104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 HB1824 Introduced , by Rep. Jay Hoffman SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/203 from Ch. 120, par. 2-203 Creates the Master Development Plan Recognition Act. Provides that certain contributions made by the State or units of local government are considered made pursuant to a master development plan within the meaning of Section 118 of the Internal Revenue Code of 1986. Amends the Illinois Income Tax Act. Creates a deduction for capital contributions that are made pursuant to a master development plan and that are included in the taxpayer's federal taxable income for the taxable year under Section 118 of the Internal Revenue Code. Effective immediately. LRB104 09229 HLH 19286 b A BILL FOR 104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 HB1824 Introduced , by Rep. Jay Hoffman SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/203 from Ch. 120, par. 2-203 New Act 35 ILCS 5/203 from Ch. 120, par. 2-203 Creates the Master Development Plan Recognition Act. Provides that certain contributions made by the State or units of local government are considered made pursuant to a master development plan within the meaning of Section 118 of the Internal Revenue Code of 1986. Amends the Illinois Income Tax Act. Creates a deduction for capital contributions that are made pursuant to a master development plan and that are included in the taxpayer's federal taxable income for the taxable year under Section 118 of the Internal Revenue Code. Effective immediately. LRB104 09229 HLH 19286 b LRB104 09229 HLH 19286 b A BILL FOR
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 HB1824 Introduced , by Rep. Jay Hoffman SYNOPSIS AS INTRODUCED:
New Act35 ILCS 5/203 from Ch. 120, par. 2-203 New Act 35 ILCS 5/203 from Ch. 120, par. 2-203
New Act
35 ILCS 5/203 from Ch. 120, par. 2-203
Creates the Master Development Plan Recognition Act. Provides that certain contributions made by the State or units of local government are considered made pursuant to a master development plan within the meaning of Section 118 of the Internal Revenue Code of 1986. Amends the Illinois Income Tax Act. Creates a deduction for capital contributions that are made pursuant to a master development plan and that are included in the taxpayer's federal taxable income for the taxable year under Section 118 of the Internal Revenue Code. Effective immediately.
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A BILL FOR
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HB1824 LRB104 09229 HLH 19286 b
1 AN ACT concerning State government.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the Master
5 Development Plan Recognition Act.
6 Section 5. Legislative purpose. In 1979, the General
7 Assembly passed legislation creating the Department of
8 Commerce and Community Affairs as the primary State agency
9 responsible for the State's economic competitiveness. In 2003,
10 the Department of Commerce and Community Affairs was renamed
11 the Department of Commerce and Economic Opportunity. To date,
12 the Department of Commerce and Economic Opportunity has
13 continued the Department of Commerce and Community Affairs'
14 mission of economic growth. To that end, the Department of
15 Commerce and Economic Opportunity administers many programs
16 that, as a whole, comprise a master development plan designed
17 to facilitate economic and community revitalization throughout
18 the State. In addition, the State has established and
19 supported other financial assistance programs that promote
20 economic growth consistent with a master development plan. The
21 purpose of this Act is to define those actions taken by the
22 State or its political subdivisions that constitute
23 contributions made by a governmental entity pursuant to a
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 HB1824 Introduced , by Rep. Jay Hoffman SYNOPSIS AS INTRODUCED:
New Act35 ILCS 5/203 from Ch. 120, par. 2-203 New Act 35 ILCS 5/203 from Ch. 120, par. 2-203
New Act
35 ILCS 5/203 from Ch. 120, par. 2-203
Creates the Master Development Plan Recognition Act. Provides that certain contributions made by the State or units of local government are considered made pursuant to a master development plan within the meaning of Section 118 of the Internal Revenue Code of 1986. Amends the Illinois Income Tax Act. Creates a deduction for capital contributions that are made pursuant to a master development plan and that are included in the taxpayer's federal taxable income for the taxable year under Section 118 of the Internal Revenue Code. Effective immediately.
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LRB104 09229 HLH 19286 b
A BILL FOR
New Act
35 ILCS 5/203 from Ch. 120, par. 2-203
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1 master development plan approved by the governmental entity
2 for purposes of Section 118 of the Internal Revenue Code of
3 1986.
4 Section 10. Eligible contributions. Contributions made by
5 a governmental entity pursuant to a master development plan
6 approved by the governmental entity within the meaning of
7 Section 118 of the Internal Revenue Code of 1986 include, but
8 are not limited to, the following:
9 (1) grants approved by the Department of Commerce and
10 Economic Opportunity, or by any other agency of, or entity
11 created by, the State of Illinois, regardless of whether
12 the grants are also approved by any other agency, board,
13 or other office of State government, and regardless of
14 when the funding in connection with the grant is
15 authorized or paid;
16 (2) grants approved by an authorized representative of
17 any county or municipality within the State, or any agency
18 of, or entity created by, the county or municipality,
19 whether the funding for the grants originates in whole or
20 in part with the State or with the county or municipality,
21 and regardless of when the funding in connection with the
22 grant is authorized or paid;
23 (3) tax increment financing applications for which a
24 letter, or final, preliminary, or conditional approval,
25 has been issued by an appropriate representative of State,
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1 county, or municipal government, and regardless of when
2 the funding in connection with the tax increment financing
3 application is authorized or paid; and
4 (4) any other financing provided pursuant to a
5 development plan, redevelopment plan, revitalization plan,
6 or similar plan approved by an appropriate representative
7 of State, county, or municipal government, and regardless
8 of when the funding in connection with the plan is
9 authorized or paid.
10 Section 900. The Illinois Income Tax Act is amended by
11 changing Section 203 as follows:
12 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
13 Sec. 203. Base income defined.
14 (a) Individuals.
15 (1) In general. In the case of an individual, base
16 income means an amount equal to the taxpayer's adjusted
17 gross income for the taxable year as modified by paragraph
18 (2).
19 (2) Modifications. The adjusted gross income referred
20 to in paragraph (1) shall be modified by adding thereto
21 the sum of the following amounts:
22 (A) An amount equal to all amounts paid or accrued
23 to the taxpayer as interest or dividends during the
24 taxable year to the extent excluded from gross income
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1 in the computation of adjusted gross income, except
2 stock dividends of qualified public utilities
3 described in Section 305(e) of the Internal Revenue
4 Code;
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 adjusted gross income for the
8 taxable year;
9 (C) An amount equal to the amount received during
10 the taxable year as a recovery or refund of real
11 property taxes paid with respect to the taxpayer's
12 principal residence under the Revenue Act of 1939 and
13 for which a deduction was previously taken under
14 subparagraph (L) of this paragraph (2) prior to July
15 1, 1991, the retrospective application date of Article
16 4 of Public Act 87-17. In the case of multi-unit or
17 multi-use structures and farm dwellings, the taxes on
18 the taxpayer's principal residence shall be that
19 portion of the total taxes for the entire property
20 which is attributable to such principal residence;
21 (D) 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 adjusted gross income;
25 (D-5) An amount, to the extent not included in
26 adjusted gross income, equal to the amount of money
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1 withdrawn by the taxpayer in the taxable year from a
2 medical care savings account and the interest earned
3 on the account in the taxable year of a withdrawal
4 pursuant to subsection (b) of Section 20 of the
5 Medical Care Savings Account Act or subsection (b) of
6 Section 20 of the Medical Care Savings Account Act of
7 2000;
8 (D-10) For taxable years ending after December 31,
9 1997, an amount equal to any eligible remediation
10 costs that the individual deducted in computing
11 adjusted gross income and for which the individual
12 claims a credit under subsection (l) of Section 201;
13 (D-15) For taxable years 2001 and thereafter, an
14 amount equal to the bonus depreciation deduction taken
15 on the taxpayer's federal income tax return for the
16 taxable year under subsection (k) of Section 168 of
17 the Internal Revenue Code;
18 (D-16) If the taxpayer sells, transfers, abandons,
19 or otherwise disposes of property for which the
20 taxpayer was required in any taxable year to make an
21 addition modification under subparagraph (D-15), then
22 an amount equal to the aggregate amount of the
23 deductions taken in all taxable years under
24 subparagraph (Z) with respect to that property.
25 If the taxpayer continues to own property through
26 the last day of the last tax year for which a
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1 subtraction is allowed with respect to that property
2 under subparagraph (Z) and for which the taxpayer was
3 allowed in any taxable year to make a subtraction
4 modification under subparagraph (Z), then an amount
5 equal to that subtraction modification.
6 The taxpayer is required to make the addition
7 modification under this subparagraph only once with
8 respect to any one piece of property;
9 (D-17) An amount equal to the amount otherwise
10 allowed as a deduction in computing base income for
11 interest paid, accrued, or incurred, directly or
12 indirectly, (i) for taxable years ending on or after
13 December 31, 2004, to a foreign person who would be a
14 member of the same unitary business group but for the
15 fact that foreign person's business activity outside
16 the United States is 80% or more of the foreign
17 person's total business activity and (ii) for taxable
18 years ending on or after December 31, 2008, to a person
19 who would be a member of the same unitary business
20 group but for the fact that the person is prohibited
21 under Section 1501(a)(27) from being included in the
22 unitary business group because he or she is ordinarily
23 required to apportion business income under different
24 subsections of Section 304. The addition modification
25 required by this subparagraph shall be reduced to the
26 extent that dividends were included in base income of
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1 the unitary group for the same taxable year and
2 received by the taxpayer or by a member of the
3 taxpayer's unitary business group (including amounts
4 included in gross income under Sections 951 through
5 964 of the Internal Revenue Code and amounts included
6 in gross income under Section 78 of the Internal
7 Revenue Code) with respect to the stock of the same
8 person to whom the interest was paid, accrued, or
9 incurred.
10 This paragraph shall not apply to the following:
11 (i) an item of interest paid, accrued, or
12 incurred, directly or indirectly, to a person who
13 is subject in a foreign country or state, other
14 than a state which requires mandatory unitary
15 reporting, to a tax on or measured by net income
16 with respect to such interest; or
17 (ii) an item of interest paid, accrued, or
18 incurred, directly or indirectly, to a person if
19 the taxpayer can establish, based on a
20 preponderance of the evidence, both of the
21 following:
22 (a) the person, during the same taxable
23 year, paid, accrued, or incurred, the interest
24 to a person that is not a related member, and
25 (b) the transaction giving rise to the
26 interest expense between the taxpayer and the
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1 person did not have as a principal purpose the
2 avoidance of Illinois income tax, and is paid
3 pursuant to a contract or agreement that
4 reflects an arm's-length interest rate and
5 terms; or
6 (iii) the taxpayer can establish, based on
7 clear and convincing evidence, that the interest
8 paid, accrued, or incurred relates to a contract
9 or agreement entered into at arm's-length rates
10 and terms and the principal purpose for the
11 payment is not federal or Illinois tax avoidance;
12 or
13 (iv) an item of interest paid, accrued, or
14 incurred, directly or indirectly, to a person if
15 the taxpayer establishes by clear and convincing
16 evidence that the adjustments are unreasonable; or
17 if the taxpayer and the Director agree in writing
18 to the application or use of an alternative method
19 of apportionment under Section 304(f).
20 Nothing in this subsection shall preclude the
21 Director from making any other adjustment
22 otherwise allowed under Section 404 of this Act
23 for any tax year beginning after the effective
24 date of this amendment provided such adjustment is
25 made pursuant to regulation adopted by the
26 Department and such regulations provide methods
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1 and standards by which the Department will utilize
2 its authority under Section 404 of this Act;
3 (D-18) An amount equal to the amount of intangible
4 expenses and costs otherwise allowed as a deduction in
5 computing base income, and that were paid, accrued, or
6 incurred, directly or indirectly, (i) for taxable
7 years ending on or after December 31, 2004, to a
8 foreign person who would be a member of the same
9 unitary business group but for the fact that the
10 foreign person's business activity outside the United
11 States is 80% or more of that person's total business
12 activity and (ii) for taxable years ending on or after
13 December 31, 2008, to a person who would be a member of
14 the same unitary business group but for the fact that
15 the person is prohibited under Section 1501(a)(27)
16 from being included in the unitary business group
17 because he or she is ordinarily required to apportion
18 business income under different subsections of Section
19 304. The addition modification required by this
20 subparagraph shall be reduced to the extent that
21 dividends were included in base income of the unitary
22 group for the same taxable year and received by the
23 taxpayer or by a member of the taxpayer's unitary
24 business group (including amounts included in gross
25 income under Sections 951 through 964 of the Internal
26 Revenue Code and amounts included in gross income
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1 under Section 78 of the Internal Revenue Code) with
2 respect to the stock of the same person to whom the
3 intangible expenses and costs were directly or
4 indirectly paid, incurred, or accrued. The preceding
5 sentence does not apply to the extent that the same
6 dividends caused a reduction to the addition
7 modification required under Section 203(a)(2)(D-17) of
8 this Act. As used in this subparagraph, the term
9 "intangible expenses and costs" includes (1) expenses,
10 losses, and costs for, or related to, the direct or
11 indirect acquisition, use, maintenance or management,
12 ownership, sale, exchange, or any other disposition of
13 intangible property; (2) losses incurred, directly or
14 indirectly, from factoring transactions or discounting
15 transactions; (3) royalty, patent, technical, and
16 copyright fees; (4) licensing fees; and (5) other
17 similar expenses and costs. For purposes of this
18 subparagraph, "intangible property" includes patents,
19 patent applications, trade names, trademarks, service
20 marks, copyrights, mask works, trade secrets, and
21 similar types of intangible assets.
