Bill Text: IL SB1535 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Makes changes concerning the federal depreciation deduction and net operating losses to restore provisions that were in effect prior to Public Act 102-16. Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that no tax shall be imposed under the Act for persons dying on or after the effective date of the amendatory Act or for transfers made on or after the effective date of the amendatory Act. Amends the Business Corporation Act of 1983. Provides that provisions imposing a franchise tax on corporations are repealed on December 31, 2024. Provides that, on and after January 1, 2022 and prior to January 1, 2023, the first $10,000 in liability is exempt from the franchise tax. Provides that, on and after January 1, 2023 and prior to January 1, 2024, the first $100,000 in liability is exempt from the franchise tax. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2023-02-08 - Referred to Assignments [SB1535 Detail]

Download: Illinois-2023-SB1535-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1535 Introduced 2/8/2023, by Sen. Dan McConchie SYNOPSIS AS INTRODUCED:
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/207 from Ch. 120, par. 2-207
35 ILCS 405/2 from Ch. 120, par. 405A-2
35 ILCS 405/3 from Ch. 120, par. 405A-3
35 ILCS 405/4 from Ch. 120, par. 405A-4
805 ILCS 5/15.35 from Ch. 32, par. 15.35
805 ILCS 5/15.65 from Ch. 32, par. 15.65
Amends the Illinois Income Tax Act. Makes changes concerning the federal depreciation deduction and net operating losses to restore provisions that were in effect prior to Public Act 102-16. Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that no tax shall be imposed under the Act for persons dying on or after the effective date of the amendatory Act or for transfers made on or after the effective date of the amendatory Act. Amends the Business Corporation Act of 1983. Provides that provisions imposing a franchise tax on corporations are repealed on December 31, 2024. Provides that, on and after January 1, 2022 and prior to January 1, 2023, the first $10,000 in liability is exempt from the franchise tax. Provides that, on and after January 1, 2023 and prior to January 1, 2024, the first $100,000 in liability is exempt from the franchise tax. Effective immediately.
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A BILL FOR
SB1535 LRB103 25041 HLH 51375 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Sections 203 and 207 as follows:
(35 ILCS 5/203) (from Ch. 120, par. 2-203)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by paragraph
(2).
(2) Modifications. The adjusted gross income referred
to in paragraph (1) shall be modified by adding thereto
the sum of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of adjusted gross income, except
stock dividends of qualified public utilities
described in Section 305(e) of the Internal Revenue
Code;
(B) An amount equal to the amount of tax imposed by

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

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

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subparagraph (Z), then an amount equal to that
subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts

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included in gross income under Sections 951 through
964 of the Internal Revenue Code and amounts included
in gross income under Section 78 of the Internal
Revenue Code) with respect to the stock of the same
person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that

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reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(D-18) An amount equal to the amount of intangible

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expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal
Revenue Code and amounts included in gross income
under Section 78 of the Internal Revenue Code) with
respect to the stock of the same person to whom the
intangible expenses and costs were directly or

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indirectly paid, incurred, or accrued. The preceding
sentence does not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or

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(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the

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

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and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
Act;
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal
to the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from
the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under

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Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials
comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing
Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;
(D-20.5) For taxable years beginning on or after
January 1, 2018, in the case of a distribution from a

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qualified ABLE program under Section 529A of the
Internal Revenue Code, other than a distribution from
a qualified ABLE program created under Section 16.6 of
the State Treasurer Act, an amount equal to the amount
excluded from gross income under Section 529A(c)(1)(B)
of the Internal Revenue Code;
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the
State to an out-of-state program, an amount equal to
the amount of moneys previously deducted from base
income under subsection (a)(2)(Y) of this Section;
(D-21.5) For taxable years beginning on or after
January 1, 2018, in the case of the transfer of moneys
from a qualified tuition program under Section 529 or
a qualified ABLE program under Section 529A of the
Internal Revenue Code that is administered by this
State to an ABLE account established under an
out-of-state ABLE account program, an amount equal to
the contribution component of the transferred amount
that was previously deducted from base income under
subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
Section;
(D-22) For taxable years beginning on or after
January 1, 2009, and prior to January 1, 2018, in the

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case of a nonqualified withdrawal or refund of moneys
from a qualified tuition program under Section 529 of
the Internal Revenue Code administered by the State
that is not used for qualified expenses at an eligible
education institution, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(y) of this Section,
provided that the withdrawal or refund did not result
from the beneficiary's death or disability. For
taxable years beginning on or after January 1, 2018:
(1) in the case of a nonqualified withdrawal or
refund, as defined under Section 16.5 of the State
Treasurer Act, of moneys from a qualified tuition
program under Section 529 of the Internal Revenue Code
administered by the State, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(Y) of this Section, and
(2) in the case of a nonqualified withdrawal or refund
from a qualified ABLE program under Section 529A of
the Internal Revenue Code administered by the State
that is not used for qualified disability expenses, an
amount equal to the contribution component of the
nonqualified withdrawal or refund that was previously
deducted from base income under subsection (a)(2)(HH)

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of this Section;
(D-23) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-24) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(D-25) In the case of a resident, an amount equal
to the amount of tax for which a credit is allowed
pursuant to Section 201(p)(7) of this Act;
and by deducting from the total so obtained the sum of the
following amounts:
(E) For taxable years ending before December 31,
2001, any amount included in such total in respect of
any compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a
resident by reason of being on active duty in the Armed
Forces of the United States and in respect of any
compensation paid or accrued to a resident who as a
governmental employee was a prisoner of war or missing
in action, and in respect of any compensation paid to a
resident in 1971 or thereafter for annual training
performed pursuant to Sections 502 and 503, Title 32,

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United States Code as a member of the Illinois
National Guard or, beginning with taxable years ending
on or after December 31, 2007, the National Guard of
any other state. For taxable years ending on or after
December 31, 2001, any amount included in such total
in respect of any compensation (including but not
limited to any compensation paid or accrued to a
serviceman while a prisoner of war or missing in
action) paid to a resident by reason of being a member
of any component of the Armed Forces of the United
States and in respect of any compensation paid or
accrued to a resident who as a governmental employee
was a prisoner of war or missing in action, and in
respect of any compensation paid to a resident in 2001
or thereafter by reason of being a member of the
Illinois National Guard or, beginning with taxable
years ending on or after December 31, 2007, the
National Guard of any other state. The provisions of
this subparagraph (E) are exempt from the provisions
of Section 250;
(F) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
408 of the Internal Revenue Code, or included in such
total as distributions under the provisions of any
retirement or disability plan for employees of any

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governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in
computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(I) An amount equal to all amounts included in
such total pursuant to the provisions of Section 111
of the Internal Revenue Code as a recovery of items
previously deducted from adjusted gross income in the
computation of taxable income;
(J) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act, and conducts
substantially all of its operations in a River Edge
Redevelopment Zone or zones. This subparagraph (J) is
exempt from the provisions of Section 250;
(K) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated

