Illinois Senate Bill SB1906 Latest Draft

                            103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1906 Introduced 2/9/2023, by Sen. Chapin Rose SYNOPSIS AS INTRODUCED:  35 ILCS 5/203 from Ch. 120, par. 2-203  Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude (i) the portion of income or loss that is received from a trade or business conducted within and without Illinois and that is not derived from or connected with Illinois sources and (ii) the portion of income or loss that is received from a pass-through entity conducting business within and without Illinois and that is not derived from or connected with Illinois sources. Effective immediately.  LRB103 05197 HLH 50213 b   A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1906 Introduced 2/9/2023, by Sen. Chapin Rose SYNOPSIS AS INTRODUCED:  35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203 Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude (i) the portion of income or loss that is received from a trade or business conducted within and without Illinois and that is not derived from or connected with Illinois sources and (ii) the portion of income or loss that is received from a pass-through entity conducting business within and without Illinois and that is not derived from or connected with Illinois sources. Effective immediately.  LRB103 05197 HLH 50213 b     LRB103 05197 HLH 50213 b   A BILL FOR
103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1906 Introduced 2/9/2023, by Sen. Chapin Rose SYNOPSIS AS INTRODUCED:
35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude (i) the portion of income or loss that is received from a trade or business conducted within and without Illinois and that is not derived from or connected with Illinois sources and (ii) the portion of income or loss that is received from a pass-through entity conducting business within and without Illinois and that is not derived from or connected with Illinois sources. Effective immediately.
LRB103 05197 HLH 50213 b     LRB103 05197 HLH 50213 b
    LRB103 05197 HLH 50213 b
A BILL FOR
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1  AN ACT concerning revenue.
2  Be it enacted by the People of the State of Illinois,
3  represented in the General Assembly:
4  Section 5. The Illinois Income Tax Act is amended by
5  changing Section 203 as follows:
6  (35 ILCS 5/203) (from Ch. 120, par. 2-203)
7  Sec. 203. Base income defined.
8  (a) Individuals.
9  (1) In general. In the case of an individual, base
10  income means an amount equal to the taxpayer's adjusted
11  gross income for the taxable year as modified by paragraph
12  (2).
13  (2) Modifications. The adjusted gross income referred
14  to in paragraph (1) shall be modified by adding thereto
15  the sum of the following amounts:
16  (A) An amount equal to all amounts paid or accrued
17  to the taxpayer as interest or dividends during the
18  taxable year to the extent excluded from gross income
19  in the computation of adjusted gross income, except
20  stock dividends of qualified public utilities
21  described in Section 305(e) of the Internal Revenue
22  Code;
23  (B) An amount equal to the amount of tax imposed by

 

103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1906 Introduced 2/9/2023, by Sen. Chapin Rose SYNOPSIS AS INTRODUCED:
35 ILCS 5/203 from Ch. 120, par. 2-203 35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude (i) the portion of income or loss that is received from a trade or business conducted within and without Illinois and that is not derived from or connected with Illinois sources and (ii) the portion of income or loss that is received from a pass-through entity conducting business within and without Illinois and that is not derived from or connected with Illinois sources. Effective immediately.
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    LRB103 05197 HLH 50213 b
A BILL FOR

 

 

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



    LRB103 05197 HLH 50213 b

 

 



 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  (GG), the insurer to which the premiums were paid must
2  add back to income the amount subtracted by the
3  taxpayer pursuant to this subparagraph (GG). This
4  subparagraph (GG) is exempt from the provisions of
5  Section 250; and
6  (HH) For taxable years beginning on or after
7  January 1, 2018 and prior to January 1, 2023, a maximum
8  of $10,000 contributed in the taxable year to a
9  qualified ABLE account under Section 16.6 of the State
10  Treasurer Act, except that amounts excluded from gross
11  income under Section 529(c)(3)(C)(i) or Section
12  529A(c)(1)(C) of the Internal Revenue Code shall not
13  be considered moneys contributed under this
14  subparagraph (HH). For purposes of this subparagraph
15  (HH), contributions made by an employer on behalf of
16  an employee, or matching contributions made by an
17  employee, shall be treated as made by the employee.
18  (b) Corporations.
19  (1) In general. In the case of a corporation, base
20  income means an amount equal to the taxpayer's taxable
21  income for the taxable year as modified by paragraph (2).
22  (2) Modifications. The taxable income referred to in
23  paragraph (1) shall be modified by adding thereto the sum
24  of the following amounts:
25  (A) An amount equal to all amounts paid or accrued

 

 