22 This paragraph shall not apply to the following:
23 (i) any item of intangible expenses or costs
24 paid, accrued, or incurred, directly or
25 indirectly, from a transaction with a person who
26 is subject in a foreign country or state, other
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1 than a state which requires mandatory unitary
2 reporting, to a tax on or measured by net income
3 with respect to such item; or
4 (ii) any item of intangible expense or cost
5 paid, accrued, or incurred, directly or
6 indirectly, if the taxpayer can establish, based
7 on a preponderance of the evidence, both of the
8 following:
9 (a) the person during the same taxable
10 year paid, accrued, or incurred, the
11 intangible expense or cost to a person that is
12 not a related member, and
13 (b) the transaction giving rise to the
14 intangible expense or cost between the
15 taxpayer and the person did not have as a
16 principal purpose the avoidance of Illinois
17 income tax, and is paid pursuant to a contract
18 or agreement that reflects arm's-length terms;
19 or
20 (iii) any item of intangible expense or cost
21 paid, accrued, or incurred, directly or
22 indirectly, from a transaction with a person if
23 the taxpayer establishes by clear and convincing
24 evidence, that the adjustments are unreasonable;
25 or if the taxpayer and the Director agree in
26 writing to the application or use of an
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1 alternative method of apportionment under Section
2 304(f);
3 Nothing in this subsection shall preclude the
4 Director from making any other adjustment
5 otherwise allowed under Section 404 of this Act
6 for any tax year beginning after the effective
7 date of this amendment provided such adjustment is
8 made pursuant to regulation adopted by the
9 Department and such regulations provide methods
10 and standards by which the Department will utilize
11 its authority under Section 404 of this Act;
12 (D-19) For taxable years ending on or after
13 December 31, 2008, an amount equal to the amount of
14 insurance premium expenses and costs otherwise allowed
15 as a deduction in computing base income, and that were
16 paid, accrued, or incurred, directly or indirectly, to
17 a person who would be a member of the same unitary
18 business group but for the fact that the person is
19 prohibited under Section 1501(a)(27) from being
20 included in the unitary business group because he or
21 she is ordinarily required to apportion business
22 income under different subsections of Section 304. The
23 addition modification required by this subparagraph
24 shall be reduced to the extent that dividends were
25 included in base income of the unitary group for the
26 same taxable year and received by the taxpayer or by a
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1 member of the taxpayer's unitary business group
2 (including amounts included in gross income under
3 Sections 951 through 964 of the Internal Revenue Code
4 and amounts included in gross income under Section 78
5 of the Internal Revenue Code) with respect to the
6 stock of the same person to whom the premiums and costs
7 were directly or indirectly paid, incurred, or
8 accrued. The preceding sentence does not apply to the
9 extent that the same dividends caused a reduction to
10 the addition modification required under Section
11 203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
12 Act;
13 (D-20) For taxable years beginning on or after
14 January 1, 2002 and ending on or before December 31,
15 2006, in the case of a distribution from a qualified
16 tuition program under Section 529 of the Internal
17 Revenue Code, other than (i) a distribution from a
18 College Savings Pool created under Section 16.5 of the
19 State Treasurer Act or (ii) a distribution from the
20 Illinois Prepaid Tuition Trust Fund, an amount equal
21 to the amount excluded from gross income under Section
22 529(c)(3)(B). For taxable years beginning on or after
23 January 1, 2007, in the case of a distribution from a
24 qualified tuition program under Section 529 of the
25 Internal Revenue Code, other than (i) a distribution
26 from a College Savings Pool created under Section 16.5
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1 of the State Treasurer Act, (ii) a distribution from
2 the Illinois Prepaid Tuition Trust Fund, or (iii) a
3 distribution from a qualified tuition program under
4 Section 529 of the Internal Revenue Code that (I)
5 adopts and determines that its offering materials
6 comply with the College Savings Plans Network's
7 disclosure principles and (II) has made reasonable
8 efforts to inform in-state residents of the existence
9 of in-state qualified tuition programs by informing
10 Illinois residents directly and, where applicable, to
11 inform financial intermediaries distributing the
12 program to inform in-state residents of the existence
13 of in-state qualified tuition programs at least
14 annually, an amount equal to the amount excluded from
15 gross income under Section 529(c)(3)(B).
16 For the purposes of this subparagraph (D-20), a
17 qualified tuition program has made reasonable efforts
18 if it makes disclosures (which may use the term
19 "in-state program" or "in-state plan" and need not
20 specifically refer to Illinois or its qualified
21 programs by name) (i) directly to prospective
22 participants in its offering materials or makes a
23 public disclosure, such as a website posting; and (ii)
24 where applicable, to intermediaries selling the
25 out-of-state program in the same manner that the
26 out-of-state program distributes its offering
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1 materials;
2 (D-20.5) For taxable years beginning on or after
3 January 1, 2018, in the case of a distribution from a
4 qualified ABLE program under Section 529A of the
5 Internal Revenue Code, other than a distribution from
6 a qualified ABLE program created under Section 16.6 of
7 the State Treasurer Act, an amount equal to the amount
8 excluded from gross income under Section 529A(c)(1)(B)
9 of the Internal Revenue Code;
10 (D-21) For taxable years beginning on or after
11 January 1, 2007, in the case of transfer of moneys from
12 a qualified tuition program under Section 529 of the
13 Internal Revenue Code that is administered by the
14 State to an out-of-state program, an amount equal to
15 the amount of moneys previously deducted from base
16 income under subsection (a)(2)(Y) of this Section;
17 (D-21.5) For taxable years beginning on or after
18 January 1, 2018, in the case of the transfer of moneys
19 from a qualified tuition program under Section 529 or
20 a qualified ABLE program under Section 529A of the
21 Internal Revenue Code that is administered by this
22 State to an ABLE account established under an
23 out-of-state ABLE account program, an amount equal to
24 the contribution component of the transferred amount
25 that was previously deducted from base income under
26 subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
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1 Section;
2 (D-22) For taxable years beginning on or after
3 January 1, 2009, and prior to January 1, 2018, in the
4 case of a nonqualified withdrawal or refund of moneys
5 from a qualified tuition program under Section 529 of
6 the Internal Revenue Code administered by the State
7 that is not used for qualified expenses at an eligible
8 education institution, an amount equal to the
9 contribution component of the nonqualified withdrawal
10 or refund that was previously deducted from base
11 income under subsection (a)(2)(y) of this Section,
12 provided that the withdrawal or refund did not result
13 from the beneficiary's death or disability. For
14 taxable years beginning on or after January 1, 2018:
15 (1) in the case of a nonqualified withdrawal or
16 refund, as defined under Section 16.5 of the State
17 Treasurer Act, of moneys from a qualified tuition
18 program under Section 529 of the Internal Revenue Code
19 administered by the State, an amount equal to the
20 contribution component of the nonqualified withdrawal
21 or refund that was previously deducted from base
22 income under subsection (a)(2)(Y) of this Section, and
23 (2) in the case of a nonqualified withdrawal or refund
24 from a qualified ABLE program under Section 529A of
25 the Internal Revenue Code administered by the State
26 that is not used for qualified disability expenses, an
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1 amount equal to the contribution component of the
2 nonqualified withdrawal or refund that was previously
3 deducted from base income under subsection (a)(2)(HH)
4 of this Section;
5 (D-23) 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 (D-24) 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 (D-25) In the case of a resident, an amount equal
14 to the amount of tax for which a credit is allowed
15 pursuant to Section 201(p)(7) of this Act;
16 and by deducting from the total so obtained the sum of the
17 following amounts:
18 (E) For taxable years ending before December 31,
19 2001, any amount included in such total in respect of
20 any compensation (including but not limited to any
21 compensation paid or accrued to a serviceman while a
22 prisoner of war or missing in action) paid to a
23 resident by reason of being on active duty in the Armed
24 Forces of the United States and in respect of any
25 compensation paid or accrued to a resident who as a
26 governmental employee was a prisoner of war or missing
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1 in action, and in respect of any compensation paid to a
2 resident in 1971 or thereafter for annual training
3 performed pursuant to Sections 502 and 503, Title 32,
4 United States Code as a member of the Illinois
5 National Guard or, beginning with taxable years ending
6 on or after December 31, 2007, the National Guard of
7 any other state. For taxable years ending on or after
8 December 31, 2001, any amount included in such total
9 in respect of any compensation (including but not
10 limited to any compensation paid or accrued to a
11 serviceman while a prisoner of war or missing in
12 action) paid to a resident by reason of being a member
13 of any component of the Armed Forces of the United
14 States and in respect of any compensation paid or
15 accrued to a resident who as a governmental employee
16 was a prisoner of war or missing in action, and in
17 respect of any compensation paid to a resident in 2001
18 or thereafter by reason of being a member of the
19 Illinois National Guard or, beginning with taxable
20 years ending on or after December 31, 2007, the
21 National Guard of any other state. The provisions of
22 this subparagraph (E) are exempt from the provisions
23 of Section 250;
24 (F) An amount equal to all amounts included in
25 such total pursuant to the provisions of Sections
26 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
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1 408 of the Internal Revenue Code, or included in such
2 total as distributions under the provisions of any
3 retirement or disability plan for employees of any
4 governmental agency or unit, or retirement payments to
5 retired partners, which payments are excluded in
6 computing net earnings from self employment by Section
7 1402 of the Internal Revenue Code and regulations
8 adopted pursuant thereto;
9 (G) The valuation limitation amount;
10 (H) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the taxpayer
12 and included in such total for the taxable year;
13 (I) An amount equal to all amounts included in
14 such total pursuant to the provisions of Section 111
15 of the Internal Revenue Code as a recovery of items
16 previously deducted from adjusted gross income in the
17 computation of taxable income;
18 (J) An amount equal to those dividends included in
19 such total which were paid by a corporation which
20 conducts business operations in a River Edge
21 Redevelopment Zone or zones created under the River
22 Edge Redevelopment Zone Act, and conducts
23 substantially all of its operations in a River Edge
24 Redevelopment Zone or zones. This subparagraph (J) is
25 exempt from the provisions of Section 250;
26 (K) An amount equal to those dividends included in
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1 such total that were paid by a corporation that
2 conducts business operations in a federally designated
3 Foreign Trade Zone or Sub-Zone and that is designated
4 a High Impact Business located in Illinois; provided
5 that dividends eligible for the deduction provided in
6 subparagraph (J) of paragraph (2) of this subsection
7 shall not be eligible for the deduction provided under
8 this subparagraph (K);
9 (L) For taxable years ending after December 31,
10 1983, an amount equal to all social security benefits
11 and railroad retirement benefits included in such
12 total pursuant to Sections 72(r) and 86 of the
13 Internal Revenue Code;
14 (M) With the exception of any amounts subtracted
15 under subparagraph (N), an amount equal to the sum of
16 all amounts disallowed as deductions by (i) Sections
17 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
18 and all amounts of expenses allocable to interest and
19 disallowed as deductions by Section 265(a)(1) of the
20 Internal Revenue Code; and (ii) for taxable years
21 ending on or after August 13, 1999, Sections
22 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
23 Internal Revenue Code, plus, for taxable years ending
24 on or after December 31, 2011, Section 45G(e)(3) of
25 the Internal Revenue Code and, for taxable years
26 ending on or after December 31, 2008, any amount
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1 included in gross income under Section 87 of the
2 Internal Revenue Code; the provisions of this
3 subparagraph are exempt from the provisions of Section
4 250;
5 (N) An amount equal to all amounts included in
6 such total which are exempt from taxation by this
7 State either by reason of its statutes or Constitution
8 or by reason of the Constitution, treaties or statutes
9 of the United States; provided that, in the case of any
10 statute of this State that exempts income derived from
11 bonds or other obligations from the tax imposed under
12 this Act, the amount exempted shall be the interest
13 net of bond premium amortization;
14 (O) An amount equal to any contribution made to a
15 job training project established pursuant to the Tax
16 Increment Allocation Redevelopment Act;
17 (P) An amount equal to the amount of the deduction
18 used to compute the federal income tax credit for
19 restoration of substantial amounts held under claim of
20 right for the taxable year pursuant to Section 1341 of
21 the Internal Revenue Code or of any itemized deduction
22 taken from adjusted gross income in the computation of
23 taxable income for restoration of substantial amounts
24 held under claim of right for the taxable year;
25 (Q) An amount equal to any amounts included in
26 such total, received by the taxpayer as an
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1 acceleration in the payment of life, endowment or
2 annuity benefits in advance of the time they would
3 otherwise be payable as an indemnity for a terminal
4 illness;
5 (R) An amount equal to the amount of any federal or
6 State bonus paid to veterans of the Persian Gulf War;
7 (S) An amount, to the extent included in adjusted
8 gross income, equal to the amount of a contribution
9 made in the taxable year on behalf of the taxpayer to a
10 medical care savings account established under the
11 Medical Care Savings Account Act or the Medical Care
12 Savings Account Act of 2000 to the extent the
13 contribution is accepted by the account administrator
14 as provided in that Act;
15 (T) An amount, to the extent included in adjusted
16 gross income, equal to the amount of interest earned
17 in the taxable year on a medical care savings account
18 established under the Medical Care Savings Account Act
19 or the Medical Care Savings Account Act of 2000 on
20 behalf of the taxpayer, other than interest added
21 pursuant to item (D-5) of this paragraph (2);
22 (U) For one taxable year beginning on or after
23 January 1, 1994, an amount equal to the total amount of
24 tax imposed and paid under subsections (a) and (b) of
25 Section 201 of this Act on grant amounts received by
26 the taxpayer under the Nursing Home Grant Assistance
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1 Act during the taxpayer's taxable years 1992 and 1993;
2 (V) Beginning with tax years ending on or after
3 December 31, 1995 and ending with tax years ending on
4 or before December 31, 2004, an amount equal to the
5 amount paid by a taxpayer who is a self-employed
6 taxpayer, a partner of a partnership, or a shareholder
7 in a Subchapter S corporation for health insurance or
8 long-term care insurance for that taxpayer or that
9 taxpayer's spouse or dependents, to the extent that
10 the amount paid for that health insurance or long-term
11 care insurance may be deducted under Section 213 of
12 the Internal Revenue Code, has not been deducted on
13 the federal income tax return of the taxpayer, and
14 does not exceed the taxable income attributable to
15 that taxpayer's income, self-employment income, or
16 Subchapter S corporation income; except that no
17 deduction shall be allowed under this item (V) if the
18 taxpayer is eligible to participate in any health
19 insurance or long-term care insurance plan of an
20 employer of the taxpayer or the taxpayer's spouse. The
21 amount of the health insurance and long-term care
22 insurance subtracted under this item (V) shall be
23 determined by multiplying total health insurance and
24 long-term care insurance premiums paid by the taxpayer
25 times a number that represents the fractional
26 percentage of eligible medical expenses under Section
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1 213 of the Internal Revenue Code of 1986 not actually
2 deducted on the taxpayer's federal income tax return;
3 (W) For taxable years beginning on or after
4 January 1, 1998, all amounts included in the
5 taxpayer's federal gross income in the taxable year
6 from amounts converted from a regular IRA to a Roth
7 IRA. This paragraph is exempt from the provisions of
8 Section 250;
9 (X) For taxable year 1999 and thereafter, an
10 amount equal to the amount of any (i) distributions,
11 to the extent includible in gross income for federal
12 income tax purposes, made to the taxpayer because of
13 his or her status as a victim of persecution for racial
14 or religious reasons by Nazi Germany or any other Axis
15 regime or as an heir of the victim and (ii) items of
16 income, to the extent includible in gross income for
17 federal income tax purposes, attributable to, derived
18 from or in any way related to assets stolen from,
19 hidden from, or otherwise lost to a victim of
20 persecution for racial or religious reasons by Nazi
21 Germany or any other Axis regime immediately prior to,
22 during, and immediately after World War II, including,
23 but not limited to, interest on the proceeds
24 receivable as insurance under policies issued to a
25 victim of persecution for racial or religious reasons
26 by Nazi Germany or any other Axis regime by European
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1 insurance companies immediately prior to and during
2 World War II; provided, however, this subtraction from
3 federal adjusted gross income does not apply to assets
4 acquired with such assets or with the proceeds from
5 the sale of such assets; provided, further, this
6 paragraph shall only apply to a taxpayer who was the
7 first recipient of such assets after their recovery
8 and who is a victim of persecution for racial or
9 religious reasons by Nazi Germany or any other Axis
10 regime or as an heir of the victim. The amount of and
11 the eligibility for any public assistance, benefit, or
12 similar entitlement is not affected by the inclusion
13 of items (i) and (ii) of this paragraph in gross income
14 for federal income tax purposes. This paragraph is
15 exempt from the provisions of Section 250;
16 (Y) For taxable years beginning on or after
17 January 1, 2002 and ending on or before December 31,
18 2004, moneys contributed in the taxable year to a
19 College Savings Pool account under Section 16.5 of the
20 State Treasurer Act, except that amounts excluded from
21 gross income under Section 529(c)(3)(C)(i) of the
22 Internal Revenue Code shall not be considered moneys
23 contributed under this subparagraph (Y). For taxable
24 years beginning on or after January 1, 2005, a maximum
25 of $10,000 contributed in the taxable year to (i) a
26 College Savings Pool account under Section 16.5 of the
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1 State Treasurer Act or (ii) the Illinois Prepaid
2 Tuition Trust Fund, except that amounts excluded from
3 gross income under Section 529(c)(3)(C)(i) of the
4 Internal Revenue Code shall not be considered moneys
5 contributed under this subparagraph (Y). For purposes
6 of this subparagraph, contributions made by an
7 employer on behalf of an employee, or matching
8 contributions made by an employee, shall be treated as
9 made by the employee. This subparagraph (Y) is exempt
10 from the provisions of Section 250;
11 (Z) For taxable years 2001 and thereafter, for the
12 taxable year in which the bonus depreciation deduction
13 is taken on the taxpayer's federal income tax return
14 under subsection (k) of Section 168 of the Internal
15 Revenue Code and for each applicable taxable year
16 thereafter, an amount equal to "x", where:
17 (1) "y" equals the amount of the depreciation
18 deduction taken for the taxable year on the
19 taxpayer's federal income tax return on property
20 for which the bonus depreciation deduction was
21 taken in any year under subsection (k) of Section
22 168 of the Internal Revenue Code, but not
23 including the bonus depreciation deduction;
24 (2) for taxable years ending on or before
25 December 31, 2005, "x" equals "y" multiplied by 30
26 and then divided by 70 (or "y" multiplied by
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1 0.429); and
2 (3) for taxable years ending after December
3 31, 2005:
4 (i) for property on which a bonus
5 depreciation deduction of 30% of the adjusted
6 basis was taken, "x" equals "y" multiplied by
7 30 and then divided by 70 (or "y" multiplied
8 by 0.429);
9 (ii) for property on which a bonus
10 depreciation deduction of 50% of the adjusted
11 basis was taken, "x" equals "y" multiplied by
12 1.0;
13 (iii) for property on which a bonus
14 depreciation deduction of 100% of the adjusted
15 basis was taken in a taxable year ending on or
16 after December 31, 2021, "x" equals the
17 depreciation deduction that would be allowed
18 on that property if the taxpayer had made the
19 election under Section 168(k)(7) of the
20 Internal Revenue Code to not claim bonus
21 depreciation on that property; and
22 (iv) for property on which a bonus
23 depreciation deduction of a percentage other
24 than 30%, 50% or 100% of the adjusted basis
25 was taken in a taxable year ending on or after
26 December 31, 2021, "x" equals "y" multiplied
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1 by 100 times the percentage bonus depreciation
2 on the property (that is, 100(bonus%)) and
3 then divided by 100 times 1 minus the
4 percentage bonus depreciation on the property
5 (that is, 100(1-bonus%)).