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a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (J) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (K);
(L) For taxable years ending after December 31,
1983, an amount equal to all social security benefits
and railroad retirement benefits included in such
total pursuant to Sections 72(r) and 86 of the
Internal Revenue Code;
(M) With the exception of any amounts subtracted
under subparagraph (N), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, for taxable years ending
on or after December 31, 2011, Section 45G(e)(3) of
the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section

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250;
(N) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(O) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts
held under claim of right for the taxable year;
(Q) An amount equal to any amounts included in
such total, received by the taxpayer as an
acceleration in the payment of life, endowment or
annuity benefits in advance of the time they would
otherwise be payable as an indemnity for a terminal

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illness;
(R) An amount equal to the amount of any federal or
State bonus paid to veterans of the Persian Gulf War;
(S) An amount, to the extent included in adjusted
gross income, equal to the amount of a contribution
made in the taxable year on behalf of the taxpayer to a
medical care savings account established under the
Medical Care Savings Account Act or the Medical Care
Savings Account Act of 2000 to the extent the
contribution is accepted by the account administrator
as provided in that Act;
(T) An amount, to the extent included in adjusted
gross income, equal to the amount of interest earned
in the taxable year on a medical care savings account
established under the Medical Care Savings Account Act
or the Medical Care Savings Account Act of 2000 on
behalf of the taxpayer, other than interest added
pursuant to item (D-5) of this paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount of
tax imposed and paid under subsections (a) and (b) of
Section 201 of this Act on grant amounts received by
the taxpayer under the Nursing Home Grant Assistance
Act during the taxpayer's taxable years 1992 and 1993;
(V) Beginning with tax years ending on or after
December 31, 1995 and ending with tax years ending on

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or before December 31, 2004, an amount equal to the
amount paid by a taxpayer who is a self-employed
taxpayer, a partner of a partnership, or a shareholder
in a Subchapter S corporation for health insurance or
long-term care insurance for that taxpayer or that
taxpayer's spouse or dependents, to the extent that
the amount paid for that health insurance or long-term
care insurance may be deducted under Section 213 of
the Internal Revenue Code, has not been deducted on
the federal income tax return of the taxpayer, and
does not exceed the taxable income attributable to
that taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if the
taxpayer is eligible to participate in any health
insurance or long-term care insurance plan of an
employer of the taxpayer or the taxpayer's spouse. The
amount of the health insurance and long-term care
insurance subtracted under this item (V) shall be
determined by multiplying total health insurance and
long-term care insurance premiums paid by the taxpayer
times a number that represents the fractional
percentage of eligible medical expenses under Section
213 of the Internal Revenue Code of 1986 not actually
deducted on the taxpayer's federal income tax return;
(W) For taxable years beginning on or after

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January 1, 1998, all amounts included in the
taxpayer's federal gross income in the taxable year
from amounts converted from a regular IRA to a Roth
IRA. This paragraph is exempt from the provisions of
Section 250;
(X) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets

SB1535 - 23 - LRB103 25041 HLH 51375 b
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(Y) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2004, moneys contributed in the taxable year to a
College Savings Pool account under Section 16.5 of the
State Treasurer Act, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the

SB1535 - 24 - LRB103 25041 HLH 51375 b
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For purposes
of this subparagraph, contributions made by an
employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as
made by the employee. This subparagraph (Y) is exempt
from the provisions of Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:

SB1535 - 25 - LRB103 25041 HLH 51375 b
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) (blank); for property on which a
bonus depreciation deduction of 100% of the
adjusted basis was taken in a taxable year
ending on or after December 31, 2021, "x"
equals the depreciation deduction that would
be allowed on that property if the taxpayer
had made the election under Section 168(k)(7)
of the Internal Revenue Code to not claim
bonus depreciation on that property; and
(iv) (blank). for property on which a
bonus depreciation deduction of a percentage
other than 30%, 50% or 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals "y"
multiplied by 100 times the percentage bonus
depreciation on the property (that is,
100(bonus%)) and then divided by 100 times 1

SB1535 - 26 - LRB103 25041 HLH 51375 b
minus the percentage bonus depreciation on the
property (that is, 100(1–bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (Z)
and for which the taxpayer was required in any taxable
year to make an addition modification under
subparagraph (D-15), then an amount equal to that
addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any

SB1535 - 27 - LRB103 25041 HLH 51375 b
one piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,
other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to

SB1535 - 28 - LRB103 25041 HLH 51375 b
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-17) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (DD) is exempt from the provisions
of Section 250;
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for

SB1535 - 29 - LRB103 25041 HLH 51375 b
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-18) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (EE) is
exempt from the provisions of Section 250;
(FF) An amount equal to any amount awarded to the
taxpayer during the taxable year by the Court of
Claims under subsection (c) of Section 8 of the Court
of Claims Act for time unjustly served in a State
prison. This subparagraph (FF) is exempt from the
provisions of Section 250;
(GG) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance

SB1535 - 30 - LRB103 25041 HLH 51375 b
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(GG), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (GG). This
subparagraph (GG) is exempt from the provisions of
Section 250;
(HH) For taxable years beginning on or after
January 1, 2018 and prior to January 1, 2028, a maximum
of $10,000 contributed in the taxable year to a
qualified ABLE account under Section 16.6 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) or Section
529A(c)(1)(C) of the Internal Revenue Code shall not
be considered moneys contributed under this
subparagraph (HH). For purposes of this subparagraph
(HH), contributions made by an employer on behalf of
an employee, or matching contributions made by an
employee, shall be treated as made by the employee;
and
(II) For taxable years that begin on or after
January 1, 2021 and begin before January 1, 2026, the
amount that is included in the taxpayer's federal
adjusted gross income pursuant to Section 61 of the

SB1535 - 31 - LRB103 25041 HLH 51375 b
Internal Revenue Code as discharge of indebtedness
attributable to student loan forgiveness and that is
not excluded from the taxpayer's federal adjusted
gross income pursuant to paragraph (5) of subsection
(f) of Section 108 of the Internal Revenue Code.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest and all distributions
received from regulated investment companies during
the taxable year to the extent excluded from gross
income in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(C) In the case of a regulated investment company,
an amount equal to the excess of (i) the net long-term
capital gain for the taxable year, over (ii) the
amount of the capital gain dividends designated as

SB1535 - 32 - LRB103 25041 HLH 51375 b
such in accordance with Section 852(b)(3)(C) of the
Internal Revenue Code and any amount designated under
Section 852(b)(3)(D) of the Internal Revenue Code,
attributable to the taxable year (this amendatory Act
of 1995 (Public Act 89-89) is declarative of existing
law and is not a new enactment);
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such earlier taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and