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1  to the taxpayer as interest and all distributions
2  received from regulated investment companies during
3  the taxable year to the extent excluded from gross
4  income in the computation of taxable income;
5  (B) An amount equal to the amount of tax imposed by
6  this Act to the extent deducted from gross income in
7  the computation of taxable income for the taxable
8  year;
9  (C) In the case of a regulated investment company,
10  an amount equal to the excess of (i) the net long-term
11  capital gain for the taxable year, over (ii) the
12  amount of the capital gain dividends designated as
13  such in accordance with Section 852(b)(3)(C) of the
14  Internal Revenue Code and any amount designated under
15  Section 852(b)(3)(D) of the Internal Revenue Code,
16  attributable to the taxable year (this amendatory Act
17  of 1995 (Public Act 89-89) is declarative of existing
18  law and is not a new enactment);
19  (D) The amount of any net operating loss deduction
20  taken in arriving at taxable income, other than a net
21  operating loss carried forward from a taxable year
22  ending prior to December 31, 1986;
23  (E) For taxable years in which a net operating
24  loss carryback or carryforward from a taxable year
25  ending prior to December 31, 1986 is an element of
26  taxable income under paragraph (1) of subsection (e)

 

 

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

 

 

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1  (E-5) For taxable years ending after December 31,
2  1997, an amount equal to any eligible remediation
3  costs that the corporation deducted in computing
4  adjusted gross income and for which the corporation
5  claims a credit under subsection (l) of Section 201;
6  (E-10) For taxable years 2001 and thereafter, an
7  amount equal to the bonus depreciation deduction taken
8  on the taxpayer's federal income tax return for the
9  taxable year under subsection (k) of Section 168 of
10  the Internal Revenue Code;
11  (E-11) If the taxpayer sells, transfers, abandons,
12  or otherwise disposes of property for which the
13  taxpayer was required in any taxable year to make an
14  addition modification under subparagraph (E-10), then
15  an amount equal to the aggregate amount of the
16  deductions taken in all taxable years under
17  subparagraph (T) with respect to that property.
18  If the taxpayer continues to own property through
19  the last day of the last tax year for which a
20  subtraction is allowed with respect to that property
21  under subparagraph (T) and for which the taxpayer was
22  allowed in any taxable year to make a subtraction
23  modification under subparagraph (T), then an amount
24  equal to that subtraction modification.
25  The taxpayer is required to make the addition
26  modification under this subparagraph only once with

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  accrued. The preceding sentence does not apply to the
2  extent that the same dividends caused a reduction to
3  the addition modification required under Section
4  203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
5  Act;
6  (E-15) For taxable years beginning after December
7  31, 2008, any deduction for dividends paid by a
8  captive real estate investment trust that is allowed
9  to a real estate investment trust under Section
10  857(b)(2)(B) of the Internal Revenue Code for
11  dividends paid;
12  (E-16) An amount equal to the credit allowable to
13  the taxpayer under Section 218(a) of this Act,
14  determined without regard to Section 218(c) of this
15  Act;
16  (E-17) For taxable years ending on or after
17  December 31, 2017, an amount equal to the deduction
18  allowed under Section 199 of the Internal Revenue Code
19  for the taxable year;
20  (E-18) for taxable years beginning after December
21  31, 2018, an amount equal to the deduction allowed
22  under Section 250(a)(1)(A) of the Internal Revenue
23  Code for the taxable year;
24  (E-19) for taxable years ending on or after June
25  30, 2021, an amount equal to the deduction allowed
26  under Section 250(a)(1)(B)(i) of the Internal Revenue

 

 

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1  Code for the taxable year;
2  (E-20) for taxable years ending on or after June
3  30, 2021, an amount equal to the deduction allowed
4  under Sections 243(e) and 245A(a) of the Internal
5  Revenue Code for the taxable year.
6  and by deducting from the total so obtained the sum of the
7  following amounts:
8  (F) An amount equal to the amount of any tax
9  imposed by this Act which was refunded to the taxpayer
10  and included in such total for the taxable year;
11  (G) An amount equal to any amount included in such
12  total under Section 78 of the Internal Revenue Code;
13  (H) In the case of a regulated investment company,
14  an amount equal to the amount of exempt interest
15  dividends as defined in subsection (b)(5) of Section
16  852 of the Internal Revenue Code, paid to shareholders
17  for the taxable year;
18  (I) With the exception of any amounts subtracted
19  under subparagraph (J), an amount equal to the sum of
20  all amounts disallowed as deductions by (i) Sections
21  171(a)(2) and 265(a)(2) and amounts disallowed as
22  interest expense by Section 291(a)(3) of the Internal
23  Revenue Code, and all amounts of expenses allocable to
24  interest and disallowed as deductions by Section
25  265(a)(1) of the Internal Revenue Code; and (ii) for
26  taxable years ending on or after August 13, 1999,

 

 