6 The aggregate amount deducted under this
7 subparagraph in all taxable years for any one piece of
8 property may not exceed the amount of the bonus
9 depreciation deduction taken on that property on the
10 taxpayer's federal income tax return under subsection
11 (k) of Section 168 of the Internal Revenue Code. This
12 subparagraph (Z) is exempt from the provisions of
13 Section 250;
14 (AA) If the taxpayer sells, transfers, abandons,
15 or otherwise disposes of property for which the
16 taxpayer was required in any taxable year to make an
17 addition modification under subparagraph (D-15), then
18 an amount equal to that addition modification.
19 If the taxpayer continues to own property through
20 the last day of the last tax year for which a
21 subtraction is allowed with respect to that property
22 under subparagraph (Z) and for which the taxpayer was
23 required in any taxable year to make an addition
24 modification under subparagraph (D-15), then an amount
25 equal to that addition modification.
26 The taxpayer is allowed to take the deduction
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1 under this subparagraph only once with respect to any
2 one piece of property.
3 This subparagraph (AA) is exempt from the
4 provisions of Section 250;
5 (BB) Any amount included in adjusted gross income,
6 other than salary, received by a driver in a
7 ridesharing arrangement using a motor vehicle;
8 (CC) The amount of (i) any interest income (net of
9 the deductions allocable thereto) taken into account
10 for the taxable year with respect to a transaction
11 with a taxpayer that is required to make an addition
12 modification with respect to such transaction under
13 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
14 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
15 the amount of that addition modification, and (ii) any
16 income from intangible property (net of the deductions
17 allocable thereto) taken into account for the taxable
18 year with respect to a transaction with a taxpayer
19 that is required to make an addition modification with
20 respect to such transaction under Section
21 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
22 203(d)(2)(D-8), but not to exceed the amount of that
23 addition modification. This subparagraph (CC) is
24 exempt from the provisions of Section 250;
25 (DD) An amount equal to the interest income taken
26 into account for the taxable year (net of the
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1 deductions allocable thereto) with respect to
2 transactions with (i) a foreign person who would be a
3 member of the taxpayer's unitary business group but
4 for the fact that the foreign person's business
5 activity outside the United States is 80% or more of
6 that person's total business activity and (ii) for
7 taxable years ending on or after December 31, 2008, to
8 a person who would be a member of the same unitary
9 business group but for the fact that the person is
10 prohibited under Section 1501(a)(27) from being
11 included in the unitary business group because he or
12 she is ordinarily required to apportion business
13 income under different subsections of Section 304, but
14 not to exceed the addition modification required to be
15 made for the same taxable year under Section
16 203(a)(2)(D-17) for interest paid, accrued, or
17 incurred, directly or indirectly, to the same person.
18 This subparagraph (DD) is exempt from the provisions
19 of Section 250;
20 (EE) An amount equal to the income from intangible
21 property taken into account for the taxable year (net
22 of the 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-18) for intangible expenses and costs
12 paid, accrued, or incurred, directly or indirectly, to
13 the same foreign person. This subparagraph (EE) is
14 exempt from the provisions of Section 250;
15 (FF) An amount equal to any amount awarded to the
16 taxpayer during the taxable year by the Court of
17 Claims under subsection (c) of Section 8 of the Court
18 of Claims Act for time unjustly served in a State
19 prison. This subparagraph (FF) is exempt from the
20 provisions of Section 250;
21 (GG) For taxable years ending on or after December
22 31, 2011, in the case of a taxpayer who was required to
23 add back any insurance premiums under Section
24 203(a)(2)(D-19), such taxpayer may elect to subtract
25 that part of a reimbursement received from the
26 insurance company equal to the amount of the expense
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1 or loss (including expenses incurred by the insurance
2 company) that would have been taken into account as a
3 deduction for federal income tax purposes if the
4 expense or loss had been uninsured. If a taxpayer
5 makes the election provided for by this subparagraph
6 (GG), the insurer to which the premiums were paid must
7 add back to income the amount subtracted by the
8 taxpayer pursuant to this subparagraph (GG). This
9 subparagraph (GG) is exempt from the provisions of
10 Section 250;
11 (HH) For taxable years beginning on or after
12 January 1, 2018 and prior to January 1, 2028, a maximum
13 of $10,000 contributed in the taxable year to a
14 qualified ABLE account under Section 16.6 of the State
15 Treasurer Act, except that amounts excluded from gross
16 income under Section 529(c)(3)(C)(i) or Section
17 529A(c)(1)(C) of the Internal Revenue Code shall not
18 be considered moneys contributed under this
19 subparagraph (HH). For purposes of this subparagraph
20 (HH), contributions made by an employer on behalf of
21 an employee, or matching contributions made by an
22 employee, shall be treated as made by the employee;
23 (II) For taxable years that begin on or after
24 January 1, 2021 and begin before January 1, 2026, the
25 amount that is included in the taxpayer's federal
26 adjusted gross income pursuant to Section 61 of the
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1 Internal Revenue Code as discharge of indebtedness
2 attributable to student loan forgiveness and that is
3 not excluded from the taxpayer's federal adjusted
4 gross income pursuant to paragraph (5) of subsection
5 (f) of Section 108 of the Internal Revenue Code;
6 (JJ) For taxable years beginning on or after
7 January 1, 2023, for any cannabis establishment
8 operating in this State and licensed under the
9 Cannabis Regulation and Tax Act or any cannabis
10 cultivation center or medical cannabis dispensing
11 organization operating in this State and licensed
12 under the Compassionate Use of Medical Cannabis
13 Program Act, an amount equal to the deductions that
14 were disallowed under Section 280E of the Internal
15 Revenue Code for the taxable year and that would not be
16 added back under this subsection. The provisions of
17 this subparagraph (JJ) are exempt from the provisions
18 of Section 250; and
19 (KK) To the extent includible in gross income for
20 federal income tax purposes, any amount awarded or
21 paid to the taxpayer as a result of a judgment or
22 settlement for fertility fraud as provided in Section
23 15 of the Illinois Fertility Fraud Act, donor
24 fertility fraud as provided in Section 20 of the
25 Illinois Fertility Fraud Act, or similar action in
26 another state; and
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1 (LL) For taxable years beginning on or after
2 January 1, 2026, if the taxpayer is a qualified
3 worker, as defined in the Workforce Development
4 through Charitable Loan Repayment Act, an amount equal
5 to the amount included in the taxpayer's federal
6 adjusted gross income that is attributable to student
7 loan repayment assistance received by the taxpayer
8 during the taxable year from a qualified community
9 foundation under the provisions of the Workforce
10 Development through Through Charitable Loan Repayment
11 Act.
12 This subparagraph (LL) is exempt from the
13 provisions of Section 250; and .
14 (MM) (LL) For taxable years beginning on or after
15 January 1, 2025, if the taxpayer is an eligible
16 resident as defined in the Medical Debt Relief Act, an
17 amount equal to the amount included in the taxpayer's
18 federal adjusted gross income that is attributable to
19 medical debt relief received by the taxpayer during
20 the taxable year from a nonprofit medical debt relief
21 coordinator under the provisions of the Medical Debt
22 Relief Act. This subparagraph (MM) (LL) is exempt from
23 the provisions of Section 250.
24 (b) Corporations.
25 (1) In general. In the case of a corporation, base
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1 income means an amount equal to the taxpayer's taxable
2 income for the taxable year as modified by paragraph (2).
3 (2) Modifications. The taxable income referred to in
4 paragraph (1) shall be modified by adding thereto the sum
5 of the following amounts:
6 (A) An amount equal to all amounts paid or accrued
7 to the taxpayer as interest and all distributions
8 received from regulated investment companies during
9 the taxable year to the extent excluded from gross
10 income in the computation of taxable income;
11 (B) An amount equal to the amount of tax imposed by
12 this Act to the extent deducted from gross income in
13 the computation of taxable income for the taxable
14 year;
15 (C) In the case of a regulated investment company,
16 an amount equal to the excess of (i) the net long-term
17 capital gain for the taxable year, over (ii) the
18 amount of the capital gain dividends designated as
19 such in accordance with Section 852(b)(3)(C) of the
20 Internal Revenue Code and any amount designated under
21 Section 852(b)(3)(D) of the Internal Revenue Code,
22 attributable to the taxable year (this amendatory Act
23 of 1995 (Public Act 89-89) is declarative of existing
24 law and is not a new enactment);
25 (D) The amount of any net operating loss deduction
26 taken in arriving at taxable income, other than a net
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1 operating loss carried forward from a taxable year
2 ending prior to December 31, 1986;
3 (E) For taxable years in which a net operating
4 loss carryback or carryforward from a taxable year
5 ending prior to December 31, 1986 is an element of
6 taxable income under paragraph (1) of subsection (e)
7 or subparagraph (E) of paragraph (2) of subsection
8 (e), the amount by which addition modifications other
9 than those provided by this subparagraph (E) exceeded
10 subtraction modifications in such earlier taxable
11 year, with the following limitations applied in the
12 order that they are listed:
13 (i) the addition modification relating to the
14 net operating loss carried back or forward to the
15 taxable year from any taxable year ending prior to
16 December 31, 1986 shall be reduced by the amount
17 of addition modification under this subparagraph
18 (E) which related to that net operating loss and
19 which was taken into account in calculating the
20 base income of an earlier taxable year, and
21 (ii) 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 not exceed the amount of
25 such carryback or carryforward;
26 For taxable years in which there is a net
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1 operating loss carryback or carryforward from more
2 than one other taxable year ending prior to December
3 31, 1986, the addition modification provided in this
4 subparagraph (E) shall be the sum of the amounts
5 computed independently under the preceding provisions
6 of this subparagraph (E) for each such taxable year;
7 (E-5) For taxable years ending after December 31,
8 1997, an amount equal to any eligible remediation
9 costs that the corporation deducted in computing
10 adjusted gross income and for which the corporation
11 claims a credit under subsection (l) of Section 201;
12 (E-10) For taxable years 2001 and thereafter, an
13 amount equal to the bonus depreciation deduction taken
14 on the taxpayer's federal income tax return for the
15 taxable year under subsection (k) of Section 168 of
16 the Internal Revenue Code;
17 (E-11) If the taxpayer sells, transfers, abandons,
18 or otherwise disposes of property for which the
19 taxpayer was required in any taxable year to make an
20 addition modification under subparagraph (E-10), then
21 an amount equal to the aggregate amount of the
22 deductions taken in all taxable years under
23 subparagraph (T) with respect to that property.
24 If the taxpayer continues to own property through
25 the last day of the last tax year for which a
26 subtraction is allowed with respect to that property
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1 under subparagraph (T) and for which the taxpayer was
2 allowed in any taxable year to make a subtraction
3 modification under subparagraph (T), then an amount
4 equal to that subtraction modification.
5 The taxpayer is required to make the addition
6 modification under this subparagraph only once with
7 respect to any one piece of property;
8 (E-12) An amount equal to the amount otherwise
9 allowed as a deduction in computing base income for
10 interest paid, accrued, or incurred, directly or
11 indirectly, (i) for taxable years ending on or after
12 December 31, 2004, to a foreign person who would be a
13 member of the same unitary business group but for the
14 fact the foreign person's business activity outside
15 the United States is 80% or more of the foreign
16 person's total business activity and (ii) for taxable
17 years ending on or after December 31, 2008, to a person
18 who would be a member of the same unitary business
19 group but for the fact that the person is prohibited
20 under Section 1501(a)(27) from being included in the
21 unitary business group because he or she is ordinarily
22 required to apportion business income under different
23 subsections of Section 304. The addition modification
24 required by this subparagraph shall be reduced to the
25 extent that dividends were included in base income of
26 the unitary group for the same taxable year and
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1 received by the taxpayer or by a member of the
2 taxpayer's unitary business group (including amounts
3 included in gross income pursuant to Sections 951
4 through 964 of the Internal Revenue Code and amounts
5 included in gross income under Section 78 of the
6 Internal Revenue Code) with respect to the stock of
7 the same person to whom the interest was paid,
8 accrued, or incurred.
