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1 AN ACT concerning health.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Medical Debt Relief Act.
6 Section 5. Findings. The General Assembly finds that:
7 (a) People with medical debt often forgo needed medical
8 care, have difficulty meeting basic needs, and face an
9 increased risk of bankruptcy.
10 (b) Of the estimated 1,900,000 Illinois residents with
11 medical debt in collections, 1,700,000 live at or below 400%
12 of the federal poverty guidelines updated periodically in the
13 Federal Register by the U.S. Department of Health and Human
14 Services. The average medical debt per individual is
15 approximately $2,300, and of the total estimated
16 $4,370,000,000 in medical debt that is in collections in
17 Illinois, roughly $4,000,000,000 is acquirable, erasable
18 medical debt carried by low-income Americans.
19 (c) Medical debt impacts communities throughout the State.
20 There are at least 12 counties in Illinois in which 20% to 30%
21 of residents are living with medical debt in collections:
22 Alexander, Coles, Grundy, Jefferson, Macon, Marion, Massac,
23 Randolph, Schuyler, Shelby, Vermilion, and Warren counties.
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1 These 12 counties have approximately 475,000 residents, about
2 112,000 of whom have medical debt in collections. 13% of Cook
3 County residents have medical debt in collections, and their
4 medical debts comprise more than a quarter of the statewide
5 total.
6 (d) While any person can accumulate medical debt, people
7 of color are disproportionately affected. Nationally, 13% of
8 the population has medical debt in collections, but 15% of
9 people in communities of color have medical debt in
10 collections. In Illinois, 14% of the population has medical
11 debt in collections, but 20% of the population in communities
12 of color have medical debt in collections.
13 (e) The medical debt disparity reinforces racial inequity
14 and exacerbates disparities in health outcomes. Structural
15 barriers, including housing, credit, and employment
16 opportunities, further increase financial vulnerability for
17 communities of color, making it more difficult to pay medical
18 bills on time.
19 (f) Since medical debt can be difficult for hospital
20 systems to collect, they will often settle debt obligations
21 for a fraction of the total amount owed.
22 (g) Cook County launched a successful effort to erase
23 medical debt obligations for Cook County residents in
24 partnership with a national nonprofit organization. Accounting
25 for Cook County's investment, an additional commitment of
26 approximately $24,500,000 would eliminate all current medical
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1 debt for Illinois residents living at or below 400% of the
2 federal poverty guidelines.
3 (h) Illinois can accelerate health equity for residents
4 across the State by establishing a Medical Debt Relief Pilot
5 Program to provide grant funding to a nonprofit medical debt
6 relief coordinator to relieve thousands of families from the
7 crushing burden of medical debt.
8 Section 10. Definitions. As used in this Act:
9 "Eligible resident" means an individual who:
10 (1) is a resident of the State of Illinois; and
11 (2) has a household income at or below 400% of the
12 federal poverty guidelines or who has medical debt equal
13 to 5% or more of the individual's household income.
14 "Department" means the Department of Healthcare and Family
15 Services.
16 "Medical debt" means an obligation to pay money arising
17 from the receipt of health care services.
18 "Medical debt relief" means the discharge of a patient's
19 medical debt, including debt that is not in collections.
20 "Nonprofit medical debt relief coordinator" means a
21 nonprofit organization that is experienced in locating,
22 acquiring, and relieving medical debt for individuals and that
23 is able to discharge medical debt of an eligible resident in a
24 manner that does not result in a taxable event for the
25 resident.
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1 "Pilot program" means the Medical Debt Relief Pilot
2 Program.
3 Section 15. Medical Debt Relief Pilot Program.
4 (a) Subject to appropriation, the Department of Healthcare
5 and Family Services shall establish a Medical Debt Relief
6 Pilot Program to discharge the medical debt of eligible
7 residents.
8 (b) Under the pilot program, the Department shall provide
9 grant funding to a nonprofit medical debt relief coordinator
10 to use the grant funds and any other private funds available to
11 negotiate and settle, to the extent possible, the medical debt
12 of eligible residents owed to hospitals and other health care
13 providers and entities. The hospitals and other health care
14 providers and entities may be located outside of the State of
15 Illinois, so long as the negotiation and settlement of medical
16 debt is on behalf of an eligible resident.
17 (c) The Department shall establish the pilot program no
18 later than January 1, 2025. The Department shall administer
19 the pilot program consistent with the requirements of the
20 Grant Accountability and Transparency Act to determine which
21 nonprofit medical debt relief coordinator to use, unless the
22 Department and the State's Grant Accountability and
23 Transparency Unit determine that only a single nonprofit
24 medical debt relief coordinator has the capacity and
25 willingness to carry out the duties specified in this Act. The
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1 Department shall publish on its website any agreement,
2 including amendments and attachments, entered into with a debt
3 relief coordinator within 5 business days after the agreement
4 or amendment was entered into by the Department.
5 (d) The nonprofit medical debt relief coordinator shall:
6 (1) Identify eligible residents who qualify for the
7 pilot program.
8 (2) Review the medical debt accounts of each
9 commercial debt collection agency or health care provider
10 willing to sell medical debt accounts of eligible
11 residents.
12 (3) Conduct an outreach pilot program with hospitals,
13 hospital systems, and other providers and entities about
14 the benefits of the Medical Debt Relief Pilot Program.
15 Such outreach shall first be initiated with safety-net
16 hospitals.
17 (4) Negotiate and acquire medical debt of eligible
18 residents from health care providers and medical debt
19 collection agencies.
20 (5) Within 60 days of the acquisition of an eligible
21 resident's medical debt, notify all eligible residents
22 whose medical debt has been discharged under the pilot
23 program, in a manner approved by the Department, that they
24 no longer have specified medical debt owed to the relevant
25 health care provider or commercial debt collection agency.
26 (6) Not attempt to seek payment from an eligible
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1 resident for medical debt purchased by the nonprofit
2 medical debt relief coordinator.
3 (7) To the extent possible, give priority to hospitals
4 and providers who serve a high percentage of volume of
5 Medicaid customers and providers located in
6 disproportionately impacted area zip codes.
7 (e) The Department shall provide an annual report to the
8 Governor and General Assembly that includes, but is not
9 limited to:
10 (1) The amount of medical debt purchased and
11 discharged under the pilot program.
12 (2) The number of eligible residents who received
13 medical debt relief under the pilot program.
14 (3) The demographic characteristics of the eligible
15 residents, including, but not limited to, race, ethnicity,
16 income level, zip code, and insurance status.
17 (4) The number and characteristics of health care
18 providers from whom medical debt was purchased and
19 discharged, including, but not limited to, geography and
20 payor mix.
21 (f) The Department shall adopt any rules necessary to
22 implement this Act.
23 Section 20. Repealer. The Act is repealed on July 1, 2029.
24 Section 100. The State Finance Act is amended by adding
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1 Sections 5.1015 and 6z-140 as follows:
2 (30 ILCS 105/5.1015 new)
3 Sec. 5.1015. The Medical Debt Relief Pilot Program Fund.
4 (30 ILCS 105/6z-140 new)
5 Sec. 6z-140. Medical Debt Relief Pilot Program Fund. The
6 Medical Debt Relief Pilot Program Fund is created as a special
7 fund in the State treasury. All moneys in the Fund shall be
8 appropriated to the Department of Healthcare and Family
9 Services and expended exclusively for the Medical Debt Relief
10 Pilot Program to provide grant funding to a nonprofit medical
11 debt relief coordinator to be used to discharge the medical
12 debt of eligible residents as defined in the Medical Debt
13 Relief Act. Based on a budget approved by the Department, the
14 grant funding may also be used for any administrative services
15 provided by the nonprofit medical debt relief coordinator to
16 discharge the medical debt of eligible residents.
17 Section 105. The Illinois Income Tax Act is amended by
18 changing Section 203 as follows:
19 (35 ILCS 5/203)
20 Sec. 203. Base income defined.
21 (a) Individuals.
22 (1) In general. In the case of an individual, base
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1 income means an amount equal to the taxpayer's adjusted
2 gross income for the taxable year as modified by paragraph
3 (2).
4 (2) Modifications. The adjusted gross income referred
5 to in paragraph (1) shall be modified by adding thereto
6 the sum of the following amounts:
7 (A) An amount equal to all amounts paid or accrued
8 to the taxpayer as interest or dividends during the
9 taxable year to the extent excluded from gross income
10 in the computation of adjusted gross income, except
11 stock dividends of qualified public utilities
12 described in Section 305(e) of the Internal Revenue
13 Code;
14 (B) An amount equal to the amount of tax imposed by
15 this Act to the extent deducted from gross income in
16 the computation of adjusted gross income for the
17 taxable year;
18 (C) An amount equal to the amount received during
19 the taxable year as a recovery or refund of real
20 property taxes paid with respect to the taxpayer's
21 principal residence under the Revenue Act of 1939 and
22 for which a deduction was previously taken under
23 subparagraph (L) of this paragraph (2) prior to July
24 1, 1991, the retrospective application date of Article
25 4 of Public Act 87-17. In the case of multi-unit or
26 multi-use structures and farm dwellings, the taxes on
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1 the taxpayer's principal residence shall be that
2 portion of the total taxes for the entire property
3 which is attributable to such principal residence;
4 (D) An amount equal to the amount of the capital
5 gain deduction allowable under the Internal Revenue
6 Code, to the extent deducted from gross income in the
7 computation of adjusted gross income;
8 (D-5) An amount, to the extent not included in
9 adjusted gross income, equal to the amount of money
10 withdrawn by the taxpayer in the taxable year from a
11 medical care savings account and the interest earned
12 on the account in the taxable year of a withdrawal
13 pursuant to subsection (b) of Section 20 of the
14 Medical Care Savings Account Act or subsection (b) of
15 Section 20 of the Medical Care Savings Account Act of
16 2000;
17 (D-10) For taxable years ending after December 31,
18 1997, an amount equal to any eligible remediation
19 costs that the individual deducted in computing
20 adjusted gross income and for which the individual
21 claims a credit under subsection (l) of Section 201;
22 (D-15) For taxable years 2001 and thereafter, an
23 amount equal to the bonus depreciation deduction taken
24 on the taxpayer's federal income tax return for the
25 taxable year under subsection (k) of Section 168 of
26 the Internal Revenue Code;
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1 (D-16) If the taxpayer sells, transfers, abandons,
2 or otherwise disposes of property for which the
3 taxpayer was required in any taxable year to make an
4 addition modification under subparagraph (D-15), then
5 an amount equal to the aggregate amount of the
6 deductions taken in all taxable years under
7 subparagraph (Z) with respect to that property.
8 If the taxpayer continues to own property through
9 the last day of the last tax year for which a
10 subtraction is allowed with respect to that property
11 under subparagraph (Z) and for which the taxpayer was
12 allowed in any taxable year to make a subtraction
13 modification under subparagraph (Z), then an amount
14 equal to that subtraction modification.
15 The taxpayer is required to make the addition
16 modification under this subparagraph only once with
17 respect to any one piece of property;
18 (D-17) An amount equal to the amount otherwise
19 allowed as a deduction in computing base income for
20 interest paid, accrued, or incurred, directly or
21 indirectly, (i) for taxable years ending on or after
22 December 31, 2004, to a foreign person who would be a
23 member of the same unitary business group but for the
24 fact that foreign person's business activity outside
25 the United States is 80% or more of the foreign
26 person's total business activity and (ii) for taxable
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1 years ending on or after December 31, 2008, to a person
2 who would be a member of the same unitary business
3 group but for the fact that the person is prohibited
4 under Section 1501(a)(27) from being included in the
5 unitary business group because he or she is ordinarily
6 required to apportion business income under different
7 subsections of Section 304. The addition modification
8 required by this subparagraph shall be reduced to the
9 extent that dividends were included in base income of
10 the unitary group for the same taxable year and
11 received by the taxpayer or by a member of the
12 taxpayer's unitary business group (including amounts
13 included in gross income under Sections 951 through
14 964 of the Internal Revenue Code and amounts included
15 in gross income under Section 78 of the Internal
16 Revenue Code) with respect to the stock of the same
17 person to whom the interest was paid, accrued, or
18 incurred.
19 This paragraph shall not apply to the following:
20 (i) an item of interest paid, accrued, or
21 incurred, directly or indirectly, to a person who
22 is subject in a foreign country or state, other
23 than a state which requires mandatory unitary
24 reporting, to a tax on or measured by net income
25 with respect to such interest; or
26 (ii) an item of interest paid, accrued, or
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1 incurred, directly or indirectly, to a person if
2 the taxpayer can establish, based on a
3 preponderance of the evidence, both of the
4 following:
5 (a) the person, during the same taxable
6 year, paid, accrued, or incurred, the interest
7 to a person that is not a related member, and
8 (b) the transaction giving rise to the
9 interest expense between the taxpayer and the
10 person did not have as a principal purpose the
11 avoidance of Illinois income tax, and is paid
12 pursuant to a contract or agreement that
13 reflects an arm's-length interest rate and
14 terms; or
15 (iii) the taxpayer can establish, based on
16 clear and convincing evidence, that the interest
17 paid, accrued, or incurred relates to a contract
18 or agreement entered into at arm's-length rates
19 and terms and the principal purpose for the
20 payment is not federal or Illinois tax avoidance;
21 or
22 (iv) an item of interest paid, accrued, or
23 incurred, directly or indirectly, to a person if
24 the taxpayer establishes by clear and convincing
25 evidence that the adjustments are unreasonable; or
26 if the taxpayer and the Director agree in writing
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1 to the application or use of an alternative method
2 of apportionment under Section 304(f).
3 Nothing in this subsection shall preclude the
4 Director from making any other adjustment
5 otherwise allowed under Section 404 of this Act
6 for any tax year beginning after the effective
7 date of this amendment provided such adjustment is
8 made pursuant to regulation adopted by the
9 Department and such regulations provide methods
10 and standards by which the Department will utilize
11 its authority under Section 404 of this Act;
12 (D-18) An amount equal to the amount of intangible
13 expenses and costs otherwise allowed as a deduction in
14 computing base income, and that were paid, accrued, or
15 incurred, directly or indirectly, (i) for taxable
16 years ending on or after December 31, 2004, to a
17 foreign person who would be a member of the same
18 unitary business group but for the fact that the
19 foreign person's business activity outside the United
20 States is 80% or more of that person's total business
21 activity and (ii) for taxable years ending on or after
22 December 31, 2008, to a person who would be a member of
23 the same unitary business group but for the fact that
24 the person is prohibited under Section 1501(a)(27)
25 from being included in the unitary business group
26 because he or she is ordinarily required to apportion
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1 business income under different subsections of Section
2 304. The addition modification required by this
3 subparagraph shall be reduced to the extent that
4 dividends were included in base income of the unitary
5 group for the same taxable year and received by the
6 taxpayer or by a member of the taxpayer's unitary
7 business group (including amounts included in gross
8 income under Sections 951 through 964 of the Internal
9 Revenue Code and amounts included in gross income
10 under Section 78 of the Internal Revenue Code) with
11 respect to the stock of the same person to whom the
12 intangible expenses and costs were directly or
13 indirectly paid, incurred, or accrued. The preceding
14 sentence does not apply to the extent that the same
15 dividends caused a reduction to the addition
16 modification required under Section 203(a)(2)(D-17) of
17 this Act. As used in this subparagraph, the term
18 "intangible expenses and costs" includes (1) expenses,
19 losses, and costs for, or related to, the direct or
20 indirect acquisition, use, maintenance or management,
21 ownership, sale, exchange, or any other disposition of
22 intangible property; (2) losses incurred, directly or
23 indirectly, from factoring transactions or discounting
24 transactions; (3) royalty, patent, technical, and
25 copyright fees; (4) licensing fees; and (5) other
26 similar expenses and costs. For purposes of this
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1 subparagraph, "intangible property" includes patents,
2 patent applications, trade names, trademarks, service
3 marks, copyrights, mask works, trade secrets, and
4 similar types of intangible assets.