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1  Sections 171(a)(2), 265, 280C, 291(a)(3), and
2  832(b)(5)(B)(i) of the Internal Revenue Code, plus,
3  for tax years ending on or after December 31, 2011,
4  amounts disallowed as deductions by Section 45G(e)(3)
5  of the Internal Revenue Code and, for taxable years
6  ending on or after December 31, 2008, any amount
7  included in gross income under Section 87 of the
8  Internal Revenue Code and the policyholders' share of
9  tax-exempt interest of a life insurance company under
10  Section 807(a)(2)(B) of the Internal Revenue Code (in
11  the case of a life insurance company with gross income
12  from a decrease in reserves for the tax year) or
13  Section 807(b)(1)(B) of the Internal Revenue Code (in
14  the case of a life insurance company allowed a
15  deduction for an increase in reserves for the tax
16  year); the provisions of this subparagraph are exempt
17  from the provisions of Section 250;
18  (J) An amount equal to all amounts included in
19  such total which are exempt from taxation by this
20  State either by reason of its statutes or Constitution
21  or by reason of the Constitution, treaties or statutes
22  of the United States; provided that, in the case of any
23  statute of this State that exempts income derived from
24  bonds or other obligations from the tax imposed under
25  this Act, the amount exempted shall be the interest
26  net of bond premium amortization;

 

 

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1  (K) 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 substantially
6  all of its operations in a River Edge Redevelopment
7  Zone or zones. This subparagraph (K) is exempt from
8  the provisions of Section 250;
9  (L) 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 (K) of paragraph 2 of this subsection
16  shall not be eligible for the deduction provided under
17  this subparagraph (L);
18  (M) For any taxpayer that is a financial
19  organization within the meaning of Section 304(c) of
20  this Act, an amount included in such total as interest
21  income from a loan or loans made by such taxpayer to a
22  borrower, to the extent that such a loan is secured by
23  property which is eligible for the River Edge
24  Redevelopment Zone Investment Credit. To determine the
25  portion of a loan or loans that is secured by property
26  eligible for a Section 201(f) investment credit to the

 

 

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

 

 

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1  investment credit property which secures the loan or
2  loans, using for this purpose the original basis of
3  such property on the date that it was placed in service
4  in a federally designated Foreign Trade Zone or
5  Sub-Zone located in Illinois. No taxpayer that is
6  eligible for the deduction provided in subparagraph
7  (M) of paragraph (2) of this subsection shall be
8  eligible for the deduction provided under this
9  subparagraph (M-1). The subtraction modification
10  available to taxpayers in any year under this
11  subsection shall be that portion of the total interest
12  paid by the borrower with respect to such loan
13  attributable to the eligible property as calculated
14  under the previous sentence;
15  (N) Two times any contribution made during the
16  taxable year to a designated zone organization to the
17  extent that the contribution (i) qualifies as a
18  charitable contribution under subsection (c) of
19  Section 170 of the Internal Revenue Code and (ii)
20  must, by its terms, be used for a project approved by
21  the Department of Commerce and Economic Opportunity
22  under Section 11 of the Illinois Enterprise Zone Act
23  or under Section 10-10 of the River Edge Redevelopment
24  Zone Act. This subparagraph (N) is exempt from the
25  provisions of Section 250;
26  (O) An amount equal to: (i) 85% for taxable years

 

 

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1  ending on or before December 31, 1992, or, a
2  percentage equal to the percentage allowable under
3  Section 243(a)(1) of the Internal Revenue Code of 1986
4  for taxable years ending after December 31, 1992, of
5  the amount by which dividends included in taxable
6  income and received from a corporation that is not
7  created or organized under the laws of the United
8  States or any state or political subdivision thereof,
9  including, for taxable years ending on or after
10  December 31, 1988, dividends received or deemed
11  received or paid or deemed paid under Sections 951
12  through 965 of the Internal Revenue Code, exceed the
13  amount of the modification provided under subparagraph
14  (G) of paragraph (2) of this subsection (b) which is
15  related to such dividends, and including, for taxable
16  years ending on or after December 31, 2008, dividends
17  received from a captive real estate investment trust;
18  plus (ii) 100% of the amount by which dividends,
19  included in taxable income and received, including,
20  for taxable years ending on or after December 31,
21  1988, dividends received or deemed received or paid or
22  deemed paid under Sections 951 through 964 of the
23  Internal Revenue Code and including, for taxable years
24  ending on or after December 31, 2008, dividends
25  received from a captive real estate investment trust,
26  from any such corporation specified in clause (i) that

 

 