9 This paragraph shall not apply to the following:
10 (i) an item of interest paid, accrued, or
11 incurred, directly or indirectly, to a person who
12 is subject in a foreign country or state, other
13 than a state which requires mandatory unitary
14 reporting, to a tax on or measured by net income
15 with respect to such interest; or
16 (ii) an item of interest paid, accrued, or
17 incurred, directly or indirectly, to a person if
18 the taxpayer can establish, based on a
19 preponderance of the evidence, both of the
20 following:
21 (a) the person, during the same taxable
22 year, paid, accrued, or incurred, the interest
23 to a person that is not a related member, and
24 (b) the transaction giving rise to the
25 interest expense between the taxpayer and the
26 person did not have as a principal purpose the
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1 avoidance of Illinois income tax, and is paid
2 pursuant to a contract or agreement that
3 reflects an arm's-length interest rate and
4 terms; or
5 (iii) the taxpayer can establish, based on
6 clear and convincing evidence, that the interest
7 paid, accrued, or incurred relates to a contract
8 or agreement entered into at arm's-length rates
9 and terms and the principal purpose for the
10 payment is not federal or Illinois tax avoidance;
11 or
12 (iv) an item of interest paid, accrued, or
13 incurred, directly or indirectly, to a person if
14 the taxpayer establishes by clear and convincing
15 evidence that the adjustments are unreasonable; or
16 if the taxpayer and the Director agree in writing
17 to the application or use of an alternative method
18 of apportionment under Section 304(f).
19 Nothing in this subsection shall preclude the
20 Director from making any other adjustment
21 otherwise allowed under Section 404 of this Act
22 for any tax year beginning after the effective
23 date of this amendment provided such adjustment is
24 made pursuant to regulation adopted by the
25 Department and such regulations provide methods
26 and standards by which the Department will utilize
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1 its authority under Section 404 of this Act;
2 (E-13) An amount equal to the amount of intangible
3 expenses and costs otherwise allowed as a deduction in
4 computing base income, and that were paid, accrued, or
5 incurred, directly or indirectly, (i) for taxable
6 years ending on or after December 31, 2004, to a
7 foreign person who would be a member of the same
8 unitary business group but for the fact that the
9 foreign person's business activity outside the United
10 States is 80% or more of that person's total business
11 activity and (ii) for taxable years ending on or after
12 December 31, 2008, to a person who would be a member of
13 the same unitary business group but for the fact that
14 the person is prohibited under Section 1501(a)(27)
15 from being included in the unitary business group
16 because he or she is ordinarily required to apportion
17 business income under different subsections of Section
18 304. The addition modification required by this
19 subparagraph shall be reduced to the extent that
20 dividends were included in base income of the unitary
21 group for the same taxable year and received by the
22 taxpayer or by a member of the taxpayer's unitary
23 business group (including amounts included in gross
24 income pursuant to Sections 951 through 964 of the
25 Internal Revenue Code and amounts included in gross
26 income under Section 78 of the Internal Revenue Code)
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1 with respect to the stock of the same person to whom
2 the intangible expenses and costs were directly or
3 indirectly paid, incurred, or accrued. The preceding
4 sentence shall not apply to the extent that the same
5 dividends caused a reduction to the addition
6 modification required under Section 203(b)(2)(E-12) of
7 this Act. As used in this subparagraph, the term
8 "intangible expenses and costs" includes (1) expenses,
9 losses, and costs for, or related to, the direct or
10 indirect acquisition, use, maintenance or management,
11 ownership, sale, exchange, or any other disposition of
12 intangible property; (2) losses incurred, directly or
13 indirectly, from factoring transactions or discounting
14 transactions; (3) royalty, patent, technical, and
15 copyright fees; (4) licensing fees; and (5) other
16 similar expenses and costs. For purposes of this
17 subparagraph, "intangible property" includes patents,
18 patent applications, trade names, trademarks, service
19 marks, copyrights, mask works, trade secrets, and
20 similar types of intangible assets.
21 This paragraph shall not apply to the following:
22 (i) any item of intangible expenses or costs
23 paid, accrued, or incurred, directly or
24 indirectly, from a transaction with a person who
25 is subject in a foreign country or state, other
26 than a state which requires mandatory unitary
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1 reporting, to a tax on or measured by net income
2 with respect to such item; or
3 (ii) any item of intangible expense or cost
4 paid, accrued, or incurred, directly or
5 indirectly, if the taxpayer can establish, based
6 on a preponderance of the evidence, both of the
7 following:
8 (a) the person during the same taxable
9 year paid, accrued, or incurred, the
10 intangible expense or cost to a person that is
11 not a related member, and
12 (b) the transaction giving rise to the
13 intangible expense or cost between the
14 taxpayer and the person did not have as a
15 principal purpose the avoidance of Illinois
16 income tax, and is paid pursuant to a contract
17 or agreement that reflects arm's-length terms;
18 or
19 (iii) any item of intangible expense or cost
20 paid, accrued, or incurred, directly or
21 indirectly, from a transaction with a person if
22 the taxpayer establishes by clear and convincing
23 evidence, that the adjustments are unreasonable;
24 or if the taxpayer and the Director agree in
25 writing to the application or use of an
26 alternative method of apportionment under Section
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1 304(f);
2 Nothing in this subsection shall preclude the
3 Director from making any other adjustment
4 otherwise allowed under Section 404 of this Act
5 for any tax year beginning after the effective
6 date of this amendment provided such adjustment is
7 made pursuant to regulation adopted by the
8 Department and such regulations provide methods
9 and standards by which the Department will utilize
10 its authority under Section 404 of this Act;
11 (E-14) For taxable years ending on or after
12 December 31, 2008, an amount equal to the amount of
13 insurance premium expenses and costs otherwise allowed
14 as a deduction in computing base income, and that were
15 paid, accrued, or incurred, directly or indirectly, to
16 a person who would be a member of the same unitary
17 business group but for the fact that the person is
18 prohibited under Section 1501(a)(27) from being
19 included in the unitary business group because he or
20 she is ordinarily required to apportion business
21 income under different subsections of Section 304. The
22 addition modification required by this subparagraph
23 shall be reduced to the extent that dividends were
24 included in base income of the unitary group for the
25 same taxable year and received by the taxpayer or by a
26 member of the taxpayer's unitary business group
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1 (including amounts included in gross income under
2 Sections 951 through 964 of the Internal Revenue Code
3 and amounts included in gross income under Section 78
4 of the Internal Revenue Code) with respect to the
5 stock of the same person to whom the premiums and costs
6 were directly or indirectly paid, incurred, or
7 accrued. The preceding sentence does not apply to the
8 extent that the same dividends caused a reduction to
9 the addition modification required under Section
10 203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
11 Act;
12 (E-15) For taxable years beginning after December
13 31, 2008, any deduction for dividends paid by a
14 captive real estate investment trust that is allowed
15 to a real estate investment trust under Section
16 857(b)(2)(B) of the Internal Revenue Code for
17 dividends paid;
18 (E-16) An amount equal to the credit allowable to
19 the taxpayer under Section 218(a) of this Act,
20 determined without regard to Section 218(c) of this
21 Act;
22 (E-17) For taxable years ending on or after
23 December 31, 2017, an amount equal to the deduction
24 allowed under Section 199 of the Internal Revenue Code
25 for the taxable year;
26 (E-18) for taxable years beginning after December
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1 31, 2018, an amount equal to the deduction allowed
2 under Section 250(a)(1)(A) of the Internal Revenue
3 Code for the taxable year;
4 (E-19) for taxable years ending on or after June
5 30, 2021, an amount equal to the deduction allowed
6 under Section 250(a)(1)(B)(i) of the Internal Revenue
7 Code for the taxable year;
8 (E-20) for taxable years ending on or after June
9 30, 2021, an amount equal to the deduction allowed
10 under Sections 243(e) and 245A(a) of the Internal
11 Revenue Code for the taxable year;
12 (E-21) the amount that is claimed as a federal
13 deduction when computing the taxpayer's federal
14 taxable income for the taxable year and that is
15 attributable to an endowment gift for which the
16 taxpayer receives a credit under the Illinois Gives
17 Tax Credit Act;
18 and by deducting from the total so obtained the sum of the
19 following amounts:
20 (F) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the taxpayer
22 and included in such total for the taxable year;
23 (G) An amount equal to any amount included in such
24 total under Section 78 of the Internal Revenue Code;
25 (H) In the case of a regulated investment company,
26 an amount equal to the amount of exempt interest
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1 dividends as defined in subsection (b)(5) of Section
2 852 of the Internal Revenue Code, paid to shareholders
3 for the taxable year;
4 (I) With the exception of any amounts subtracted
5 under subparagraph (J), an amount equal to the sum of
6 all amounts disallowed as deductions by (i) Sections
7 171(a)(2) and 265(a)(2) and amounts disallowed as
8 interest expense by Section 291(a)(3) of the Internal
9 Revenue Code, and all amounts of expenses allocable to
10 interest and disallowed as deductions by Section
11 265(a)(1) of the Internal Revenue Code; and (ii) for
12 taxable years ending on or after August 13, 1999,
13 Sections 171(a)(2), 265, 280C, 291(a)(3), and
14 832(b)(5)(B)(i) of the Internal Revenue Code, plus,
15 for tax years ending on or after December 31, 2011,
16 amounts disallowed as deductions by Section 45G(e)(3)
17 of the Internal Revenue Code and, for taxable years
18 ending on or after December 31, 2008, any amount
19 included in gross income under Section 87 of the
20 Internal Revenue Code and the policyholders' share of
21 tax-exempt interest of a life insurance company under
22 Section 807(a)(2)(B) of the Internal Revenue Code (in
23 the case of a life insurance company with gross income
24 from a decrease in reserves for the tax year) or
25 Section 807(b)(1)(B) of the Internal Revenue Code (in
26 the case of a life insurance company allowed a
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1 deduction for an increase in reserves for the tax
2 year); the provisions of this subparagraph are exempt
3 from the provisions of Section 250;
4 (J) An amount equal to all amounts included in
5 such total which are exempt from taxation by this
6 State either by reason of its statutes or Constitution
7 or by reason of the Constitution, treaties or statutes
8 of the United States; provided that, in the case of any
9 statute of this State that exempts income derived from
10 bonds or other obligations from the tax imposed under
11 this Act, the amount exempted shall be the interest
12 net of bond premium amortization;
13 (K) 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 substantially
18 all of its operations in a River Edge Redevelopment
19 Zone or zones. This subparagraph (K) is exempt from
20 the provisions of Section 250;
21 (L) 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 (K) of paragraph 2 of this subsection
2 shall not be eligible for the deduction provided under
3 this subparagraph (L);
4 (M) For any taxpayer that is a financial
5 organization within the meaning of Section 304(c) of
6 this Act, an amount included in such total as interest
7 income from a loan or loans made by such taxpayer to a
8 borrower, to the extent that such a loan is secured by
9 property which is eligible for the River Edge
10 Redevelopment Zone Investment Credit. To determine the
11 portion of a loan or loans that is secured by property
12 eligible for a Section 201(f) investment credit to the
13 borrower, the entire principal amount of the loan or
14 loans between the taxpayer and the borrower should be
15 divided into the basis of the Section 201(f)
16 investment credit property which secures the loan or
17 loans, using for this purpose the original basis of
18 such property on the date that it was placed in service
19 in the River Edge Redevelopment Zone. The subtraction
20 modification available to the taxpayer in any year
21 under this subsection shall be that portion of the
22 total interest paid by the borrower with respect to
23 such loan attributable to the eligible property as
24 calculated under the previous sentence. This
25 subparagraph (M) is exempt from the provisions of
26 Section 250;
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1 (M-1) For any taxpayer that is a financial
2 organization within the meaning of Section 304(c) of
3 this Act, an amount included in such total as interest
4 income from a loan or loans made by such taxpayer to a
5 borrower, to the extent that such a loan is secured by
6 property which is eligible for the High Impact
7 Business Investment Credit. To determine the portion
8 of a loan or loans that is secured by property eligible
9 for a Section 201(h) investment credit to the
10 borrower, the entire principal amount of the loan or
11 loans between the taxpayer and the borrower should be
12 divided into the basis of the Section 201(h)
13 investment credit property which secures the loan or
14 loans, using for this purpose the original basis of
15 such property on the date that it was placed in service
16 in a federally designated Foreign Trade Zone or
17 Sub-Zone located in Illinois. No taxpayer that is
18 eligible for the deduction provided in subparagraph
19 (M) of paragraph (2) of this subsection shall be
20 eligible for the deduction provided under this
21 subparagraph (M-1). The subtraction modification
22 available to taxpayers in any year under this
23 subsection shall be that portion of the total interest
24 paid by the borrower with respect to such loan
25 attributable to the eligible property as calculated
26 under the previous sentence;
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1 (N) Two times any contribution made during the
2 taxable year to a designated zone organization to the
3 extent that the contribution (i) qualifies as a
4 charitable contribution under subsection (c) of
5 Section 170 of the Internal Revenue Code and (ii)
6 must, by its terms, be used for a project approved by
7 the Department of Commerce and Economic Opportunity
8 under Section 11 of the Illinois Enterprise Zone Act
9 or under Section 10-10 of the River Edge Redevelopment
10 Zone Act. This subparagraph (N) is exempt from the
11 provisions of Section 250;
12 (O) An amount equal to: (i) 85% for taxable years
13 ending on or before December 31, 1992, or, a
14 percentage equal to the percentage allowable under
15 Section 243(a)(1) of the Internal Revenue Code of 1986
16 for taxable years ending after December 31, 1992, of
17 the amount by which dividends included in taxable
18 income and received from a corporation that is not
19 created or organized under the laws of the United
20 States or any state or political subdivision thereof,
21 including, for taxable years ending on or after
22 December 31, 1988, dividends received or deemed
23 received or paid or deemed paid under Sections 951
24 through 965 of the Internal Revenue Code, exceed the
25 amount of the modification provided under subparagraph
26 (G) of paragraph (2) of this subsection (b) which is
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1 related to such dividends, and including, for taxable
2 years ending on or after December 31, 2008, dividends
3 received from a captive real estate investment trust;
4 plus (ii) 100% of the amount by which dividends,
5 included in taxable income and received, including,
6 for taxable years ending on or after December 31,
7 1988, dividends received or deemed received or paid or
8 deemed paid under Sections 951 through 964 of the
9 Internal Revenue Code and including, for taxable years
10 ending on or after December 31, 2008, dividends
11 received from a captive real estate investment trust,
12 from any such corporation specified in clause (i) that
13 would but for the provisions of Section 1504(b)(3) of
14 the Internal Revenue Code be treated as a member of the
15 affiliated group which includes the dividend
16 recipient, exceed the amount of the modification
17 provided under subparagraph (G) of paragraph (2) of
18 this subsection (b) which is related to such
19 dividends. For taxable years ending on or after June
20 30, 2021, (i) for purposes of this subparagraph, the
21 term "dividend" does not include any amount treated as
22 a dividend under Section 1248 of the Internal Revenue
23 Code, and (ii) this subparagraph shall not apply to
24 dividends for which a deduction is allowed under
25 Section 245(a) of the Internal Revenue Code. This
26 subparagraph (O) is exempt from the provisions of
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1 Section 250 of this Act;
2 (P) An amount equal to any contribution made to a
3 job training project established pursuant to the Tax
4 Increment Allocation Redevelopment Act;
5 (Q) An amount equal to the amount of the deduction
6 used to compute the federal income tax credit for
7 restoration of substantial amounts held under claim of
8 right for the taxable year pursuant to Section 1341 of
9 the Internal Revenue Code;
