Illinois House Bill HB0998 Latest Draft

                            103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB0998 Introduced , by Rep. La Shawn K. Ford SYNOPSIS AS INTRODUCED:  35 ILCS 5/203 from Ch. 120, par. 2-203  Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to Section 280E of the Internal Revenue Code related to the production and distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back when computing the taxpayer's base income. Effective immediately.  LRB103 03557 HLH 48563 b   A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB0998 Introduced , by Rep. La Shawn K. Ford SYNOPSIS AS INTRODUCED:  35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203 Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to Section 280E of the Internal Revenue Code related to the production and distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back when computing the taxpayer's base income. Effective immediately.  LRB103 03557 HLH 48563 b     LRB103 03557 HLH 48563 b   A BILL FOR
103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB0998 Introduced , by Rep. La Shawn K. Ford SYNOPSIS AS INTRODUCED:
35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to Section 280E of the Internal Revenue Code related to the production and distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back when computing the taxpayer's base income. Effective immediately.
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    LRB103 03557 HLH 48563 b
A BILL FOR
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1  AN ACT concerning revenue.
2  Be it enacted by the People of the State of Illinois,
3  represented in the General Assembly:
4  Section 5. The Illinois Income Tax Act is amended by
5  changing Section 203 as follows:
6  (35 ILCS 5/203) (from Ch. 120, par. 2-203)
7  Sec. 203. Base income defined.
8  (a) Individuals.
9  (1) In general. In the case of an individual, base
10  income means an amount equal to the taxpayer's adjusted
11  gross income for the taxable year as modified by paragraph
12  (2).
13  (2) Modifications. The adjusted gross income referred
14  to in paragraph (1) shall be modified by adding thereto
15  the sum of the following amounts:
16  (A) An amount equal to all amounts paid or accrued
17  to the taxpayer as interest or dividends during the
18  taxable year to the extent excluded from gross income
19  in the computation of adjusted gross income, except
20  stock dividends of qualified public utilities
21  described in Section 305(e) of the Internal Revenue
22  Code;
23  (B) An amount equal to the amount of tax imposed by

 

103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB0998 Introduced , by Rep. La Shawn K. Ford SYNOPSIS AS INTRODUCED:
35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to Section 280E of the Internal Revenue Code related to the production and distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax deduction, exemption, or credit and not otherwise required to be added back when computing the taxpayer's base income. Effective immediately.
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A BILL FOR

 

 

35 ILCS 5/203 from Ch. 120, par. 2-203



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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  (GG), the insurer to which the premiums were paid must
2  add back to income the amount subtracted by the
3  taxpayer pursuant to this subparagraph (GG). This
4  subparagraph (GG) is exempt from the provisions of
5  Section 250; and
6  (HH) For taxable years beginning on or after
7  January 1, 2018 and prior to January 1, 2023, a maximum
8  of $10,000 contributed in the taxable year to a
9  qualified ABLE account under Section 16.6 of the State
10  Treasurer Act, except that amounts excluded from gross
11  income under Section 529(c)(3)(C)(i) or Section
12  529A(c)(1)(C) of the Internal Revenue Code shall not
13  be considered moneys contributed under this
14  subparagraph (HH). For purposes of this subparagraph
15  (HH), contributions made by an employer on behalf of
16  an employee, or matching contributions made by an
17  employee, shall be treated as made by the employee;
18  and .
19  (II) For taxable years beginning on or after
20  January 1, 2024, the amount of any federal deduction
21  disallowed pursuant to Section 280E of the Internal
22  Revenue Code related to the production and
23  distribution of adult-use cannabis products by an
24  entity licensed under the Cannabis Regulation and Tax
25  Act, if those amounts are not used as the basis for any
26  other tax deduction, exemption, or credit and not

 

 