5 This paragraph shall not apply to the following:
6 (i) any item of intangible expenses or costs
7 paid, accrued, or incurred, directly or
8 indirectly, from a transaction with a person who
9 is subject in a foreign country or state, other
10 than a state which requires mandatory unitary
11 reporting, to a tax on or measured by net income
12 with respect to such item; or
13 (ii) any item of intangible expense or cost
14 paid, accrued, or incurred, directly or
15 indirectly, if the taxpayer can establish, based
16 on a preponderance of the evidence, both of the
17 following:
18 (a) the person during the same taxable
19 year paid, accrued, or incurred, the
20 intangible expense or cost to a person that is
21 not a related member, and
22 (b) the transaction giving rise to the
23 intangible expense or cost between the
24 taxpayer and the person did not have as a
25 principal purpose the avoidance of Illinois
26 income tax, and is paid pursuant to a contract
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1 or agreement that reflects arm's-length terms;
2 or
3 (iii) any item of intangible expense or cost
4 paid, accrued, or incurred, directly or
5 indirectly, from a transaction with a person if
6 the taxpayer establishes by clear and convincing
7 evidence, that the adjustments are unreasonable;
8 or if the taxpayer and the Director agree in
9 writing to the application or use of an
10 alternative method of apportionment under Section
11 304(f);
12 Nothing in this subsection shall preclude the
13 Director from making any other adjustment
14 otherwise allowed under Section 404 of this Act
15 for any tax year beginning after the effective
16 date of this amendment provided such adjustment is
17 made pursuant to regulation adopted by the
18 Department and such regulations provide methods
19 and standards by which the Department will utilize
20 its authority under Section 404 of this Act;
21 (D-19) For taxable years ending on or after
22 December 31, 2008, an amount equal to the amount of
23 insurance premium expenses and costs otherwise allowed
24 as a deduction in computing base income, and that were
25 paid, accrued, or incurred, directly or indirectly, to
26 a person who would be a member of the same unitary
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1 business group but for the fact that the person is
2 prohibited under Section 1501(a)(27) from being
3 included in the unitary business group because he or
4 she is ordinarily required to apportion business
5 income under different subsections of Section 304. The
6 addition modification required by this subparagraph
7 shall be reduced to the extent that dividends were
8 included in base income of the unitary group for the
9 same taxable year and received by the taxpayer or by a
10 member of the taxpayer's unitary business group
11 (including amounts included in gross income under
12 Sections 951 through 964 of the Internal Revenue Code
13 and amounts included in gross income under Section 78
14 of the Internal Revenue Code) with respect to the
15 stock of the same person to whom the premiums and costs
16 were directly or indirectly paid, incurred, or
17 accrued. The preceding sentence does not apply to the
18 extent that the same dividends caused a reduction to
19 the addition modification required under Section
20 203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
21 Act;
22 (D-20) For taxable years beginning on or after
23 January 1, 2002 and ending on or before December 31,
24 2006, in the case of a distribution from a qualified
25 tuition program under Section 529 of the Internal
26 Revenue Code, other than (i) a distribution from a
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1 College Savings Pool created under Section 16.5 of the
2 State Treasurer Act or (ii) a distribution from the
3 Illinois Prepaid Tuition Trust Fund, an amount equal
4 to the amount excluded from gross income under Section
5 529(c)(3)(B). For taxable years beginning on or after
6 January 1, 2007, in the case of a distribution from a
7 qualified tuition program under Section 529 of the
8 Internal Revenue Code, other than (i) a distribution
9 from a College Savings Pool created under Section 16.5
10 of the State Treasurer Act, (ii) a distribution from
11 the Illinois Prepaid Tuition Trust Fund, or (iii) a
12 distribution from a qualified tuition program under
13 Section 529 of the Internal Revenue Code that (I)
14 adopts and determines that its offering materials
15 comply with the College Savings Plans Network's
16 disclosure principles and (II) has made reasonable
17 efforts to inform in-state residents of the existence
18 of in-state qualified tuition programs by informing
19 Illinois residents directly and, where applicable, to
20 inform financial intermediaries distributing the
21 program to inform in-state residents of the existence
22 of in-state qualified tuition programs at least
23 annually, an amount equal to the amount excluded from
24 gross income under Section 529(c)(3)(B).
25 For the purposes of this subparagraph (D-20), a
26 qualified tuition program has made reasonable efforts
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1 if it makes disclosures (which may use the term
2 "in-state program" or "in-state plan" and need not
3 specifically refer to Illinois or its qualified
4 programs by name) (i) directly to prospective
5 participants in its offering materials or makes a
6 public disclosure, such as a website posting; and (ii)
7 where applicable, to intermediaries selling the
8 out-of-state program in the same manner that the
9 out-of-state program distributes its offering
10 materials;
11 (D-20.5) For taxable years beginning on or after
12 January 1, 2018, in the case of a distribution from a
13 qualified ABLE program under Section 529A of the
14 Internal Revenue Code, other than a distribution from
15 a qualified ABLE program created under Section 16.6 of
16 the State Treasurer Act, an amount equal to the amount
17 excluded from gross income under Section 529A(c)(1)(B)
18 of the Internal Revenue Code;
19 (D-21) For taxable years beginning on or after
20 January 1, 2007, in the case of transfer of moneys from
21 a qualified tuition program under Section 529 of the
22 Internal Revenue Code that is administered by the
23 State to an out-of-state program, an amount equal to
24 the amount of moneys previously deducted from base
25 income under subsection (a)(2)(Y) of this Section;
26 (D-21.5) For taxable years beginning on or after
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1 January 1, 2018, in the case of the transfer of moneys
2 from a qualified tuition program under Section 529 or
3 a qualified ABLE program under Section 529A of the
4 Internal Revenue Code that is administered by this
5 State to an ABLE account established under an
6 out-of-state ABLE account program, an amount equal to
7 the contribution component of the transferred amount
8 that was previously deducted from base income under
9 subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
10 Section;
11 (D-22) For taxable years beginning on or after
12 January 1, 2009, and prior to January 1, 2018, in the
13 case of a nonqualified withdrawal or refund of moneys
14 from a qualified tuition program under Section 529 of
15 the Internal Revenue Code administered by the State
16 that is not used for qualified expenses at an eligible
17 education institution, an amount equal to the
18 contribution component of the nonqualified withdrawal
19 or refund that was previously deducted from base
20 income under subsection (a)(2)(y) of this Section,
21 provided that the withdrawal or refund did not result
22 from the beneficiary's death or disability. For
23 taxable years beginning on or after January 1, 2018:
24 (1) in the case of a nonqualified withdrawal or
25 refund, as defined under Section 16.5 of the State
26 Treasurer Act, of moneys from a qualified tuition
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1 program under Section 529 of the Internal Revenue Code
2 administered by the State, an amount equal to the
3 contribution component of the nonqualified withdrawal
4 or refund that was previously deducted from base
5 income under subsection (a)(2)(Y) of this Section, and
6 (2) in the case of a nonqualified withdrawal or refund
7 from a qualified ABLE program under Section 529A of
8 the Internal Revenue Code administered by the State
9 that is not used for qualified disability expenses, an
10 amount equal to the contribution component of the
11 nonqualified withdrawal or refund that was previously
12 deducted from base income under subsection (a)(2)(HH)
13 of this Section;
14 (D-23) An amount equal to the credit allowable to
15 the taxpayer under Section 218(a) of this Act,
16 determined without regard to Section 218(c) of this
17 Act;
18 (D-24) For taxable years ending on or after
19 December 31, 2017, an amount equal to the deduction
20 allowed under Section 199 of the Internal Revenue Code
21 for the taxable year;
22 (D-25) In the case of a resident, an amount equal
23 to the amount of tax for which a credit is allowed
24 pursuant to Section 201(p)(7) of this Act;
25 and by deducting from the total so obtained the sum of the
26 following amounts:
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1 (E) For taxable years ending before December 31,
2 2001, any amount included in such total in respect of
3 any compensation (including but not limited to any
4 compensation paid or accrued to a serviceman while a
5 prisoner of war or missing in action) paid to a
6 resident by reason of being on active duty in the Armed
7 Forces of the United States and in respect of any
8 compensation paid or accrued to a resident who as a
9 governmental employee was a prisoner of war or missing
10 in action, and in respect of any compensation paid to a
11 resident in 1971 or thereafter for annual training
12 performed pursuant to Sections 502 and 503, Title 32,
13 United States Code as a member of the Illinois
14 National Guard or, beginning with taxable years ending
15 on or after December 31, 2007, the National Guard of
16 any other state. For taxable years ending on or after
17 December 31, 2001, any amount included in such total
18 in respect of any compensation (including but not
19 limited to any compensation paid or accrued to a
20 serviceman while a prisoner of war or missing in
21 action) paid to a resident by reason of being a member
22 of any component of the Armed Forces of the United
23 States and in respect of any compensation paid or
24 accrued to a resident who as a governmental employee
25 was a prisoner of war or missing in action, and in
26 respect of any compensation paid to a resident in 2001
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1 or thereafter by reason of being a member of the
2 Illinois National Guard or, beginning with taxable
3 years ending on or after December 31, 2007, the
4 National Guard of any other state. The provisions of
5 this subparagraph (E) are exempt from the provisions
6 of Section 250;
7 (F) An amount equal to all amounts included in
8 such total pursuant to the provisions of Sections
9 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
10 408 of the Internal Revenue Code, or included in such
11 total as distributions under the provisions of any
12 retirement or disability plan for employees of any
13 governmental agency or unit, or retirement payments to
14 retired partners, which payments are excluded in
15 computing net earnings from self employment by Section
16 1402 of the Internal Revenue Code and regulations
17 adopted pursuant thereto;
18 (G) The valuation limitation amount;
19 (H) An amount equal to the amount of any tax
20 imposed by this Act which was refunded to the taxpayer
21 and included in such total for the taxable year;
22 (I) An amount equal to all amounts included in
23 such total pursuant to the provisions of Section 111
24 of the Internal Revenue Code as a recovery of items
25 previously deducted from adjusted gross income in the
26 computation of taxable income;
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1 (J) An amount equal to those dividends included in
2 such total which were paid by a corporation which
3 conducts business operations in a River Edge
4 Redevelopment Zone or zones created under the River
5 Edge Redevelopment Zone Act, and conducts
6 substantially all of its operations in a River Edge
7 Redevelopment Zone or zones. This subparagraph (J) is
8 exempt from the provisions of Section 250;
9 (K) An amount equal to those dividends included in
10 such total that were paid by a corporation that
11 conducts business operations in a federally designated
12 Foreign Trade Zone or Sub-Zone and that is designated
13 a High Impact Business located in Illinois; provided
14 that dividends eligible for the deduction provided in
15 subparagraph (J) of paragraph (2) of this subsection
16 shall not be eligible for the deduction provided under
17 this subparagraph (K);
18 (L) For taxable years ending after December 31,
19 1983, an amount equal to all social security benefits
20 and railroad retirement benefits included in such
21 total pursuant to Sections 72(r) and 86 of the
22 Internal Revenue Code;
23 (M) With the exception of any amounts subtracted
24 under subparagraph (N), an amount equal to the sum of
25 all amounts disallowed as deductions by (i) Sections
26 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
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1 and all amounts of expenses allocable to interest and
2 disallowed as deductions by Section 265(a)(1) of the
3 Internal Revenue Code; and (ii) for taxable years
4 ending on or after August 13, 1999, Sections
5 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
6 Internal Revenue Code, plus, for taxable years ending
7 on or after December 31, 2011, Section 45G(e)(3) of
8 the Internal Revenue Code and, for taxable years
9 ending on or after December 31, 2008, any amount
10 included in gross income under Section 87 of the
11 Internal Revenue Code; the provisions of this
12 subparagraph are exempt from the provisions of Section
13 250;
14 (N) An amount equal to all amounts included in
15 such total which are exempt from taxation by this
16 State either by reason of its statutes or Constitution
17 or by reason of the Constitution, treaties or statutes
18 of the United States; provided that, in the case of any
19 statute of this State that exempts income derived from
20 bonds or other obligations from the tax imposed under
21 this Act, the amount exempted shall be the interest
22 net of bond premium amortization;
23 (O) An amount equal to any contribution made to a
24 job training project established pursuant to the Tax
25 Increment Allocation Redevelopment Act;
26 (P) An amount equal to the amount of the deduction
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1 used to compute the federal income tax credit for
2 restoration of substantial amounts held under claim of
3 right for the taxable year pursuant to Section 1341 of
4 the Internal Revenue Code or of any itemized deduction
5 taken from adjusted gross income in the computation of
6 taxable income for restoration of substantial amounts
7 held under claim of right for the taxable year;
8 (Q) An amount equal to any amounts included in
9 such total, received by the taxpayer as an
10 acceleration in the payment of life, endowment or
11 annuity benefits in advance of the time they would
12 otherwise be payable as an indemnity for a terminal
13 illness;
14 (R) An amount equal to the amount of any federal or
15 State bonus paid to veterans of the Persian Gulf War;
16 (S) An amount, to the extent included in adjusted
17 gross income, equal to the amount of a contribution
18 made in the taxable year on behalf of the taxpayer to a
19 medical care savings account established under the
20 Medical Care Savings Account Act or the Medical Care
21 Savings Account Act of 2000 to the extent the
22 contribution is accepted by the account administrator
23 as provided in that Act;
24 (T) An amount, to the extent included in adjusted
25 gross income, equal to the amount of interest earned
