zone site remediation tax
14 credit.
15         (i) For tax years ending on or after December 31, 2006,
16     a taxpayer shall be allowed a credit against the tax
17     imposed by subsections (a) and (b) of this Section for
18     certain amounts paid for unreimbursed eligible remediation
19     costs, as specified in this subsection. For purposes of
20     this Section, "unreimbursed eligible remediation costs"
21     means costs approved by the Illinois Environmental
22     Protection Agency ("Agency") under Section 58.14a of the
23     Environmental Protection Act that were paid in performing
24     environmental remediation at a site within a River Edge
25     Redevelopment Zone for which a No Further Remediation
26     Letter was issued by the Agency and recorded under Section

 

 

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1     58.10 of the Environmental Protection Act. The credit must
2     be claimed for the taxable year in which Agency approval of
3     the eligible remediation costs is granted. The credit is
4     not available to any taxpayer if the taxpayer or any
5     related party caused or contributed to, in any material
6     respect, a release of regulated substances on, in, or under
7     the site that was identified and addressed by the remedial
8     action pursuant to the Site Remediation Program of the
9     Environmental Protection Act. Determinations as to credit
10     availability for purposes of this Section shall be made
11     consistent with rules adopted by the Pollution Control
12     Board pursuant to the Illinois Administrative Procedure
13     Act for the administration and enforcement of Section 58.9
14     of the Environmental Protection Act. For purposes of this
15     Section, "taxpayer" includes a person whose tax attributes
16     the taxpayer has succeeded to under Section 381 of the
17     Internal Revenue Code and "related party" includes the
18     persons disallowed a deduction for losses by paragraphs
19     (b), (c), and (f)(1) of Section 267 of the Internal Revenue
20     Code by virtue of being a related taxpayer, as well as any
21     of its partners. The credit allowed against the tax imposed
22     by subsections (a) and (b) shall be equal to 25% of the
23     unreimbursed eligible remediation costs in excess of
24     $100,000 per site.
25         (ii) A credit allowed under this subsection that is
26     unused in the year the credit is earned may be carried

 

 

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1     forward to each of the 5 taxable years following the year
2     for which the credit is first earned until it is used. This
3     credit shall be applied first to the earliest year for
4     which there is a liability. If there is a credit under this
5     subsection from more than one tax year that is available to
6     offset a liability, the earliest credit arising under this
7     subsection shall be applied first. A credit allowed under
8     this subsection may be sold to a buyer as part of a sale of
9     all or part of the remediation site for which the credit
10     was granted. The purchaser of a remediation site and the
11     tax credit shall succeed to the unused credit and remaining
12     carry-forward period of the seller. To perfect the
13     transfer, the assignor shall record the transfer in the
14     chain of title for the site and provide written notice to
15     the Director of the Illinois Department of Revenue of the
16     assignor's intent to sell the remediation site and the
17     amount of the tax credit to be transferred as a portion of
18     the sale. In no event may a credit be transferred to any
19     taxpayer if the taxpayer or a related party would not be
20     eligible under the provisions of subsection (i).
21         (iii) For purposes of this Section, the term "site"
22     shall have the same meaning as under Section 58.2 of the
23     Environmental Protection Act.
24         (iv) This subsection is exempt from the provisions of
25     Section 250.
26 (Source: P.A. 94-1021, eff. 7-12-06; 95-454, eff. 8-27-07.)
 

 

 

09600SB2252ham004 - 35 - LRB096 10038 RCE 27736 a

1     (35 ILCS 5/202.5 new)
2     Sec. 202.5. Net income attributable to the period prior to
3 July 1, 2009 and net income attributable to the period after
4 June 30, 2009.
5     (a) In general. With respect to the taxable year of a
6 taxpayer beginning prior to July 1, 2009, and ending after June
7 30, 2009, net income (before exemptions) for the period after
8 June 30, 2009, is that amount that bears the same ratio to the
9 taxpayer's net income (before exemptions) for the entire
10 taxable year as the number of months in that year after June
11 30, 2009, bears to the total number of months in that year, and
12 the net income (before exemptions) for the period prior to July
13 1, 2009 is that amount that bears the same ratio to the
14 taxpayer's net income (before exemptions) for the entire
15 taxable year as the number of months in that year prior to July
16 1, 2009, bears to the total number of months in that year.
17     (b) Election to attribute income and deduction items
18 specifically to the respective portions of a taxable year prior
19 to July 1, 2009, and after June 30, 2009. In the case of a
20 taxpayer with a taxable year beginning prior to July 1, 2009,
21 and ending after June 30, 2009, the taxpayer may elect, instead
22 of the procedure established in subsection (a) of this Section,
23 to determine net income (before exemptions) on a specific
24 accounting basis for the 2 portions of his or her taxable year:
25         (i) from the beginning of the taxable year through June

 

 

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1     30, 2009; and
2         (ii) from July 1, 2009 through the end of the taxable
3     year.
4     The election provided by this subsection (b) must be made
5 in the form and manner that the Department requires by rule,
6 and must be made no later than the due date (including any
7 extensions thereof) for the filing of the return for the
8 taxable year, and is irrevocable.
9     (c) If the taxpayer elects specific accounting under
10 subsection (b):
11         (1) there shall be taken into account in computing base
12     income for each of the 2 portions of the taxable year only
13     those items earned, received, paid, incurred or accrued in
14     each such period;
15         (2) for purposes of apportioning business income of the
16     taxpayer, the provisions in Article 3 shall be applied on
17     the basis of the taxpayer's full taxable year, without
18     regard to this Section;
19         (3) the net loss carryforward deduction for the taxable
20     year under Section 207 may not exceed combined net income
21     (before exemptions) of both portions of the taxable year,
22     and shall be used against the net income (before
23     exemptions) of the portion of the taxable year from the
24     beginning of the taxable year through June 30, 2009, before
25     any remaining amount is used against the net income (before
26     exemptions) of the latter portion of the year; and

 

 

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1     (d) Under subsection (a) or (b):
2         (1) the exemptions allowed under Section 204 for the
3     period prior to July 1, 2009, shall be equal to the total
4     exemptions that would be allowed for the taxable year under
5     Section 204, multiplied by the number of months in the
6     portion of the taxable year ending on June 30, 2009 and
7     divided by 12; and
8         (2) the exemptions allowed under Section 204 for the
9     period after June 30, 2009, through the end of the taxable
10     year shall be equal to the total exemptions allowed under
11     Section 204 for the taxable year, multiplied by the number
12     of months in the taxable year for the period beginning on
13     July 1, 2009 and divided by 12.
 