10 (R) On and after July 20, 1999, in the case of an
11 attorney-in-fact with respect to whom an interinsurer
12 or a reciprocal insurer has made the election under
13 Section 835 of the Internal Revenue Code, 26 U.S.C.
14 835, an amount equal to the excess, if any, of the
15 amounts paid or incurred by that interinsurer or
16 reciprocal insurer in the taxable year to the
17 attorney-in-fact over the deduction allowed to that
18 interinsurer or reciprocal insurer with respect to the
19 attorney-in-fact under Section 835(b) of the Internal
20 Revenue Code for the taxable year; the provisions of
21 this subparagraph are exempt from the provisions of
22 Section 250;
23 (S) For taxable years ending on or after December
24 31, 1997, in the case of a Subchapter S corporation, an
25 amount equal to all amounts of income allocable to a
26 shareholder subject to the Personal Property Tax
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1 Replacement Income Tax imposed by subsections (c) and
2 (d) of Section 201 of this Act, including amounts
3 allocable to organizations exempt from federal income
4 tax by reason of Section 501(a) of the Internal
5 Revenue Code. This subparagraph (S) is exempt from the
6 provisions of Section 250;
7 (T) For taxable years 2001 and thereafter, for the
8 taxable year in which the bonus depreciation deduction
9 is taken on the taxpayer's federal income tax return
10 under subsection (k) of Section 168 of the Internal
11 Revenue Code and for each applicable taxable year
12 thereafter, an amount equal to "x", where:
13 (1) "y" equals the amount of the depreciation
14 deduction taken for the taxable year on the
15 taxpayer's federal income tax return on property
16 for which the bonus depreciation deduction was
17 taken in any year under subsection (k) of Section
18 168 of the Internal Revenue Code, but not
19 including the bonus depreciation deduction;
20 (2) for taxable years ending on or before
21 December 31, 2005, "x" equals "y" multiplied by 30
22 and then divided by 70 (or "y" multiplied by
23 0.429); and
24 (3) for taxable years ending after December
25 31, 2005:
26 (i) for property on which a bonus
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1 depreciation deduction of 30% of the adjusted
2 basis was taken, "x" equals "y" multiplied by
3 30 and then divided by 70 (or "y" multiplied
4 by 0.429);
5 (ii) for property on which a bonus
6 depreciation deduction of 50% of the adjusted
7 basis was taken, "x" equals "y" multiplied by
8 1.0;
9 (iii) for property on which a bonus
10 depreciation deduction of 100% of the adjusted
11 basis was taken in a taxable year ending on or
12 after December 31, 2021, "x" equals the
13 depreciation deduction that would be allowed
14 on that property if the taxpayer had made the
15 election under Section 168(k)(7) of the
16 Internal Revenue Code to not claim bonus
17 depreciation on that property; and
18 (iv) for property on which a bonus
19 depreciation deduction of a percentage other
20 than 30%, 50% or 100% of the adjusted basis
21 was taken in a taxable year ending on or after
22 December 31, 2021, "x" equals "y" multiplied
23 by 100 times the percentage bonus depreciation
24 on the property (that is, 100(bonus%)) and
25 then divided by 100 times 1 minus the
26 percentage bonus depreciation on the property
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1 (that is, 100(1-bonus%)).
2 The aggregate amount deducted under this
3 subparagraph in all taxable years for any one piece of
4 property may not exceed the amount of the bonus
5 depreciation deduction taken on that property on the
6 taxpayer's federal income tax return under subsection
7 (k) of Section 168 of the Internal Revenue Code. This
8 subparagraph (T) is exempt from the provisions of
9 Section 250;
10 (U) If the taxpayer sells, transfers, abandons, or
11 otherwise disposes of property for which the taxpayer
12 was required in any taxable year to make an addition
13 modification under subparagraph (E-10), then an amount
14 equal to that addition modification.
15 If the taxpayer continues to own property through
16 the last day of the last tax year for which a
17 subtraction is allowed with respect to that property
18 under subparagraph (T) and for which the taxpayer was
19 required in any taxable year to make an addition
20 modification under subparagraph (E-10), then an amount
21 equal to that addition modification.
22 The taxpayer is allowed to take the deduction
23 under this subparagraph only once with respect to any
24 one piece of property.
25 This subparagraph (U) is exempt from the
26 provisions of Section 250;
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1 (V) The amount of: (i) any interest income (net of
2 the deductions allocable thereto) taken into account
3 for the taxable year with respect to a transaction
4 with a taxpayer that is required to make an addition
5 modification with respect to such transaction under
6 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
7 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
8 the amount of such addition modification, (ii) any
9 income from intangible property (net of the deductions
10 allocable thereto) taken into account for the taxable
11 year with respect to a transaction with a taxpayer
12 that is required to make an addition modification with
13 respect to such transaction under Section
14 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
15 203(d)(2)(D-8), but not to exceed the amount of such
16 addition modification, and (iii) any insurance premium
17 income (net of deductions allocable thereto) taken
18 into account for the taxable year with respect to a
19 transaction with a taxpayer that is required to make
20 an addition modification with respect to such
21 transaction under Section 203(a)(2)(D-19), Section
22 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
23 203(d)(2)(D-9), but not to exceed the amount of that
24 addition modification. This subparagraph (V) is exempt
25 from the provisions of Section 250;
26 (W) An amount equal to the interest income taken
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1 into account for the taxable year (net of the
2 deductions allocable thereto) with respect to
3 transactions with (i) a foreign person who would be a
4 member of the taxpayer's unitary business group but
5 for the fact that the foreign person's business
6 activity outside the United States is 80% or more of
7 that person's total business activity and (ii) for
8 taxable years ending on or after December 31, 2008, 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, but
15 not to exceed the addition modification required to be
16 made for the same taxable year under Section
17 203(b)(2)(E-12) for interest paid, accrued, or
18 incurred, directly or indirectly, to the same person.
19 This subparagraph (W) is exempt from the provisions of
20 Section 250;
21 (X) An amount equal to the income from intangible
22 property taken into account for the taxable year (net
23 of the deductions allocable thereto) with respect to
24 transactions with (i) a foreign person who would be a
25 member of the taxpayer's unitary business group but
26 for the fact that the foreign person's business
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1 activity outside the United States is 80% or more of
2 that person's total business activity and (ii) for
3 taxable years ending on or after December 31, 2008, to
4 a person who would be a member of the same unitary
5 business group but for the fact that the person is
6 prohibited under Section 1501(a)(27) from being
7 included in the unitary business group because he or
8 she is ordinarily required to apportion business
9 income under different subsections of Section 304, but
10 not to exceed the addition modification required to be
11 made for the same taxable year under Section
12 203(b)(2)(E-13) for intangible expenses and costs
13 paid, accrued, or incurred, directly or indirectly, to
14 the same foreign person. This subparagraph (X) is
15 exempt from the provisions of Section 250;
16 (Y) 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(b)(2)(E-14), 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 (Y), 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 (Y). This
4 subparagraph (Y) is exempt from the provisions of
5 Section 250;
6 (Z) The difference between the nondeductible
7 controlled foreign corporation dividends under Section
8 965(e)(3) of the Internal Revenue Code over the
9 taxable income of the taxpayer, computed without
10 regard to Section 965(e)(2)(A) of the Internal Revenue
11 Code, and without regard to any net operating loss
12 deduction. This subparagraph (Z) is exempt from the
13 provisions of Section 250; and
14 (AA) For taxable years beginning on or after
15 January 1, 2023, for any cannabis establishment
16 operating in this State and licensed under the
17 Cannabis Regulation and Tax Act or any cannabis
18 cultivation center or medical cannabis dispensing
19 organization operating in this State and licensed
20 under the Compassionate Use of Medical Cannabis
21 Program Act, an amount equal to the deductions that
22 were disallowed under Section 280E of the Internal
23 Revenue Code for the taxable year and that would not be
24 added back under this subsection. The provisions of
25 this subparagraph (AA) are exempt from the provisions
26 of Section 250; and .
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1 (BB) For taxable years ending on or after December
2 31, 2025, any contribution to the capital of the
3 taxpayer from the Department of Commerce and Economic
4 Opportunity or any other agency or political
5 subdivision of the State that is made pursuant to a
6 master development plan, as defined in the Master
7 Development Plan Recognition Act, and that is included
8 in the taxpayer's federal taxable income for the
9 taxable year under Section 118 of the Internal Revenue
10 Code; this subparagraph (BB) is exempt from the
11 provisions of Section 250.
12 (3) Special rule. For purposes of paragraph (2)(A),
13 "gross income" in the case of a life insurance company,
14 for tax years ending on and after December 31, 1994, and
15 prior to December 31, 2011, shall mean the gross
16 investment income for the taxable year and, for tax years
17 ending on or after December 31, 2011, shall mean all
18 amounts included in life insurance gross income under
19 Section 803(a)(3) of the Internal Revenue Code.
20 (c) Trusts and estates.
21 (1) In general. In the case of a trust or estate, base
22 income means an amount equal to the taxpayer's taxable
23 income for the taxable year as modified by paragraph (2).
24 (2) Modifications. Subject to the provisions of
25 paragraph (3), the taxable income referred to in paragraph
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1 (1) shall be modified by adding thereto the sum of the
2 following amounts:
3 (A) An amount equal to all amounts paid or accrued
4 to the taxpayer as interest or dividends during the
5 taxable year to the extent excluded from gross income
6 in the computation of taxable income;
7 (B) In the case of (i) an estate, $600; (ii) a
8 trust which, under its governing instrument, is
9 required to distribute all of its income currently,
10 $300; and (iii) any other trust, $100, but in each such
11 case, only to the extent such amount was deducted in
12 the computation of taxable income;
13 (C) An amount equal to the amount of tax imposed by
14 this Act to the extent deducted from gross income in
15 the computation of taxable income for the taxable
16 year;
17 (D) The amount of any net operating loss deduction
18 taken in arriving at taxable income, other than a net
19 operating loss carried forward from a taxable year
20 ending prior to December 31, 1986;
21 (E) For taxable years in which a net operating
22 loss carryback or carryforward from a taxable year
23 ending prior to December 31, 1986 is an element of
24 taxable income under paragraph (1) of subsection (e)
25 or subparagraph (E) of paragraph (2) of subsection
26 (e), the amount by which addition modifications other
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1 than those provided by this subparagraph (E) exceeded
2 subtraction modifications in such taxable year, with
3 the following limitations applied in the order that
4 they are listed:
5 (i) the addition modification relating to the
6 net operating loss carried back or forward to the
7 taxable year from any taxable year ending prior to
8 December 31, 1986 shall be reduced by the amount
9 of addition modification under this subparagraph
10 (E) which related to that net operating loss and
11 which was taken into account in calculating the
12 base income of an earlier taxable year, and
13 (ii) the addition modification relating to the
14 net operating loss carried back or forward to the
15 taxable year from any taxable year ending prior to
16 December 31, 1986 shall not exceed the amount of
17 such carryback or carryforward;
18 For taxable years in which there is a net
19 operating loss carryback or carryforward from more
20 than one other taxable year ending prior to December
21 31, 1986, the addition modification provided in this
22 subparagraph (E) shall be the sum of the amounts
23 computed independently under the preceding provisions
24 of this subparagraph (E) for each such taxable year;
25 (F) For taxable years ending on or after January
26 1, 1989, an amount equal to the tax deducted pursuant
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1 to Section 164 of the Internal Revenue Code if the
2 trust or estate is claiming the same tax for purposes
3 of the Illinois foreign tax credit under Section 601
4 of this Act;
5 (G) An amount equal to the amount of the capital
6 gain deduction allowable under the Internal Revenue
7 Code, to the extent deducted from gross income in the
8 computation of taxable income;
9 (G-5) For taxable years ending after December 31,
10 1997, an amount equal to any eligible remediation
11 costs that the trust or estate deducted in computing
12 adjusted gross income and for which the trust or
13 estate claims a credit under subsection (l) of Section
14 201;
15 (G-10) For taxable years 2001 and thereafter, an
16 amount equal to the bonus depreciation deduction taken
17 on the taxpayer's federal income tax return for the
18 taxable year under subsection (k) of Section 168 of
19 the Internal Revenue Code; and
20 (G-11) If the taxpayer sells, transfers, abandons,
21 or otherwise disposes of property for which the
22 taxpayer was required in any taxable year to make an
23 addition modification under subparagraph (G-10), then
24 an amount equal to the aggregate amount of the
25 deductions taken in all taxable years under
26 subparagraph (R) with respect to that property.
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1 If the taxpayer continues to own property through
2 the last day of the last tax year for which a
3 subtraction is allowed with respect to that property
4 under subparagraph (R) and for which the taxpayer was
5 allowed in any taxable year to make a subtraction
6 modification under subparagraph (R), then an amount
7 equal to that subtraction modification.
8 The taxpayer is required to make the addition
9 modification under this subparagraph only once with
10 respect to any one piece of property;
11 (G-12) An amount equal to the amount otherwise
12 allowed as a deduction in computing base income for
13 interest paid, accrued, or incurred, directly or
14 indirectly, (i) for taxable years ending on or after
15 December 31, 2004, to a foreign person who would be a
16 member of the same unitary business group but for the
17 fact that the foreign person's business activity
18 outside the United States is 80% or more of the foreign
19 person's total business activity and (ii) for taxable
20 years ending on or after December 31, 2008, to a person
21 who would be a member of the same unitary business
22 group but for the fact that the person is prohibited
23 under Section 1501(a)(27) from being included in the
24 unitary business group because he or she is ordinarily
25 required to apportion business income under different
26 subsections of Section 304. The addition modification
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1 required by this subparagraph shall be reduced to the
2 extent that dividends were included in base income of
3 the unitary group for the same taxable year and
4 received by the taxpayer or by a member of the
5 taxpayer's unitary business group (including amounts
6 included in gross income pursuant to Sections 951
7 through 964 of the Internal Revenue Code and amounts
8 included in gross income under Section 78 of the
9 Internal Revenue Code) with respect to the stock of
10 the same person to whom the interest was paid,
11 accrued, or incurred.