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1  otherwise required to be added back when computing the
2  taxpayer's base income under this Section. This
3  subparagraph (II) is exempt from the provisions of
4  Section 250.
5  (b) Corporations.
6  (1) In general. In the case of a corporation, base
7  income means an amount equal to the taxpayer's taxable
8  income for the taxable year as modified by paragraph (2).
9  (2) Modifications. The taxable income referred to in
10  paragraph (1) shall be modified by adding thereto the sum
11  of the following amounts:
12  (A) An amount equal to all amounts paid or accrued
13  to the taxpayer as interest and all distributions
14  received from regulated investment companies during
15  the taxable year to the extent excluded from gross
16  income in the computation of taxable income;
17  (B) An amount equal to the amount of tax imposed by
18  this Act to the extent deducted from gross income in
19  the computation of taxable income for the taxable
20  year;
21  (C) In the case of a regulated investment company,
22  an amount equal to the excess of (i) the net long-term
23  capital gain for the taxable year, over (ii) the
24  amount of the capital gain dividends designated as
25  such in accordance with Section 852(b)(3)(C) of the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  following:
2  (a) the person, during the same taxable
3  year, paid, accrued, or incurred, the interest
4  to a person that is not a related member, and
5  (b) the transaction giving rise to the
6  interest expense between the taxpayer and the
7  person did not have as a principal purpose the
8  avoidance of Illinois income tax, and is paid
9  pursuant to a contract or agreement that
10  reflects an arm's-length interest rate and
11  terms; or
12  (iii) the taxpayer can establish, based on
13  clear and convincing evidence, that the interest
14  paid, accrued, or incurred relates to a contract
15  or agreement entered into at arm's-length rates
16  and terms and the principal purpose for the
17  payment is not federal or Illinois tax avoidance;
18  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

 

 

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1  Director from making any other adjustment
2  otherwise allowed under Section 404 of this Act
3  for any tax year beginning after the effective
4  date of this amendment provided such adjustment is
5  made pursuant to regulation adopted by the
6  Department and such regulations provide methods
7  and standards by which the Department will utilize
8  its authority 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
6  is subject in a foreign country or state, other
7  than a state which requires mandatory unitary
8  reporting, to a tax on or measured by net income
9  with respect to such 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
3  the 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
7  alternative method of apportionment under Section
8  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
12  for any tax year beginning after the effective
13  date of this amendment provided such adjustment is
14  made pursuant to regulation adopted by the
15  Department and such regulations provide methods
16  and standards by which the Department will utilize
17  its authority under Section 404 of this Act;
18  (E-14) For taxable years ending on or after
19  December 31, 2008, an amount equal to the amount of
20  insurance premium expenses and costs otherwise allowed
21  as a deduction in computing base income, and that were
22  paid, accrued, or incurred, directly or indirectly, to
23  a person who would be a member of the same unitary
24  business group but for the fact that the person is
25  prohibited under Section 1501(a)(27) from being
26  included in the unitary business group because he or

 

 

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1  she is ordinarily required to apportion business
2  income under different subsections of Section 304. The
3  addition modification required by this subparagraph
4  shall be reduced to the extent that dividends were
5  included in base income of the unitary group for the
6  same taxable year and received by the taxpayer or by a
7  member of the taxpayer's unitary business group
8  (including amounts included in gross income under
9  Sections 951 through 964 of the Internal Revenue Code
10  and amounts included in gross income under Section 78
11  of the Internal Revenue Code) with respect to the
12  stock of the same person to whom the premiums and costs
13  were directly or indirectly paid, incurred, or
14  accrued. The preceding sentence does not apply to the
15  extent that the same dividends caused a reduction to
16  the addition modification required under Section
17  203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
18  Act;
19  (E-15) For taxable years beginning after December
20  31, 2008, any deduction for dividends paid by a
21  captive real estate investment trust that is allowed
22  to a real estate investment trust under Section
23  857(b)(2)(B) of the Internal Revenue Code for
24  dividends paid;
25  (E-16) An amount equal to the credit allowable to
26  the taxpayer under Section 218(a) of this Act,

 

 

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1  determined without regard to Section 218(c) of this
2  Act;
3  (E-17) For taxable years ending on or after
4  December 31, 2017, an amount equal to the deduction
5  allowed under Section 199 of the Internal Revenue Code
6  for the taxable year;
7  (E-18) for taxable years beginning after December
8  31, 2018, an amount equal to the deduction allowed
9  under Section 250(a)(1)(A) of the Internal Revenue
10  Code for the taxable year;
11  (E-19) for taxable years ending on or after June
12  30, 2021, an amount equal to the deduction allowed
13  under Section 250(a)(1)(B)(i) of the Internal Revenue
14  Code for the taxable year;
15  (E-20) for taxable years ending on or after June
16  30, 2021, an amount equal to the deduction allowed
17  under Sections 243(e) and 245A(a) of the Internal
18  Revenue Code for the taxable year.
19  and by deducting from the total so obtained the sum of the
20  following amounts:
21  (F) An amount equal to the amount of any tax
22  imposed by this Act which was refunded to the taxpayer
23  and included in such total for the taxable year;
24  (G) An amount equal to any amount included in such
25  total under Section 78 of the Internal Revenue Code;
26  (H) In the case of a regulated investment company,