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1  would but for the provisions of Section 1504(b)(3) of
2  the Internal Revenue Code be treated as a member of the
3  affiliated group which includes the dividend
4  recipient, exceed the amount of the modification
5  provided under subparagraph (G) of paragraph (2) of
6  this subsection (b) which is related to such
7  dividends. For taxable years ending on or after June
8  30, 2021, (i) for purposes of this subparagraph, the
9  term "dividend" does not include any amount treated as
10  a dividend under Section 1248 of the Internal Revenue
11  Code, and (ii) this subparagraph shall not apply to
12  dividends for which a deduction is allowed under
13  Section 245(a) of the Internal Revenue Code. This
14  subparagraph (O) is exempt from the provisions of
15  Section 250 of this Act;
16  (P) An amount equal to any contribution made to a
17  job training project established pursuant to the Tax
18  Increment Allocation Redevelopment Act;
19  (Q) An amount equal to the amount of the deduction
20  used to compute the federal income tax credit for
21  restoration of substantial amounts held under claim of
22  right for the taxable year pursuant to Section 1341 of
23  the Internal Revenue Code;
24  (R) On and after July 20, 1999, in the case of an
25  attorney-in-fact with respect to whom an interinsurer
26  or a reciprocal insurer has made the election under

 

 

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

 

 

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1  (1) "y" equals the amount of the depreciation
2  deduction taken for the taxable year on the
3  taxpayer's federal income tax return on property
4  for which the bonus depreciation deduction was
5  taken in any year under subsection (k) of Section
6  168 of the Internal Revenue Code, but not
7  including the bonus depreciation deduction;
8  (2) for taxable years ending on or before
9  December 31, 2005, "x" equals "y" multiplied by 30
10  and then divided by 70 (or "y" multiplied by
11  0.429); and
12  (3) for taxable years ending after December
13  31, 2005:
14  (i) for property on which a bonus
15  depreciation deduction of 30% of the adjusted
16  basis was taken, "x" equals "y" multiplied by
17  30 and then divided by 70 (or "y" multiplied
18  by 0.429);
19  (ii) for property on which a bonus
20  depreciation deduction of 50% of the adjusted
21  basis was taken, "x" equals "y" multiplied by
22  1.0;
23  (iii) for property on which a bonus
24  depreciation deduction of 100% of the adjusted
25  basis was taken in a taxable year ending on or
26  after December 31, 2021, "x" equals the

 

 

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1  depreciation deduction that would be allowed
2  on that property if the taxpayer had made the
3  election under Section 168(k)(7) of the
4  Internal Revenue Code to not claim bonus
5  depreciation on that property; and
6  (iv) for property on which a bonus
7  depreciation deduction of a percentage other
8  than 30%, 50% or 100% of the adjusted basis
9  was taken in a taxable year ending on or after
10  December 31, 2021, "x" equals "y" multiplied
11  by 100 times the percentage bonus depreciation
12  on the property (that is, 100(bonus%)) and
13  then divided by 100 times 1 minus the
14  percentage bonus depreciation on the property
15  (that is, 100(1bonus%)).
16  The aggregate amount deducted under this
17  subparagraph in all taxable years for any one piece of
18  property may not exceed the amount of the bonus
19  depreciation deduction taken on that property on the
20  taxpayer's federal income tax return under subsection
21  (k) of Section 168 of the Internal Revenue Code. This
22  subparagraph (T) is exempt from the provisions of
23  Section 250;
24  (U) If the taxpayer sells, transfers, abandons, or
25  otherwise disposes of property for which the taxpayer
26  was required in any taxable year to make an addition

 

 

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

 

 

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

 

 

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

 

 

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1  paid, accrued, or incurred, directly or indirectly, to
2  the same foreign person. This subparagraph (X) is
3  exempt from the provisions of Section 250;
4  (Y) 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(b)(2)(E-14), 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  (Y), 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 (Y). This
18  subparagraph (Y) is exempt from the provisions of
19  Section 250; and
20  (Z) The difference between the nondeductible
21  controlled foreign corporation dividends under Section
22  965(e)(3) of the Internal Revenue Code over the
23  taxable income of the taxpayer, computed without
24  regard to Section 965(e)(2)(A) of the Internal Revenue
25  Code, and without regard to any net operating loss
26  deduction. This subparagraph (Z) is exempt from the

 

 

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1  provisions of Section 250.
2  (3) Special rule. For purposes of paragraph (2)(A),
3  "gross income" in the case of a life insurance company,
4  for tax years ending on and after December 31, 1994, and
5  prior to December 31, 2011, shall mean the gross
6  investment income for the taxable year and, for tax years
7  ending on or after December 31, 2011, shall mean all
8  amounts included in life insurance gross income under
9  Section 803(a)(3) of the Internal Revenue Code.
10  (c) Trusts and estates.
11  (1) In general. In the case of a trust or estate, base
12  income means an amount equal to the taxpayer's taxable
13  income for the taxable year as modified by paragraph (2).
14  (2) Modifications. Subject to the provisions of
15  paragraph (3), the taxable income referred to in paragraph
16  (1) shall be modified by adding thereto the sum of the
17  following amounts:
18  (A) An amount equal to all amounts paid or accrued
19  to the taxpayer as interest or dividends during the
20  taxable year to the extent excluded from gross income
21  in the computation of taxable income;
22  (B) In the case of (i) an estate, $600; (ii) a
23  trust which, under its governing instrument, is
24  required to distribute all of its income currently,
25  $300; and (iii) any other trust, $100, but in each such