SB1535 - 33 - LRB103 25041 HLH 51375 b
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(E-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the corporation deducted in computing
adjusted gross income and for which the corporation
claims a credit under subsection (l) of Section 201;
(E-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the

SB1535 - 34 - LRB103 25041 HLH 51375 b
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (T)
and for which the taxpayer was allowed in any taxable
year to make a subtraction modification under
subparagraph (T), then an amount equal to that
subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(E-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable

SB1535 - 35 - LRB103 25041 HLH 51375 b
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or

SB1535 - 36 - LRB103 25041 HLH 51375 b
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing

SB1535 - 37 - LRB103 25041 HLH 51375 b
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion

SB1535 - 38 - LRB103 25041 HLH 51375 b
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this

SB1535 - 39 - LRB103 25041 HLH 51375 b
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract

SB1535 - 40 - LRB103 25041 HLH 51375 b
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary

SB1535 - 41 - LRB103 25041 HLH 51375 b
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
Act;
(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a
captive real estate investment trust that is allowed
to a real estate investment trust under Section
857(b)(2)(B) of the Internal Revenue Code for

SB1535 - 42 - LRB103 25041 HLH 51375 b
dividends paid;
(E-16) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(E-17) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(E-18) for taxable years beginning after December
31, 2018, an amount equal to the deduction allowed
under Section 250(a)(1)(A) of the Internal Revenue
Code for the taxable year;
(E-19) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Section 250(a)(1)(B)(i) of the Internal Revenue
Code for the taxable year;
(E-20) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Sections 243(e) and 245A(a) of the Internal
Revenue Code for the taxable year.
and by deducting from the total so obtained the sum of the
following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;

SB1535 - 43 - LRB103 25041 HLH 51375 b
(G) An amount equal to any amount included in such
total under Section 78 of the Internal Revenue Code;
(H) In the case of a regulated investment company,
an amount equal to the amount of exempt interest
dividends as defined in subsection (b)(5) of Section
852 of the Internal Revenue Code, paid to shareholders
for the taxable year;
(I) With the exception of any amounts subtracted
under subparagraph (J), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) and amounts disallowed as
interest expense by Section 291(a)(3) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) of the Internal Revenue Code; and (ii) for
taxable years ending on or after August 13, 1999,
Sections 171(a)(2), 265, 280C, 291(a)(3), and
832(b)(5)(B)(i) of the Internal Revenue Code, plus,
for tax years ending on or after December 31, 2011,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code and the policyholders' share of
tax-exempt interest of a life insurance company under
Section 807(a)(2)(B) of the Internal Revenue Code (in

SB1535 - 44 - LRB103 25041 HLH 51375 b
the case of a life insurance company with gross income
from a decrease in reserves for the tax year) or
Section 807(b)(1)(B) of the Internal Revenue Code (in
the case of a life insurance company allowed a
deduction for an increase in reserves for the tax
year); the provisions of this subparagraph are exempt
from the provisions of Section 250;
(J) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;
(L) An amount equal to those dividends included in
such total that were paid by a corporation that

SB1535 - 45 - LRB103 25041 HLH 51375 b
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph 2 of this subsection
shall not be eligible for the deduction provided under
this subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the River Edge
Redevelopment Zone Investment Credit. To determine the
portion of a loan or loans that is secured by property
eligible for a Section 201(f) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(f)
investment credit property which secures the loan or
loans, using for this purpose the original basis of
such property on the date that it was placed in service
in the River Edge Redevelopment Zone. The subtraction
modification available to the taxpayer in any year
under this subsection shall be that portion of the
total interest paid by the borrower with respect to

SB1535 - 46 - LRB103 25041 HLH 51375 b
such loan attributable to the eligible property as
calculated under the previous sentence. This
subparagraph (M) is exempt from the provisions of
Section 250;
(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the High Impact
Business Investment Credit. To determine the portion
of a loan or loans that is secured by property eligible
for a Section 201(h) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(h)
investment credit property which secures the loan or
loans, using for this purpose the original basis of
such property on the date that it was placed in service
in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois. No taxpayer that is
eligible for the deduction provided in subparagraph
(M) of paragraph (2) of this subsection shall be
eligible for the deduction provided under this
subparagraph (M-1). The subtraction modification
available to taxpayers in any year under this

SB1535 - 47 - LRB103 25041 HLH 51375 b
subsection shall be that portion of the total interest
paid by the borrower with respect to such loan
attributable to the eligible property as calculated
under the previous sentence;
(N) Two times any contribution made during the
taxable year to a designated zone organization to the
extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii)
must, by its terms, be used for a project approved by
the Department of Commerce and Economic Opportunity
under Section 11 of the Illinois Enterprise Zone Act
or under Section 10-10 of the River Edge Redevelopment
Zone Act. This subparagraph (N) is exempt from the
provisions of Section 250;
(O) An amount equal to: (i) 85% for taxable years
ending on or before December 31, 1992, or, a
percentage equal to the percentage allowable under
Section 243(a)(1) of the Internal Revenue Code of 1986
for taxable years ending after December 31, 1992, of
the amount by which dividends included in taxable
income and received from a corporation that is not
created or organized under the laws of the United
States or any state or political subdivision thereof,
including, for taxable years ending on or after
December 31, 1988, dividends received or deemed

SB1535 - 48 - LRB103 25041 HLH 51375 b
received or paid or deemed paid under Sections 951
through 965 of the Internal Revenue Code, exceed the
amount of the modification provided under subparagraph
(G) of paragraph (2) of this subsection (b) which is
related to such dividends, and including, for taxable
years ending on or after December 31, 2008, dividends
received from a captive real estate investment trust;
plus (ii) 100% of the amount by which dividends,
included in taxable income and received, including,
for taxable years ending on or after December 31,
1988, dividends received or deemed received or paid or
deemed paid under Sections 951 through 964 of the
Internal Revenue Code and including, for taxable years
ending on or after December 31, 2008, dividends
received from a captive real estate investment trust,
from any such corporation specified in clause (i) that
would but for the provisions of Section 1504(b)(3) of
the Internal Revenue Code be treated as a member of the
affiliated group which includes the dividend
recipient, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such
dividends. For taxable years ending on or after June
30, 2021, (i) for purposes of this subparagraph, the
term "dividend" does not include any amount treated as
a dividend under Section 1248 of the Internal Revenue

SB1535 - 49 - LRB103 25041 HLH 51375 b
Code, and (ii) this subparagraph shall not apply to
dividends for which a deduction is allowed under
Section 245(a) of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250 of this Act;
(P) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(R) On and after July 20, 1999, in the case of an
attorney-in-fact with respect to whom an interinsurer
or a reciprocal insurer has made the election under
Section 835 of the Internal Revenue Code, 26 U.S.C.
835, an amount equal to the excess, if any, of the
amounts paid or incurred by that interinsurer or
reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to that
interinsurer or reciprocal insurer with respect to the
attorney-in-fact under Section 835(b) of the Internal
Revenue Code for the taxable year; the provisions of
this subparagraph are exempt from the provisions of
Section 250;