14     (35 ILCS 5/202.6 new)
15     Sec. 202.6. Net income attributable to the period prior to
16 July 1, 2011 and net income attributable to the period after
17 June 30, 2011.
18     (a) In general. With respect to the taxable year of a
19 taxpayer beginning prior to July 1, 2011 and ending after June
20 30, 2011, net income (before exemptions) for the period after
21 June 30, 2011, is that amount that bears the same ratio to the
22 taxpayer's net income (before exemptions) for the entire
23 taxable year as the number of months in that year after June
24 30, 2011, bears to the total number of months in that year, and
25 the net income (before exemptions) income for the period prior

 

 

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1 to July 1, 2011 is that amount that bears the same ratio to the
2 taxpayer's net income (before exemptions) for the entire
3 taxable year as the number of months in that year prior to July
4 1, 2011, bears to the total number of months in that year.
5     (b) Election to attribute income and deduction items
6 specifically to the respective portions of a taxable year prior
7 to July 1, 2011, and after June 30, 2011. In the case of a
8 taxpayer with a taxable year beginning prior to July 1, 2011,
9 and ending after June 30, 2011, the taxpayer may elect, instead
10 of the procedure established in subsection (a) of this Section,
11 to determine net income (before exemptions) on a specific
12 accounting basis for the 2 portions of his or her taxable year:
13         (1) from the beginning of the taxable year through June
14     30, 2011; and
15         (2) from July 1, 2011, through the end of the taxable
16     year. The election provided by this subsection (b) must be
17     made in form and manner that the Department requires by
18     rule, and must be made no later than the due date
19     (including any extensions thereof) for the filing of the
20     return for the taxable year, and is irrevocable.
21     (c) If the taxpayer elects specific accounting under
22 subsection (b):
23         (1) there shall be taken into account in computing base
24     income for each of the 2 portions of the taxable year only
25     those items earned, received, paid, incurred or accrued in
26     each such period;

 

 

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1         (2) for purposes of apportioning business income of the
2     taxpayer, the provisions in Article 3 shall be applied on
3     the basis of the taxpayer's full taxable year, without
4     regard to this Section;
5         (3) the net loss carryforward deduction for the taxable
6     year under Section 207 may not exceed combined net income
7     (before exemptions) of both portions of the taxable year,
8     and shall be used against the net income (before
9     exemptions) of the portion of the taxable year from the
10     beginning of the taxable year through June 30, 2011, before
11     any remaining amount is used against the net income (before
12     exemptions) of the latter portion of the year.
13     (d) Under subsection (a) or (b):
14         (1) the exemptions allowed under Section 204 for the
15     period prior to July 1, 2011, shall be equal to the total
16     exemptions that would be allowed for the taxable year under
17     Section 204, multiplied by the number of months in the
18     portion of the taxable year ending June 30, 2011 and
19     divided by 12; and
20         (2) the exemptions allowed under Section 204 for the
21     period after June 30, 2011, through the end of the taxable
22     year shall equal to the total exemptions allowed for the
23     taxable year, multiplied by the number of months in the
24     taxable year for the period beginning on July 1, 2011 and
25     divided by 12.
 

 

 

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1     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
2     Sec. 203. Base income defined.
3     (a) Individuals.
4         (1) In general. In the case of an individual, base
5     income means an amount equal to the taxpayer's adjusted
6     gross income for the taxable year as modified by paragraph
7     (2).
8         (2) Modifications. The adjusted gross income referred
9     to in paragraph (1) shall be modified by adding thereto the
10     sum of the following amounts:
11             (A) An amount equal to all amounts paid or accrued
12         to the taxpayer as interest or dividends during the
13         taxable year to the extent excluded from gross income
14         in the computation of adjusted gross income, except
15         stock dividends of qualified public utilities
16         described in Section 305(e) of the Internal Revenue
17         Code;
18             (B) An amount equal to the amount of tax imposed by
19         this Act to the extent deducted from gross income in
20         the computation of adjusted gross income for the
21         taxable year;
22             (C) An amount equal to the amount received during
23         the taxable year as a recovery or refund of real
24         property taxes paid with respect to the taxpayer's
25         principal residence under the Revenue Act of 1939 and
26         for which a deduction was previously taken under

 

 

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

 

 

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

 

 

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

 

 

09600SB2252ham004 - 44 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 45 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 46 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 47 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 48 - LRB096 10038 RCE 27736 a

1                 income tax, and is paid pursuant to a contract
2                 or agreement that reflects arm's-length terms;
3                 or
4                 (iii) any item of intangible expense or cost
5             paid, accrued, or incurred, directly or
6             indirectly, from a transaction with a person if the
7             taxpayer establishes by clear and convincing
8             evidence, that the adjustments are unreasonable;
9             or if the taxpayer and the Director agree in
10             writing to the application or use of an alternative
11             method 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-19) For taxable years ending on or after
22         December 31, 2008, an amount equal to the amount of
23         insurance premium expenses and costs otherwise allowed
24         as a deduction in computing base income, and that were
25         paid, accrued, or incurred, directly or indirectly, to
26         a person who would be a member of the same unitary

 

 

09600SB2252ham004 - 49 - LRB096 10038 RCE 27736 a

1         business group but for the fact that the person is
2         prohibited under Section 1501(a)(27) from being
3         included in the unitary business group because he or
4         she is ordinarily required to apportion business
5         income under different subsections of Section 304. The
6         addition modification required by this subparagraph
7         shall be reduced to the extent that dividends were
8         included in base income of the unitary group for the
9         same taxable year and received by the taxpayer or by a
10         member of the taxpayer's unitary business group
11         (including amounts included in gross income under
12         Sections 951 through 964 of the Internal Revenue Code
13         and amounts included in gross income under Section 78
14         of the Internal Revenue Code) with respect to the stock
15         of the same person to whom the premiums and costs were
16         directly or indirectly paid, incurred, or accrued. The
17         preceding sentence does not apply to the extent that
18         the same dividends caused a reduction to the addition
19         modification required under Section 203(a)(2)(D-17) or
20         Section 203(a)(2)(D-18) of this Act; .
21             (D-20) For taxable years beginning on or after
22         January 1, 2002 and ending on or before December 31,
23         2006, in the case of a distribution from a qualified
24         tuition program under Section 529 of the Internal
25         Revenue Code, other than (i) a distribution from a
26         College Savings Pool created under Section 16.5 of the