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  taxable years ending on or after December 31, 2008,
2  any amount included in gross income under Section 87
3  of the Internal Revenue Code; the provisions of this
4  subparagraph are exempt from the provisions of Section
5  250;
6  (M) An amount equal to those dividends included in
7  such total which were paid by a corporation which
8  conducts business operations in a River Edge
9  Redevelopment Zone or zones created under the River
10  Edge Redevelopment Zone Act and conducts substantially
11  all of its operations in a River Edge Redevelopment
12  Zone or zones. This subparagraph (M) is exempt from
13  the provisions of Section 250;
14  (N) An amount equal to any contribution made to a
15  job training project established pursuant to the Tax
16  Increment Allocation Redevelopment Act;
17  (O) An amount equal to those dividends included in
18  such total that were paid by a corporation that
19  conducts business operations in a federally designated
20  Foreign Trade Zone or Sub-Zone and that is designated
21  a High Impact Business located in Illinois; provided
22  that dividends eligible for the deduction provided in
23  subparagraph (M) of paragraph (2) of this subsection
24  shall not be eligible for the deduction provided under
25  this subparagraph (O);
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;
5  (Q) For taxable year 1999 and thereafter, an
6  amount equal to the amount of any (i) distributions,
7  to the extent includible in gross income for federal
8  income tax purposes, made to the taxpayer because of
9  his or her status as a victim of persecution for racial
10  or religious reasons by Nazi Germany or any other Axis
11  regime or as an heir of the victim and (ii) items of
12  income, to the extent includible in gross income for
13  federal income tax purposes, attributable to, derived
14  from or in any way related to assets stolen from,
15  hidden from, or otherwise lost to a victim of
16  persecution for racial or religious reasons by Nazi
17  Germany or any other Axis regime immediately prior to,
18  during, and immediately after World War II, including,
19  but not limited to, interest on the proceeds
20  receivable as insurance under policies issued to a
21  victim of persecution for racial or religious reasons
22  by Nazi Germany or any other Axis regime by European
23  insurance companies immediately prior to and during
24  World War II; provided, however, this subtraction from
25  federal adjusted gross income does not apply to assets
26  acquired with such assets or with the proceeds from

 

 

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

 

 

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

 

 

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1  December 31, 2021, "x" equals "y" multiplied
2  by 100 times the percentage bonus depreciation
3  on the property (that is, 100(bonus%)) and
4  then divided by 100 times 1 minus the
5  percentage bonus depreciation on the property
6  (that is, 100(1bonus%)).
7  The aggregate amount deducted under this
8  subparagraph in all taxable years for any one piece of
9  property may not exceed the amount of the bonus
10  depreciation deduction taken on that property on the
11  taxpayer's federal income tax return under subsection
12  (k) of Section 168 of the Internal Revenue Code. This
13  subparagraph (R) is exempt from the provisions of
14  Section 250;
15  (S) If the taxpayer sells, transfers, abandons, or
16  otherwise disposes of property for which the taxpayer
17  was required in any taxable year to make an addition
18  modification under subparagraph (G-10), then an amount
19  equal to that addition modification.
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 (R) and for which the taxpayer was
24  required in any taxable year to make an addition
25  modification under subparagraph (G-10), then an amount
26  equal to that addition modification.

 

 

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

 

 

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1  member of the taxpayer's unitary business group but
2  for the fact the foreign person's business activity
3  outside the United States is 80% or more of that
4  person's total business activity and (ii) for taxable
5  years ending on or after December 31, 2008, to a person
6  who would be a member of the same unitary business
7  group but for the fact that the person is prohibited
8  under Section 1501(a)(27) from being included in the
9  unitary business group because he or she is ordinarily
10  required to apportion business income under different
11  subsections of Section 304, but not to exceed the
12  addition modification required to be made for the same
13  taxable year under Section 203(c)(2)(G-12) for
14  interest paid, accrued, or incurred, directly or
15  indirectly, to the same person. This subparagraph (U)
16  is exempt from the provisions of Section 250;
17  (V) An amount equal to the income from intangible
18  property taken into account for the taxable year (net
19  of the deductions allocable thereto) with respect to
20  transactions with (i) a foreign person who would be a
21  member of the taxpayer's unitary business group but
22  for the fact that the foreign person's business
23  activity outside the United States is 80% or more of
24  that person's total business activity and (ii) for
25  taxable years ending on or after December 31, 2008, 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, but
6  not to exceed the addition modification required to be
7  made for the same taxable year under Section
8  203(c)(2)(G-13) for intangible expenses and costs
9  paid, accrued, or incurred, directly or indirectly, to
10  the same foreign person. This subparagraph (V) is
11  exempt from the provisions of Section 250;
12  (W) in the case of an estate, an amount equal to
13  all amounts included in such total pursuant to the
14  provisions of Section 111 of the Internal Revenue Code
15  as a recovery of items previously deducted by the
16  decedent from adjusted gross income in the computation
17  of taxable income. This subparagraph (W) is exempt
18  from Section 250;
19  (X) an amount equal to the refund included in such
20  total of any tax deducted for federal income tax
21  purposes, to the extent that deduction was added back
22  under subparagraph (F). This subparagraph (X) is
23  exempt from the provisions of Section 250;
24  (Y) For taxable years ending on or after December
25  31, 2011, in the case of a taxpayer who was required to
26  add back any insurance premiums under Section