26 in the taxable year on a medical care savings account
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1 established under the Medical Care Savings Account Act
2 or the Medical Care Savings Account Act of 2000 on
3 behalf of the taxpayer, other than interest added
4 pursuant to item (D-5) of this paragraph (2);
5 (U) For one taxable year beginning on or after
6 January 1, 1994, an amount equal to the total amount of
7 tax imposed and paid under subsections (a) and (b) of
8 Section 201 of this Act on grant amounts received by
9 the taxpayer under the Nursing Home Grant Assistance
10 Act during the taxpayer's taxable years 1992 and 1993;
11 (V) Beginning with tax years ending on or after
12 December 31, 1995 and ending with tax years ending on
13 or before December 31, 2004, an amount equal to the
14 amount paid by a taxpayer who is a self-employed
15 taxpayer, a partner of a partnership, or a shareholder
16 in a Subchapter S corporation for health insurance or
17 long-term care insurance for that taxpayer or that
18 taxpayer's spouse or dependents, to the extent that
19 the amount paid for that health insurance or long-term
20 care insurance may be deducted under Section 213 of
21 the Internal Revenue Code, has not been deducted on
22 the federal income tax return of the taxpayer, and
23 does not exceed the taxable income attributable to
24 that taxpayer's income, self-employment income, or
25 Subchapter S corporation income; except that no
26 deduction shall be allowed under this item (V) if the
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1 taxpayer is eligible to participate in any health
2 insurance or long-term care insurance plan of an
3 employer of the taxpayer or the taxpayer's spouse. The
4 amount of the health insurance and long-term care
5 insurance subtracted under this item (V) shall be
6 determined by multiplying total health insurance and
7 long-term care insurance premiums paid by the taxpayer
8 times a number that represents the fractional
9 percentage of eligible medical expenses under Section
10 213 of the Internal Revenue Code of 1986 not actually
11 deducted on the taxpayer's federal income tax return;
12 (W) For taxable years beginning on or after
13 January 1, 1998, all amounts included in the
14 taxpayer's federal gross income in the taxable year
15 from amounts converted from a regular IRA to a Roth
16 IRA. This paragraph is exempt from the provisions of
17 Section 250;
18 (X) For taxable year 1999 and thereafter, an
19 amount equal to the amount of any (i) distributions,
20 to the extent includible in gross income for federal
21 income tax purposes, made to the taxpayer because of
22 his or her status as a victim of persecution for racial
23 or religious reasons by Nazi Germany or any other Axis
24 regime or as an heir of the victim and (ii) items of
25 income, to the extent includible in gross income for
26 federal income tax purposes, attributable to, derived
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1 from or in any way related to assets stolen from,
2 hidden from, or otherwise lost to a victim of
3 persecution for racial or religious reasons by Nazi
4 Germany or any other Axis regime immediately prior to,
5 during, and immediately after World War II, including,
6 but not limited to, interest on the proceeds
7 receivable as insurance under policies issued to a
8 victim of persecution for racial or religious reasons
9 by Nazi Germany or any other Axis regime by European
10 insurance companies immediately prior to and during
11 World War II; provided, however, this subtraction from
12 federal adjusted gross income does not apply to assets
13 acquired with such assets or with the proceeds from
14 the sale of such assets; provided, further, this
15 paragraph shall only apply to a taxpayer who was the
16 first recipient of such assets after their recovery
17 and who is a victim of persecution for racial or
18 religious reasons by Nazi Germany or any other Axis
19 regime or as an heir of the victim. The amount of and
20 the eligibility for any public assistance, benefit, or
21 similar entitlement is not affected by the inclusion
22 of items (i) and (ii) of this paragraph in gross income
23 for federal income tax purposes. This paragraph is
24 exempt from the provisions of Section 250;
25 (Y) For taxable years beginning on or after
26 January 1, 2002 and ending on or before December 31,
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1 2004, moneys contributed in the taxable year to a
2 College Savings Pool account under Section 16.5 of the
3 State Treasurer Act, except that amounts excluded from
4 gross income under Section 529(c)(3)(C)(i) of the
5 Internal Revenue Code shall not be considered moneys
6 contributed under this subparagraph (Y). For taxable
7 years beginning on or after January 1, 2005, a maximum
8 of $10,000 contributed in the taxable year to (i) a
9 College Savings Pool account under Section 16.5 of the
10 State Treasurer Act or (ii) the Illinois Prepaid
11 Tuition Trust Fund, except that amounts excluded from
12 gross income under Section 529(c)(3)(C)(i) of the
13 Internal Revenue Code shall not be considered moneys
14 contributed under this subparagraph (Y). For purposes
15 of this subparagraph, contributions made by an
16 employer on behalf of an employee, or matching
17 contributions made by an employee, shall be treated as
18 made by the employee. This subparagraph (Y) is exempt
19 from the provisions of Section 250;
20 (Z) For taxable years 2001 and thereafter, for the
21 taxable year in which the bonus depreciation deduction
22 is taken on the taxpayer's federal income tax return
23 under subsection (k) of Section 168 of the Internal
24 Revenue Code and for each applicable taxable year
25 thereafter, an amount equal to "x", where:
26 (1) "y" equals the amount of the depreciation
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1 deduction taken for the taxable year on the
2 taxpayer's federal income tax return on property
3 for which the bonus depreciation deduction was
4 taken in any year under subsection (k) of Section
5 168 of the Internal Revenue Code, but not
6 including the bonus depreciation deduction;
7 (2) for taxable years ending on or before
8 December 31, 2005, "x" equals "y" multiplied by 30
9 and then divided by 70 (or "y" multiplied by
10 0.429); and
11 (3) for taxable years ending after December
12 31, 2005:
13 (i) for property on which a bonus
14 depreciation deduction of 30% of the adjusted
15 basis was taken, "x" equals "y" multiplied by
16 30 and then divided by 70 (or "y" multiplied
17 by 0.429);
18 (ii) for property on which a bonus
19 depreciation deduction of 50% of the adjusted
20 basis was taken, "x" equals "y" multiplied by
21 1.0;
22 (iii) for property on which a bonus
23 depreciation deduction of 100% of the adjusted
24 basis was taken in a taxable year ending on or
25 after December 31, 2021, "x" equals the
26 depreciation deduction that would be allowed
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1 on that property if the taxpayer had made the
2 election under Section 168(k)(7) of the
3 Internal Revenue Code to not claim bonus
4 depreciation on that property; and
5 (iv) for property on which a bonus
6 depreciation deduction of a percentage other
7 than 30%, 50% or 100% of the adjusted basis
8 was taken in a taxable year ending on or after
9 December 31, 2021, "x" equals "y" multiplied
10 by 100 times the percentage bonus depreciation
11 on the property (that is, 100(bonus%)) and
12 then divided by 100 times 1 minus the
13 percentage bonus depreciation on the property
14 (that is, 100(1-bonus%)).
15 The aggregate amount deducted under this
16 subparagraph in all taxable years for any one piece of
17 property may not exceed the amount of the bonus
18 depreciation deduction taken on that property on the
19 taxpayer's federal income tax return under subsection
20 (k) of Section 168 of the Internal Revenue Code. This
21 subparagraph (Z) is exempt from the provisions of
22 Section 250;
23 (AA) If the taxpayer sells, transfers, abandons,
24 or otherwise disposes of property for which the
25 taxpayer was required in any taxable year to make an
26 addition modification under subparagraph (D-15), then
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1 an amount equal to that addition modification.
2 If the taxpayer continues to own property through
3 the last day of the last tax year for which a
4 subtraction is allowed with respect to that property
5 under subparagraph (Z) and for which the taxpayer was
6 required in any taxable year to make an addition
7 modification under subparagraph (D-15), then an amount
8 equal to that addition modification.
9 The taxpayer is allowed to take the deduction
10 under this subparagraph only once with respect to any
11 one piece of property.
12 This subparagraph (AA) is exempt from the
13 provisions of Section 250;
14 (BB) Any amount included in adjusted gross income,
15 other than salary, received by a driver in a
16 ridesharing arrangement using a motor vehicle;
17 (CC) The amount of (i) any interest income (net of
18 the deductions allocable thereto) taken into account
19 for the taxable year with respect to a transaction
20 with a taxpayer that is required to make an addition
21 modification with respect to such transaction under
22 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
23 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
24 the amount of that addition modification, and (ii) any
25 income from intangible property (net of the deductions
26 allocable thereto) taken into account for the taxable
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1 year with respect to a transaction with a taxpayer
2 that is required to make an addition modification with
3 respect to such transaction under Section
4 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
5 203(d)(2)(D-8), but not to exceed the amount of that
6 addition modification. This subparagraph (CC) is
7 exempt from the provisions of Section 250;
8 (DD) An amount equal to the interest income taken
9 into account for the taxable year (net of the
10 deductions allocable thereto) with respect to
11 transactions with (i) a foreign person who would be a
12 member of the taxpayer's unitary business group but
13 for the fact that the foreign person's business
14 activity outside the United States is 80% or more of
15 that person's total business activity and (ii) for
16 taxable years ending on or after December 31, 2008, to
17 a person who would be a member of the same unitary
18 business group but for the fact that the person is
19 prohibited under Section 1501(a)(27) from being
20 included in the unitary business group because he or
21 she is ordinarily required to apportion business
22 income under different subsections of Section 304, but
23 not to exceed the addition modification required to be
24 made for the same taxable year under Section
25 203(a)(2)(D-17) for interest paid, accrued, or
26 incurred, directly or indirectly, to the same person.
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1 This subparagraph (DD) is exempt from the provisions
2 of Section 250;
3 (EE) An amount equal to the income from intangible
4 property taken into account for the taxable year (net
5 of the deductions allocable thereto) with respect to
6 transactions with (i) a foreign person who would be a
7 member of the taxpayer's unitary business group but
8 for the fact that the foreign person's business
9 activity outside the United States is 80% or more of
10 that person's total business activity and (ii) for
11 taxable years ending on or after December 31, 2008, 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, but
18 not to exceed the addition modification required to be
19 made for the same taxable year under Section
20 203(a)(2)(D-18) for intangible expenses and costs
21 paid, accrued, or incurred, directly or indirectly, to
22 the same foreign person. This subparagraph (EE) is
23 exempt from the provisions of Section 250;
24 (FF) An amount equal to any amount awarded to the
25 taxpayer during the taxable year by the Court of
26 Claims under subsection (c) of Section 8 of the Court
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1 of Claims Act for time unjustly served in a State
2 prison. This subparagraph (FF) is exempt from the
3 provisions of Section 250;
4 (GG) For taxable years ending on or after December
5 31, 2011, in the case of a taxpayer who was required to
6 add back any insurance premiums under Section
7 203(a)(2)(D-19), such taxpayer may elect to subtract
8 that part of a reimbursement received from the
9 insurance company equal to the amount of the expense
10 or loss (including expenses incurred by the insurance
11 company) that would have been taken into account as a
12 deduction for federal income tax purposes if the
13 expense or loss had been uninsured. If a taxpayer
14 makes the election provided for by this subparagraph
15 (GG), the insurer to which the premiums were paid must
16 add back to income the amount subtracted by the
17 taxpayer pursuant to this subparagraph (GG). This
18 subparagraph (GG) is exempt from the provisions of
19 Section 250;
20 (HH) For taxable years beginning on or after
21 January 1, 2018 and prior to January 1, 2028, a maximum
22 of $10,000 contributed in the taxable year to a
23 qualified ABLE account under Section 16.6 of the State
24 Treasurer Act, except that amounts excluded from gross
25 income under Section 529(c)(3)(C)(i) or Section
26 529A(c)(1)(C) of the Internal Revenue Code shall not
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1 be considered moneys contributed under this
2 subparagraph (HH). For purposes of this subparagraph
3 (HH), contributions made by an employer on behalf of
4 an employee, or matching contributions made by an
5 employee, shall be treated as made by the employee;
6 (II) For taxable years that begin on or after
7 January 1, 2021 and begin before January 1, 2026, the
8 amount that is included in the taxpayer's federal
9 adjusted gross income pursuant to Section 61 of the
10 Internal Revenue Code as discharge of indebtedness
11 attributable to student loan forgiveness and that is
12 not excluded from the taxpayer's federal adjusted
13 gross income pursuant to paragraph (5) of subsection
14 (f) of Section 108 of the Internal Revenue Code; and
15 (JJ) For taxable years beginning on or after
16 January 1, 2023, for any cannabis establishment
17 operating in this State and licensed under the
18 Cannabis Regulation and Tax Act or any cannabis
19 cultivation center or medical cannabis dispensing
20 organization operating in this State and licensed
21 under the Compassionate Use of Medical Cannabis
22 Program Act, an amount equal to the deductions that
23 were disallowed under Section 280E of the Internal
24 Revenue Code for the taxable year and that would not be
25 added back under this subsection. The provisions of
26 this subparagraph (JJ) are exempt from the provisions
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1 of Section 250; and .
2 (KK) (JJ) To the extent includible in gross income
3 for federal income tax purposes, any amount awarded or
4 paid to the taxpayer as a result of a judgment or
5 settlement for fertility fraud as provided in Section
6 15 of the Illinois Fertility Fraud Act, donor
7 fertility fraud as provided in Section 20 of the
8 Illinois Fertility Fraud Act, or similar action in
9 another state.
10 (LL) For taxable years beginning on or after
11 January 1, 2025, if the taxpayer is an eligible
12 resident as defined in the Medical Debt Relief Act, an
13 amount equal to the amount included in the taxpayer's
14 federal adjusted gross income that is attributable to
15 medical debt relief received by the taxpayer during
16 the taxable year from a nonprofit medical debt relief
17 coordinator under the provisions of the Medical Debt
18 Relief Act. This subparagraph (LL) is exempt from the
19 provisions of Section 250.
20 (b) Corporations.
21 (1) In general. In the case of a corporation, base
22 income means an amount equal to the taxpayer's taxable
23 income for the taxable year as modified by paragraph (2).