 

 

09600SB2252ham004 - 50 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 51 - LRB096 10038 RCE 27736 a

1         "in-state program" or "in-state plan" and need not
2         specifically refer to Illinois or its qualified
3         programs by name) (i) directly to prospective
4         participants in its offering materials or makes a
5         public disclosure, such as a website posting; and (ii)
6         where applicable, to intermediaries selling the
7         out-of-state program in the same manner that the
8         out-of-state program distributes its offering
9         materials;
10                 (D-21) For taxable years beginning on or after
11         January 1, 2007, in the case of transfer of moneys from
12         a qualified tuition program under Section 529 of the
13         Internal Revenue Code that is administered by the State
14         to an out-of-state program, an amount equal to the
15         amount of moneys previously deducted from base income
16         under subsection (a)(2)(Y) of this Section; .
17             (D-22) Income from discharge of indebtedness in
18         connection with a reacquisition of an applicable debt
19         instrument during the tax year, for which an election
20         to defer the income was made under Section 108(i)(1) of
21         the Internal Revenue Code; and
22             (D-23) Any deduction allowed for the tax year for a
23         net operating loss carried back more than 2 years under
24         Section 172(b)(1)(H) of the Internal Revenue Code;
25     and by deducting from the total so obtained the sum of the
26     following amounts:

 

 

09600SB2252ham004 - 52 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 53 - LRB096 10038 RCE 27736 a

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;

 

 

09600SB2252ham004 - 54 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 56 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 59 - LRB096 10038 RCE 27736 a

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

 

 

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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) Income from discharge of indebtedness
21         included in adjusted gross income for the taxable year
22         under Section 108(i)(1)(A) or (B) of the Internal
23         Revenue Code. This subparagraph (FF) is exempt from the
24         provisions of Section 250; and
25             (GG) An amount equal to the additional net
26         operating loss carryover deduction that would be

 

 

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1         allowed in computing adjusted gross income for the
2         taxable year if the taxpayer had not made an election
3         to carry back the loss more than 2 years under Section
4         172(b)(1)(H) of the Internal Revenue Code. This
5         subparagraph (GG) is exempt from the provisions of
6         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

 

 

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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

 

 

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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

 

 

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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

 

 

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1         group but for the fact that the person is prohibited
2         under Section 1501(a)(27) from being included in the
3         unitary business group because he or she is ordinarily
4         required to apportion business income under different
5         subsections of Section 304. The addition modification
6         required by this subparagraph shall be reduced to the
7         extent that dividends were included in base income of
8         the unitary group for the same taxable year and
9         received by the taxpayer or by a member of the
10         taxpayer's unitary business group (including amounts
11         included in gross income pursuant to Sections 951
12         through 964 of the Internal Revenue Code and amounts
13         included in gross income under Section 78 of the
14         Internal Revenue Code) with respect to the stock of 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

 

 

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1             preponderance of the evidence, both of the
2             following:
3                     (a) the person, during the same taxable
4                 year, paid, accrued, or incurred, the interest
5                 to a person that is not a related member, and
6                     (b) the transaction giving rise to the
7                 interest expense between the taxpayer and the
8                 person did not have as a principal purpose the
9                 avoidance of Illinois income tax, and is paid
10                 pursuant to a contract or agreement that
11                 reflects an arm's-length interest rate and
12                 terms; or
13                 (iii) the taxpayer can establish, based on
14             clear and convincing evidence, that the interest
15             paid, accrued, or incurred relates to a contract 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

 

 

09600SB2252ham004 - 71 - LRB096 10038 RCE 27736 a

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

 

 

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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

 

 

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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

 

 

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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; and
22             (E-16) Income from discharge of indebtedness in
23         connection with a reacquisition of an applicable debt
24         instrument during the tax year, for which an election
25         to defer the income was made under Section 108(i)(1) of
26         the Internal Revenue Code;

 

 

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

 

 

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1             (J) An amount equal to all amounts included in such
2         total which are exempt from taxation by this State
3         either by reason of its statutes or Constitution or by
4         reason of the Constitution, treaties or statutes of the
5         United States; provided that, in the case of any
6         statute of this State that exempts income derived from
7         bonds or other obligations from the tax imposed under
8         this Act, the amount exempted shall be the interest net
9         of bond premium amortization;
10             (K) An amount equal to those dividends included in
11         such total which were paid by a corporation which
12         conducts business operations in an Enterprise Zone or
13         zones created under the Illinois Enterprise Zone Act or
14         a River Edge Redevelopment Zone or zones created under
15         the River Edge Redevelopment Zone Act and conducts
16         substantially all of its operations in an Enterprise
17         Zone or zones or a River Edge Redevelopment Zone or
18         zones. This subparagraph (K) is exempt from the
19         provisions of Section 250;
20             (L) An amount equal to those dividends included in
21         such total that were paid by a corporation that
22         conducts business operations in a federally designated
23         Foreign Trade Zone or Sub-Zone and that is designated a
24         High Impact Business located in Illinois; provided
25         that dividends eligible for the deduction provided in
26         subparagraph (K) of paragraph 2 of this subsection

 

 