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(S) For taxable years ending on or after December
31, 1997, in the case of a Subchapter S corporation, an
amount equal to all amounts of income allocable to a
shareholder subject to the Personal Property Tax
Replacement Income Tax imposed by subsections (c) and
(d) of Section 201 of this Act, including amounts
allocable to organizations exempt from federal income
tax by reason of Section 501(a) of the Internal
Revenue Code. This subparagraph (S) is exempt from the
provisions of Section 250;
(T) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by

SB1535 - 51 - LRB103 25041 HLH 51375 b
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) (blank); for property on which a
bonus depreciation deduction of 100% of the
adjusted basis was taken in a taxable year
ending on or after December 31, 2021, "x"
equals the depreciation deduction that would
be allowed on that property if the taxpayer
had made the election under Section 168(k)(7)
of the Internal Revenue Code to not claim
bonus depreciation on that property; and
(iv) (blank). for property on which a
bonus depreciation deduction of a percentage
other than 30%, 50% or 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals "y"

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multiplied by 100 times the percentage bonus
depreciation on the property (that is,
100(bonus%)) and then divided by 100 times 1
minus the percentage bonus depreciation on the
property (that is, 100(1–bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (T) is exempt from the provisions of
Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (T)
and for which the taxpayer was required in any taxable
year to make an addition modification under
subparagraph (E-10), then an amount equal to that

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addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;
(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto) taken
into account for the taxable year with respect to a
transaction with a taxpayer that is required to make
an addition modification with respect to such

SB1535 - 54 - LRB103 25041 HLH 51375 b
transaction under Section 203(a)(2)(D-19), Section
203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
203(d)(2)(D-9), but not to exceed the amount of that
addition modification. This subparagraph (V) is exempt
from the provisions of Section 250;
(W) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-12) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (W) is exempt from the provisions of
Section 250;

SB1535 - 55 - LRB103 25041 HLH 51375 b
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), such taxpayer may elect to subtract
that part of a reimbursement received from the

SB1535 - 56 - LRB103 25041 HLH 51375 b
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250; and
(Z) The difference between the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code over the
taxable income of the taxpayer, computed without
regard to Section 965(e)(2)(A) of the Internal Revenue
Code, and without regard to any net operating loss
deduction. This subparagraph (Z) is exempt from the
provisions of Section 250.
(3) Special rule. For purposes of paragraph (2)(A),
"gross income" in the case of a life insurance company,
for tax years ending on and after December 31, 1994, and
prior to December 31, 2011, shall mean the gross
investment income for the taxable year and, for tax years
ending on or after December 31, 2011, shall mean all
amounts included in life insurance gross income under

SB1535 - 57 - LRB103 25041 HLH 51375 b
Section 803(a)(3) of the Internal Revenue Code.
(c) Trusts and estates.
(1) In general. In the case of a trust or estate, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in paragraph
(1) shall be modified by adding thereto the sum of the
following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each such
case, only to the extent such amount was deducted in
the computation of taxable income;
(C) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net

SB1535 - 58 - LRB103 25041 HLH 51375 b
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such taxable year, with
the following limitations applied in the order that
they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net

SB1535 - 59 - LRB103 25041 HLH 51375 b
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(F) For taxable years ending on or after January
1, 1989, an amount equal to the tax deducted pursuant
to Section 164 of the Internal Revenue Code if the
trust or estate is claiming the same tax for purposes
of the Illinois foreign tax credit under Section 601
of this Act;
(G) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(G-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the trust or estate deducted in computing
adjusted gross income and for which the trust or
estate claims a credit under subsection (l) of Section
201;
(G-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of

SB1535 - 60 - LRB103 25041 HLH 51375 b
the Internal Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (R)
and for which the taxpayer was allowed in any taxable
year to make a subtraction modification under
subparagraph (R), then an amount equal to that
subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the

SB1535 - 61 - LRB103 25041 HLH 51375 b
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary

SB1535 - 62 - LRB103 25041 HLH 51375 b
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if

SB1535 - 63 - LRB103 25041 HLH 51375 b
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that

SB1535 - 64 - LRB103 25041 HLH 51375 b
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring

SB1535 - 65 - LRB103 25041 HLH 51375 b
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the

SB1535 - 66 - LRB103 25041 HLH 51375 b
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed

SB1535 - 67 - LRB103 25041 HLH 51375 b
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
Act;
(G-15) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,

SB1535 - 68 - LRB103 25041 HLH 51375 b
determined without regard to Section 218(c) of this
Act;
(G-16) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the sum of the
following amounts:
(H) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
of the Internal Revenue Code or included in such total
as distributions under the provisions of any
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in
computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C), (D), (E), (F) and (G) which are exempt from

SB1535 - 69 - LRB103 25041 HLH 51375 b
taxation by this State either by reason of its
statutes or Constitution or by reason of the
Constitution, treaties or statutes of the United
States; provided that, in the case of any statute of
this State that exempts income derived from bonds or
other obligations from the tax imposed under this Act,
the amount exempted shall be the interest net of bond
premium amortization;
(L) With the exception of any amounts subtracted
under subparagraph (K), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(M) An amount equal to those dividends included in

SB1535 - 70 - LRB103 25041 HLH 51375 b
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (M) is exempt from
the provisions of Section 250;
(N) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(O) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (M) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (O);
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(Q) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,

SB1535 - 71 - LRB103 25041 HLH 51375 b
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and

SB1535 - 72 - LRB103 25041 HLH 51375 b
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted

SB1535 - 73 - LRB103 25041 HLH 51375 b
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) (blank); for property on which a
bonus depreciation deduction of 100% of the
adjusted basis was taken in a taxable year
ending on or after December 31, 2021, "x"
equals the depreciation deduction that would
be allowed on that property if the taxpayer
had made the election under Section 168(k)(7)
of the Internal Revenue Code to not claim
bonus depreciation on that property; and
(iv) (blank). for property on which a
bonus depreciation deduction of a percentage
other than 30%, 50% or 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals "y"
multiplied by 100 times the percentage bonus
depreciation on the property (that is,
100(bonus%)) and then divided by 100 times 1
minus the percentage bonus depreciation on the
property (that is, 100(1–bonus%)).