24 (2) Modifications. The taxable income referred to in
25 paragraph (1) shall be modified by adding thereto the sum
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1 of the following amounts:
2 (A) An amount equal to all amounts paid or accrued
3 to the taxpayer as interest and all distributions
4 received from regulated investment companies during
5 the taxable year to the extent excluded from gross
6 income in the computation of taxable income;
7 (B) An amount equal to the amount of tax imposed by
8 this Act to the extent deducted from gross income in
9 the computation of taxable income for the taxable
10 year;
11 (C) In the case of a regulated investment company,
12 an amount equal to the excess of (i) the net long-term
13 capital gain for the taxable year, over (ii) the
14 amount of the capital gain dividends designated as
15 such in accordance with Section 852(b)(3)(C) of the
16 Internal Revenue Code and any amount designated under
17 Section 852(b)(3)(D) of the Internal Revenue Code,
18 attributable to the taxable year (this amendatory Act
19 of 1995 (Public Act 89-89) is declarative of existing
20 law and is not a new enactment);
21 (D) The amount of any net operating loss deduction
22 taken in arriving at taxable income, other than a net
23 operating loss carried forward from a taxable year
24 ending prior to December 31, 1986;
25 (E) For taxable years in which a net operating
26 loss carryback or carryforward from a taxable year
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1 ending prior to December 31, 1986 is an element of
2 taxable income under paragraph (1) of subsection (e)
3 or subparagraph (E) of paragraph (2) of subsection
4 (e), the amount by which addition modifications other
5 than those provided by this subparagraph (E) exceeded
6 subtraction modifications in such earlier taxable
7 year, with the following limitations applied in the
8 order that they are listed:
9 (i) the addition modification relating to the
10 net operating loss carried back or forward to the
11 taxable year from any taxable year ending prior to
12 December 31, 1986 shall be reduced by the amount
13 of addition modification under this subparagraph
14 (E) which related to that net operating loss and
15 which was taken into account in calculating the
16 base income of an earlier taxable year, and
17 (ii) the addition modification relating to the
18 net operating loss carried back or forward to the
19 taxable year from any taxable year ending prior to
20 December 31, 1986 shall not exceed the amount of
21 such carryback or carryforward;
22 For taxable years in which there is a net
23 operating loss carryback or carryforward from more
24 than one other taxable year ending prior to December
25 31, 1986, the addition modification provided in this
26 subparagraph (E) shall be the sum of the amounts
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1 computed independently under the preceding provisions
2 of this subparagraph (E) for each such taxable year;
3 (E-5) For taxable years ending after December 31,
4 1997, an amount equal to any eligible remediation
5 costs that the corporation deducted in computing
6 adjusted gross income and for which the corporation
7 claims a credit under subsection (l) of Section 201;
8 (E-10) 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 (E-11) 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 (E-10), then
17 an amount equal to the aggregate amount of the
18 deductions taken in all taxable years under
19 subparagraph (T) 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 (T) and for which the taxpayer was
24 allowed in any taxable year to make a subtraction
25 modification under subparagraph (T), 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 (E-12) 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 the 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 pursuant to Sections 951
26 through 964 of the Internal Revenue Code and amounts
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1 included in gross income under Section 78 of the
2 Internal Revenue Code) with respect to the stock of
3 the same person to whom the interest was paid,
4 accrued, or 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 (E-13) An amount equal to the amount of intangible
25 expenses and costs otherwise allowed as a deduction in
26 computing base income, and that were paid, accrued, or
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1 incurred, directly or indirectly, (i) for taxable
2 years ending on or after December 31, 2004, to a
3 foreign person who would be a member of the same
4 unitary business group but for the fact that the
5 foreign person's business activity outside the United
6 States is 80% or more of that person's total business
7 activity and (ii) for taxable years ending on or after
8 December 31, 2008, to a person who would be a member of
9 the same unitary business group but for the fact that
10 the person is prohibited under Section 1501(a)(27)
11 from being included in the unitary business group
12 because he or she is ordinarily required to apportion
13 business income under different subsections of Section
14 304. The addition modification required by this
15 subparagraph shall be reduced to the extent that
16 dividends were included in base income of the unitary
17 group for the same taxable year and received by the
18 taxpayer or by a member of the taxpayer's unitary
19 business group (including amounts included in gross
20 income pursuant to Sections 951 through 964 of the
21 Internal Revenue Code and amounts included in gross
22 income under Section 78 of the Internal Revenue Code)
23 with respect to the stock of the same person to whom
24 the intangible expenses and costs were directly or
25 indirectly paid, incurred, or accrued. The preceding
26 sentence shall not apply to the extent that the same
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1 dividends caused a reduction to the addition
2 modification required under Section 203(b)(2)(E-12) 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 (E-14) 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(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
7 Act;
8 (E-15) For taxable years beginning after December
9 31, 2008, any deduction for dividends paid by a
10 captive real estate investment trust that is allowed
11 to a real estate investment trust under Section
12 857(b)(2)(B) of the Internal Revenue Code for
13 dividends paid;
14 (E-16) An amount equal to the credit allowable to
15 the taxpayer under Section 218(a) of this Act,
16 determined without regard to Section 218(c) of this
17 Act;
18 (E-17) For taxable years ending on or after
19 December 31, 2017, an amount equal to the deduction
20 allowed under Section 199 of the Internal Revenue Code
21 for the taxable year;
22 (E-18) for taxable years beginning after December
23 31, 2018, an amount equal to the deduction allowed
24 under Section 250(a)(1)(A) of the Internal Revenue
25 Code for the taxable year;
26 (E-19) for taxable years ending on or after June
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1 30, 2021, an amount equal to the deduction allowed
2 under Section 250(a)(1)(B)(i) of the Internal Revenue
3 Code for the taxable year;
4 (E-20) for taxable years ending on or after June
5 30, 2021, an amount equal to the deduction allowed
6 under Sections 243(e) and 245A(a) of the Internal
7 Revenue Code for the taxable year.
8 and by deducting from the total so obtained the sum of the
9 following amounts:
10 (F) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the taxpayer
12 and included in such total for the taxable year;
13 (G) An amount equal to any amount included in such
14 total under Section 78 of the Internal Revenue Code;
15 (H) In the case of a regulated investment company,
16 an amount equal to the amount of exempt interest
17 dividends as defined in subsection (b)(5) of Section
18 852 of the Internal Revenue Code, paid to shareholders
19 for the taxable year;
20 (I) With the exception of any amounts subtracted
21 under subparagraph (J), an amount equal to the sum of
22 all amounts disallowed as deductions by (i) Sections
23 171(a)(2) and 265(a)(2) and amounts disallowed as
24 interest expense by Section 291(a)(3) of the Internal
25 Revenue Code, and all amounts of expenses allocable to
26 interest and disallowed as deductions by Section
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1 265(a)(1) of the Internal Revenue Code; and (ii) for
2 taxable years ending on or after August 13, 1999,
3 Sections 171(a)(2), 265, 280C, 291(a)(3), and
4 832(b)(5)(B)(i) of the Internal Revenue Code, plus,
5 for tax years ending on or after December 31, 2011,
6 amounts disallowed as deductions by Section 45G(e)(3)
7 of the Internal Revenue Code and, for taxable years
8 ending on or after December 31, 2008, any amount
9 included in gross income under Section 87 of the
10 Internal Revenue Code and the policyholders' share of
11 tax-exempt interest of a life insurance company under
12 Section 807(a)(2)(B) of the Internal Revenue Code (in
13 the case of a life insurance company with gross income
14 from a decrease in reserves for the tax year) or
15 Section 807(b)(1)(B) of the Internal Revenue Code (in
16 the case of a life insurance company allowed a
17 deduction for an increase in reserves for the tax
18 year); the provisions of this subparagraph are exempt
19 from the provisions of Section 250;
20 (J) An amount equal to all amounts included in
21 such total which are exempt from taxation by this
22 State either by reason of its statutes or Constitution
23 or by reason of the Constitution, treaties or statutes
24 of the United States; provided that, in the case of any
25 statute of this State that exempts income derived from
26 bonds or other obligations from the tax imposed under
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1 this Act, the amount exempted shall be the interest
2 net of bond premium amortization;
3 (K) An amount equal to those dividends included in
4 such total which were paid by a corporation which
5 conducts business operations in a River Edge
6 Redevelopment Zone or zones created under the River
7 Edge Redevelopment Zone Act and conducts substantially
8 all of its operations in a River Edge Redevelopment
9 Zone or zones. This subparagraph (K) is exempt from
10 the provisions of Section 250;
11 (L) An amount equal to those dividends included in
12 such total that were paid by a corporation that
13 conducts business operations in a federally designated
14 Foreign Trade Zone or Sub-Zone and that is designated
15 a High Impact Business located in Illinois; provided
16 that dividends eligible for the deduction provided in
17 subparagraph (K) of paragraph 2 of this subsection
18 shall not be eligible for the deduction provided under
19 this subparagraph (L);
20 (M) For any taxpayer that is a financial
21 organization within the meaning of Section 304(c) of
22 this Act, an amount included in such total as interest
23 income from a loan or loans made by such taxpayer to a
24 borrower, to the extent that such a loan is secured by
25 property which is eligible for the River Edge
26 Redevelopment Zone Investment Credit. To determine the
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1 portion of a loan or loans that is secured by property
2 eligible for a Section 201(f) investment credit to the
3 borrower, the entire principal amount of the loan or
4 loans between the taxpayer and the borrower should be
5 divided into the basis of the Section 201(f)
6 investment credit property which secures the loan or
7 loans, using for this purpose the original basis of
8 such property on the date that it was placed in service
9 in the River Edge Redevelopment Zone. The subtraction
10 modification available to the taxpayer in any year
11 under this subsection shall be that portion of the
12 total interest paid by the borrower with respect to
13 such loan attributable to the eligible property as
14 calculated under the previous sentence. This
15 subparagraph (M) is exempt from the provisions of
16 Section 250;
17 (M-1) For any taxpayer that is a financial
18 organization within the meaning of Section 304(c) of
19 this Act, an amount included in such total as interest
20 income from a loan or loans made by such taxpayer to a
21 borrower, to the extent that such a loan is secured by
22 property which is eligible for the High Impact
23 Business Investment Credit. To determine the portion
24 of a loan or loans that is secured by property eligible
25 for a Section 201(h) investment credit to the
26 borrower, the entire principal amount of the loan or
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1 loans between the taxpayer and the borrower should be
2 divided into the basis of the Section 201(h)
3 investment credit property which secures the loan or
4 loans, using for this purpose the original basis of
5 such property on the date that it was placed in service
6 in a federally designated Foreign Trade Zone or
7 Sub-Zone located in Illinois. No taxpayer that is
8 eligible for the deduction provided in subparagraph
9 (M) of paragraph (2) of this subsection shall be
10 eligible for the deduction provided under this
11 subparagraph (M-1). The subtraction modification
12 available to taxpayers in any year under this
13 subsection shall be that portion of the total interest
14 paid by the borrower with respect to such loan
15 attributable to the eligible property as calculated
16 under the previous sentence;
17 (N) Two times any contribution made during the
18 taxable year to a designated zone organization to the
19 extent that the contribution (i) qualifies as a
20 charitable contribution under subsection (c) of
21 Section 170 of the Internal Revenue Code and (ii)
22 must, by its terms, be used for a project approved by
23 the Department of Commerce and Economic Opportunity
24 under Section 11 of the Illinois Enterprise Zone Act
25 or under Section 10-10 of the River Edge Redevelopment
26 Zone Act. This subparagraph (N) is exempt from the
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1 provisions of Section 250;
2 (O) An amount equal to: (i) 85% for taxable years
3 ending on or before December 31, 1992, or, a
4 percentage equal to the percentage allowable under
5 Section 243(a)(1) of the Internal Revenue Code of 1986
6 for taxable years ending after December 31, 1992, of
7 the amount by which dividends included in taxable
8 income and received from a corporation that is not
9 created or organized under the laws of the United
10 States or any state or political subdivision thereof,
11 including, for taxable years ending on or after
12 December 31, 1988, dividends received or deemed
13 received or paid or deemed paid under Sections 951
14 through 965 of the Internal Revenue Code, exceed the
15 amount of the modification provided under subparagraph
16 (G) of paragraph (2) of this subsection (b) which is
17 related to such dividends, and including, for taxable
18 years ending on or after December 31, 2008, dividends
19 received from a captive real estate investment trust;
20 plus (ii) 100% of the amount by which dividends,
21 included in taxable income and received, including,
22 for taxable years ending on or after December 31,
23 1988, dividends received or deemed received or paid or
24 deemed paid under Sections 951 through 964 of the
25 Internal Revenue Code and including, for taxable years
26 ending on or after December 31, 2008, dividends
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1 received from a captive real estate investment trust,
2 from any such corporation specified in clause (i) that
3 would but for the provisions of Section 1504(b)(3) of
4 the Internal Revenue Code be treated as a member of the
5 affiliated group which includes the dividend
6 recipient, exceed the amount of the modification
7 provided under subparagraph (G) of paragraph (2) of
8 this subsection (b) which is related to such
9 dividends. For taxable years ending on or after June
10 30, 2021, (i) for purposes of this subparagraph, the
11 term "dividend" does not include any amount treated as
12 a dividend under Section 1248 of the Internal Revenue
13 Code, and (ii) this subparagraph shall not apply to
14 dividends for which a deduction is allowed under
15 Section 245(a) of the Internal Revenue Code. This
16 subparagraph (O) is exempt from the provisions of
17 Section 250 of this Act;
18 (P) An amount equal to any contribution made to a
19 job training project established pursuant to the Tax
20 Increment Allocation Redevelopment Act;
21 (Q) An amount equal to the amount of the deduction
22 used to compute the federal income tax credit for
23 restoration of substantial amounts held under claim of
24 right for the taxable year pursuant to Section 1341 of
25 the Internal Revenue Code;
26 (R) On and after July 20, 1999, in the case of an
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1 attorney-in-fact with respect to whom an interinsurer
2 or a reciprocal insurer has made the election under
3 Section 835 of the Internal Revenue Code, 26 U.S.C.
4 835, an amount equal to the excess, if any, of the
5 amounts paid or incurred by that interinsurer or
6 reciprocal insurer in the taxable year to the
7 attorney-in-fact over the deduction allowed to that
8 interinsurer or reciprocal insurer with respect to the
9 attorney-in-fact under Section 835(b) of the Internal
10 Revenue Code for the taxable year; the provisions of
11 this subparagraph are exempt from the provisions of
12 Section 250;
13 (S) For taxable years ending on or after December
14 31, 1997, in the case of a Subchapter S corporation, an
15 amount equal to all amounts of income allocable to a
16 shareholder subject to the Personal Property Tax
17 Replacement Income Tax imposed by subsections (c) and
18 (d) of Section 201 of this Act, including amounts
19 allocable to organizations exempt from federal income
20 tax by reason of Section 501(a) of the Internal
21 Revenue Code. This subparagraph (S) is exempt from the
22 provisions of Section 250;
23 (T) For taxable years 2001 and thereafter, for the
24 taxable year in which the bonus depreciation deduction
25 is taken on the taxpayer's federal income tax return
26 under subsection (k) of Section 168 of the Internal
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1 Revenue Code and for each applicable taxable year
2 thereafter, an amount equal to "x", where:
3 (1) "y" equals the amount of the depreciation
4 deduction taken for the taxable year on the
5 taxpayer's federal income tax return on property
6 for which the bonus depreciation deduction was
7 taken in any year under subsection (k) of Section
8 168 of the Internal Revenue Code, but not
9 including the bonus depreciation deduction;
10 (2) for taxable years ending on or before
11 December 31, 2005, "x" equals "y" multiplied by 30
12 and then divided by 70 (or "y" multiplied by
13 0.429); and
14 (3) for taxable years ending after December
15 31, 2005:
16 (i) for property on which a bonus
17 depreciation deduction of 30% of the adjusted
18 basis was taken, "x" equals "y" multiplied by
19 30 and then divided by 70 (or "y" multiplied
20 by 0.429);
21 (ii) for property on which a bonus
22 depreciation deduction of 50% of the adjusted
23 basis was taken, "x" equals "y" multiplied by
24 1.0;
25 (iii) for property on which a bonus
26 depreciation deduction of 100% of the adjusted
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1 basis was taken in a taxable year ending on or
2 after December 31, 2021, "x" equals the
3 depreciation deduction that would be allowed
4 on that property if the taxpayer had made the
5 election under Section 168(k)(7) of the
6 Internal Revenue Code to not claim bonus
7 depreciation on that property; and
8 (iv) for property on which a bonus
9 depreciation deduction of a percentage other
10 than 30%, 50% or 100% of the adjusted basis
11 was taken in a taxable year ending on or after
12 December 31, 2021, "x" equals "y" multiplied
13 by 100 times the percentage bonus depreciation
14 on the property (that is, 100(bonus%)) and
15 then divided by 100 times 1 minus the
16 percentage bonus depreciation on the property
17 (that is, 100(1-bonus%)).