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1         shall not be eligible for the deduction provided under
2         this subparagraph (L);
3             (M) For any taxpayer that is a financial
4         organization within the meaning of Section 304(c) of
5         this Act, an amount included in such total as interest
6         income from a loan or loans made by such taxpayer to a
7         borrower, to the extent that such a loan is secured by
8         property which is eligible for the Enterprise Zone
9         Investment Credit or the River Edge Redevelopment Zone
10         Investment Credit. To determine the portion of a loan
11         or loans that is secured by property eligible for a
12         Section 201(f) investment credit to the borrower, the
13         entire principal amount of the loan or loans between
14         the taxpayer and the borrower should be divided into
15         the basis of the Section 201(f) investment credit
16         property which secures the loan or loans, using for
17         this purpose the original basis of such property on the
18         date that it was placed in service in the Enterprise
19         Zone or the River Edge Redevelopment Zone. The
20         subtraction modification available to taxpayer in any
21         year under this subsection shall be that portion of the
22         total interest paid by the borrower with respect to
23         such loan attributable to the eligible property as
24         calculated under the previous sentence. This
25         subparagraph (M) is exempt from the provisions of
26         Section 250;

 

 

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

 

 

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1         taxable year to a designated zone organization to the
2         extent that the contribution (i) qualifies as a
3         charitable contribution under subsection (c) of
4         Section 170 of the Internal Revenue Code and (ii) must,
5         by its terms, be used for a project approved by the
6         Department of Commerce and Economic Opportunity under
7         Section 11 of the Illinois Enterprise Zone Act or under
8         Section 10-10 of the River Edge Redevelopment Zone Act.
9         This subparagraph (N) is exempt from the provisions of
10         Section 250;
11             (O) An amount equal to: (i) 85% for taxable years
12         ending on or before December 31, 1992, or, a percentage
13         equal to the percentage allowable under Section
14         243(a)(1) of the Internal Revenue Code of 1986 for
15         taxable years ending after December 31, 1992, of the
16         amount by which dividends included in taxable income
17         and received from a corporation that is not created or
18         organized under the laws of the United States or any
19         state or political subdivision thereof, including, for
20         taxable years ending on or after December 31, 1988,
21         dividends received or deemed received or paid or deemed
22         paid under Sections 951 through 964 of the Internal
23         Revenue Code, exceed the amount of the modification
24         provided under subparagraph (G) of paragraph (2) of
25         this subsection (b) which is related to such dividends,
26         and including, for taxable years ending on or after

 

 

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1         December 31, 2008, dividends received from a captive
2         real estate investment trust; plus (ii) 100% of the
3         amount by which dividends, included in taxable income
4         and received, including, for taxable years ending on or
5         after December 31, 1988, dividends received or deemed
6         received or paid or deemed paid under Sections 951
7         through 964 of the Internal Revenue Code and including,
8         for taxable years ending on or after December 31, 2008,
9         dividends received from a captive real estate
10         investment trust, from any such corporation specified
11         in clause (i) that would but for the provisions of
12         Section 1504 (b) (3) of the Internal Revenue Code be
13         treated as a member of the affiliated group which
14         includes the dividend recipient, exceed the amount of
15         the modification provided under subparagraph (G) of
16         paragraph (2) of this subsection (b) which is related
17         to such dividends. This subparagraph (O) is exempt from
18         the provisions of Section 250 of this Act;
19             (P) An amount equal to any contribution made to a
20         job training project established pursuant to the Tax
21         Increment Allocation Redevelopment Act;
22             (Q) An amount equal to the amount of the deduction
23         used to compute the federal income tax credit for
24         restoration of substantial amounts held under claim of
25         right for the taxable year pursuant to Section 1341 of
26         the Internal Revenue Code of 1986;

 

 

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1             (R) On and after July 20, 1999, in the case of an
2         attorney-in-fact with respect to whom an interinsurer
3         or a reciprocal insurer has made the election under
4         Section 835 of the Internal Revenue Code, 26 U.S.C.
5         835, an amount equal to the excess, if any, of the
6         amounts paid or incurred by that interinsurer or
7         reciprocal insurer in the taxable year to the
8         attorney-in-fact over the deduction allowed to that
9         interinsurer or reciprocal insurer with respect to the
10         attorney-in-fact under Section 835(b) of the Internal
11         Revenue Code for the taxable year; the provisions of
12         this subparagraph are exempt from the provisions of
13         Section 250;
14             (S) For taxable years ending on or after December
15         31, 1997, in the case of a Subchapter S corporation, an
16         amount equal to all amounts of income allocable to a
17         shareholder subject to the Personal Property Tax
18         Replacement Income Tax imposed by subsections (c) and
19         (d) of Section 201 of this Act, including amounts
20         allocable to organizations exempt from federal income
21         tax by reason of Section 501(a) of the Internal Revenue
22         Code. This subparagraph (S) is exempt from the
23         provisions of Section 250;
24             (T) 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 (T) is exempt from the provisions of
7         Section 250;
8             (U) 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 (E-10), 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 (E-10), 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 (U) is exempt from the
24         provisions of Section 250;
25             (V) 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, (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, and (iii) any insurance premium
15         income (net of deductions allocable thereto) taken
16         into account for the taxable year with respect to a
17         transaction with a taxpayer that is required to make an
18         addition modification with respect to such transaction
19         under Section 203(a)(2)(D-19), Section
20         203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
21         203(d)(2)(D-9), but not to exceed the amount of that
22         addition modification. This subparagraph (V) is exempt
23         from the provisions of Section 250;
24             (W) An amount equal to the interest income taken
25         into account for the taxable year (net of the
26         deductions allocable thereto) with respect to

 

 

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

 

 

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1         who would be a member of the same unitary business
2         group but for the fact that the person is prohibited
3         under Section 1501(a)(27) from being included in the
4         unitary business group because he or she is ordinarily
5         required to apportion business income under different
6         subsections of Section 304, but not to exceed the
7         addition modification required to be made for the same
8         taxable year under Section 203(b)(2)(E-13) for
9         intangible expenses and costs paid, accrued, or
10         incurred, directly or indirectly, to the same foreign
11         person. This subparagraph (X) is exempt from the
12         provisions of Section 250; and .
13             (Y) Income from discharge of indebtedness included
14         in taxable income for the taxable year under Section
15         108(i)(1)(A) or (B) of the Internal Revenue Code. This
16         subparagraph (Y) is exempt from the provisions of
17         Section 250.
18         (3) Special rule. For purposes of paragraph (2) (A),
19     "gross income" in the case of a life insurance company, for
20     tax years ending on and after December 31, 1994, shall mean
21     the gross investment income for the taxable year.
 