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The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (R) is exempt from the provisions of
Section 250;
(S) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (R)
and for which the taxpayer was required in any taxable
year to make an addition modification under
subparagraph (G-10), then an amount equal to that
addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (S) is exempt from the

SB1535 - 75 - LRB103 25041 HLH 51375 b
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable

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years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (U)
is exempt from the provisions of Section 250;
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business

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income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(c)(2)(G-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (V) is
exempt from the provisions of Section 250;
(W) in the case of an estate, an amount equal to
all amounts included in such total pursuant to the
provisions of Section 111 of the Internal Revenue Code
as a recovery of items previously deducted by the
decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt
from Section 250;
(X) an amount equal to the refund included in such
total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance

SB1535 - 78 - LRB103 25041 HLH 51375 b
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250; and
(Z) For taxable years beginning after December 31,
2018 and before January 1, 2026, the amount of excess
business loss of the taxpayer disallowed as a
deduction by Section 461(l)(1)(B) of the Internal
Revenue Code.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently
set aside for charitable purposes pursuant to Internal
Revenue Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).

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(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income for
the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the
Internal Revenue Code in calculating its taxable
income;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(D-5) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an

SB1535 - 80 - LRB103 25041 HLH 51375 b
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (O)
and for which the taxpayer was allowed in any taxable
year to make a subtraction modification under
subparagraph (O), then an amount equal to that
subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person

SB1535 - 81 - LRB103 25041 HLH 51375 b
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if

SB1535 - 82 - LRB103 25041 HLH 51375 b
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method

SB1535 - 83 - LRB103 25041 HLH 51375 b
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section

SB1535 - 84 - LRB103 25041 HLH 51375 b
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,

SB1535 - 85 - LRB103 25041 HLH 51375 b
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;

SB1535 - 86 - LRB103 25041 HLH 51375 b
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(D-9) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is

SB1535 - 87 - LRB103 25041 HLH 51375 b
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
(D-10) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-11) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code

SB1535 - 88 - LRB103 25041 HLH 51375 b
for the taxable year;
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C) and (D) which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348(b)(1) of the Internal Revenue Code (as in
effect December 31, 1981) or a reasonable allowance
for compensation paid or accrued for services rendered
by partners to the partnership, whichever is greater;
this subparagraph (H) is exempt from the provisions of
Section 250;
(I) An amount equal to all amounts of income

SB1535 - 89 - LRB103 25041 HLH 51375 b
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code; this subparagraph
(I) is exempt from the provisions of Section 250;
(J) With the exception of any amounts subtracted
under subparagraph (G), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which

SB1535 - 90 - LRB103 25041 HLH 51375 b
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations from a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;
(L) An amount equal to any contribution made to a
job training project established pursuant to the Real
Property Tax Increment Allocation Redevelopment Act;
(M) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (M);
(N) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(O) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return

SB1535 - 91 - LRB103 25041 HLH 51375 b
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) (blank); for property on which a

SB1535 - 92 - LRB103 25041 HLH 51375 b
bonus depreciation deduction of 100% of the
adjusted basis was taken in a taxable year
ending on or after December 31, 2021, "x"
equals the depreciation deduction that would
be allowed on that property if the taxpayer
had made the election under Section 168(k)(7)
of the Internal Revenue Code to not claim
bonus depreciation on that property; and
(iv) (blank). for property on which a
bonus depreciation deduction of a percentage
other than 30%, 50% or 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals "y"
multiplied by 100 times the percentage bonus
depreciation on the property (that is,
100(bonus%)) and then divided by 100 times 1
minus the percentage bonus depreciation on the
property (that is, 100(1–bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250;

SB1535 - 93 - LRB103 25041 HLH 51375 b
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes a subtraction is allowed
with respect to that property under subparagraph (O)
and for which the taxpayer was required in any taxable
year to make an addition modification under
subparagraph (D-5), then an amount equal to that
addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;
(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

SB1535 - 94 - LRB103 25041 HLH 51375 b
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be

SB1535 - 95 - LRB103 25041 HLH 51375 b
made for the same taxable year under Section
203(d)(2)(D-7) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (R) is exempt from Section 250;
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(d)(2)(D-8) for intangible expenses and costs paid,
accrued, or incurred, directly or indirectly, to the
same person. This subparagraph (S) is exempt from
Section 250; and
(T) For taxable years ending on or after December

SB1535 - 96 - LRB103 25041 HLH 51375 b
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(T), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (T). This
subparagraph (T) is exempt from the provisions of
Section 250.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of paragraph
(2) and subsection (b)(3), for purposes of this Section
and Section 803(e), a taxpayer's gross income, adjusted
gross income, or taxable income for the taxable year shall
mean the amount of gross income, adjusted gross income or
taxable income properly reportable for federal income tax
purposes for the taxable year under the provisions of the
Internal Revenue Code. Taxable income may be less than
zero. However, for taxable years ending on or after

SB1535 - 97 - LRB103 25041 HLH 51375 b
December 31, 1986, net operating loss carryforwards from
taxable years ending prior to December 31, 1986, may not
exceed the sum of federal taxable income for the taxable
year before net operating loss deduction, plus the excess
of addition modifications over subtraction modifications
for the taxable year. For taxable years ending prior to
December 31, 1986, taxable income may never be an amount
in excess of the net operating loss for the taxable year as
defined in subsections (c) and (d) of Section 172 of the
Internal Revenue Code, provided that when taxable income
of a corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations or
subparagraph (E) of paragraph (2) of subsection (c) for
trusts and estates, exceed subtraction modifications, an
addition modification must be made under those
subparagraphs for any other taxable year to which the
taxable income less than zero (net operating loss) is
applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this subsection
(e) applied in conjunction with Section 172 of the
Internal Revenue Code.
(2) Special rule. For purposes of paragraph (1) of
this subsection, the taxable income properly reportable
for federal income tax purposes shall mean:

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(A) Certain life insurance companies. In the case
of a life insurance company subject to the tax imposed
by Section 801 of the Internal Revenue Code, life
insurance company taxable income, plus the amount of
distribution from pre-1984 policyholder surplus
accounts as calculated under Section 815a of the
Internal Revenue Code;
(B) Certain other insurance companies. In the case
of mutual insurance companies subject to the tax
imposed by Section 831 of the Internal Revenue Code,
insurance company taxable income;
(C) Regulated investment companies. In the case of
a regulated investment company subject to the tax
imposed by Section 852 of the Internal Revenue Code,
investment company taxable income;
(D) Real estate investment trusts. In the case of
a real estate investment trust subject to the tax
imposed by Section 857 of the Internal Revenue Code,
real estate investment trust taxable income;
(E) Consolidated corporations. In the case of a
corporation which is a member of an affiliated group
of corporations filing a consolidated income tax
return for the taxable year for federal income tax
purposes, taxable income determined as if such
corporation had filed a separate return for federal
income tax purposes for the taxable year and each

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

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

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

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

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date (determined under the Internal Revenue Code as in
effect on that date), or (ii) the total gain realized
and reportable for federal income tax purposes in
respect of the sale, exchange or other disposition of
such property.
(B) If the fair market value of property referred
to in paragraph (1) was not readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is that amount which bears
the same ratio to the total gain reported in respect of
the property for federal income tax purposes for the
taxable year, as the number of full calendar months in
that part of the taxpayer's holding period for the
property ending July 31, 1969 bears to the number of
full calendar months in the taxpayer's entire holding
period for the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.
(g) Double deductions. Unless specifically provided
otherwise, nothing in this Section shall permit the same item
to be deducted more than once.
(h) Legislative intention. Except as expressly provided by
this Section there shall be no modifications or limitations on