18 The aggregate amount deducted under this
19 subparagraph in all taxable years for any one piece of
20 property may not exceed the amount of the bonus
21 depreciation deduction taken on that property on the
22 taxpayer's federal income tax return under subsection
23 (k) of Section 168 of the Internal Revenue Code. This
24 subparagraph (T) is exempt from the provisions of
25 Section 250;
26 (U) If the taxpayer sells, transfers, abandons, or
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1 otherwise disposes of property for which the taxpayer
2 was required in any taxable year to make an addition
3 modification under subparagraph (E-10), then an amount
4 equal to that addition modification.
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 required in any taxable year to make an addition
10 modification under subparagraph (E-10), then an amount
11 equal to that addition modification.
12 The taxpayer is allowed to take the deduction
13 under this subparagraph only once with respect to any
14 one piece of property.
15 This subparagraph (U) is exempt from the
16 provisions of Section 250;
17 (V) The amount of: (i) any interest income (net of
18 the deductions allocable thereto) taken into account
19 for the taxable year with respect to a transaction
20 with a taxpayer that is required to make an addition
21 modification with respect to such transaction under
22 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
23 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
24 the amount of such addition modification, (ii) any
25 income from intangible property (net of the deductions
26 allocable thereto) taken into account for the taxable
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1 year with respect to a transaction with a taxpayer
2 that is required to make an addition modification with
3 respect to such transaction under Section
4 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
5 203(d)(2)(D-8), but not to exceed the amount of such
6 addition modification, and (iii) any insurance premium
7 income (net of deductions allocable thereto) taken
8 into account for the taxable year with respect to a
9 transaction with a taxpayer that is required to make
10 an addition modification with respect to such
11 transaction under Section 203(a)(2)(D-19), Section
12 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
13 203(d)(2)(D-9), but not to exceed the amount of that
14 addition modification. This subparagraph (V) is exempt
15 from the provisions of Section 250;
16 (W) An amount equal to the interest income taken
17 into account for the taxable year (net of the
18 deductions allocable thereto) with respect to
19 transactions with (i) a foreign person who would be a
20 member of the taxpayer's unitary business group but
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(b)(2)(E-12) for interest paid, accrued, or
8 incurred, directly or indirectly, to the same person.
9 This subparagraph (W) is exempt from the provisions of
10 Section 250;
11 (X) An amount equal to the income from intangible
12 property taken into account for the taxable year (net
13 of the deductions allocable thereto) with respect to
14 transactions with (i) a foreign person who would be a
15 member of the taxpayer's unitary business group but
16 for the fact that the foreign person's business
17 activity outside the United States is 80% or more of
18 that person's total business activity and (ii) for
19 taxable years ending on or after December 31, 2008, to
20 a person who would be a member of the same unitary
21 business group but for the fact that the person is
22 prohibited under Section 1501(a)(27) from being
23 included in the unitary business group because he or
24 she is ordinarily required to apportion business
25 income under different subsections of Section 304, but
26 not to exceed the addition modification required to be
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1 made for the same taxable year under Section
2 203(b)(2)(E-13) for intangible expenses and costs
3 paid, accrued, or incurred, directly or indirectly, to
4 the same foreign person. This subparagraph (X) is
5 exempt from the provisions of Section 250;
6 (Y) For taxable years ending on or after December
7 31, 2011, in the case of a taxpayer who was required to
8 add back any insurance premiums under Section
9 203(b)(2)(E-14), such taxpayer may elect to subtract
10 that part of a reimbursement received from the
11 insurance company equal to the amount of the expense
12 or loss (including expenses incurred by the insurance
13 company) that would have been taken into account as a
14 deduction for federal income tax purposes if the
15 expense or loss had been uninsured. If a taxpayer
16 makes the election provided for by this subparagraph
17 (Y), the insurer to which the premiums were paid must
18 add back to income the amount subtracted by the
19 taxpayer pursuant to this subparagraph (Y). This
20 subparagraph (Y) is exempt from the provisions of
21 Section 250;
22 (Z) The difference between the nondeductible
23 controlled foreign corporation dividends under Section
24 965(e)(3) of the Internal Revenue Code over the
25 taxable income of the taxpayer, computed without
26 regard to Section 965(e)(2)(A) of the Internal Revenue
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1 Code, and without regard to any net operating loss
2 deduction. This subparagraph (Z) is exempt from the
3 provisions of Section 250; and
4 (AA) For taxable years beginning on or after
5 January 1, 2023, for any cannabis establishment
6 operating in this State and licensed under the
7 Cannabis Regulation and Tax Act or any cannabis
8 cultivation center or medical cannabis dispensing
9 organization operating in this State and licensed
10 under the Compassionate Use of Medical Cannabis
11 Program Act, an amount equal to the deductions that
12 were disallowed under Section 280E of the Internal
13 Revenue Code for the taxable year and that would not be
14 added back under this subsection. The provisions of
15 this subparagraph (AA) are exempt from the provisions
16 of Section 250.
17 (3) Special rule. For purposes of paragraph (2)(A),
18 "gross income" in the case of a life insurance company,
19 for tax years ending on and after December 31, 1994, and
20 prior to December 31, 2011, shall mean the gross
21 investment income for the taxable year and, for tax years
22 ending on or after December 31, 2011, shall mean all
23 amounts included in life insurance gross income under
24 Section 803(a)(3) of the Internal Revenue Code.
25 (c) Trusts and estates.
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1 (1) In general. In the case of a trust or estate, base
2 income means an amount equal to the taxpayer's taxable
3 income for the taxable year as modified by paragraph (2).
4 (2) Modifications. Subject to the provisions of
5 paragraph (3), the taxable income referred to in paragraph
6 (1) shall be modified by adding thereto the sum of the
7 following amounts:
8 (A) An amount equal to all amounts paid or accrued
9 to the taxpayer as interest or dividends during the
10 taxable year to the extent excluded from gross income
11 in the computation of taxable income;
12 (B) In the case of (i) an estate, $600; (ii) a
13 trust which, under its governing instrument, is
14 required to distribute all of its income currently,
15 $300; and (iii) any other trust, $100, but in each such
16 case, only to the extent such amount was deducted in
17 the computation of taxable income;
18 (C) An amount equal to the amount of tax imposed by
19 this Act to the extent deducted from gross income in
20 the computation of taxable income for the taxable
21 year;
22 (D) The amount of any net operating loss deduction
23 taken in arriving at taxable income, other than a net
24 operating loss carried forward from a taxable year
25 ending prior to December 31, 1986;
26 (E) For taxable years in which a net operating
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1 loss carryback or carryforward from a taxable year
2 ending prior to December 31, 1986 is an element of
3 taxable income under paragraph (1) of subsection (e)
4 or subparagraph (E) of paragraph (2) of subsection
5 (e), the amount by which addition modifications other
6 than those provided by this subparagraph (E) exceeded
7 subtraction modifications in such taxable year, with
8 the following limitations applied in the order that
9 they are listed:
10 (i) the addition modification relating to the
11 net operating loss carried back or forward to the
12 taxable year from any taxable year ending prior to
13 December 31, 1986 shall be reduced by the amount
14 of addition modification under this subparagraph
15 (E) which related to that net operating loss and
16 which was taken into account in calculating the
17 base income of an earlier taxable year, and
18 (ii) the addition modification relating to the
19 net operating loss carried back or forward to the
20 taxable year from any taxable year ending prior to
21 December 31, 1986 shall not exceed the amount of
22 such carryback or carryforward;
23 For taxable years in which there is a net
24 operating loss carryback or carryforward from more
25 than one other taxable year ending prior to December
26 31, 1986, the addition modification provided in this
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1 subparagraph (E) shall be the sum of the amounts
2 computed independently under the preceding provisions
3 of this subparagraph (E) for each such taxable year;
4 (F) For taxable years ending on or after January
5 1, 1989, an amount equal to the tax deducted pursuant
6 to Section 164 of the Internal Revenue Code if the
7 trust or estate is claiming the same tax for purposes
8 of the Illinois foreign tax credit under Section 601
9 of this Act;
10 (G) An amount equal to the amount of the capital
11 gain deduction allowable under the Internal Revenue
12 Code, to the extent deducted from gross income in the
13 computation of taxable income;
14 (G-5) For taxable years ending after December 31,
15 1997, an amount equal to any eligible remediation
16 costs that the trust or estate deducted in computing
17 adjusted gross income and for which the trust or
18 estate claims a credit under subsection (l) of Section
19 201;
20 (G-10) For taxable years 2001 and thereafter, an
21 amount equal to the bonus depreciation deduction taken
22 on the taxpayer's federal income tax return for the
23 taxable year under subsection (k) of Section 168 of
24 the Internal Revenue Code; and
25 (G-11) If the taxpayer sells, transfers, abandons,
26 or otherwise disposes of property for which the
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1 taxpayer was required in any taxable year to make an
2 addition modification under subparagraph (G-10), then
3 an amount equal to the aggregate amount of the
4 deductions taken in all taxable years under
5 subparagraph (R) with respect to that property.
6 If the taxpayer continues to own property through
7 the last day of the last tax year for which a
8 subtraction is allowed with respect to that property
9 under subparagraph (R) and for which the taxpayer was
10 allowed in any taxable year to make a subtraction
11 modification under subparagraph (R), then an amount
12 equal to that subtraction modification.
13 The taxpayer is required to make the addition
14 modification under this subparagraph only once with
15 respect to any one piece of property;
16 (G-12) An amount equal to the amount otherwise
17 allowed as a deduction in computing base income for
18 interest paid, accrued, or incurred, directly or
19 indirectly, (i) for taxable years ending on or after
20 December 31, 2004, to a foreign person who would be a
21 member of the same unitary business group but for the
22 fact that the foreign person's business activity
23 outside the United States is 80% or more of the foreign
24 person's total business activity and (ii) for taxable
25 years ending on or after December 31, 2008, to a person
26 who would be a member of the same unitary business
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1 group but for the fact that the person is prohibited
2 under Section 1501(a)(27) from being included in the
3 unitary business group because he or she is ordinarily
4 required to apportion business income under different
5 subsections of Section 304. The addition modification
6 required by this subparagraph shall be reduced to the
7 extent that dividends were included in base income of
8 the unitary group for the same taxable year and
9 received by the taxpayer or by a member of the
10 taxpayer's unitary business group (including amounts
11 included in gross income pursuant to Sections 951
12 through 964 of the Internal Revenue Code and amounts
13 included in gross income under Section 78 of the
14 Internal Revenue Code) with respect to the stock of
15 the same person to whom the interest was paid,
16 accrued, or incurred.
17 This paragraph shall not apply to the following:
18 (i) an item of interest paid, accrued, or
19 incurred, directly or indirectly, to a person who
20 is subject in a foreign country or state, other
21 than a state which requires mandatory unitary
22 reporting, to a tax on or measured by net income
23 with respect to such interest; or
24 (ii) an item of interest paid, accrued, or
25 incurred, directly or indirectly, to a person if
26 the taxpayer can establish, based on a
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1 preponderance of the evidence, both of the
2 following:
3 (a) the person, during the same taxable
4 year, paid, accrued, or incurred, the interest
5 to a person that is not a related member, and
6 (b) the transaction giving rise to the
7 interest expense between the taxpayer and the
8 person did not have as a principal purpose the
9 avoidance of Illinois income tax, and is paid
10 pursuant to a contract or agreement that
11 reflects an arm's-length interest rate and
12 terms; or
13 (iii) the taxpayer can establish, based on
14 clear and convincing evidence, that the interest
15 paid, accrued, or incurred relates to a contract
16 or agreement entered into at arm's-length rates
17 and terms and the principal purpose for the
18 payment is not federal or Illinois tax avoidance;
19 or
20 (iv) an item of interest paid, accrued, or
21 incurred, directly or indirectly, to a person if
22 the taxpayer establishes by clear and convincing
23 evidence that the adjustments are unreasonable; or
24 if the taxpayer and the Director agree in writing
25 to the application or use of an alternative method
26 of apportionment under Section 304(f).
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1 Nothing in this subsection shall preclude the
2 Director from making any other adjustment
3 otherwise allowed under Section 404 of this Act
4 for any tax year beginning after the effective
5 date of this amendment provided such adjustment is
6 made pursuant to regulation adopted by the
7 Department and such regulations provide methods
8 and standards by which the Department will utilize
9 its authority under Section 404 of this Act;
10 (G-13) An amount equal to the amount of intangible
11 expenses and costs otherwise allowed as a deduction in
12 computing base income, and that were paid, accrued, or
13 incurred, directly or indirectly, (i) for taxable
14 years ending on or after December 31, 2004, to a
15 foreign person who would be a member of the same
16 unitary business group but for the fact that the
17 foreign person's business activity outside the United
18 States is 80% or more of that person's total business
19 activity and (ii) for taxable years ending on or after
20 December 31, 2008, to a person who would be a member of
21 the same unitary business group but for the fact that
22 the person is prohibited under Section 1501(a)(27)
23 from being included in the unitary business group
24 because he or she is ordinarily required to apportion
25 business income under different subsections of Section
26 304. The addition modification required by this
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1 subparagraph shall be reduced to the extent that
2 dividends were included in base income of the unitary
3 group for the same taxable year and received by the
4 taxpayer or by a member of the taxpayer's unitary
5 business group (including amounts included in gross
6 income pursuant to Sections 951 through 964 of the
7 Internal Revenue Code and amounts included in gross
8 income under Section 78 of the Internal Revenue Code)
9 with respect to the stock of the same person to whom
10 the intangible expenses and costs were directly or
11 indirectly paid, incurred, or accrued. The preceding
12 sentence shall not apply to the extent that the same
13 dividends caused a reduction to the addition
14 modification required under Section 203(c)(2)(G-12) of
15 this Act. As used in this subparagraph, the term
16 "intangible expenses and costs" includes: (1)
17 expenses, losses, and costs for or related to the
18 direct or indirect acquisition, use, maintenance or
19 management, ownership, sale, exchange, or any other
20 disposition of intangible property; (2) losses
21 incurred, directly or indirectly, from factoring
22 transactions or discounting transactions; (3) royalty,
23 patent, technical, and copyright fees; (4) licensing
24 fees; and (5) other similar expenses and costs. For
25 purposes of this subparagraph, "intangible property"
26 includes patents, patent applications, trade names,
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1 trademarks, service marks, copyrights, mask works,
2 trade secrets, and similar types of intangible assets.