22     (c) Trusts and estates.
23         (1) In general. In the case of a trust or estate, base
24     income means an amount equal to the taxpayer's taxable
25     income for the taxable year as modified by paragraph (2).

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         member of the taxpayer's unitary business group
2         (including amounts included in gross income under
3         Sections 951 through 964 of the Internal Revenue Code
4         and amounts included in gross income under Section 78
5         of the Internal Revenue Code) with respect to the stock
6         of the same person to whom the premiums and costs were
7         directly or indirectly paid, incurred, or accrued. The
8         preceding sentence does not apply to the extent that
9         the same dividends caused a reduction to the addition
10         modification required under Section 203(c)(2)(G-12) or
11         Section 203(c)(2)(G-13) of this Act; and .
12             (G-15) Income from discharge of indebtedness in
13         connection with a reacquisition of an applicable debt
14         instrument during the tax year, for which an election
15         to defer the income was made under Section 108(i)(1) of
16         the Internal Revenue Code;
17     and by deducting from the total so obtained the sum of the
18     following amounts:
19             (H) An amount equal to all amounts included in such
20         total pursuant to the provisions of Sections 402(a),
21         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
22         Internal Revenue Code or included in such total as
23         distributions under the provisions of any retirement
24         or disability plan for employees of any governmental
25         agency or unit, or retirement payments to retired
26         partners, which payments are excluded in computing net

 

 

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1         earnings from self employment by Section 1402 of the
2         Internal Revenue Code and regulations adopted pursuant
3         thereto;
4             (I) The valuation limitation amount;
5             (J) An amount equal to the amount of any tax
6         imposed by this Act which was refunded to the taxpayer
7         and included in such total for the taxable year;
8             (K) An amount equal to all amounts included in
9         taxable income as modified by subparagraphs (A), (B),
10         (C), (D), (E), (F) and (G) which are exempt from
11         taxation by this State either by reason of its statutes
12         or Constitution or by reason of the Constitution,
13         treaties or statutes of the United States; provided
14         that, in the case of any statute of this State that
15         exempts income derived from bonds or other obligations
16         from the tax imposed under this Act, the amount
17         exempted shall be the interest net of bond premium
18         amortization;
19             (L) With the exception of any amounts subtracted
20         under subparagraph (K), an amount equal to the sum of
21         all amounts disallowed as deductions by (i) Sections
22         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
23         as now or hereafter amended, and all amounts of
24         expenses allocable to interest and disallowed as
25         deductions by Section 265(1) of the Internal Revenue
26         Code of 1954, as now or hereafter amended; and (ii) for

 

 

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1         taxable years ending on or after August 13, 1999,
2         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
3         the Internal Revenue Code; the provisions of this
4         subparagraph are exempt from the provisions of Section
5         250;
6             (M) An amount equal to those dividends included in
7         such total which were paid by a corporation which
8         conducts business operations in an Enterprise Zone or
9         zones created under the Illinois Enterprise Zone Act or
10         a River Edge Redevelopment Zone or zones created under
11         the River Edge Redevelopment Zone Act and conducts
12         substantially all of its operations in an Enterprise
13         Zone or Zones or a River Edge Redevelopment Zone or
14         zones. This subparagraph (M) is exempt from the
15         provisions of Section 250;
16             (N) An amount equal to any contribution made to a
17         job training project established pursuant to the Tax
18         Increment Allocation Redevelopment Act;
19             (O) An amount equal to those dividends included in
20         such total that were paid by a corporation that
21         conducts business operations in a federally designated
22         Foreign Trade Zone or Sub-Zone and that is designated a
23         High Impact Business located in Illinois; provided
24         that dividends eligible for the deduction provided in
25         subparagraph (M) of paragraph (2) of this subsection
26         shall not be eligible for the deduction provided under

 

 

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1         this subparagraph (O);
2             (P) An amount equal to the amount of the deduction
3         used to compute the federal income tax credit for
4         restoration of substantial amounts held under claim of
5         right for the taxable year pursuant to Section 1341 of
6         the Internal Revenue Code of 1986;
7             (Q) For taxable year 1999 and thereafter, an amount
8         equal to the amount of any (i) distributions, to the
9         extent includible in gross income for federal income
10         tax purposes, made to the taxpayer because of his or
11         her status as a victim of persecution for racial or
12         religious reasons by Nazi Germany or any other Axis
13         regime or as an heir of the victim and (ii) items of
14         income, to the extent includible in gross income for
15         federal income tax purposes, attributable to, derived
16         from or in any way related to assets stolen from,
17         hidden from, or otherwise lost to a victim of
18         persecution for racial or religious reasons by Nazi
19         Germany or any other Axis regime immediately prior to,
20         during, and immediately after World War II, including,
21         but not limited to, interest on the proceeds receivable
22         as insurance under policies issued to a victim of
23         persecution for racial or religious reasons by Nazi
24         Germany or any other Axis regime by European insurance
25         companies immediately prior to and during World War II;
26         provided, however, this subtraction from federal

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         property taken into account for the taxable year (net
2         of the deductions allocable thereto) with respect to
3         transactions with (i) a foreign person who would be a
4         member of the taxpayer's unitary business group but for
5         the fact that the foreign person's business activity
6         outside the United States is 80% or more of that
7         person's total business activity and (ii) for taxable
8         years ending on or after December 31, 2008, to a person
9         who would be a member of the same unitary business
10         group but for the fact that the person is prohibited
11         under Section 1501(a)(27) from being included in the
12         unitary business group because he or she is ordinarily
13         required to apportion business income under different
14         subsections of Section 304, but not to exceed the
15         addition modification required to be made for the same
16         taxable year under Section 203(c)(2)(G-13) for
17         intangible expenses and costs paid, accrued, or
18         incurred, directly or indirectly, to the same foreign
19         person. This subparagraph (V) is exempt from the
20         provisions of Section 250; and .
21             (W) Income from discharge of indebtedness included
22         in taxable income for the taxable year under Section
23         108(i)(1)(A) or (B) of the Internal Revenue Code. This
24         subparagraph (W) is exempt from the provisions of
25         Section 250.
26         (3) Limitation. The amount of any modification

 

 

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1     otherwise required under this subsection shall, under
2     regulations prescribed by the Department, be adjusted by
3     any amounts included therein which were properly paid,
4     credited, or required to be distributed, or permanently set
5     aside for charitable purposes pursuant to Internal Revenue
6     Code Section 642(c) during the taxable year.
 