12 This paragraph shall not apply to the following:
13 (i) an item of interest paid, accrued, or
14 incurred, directly or indirectly, to a person who
15 is subject in a foreign country or state, other
16 than a state which requires mandatory unitary
17 reporting, to a tax on or measured by net income
18 with respect to such interest; or
19 (ii) an item of interest paid, accrued, or
20 incurred, directly or indirectly, to a person if
21 the taxpayer can establish, based on a
22 preponderance of the evidence, both of the
23 following:
24 (a) the person, during the same taxable
25 year, paid, accrued, or incurred, the interest
26 to a person that is not a related member, and
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1 (b) the transaction giving rise to the
2 interest expense between the taxpayer and the
3 person did not have as a principal purpose the
4 avoidance of Illinois income tax, and is paid
5 pursuant to a contract or agreement that
6 reflects an arm's-length interest rate and
7 terms; or
8 (iii) the taxpayer can establish, based on
9 clear and convincing evidence, that the interest
10 paid, accrued, or incurred relates to a contract
11 or agreement entered into at arm's-length rates
12 and terms and the principal purpose for the
13 payment is not federal or Illinois tax avoidance;
14 or
15 (iv) an item of interest paid, accrued, or
16 incurred, directly or indirectly, to a person if
17 the taxpayer establishes by clear and convincing
18 evidence that the adjustments are unreasonable; or
19 if the taxpayer and the Director agree in writing
20 to the application or use of an alternative method
21 of apportionment under Section 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 (G-13) An amount equal to the amount of intangible
6 expenses and costs otherwise allowed as a deduction in
7 computing base income, and that were paid, accrued, or
8 incurred, directly or indirectly, (i) for taxable
9 years ending on or after December 31, 2004, to a
10 foreign person who would be a member of the same
11 unitary business group but for the fact that the
12 foreign person's business activity outside the United
13 States is 80% or more of that person's total business
14 activity and (ii) for taxable years ending on or after
15 December 31, 2008, to a person who would be a member of
16 the same unitary business group but for the fact that
17 the person is prohibited under Section 1501(a)(27)
18 from being included in the unitary business group
19 because he or she is ordinarily required to apportion
20 business income under different subsections of Section
21 304. The addition modification required by this
22 subparagraph shall be reduced to the extent that
23 dividends were included in base income of the unitary
24 group for the same taxable year and received by the
25 taxpayer or by a member of the taxpayer's unitary
26 business group (including amounts included in gross
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1 income pursuant to Sections 951 through 964 of the
2 Internal Revenue Code and amounts included in gross
3 income under Section 78 of the Internal Revenue Code)
4 with respect to the stock of the same person to whom
5 the intangible expenses and costs were directly or
6 indirectly paid, incurred, or accrued. The preceding
7 sentence shall not apply to the extent that the same
8 dividends caused a reduction to the addition
9 modification required under Section 203(c)(2)(G-12) of
10 this Act. As used in this subparagraph, the term
11 "intangible expenses and costs" includes: (1)
12 expenses, losses, and costs for or related to the
13 direct or indirect acquisition, use, maintenance or
14 management, ownership, sale, exchange, or any other
15 disposition of intangible property; (2) losses
16 incurred, directly or indirectly, from factoring
17 transactions or discounting transactions; (3) royalty,
18 patent, technical, and copyright fees; (4) licensing
19 fees; and (5) other similar expenses and costs. For
20 purposes of this subparagraph, "intangible property"
21 includes patents, patent applications, trade names,
22 trademarks, service marks, copyrights, mask works,
23 trade secrets, and similar types of intangible assets.
24 This paragraph shall not apply to the following:
25 (i) any item of intangible expenses or costs
26 paid, accrued, or incurred, directly or
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1 indirectly, from a transaction with a person who
2 is subject in a foreign country or state, other
3 than a state which requires mandatory unitary
4 reporting, to a tax on or measured by net income
5 with respect to such item; or
6 (ii) any item of intangible expense or cost
7 paid, accrued, or incurred, directly or
8 indirectly, if the taxpayer can establish, based
9 on a preponderance of the evidence, both of the
10 following:
11 (a) the person during the same taxable
12 year paid, accrued, or incurred, the
13 intangible expense or cost to a person that is
14 not a related member, and
15 (b) the transaction giving rise to the
16 intangible expense or cost between the
17 taxpayer and the person did not have as a
18 principal purpose the avoidance of Illinois
19 income tax, and is paid pursuant to a contract
20 or agreement that reflects arm's-length terms;
21 or
22 (iii) any item of intangible expense or cost
23 paid, accrued, or incurred, directly or
24 indirectly, from a transaction with a person if
25 the taxpayer establishes by clear and convincing
26 evidence, that the adjustments are unreasonable;
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1 or if the taxpayer and the Director agree in
2 writing to the application or use of an
3 alternative method of apportionment under Section
4 304(f);
5 Nothing in this subsection shall preclude the
6 Director from making any other adjustment
7 otherwise allowed under Section 404 of this Act
8 for any tax year beginning after the effective
9 date of this amendment provided such adjustment is
10 made pursuant to regulation adopted by the
11 Department and such regulations provide methods
12 and standards by which the Department will utilize
13 its authority under Section 404 of this Act;
14 (G-14) For taxable years ending on or after
15 December 31, 2008, an amount equal to the amount of
16 insurance premium expenses and costs otherwise allowed
17 as a deduction in computing base income, and that were
18 paid, accrued, or incurred, directly or indirectly, to
19 a person who would be a member of the same unitary
20 business group but for the fact that the person is
21 prohibited under Section 1501(a)(27) from being
22 included in the unitary business group because he or
23 she is ordinarily required to apportion business
24 income under different subsections of Section 304. The
25 addition modification required by this subparagraph
26 shall be reduced to the extent that dividends were
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1 included in base income of the unitary group for the
2 same taxable year and received by the taxpayer or by a
3 member of the taxpayer's unitary business group
4 (including amounts included in gross income under
5 Sections 951 through 964 of the Internal Revenue Code
6 and amounts included in gross income under Section 78
7 of the Internal Revenue Code) with respect to the
8 stock of the same person to whom the premiums and costs
9 were directly or indirectly paid, incurred, or
10 accrued. The preceding sentence does not apply to the
11 extent that the same dividends caused a reduction to
12 the addition modification required under Section
13 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
14 Act;
15 (G-15) An amount equal to the credit allowable to
16 the taxpayer under Section 218(a) of this Act,
17 determined without regard to Section 218(c) of this
18 Act;
19 (G-16) For taxable years ending on or after
20 December 31, 2017, an amount equal to the deduction
21 allowed under Section 199 of the Internal Revenue Code
22 for the taxable year;
23 (G-17) the amount that is claimed as a federal
24 deduction when computing the taxpayer's federal
25 taxable income for the taxable year and that is
26 attributable to an endowment gift for which the
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1 taxpayer receives a credit under the Illinois Gives
2 Tax Credit Act;
3 and by deducting from the total so obtained the sum of the
4 following amounts:
5 (H) An amount equal to all amounts included in
6 such total pursuant to the provisions of Sections
7 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
8 of the Internal Revenue Code or included in such total
9 as distributions under the provisions of any
10 retirement or disability plan for employees of any
11 governmental agency or unit, or retirement payments to
12 retired partners, which payments are excluded in
13 computing net earnings from self employment by Section
14 1402 of the Internal Revenue Code and regulations
15 adopted pursuant thereto;
16 (I) The valuation limitation amount;
17 (J) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the taxpayer
19 and included in such total for the taxable year;
20 (K) An amount equal to all amounts included in
21 taxable income as modified by subparagraphs (A), (B),
22 (C), (D), (E), (F) and (G) which are exempt from
23 taxation by this State either by reason of its
24 statutes or Constitution or by reason of the
25 Constitution, treaties or statutes of the United
26 States; provided that, in the case of any statute of
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1 this State that exempts income derived from bonds or
2 other obligations from the tax imposed under this Act,
3 the amount exempted shall be the interest net of bond
4 premium amortization;
5 (L) With the exception of any amounts subtracted
6 under subparagraph (K), an amount equal to the sum of
7 all amounts disallowed as deductions by (i) Sections
8 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
9 and all amounts of expenses allocable to interest and
10 disallowed as deductions by Section 265(a)(1) of the
11 Internal Revenue Code; and (ii) for taxable years
12 ending on or after August 13, 1999, Sections
13 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
14 Internal Revenue Code, plus, (iii) for taxable years
15 ending on or after December 31, 2011, Section
16 45G(e)(3) of the Internal Revenue Code and, for
17 taxable years ending on or after December 31, 2008,
18 any amount included in gross income under Section 87
19 of the Internal Revenue Code; the provisions of this
20 subparagraph are exempt from the provisions of Section
21 250;
22 (M) An amount equal to those dividends included in
23 such total which were paid by a corporation which
24 conducts business operations in a River Edge
25 Redevelopment Zone or zones created under the River
26 Edge Redevelopment Zone Act and conducts substantially
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1 all of its operations in a River Edge Redevelopment
2 Zone or zones. This subparagraph (M) is exempt from
3 the provisions of Section 250;
4 (N) An amount equal to any contribution made to a
5 job training project established pursuant to the Tax
6 Increment Allocation Redevelopment Act;
7 (O) An amount equal to those dividends included in
8 such total that were paid by a corporation that
9 conducts business operations in a federally designated
10 Foreign Trade Zone or Sub-Zone and that is designated
11 a High Impact Business located in Illinois; provided
12 that dividends eligible for the deduction provided in
13 subparagraph (M) of paragraph (2) of this subsection
14 shall not be eligible for the deduction provided under
15 this subparagraph (O);
16 (P) An amount equal to the amount of the deduction
17 used to compute the federal income tax credit for
18 restoration of substantial amounts held under claim of
19 right for the taxable year pursuant to Section 1341 of
20 the Internal Revenue Code;
21 (Q) For taxable year 1999 and thereafter, an
22 amount equal to the amount of any (i) distributions,
23 to the extent includible in gross income for federal
24 income tax purposes, made to the taxpayer because of
25 his or her status as a victim of persecution for racial
26 or religious reasons by Nazi Germany or any other Axis
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1 regime or as an heir of the victim and (ii) items of
2 income, to the extent includible in gross income for
3 federal income tax purposes, attributable to, derived
4 from or in any way related to assets stolen from,
5 hidden from, or otherwise lost to a victim of
6 persecution for racial or religious reasons by Nazi
7 Germany or any other Axis regime immediately prior to,
8 during, and immediately after World War II, including,
9 but not limited to, interest on the proceeds
10 receivable as insurance under policies issued to a
11 victim of persecution for racial or religious reasons
12 by Nazi Germany or any other Axis regime by European
13 insurance companies immediately prior to and during
14 World War II; provided, however, this subtraction from
15 federal adjusted gross income does not apply to assets
16 acquired with such assets or with the proceeds from
17 the sale of such assets; provided, further, this
18 paragraph shall only apply to a taxpayer who was the
19 first recipient of such assets after their recovery
20 and who is a victim of persecution for racial or
21 religious reasons by Nazi Germany or any other Axis
22 regime or as an heir of the victim. The amount of and
23 the eligibility for any public assistance, benefit, or
24 similar entitlement is not affected by the inclusion
25 of items (i) and (ii) of this paragraph in gross income
26 for federal income tax purposes. This paragraph is
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1 exempt from the provisions of Section 250;
2 (R) For taxable years 2001 and thereafter, for the
3 taxable year in which the bonus depreciation deduction
4 is taken on the taxpayer's federal income tax return
5 under subsection (k) of Section 168 of the Internal
6 Revenue Code and for each applicable taxable year
7 thereafter, an amount equal to "x", where:
8 (1) "y" equals the amount of the depreciation
9 deduction taken for the taxable year on the
10 taxpayer's federal income tax return on property
11 for which the bonus depreciation deduction was
12 taken in any year under subsection (k) of Section
13 168 of the Internal Revenue Code, but not
14 including the bonus depreciation deduction;
15 (2) for taxable years ending on or before
16 December 31, 2005, "x" equals "y" multiplied by 30
17 and then divided by 70 (or "y" multiplied by
18 0.429); and
19 (3) for taxable years ending after December
20 31, 2005:
21 (i) for property on which a bonus
22 depreciation deduction of 30% of the adjusted
23 basis was taken, "x" equals "y" multiplied by
24 30 and then divided by 70 (or "y" multiplied
25 by 0.429);
26 (ii) for property on which a bonus
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1 depreciation deduction of 50% of the adjusted
2 basis was taken, "x" equals "y" multiplied by
3 1.0;
4 (iii) for property on which a bonus
5 depreciation deduction of 100% of the adjusted
6 basis was taken in a taxable year ending on or
7 after December 31, 2021, "x" equals the
8 depreciation deduction that would be allowed
9 on that property if the taxpayer had made the
10 election under Section 168(k)(7) of the
11 Internal Revenue Code to not claim bonus
12 depreciation on that property; and
13 (iv) for property on which a bonus
14 depreciation deduction of a percentage other
15 than 30%, 50% or 100% of the adjusted basis
16 was taken in a taxable year ending on or after
17 December 31, 2021, "x" equals "y" multiplied
18 by 100 times the percentage bonus depreciation
19 on the property (that is, 100(bonus%)) and
20 then divided by 100 times 1 minus the
21 percentage bonus depreciation on the property
22 (that is, 100(1-bonus%)).
23 The aggregate amount deducted under this
24 subparagraph in all taxable years for any one piece of
25 property may not exceed the amount of the bonus
26 depreciation deduction taken on that property on the
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1 taxpayer's federal income tax return under subsection
2 (k) of Section 168 of the Internal Revenue Code. This
3 subparagraph (R) is exempt from the provisions of
4 Section 250;
5 (S) If the taxpayer sells, transfers, abandons, or
6 otherwise disposes of property for which the taxpayer
7 was required in any taxable year to make an addition
8 modification under subparagraph (G-10), then an amount
9 equal to that addition modification.
10 If the taxpayer continues to own property through
11 the last day of the last tax year for which a
12 subtraction is allowed with respect to that property
13 under subparagraph (R) and for which the taxpayer was
14 required in any taxable year to make an addition
15 modification under subparagraph (G-10), then an amount
16 equal to that addition modification.
17 The taxpayer is allowed to take the deduction
18 under this subparagraph only once with respect to any
19 one piece of property.