3 This paragraph shall not apply to the following:
4 (i) any item of intangible expenses or costs
5 paid, accrued, or incurred, directly or
6 indirectly, from a transaction with 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 item; or
11 (ii) any item of intangible expense or cost
12 paid, accrued, or incurred, directly or
13 indirectly, if the taxpayer can establish, based
14 on a preponderance of the evidence, both of the
15 following:
16 (a) the person during the same taxable
17 year paid, accrued, or incurred, the
18 intangible expense or cost to a person that is
19 not a related member, and
20 (b) the transaction giving rise to the
21 intangible expense or cost between the
22 taxpayer and the person did not have as a
23 principal purpose the avoidance of Illinois
24 income tax, and is paid pursuant to a contract
25 or agreement that reflects arm's-length terms;
26 or
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1 (iii) any item of intangible expense or cost
2 paid, accrued, or incurred, directly or
3 indirectly, from a transaction with a person if
4 the taxpayer establishes by clear and convincing
5 evidence, that the adjustments are unreasonable;
6 or if the taxpayer and the Director agree in
7 writing to the application or use of an
8 alternative method of apportionment under Section
9 304(f);
10 Nothing in this subsection shall preclude the
11 Director from making any other adjustment
12 otherwise allowed under Section 404 of this Act
13 for any tax year beginning after the effective
14 date of this amendment provided such adjustment is
15 made pursuant to regulation adopted by the
16 Department and such regulations provide methods
17 and standards by which the Department will utilize
18 its authority under Section 404 of this Act;
19 (G-14) For taxable years ending on or after
20 December 31, 2008, an amount equal to the amount of
21 insurance premium expenses and costs otherwise allowed
22 as a deduction in computing base income, and that were
23 paid, accrued, or incurred, directly or indirectly, 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. The
4 addition modification required by this subparagraph
5 shall be reduced to the extent that dividends were
6 included in base income of the unitary group for the
7 same taxable year and received by the taxpayer or by a
8 member of the taxpayer's unitary business group
9 (including amounts included in gross income under
10 Sections 951 through 964 of the Internal Revenue Code
11 and amounts included in gross income under Section 78
12 of the Internal Revenue Code) with respect to the
13 stock of the same person to whom the premiums and costs
14 were directly or indirectly paid, incurred, or
15 accrued. The preceding sentence does not apply to the
16 extent that the same dividends caused a reduction to
17 the addition modification required under Section
18 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
19 Act;
20 (G-15) An amount equal to the credit allowable to
21 the taxpayer under Section 218(a) of this Act,
22 determined without regard to Section 218(c) of this
23 Act;
24 (G-16) For taxable years ending on or after
25 December 31, 2017, an amount equal to the deduction
26 allowed under Section 199 of the Internal Revenue Code
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1 for the taxable year;
2 and by deducting from the total so obtained the sum of the
3 following amounts:
4 (H) An amount equal to all amounts included in
5 such total pursuant to the provisions of Sections
6 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
7 of the Internal Revenue Code or included in such total
8 as distributions under the provisions of any
9 retirement or disability plan for employees of any
10 governmental agency or unit, or retirement payments to
11 retired partners, which payments are excluded in
12 computing net earnings from self employment by Section
13 1402 of the Internal Revenue Code and regulations
14 adopted pursuant thereto;
15 (I) The valuation limitation amount;
16 (J) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the taxpayer
18 and included in such total for the taxable year;
19 (K) An amount equal to all amounts included in
20 taxable income as modified by subparagraphs (A), (B),
21 (C), (D), (E), (F) and (G) which are exempt from
22 taxation by this State either by reason of its
23 statutes or Constitution or by reason of the
24 Constitution, treaties or statutes of the United
25 States; provided that, in the case of any statute of
26 this State that exempts income derived from bonds or
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1 other obligations from the tax imposed under this Act,
2 the amount exempted shall be the interest net of bond
3 premium amortization;
4 (L) With the exception of any amounts subtracted
5 under subparagraph (K), an amount equal to the sum of
6 all amounts disallowed as deductions by (i) Sections
7 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
8 and all amounts of expenses allocable to interest and
9 disallowed as deductions by Section 265(a)(1) of the
10 Internal Revenue Code; and (ii) for taxable years
11 ending on or after August 13, 1999, Sections
12 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
13 Internal Revenue Code, plus, (iii) for taxable years
14 ending on or after December 31, 2011, Section
15 45G(e)(3) of the Internal Revenue Code and, for
16 taxable years ending on or after December 31, 2008,
17 any amount included in gross income under Section 87
18 of the Internal Revenue Code; the provisions of this
19 subparagraph are exempt from the provisions of Section
20 250;
21 (M) An amount equal to those dividends included in
22 such total which were paid by a corporation which
23 conducts business operations in a River Edge
24 Redevelopment Zone or zones created under the River
25 Edge Redevelopment Zone Act and conducts substantially
26 all of its operations in a River Edge Redevelopment
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1 Zone or zones. This subparagraph (M) is exempt from
2 the provisions of Section 250;
3 (N) An amount equal to any contribution made to a
4 job training project established pursuant to the Tax
5 Increment Allocation Redevelopment Act;
6 (O) An amount equal to those dividends included in
7 such total that were paid by a corporation that
8 conducts business operations in a federally designated
9 Foreign Trade Zone or Sub-Zone and that is designated
10 a High Impact Business located in Illinois; provided
11 that dividends eligible for the deduction provided in
12 subparagraph (M) of paragraph (2) of this subsection
13 shall not be eligible for the deduction provided under
14 this subparagraph (O);
15 (P) An amount equal to the amount of the deduction
16 used to compute the federal income tax credit for
17 restoration of substantial amounts held under claim of
18 right for the taxable year pursuant to Section 1341 of
19 the Internal Revenue Code;
20 (Q) For taxable year 1999 and thereafter, an
21 amount equal to the amount of any (i) distributions,
22 to the extent includible in gross income for federal
23 income tax purposes, made to the taxpayer because of
24 his or her status as a victim of persecution for racial
25 or religious reasons by Nazi Germany or any other Axis
26 regime or as an heir of the victim and (ii) items of
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1 income, to the extent includible in gross income for
2 federal income tax purposes, attributable to, derived
3 from or in any way related to assets stolen from,
4 hidden from, or otherwise lost to a victim of
5 persecution for racial or religious reasons by Nazi
6 Germany or any other Axis regime immediately prior to,
7 during, and immediately after World War II, including,
8 but not limited to, interest on the proceeds
9 receivable as insurance under policies issued to a
10 victim of persecution for racial or religious reasons
11 by Nazi Germany or any other Axis regime by European
12 insurance companies immediately prior to and during
13 World War II; provided, however, this subtraction from
14 federal adjusted gross income does not apply to assets
15 acquired with such assets or with the proceeds from
16 the sale of such assets; provided, further, this
17 paragraph shall only apply to a taxpayer who was the
18 first recipient of such assets after their recovery
19 and who is a victim of persecution for racial or
20 religious reasons by Nazi Germany or any other Axis
21 regime or as an heir of the victim. The amount of and
22 the eligibility for any public assistance, benefit, or
23 similar entitlement is not affected by the inclusion
24 of items (i) and (ii) of this paragraph in gross income
25 for federal income tax purposes. This paragraph is
26 exempt from the provisions of Section 250;
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1 (R) For taxable years 2001 and thereafter, for the
2 taxable year in which the bonus depreciation deduction
3 is taken on the taxpayer's federal income tax return
4 under subsection (k) of Section 168 of the Internal
5 Revenue Code and for each applicable taxable year
6 thereafter, an amount equal to "x", where:
7 (1) "y" equals the amount of the depreciation
8 deduction taken for the taxable year on the
9 taxpayer's federal income tax return on property
10 for which the bonus depreciation deduction was
11 taken in any year under subsection (k) of Section
12 168 of the Internal Revenue Code, but not
13 including the bonus depreciation deduction;
14 (2) for taxable years ending on or before
15 December 31, 2005, "x" equals "y" multiplied by 30
16 and then divided by 70 (or "y" multiplied by
17 0.429); and
18 (3) for taxable years ending after December
19 31, 2005:
20 (i) for property on which a bonus
21 depreciation deduction of 30% of the adjusted
22 basis was taken, "x" equals "y" multiplied by
23 30 and then divided by 70 (or "y" multiplied
24 by 0.429);
25 (ii) for property on which a bonus
26 depreciation deduction of 50% of the adjusted
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1 basis was taken, "x" equals "y" multiplied by
2 1.0;
3 (iii) for property on which a bonus
4 depreciation deduction of 100% of the adjusted
5 basis was taken in a taxable year ending on or
6 after December 31, 2021, "x" equals the
7 depreciation deduction that would be allowed
8 on that property if the taxpayer had made the
9 election under Section 168(k)(7) of the
10 Internal Revenue Code to not claim bonus
11 depreciation on that property; and
12 (iv) for property on which a bonus
13 depreciation deduction of a percentage other
14 than 30%, 50% or 100% of the adjusted basis
15 was taken in a taxable year ending on or after
16 December 31, 2021, "x" equals "y" multiplied
17 by 100 times the percentage bonus depreciation
18 on the property (that is, 100(bonus%)) and
19 then divided by 100 times 1 minus the
20 percentage bonus depreciation on the property
21 (that is, 100(1-bonus%)).
22 The aggregate amount deducted under this
23 subparagraph in all taxable years for any one piece of
24 property may not exceed the amount of the bonus
25 depreciation deduction taken on that property on the
26 taxpayer's federal income tax return under subsection
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1 (k) of Section 168 of the Internal Revenue Code. This
2 subparagraph (R) is exempt from the provisions of
3 Section 250;
4 (S) If the taxpayer sells, transfers, abandons, or
5 otherwise disposes of property for which the taxpayer
6 was required in any taxable year to make an addition
7 modification under subparagraph (G-10), then an amount
8 equal to that addition modification.
9 If the taxpayer continues to own property through
10 the last day of the last tax year for which a
11 subtraction is allowed with respect to that property
12 under subparagraph (R) and for which the taxpayer was
13 required in any taxable year to make an addition
14 modification under subparagraph (G-10), then an amount
15 equal to that addition modification.
16 The taxpayer is allowed to take the deduction
17 under this subparagraph only once with respect to any
18 one piece of property.
19 This subparagraph (S) is exempt from the
20 provisions of Section 250;
21 (T) The amount of (i) any interest income (net of
22 the deductions allocable thereto) taken into account
23 for the taxable year with respect to a transaction
24 with a taxpayer that is required to make an addition
25 modification with respect to such transaction under
26 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
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1 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
2 the amount of such addition modification and (ii) any
3 income from intangible property (net of the deductions
4 allocable thereto) taken into account for the taxable
5 year with respect to a transaction with a taxpayer
6 that is required to make an addition modification with
7 respect to such transaction under Section
8 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
9 203(d)(2)(D-8), but not to exceed the amount of such
10 addition modification. This subparagraph (T) is exempt
11 from the provisions of Section 250;
12 (U) An amount equal to the interest income taken
13 into account for the taxable year (net of the
14 deductions allocable thereto) with respect to
15 transactions with (i) a foreign person who would be a
16 member of the taxpayer's unitary business group but
17 for the fact the foreign person's business activity
18 outside the United States is 80% or more of that
19 person's total business activity and (ii) for taxable
20 years ending on or after December 31, 2008, to a person
21 who would be a member of the same unitary business
22 group but for the fact that the person is prohibited
23 under Section 1501(a)(27) from being included in the
24 unitary business group because he or she is ordinarily
25 required to apportion business income under different
26 subsections of Section 304, but not to exceed the
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1 addition modification required to be made for the same
2 taxable year under Section 203(c)(2)(G-12) for
3 interest paid, accrued, or incurred, directly or
4 indirectly, to the same person. This subparagraph (U)
5 is exempt from the provisions of Section 250;
6 (V) An amount equal to the income from intangible
7 property taken into account for the taxable year (net
8 of the deductions allocable thereto) with respect to
9 transactions with (i) a foreign person who would be a
10 member of the taxpayer's unitary business group but
11 for the fact that the foreign person's business
12 activity outside the United States is 80% or more of
13 that person's total business activity and (ii) for
14 taxable years ending on or after December 31, 2008, to
15 a person who would be a member of the same unitary
16 business group but for the fact that the person is
17 prohibited under Section 1501(a)(27) from being
18 included in the unitary business group because he or
19 she is ordinarily required to apportion business
20 income under different subsections of Section 304, but
21 not to exceed the addition modification required to be
22 made for the same taxable year under Section
23 203(c)(2)(G-13) for intangible expenses and costs
24 paid, accrued, or incurred, directly or indirectly, to
25 the same foreign person. This subparagraph (V) is
26 exempt from the provisions of Section 250;
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1 (W) in the case of an estate, an amount equal to
2 all amounts included in such total pursuant to the
3 provisions of Section 111 of the Internal Revenue Code
4 as a recovery of items previously deducted by the
5 decedent from adjusted gross income in the computation
6 of taxable income. This subparagraph (W) is exempt
7 from Section 250;
8 (X) an amount equal to the refund included in such
9 total of any tax deducted for federal income tax
10 purposes, to the extent that deduction was added back
11 under subparagraph (F). This subparagraph (X) is
12 exempt from the provisions of Section 250;
13 (Y) For taxable years ending on or after December
14 31, 2011, in the case of a taxpayer who was required to
15 add back any insurance premiums under Section
16 203(c)(2)(G-14), such taxpayer may elect to subtract
17 that part of a reimbursement received from the
18 insurance company equal to the amount of the expense
19 or loss (including expenses incurred by the insurance
20 company) that would have been taken into account as a
21 deduction for federal income tax purposes if the
22 expense or loss had been uninsured. If a taxpayer
23 makes the election provided for by this subparagraph
24 (Y), the insurer to which the premiums were paid must
25 add back to income the amount subtracted by the
26 taxpayer pursuant to this subparagraph (Y). This
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1 subparagraph (Y) is exempt from the provisions of
2 Section 250;
3 (Z) For taxable years beginning after December 31,
4 2018 and before January 1, 2026, the amount of excess
5 business loss of the taxpayer disallowed as a
6 deduction by Section 461(l)(1)(B) of the Internal
7 Revenue Code; and
8 (AA) For taxable years beginning on or after
9 January 1, 2023, for any cannabis establishment
10 operating in this State and licensed under the
11 Cannabis Regulation and Tax Act or any cannabis
12 cultivation center or medical cannabis dispensing
13 organization operating in this State and licensed
14 under the Compassionate Use of Medical Cannabis
15 Program Act, an amount equal to the deductions that
16 were disallowed under Section 280E of the Internal
17 Revenue Code for the taxable year and that would not be
18 added back under this subsection. The provisions of
19 this subparagraph (AA) are exempt from the provisions
20 of Section 250.