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the amounts of income, gain, loss or deduction taken into
account in determining gross income, adjusted gross income or
taxable income for federal income tax purposes for the taxable
year, or in the amount of such items entering into the
computation of base income and net income under this Act for
such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
8-27-21; 102-813, eff. 5-13-22; 102-1112, eff. 12-21-22.)
(35 ILCS 5/207) (from Ch. 120, par. 2-207)
Sec. 207. Net Losses.
(a) If after applying all of the (i) modifications
provided for in paragraph (2) of Section 203(b), paragraph (2)
of Section 203(c) and paragraph (2) of Section 203(d) and (ii)
the allocation and apportionment provisions of Article 3 of
this Act and subsection (c) of this Section, the taxpayer's
net income results in a loss;
(1) for any taxable year ending prior to December 31,
1999, such loss shall be allowed as a carryover or
carryback deduction in the manner allowed under Section
172 of the Internal Revenue Code;
(2) for any taxable year ending on or after December
31, 1999 and prior to December 31, 2003, such loss shall be
allowed as a carryback to each of the 2 taxable years

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preceding the taxable year of such loss and shall be a net
operating loss carryover to each of the 20 taxable years
following the taxable year of such loss;
(3) for any taxable year ending on or after December
31, 2003 and prior to December 31, 2021, such loss shall be
allowed as a net operating loss carryover to each of the 12
taxable years following the taxable year of such loss,
except as provided in subsection (d); and
(4) for any taxable year ending on or after December
31, 2021, and for any net loss incurred in a taxable year
prior to a taxable year ending on or after December 31,
2021 for which the statute of limitation for utilization
of such net loss has not expired, such loss shall be
allowed as a net operating loss carryover to each of the 20
taxable years following the taxable year of such loss,
except as provided in subsection (d).
(a-5) Election to relinquish carryback and order of
application of losses.
(A) For losses incurred in tax years ending prior
to December 31, 2003, the taxpayer may elect to
relinquish the entire carryback period with respect to
such loss. Such election shall be made in the form and
manner prescribed by the Department and shall be made
by the due date (including extensions of time) for
filing the taxpayer's return for the taxable year in
which such loss is incurred, and such election, once

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made, shall be irrevocable.
(B) The entire amount of such loss shall be
carried to the earliest taxable year to which such
loss may be carried. The amount of such loss which
shall be carried to each of the other taxable years
shall be the excess, if any, of the amount of such loss
over the sum of the deductions for carryback or
carryover of such loss allowable for each of the prior
taxable years to which such loss may be carried.
(b) Any loss determined under subsection (a) of this
Section must be carried back or carried forward in the same
manner for purposes of subsections (a) and (b) of Section 201
of this Act as for purposes of subsections (c) and (d) of
Section 201 of this Act.
(c) Notwithstanding any other provision of this Act, for
each taxable year ending on or after December 31, 2008, for
purposes of computing the loss for the taxable year under
subsection (a) of this Section and the deduction taken into
account for the taxable year for a net operating loss
carryover under paragraphs (1), (2), and (3) of subsection (a)
of this Section, the loss and net operating loss carryover
shall be reduced in an amount equal to the reduction to the net
operating loss and net operating loss carryover to the taxable
year, respectively, required under Section 108(b)(2)(A) of the
Internal Revenue Code, multiplied by a fraction, the numerator
of which is the amount of discharge of indebtedness income

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that is excluded from gross income for the taxable year (but
only if the taxable year ends on or after December 31, 2008)
under Section 108(a) of the Internal Revenue Code and that
would have been allocated and apportioned to this State under
Article 3 of this Act but for that exclusion, and the
denominator of which is the total amount of discharge of
indebtedness income excluded from gross income under Section
108(a) of the Internal Revenue Code for the taxable year. The
reduction required under this subsection (c) shall be made
after the determination of Illinois net income for the taxable
year in which the indebtedness is discharged.
(d) In the case of a corporation (other than a Subchapter S
corporation), no carryover deduction shall be allowed under
this Section for any taxable year ending after December 31,
2010 and prior to December 31, 2012, and no carryover
deduction shall exceed $100,000 for any taxable year ending on
or after December 31, 2012 and prior to December 31, 2014 and
for any taxable year ending on or after December 31, 2021 and
prior to December 31, 2023 December 31, 2024; provided that,
for purposes of determining the taxable years to which a net
loss may be carried under subsection (a) of this Section, no
taxable year for which a deduction is disallowed under this
subsection, or for which the deduction would exceed $100,000
if not for this subsection, shall be counted.
(e) In the case of a residual interest holder in a real
estate mortgage investment conduit subject to Section 860E of

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the Internal Revenue Code, the net loss in subsection (a)
shall be equal to:
(1) the amount computed under subsection (a), without
regard to this subsection (e), or if that amount is
positive, zero;
(2) minus an amount equal to the amount computed under
subsection (a), without regard to this subsection (e),
minus the amount that would be computed under subsection
(a) if the taxpayer's federal taxable income were computed
without regard to Section 860E of the Internal Revenue
Code and without regard to this subsection (e).
The modification in this subsection (e) is exempt from the
provisions of Section 250.
(Source: P.A. 102-16, eff. 6-17-21; 102-669, eff. 11-16-21.)
Section 10. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Sections 2, 3, and 4 as
follows:
(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.
"Federal estate tax" means the tax due to the United
States with respect to a taxable transfer under Chapter 11 of
the Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer

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under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or the
federal generation-skipping transfer tax.
"Illinois estate tax" means the tax due to this State with
respect to a taxable transfer.
"Illinois generation-skipping transfer tax" means the tax
due to this State with respect to a taxable transfer that gives
rise to a federal generation-skipping transfer tax.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as
amended from time to time.
"Person" means and includes any individual, trust, estate,
partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this
State for purposes of the Illinois Income Tax Act, as amended

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from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and
allowed under the Internal Revenue Code as in effect on
December 31, 2001, without the reduction in the State Death
Tax Credit as provided in Section 2011(b)(2) or the
termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
increased applicable exclusion amount through December 31,
2005.
(b) For persons dying after December 31, 2005 and on or
before December 31, 2009, and for persons dying after December
31, 2010 and prior to the effective date of this amendatory Act
of the 103rd General Assembly, an amount equal to the full
credit calculable under Section 2011 or 2604 of the Internal
Revenue Code as the credit would have been computed and
allowed under the Internal Revenue Code as in effect on
December 31, 2001, without the reduction in the State Death
Tax Credit as provided in Section 2011(b)(2) or the
termination of the State Death Tax Credit as provided in