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  shareholder subject to the Personal Property Tax
2  Replacement Income Tax imposed by subsections (c) and
3  (d) of Section 201 of this Act, including amounts
4  allocable to organizations exempt from federal income
5  tax by reason of Section 501(a) of the Internal
6  Revenue Code. This subparagraph (S) is exempt from the
7  provisions of Section 250;
8  (T) For taxable years 2001 and thereafter, for the
9  taxable year in which the bonus depreciation deduction
10  is taken on the taxpayer's federal income tax return
11  under subsection (k) of Section 168 of the Internal
12  Revenue Code and for each applicable taxable year
13  thereafter, an amount equal to "x", where:
14  (1) "y" equals the amount of the depreciation
15  deduction taken for the taxable year on the
16  taxpayer's federal income tax return on property
17  for which the bonus depreciation deduction was
18  taken in any year under subsection (k) of Section
19  168 of the Internal Revenue Code, but not
20  including the bonus depreciation deduction;
21  (2) for taxable years ending on or before
22  December 31, 2005, "x" equals "y" multiplied by 30
23  and then divided by 70 (or "y" multiplied by
24  0.429); and
25  (3) for taxable years ending after December
26  31, 2005:

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  makes the election provided for by this subparagraph
2  (Y), the insurer to which the premiums were paid must
3  add back to income the amount subtracted by the
4  taxpayer pursuant to this subparagraph (Y). This
5  subparagraph (Y) is exempt from the provisions of
6  Section 250; and
7  (Z) The difference between the nondeductible
8  controlled foreign corporation dividends under Section
9  965(e)(3) of the Internal Revenue Code over the
10  taxable income of the taxpayer, computed without
11  regard to Section 965(e)(2)(A) of the Internal Revenue
12  Code, and without regard to any net operating loss
13  deduction. This subparagraph (Z) is exempt from the
14  provisions of Section 250; and .
15  (AA) For taxable years beginning on or after
16  January 1, 2024, the amount of any federal deduction
17  disallowed pursuant to Section 280E of the Internal
18  Revenue Code related to the production and
19  distribution of adult-use cannabis products by an
20  entity licensed under the Cannabis Regulation and Tax
21  Act, if those amounts are not used as the basis for any
22  other tax deduction, exemption, or credit and not
23  otherwise required to be added back when computing the
24  taxpayer's base income under this Section. This
25  subparagraph (AA) is exempt from the provisions of
26  Section 250.

 

 

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1  (3) Special rule. For purposes of paragraph (2)(A),
2  "gross income" in the case of a life insurance company,
3  for tax years ending on and after December 31, 1994, and
4  prior to December 31, 2011, shall mean the gross
5  investment income for the taxable year and, for tax years
6  ending on or after December 31, 2011, shall mean all
7  amounts included in life insurance gross income under
8  Section 803(a)(3) of the Internal Revenue Code.
9  (c) Trusts and estates.
10  (1) In general. In the case of a trust or estate, base
11  income means an amount equal to the taxpayer's taxable
12  income for the taxable year as modified by paragraph (2).
13  (2) Modifications. Subject to the provisions of
14  paragraph (3), the taxable income referred to in paragraph
15  (1) shall be modified by adding thereto the sum of the
16  following amounts:
17  (A) An amount equal to all amounts paid or accrued
18  to the taxpayer as interest or dividends during the
19  taxable year to the extent excluded from gross income
20  in the computation of taxable income;
21  (B) In the case of (i) an estate, $600; (ii) a
22  trust which, under its governing instrument, is
23  required to distribute all of its income currently,
24  $300; and (iii) any other trust, $100, but in each such
25  case, only to the extent such amount was deducted in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  the addition modification required under Section
2  203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
3  Act;
4  (G-15) An amount equal to the credit allowable to
5  the taxpayer under Section 218(a) of this Act,
6  determined without regard to Section 218(c) of this
7  Act;
8  (G-16) For taxable years ending on or after
9  December 31, 2017, an amount equal to the deduction
10  allowed under Section 199 of the Internal Revenue Code
11  for the taxable year;
12  and by deducting from the total so obtained the sum of the
13  following amounts:
14  (H) An amount equal to all amounts included in
15  such total pursuant to the provisions of Sections
16  402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
17  of the Internal Revenue Code or included in such total
18  as distributions under the provisions of any
19  retirement or disability plan for employees of any
20  governmental agency or unit, or retirement payments to
21  retired partners, which payments are excluded in
22  computing net earnings from self employment by Section
23  1402 of the Internal Revenue Code and regulations
24  adopted pursuant thereto;
25  (I) The valuation limitation amount;
26  (J) An amount equal to the amount of any tax