21 (3) Limitation. The amount of any modification
22 otherwise required under this subsection shall, under
23 regulations prescribed by the Department, be adjusted by
24 any amounts included therein which were properly paid,
25 credited, or required to be distributed, or permanently
26 set aside for charitable purposes pursuant to Internal
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1 Revenue Code Section 642(c) during the taxable year.
2 (d) Partnerships.
3 (1) In general. In the case of a partnership, base
4 income means an amount equal to the taxpayer's taxable
5 income for the taxable year as modified by paragraph (2).
6 (2) Modifications. The taxable income referred to in
7 paragraph (1) shall be modified by adding thereto the sum
8 of the following amounts:
9 (A) An amount equal to all amounts paid or accrued
10 to the taxpayer as interest or dividends during the
11 taxable year to the extent excluded from gross income
12 in the computation of taxable income;
13 (B) An amount equal to the amount of tax imposed by
14 this Act to the extent deducted from gross income for
15 the taxable year;
16 (C) The amount of deductions allowed to the
17 partnership pursuant to Section 707 (c) of the
18 Internal Revenue Code in calculating its taxable
19 income;
20 (D) 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 (D-5) For taxable years 2001 and thereafter, an
25 amount equal to the bonus depreciation deduction taken
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1 on the taxpayer's federal income tax return for the
2 taxable year under subsection (k) of Section 168 of
3 the Internal Revenue Code;
4 (D-6) If the taxpayer sells, transfers, abandons,
5 or otherwise disposes of property for which the
6 taxpayer was required in any taxable year to make an
7 addition modification under subparagraph (D-5), then
8 an amount equal to the aggregate amount of the
9 deductions taken in all taxable years under
10 subparagraph (O) with respect to that property.
11 If the taxpayer continues to own property through
12 the last day of the last tax year for which a
13 subtraction is allowed with respect to that property
14 under subparagraph (O) and for which the taxpayer was
15 allowed in any taxable year to make a subtraction
16 modification under subparagraph (O), then an amount
17 equal to that subtraction modification.
18 The taxpayer is required to make the addition
19 modification under this subparagraph only once with
20 respect to any one piece of property;
21 (D-7) An amount equal to the amount otherwise
22 allowed as a deduction in computing base income for
23 interest paid, accrued, or incurred, directly or
24 indirectly, (i) for taxable years ending on or after
25 December 31, 2004, to a foreign person who would be a
26 member of the same unitary business group but for the
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1 fact the foreign person's business activity outside
2 the United States is 80% or more of the foreign
3 person's total business activity and (ii) for taxable
4 years ending on or after December 31, 2008, to a person
5 who would be a member of the same unitary business
6 group but for the fact that the person is prohibited
7 under Section 1501(a)(27) from being included in the
8 unitary business group because he or she is ordinarily
9 required to apportion business income under different
10 subsections of Section 304. The addition modification
11 required by this subparagraph shall be reduced to the
12 extent that dividends were included in base income of
13 the unitary group for the same taxable year and
14 received by the taxpayer or by a member of the
15 taxpayer's unitary business group (including amounts
16 included in gross income pursuant to Sections 951
17 through 964 of the Internal Revenue Code and amounts
18 included in gross income under Section 78 of the
19 Internal Revenue Code) with respect to the stock of
20 the same person to whom the interest was paid,
21 accrued, or incurred.
22 This paragraph shall not apply to the following:
23 (i) an item of interest paid, accrued, or
24 incurred, directly or indirectly, to a person who
25 is subject in a foreign country or state, other
26 than a state which requires mandatory unitary
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1 reporting, to a tax on or measured by net income
2 with respect to such interest; or
3 (ii) an item of interest paid, accrued, or
4 incurred, directly or indirectly, to a person if
5 the taxpayer can establish, based on a
6 preponderance of the evidence, both of the
7 following:
8 (a) the person, during the same taxable
9 year, paid, accrued, or incurred, the interest
10 to a person that is not a related member, and
11 (b) the transaction giving rise to the
12 interest expense between the taxpayer and the
13 person did not have as a principal purpose the
14 avoidance of Illinois income tax, and is paid
15 pursuant to a contract or agreement that
16 reflects an arm's-length interest rate and
17 terms; or
18 (iii) the taxpayer can establish, based on
19 clear and convincing evidence, that the interest
20 paid, accrued, or incurred relates to a contract
21 or agreement entered into at arm's-length rates
22 and terms and the principal purpose for the
23 payment is not federal or Illinois tax avoidance;
24 or
25 (iv) an item of interest paid, accrued, or
26 incurred, directly or indirectly, to a person if
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1 the taxpayer establishes by clear and convincing
2 evidence that the adjustments are unreasonable; or
3 if the taxpayer and the Director agree in writing
4 to the application or use of an alternative method
5 of apportionment under Section 304(f).
6 Nothing in this subsection shall preclude the
7 Director from making any other adjustment
8 otherwise allowed under Section 404 of this Act
9 for any tax year beginning after the effective
10 date of this amendment provided such adjustment is
11 made pursuant to regulation adopted by the
12 Department and such regulations provide methods
13 and standards by which the Department will utilize
14 its authority under Section 404 of this Act; and
15 (D-8) An amount equal to the amount of intangible
16 expenses and costs otherwise allowed as a deduction in
17 computing base income, and that were paid, accrued, or
18 incurred, directly or indirectly, (i) for taxable
19 years ending on or after December 31, 2004, to a
20 foreign person who would be a member of the same
21 unitary business group but for the fact that the
22 foreign person's business activity outside the United
23 States is 80% or more of that person's total business
24 activity and (ii) for taxable years ending on or after
25 December 31, 2008, to a person who would be a member of
26 the same unitary business group but for the fact that
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1 the person is prohibited under Section 1501(a)(27)
2 from being included in the unitary business group
3 because he or she is ordinarily required to apportion
4 business income under different subsections of Section
5 304. The addition modification required by this
6 subparagraph shall be reduced to the extent that
7 dividends were included in base income of the unitary
8 group for the same taxable year and received by the
9 taxpayer or by a member of the taxpayer's unitary
10 business group (including amounts included in gross
11 income pursuant to Sections 951 through 964 of the
12 Internal Revenue Code and amounts included in gross
13 income under Section 78 of the Internal Revenue Code)
14 with respect to the stock of the same person to whom
15 the intangible expenses and costs were directly or
16 indirectly paid, incurred or accrued. The preceding
17 sentence shall not apply to the extent that the same
18 dividends caused a reduction to the addition
19 modification required under Section 203(d)(2)(D-7) of
20 this Act. As used in this subparagraph, the term
21 "intangible expenses and costs" includes (1) expenses,
22 losses, and costs for, or related to, the direct or
23 indirect acquisition, use, maintenance or management,
24 ownership, sale, exchange, or any other disposition of
25 intangible property; (2) losses incurred, directly or
26 indirectly, from factoring transactions or discounting
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1 transactions; (3) royalty, patent, technical, and
2 copyright fees; (4) licensing fees; and (5) other
3 similar expenses and costs. For purposes of this
4 subparagraph, "intangible property" includes patents,
5 patent applications, trade names, trademarks, service
6 marks, copyrights, mask works, trade secrets, and
7 similar types of intangible assets;
8 This paragraph shall not apply to the following:
9 (i) any item of intangible expenses or costs
10 paid, accrued, or incurred, directly or
11 indirectly, from a transaction with a person who
12 is subject in a foreign country or state, other
13 than a state which requires mandatory unitary
14 reporting, to a tax on or measured by net income
15 with respect to such item; or
16 (ii) any item of intangible expense or cost
17 paid, accrued, or incurred, directly or
18 indirectly, if the taxpayer can establish, based
19 on a preponderance of the evidence, both of the
20 following:
21 (a) the person during the same taxable
22 year paid, accrued, or incurred, the
23 intangible expense or cost to a person that is
24 not a related member, and
25 (b) the transaction giving rise to the
26 intangible expense or cost between the
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1 taxpayer and the person did not have as a
2 principal purpose the avoidance of Illinois
3 income tax, and is paid pursuant to a contract
4 or agreement that reflects arm's-length terms;
5 or
6 (iii) any item of intangible expense or cost
7 paid, accrued, or incurred, directly or
8 indirectly, from a transaction with a person if
9 the taxpayer establishes by clear and convincing
10 evidence, that the adjustments are unreasonable;
11 or if the taxpayer and the Director agree in
12 writing to the application or use of an
13 alternative method of apportionment under Section
14 304(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-9) For taxable years ending on or after
25 December 31, 2008, an amount equal to the amount of
26 insurance premium expenses and costs otherwise allowed
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1 as a deduction in computing base income, and that were
2 paid, accrued, or incurred, directly or indirectly, 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. The
9 addition modification required by this subparagraph
10 shall be reduced to the extent that dividends were
11 included in base income of the unitary group for the
12 same taxable year and received by the taxpayer or by a
13 member of the taxpayer's unitary business group
14 (including amounts included in gross income under
15 Sections 951 through 964 of the Internal Revenue Code
16 and amounts included in gross income under Section 78
17 of the Internal Revenue Code) with respect to the
18 stock of the same person to whom the premiums and costs
19 were directly or indirectly paid, incurred, or
20 accrued. The preceding sentence does not apply to the
21 extent that the same dividends caused a reduction to
22 the addition modification required under Section
23 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
24 (D-10) An amount equal to the credit allowable to
25 the taxpayer under Section 218(a) of this Act,
26 determined without regard to Section 218(c) of this
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1 Act;
2 (D-11) For taxable years ending on or after
3 December 31, 2017, an amount equal to the deduction
4 allowed under Section 199 of the Internal Revenue Code
5 for the taxable year;
6 and by deducting from the total so obtained the following
7 amounts:
8 (E) The valuation limitation amount;
9 (F) An amount equal to the amount of any tax
10 imposed by this Act which was refunded to the taxpayer
11 and included in such total for the taxable year;
12 (G) An amount equal to all amounts included in
13 taxable income as modified by subparagraphs (A), (B),
14 (C) and (D) which are exempt from taxation by this
15 State either by reason of its statutes or Constitution
16 or by reason of the Constitution, treaties or statutes
17 of the United States; provided that, in the case of any
18 statute of this State that exempts income derived from
19 bonds or other obligations from the tax imposed under
20 this Act, the amount exempted shall be the interest
21 net of bond premium amortization;
22 (H) Any income of the partnership which
23 constitutes personal service income as defined in
24 Section 1348(b)(1) of the Internal Revenue Code (as in
25 effect December 31, 1981) or a reasonable allowance
26 for compensation paid or accrued for services rendered
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1 by partners to the partnership, whichever is greater;
2 this subparagraph (H) is exempt from the provisions of
3 Section 250;
4 (I) An amount equal to all amounts of income
5 distributable to an entity subject to the Personal
6 Property Tax Replacement Income Tax imposed by
7 subsections (c) and (d) of Section 201 of this Act
8 including amounts distributable to organizations
9 exempt from federal income tax by reason of Section
10 501(a) of the Internal Revenue Code; this subparagraph
11 (I) is exempt from the provisions of Section 250;
12 (J) With the exception of any amounts subtracted
13 under subparagraph (G), an amount equal to the sum of
14 all amounts disallowed as deductions by (i) Sections
15 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
16 and all amounts of expenses allocable to interest and
17 disallowed as deductions by Section 265(a)(1) of the
18 Internal Revenue Code; and (ii) for taxable years
19 ending on or after August 13, 1999, Sections
20 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
21 Internal Revenue Code, plus, (iii) for taxable years
22 ending on or after December 31, 2011, Section
23 45G(e)(3) of the Internal Revenue Code and, for
24 taxable years ending on or after December 31, 2008,
25 any amount included in gross income under Section 87
26 of the Internal Revenue Code; the provisions of this
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1 subparagraph are exempt from the provisions of Section
2 250;
3 (K) An amount equal to those dividends included in
4 such total which were paid by a corporation which
5 conducts business operations in a River Edge
6 Redevelopment Zone or zones created under the River
7 Edge Redevelopment Zone Act and conducts substantially
8 all of its operations from a River Edge Redevelopment
9 Zone or zones. This subparagraph (K) is exempt from
10 the provisions of Section 250;
11 (L) An amount equal to any contribution made to a
12 job training project established pursuant to the Real
13 Property Tax Increment Allocation Redevelopment Act;
14 (M) An amount equal to those dividends included in
15 such total that were paid by a corporation that
16 conducts business operations in a federally designated
17 Foreign Trade Zone or Sub-Zone and that is designated
18 a High Impact Business located in Illinois; provided
19 that dividends eligible for the deduction provided in
20 subparagraph (K) of paragraph (2) of this subsection
21 shall not be eligible for the deduction provided under
22 this subparagraph (M);
23 (N) An amount equal to the amount of the deduction
24 used to compute the federal income tax credit for
25 restoration of substantial amounts held under claim of
26 right for the taxable year pursuant to Section 1341 of
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1 the Internal Revenue Code;
2 (O) For taxable years 2001 and thereafter, for the
3 taxable year in which the bonus depreciation deduction
4 is taken on the taxpayer's federal income tax return
5 under subsection (k) of Section 168 of the Internal
6 Revenue Code and for each applicable taxable year
7 thereafter, an amount equal to "x", where:
8 (1) "y" equals the amount of the depreciation
9 deduction taken for the taxable year on the
10 taxpayer's federal income tax return on property
11 for which the bonus depreciation deduction was
12 taken in any year under subsection (k) of Section
13 168 of the Internal Revenue Code, but not
14 including the bonus depreciation deduction;
15 (2) for taxable years ending on or before
16 December 31, 2005, "x" equals "y" multiplied by 30
17 and then divided by 70 (or "y" multiplied by
18 0.429); and
19 (3) for taxable years ending after December
20 31, 2005:
21 (i) for property on which a bonus
22 depreciation deduction of 30% of the adjusted
23 basis was taken, "x" equals "y" multiplied by
24 30 and then divided by 70 (or "y" multiplied
25 by 0.429);
26 (ii) for property on which a bonus
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1 depreciation deduction of 50% of the adjusted
2 basis was taken, "x" equals "y" multiplied by
3 1.0;
4 (iii) for property on which a bonus
5 depreciation deduction of 100% of the adjusted
6 basis was taken in a taxable year ending on or
7 after December 31, 2021, "x" equals the
8 depreciation deduction that would be allowed
9 on that property if the taxpayer had made the
10 election under Section 168(k)(7) of the
11 Internal Revenue Code to not claim bonus
12 depreciation on that property; and
13 (iv) for property on which a bonus
14 depreciation deduction of a percentage other
15 than 30%, 50% or 100% of the adjusted basis
16 was taken in a taxable year ending on or after
17 December 31, 2021, "x" equals "y" multiplied
18 by 100 times the percentage bonus depreciation
19 on the property (that is, 100(bonus%)) and
20 then divided by 100 times 1 minus the
21 percentage bonus depreciation on the property
22 (that is, 100(1-bonus%)).