 

 

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1  203(c)(2)(G-14), such taxpayer may elect to subtract
2  that part of a reimbursement received from the
3  insurance company equal to the amount of the expense
4  or loss (including expenses incurred by the insurance
5  company) that would have been taken into account as a
6  deduction for federal income tax purposes if the
7  expense or loss had been uninsured. If a taxpayer
8  makes the election provided for by this subparagraph
9  (Y), the insurer to which the premiums were paid must
10  add back to income the amount subtracted by the
11  taxpayer pursuant to this subparagraph (Y). This
12  subparagraph (Y) is exempt from the provisions of
13  Section 250; and
14  (Z) For taxable years beginning after December 31,
15  2018 and before January 1, 2026, the amount of excess
16  business loss of the taxpayer disallowed as a
17  deduction by Section 461(l)(1)(B) of the Internal
18  Revenue Code.
19  (3) Limitation. The amount of any modification
20  otherwise required under this subsection shall, under
21  regulations prescribed by the Department, be adjusted by
22  any amounts included therein which were properly paid,
23  credited, or required to be distributed, or permanently
24  set aside for charitable purposes pursuant to Internal
25  Revenue Code Section 642(c) during the taxable year.

 

 

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1  (d) Partnerships.
2  (1) In general. In the case of a partnership, base
3  income means an amount equal to the taxpayer's taxable
4  income for the taxable year as modified by paragraph (2).
5  (2) Modifications. The taxable income referred to in
6  paragraph (1) shall be modified by adding thereto the sum
7  of the following amounts:
8  (A) An amount equal to all amounts paid or accrued
9  to the taxpayer as interest or dividends during the
10  taxable year to the extent excluded from gross income
11  in the computation of taxable income;
12  (B) An amount equal to the amount of tax imposed by
13  this Act to the extent deducted from gross income for
14  the taxable year;
15  (C) The amount of deductions allowed to the
16  partnership pursuant to Section 707 (c) of the
17  Internal Revenue Code in calculating its taxable
18  income;
19  (D) An amount equal to the amount of the capital
20  gain deduction allowable under the Internal Revenue
21  Code, to the extent deducted from gross income in the
22  computation of taxable income;
23  (D-5) For taxable years 2001 and thereafter, an
24  amount equal to the bonus depreciation deduction taken
25  on the taxpayer's federal income tax return for the
26  taxable year under subsection (k) of Section 168 of

 

 

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1  the Internal Revenue Code;
2  (D-6) If the taxpayer sells, transfers, abandons,
3  or otherwise disposes of property for which the
4  taxpayer was required in any taxable year to make an
5  addition modification under subparagraph (D-5), then
6  an amount equal to the aggregate amount of the
7  deductions taken in all taxable years under
8  subparagraph (O) with respect to that property.
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 (O) and for which the taxpayer was
13  allowed in any taxable year to make a subtraction
14  modification under subparagraph (O), then an amount
15  equal to that subtraction modification.
16  The taxpayer is required to make the addition
17  modification under this subparagraph only once with
18  respect to any one piece of property;
19  (D-7) An amount equal to the amount otherwise
20  allowed as a deduction in computing base income for
21  interest paid, accrued, or incurred, directly or
22  indirectly, (i) for taxable years ending on or after
23  December 31, 2004, to a foreign person who would be a
24  member of the same unitary business group but for the
25  fact the foreign person's business activity outside
26  the United States is 80% or more of the foreign

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  income tax, and is paid pursuant to a contract
2  or agreement that reflects arm's-length terms;
3  or
4  (iii) any item of intangible expense or cost
5  paid, accrued, or incurred, directly or
6  indirectly, from a transaction with a person if
7  the taxpayer establishes by clear and convincing
8  evidence, that the adjustments are unreasonable;
9  or if the taxpayer and the Director agree in
10  writing to the application or use of an
11  alternative method of apportionment under Section
12  304(f);
13  Nothing in this subsection shall preclude the
14  Director from making any other adjustment
15  otherwise allowed under Section 404 of this Act
16  for any tax year beginning after the effective
17  date of this amendment provided such adjustment is
18  made pursuant to regulation adopted by the
19  Department and such regulations provide methods
20  and standards by which the Department will utilize
21  its authority under Section 404 of this Act;
22  (D-9) For taxable years ending on or after
23  December 31, 2008, an amount equal to the amount of
24  insurance premium expenses and costs otherwise allowed
25  as a deduction in computing base income, and that were
26  paid, accrued, or incurred, directly or indirectly, to