20 This subparagraph (S) is exempt from the
21 provisions of Section 250;
22 (T) The amount of (i) any interest income (net of
23 the deductions allocable thereto) taken into account
24 for the taxable year with respect to a transaction
25 with a taxpayer that is required to make an addition
26 modification with respect to such transaction under
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1 Section 203(a)(2)(D-17), 203(b)(2)(E-12),
2 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
3 the amount of such addition modification and (ii) any
4 income from intangible property (net of the deductions
5 allocable thereto) taken into account for the taxable
6 year with respect to a transaction with a taxpayer
7 that is required to make an addition modification with
8 respect to such transaction under Section
9 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
10 203(d)(2)(D-8), but not to exceed the amount of such
11 addition modification. This subparagraph (T) is exempt
12 from the provisions of Section 250;
13 (U) An amount equal to the interest income taken
14 into account for the taxable year (net of the
15 deductions allocable thereto) with respect to
16 transactions with (i) a foreign person who would be a
17 member of the taxpayer's unitary business group but
18 for the fact the foreign person's business activity
19 outside the United States is 80% or more of that
20 person's total business activity and (ii) for taxable
21 years ending on or after December 31, 2008, to a person
22 who would be a member of the same unitary business
23 group but for the fact that the person is prohibited
24 under Section 1501(a)(27) from being included in the
25 unitary business group because he or she is ordinarily
26 required to apportion business income under different
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1 subsections of Section 304, but not to exceed the
2 addition modification required to be made for the same
3 taxable year under Section 203(c)(2)(G-12) for
4 interest paid, accrued, or incurred, directly or
5 indirectly, to the same person. This subparagraph (U)
6 is exempt from the provisions of Section 250;
7 (V) An amount equal to the income from intangible
8 property taken into account for the taxable year (net
9 of the deductions allocable thereto) with respect to
10 transactions with (i) a foreign person who would be a
11 member of the taxpayer's unitary business group but
12 for the fact that the foreign person's business
13 activity outside the United States is 80% or more of
14 that person's total business activity and (ii) for
15 taxable years ending on or after December 31, 2008, to
16 a person who would be a member of the same unitary
17 business group but for the fact that the person is
18 prohibited under Section 1501(a)(27) from being
19 included in the unitary business group because he or
20 she is ordinarily required to apportion business
21 income under different subsections of Section 304, but
22 not to exceed the addition modification required to be
23 made for the same taxable year under Section
24 203(c)(2)(G-13) for intangible expenses and costs
25 paid, accrued, or incurred, directly or indirectly, to
26 the same foreign person. This subparagraph (V) is
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1 exempt from the provisions of Section 250;
2 (W) in the case of an estate, an amount equal to
3 all amounts included in such total pursuant to the
4 provisions of Section 111 of the Internal Revenue Code
5 as a recovery of items previously deducted by the
6 decedent from adjusted gross income in the computation
7 of taxable income. This subparagraph (W) is exempt
8 from Section 250;
9 (X) an amount equal to the refund included in such
10 total of any tax deducted for federal income tax
11 purposes, to the extent that deduction was added back
12 under subparagraph (F). This subparagraph (X) is
13 exempt from the provisions of Section 250;
14 (Y) For taxable years ending on or after December
15 31, 2011, in the case of a taxpayer who was required to
16 add back any insurance premiums under Section
17 203(c)(2)(G-14), such taxpayer may elect to subtract
18 that part of a reimbursement received from the
19 insurance company equal to the amount of the expense
20 or loss (including expenses incurred by the insurance
21 company) that would have been taken into account as a
22 deduction for federal income tax purposes if the
23 expense or loss had been uninsured. If a taxpayer
24 makes the election provided for by this subparagraph
25 (Y), the insurer to which the premiums were paid must
26 add back to income the amount subtracted by the
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1 taxpayer pursuant to this subparagraph (Y). This
2 subparagraph (Y) is exempt from the provisions of
3 Section 250;
4 (Z) For taxable years beginning after December 31,
5 2018 and before January 1, 2026, the amount of excess
6 business loss of the taxpayer disallowed as a
7 deduction by Section 461(l)(1)(B) of the Internal
8 Revenue Code; and
9 (AA) For taxable years beginning on or after
10 January 1, 2023, for any cannabis establishment
11 operating in this State and licensed under the
12 Cannabis Regulation and Tax Act or any cannabis
13 cultivation center or medical cannabis dispensing
14 organization operating in this State and licensed
15 under the Compassionate Use of Medical Cannabis
16 Program Act, an amount equal to the deductions that
17 were disallowed under Section 280E of the Internal
18 Revenue Code for the taxable year and that would not be
19 added back under this subsection. The provisions of
20 this subparagraph (AA) are exempt from the provisions
21 of Section 250.
22 (3) Limitation. The amount of any modification
23 otherwise required under this subsection shall, under
24 regulations prescribed by the Department, be adjusted by
25 any amounts included therein which were properly paid,
26 credited, or required to be distributed, or permanently
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1 set aside for charitable purposes pursuant to Internal
2 Revenue Code Section 642(c) during the taxable year.
3 (d) Partnerships.
4 (1) In general. In the case of a partnership, base
5 income means an amount equal to the taxpayer's taxable
6 income for the taxable year as modified by paragraph (2).
7 (2) Modifications. The taxable income referred to in
8 paragraph (1) shall be modified by adding thereto the sum
9 of the following amounts:
10 (A) An amount equal to all amounts paid or accrued
11 to the taxpayer as interest or dividends during the
12 taxable year to the extent excluded from gross income
13 in the computation of taxable income;
14 (B) An amount equal to the amount of tax imposed by
15 this Act to the extent deducted from gross income for
16 the taxable year;
17 (C) The amount of deductions allowed to the
18 partnership pursuant to Section 707 (c) of the
19 Internal Revenue Code in calculating its taxable
20 income;
21 (D) 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 (D-5) For taxable years 2001 and thereafter, an
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1 amount equal to the bonus depreciation deduction taken
2 on the taxpayer's federal income tax return for the
3 taxable year under subsection (k) of Section 168 of
4 the Internal Revenue Code;
5 (D-6) If the taxpayer sells, transfers, abandons,
6 or otherwise disposes of property for which the
7 taxpayer was required in any taxable year to make an
8 addition modification under subparagraph (D-5), then
9 an amount equal to the aggregate amount of the
10 deductions taken in all taxable years under
11 subparagraph (O) with respect to that property.
12 If the taxpayer continues to own property through
13 the last day of the last tax year for which a
14 subtraction is allowed with respect to that property
15 under subparagraph (O) and for which the taxpayer was
16 allowed in any taxable year to make a subtraction
17 modification under subparagraph (O), then an amount
18 equal to that subtraction modification.
19 The taxpayer is required to make the addition
20 modification under this subparagraph only once with
21 respect to any one piece of property;
22 (D-7) An amount equal to the amount otherwise
23 allowed as a deduction in computing base income for
24 interest paid, accrued, or incurred, directly or
25 indirectly, (i) for taxable years ending on or after
26 December 31, 2004, to a foreign person who would be a
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1 member of the same unitary business group but for the
2 fact the foreign person's business activity outside
3 the United States is 80% or more of the foreign
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. The addition modification
12 required by this subparagraph shall be reduced to the
13 extent that dividends were included in base income of
14 the unitary group for the same taxable year and
15 received by the taxpayer or by a member of the
16 taxpayer's unitary business group (including amounts
17 included in gross income pursuant to Sections 951
18 through 964 of the Internal Revenue Code and amounts
19 included in gross income under Section 78 of the
20 Internal Revenue Code) with respect to the stock of
21 the same person to whom the interest was paid,
22 accrued, or incurred.
23 This paragraph shall not apply to the following:
24 (i) an item of interest paid, accrued, or
25 incurred, directly or indirectly, to a person who
26 is subject in a foreign country or state, other
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1 than a state which requires mandatory unitary
2 reporting, to a tax on or measured by net income
3 with respect to such interest; or
4 (ii) an item of interest paid, accrued, or
5 incurred, directly or indirectly, to a person if
6 the taxpayer can establish, based on a
7 preponderance of the evidence, both of the
8 following:
9 (a) the person, during the same taxable
10 year, paid, accrued, or incurred, the interest
11 to a person that is not a related member, and
12 (b) the transaction giving rise to the
13 interest expense between the taxpayer and the
14 person did not have as a principal purpose the
15 avoidance of Illinois income tax, and is paid
16 pursuant to a contract or agreement that
17 reflects an arm's-length interest rate and
18 terms; or
19 (iii) the taxpayer can establish, based on
20 clear and convincing evidence, that the interest
21 paid, accrued, or incurred relates to a contract
22 or agreement entered into at arm's-length rates
23 and terms and the principal purpose for the
24 payment is not federal or Illinois tax avoidance;
25 or
26 (iv) an item of interest paid, accrued, or
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1 incurred, directly or indirectly, to a person if
2 the taxpayer establishes by clear and convincing
3 evidence that the adjustments are unreasonable; or
4 if the taxpayer and the Director agree in writing
5 to the application or use of an alternative method
6 of apportionment under Section 304(f).
7 Nothing in this subsection shall preclude the
8 Director from making any other adjustment
9 otherwise allowed under Section 404 of this Act
10 for any tax year beginning after the effective
11 date of this amendment provided such adjustment is
12 made pursuant to regulation adopted by the
13 Department and such regulations provide methods
14 and standards by which the Department will utilize
15 its authority under Section 404 of this Act; and
16 (D-8) An amount equal to the amount of intangible
17 expenses and costs otherwise allowed as a deduction in
18 computing base income, and that were paid, accrued, or
19 incurred, directly or indirectly, (i) for taxable
20 years ending on or after December 31, 2004, to a
21 foreign person who would be a member of the same
22 unitary business group but for the fact that the
23 foreign person's business activity outside the United
24 States is 80% or more of that person's total business
25 activity and (ii) for taxable years ending on or after
26 December 31, 2008, to a person who would be a member of
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1 the same unitary business group but for the fact that
2 the person is prohibited under Section 1501(a)(27)
3 from being included in the unitary business group
4 because he or she is ordinarily required to apportion
5 business income under different subsections of Section
6 304. The addition modification required by this
7 subparagraph shall be reduced to the extent that
8 dividends were included in base income of the unitary
9 group for the same taxable year and received by the
10 taxpayer or by a member of the taxpayer's unitary
11 business group (including amounts included in gross
12 income pursuant to Sections 951 through 964 of the
13 Internal Revenue Code and amounts included in gross
14 income under Section 78 of the Internal Revenue Code)
15 with respect to the stock of the same person to whom
16 the intangible expenses and costs were directly or
17 indirectly paid, incurred or accrued. The preceding
18 sentence shall not apply to the extent that the same
19 dividends caused a reduction to the addition
20 modification required under Section 203(d)(2)(D-7) of
21 this Act. As used in this subparagraph, the term
22 "intangible expenses and costs" includes (1) expenses,
23 losses, and costs for, or related to, the direct or
24 indirect acquisition, use, maintenance or management,
25 ownership, sale, exchange, or any other disposition of
26 intangible property; (2) losses incurred, directly or
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1 indirectly, from factoring transactions or discounting
2 transactions; (3) royalty, patent, technical, and
3 copyright fees; (4) licensing fees; and (5) other
4 similar expenses and costs. For purposes of this
5 subparagraph, "intangible property" includes patents,
6 patent applications, trade names, trademarks, service
7 marks, copyrights, mask works, trade secrets, and
8 similar types of intangible assets;
9 This paragraph shall not apply to the following:
10 (i) any item of intangible expenses or costs
11 paid, accrued, or incurred, directly or
12 indirectly, from a transaction with a person who
13 is subject in a foreign country or state, other
14 than a state which requires mandatory unitary
15 reporting, to a tax on or measured by net income
16 with respect to such item; or
17 (ii) any item of intangible expense or cost
18 paid, accrued, or incurred, directly or
19 indirectly, if the taxpayer can establish, based
20 on a preponderance of the evidence, both of the
21 following:
22 (a) the person during the same taxable
23 year paid, accrued, or incurred, the
24 intangible expense or cost to a person that is
25 not a related member, and
26 (b) the transaction giving rise to the
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1 intangible expense or cost between the
2 taxpayer and the person did not have as a
3 principal purpose the avoidance of Illinois
4 income tax, and is paid pursuant to a contract
5 or agreement that reflects arm's-length terms;
6 or
7 (iii) any item of intangible expense or cost
8 paid, accrued, or incurred, directly or
9 indirectly, from a transaction with a person if
10 the taxpayer establishes by clear and convincing
11 evidence, that the adjustments are unreasonable;
12 or if the taxpayer and the Director agree in
13 writing to the application or use of an
14 alternative method of apportionment under Section
15 304(f);
16 Nothing in this subsection shall preclude the
17 Director from making any other adjustment
18 otherwise allowed under Section 404 of this Act
19 for any tax year beginning after the effective
20 date of this amendment provided such adjustment is
21 made pursuant to regulation adopted by the
22 Department and such regulations provide methods
23 and standards by which the Department will utilize
24 its authority under Section 404 of this Act;
25 (D-9) For taxable years ending on or after
26 December 31, 2008, an amount equal to the amount of
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1 insurance premium expenses and costs otherwise allowed
2 as a deduction in computing base income, and that were
3 paid, accrued, or incurred, directly or indirectly, to
4 a person who would be a member of the same unitary
5 business group but for the fact that the person is
6 prohibited under Section 1501(a)(27) from being
7 included in the unitary business group because he or
8 she is ordinarily required to apportion business
9 income under different subsections of Section 304. The
10 addition modification required by this subparagraph
11 shall be reduced to the extent that dividends were
12 included in base income of the unitary group for the
13 same taxable year and received by the taxpayer or by a
14 member of the taxpayer's unitary business group
15 (including amounts included in gross income under
16 Sections 951 through 964 of the Internal Revenue Code
17 and amounts included in gross income under Section 78
18 of the Internal Revenue Code) with respect to the
19 stock of the same person to whom the premiums and costs
20 were directly or indirectly paid, incurred, or
21 accrued. The preceding sentence does not apply to the
22 extent that the same dividends caused a reduction to
23 the addition modification required under Section
24 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
25 (D-10) An amount equal to the credit allowable to
26 the taxpayer under Section 218(a) of this Act,
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1 determined without regard to Section 218(c) of this
2 Act;
3 (D-11) For taxable years ending on or after
4 December 31, 2017, an amount equal to the deduction
5 allowed under Section 199 of the Internal Revenue Code
6 for the taxable year;
7 (D-12) the amount that is claimed as a federal
8 deduction when computing the taxpayer's federal
9 taxable income for the taxable year and that is
10 attributable to an endowment gift for which the
11 taxpayer receives a credit under the Illinois Gives
12 Tax Credit Act;
13 and by deducting from the total so obtained the following
14 amounts:
15 (E) The valuation limitation amount;
16 (F) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the taxpayer
18 and included in such total for the taxable year;
19 (G) An amount equal to all amounts included in
20 taxable income as modified by subparagraphs (A), (B),
21 (C) and (D) which are exempt from taxation by this
22 State either by reason of its statutes or Constitution
23 or by reason of the Constitution, treaties or statutes
24 of the United States; provided that, in the case of any
25 statute of this State that exempts income derived from
26 bonds or other obligations from the tax imposed under
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1 this Act, the amount exempted shall be the interest
2 net of bond premium amortization;
3 (H) Any income of the partnership which
4 constitutes personal service income as defined in
5 Section 1348(b)(1) of the Internal Revenue Code (as in
6 effect December 31, 1981) or a reasonable allowance
7 for compensation paid or accrued for services rendered
8 by partners to the partnership, whichever is greater;
9 this subparagraph (H) is exempt from the provisions of
10 Section 250;
11 (I) An amount equal to all amounts of income
12 distributable to an entity subject to the Personal
13 Property Tax Replacement Income Tax imposed by
14 subsections (c) and (d) of Section 201 of this Act
15 including amounts distributable to organizations
16 exempt from federal income tax by reason of Section
17 501(a) of the Internal Revenue Code; this subparagraph
18 (I) is exempt from the provisions of Section 250;
19 (J) With the exception of any amounts subtracted
20 under subparagraph (G), an amount equal to the sum of
21 all amounts disallowed as deductions by (i) Sections
22 171(a)(2) and 265(a)(2) of the Internal Revenue Code,
23 and all amounts of expenses allocable to interest and
24 disallowed as deductions by Section 265(a)(1) of the
25 Internal Revenue Code; and (ii) for taxable years
26 ending on or after August 13, 1999, Sections
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1 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
2 Internal Revenue Code, plus, (iii) for taxable years
3 ending on or after December 31, 2011, Section
4 45G(e)(3) of the Internal Revenue Code and, for
5 taxable years ending on or after December 31, 2008,
6 any amount included in gross income under Section 87
7 of the Internal Revenue Code; the provisions of this
8 subparagraph are exempt from the provisions of Section
9 250;
10 (K) An amount equal to those dividends included in
11 such total which were paid by a corporation which
12 conducts business operations in a River Edge
13 Redevelopment Zone or zones created under the River
14 Edge Redevelopment Zone Act and conducts substantially
15 all of its operations from a River Edge Redevelopment
16 Zone or zones. This subparagraph (K) is exempt from
17 the provisions of Section 250;
18 (L) An amount equal to any contribution made to a
19 job training project established pursuant to the Real
20 Property Tax Increment Allocation Redevelopment Act;
21 (M) 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 (K) of paragraph (2) of this subsection
2 shall not be eligible for the deduction provided under
3 this subparagraph (M);
4 (N) An amount equal to the amount of the deduction
5 used to compute the federal income tax credit for
6 restoration of substantial amounts held under claim of
7 right for the taxable year pursuant to Section 1341 of
8 the Internal Revenue Code;
9 (O) For taxable years 2001 and thereafter, for the
10 taxable year in which the bonus depreciation deduction
11 is taken on the taxpayer's federal income tax return
12 under subsection (k) of Section 168 of the Internal
13 Revenue Code and for each applicable taxable year
14 thereafter, an amount equal to "x", where:
15 (1) "y" equals the amount of the depreciation
16 deduction taken for the taxable year on the
17 taxpayer's federal income tax return on property
18 for which the bonus depreciation deduction was
19 taken in any year under subsection (k) of Section
20 168 of the Internal Revenue Code, but not
21 including the bonus depreciation deduction;
22 (2) for taxable years ending on or before
23 December 31, 2005, "x" equals "y" multiplied by 30
24 and then divided by 70 (or "y" multiplied by
25 0.429); and
26 (3) for taxable years ending after December
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1 31, 2005:
2 (i) for property on which a bonus
3 depreciation deduction of 30% of the adjusted
4 basis was taken, "x" equals "y" multiplied by
5 30 and then divided by 70 (or "y" multiplied
6 by 0.429);
7 (ii) for property on which a bonus
8 depreciation deduction of 50% of the adjusted
9 basis was taken, "x" equals "y" multiplied by
10 1.0;
11 (iii) for property on which a bonus
12 depreciation deduction of 100% of the adjusted
13 basis was taken in a taxable year ending on or
14 after December 31, 2021, "x" equals the
15 depreciation deduction that would be allowed
16 on that property if the taxpayer had made the
17 election under Section 168(k)(7) of the
18 Internal Revenue Code to not claim bonus
19 depreciation on that property; and
20 (iv) for property on which a bonus
21 depreciation deduction of a percentage other
22 than 30%, 50% or 100% of the adjusted basis
23 was taken in a taxable year ending on or after
24 December 31, 2021, "x" equals "y" multiplied
25 by 100 times the percentage bonus depreciation
26 on the property (that is, 100(bonus%)) and
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1 then divided by 100 times 1 minus the
2 percentage bonus depreciation on the property
3 (that is, 100(1-bonus%)).