7     (d) Partnerships.
8         (1) In general. In the case of a partnership, 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 or dividends during the
16         taxable year to the extent excluded from gross income
17         in the computation of taxable income;
18             (B) An amount equal to the amount of tax imposed by
19         this Act to the extent deducted from gross income for
20         the taxable year;
21             (C) The amount of deductions allowed to the
22         partnership pursuant to Section 707 (c) of the Internal
23         Revenue Code in calculating its taxable income;
24             (D) An amount equal to the amount of the capital
25         gain deduction allowable under the Internal Revenue

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

09600SB2252ham004 - 114 - LRB096 10038 RCE 27736 a

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

 

 

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

 

 

09600SB2252ham004 - 116 - LRB096 10038 RCE 27736 a

1         connection with a reacquisition of an applicable debt
2         instrument during the tax year, for which an election
3         to defer the income was made under Section 108(i)(1) of
4         the Internal Revenue Code;
5     and by deducting from the total so obtained the following
6     amounts:
7             (E) The valuation limitation amount;
8             (F) An amount equal to the amount of any tax
9         imposed by this Act which was refunded to the taxpayer
10         and included in such total for the taxable year;
11             (G) An amount equal to all amounts included in
12         taxable income as modified by subparagraphs (A), (B),
13         (C) and (D) which are exempt from taxation by this
14         State either by reason of its statutes or Constitution
15         or by reason of the Constitution, treaties or statutes
16         of the 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             (H) Any income of the partnership which
22         constitutes personal service income as defined in
23         Section 1348 (b) (1) of the Internal Revenue Code (as
24         in effect December 31, 1981) or a reasonable allowance
25         for compensation paid or accrued for services rendered
26         by partners to the partnership, whichever is greater;

 

 

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

 

 

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1         Edge Redevelopment Zone Act and conducts substantially
2         all of its operations in an Enterprise Zone or Zones or
3         from a River Edge Redevelopment Zone or zones. This
4         subparagraph (K) is exempt from the provisions of
5         Section 250;
6             (L) An amount equal to any contribution made to a
7         job training project established pursuant to the Real
8         Property Tax Increment Allocation Redevelopment Act;
9             (M) An amount equal to those dividends included in
10         such total that were paid by a corporation that
11         conducts business operations in a federally designated
12         Foreign Trade Zone or Sub-Zone and that is designated a
13         High Impact Business located in Illinois; provided
14         that dividends eligible for the deduction provided in
15         subparagraph (K) of paragraph (2) of this subsection
16         shall not be eligible for the deduction provided under
17         this subparagraph (M);
18             (N) An amount equal to the amount of the deduction
19         used to compute the federal income tax credit for
20         restoration of substantial amounts held under claim of
21         right for the taxable year pursuant to Section 1341 of
22         the Internal Revenue Code of 1986;
23             (O) For taxable years 2001 and thereafter, for the
24         taxable year in which the bonus depreciation deduction
25         is taken on the taxpayer's federal income tax return
26         under subsection (k) of Section 168 of the Internal

 

 

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

 

 

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

 

 

09600SB2252ham004 - 121 - LRB096 10038 RCE 27736 a

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

 

 

09600SB2252ham004 - 122 - LRB096 10038 RCE 27736 a

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

 

 

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1         incurred, directly or indirectly, to the same person.
2         This subparagraph (S) is exempt from Section 250; and .
3             (T) Income from discharge of indebtedness included
4         in taxable income for the taxable year under Section
5         108(i)(1)(A) or (B) of the Internal Revenue Code. This
6         subparagraph (T) is exempt from the provisions of
7         Section 250.
 
8     (e) Gross income; adjusted gross income; taxable income.
9         (1) In general. Subject to the provisions of paragraph
10     (2) and subsection (b) (3), for purposes of this Section
11     and Section 803(e), a taxpayer's gross income, adjusted
12     gross income, or taxable income for the taxable year shall
13     mean the amount of gross income, adjusted gross income or
14     taxable income properly reportable for federal income tax
15     purposes for the taxable year under the provisions of the
16     Internal Revenue Code. Taxable income may be less than
17     zero. However, for taxable years ending on or after
18     December 31, 1986, net operating loss carryforwards from
19     taxable years ending prior to December 31, 1986, may not
20     exceed the sum of federal taxable income for the taxable
21     year before net operating loss deduction, plus the excess
22     of addition modifications over subtraction modifications
23     for the taxable year. For taxable years ending prior to
24     December 31, 1986, taxable income may never be an amount in
25     excess of the net operating loss for the taxable year as

 

 

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

 

 

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1         of mutual insurance companies subject to the tax
2         imposed by Section 831 of the Internal Revenue Code,
3         insurance company taxable income;
4             (C) Regulated investment companies. In the case of
5         a regulated investment company subject to the tax
6         imposed by Section 852 of the Internal Revenue Code,
7         investment company taxable income;
8             (D) Real estate investment trusts. In the case of a
9         real estate investment trust subject to the tax imposed
10         by Section 857 of the Internal Revenue Code, real
11         estate investment trust taxable income;
12             (E) Consolidated corporations. In the case of a
13         corporation which is a member of an affiliated group of
14         corporations filing a consolidated income tax return
15         for the taxable year for federal income tax purposes,
16         taxable income determined as if such corporation had
17         filed a separate return for federal income tax purposes
18         for the taxable year and each preceding taxable year
19         for which it was a member of an affiliated group. For
20         purposes of this subparagraph, the taxpayer's separate
21         taxable income shall be determined as if the election
22         provided by Section 243(b) (2) of the Internal Revenue
23         Code had been in effect for all such years;
24             (F) Cooperatives. In the case of a cooperative
25         corporation or association, the taxable income of such
26         organization determined in accordance with the

 

 