 

 

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1  a person who would be a member of the same unitary
2  business group but for the fact that the person is
3  prohibited under Section 1501(a)(27) from being
4  included in the unitary business group because he or
5  she is ordinarily required to apportion business
6  income under different subsections of Section 304. The
7  addition modification required by this subparagraph
8  shall be reduced to the extent that dividends were
9  included in base income of the unitary group for the
10  same taxable year and received by the taxpayer or by a
11  member of the taxpayer's unitary business group
12  (including amounts included in gross income under
13  Sections 951 through 964 of the Internal Revenue Code
14  and amounts included in gross income under Section 78
15  of the Internal Revenue Code) with respect to the
16  stock of the same person to whom the premiums and costs
17  were directly or indirectly paid, incurred, or
18  accrued. The preceding sentence does not apply to the
19  extent that the same dividends caused a reduction to
20  the addition modification required under Section
21  203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
22  (D-10) An amount equal to the credit allowable to
23  the taxpayer under Section 218(a) of this Act,
24  determined without regard to Section 218(c) of this
25  Act;
26  (D-11) For taxable years ending on or after

 

 

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1  December 31, 2017, an amount equal to the deduction
2  allowed under Section 199 of the Internal Revenue Code
3  for the taxable year;
4  and by deducting from the total so obtained the following
5  amounts:
6  (E) The valuation limitation amount;
7  (F) An amount equal to the amount of any tax
8  imposed by this Act which was refunded to the taxpayer
9  and included in such total for the taxable year;
10  (G) An amount equal to all amounts included in
11  taxable income as modified by subparagraphs (A), (B),
12  (C) and (D) which are exempt from taxation by this
13  State either by reason of its statutes or Constitution
14  or by reason of the Constitution, treaties or statutes
15  of the United States; provided that, in the case of any
16  statute of this State that exempts income derived from
17  bonds or other obligations from the tax imposed under
18  this Act, the amount exempted shall be the interest
19  net of bond premium amortization;
20  (H) Any income of the partnership which
21  constitutes personal service income as defined in
22  Section 1348(b)(1) of the Internal Revenue Code (as in
23  effect December 31, 1981) or a reasonable allowance
24  for compensation paid or accrued for services rendered
25  by partners to the partnership, whichever is greater;
26  this subparagraph (H) is exempt from the provisions of

 

 

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1  Section 250;
2  (I) An amount equal to all amounts of income
3  distributable to an entity subject to the Personal
4  Property Tax Replacement Income Tax imposed by
5  subsections (c) and (d) of Section 201 of this Act
6  including amounts distributable to organizations
7  exempt from federal income tax by reason of Section
8  501(a) of the Internal Revenue Code; this subparagraph
9  (I) is exempt from the provisions of Section 250;
10  (J) With the exception of any amounts subtracted
11  under subparagraph (G), an amount equal to the sum of
12  all amounts disallowed as deductions by (i) Sections
13  171(a)(2) and 265(a)(2) of the Internal Revenue Code,
14  and all amounts of expenses allocable to interest and
15  disallowed as deductions by Section 265(a)(1) of the
16  Internal Revenue Code; and (ii) for taxable years
17  ending on or after August 13, 1999, Sections
18  171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
19  Internal Revenue Code, plus, (iii) for taxable years
20  ending on or after December 31, 2011, Section
21  45G(e)(3) of the Internal Revenue Code and, for
22  taxable years ending on or after December 31, 2008,
23  any amount included in gross income under Section 87
24  of the Internal Revenue Code; the provisions of this
25  subparagraph are exempt from the provisions of Section
26  250;

 

 

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

 

 

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

 

 

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1  1.0;
2  (iii) for property on which a bonus
3  depreciation deduction of 100% of the adjusted
4  basis was taken in a taxable year ending on or
5  after December 31, 2021, "x" equals the
6  depreciation deduction that would be allowed
7  on that property if the taxpayer had made the
8  election under Section 168(k)(7) of the
9  Internal Revenue Code to not claim bonus
10  depreciation on that property; and
11  (iv) for property on which a bonus
12  depreciation deduction of a percentage other
13  than 30%, 50% or 100% of the adjusted basis
14  was taken in a taxable year ending on or after
15  December 31, 2021, "x" equals "y" multiplied
16  by 100 times the percentage bonus depreciation
17  on the property (that is, 100(bonus%)) and
18  then divided by 100 times 1 minus the
19  percentage bonus depreciation on the property
20  (that is, 100(1bonus%)).
21  The aggregate amount deducted under this
22  subparagraph in all taxable years for any one piece of
23  property may not exceed the amount of the bonus
24  depreciation deduction taken on that property on the
25  taxpayer's federal income tax return under subsection
26  (k) of Section 168 of the Internal Revenue Code. This