 

 

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

 

 

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1  any amount included in gross income under Section 87
2  of the Internal Revenue Code; the provisions of this
3  subparagraph are exempt from the provisions of Section
4  250;
5  (M) An amount equal to those dividends included in
6  such total which were paid by a corporation which
7  conducts business operations in a River Edge
8  Redevelopment Zone or zones created under the River
9  Edge Redevelopment Zone Act and conducts substantially
10  all of its operations in a River Edge Redevelopment
11  Zone or zones. This subparagraph (M) is exempt from
12  the provisions of Section 250;
13  (N) An amount equal to any contribution made to a
14  job training project established pursuant to the Tax
15  Increment Allocation Redevelopment Act;
16  (O) An amount equal to those dividends included in
17  such total that were paid by a corporation that
18  conducts business operations in a federally designated
19  Foreign Trade Zone or Sub-Zone and that is designated
20  a High Impact Business located in Illinois; provided
21  that dividends eligible for the deduction provided in
22  subparagraph (M) of paragraph (2) of this subsection
23  shall not be eligible for the deduction provided under
24  this subparagraph (O);
25  (P) An amount equal to the amount of the deduction
26  used to compute the federal income tax credit for

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  prohibited under Section 1501(a)(27) from being
2  included in the unitary business group because he or
3  she is ordinarily required to apportion business
4  income under different subsections of Section 304, but
5  not to exceed the addition modification required to be
6  made for the same taxable year under Section
7  203(c)(2)(G-13) for intangible expenses and costs
8  paid, accrued, or incurred, directly or indirectly, to
9  the same foreign person. This subparagraph (V) is
10  exempt from the provisions of Section 250;
11  (W) in the case of an estate, an amount equal to
12  all amounts included in such total pursuant to the
13  provisions of Section 111 of the Internal Revenue Code
14  as a recovery of items previously deducted by the
15  decedent from adjusted gross income in the computation
16  of taxable income. This subparagraph (W) is exempt
17  from Section 250;
18  (X) an amount equal to the refund included in such
19  total of any tax deducted for federal income tax
20  purposes, to the extent that deduction was added back
21  under subparagraph (F). This subparagraph (X) is
22  exempt from the provisions of Section 250;
23  (Y) For taxable years ending on or after December
24  31, 2011, in the case of a taxpayer who was required to
25  add back any insurance premiums under Section
26  203(c)(2)(G-14), such taxpayer may elect to subtract

 

 