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Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
exclusion amount of only (i) $2,000,000 for persons dying
prior to January 1, 2012, (ii) $3,500,000 for persons dying on
or after January 1, 2012 and prior to January 1, 2013, and
(iii) $4,000,000 for persons dying on or after January 1,
2013, and with reduction to the adjusted taxable estate for
any qualified terminable interest property election as defined
in subsection (b-1) of this Section.
(b-1) The person required to file the Illinois return may
elect on a timely filed Illinois return a marital deduction
for qualified terminable interest property under Section
2056(b)(7) of the Internal Revenue Code for purposes of the
Illinois estate tax that is separate and independent of any
qualified terminable interest property election for federal
estate tax purposes. For purposes of the Illinois estate tax,
the inclusion of property in the gross estate of a surviving
spouse is the same as under Section 2044 of the Internal
Revenue Code.
In the case of any trust for which a State or federal
qualified terminable interest property election is made, the
trustee may not retain non-income producing assets for more
than a reasonable amount of time without the consent of the
surviving spouse.
"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit as a result of the

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imposition of an additional tax under Section 2032A(c) of the
Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at
the death of an individual, the deceased individual's
gross estate as defined in Section 2031 of the Internal
Revenue Code.
(2) With respect to a taxable transfer occurring as a
result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as a
result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the
imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used
for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.

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"Trust" includes a trust as defined in Section 2652(b)(1)
of the Internal Revenue Code.
(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
97-636, eff. 6-1-12.)
(35 ILCS 405/3) (from Ch. 120, par. 405A-3)
Sec. 3. Illinois estate tax.
(a) Imposition of Tax. An Illinois estate tax is imposed
on every taxable transfer involving transferred property
having a tax situs within the State of Illinois.
(b) Amount of tax. On estates of persons dying before
January 1, 2003, the amount of the Illinois estate tax shall be
the state tax credit, as defined in Section 2 of this Act, with
respect to the taxable transfer reduced by the lesser of:
(1) the amount of the state tax credit paid to any
other state or states; and
(2) the amount determined by multiplying the maximum
state tax credit allowable with respect to the taxable
transfer by the percentage which the gross value of the
transferred property not having a tax situs in Illinois
bears to the gross value of the total transferred
property.
(c) On estates of persons dying on or after January 1, 2003
and prior to the effective date of this amendatory Act of the
103rd General Assembly, the amount of the Illinois estate tax
shall be the state tax credit, as defined in Section 2 of this

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Act, reduced by the amount determined by multiplying the state
tax credit with respect to the taxable transfer by the
percentage which the gross value of the transferred property
not having a tax situs in Illinois bears to the gross value of
the total transferred property.
(d) No tax shall be imposed under this Act for persons
dying on or after the effective date of this amendatory Act of
the 103rd General Assembly.
(Source: P.A. 93-30, eff. 6-20-03; 94-419, eff. 8-2-05.)
(35 ILCS 405/4) (from Ch. 120, par. 405A-4)
Sec. 4. Illinois generation-skipping transfer tax.
(a) Imposition of tax. An Illinois generation-skipping
transfer tax is imposed on every taxable transfer resulting in
federal generation-skipping transfer tax involving transferred
property having a tax situs within the State of Illinois.
(b) Amount of tax. The amount of the Illinois
generation-skipping transfer tax shall be the maximum state
tax credit allowable with respect to the taxable transfer,
reduced by the lesser of:
(1) the amount of the state tax credit paid to any
other state or states; and
(2) the amount determined by multiplying the maximum
state tax credit allowable with respect to the taxable
transfer by the percentage which the gross value of the
transferred property not having a tax situs in Illinois

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bears to the gross value of the total transferred
property.
(c) No tax shall be imposed under this Act for transfers
occurring on or after the effective date of this amendatory
Act of the 103rd General Assembly.
(Source: P.A. 86-737.)
Section 15. The Business Corporation Act of 1983 is
amended by changing Sections 15.35 and 15.65 as follows:
(805 ILCS 5/15.35) (from Ch. 32, par. 15.35)
(Text of Section from P.A. 102-16)
Sec. 15.35. Franchise taxes payable by domestic
corporations. For the privilege of exercising its franchises
in this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) an amendment to the articles of
incorporation or a report of cumulative changes in paid-in
capital, whenever any amendment or such report discloses

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an increase in its paid-in capital over the amount thereof
last reported in any document, other than an annual
report, interim annual report or final transition annual
report required by this Act to be filed in the office of
the Secretary of State.
(c) An additional franchise tax at the time of filing
a report of paid-in capital following a statutory merger
or consolidation, which discloses that the paid-in capital
of the surviving or new corporation immediately after the
merger or consolidation is greater than the sum of the
paid-in capital of all of the merged or consolidated
corporations as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in
addition, the surviving or new corporation shall be liable
for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations
as last reported by them in any document, other than an
annual report, required by this Act to be filed with the
Secretary of State from their taxable year end to the next
succeeding anniversary month or, in the case of a
corporation which has established an extended filing
month, the extended filing month of the surviving or new
corporation; however if the taxable year ends within the
2-month period immediately preceding the anniversary month
or, in the case of a corporation which has established an

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extended filing month, the extended filing month of the
surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation
which has established an extended filing month, the
extended filing month of the surviving or new corporation
in the next succeeding calendar year.
(d) An annual franchise tax payable each year with the
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2022, the first $1,000 in liability is exempt from the tax
imposed under this Section. On and after January 1, 2022 and
prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On and after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under
this Section. The provisions of this Section shall not require
the payment of any franchise tax that would otherwise have
been due and payable on or after January 1, 2024. There shall
be no refunds or proration of franchise tax for any taxes due
and payable on or after January 1, 2024 on the basis that a
portion of the corporation's taxable year extends beyond
January 1, 2024. Public Act 101-9 shall not affect any right
accrued or established, or any liability or penalty incurred

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prior to January 1, 2024.
This Section is repealed on December 31, 2024.
(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21.)
(Text of Section from P.A. 102-282)
Sec. 15.35. Franchise taxes payable by domestic
corporations. For the privilege of exercising its franchises
in this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) an amendment to the articles of
incorporation or a report of cumulative changes in paid-in
capital, whenever any amendment or such report discloses
an increase in its paid-in capital over the amount thereof
last reported in any document, other than an annual
report, interim annual report or final transition annual
report required by this Act to be filed in the office of
the Secretary of State.
(c) An additional franchise tax at the time of filing
a report of paid-in capital following a statutory merger