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1         provisions of Section 1381 through 1388 of the Internal
2         Revenue Code;
3             (G) Subchapter S corporations. In the case of: (i)
4         a Subchapter S corporation for which there is in effect
5         an election for the taxable year under Section 1362 of
6         the Internal Revenue Code, the taxable income of such
7         corporation determined in accordance with Section
8         1363(b) of the Internal Revenue Code, except that
9         taxable income shall take into account those items
10         which are required by Section 1363(b)(1) of the
11         Internal Revenue Code to be separately stated; and (ii)
12         a Subchapter S corporation for which there is in effect
13         a federal election to opt out of the provisions of the
14         Subchapter S Revision Act of 1982 and have applied
15         instead the prior federal Subchapter S rules as in
16         effect on July 1, 1982, the taxable income of such
17         corporation determined in accordance with the federal
18         Subchapter S rules as in effect on July 1, 1982; and
19             (H) Partnerships. In the case of a partnership,
20         taxable income determined in accordance with Section
21         703 of the Internal Revenue Code, except that taxable
22         income shall take into account those items which are
23         required by Section 703(a)(1) to be separately stated
24         but which would be taken into account by an individual
25         in calculating his taxable income.
26         (3) Recapture of business expenses on disposition of

 

 

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

 

 

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

 

 

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1         taxable year, as the number of full calendar months in
2         that part of the taxpayer's holding period for the
3         property ending July 31, 1969 bears to the number of
4         full calendar months in the taxpayer's entire holding
5         period for the property.
6             (C) The Department shall prescribe such
7         regulations as may be necessary to carry out the
8         purposes of this paragraph.
 
9     (g) Double deductions. Unless specifically provided
10 otherwise, nothing in this Section shall permit the same item
11 to be deducted more than once.
 
12     (h) Legislative intention. Except as expressly provided by
13 this Section there shall be no modifications or limitations on
14 the amounts of income, gain, loss or deduction taken into
15 account in determining gross income, adjusted gross income or
16 taxable income for federal income tax purposes for the taxable
17 year, or in the amount of such items entering into the
18 computation of base income and net income under this Act for
19 such taxable year, whether in respect of property values as of
20 August 1, 1969 or otherwise.
21 (Source: P.A. 94-776, eff. 5-19-06; 94-789, eff. 5-19-06;
22 94-1021, eff. 7-12-06; 94-1074, eff. 12-26-06; 95-23, eff.
23 8-3-07; 95-233, eff. 8-16-07; 95-286, eff. 8-20-07; 95-331,
24 eff. 8-21-07; 95-707, eff. 1-11-08; 95-876, eff. 8-21-08;

 

 

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1 revised 10-15-08.)
 
2     (35 ILCS 5/212)
3     Sec. 212. Earned income tax credit.
4     (a) With respect to the federal earned income tax credit
5 allowed for the taxable year under Section 32 of the federal
6 Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
7 is entitled to a credit against the tax imposed by subsections
8 (a) and (b) of Section 201 in an amount equal to: (i) 5% of the
9 federal tax credit for each taxable year beginning on or after
10 January 1, 2000 and ending prior to December 31, 2009; (ii)
11 7.5% of the federal earned income tax credit allowed for the
12 taxable year under Section 32 of the federal Internal Revenue
13 Code, 26 U.S.C. 32, for taxable years ending on or after
14 December 31, 2009, and prior to December 31, 2010, and (iii)
15 10% of the federal earned income tax credit allowed for the
16 taxable year under Section 32 of the federal Internal Revenue
17 Code, 26 U.S.C. 32, for taxable years ending on or after
18 December 31, 2010.
19     For a non-resident or part-year resident, the amount of the
20 credit under this Section shall be in proportion to the amount
21 of income attributable to this State.
22     (b) For taxable years beginning before January 1, 2003, in
23 no event shall a credit under this Section reduce the
24 taxpayer's liability to less than zero. For each taxable year
25 beginning on or after January 1, 2003, if the amount of the

 

 

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1 credit exceeds the income tax liability for the applicable tax
2 year, then the excess credit shall be refunded to the taxpayer.
3 The amount of a refund shall not be included in the taxpayer's
4 income or resources for the purposes of determining eligibility
5 or benefit level in any means-tested benefit program
6 administered by a governmental entity unless required by
7 federal law.
8     (c) This Section is exempt from the provisions of Section
9 250.
10 (Source: P.A. 95-333, eff. 8-21-07.)
 
11     (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
12     Sec. 804. Failure to Pay Estimated Tax.
13     (a) In general. In case of any underpayment of estimated
14 tax by a taxpayer, except as provided in subsection (d) or (e),
15 the taxpayer shall be liable to a penalty in an amount
16 determined at the rate prescribed by Section 3-3 of the Uniform
17 Penalty and Interest Act upon the amount of the underpayment
18 (determined under subsection (b)) for each required
19 installment.
20     (b) Amount of underpayment. For purposes of subsection (a),
21 the amount of the underpayment shall be the excess of:
22         (1) the amount of the installment which would be
23     required to be paid under subsection (c), over
24         (2) the amount, if any, of the installment paid on or
25     before the last date prescribed for payment.

 

 

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1     (c) Amount of Required Installments.
2         (1) Amount.
3             (A) In General. Except as provided in paragraph
4         (2), the amount of any required installment shall be
5         25% of the required annual payment.
6             (B) Required Annual Payment. For purposes of
7         subparagraph (A), the term "required annual payment"
8         means the lesser of
9                 (i) 90% of the tax shown on the return for the
10             taxable year, or if no return is filed, 90% of the
11             tax for such year, or
12                 (ii) for installments due prior to April 1,
13             2010, and installments due after April 1, 2011,
14             100% of the tax shown on the return of the taxpayer
15             for the preceding taxable year if a return showing
16             a liability for tax was filed by the taxpayer for
17             the preceding taxable year and such preceding year
18             was a taxable year of 12 months; or .
19                 (iii) for installments due after April 1, 2010
20             and prior to April 1, 2011, 120% of the tax shown
21             on the return of the taxpayer for the preceding
22             taxable year if a return showing a liability for
23             tax was filed by the taxpayer for the preceding
24             taxable year and that preceding year was a taxable
25             year of 12 months; except that the amount due for
26             the first installment due after April 1, 2010,