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1  that part of a reimbursement received from the
2  insurance company equal to the amount of the expense
3  or loss (including expenses incurred by the insurance
4  company) that would have been taken into account as a
5  deduction for federal income tax purposes if the
6  expense or loss had been uninsured. If a taxpayer
7  makes the election provided for by this subparagraph
8  (Y), the insurer to which the premiums were paid must
9  add back to income the amount subtracted by the
10  taxpayer pursuant to this subparagraph (Y). This
11  subparagraph (Y) is exempt from the provisions of
12  Section 250; and
13  (Z) For taxable years beginning after December 31,
14  2018 and before January 1, 2026, the amount of excess
15  business loss of the taxpayer disallowed as a
16  deduction by Section 461(l)(1)(B) of the Internal
17  Revenue Code; and .
18  (AA) For taxable years beginning on or after January
19  1, 2024, the amount of any federal deduction disallowed
20  pursuant to Section 280E of the Internal Revenue Code
21  related to the production and distribution of adult-use
22  cannabis products by an entity licensed under the Cannabis
23  Regulation and Tax Act, if those amounts are not used as
24  the basis for any other tax deduction, exemption, or
25  credit and not otherwise required to be added back when
26  computing the taxpayer's base income under this Section.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  modification required under Section 203(d)(2)(D-7) of
2  this Act. As used in this subparagraph, the term
3  "intangible expenses and costs" includes (1) expenses,
4  losses, and costs for, or related to, the direct or
5  indirect acquisition, use, maintenance or management,
6  ownership, sale, exchange, or any other disposition of
7  intangible property; (2) losses incurred, directly or
8  indirectly, from factoring transactions or discounting
9  transactions; (3) royalty, patent, technical, and
10  copyright fees; (4) licensing fees; and (5) other
11  similar expenses and costs. For purposes of this
12  subparagraph, "intangible property" includes patents,
13  patent applications, trade names, trademarks, service
14  marks, copyrights, mask works, trade secrets, and
15  similar types of intangible assets;
16  This paragraph shall not apply to the following:
17  (i) any item of intangible expenses or costs
18  paid, accrued, or incurred, directly or
19  indirectly, from a transaction with 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 item; or
24  (ii) any item of intangible expense or cost
25  paid, accrued, or incurred, directly or
26  indirectly, if the taxpayer can establish, based

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  that dividends eligible for the deduction provided in
2  subparagraph (K) of paragraph (2) of this subsection
3  shall not be eligible for the deduction provided under
4  this subparagraph (M);
5  (N) An amount equal to the amount of the deduction
6  used to compute the federal income tax credit for
7  restoration of substantial amounts held under claim of
8  right for the taxable year pursuant to Section 1341 of
9  the Internal Revenue Code;
10  (O) 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
22  including 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
7  by 0.429);
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  (iii) for property on which a bonus
13  depreciation deduction of 100% of the adjusted
14  basis was taken in a taxable year ending on or
15  after December 31, 2021, "x" equals the
16  depreciation deduction that would be allowed
17  on that property if the taxpayer had made the
18  election under Section 168(k)(7) of the
19  Internal Revenue Code to not claim bonus
20  depreciation on that property; and
21  (iv) for property on which a bonus
22  depreciation deduction of a percentage other
23  than 30%, 50% or 100% of the adjusted basis
24  was taken in a taxable year ending on or after
25  December 31, 2021, "x" equals "y" multiplied
26  by 100 times the percentage bonus depreciation

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  January 1, 2024, the amount of any federal deduction
2  disallowed pursuant to Section 280E of the Internal
3  Revenue Code related to the production and
4  distribution of adult-use cannabis products by an
5  entity licensed under the Cannabis Regulation and Tax
6  Act, if those amounts are not used as the basis for any
7  other tax deduction, exemption, or credit and not
8  otherwise required to be added back when computing the
9  taxpayer's base income under this Section. This
10  subparagraph (U) is exempt from the provisions of
11  Section 250.
12  (e) Gross income; adjusted gross income; taxable income.
13  (1) In general. Subject to the provisions of paragraph
14  (2) and subsection (b)(3), for purposes of this Section
15  and Section 803(e), a taxpayer's gross income, adjusted
16  gross income, or taxable income for the taxable year shall
17  mean the amount of gross income, adjusted gross income or
18  taxable income properly reportable for federal income tax
19  purposes for the taxable year under the provisions of the
20  Internal Revenue Code. Taxable income may be less than
21  zero. However, for taxable years ending on or after
22  December 31, 1986, net operating loss carryforwards from
23  taxable years ending prior to December 31, 1986, may not
24  exceed the sum of federal taxable income for the taxable
25  year before net operating loss deduction, plus the excess

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  computation of base income and net income under this Act for
2  such taxable year, whether in respect of property values as of
3  August 1, 1969 or otherwise.
4  (Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
5  102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
6  8-27-21; 102-813, eff. 5-13-22.)
7  Section 99. Effective date. This Act takes effect upon
8  becoming law.

 

 

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