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or consolidation, which discloses that the paid-in capital
of the surviving or new corporation immediately after the
merger or consolidation is greater than the sum of the
paid-in capital of all of the merged or consolidated
corporations as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in
addition, the surviving or new corporation shall be liable
for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations
as last reported by them in any document, other than an
annual report, required by this Act to be filed with the
Secretary of State from their taxable year end to the next
succeeding anniversary month or, in the case of a
corporation which has established an extended filing
month, the extended filing month of the surviving or new
corporation; however if the taxable year ends within the
2-month period immediately preceding the anniversary month
or, in the case of a corporation which has established an
extended filing month, the extended filing month of the
surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation
which has established an extended filing month, the
extended filing month of the surviving or new corporation
in the next succeeding calendar year.
(d) An annual franchise tax payable each year with the

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annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2022, the first $1,000 in liability is exempt from the tax
imposed under this Section. On or after January 1, 2022 and
prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On or after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under
this Section. The provisions of this Section shall not require
the payment of any franchise tax that would otherwise have
been due and payable on or after January 1, 2024. There shall
be no refunds or proration of franchise tax for any taxes due
and payable on or after January 1, 2024 on the basis that a
portion of the corporation's taxable year extends beyond
January 1, 2024. Public Act 101-9 shall not affect any right
accrued or established, or any liability or penalty incurred
prior to January 1, 2024.
This Section is repealed on December 31, 2024.
(Source: P.A. 101-9, eff. 6-5-19; 102-282, eff. 1-1-22.)
(Text of Section from P.A. 102-558)
Sec. 15.35. Franchise taxes payable by domestic
corporations. For the privilege of exercising its franchises

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in this State, each domestic corporation shall pay to the
Secretary of State the following franchise taxes, computed on
the basis, at the rates and for the periods prescribed in this
Act:
(a) An initial franchise tax at the time of filing its
first report of issuance of shares.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) an amendment to the articles of
incorporation or a report of cumulative changes in paid-in
capital, whenever any amendment or such report discloses
an increase in its paid-in capital over the amount thereof
last reported in any document, other than an annual
report, interim annual report or final transition annual
report required by this Act to be filed in the office of
the Secretary of State.
(c) An additional franchise tax at the time of filing
a report of paid-in capital following a statutory merger
or consolidation, which discloses that the paid-in capital
of the surviving or new corporation immediately after the
merger or consolidation is greater than the sum of the
paid-in capital of all of the merged or consolidated
corporations as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in

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addition, the surviving or new corporation shall be liable
for a further additional franchise tax on the paid-in
capital of each of the merged or consolidated corporations
as last reported by them in any document, other than an
annual report, required by this Act to be filed with the
Secretary of State from their taxable year end to the next
succeeding anniversary month or, in the case of a
corporation which has established an extended filing
month, the extended filing month of the surviving or new
corporation; however if the taxable year ends within the
2-month period immediately preceding the anniversary month
or, in the case of a corporation which has established an
extended filing month, the extended filing month of the
surviving or new corporation the tax will be computed to
the anniversary month or, in the case of a corporation
which has established an extended filing month, the
extended filing month of the surviving or new corporation
in the next succeeding calendar year.
(d) An annual franchise tax payable each year with the
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2022, the first $1,000 in liability is exempt from the tax
imposed under this Section. On or after January 1, 2022 and

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prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On or after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under
this Section. The provisions of this Section shall not require
the payment of any franchise tax that would otherwise have
been due and payable on or after January 1, 2024. There shall
be no refunds or proration of franchise tax for any taxes due
and payable on or after January 1, 2024 on the basis that a
portion of the corporation's taxable year extends beyond
January 1, 2024. Public Act 101-9 shall not affect any right
accrued or established, or any liability or penalty incurred
prior to January 1, 2024.
This Section is repealed on December 31, 2024 December 31,
2025.
(Source: P.A. 101-9, eff. 6-5-19; 102-558, eff. 8-20-21.)
(805 ILCS 5/15.65) (from Ch. 32, par. 15.65)
Sec. 15.65. Franchise taxes payable by foreign
corporations. For the privilege of exercising its authority to
transact such business in this State as set out in its
application therefor or any amendment thereto, each foreign
corporation shall pay to the Secretary of State the following
franchise taxes, computed on the basis, at the rates and for
the periods prescribed in this Act:
(a) An initial franchise tax at the time of filing its

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application for authority to transact business in this
State.
(b) An additional franchise tax at the time of filing
(1) a report of the issuance of additional shares, or (2) a
report of an increase in paid-in capital without the
issuance of shares, or (3) a report of cumulative changes
in paid-in capital or a report of an exchange or
reclassification of shares, whenever any such report
discloses an increase in its paid-in capital over the
amount thereof last reported in any document, other than
an annual report, interim annual report or final
transition annual report, required by this Act to be filed
in the office of the Secretary of State.
(c) Whenever the corporation shall be a party to a
statutory merger and shall be the surviving corporation,
an additional franchise tax at the time of filing its
report following merger, if such report discloses that the
amount represented in this State of its paid-in capital
immediately after the merger is greater than the aggregate
of the amounts represented in this State of the paid-in
capital of such of the merged corporations as were
authorized to transact business in this State at the time
of the merger, as last reported by them in any documents,
other than annual reports, required by this Act to be
filed in the office of the Secretary of State; and in
addition, the surviving corporation shall be liable for a

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further additional franchise tax on the paid-in capital of
each of the merged corporations as last reported by them
in any document, other than an annual report, required by
this Act to be filed with the Secretary of State, from
their taxable year end to the next succeeding anniversary
month or, in the case of a corporation which has
established an extended filing month, the extended filing
month of the surviving corporation; however if the taxable
year ends within the 2-month period immediately preceding
the anniversary month or the extended filing month of the
surviving corporation, the tax will be computed to the
anniversary or, extended filing month of the surviving
corporation in the next succeeding calendar year.
(d) An annual franchise tax payable each year with any
annual report which the corporation is required by this
Act to file.
On or after January 1, 2020 and prior to January 1, 2021,
the first $30 in liability is exempt from the tax imposed under
this Section. On or after January 1, 2021 and prior to January
1, 2022, the first $1,000 in liability is exempt from the tax
imposed under this Section. On and after January 1, 2022 and
prior to January 1, 2023, the first $10,000 in liability is
exempt from the tax imposed under this Section. On and after
January 1, 2023 and prior to January 1, 2024, the first
$100,000 in liability is exempt from the tax imposed under
this Section. The provisions of this Section shall not require

SB1535 - 126 - LRB103 25041 HLH 51375 b
the payment of any franchise tax that would otherwise have
been due and payable on or after January 1, 2024. There shall
be no refunds or proration of franchise tax for any taxes due
and payable on or after January 1, 2024 on the basis that a
portion of the corporation's taxable year extends beyond
January 1, 2024. Public Act 101-9 shall not affect any right
accrued or established, or any liability or penalty incurred
prior to January 1, 2024.
This Section is repealed on December 31, 2024.
(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21;
102-558, eff. 8-20-21; 102-813, eff. 5-13-22.)
Section 99. Effective date. This Act takes effect upon
becoming law.