 

 

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1             shall equal the amount that, when added to the
2             total of all prior installments paid for that
3             taxable year, equals the total of the installments
4             that would be due if this item (iii) had applied to
5             all installments due for that taxable year.
6         (2) Lower Required Installment where Annualized Income
7     Installment is Less Than Amount Determined Under Paragraph
8     (1).
9             (A) In General. In the case of any required
10         installment if a taxpayer establishes that the
11         annualized income installment is less than the amount
12         determined under paragraph (1),
13                 (i) the amount of such required installment
14             shall be the annualized income installment, and
15                 (ii) any reduction in a required installment
16             resulting from the application of this
17             subparagraph shall be recaptured by increasing the
18             amount of the next required installment determined
19             under paragraph (1) by the amount of such
20             reduction, and by increasing subsequent required
21             installments to the extent that the reduction has
22             not previously been recaptured under this clause.
23             (B) Determination of Annualized Income
24         Installment. In the case of any required installment,
25         the annualized income installment is the excess, if
26         any, of

 

 

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1                 (i) an amount equal to the applicable
2             percentage of the tax for the taxable year computed
3             by placing on an annualized basis the net income
4             for months in the taxable year ending before the
5             due date for the installment, over
6                 (ii) the aggregate amount of any prior
7             required installments for the taxable year.
8             (C) Applicable Percentage.
9        In the case of the followingThe applicable
10        required installments:percentage is:
11        1st ..............................22.5%
12        2nd ...............................45%
13        3rd ...............................67.5%
14        4th ...............................90%
15             (D) Annualized Net Income; Individuals. For
16         individuals, net income shall be placed on an
17         annualized basis by:
18                 (i) multiplying by 12, or in the case of a
19             taxable year of less than 12 months, by the number
20             of months in the taxable year, the net income
21             computed without regard to the standard exemption
22             for the months in the taxable year ending before
23             the month in which the installment is required to
24             be paid;
25                 (ii) dividing the resulting amount by the
26             number of months in the taxable year ending before

 

 

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1             the month in which such installment date falls; and
2                 (iii) deducting from such amount the standard
3             exemption allowable for the taxable year, such
4             standard exemption being determined as of the last
5             date prescribed for payment of the installment.
6             (E) Annualized Net Income; Corporations. For
7         corporations, net income shall be placed on an
8         annualized basis by multiplying by 12 the taxable
9         income
10                 (i) for the first 3 months of the taxable year,
11             in the case of the installment required to be paid
12             in the 4th month,
13                 (ii) for the first 3 months or for the first 5
14             months of the taxable year, in the case of the
15             installment required to be paid in the 6th month,
16                 (iii) for the first 6 months or for the first 8
17             months of the taxable year, in the case of the
18             installment required to be paid in the 9th month,
19             and
20                 (iv) for the first 9 months or for the first 11
21             months of the taxable year, in the case of the
22             installment required to be paid in the 12th month
23             of the taxable year,
24         then dividing the resulting amount by the number of
25         months in the taxable year (3, 5, 6, 8, 9, or 11 as the
26         case may be).

 

 

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1     (d) Exceptions. Notwithstanding the provisions of the
2 preceding subsections, the penalty imposed by subsection (a)
3 shall not be imposed if the taxpayer was not required to file
4 an Illinois income tax return for the preceding taxable year,
5 or, for individuals, if the taxpayer had no tax liability for
6 the preceding taxable year and such year was a taxable year of
7 12 months. The penalty imposed by subsection (a) shall also not
8 be imposed on any underpayments of estimated tax due before the
9 effective date of this amendatory Act of 1998 which
10 underpayments are solely attributable to the change in
11 apportionment from subsection (a) to subsection (h) of Section
12 304. The provisions of this amendatory Act of 1998 apply to tax
13 years ending on or after December 31, 1998.
14     (e) The penalty imposed for underpayment of estimated tax
15 by subsection (a) of this Section shall not be imposed to the
16 extent that the Director or his or her designate determines,
17 pursuant to Section 3-8 of the Uniform Penalty and Interest Act
18 that the penalty should not be imposed.
19     (f) Definition of tax. For purposes of subsections (b) and
20 (c), the term "tax" means the excess of the tax imposed under
21 Article 2 of this Act, over the amounts credited against such
22 tax under Sections 601(b) (3) and (4).
23     (g) Application of Section in case of tax withheld under
24 Article 7. For purposes of applying this Section:
25         (1) in the case of an individual, tax withheld from
26     compensation for the taxable year shall be deemed a payment

 

 

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1     of estimated tax, and an equal part of such amount shall be
2     deemed paid on each installment date for such taxable year,
3     unless the taxpayer establishes the dates on which all
4     amounts were actually withheld, in which case the amounts
5     so withheld shall be deemed payments of estimated tax on
6     the dates on which such amounts were actually withheld;
7         (2) amounts timely paid by a partnership, Subchapter S
8     corporation, or trust on behalf of a partner, shareholder,
9     or beneficiary pursuant to subsection (f) of Section 502 or
10     Section 709.5 and claimed as a payment of estimated tax
11     shall be deemed a payment of estimated tax made on the last
12     day of the taxable year of the partnership, Subchapter S
13     corporation, or trust for which the income from the
14     withholding is made was computed; and
15         (3) all other amounts pursuant to Article 7 shall be
16     deemed a payment of estimated tax on the date the payment
17     is made to the taxpayer of the amount from which the tax is
18     withheld.
19     (g-5) Amounts withheld under the State Salary and Annuity
20 Withholding Act. An individual who has amounts withheld under
21 paragraph (10) of Section 4 of the State Salary and Annuity
22 Withholding Act may elect to have those amounts treated as
23 payments of estimated tax made on the dates on which those
24 amounts are actually withheld.
25     (i) Short taxable year. The application of this Section to
26 taxable years of less than 12 months shall be in accordance

 

 

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1 with regulations prescribed by the Department.
2     The changes in this Section made by Public Act 84-127 shall
3 apply to taxable years ending on or after January 1, 1986.
4 (Source: P.A. 95-233, eff. 8-16-07.)
 
5     Section 99. Effective date. This Act takes effect upon
6 becoming law.".