4 The aggregate amount deducted under this
5 subparagraph in all taxable years for any one piece of
6 property may not exceed the amount of the bonus
7 depreciation deduction taken on that property on the
8 taxpayer's federal income tax return under subsection
9 (k) of Section 168 of the Internal Revenue Code. This
10 subparagraph (O) is exempt from the provisions of
11 Section 250;
12 (P) If the taxpayer sells, transfers, abandons, or
13 otherwise disposes of property for which the taxpayer
14 was required in any taxable year to make an addition
15 modification under subparagraph (D-5), then an amount
16 equal to that addition modification.
17 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 (O) and for which the taxpayer was
21 required in any taxable year to make an addition
22 modification under subparagraph (D-5), then an amount
23 equal to that addition modification.
24 The taxpayer is allowed to take the deduction
25 under this subparagraph only once with respect to any
26 one piece of property.
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1 This subparagraph (P) is exempt from the
2 provisions of Section 250;
3 (Q) 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 such 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 such
18 addition modification. This subparagraph (Q) is exempt
19 from Section 250;
20 (R) 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(d)(2)(D-7) for interest paid, accrued, or
12 incurred, directly or indirectly, to the same person.
13 This subparagraph (R) is exempt from Section 250;
14 (S) An amount equal to the income from intangible
15 property taken into account for the taxable year (net
16 of the 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(d)(2)(D-8) for intangible expenses and costs paid,
6 accrued, or incurred, directly or indirectly, to the
7 same person. This subparagraph (S) is exempt from
8 Section 250;
9 (T) For taxable years ending on or after December
10 31, 2011, in the case of a taxpayer who was required to
11 add back any insurance premiums under Section
12 203(d)(2)(D-9), such taxpayer may elect to subtract
13 that part of a reimbursement received from the
14 insurance company equal to the amount of the expense
15 or loss (including expenses incurred by the insurance
16 company) that would have been taken into account as a
17 deduction for federal income tax purposes if the
18 expense or loss had been uninsured. If a taxpayer
19 makes the election provided for by this subparagraph
20 (T), the insurer to which the premiums were paid must
21 add back to income the amount subtracted by the
22 taxpayer pursuant to this subparagraph (T). This
23 subparagraph (T) is exempt from the provisions of
24 Section 250; and
25 (U) For taxable years beginning on or after
26 January 1, 2023, for any cannabis establishment
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1 operating in this State and licensed under the
2 Cannabis Regulation and Tax Act or any cannabis
3 cultivation center or medical cannabis dispensing
4 organization operating in this State and licensed
5 under the Compassionate Use of Medical Cannabis
6 Program Act, an amount equal to the deductions that
7 were disallowed under Section 280E of the Internal
8 Revenue Code for the taxable year and that would not be
9 added back under this subsection. The provisions of
10 this subparagraph (U) are exempt from the provisions
11 of Section 250.
12 (e) Gross income; adjusted gross income; taxable income.
13 (1) In general. Subject to the provisions of paragraph
14 (2) and subsection (b)(3), for purposes of this Section
15 and Section 803(e), a taxpayer's gross income, adjusted
16 gross income, or taxable income for the taxable year shall
17 mean the amount of gross income, adjusted gross income or
18 taxable income properly reportable for federal income tax
19 purposes for the taxable year under the provisions of the
20 Internal Revenue Code. Taxable income may be less than
21 zero. However, for taxable years ending on or after
22 December 31, 1986, net operating loss carryforwards from
23 taxable years ending prior to December 31, 1986, may not
24 exceed the sum of federal taxable income for the taxable
25 year before net operating loss deduction, plus the excess
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1 of addition modifications over subtraction modifications
2 for the taxable year. For taxable years ending prior to
3 December 31, 1986, taxable income may never be an amount
4 in excess of the net operating loss for the taxable year as
5 defined in subsections (c) and (d) of Section 172 of the
6 Internal Revenue Code, provided that when taxable income
7 of a corporation (other than a Subchapter S corporation),
8 trust, or estate is less than zero and addition
9 modifications, other than those provided by subparagraph
10 (E) of paragraph (2) of subsection (b) for corporations or
11 subparagraph (E) of paragraph (2) of subsection (c) for
12 trusts and estates, exceed subtraction modifications, an
13 addition modification must be made under those
14 subparagraphs for any other taxable year to which the
15 taxable income less than zero (net operating loss) is
16 applied under Section 172 of the Internal Revenue Code or
17 under subparagraph (E) of paragraph (2) of this subsection
18 (e) applied in conjunction with Section 172 of the
19 Internal Revenue Code.
20 (2) Special rule. For purposes of paragraph (1) of
21 this subsection, the taxable income properly reportable
22 for federal income tax purposes shall mean:
23 (A) Certain life insurance companies. In the case
24 of a life insurance company subject to the tax imposed
25 by Section 801 of the Internal Revenue Code, life
26 insurance company taxable income, plus the amount of
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1 distribution from pre-1984 policyholder surplus
2 accounts as calculated under Section 815a of the
3 Internal Revenue Code;
4 (B) Certain other insurance companies. In the case
5 of mutual insurance companies subject to the tax
6 imposed by Section 831 of the Internal Revenue Code,
7 insurance company taxable income;
8 (C) Regulated investment companies. In the case of
9 a regulated investment company subject to the tax
10 imposed by Section 852 of the Internal Revenue Code,
11 investment company taxable income;
12 (D) Real estate investment trusts. In the case of
13 a real estate investment trust subject to the tax
14 imposed by Section 857 of the Internal Revenue Code,
15 real estate investment trust taxable income;
16 (E) Consolidated corporations. In the case of a
17 corporation which is a member of an affiliated group
18 of corporations filing a consolidated income tax
19 return for the taxable year for federal income tax
20 purposes, taxable income determined as if such
21 corporation had filed a separate return for federal
22 income tax purposes for the taxable year and each
23 preceding taxable year for which it was a member of an
24 affiliated group. For purposes of this subparagraph,
25 the taxpayer's separate taxable income shall be
26 determined as if the election provided by Section
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1 243(b)(2) of the Internal Revenue Code had been in
2 effect for all such years;
3 (F) Cooperatives. In the case of a cooperative
4 corporation or association, the taxable income of such
5 organization determined in accordance with the
6 provisions of Section 1381 through 1388 of the
7 Internal Revenue Code, but without regard to the
8 prohibition against offsetting losses from patronage
9 activities against income from nonpatronage
10 activities; except that a cooperative corporation or
11 association may make an election to follow its federal
12 income tax treatment of patronage losses and
13 nonpatronage losses. In the event such election is
14 made, such losses shall be computed and carried over
15 in a manner consistent with subsection (a) of Section
16 207 of this Act and apportioned by the apportionment
17 factor reported by the cooperative on its Illinois
18 income tax return filed for the taxable year in which
19 the losses are incurred. The election shall be
20 effective for all taxable years with original returns
21 due on or after the date of the election. In addition,
22 the cooperative may file an amended return or returns,
23 as allowed under this Act, to provide that the
24 election shall be effective for losses incurred or
25 carried forward for taxable years occurring prior to
26 the date of the election. Once made, the election may
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1 only be revoked upon approval of the Director. The
2 Department shall adopt rules setting forth
3 requirements for documenting the elections and any
4 resulting Illinois net loss and the standards to be
5 used by the Director in evaluating requests to revoke
6 elections. Public Act 96-932 is declaratory of
7 existing law;
8 (G) Subchapter S corporations. In the case of: (i)
9 a Subchapter S corporation for which there is in
10 effect an election for the taxable year under Section
11 1362 of the Internal Revenue Code, the taxable income
12 of such corporation determined in accordance with
13 Section 1363(b) of the Internal Revenue Code, except
14 that taxable income shall take into account those
15 items which are required by Section 1363(b)(1) of the
16 Internal Revenue Code to be separately stated; and
17 (ii) a Subchapter S corporation for which there is in
18 effect a federal election to opt out of the provisions
19 of the Subchapter S Revision Act of 1982 and have
20 applied instead the prior federal Subchapter S rules
21 as in effect on July 1, 1982, the taxable income of
22 such corporation determined in accordance with the
23 federal Subchapter S rules as in effect on July 1,
24 1982; and
25 (H) Partnerships. In the case of a partnership,
26 taxable income determined in accordance with Section
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1 703 of the Internal Revenue Code, except that taxable
2 income shall take into account those items which are
3 required by Section 703(a)(1) to be separately stated
4 but which would be taken into account by an individual
5 in calculating his taxable income.
6 (3) Recapture of business expenses on disposition of
7 asset or business. Notwithstanding any other law to the
8 contrary, if in prior years income from an asset or
9 business has been classified as business income and in a
10 later year is demonstrated to be non-business income, then
11 all expenses, without limitation, deducted in such later
12 year and in the 2 immediately preceding taxable years
13 related to that asset or business that generated the
14 non-business income shall be added back and recaptured as
15 business income in the year of the disposition of the
16 asset or business. Such amount shall be apportioned to
17 Illinois using the greater of the apportionment fraction
18 computed for the business under Section 304 of this Act
19 for the taxable year or the average of the apportionment
20 fractions computed for the business under Section 304 of
21 this Act for the taxable year and for the 2 immediately
22 preceding taxable years.
23 (f) Valuation limitation amount.
24 (1) In general. The valuation limitation amount
25 referred to in subsections (a)(2)(G), (c)(2)(I) and
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1 (d)(2)(E) is an amount equal to:
2 (A) The sum of the pre-August 1, 1969 appreciation
3 amounts (to the extent consisting of gain reportable
4 under the provisions of Section 1245 or 1250 of the
5 Internal Revenue Code) for all property in respect of
6 which such gain was reported for the taxable year;
7 plus
8 (B) The lesser of (i) the sum of the pre-August 1,
9 1969 appreciation amounts (to the extent consisting of
10 capital gain) for all property in respect of which
11 such gain was reported for federal income tax purposes
12 for the taxable year, or (ii) the net capital gain for
13 the taxable year, reduced in either case by any amount
14 of such gain included in the amount determined under
15 subsection (a)(2)(F) or (c)(2)(H).
16 (2) Pre-August 1, 1969 appreciation amount.
17 (A) If the fair market value of property referred
18 to in paragraph (1) was readily ascertainable on
19 August 1, 1969, the pre-August 1, 1969 appreciation
20 amount for such property is the lesser of (i) the
21 excess of such fair market value over the taxpayer's
22 basis (for determining gain) for such property on that
23 date (determined under the Internal Revenue Code as in
24 effect on that date), or (ii) the total gain realized
25 and reportable for federal income tax purposes in
26 respect of the sale, exchange or other disposition of
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1 such property.
2 (B) If the fair market value of property referred
3 to in paragraph (1) was not readily ascertainable on
4 August 1, 1969, the pre-August 1, 1969 appreciation
5 amount for such property is that amount which bears
6 the same ratio to the total gain reported in respect of
7 the property for federal income tax purposes for the
8 taxable year, as the number of full calendar months in
9 that part of the taxpayer's holding period for the
10 property ending July 31, 1969 bears to the number of
11 full calendar months in the taxpayer's entire holding
12 period for the property.
13 (C) The Department shall prescribe such
14 regulations as may be necessary to carry out the
15 purposes of this paragraph.
16 (g) Double deductions. Unless specifically provided
17 otherwise, nothing in this Section shall permit the same item
18 to be deducted more than once.
19 (h) Legislative intention. Except as expressly provided by
20 this Section there shall be no modifications or limitations on
21 the amounts of income, gain, loss or deduction taken into
22 account in determining gross income, adjusted gross income or
23 taxable income for federal income tax purposes for the taxable
24 year, or in the amount of such items entering into the
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1 computation of base income and net income under this Act for
2 such taxable year, whether in respect of property values as of
3 August 1, 1969 or otherwise.
4 (Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
5 102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
6 12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; 103-592,
7 Article 10, Section 10-900, eff. 6-7-24; 103-592, Article 170,
8 Section 170-90, eff. 6-7-24; 103-605, eff. 7-1-24; 103-647,
9 eff. 7-1-24; revised 8-20-24.)
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