23 The aggregate amount deducted under this
24 subparagraph in all taxable years for any one piece of
25 property may not exceed the amount of the bonus
26 depreciation deduction taken on that property on the
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1 taxpayer's federal income tax return under subsection
2 (k) of Section 168 of the Internal Revenue Code. This
3 subparagraph (O) is exempt from the provisions of
4 Section 250;
5 (P) If the taxpayer sells, transfers, abandons, or
6 otherwise disposes of property for which the taxpayer
7 was required in any taxable year to make an addition
8 modification under subparagraph (D-5), then an amount
9 equal to that addition modification.
10 If the taxpayer continues to own property through
11 the last day of the last tax year for which a
12 subtraction is allowed with respect to that property
13 under subparagraph (O) and for which the taxpayer was
14 required in any taxable year to make an addition
15 modification under subparagraph (D-5), then an amount
16 equal to that addition modification.
17 The taxpayer is allowed to take the deduction
18 under this subparagraph only once with respect to any
19 one piece of property.
20 This subparagraph (P) is exempt from the
21 provisions of Section 250;
22 (Q) The amount of (i) any interest income (net of
23 the deductions allocable thereto) taken into account
24 for the taxable year with respect to a transaction
25 with a taxpayer that is required to make an addition
26 modification with respect to such transaction under
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1 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
2 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
3 the amount of such addition modification and (ii) any
4 income from intangible property (net of the deductions
5 allocable thereto) taken into account for the taxable
6 year with respect to a transaction with a taxpayer
7 that is required to make an addition modification with
8 respect to such transaction under Section
9 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
10 203(d)(2)(D-8), but not to exceed the amount of such
11 addition modification. This subparagraph (Q) is exempt
12 from Section 250;
13 (R) An amount equal to the interest income taken
14 into account for the taxable year (net of the
15 deductions allocable thereto) with respect to
16 transactions with (i) a foreign person who would be a
17 member of the taxpayer's unitary business group but
18 for the fact that the foreign person's business
19 activity outside the United States is 80% or more of
20 that person's total business activity and (ii) for
21 taxable years ending on or after December 31, 2008, to
22 a person who would be a member of the same unitary
23 business group but for the fact that the person is
24 prohibited under Section 1501(a)(27) from being
25 included in the unitary business group because he or
26 she is ordinarily required to apportion business
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1 income under different subsections of Section 304, but
2 not to exceed the addition modification required to be
3 made for the same taxable year under Section
4 203(d)(2)(D-7) for interest paid, accrued, or
5 incurred, directly or indirectly, to the same person.
6 This subparagraph (R) is exempt from Section 250;
7 (S) An amount equal to the income from intangible
8 property taken into account for the taxable year (net
9 of the deductions allocable thereto) with respect to
10 transactions with (i) a foreign person who would be a
11 member of the taxpayer's unitary business group but
12 for the fact that the foreign person's business
13 activity outside the United States is 80% or more of
14 that person's total business activity and (ii) for
15 taxable years ending on or after December 31, 2008, to
16 a person who would be a member of the same unitary
17 business group but for the fact that the person is
18 prohibited under Section 1501(a)(27) from being
19 included in the unitary business group because he or
20 she is ordinarily required to apportion business
21 income under different subsections of Section 304, but
22 not to exceed the addition modification required to be
23 made for the same taxable year under Section
24 203(d)(2)(D-8) for intangible expenses and costs paid,
25 accrued, or incurred, directly or indirectly, to the
26 same person. This subparagraph (S) is exempt from
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1 Section 250;
2 (T) For taxable years ending on or after December
3 31, 2011, in the case of a taxpayer who was required to
4 add back any insurance premiums under Section
5 203(d)(2)(D-9), such taxpayer may elect to subtract
6 that part of a reimbursement received from the
7 insurance company equal to the amount of the expense
8 or loss (including expenses incurred by the insurance
9 company) that would have been taken into account as a
10 deduction for federal income tax purposes if the
11 expense or loss had been uninsured. If a taxpayer
12 makes the election provided for by this subparagraph
13 (T), the insurer to which the premiums were paid must
14 add back to income the amount subtracted by the
15 taxpayer pursuant to this subparagraph (T). This
16 subparagraph (T) is exempt from the provisions of
17 Section 250; and
18 (U) For taxable years beginning on or after
19 January 1, 2023, for any cannabis establishment
20 operating in this State and licensed under the
21 Cannabis Regulation and Tax Act or any cannabis
22 cultivation center or medical cannabis dispensing
23 organization operating in this State and licensed
24 under the Compassionate Use of Medical Cannabis
25 Program Act, an amount equal to the deductions that
26 were disallowed under Section 280E of the Internal
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1 Revenue Code for the taxable year and that would not be
2 added back under this subsection. The provisions of
3 this subparagraph (U) are exempt from the provisions
4 of Section 250.
5 (e) Gross income; adjusted gross income; taxable income.
6 (1) In general. Subject to the provisions of paragraph
7 (2) and subsection (b)(3), for purposes of this Section
8 and Section 803(e), a taxpayer's gross income, adjusted
9 gross income, or taxable income for the taxable year shall
10 mean the amount of gross income, adjusted gross income or
11 taxable income properly reportable for federal income tax
12 purposes for the taxable year under the provisions of the
13 Internal Revenue Code. Taxable income may be less than
14 zero. However, for taxable years ending on or after
15 December 31, 1986, net operating loss carryforwards from
16 taxable years ending prior to December 31, 1986, may not
17 exceed the sum of federal taxable income for the taxable
18 year before net operating loss deduction, plus the excess
19 of addition modifications over subtraction modifications
20 for the taxable year. For taxable years ending prior to
21 December 31, 1986, taxable income may never be an amount
22 in excess of the net operating loss for the taxable year as
23 defined in subsections (c) and (d) of Section 172 of the
24 Internal Revenue Code, provided that when taxable income
25 of a corporation (other than a Subchapter S corporation),
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1 trust, or estate is less than zero and addition
2 modifications, other than those provided by subparagraph
3 (E) of paragraph (2) of subsection (b) for corporations or
4 subparagraph (E) of paragraph (2) of subsection (c) for
5 trusts and estates, exceed subtraction modifications, an
6 addition modification must be made under those
7 subparagraphs for any other taxable year to which the
8 taxable income less than zero (net operating loss) is
9 applied under Section 172 of the Internal Revenue Code or
10 under subparagraph (E) of paragraph (2) of this subsection
11 (e) applied in conjunction with Section 172 of the
12 Internal Revenue Code.
13 (2) Special rule. For purposes of paragraph (1) of
14 this subsection, the taxable income properly reportable
15 for federal income tax purposes shall mean:
16 (A) Certain life insurance companies. In the case
17 of a life insurance company subject to the tax imposed
18 by Section 801 of the Internal Revenue Code, life
19 insurance company taxable income, plus the amount of
20 distribution from pre-1984 policyholder surplus
21 accounts as calculated under Section 815a of the
22 Internal Revenue Code;
23 (B) Certain other insurance companies. In the case
24 of mutual insurance companies subject to the tax
25 imposed by Section 831 of the Internal Revenue Code,
26 insurance company taxable income;
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1 (C) Regulated investment companies. In the case of
2 a regulated investment company subject to the tax
3 imposed by Section 852 of the Internal Revenue Code,
4 investment company taxable income;
5 (D) Real estate investment trusts. In the case of
6 a real estate investment trust subject to the tax
7 imposed by Section 857 of the Internal Revenue Code,
8 real estate investment trust taxable income;
9 (E) Consolidated corporations. In the case of a
10 corporation which is a member of an affiliated group
11 of corporations filing a consolidated income tax
12 return for the taxable year for federal income tax
13 purposes, taxable income determined as if such
14 corporation had filed a separate return for federal
15 income tax purposes for the taxable year and each
16 preceding taxable year for which it was a member of an
17 affiliated group. For purposes of this subparagraph,
18 the taxpayer's separate taxable income shall be
19 determined as if the election provided by Section
20 243(b)(2) of the Internal Revenue Code had been in
21 effect for all such years;
22 (F) Cooperatives. In the case of a cooperative
23 corporation or association, the taxable income of such
24 organization determined in accordance with the
25 provisions of Section 1381 through 1388 of the
26 Internal Revenue Code, but without regard to the
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1 prohibition against offsetting losses from patronage
2 activities against income from nonpatronage
3 activities; except that a cooperative corporation or
4 association may make an election to follow its federal
5 income tax treatment of patronage losses and
6 nonpatronage losses. In the event such election is
7 made, such losses shall be computed and carried over
8 in a manner consistent with subsection (a) of Section
9 207 of this Act and apportioned by the apportionment
10 factor reported by the cooperative on its Illinois
11 income tax return filed for the taxable year in which
12 the losses are incurred. The election shall be
13 effective for all taxable years with original returns
14 due on or after the date of the election. In addition,
15 the cooperative may file an amended return or returns,
16 as allowed under this Act, to provide that the
17 election shall be effective for losses incurred or
18 carried forward for taxable years occurring prior to
19 the date of the election. Once made, the election may
20 only be revoked upon approval of the Director. The
21 Department shall adopt rules setting forth
22 requirements for documenting the elections and any
23 resulting Illinois net loss and the standards to be
24 used by the Director in evaluating requests to revoke
25 elections. Public Act 96-932 is declaratory of
26 existing law;
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1 (G) Subchapter S corporations. In the case of: (i)
2 a Subchapter S corporation for which there is in
3 effect an election for the taxable year under Section
4 1362 of the Internal Revenue Code, the taxable income
5 of such corporation determined in accordance with
6 Section 1363(b) of the Internal Revenue Code, except
7 that taxable income shall take into account those
8 items which are required by Section 1363(b)(1) of the
9 Internal Revenue Code to be separately stated; and
10 (ii) a Subchapter S corporation for which there is in
11 effect a federal election to opt out of the provisions
12 of the Subchapter S Revision Act of 1982 and have
13 applied instead the prior federal Subchapter S rules
14 as in effect on July 1, 1982, the taxable income of
15 such corporation determined in accordance with the
16 federal Subchapter S rules as in effect on July 1,
17 1982; and
18 (H) Partnerships. In the case of a partnership,
19 taxable income determined in accordance with Section
20 703 of the Internal Revenue Code, except that taxable
21 income shall take into account those items which are
22 required by Section 703(a)(1) to be separately stated
23 but which would be taken into account by an individual
24 in calculating his taxable income.
25 (3) Recapture of business expenses on disposition of
26 asset or business. Notwithstanding any other law to the
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1 contrary, if in prior years income from an asset or
2 business has been classified as business income and in a
3 later year is demonstrated to be non-business income, then
4 all expenses, without limitation, deducted in such later
5 year and in the 2 immediately preceding taxable years
6 related to that asset or business that generated the
7 non-business income shall be added back and recaptured as
8 business income in the year of the disposition of the
9 asset or business. Such amount shall be apportioned to
10 Illinois using the greater of the apportionment fraction
11 computed for the business under Section 304 of this Act
12 for the taxable year or the average of the apportionment
13 fractions computed for the business under Section 304 of
14 this Act for the taxable year and for the 2 immediately
15 preceding taxable years.
16 (f) Valuation limitation amount.
17 (1) In general. The valuation limitation amount
18 referred to in subsections (a)(2)(G), (c)(2)(I) and
19 (d)(2)(E) is an amount equal to:
20 (A) The sum of the pre-August 1, 1969 appreciation
21 amounts (to the extent consisting of gain reportable
22 under the provisions of Section 1245 or 1250 of the
23 Internal Revenue Code) for all property in respect of
24 which such gain was reported for the taxable year;
25 plus
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1 (B) The lesser of (i) the sum of the pre-August 1,
2 1969 appreciation amounts (to the extent consisting of
3 capital gain) for all property in respect of which
4 such gain was reported for federal income tax purposes
5 for the taxable year, or (ii) the net capital gain for
6 the taxable year, reduced in either case by any amount
7 of such gain included in the amount determined under
8 subsection (a)(2)(F) or (c)(2)(H).
9 (2) Pre-August 1, 1969 appreciation amount.
10 (A) If the fair market value of property referred
11 to in paragraph (1) was readily ascertainable on
12 August 1, 1969, the pre-August 1, 1969 appreciation
13 amount for such property is the lesser of (i) the
14 excess of such fair market value over the taxpayer's
15 basis (for determining gain) for such property on that
16 date (determined under the Internal Revenue Code as in
17 effect on that date), or (ii) the total gain realized
18 and reportable for federal income tax purposes in
19 respect of the sale, exchange or other disposition of
20 such property.
21 (B) If the fair market value of property referred
22 to in paragraph (1) was not readily ascertainable on
23 August 1, 1969, the pre-August 1, 1969 appreciation
24 amount for such property is that amount which bears
25 the same ratio to the total gain reported in respect of
26 the property for federal income tax purposes for the
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1 taxable year, as the number of full calendar months in
2 that part of the taxpayer's holding period for the
3 property ending July 31, 1969 bears to the number of
4 full calendar months in the taxpayer's entire holding
5 period for the property.
6 (C) The Department shall prescribe such
7 regulations as may be necessary to carry out the
8 purposes of this paragraph.
9 (g) Double deductions. Unless specifically provided
10 otherwise, nothing in this Section shall permit the same item
11 to be deducted more than once.
12 (h) Legislative intention. Except as expressly provided by
13 this Section there shall be no modifications or limitations on
14 the amounts of income, gain, loss or deduction taken into
15 account in determining gross income, adjusted gross income or
16 taxable income for federal income tax purposes for the taxable
17 year, or in the amount of such items entering into the
18 computation of base income and net income under this Act for
19 such taxable year, whether in respect of property values as of
20 August 1, 1969 or otherwise.
21 (Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
22 102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
23 12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
24 9-26-23.)
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