 

 

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

 

 

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

 

 

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1  31, 2011, in the case of a taxpayer who was required to
2  add back any insurance premiums under Section
3  203(d)(2)(D-9), such taxpayer may elect to subtract
4  that part of a reimbursement received from the
5  insurance company equal to the amount of the expense
6  or loss (including expenses incurred by the insurance
7  company) that would have been taken into account as a
8  deduction for federal income tax purposes if the
9  expense or loss had been uninsured. If a taxpayer
10  makes the election provided for by this subparagraph
11  (T), the insurer to which the premiums were paid must
12  add back to income the amount subtracted by the
13  taxpayer pursuant to this subparagraph (T). This
14  subparagraph (T) is exempt from the provisions of
15  Section 250.
16  (e) Gross income; adjusted gross income; taxable income.
17  (1) In general. Subject to the provisions of paragraph
18  (2) and subsection (b)(3), for purposes of this Section
19  and Section 803(e), a taxpayer's gross income, adjusted
20  gross income, or taxable income for the taxable year shall
21  mean the amount of gross income, adjusted gross income or
22  taxable income properly reportable for federal income tax
23  purposes for the taxable year under the provisions of the
24  Internal Revenue Code. Taxable income may be less than
25  zero. However, for taxable years ending on or after

 

 

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

 

 

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1  (A) Certain life insurance companies. In the case
2  of a life insurance company subject to the tax imposed
3  by Section 801 of the Internal Revenue Code, life
4  insurance company taxable income, plus the amount of
5  distribution from pre-1984 policyholder surplus
6  accounts as calculated under Section 815a of the
7  Internal Revenue Code;
8  (B) Certain other insurance companies. In the case
9  of mutual insurance companies subject to the tax
10  imposed by Section 831 of the Internal Revenue Code,
11  insurance company taxable income;
12  (C) Regulated investment companies. In the case of
13  a regulated investment company subject to the tax
14  imposed by Section 852 of the Internal Revenue Code,
15  investment company taxable income;
16  (D) Real estate investment trusts. In the case of
17  a real estate investment trust subject to the tax
18  imposed by Section 857 of the Internal Revenue Code,
19  real estate investment trust taxable income;
20  (E) Consolidated corporations. In the case of a
21  corporation which is a member of an affiliated group
22  of corporations filing a consolidated income tax
23  return for the taxable year for federal income tax
24  purposes, taxable income determined as if such
25  corporation had filed a separate return for federal
26  income tax purposes for the taxable year and each

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1  date (determined under the Internal Revenue Code as in
2  effect on that date), or (ii) the total gain realized
3  and reportable for federal income tax purposes in
4  respect of the sale, exchange or other disposition of
5  such property.
6  (B) If the fair market value of property referred
7  to in paragraph (1) was not readily ascertainable on
8  August 1, 1969, the pre-August 1, 1969 appreciation
9  amount for such property is that amount which bears
10  the same ratio to the total gain reported in respect of
11  the property for federal income tax purposes for the
12  taxable year, as the number of full calendar months in
13  that part of the taxpayer's holding period for the
14  property ending July 31, 1969 bears to the number of
15  full calendar months in the taxpayer's entire holding
16  period for the property.
17  (C) The Department shall prescribe such
18  regulations as may be necessary to carry out the
19  purposes of this paragraph.
20  (g) Double deductions. Unless specifically provided
21  otherwise, nothing in this Section shall permit the same item
22  to be deducted more than once.
23  (g-5) For taxable years beginning on or after January 1,
24  2024, in calculating the taxpayer's base income, the
25  taxpayer's federal adjusted gross income shall also be

 

 

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1  modified to exclude (i) the portion of income or loss that is
2  received from a trade or business conducted within and without
3  Illinois and that is not derived from or connected with
4  Illinois sources as determined in the provisions in Article 3
5  of this Act and (ii) the portion of income or loss that is
6  received from a pass-through entity conducting business within
7  and without Illinois and that is not derived from or connected
8  with Illinois sources as determined in the provisions in
9  Article 3 of this Act. This subsection (g-5) is exempt from the
10  provisions of Section 250.
11  (h) Legislative intention. Except as expressly provided by
12  this Section there shall be no modifications or limitations on
13  the amounts of income, gain, loss or deduction taken into
14  account in determining gross income, adjusted gross income or
15  taxable income for federal income tax purposes for the taxable
16  year, or in the amount of such items entering into the
17  computation of base income and net income under this Act for
18  such taxable year, whether in respect of property values as of
19  August 1, 1969 or otherwise.
20  (Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
21  102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
22  8-27-21; 102-813, eff. 5-13-22.)
23  Section 99. Effective date. This Act takes effect upon
24  becoming law.

 

 

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