Bill Text: IL SB3395 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Creates the Music and Musicians Tax Credit and Jobs Act. Provides that the Department of Commerce and Economic Opportunity may award credits to qualified music companies. Creates the Music Education Scholarship Act. Provides that the Board of Higher Education may award scholarships to applicants who are enrolled in or accepted for admission to an associate, baccalaureate, or graduate degree program in music education and who agree to meet certain teaching obligations. Amends the Illinois Income Tax Act. Creates certain income tax credits for theater infrastructure projects. Amends the Live Theater Production Tax Credit Act. Renames the Act as the Live Music and Theater Production Tax Credit Act. Provides that the Act also applies to musical performances.

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Introduced) 2024-05-03 - Rule 3-9(a) / Re-referred to Assignments [SB3395 Detail]

Download: Illinois-2023-SB3395-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB3395 Introduced 2/8/2024, by Sen. Sara Feigenholtz SYNOPSIS AS INTRODUCED:
New Act
5 ILCS 140/7.5
35 ILCS 5/203
35 ILCS 5/222
35 ILCS 5/241 new
35 ILCS 5/242 new
35 ILCS 17/10-1
35 ILCS 17/10-5
35 ILCS 17/10-10
35 ILCS 17/10-15
35 ILCS 17/10-20
35 ILCS 17/10-25
35 ILCS 17/10-30
35 ILCS 17/10-40
35 ILCS 17/10-50
Creates the Music and Musicians Tax Credit and Jobs Act. Provides that the Department of Commerce and Economic Opportunity may award credits to qualified music companies. Creates the Music Education Scholarship Act. Provides that the Board of Higher Education may award scholarships to applicants who are enrolled in or accepted for admission to an associate, baccalaureate, or graduate degree program in music education and who agree to meet certain teaching obligations. Amends the Illinois Income Tax Act. Creates certain income tax credits for theater infrastructure projects. Amends the Live Theater Production Tax Credit Act. Renames the Act as the Live Music and Theater Production Tax Credit Act. Provides that the Act also applies to musical performances.
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A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
ARTICLE 5. MUSIC AND MUSICIANS TAX CREDIT AND JOBS ACT
Section 5-1. Short title. This Act may be cited as the
Music and Musicians Tax Credit and Jobs Act. References in
this Article to "this Act" mean this Article.
Section 5-5. Purpose. The State's economy depends heavily
on music, professional musicians, music teachers, and
educators. Illinois is a cultural crown jewel of the United
States. Illinois and Chicago boast a robust history and
community of creative artists, writers, musicians, architects,
orchestras, live music and entertainment venues, civic operas,
recording studios, and universities. The COVID-19 pandemic and
the economic fallout that ensued brought on especially
difficult circumstances for the live entertainment industry at
large. Throughout the State, this has meant the closure of and
overall decrease in culturally engaging aspects of Illinois
cities from Cairo to Chicago.
According to the Americans for the Arts Action Fund, arts
and culture represent 3.1% of the State's gross domestic
product and 190,078 jobs. In fact, in 2020, Illinois arts and

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culture was larger than the State's agriculture industry. In
2015, nonprofit arts organizations in the State generated
$4,000,000,000 in economic activity that supported 111,068
jobs and generated $478,500,000 in State and local government
revenue. In Chicago specifically, nonprofit arts groups
generated $3,200,000,000 in total economic activity and
$336,500,000 in State and local government revenue. Audiences
exceeded 36,000,000 people.
Yet, during the COVID-19 pandemic, the arts suffered. As a
result, Illinois arts and culture value added decreased by 9%
between 2019 and 2020 and employment decreased by 12%.
Ultimately, $3,200,000,000 and 26,644 jobs were lost. Even as
live performances have resumed, audience sizes remain below
pre-pandemic levels. Regional theaters, local orchestras,
opera houses, and performing arts organizations are reporting
persistent drops in attendance.
It is the policy of this State to promote and encourage the
training and hiring of Illinois residents who represent the
diversity of the Illinois population through the creation and
implementation of training, education, and recruitment
programs organized in cooperation with Illinois colleges and
universities, labor organizations, and the commercial
for-profit music industry.
Section 5-10. Definitions.
"Department" means the Department of Commerce and Economic

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Opportunity.
"Expenditure in the State" means (i) an expenditure to
acquire, from a source within the State, property that is
subject to the tax under the Use Tax Act, the Service Use Tax
Act, the Service Occupation Tax Act, or the Retailers'
Occupation Tax Act or (ii) an expenditure for compensation for
services performed within the State that is subject to State
income tax under the Illinois Income Tax Act.
"Illinois labor expenditure" means gross salary or wages
including, but not limited to, taxes, benefits, and any other
consideration incurred or paid to artist employees of the
applicant for services rendered to and on behalf of the
qualified music company, provided that the expenditure is:
(1) incurred or paid by the applicant on or after the
effective date of this Act for services related to any
portion of a qualified music company from rehearsals,
performances, and any other qualified music company
related activities;
(2) limited to the first $100,000 of wages incurred or
paid to each employee of a qualified music production in
each tax year;
(3) included in the federal income tax basis of the
property;
(4) paid in the tax year for which the applicant is
claiming the tax credit award or no later than 60 days
after the end of the tax year;

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(5) paid to persons residing in Illinois at the time
payments were made; and
(6) reasonable under the circumstances.
"Qualified music company" means an entity that (i) is
authorized to do business in Illinois, (ii) is engaged
directly or indirectly in the production, distribution, or
promotion of music, (iii) is certified by the Department as
meeting the eligibility requirements of this Act, and (iv) has
executed a contract with the Department providing the terms
and conditions for its participation.
"QMC payroll" means wages reported by the qualified music
company in box 1 of each W-2 form prepared for an employee of
the qualified music company who is an Illinois resident.
"Resident copyright" means the copyright of a musical
composition written by an Illinois resident or owned by an
Illinois-domiciled music company, as evidenced by documents of
ownership, including, but not limited to, registration with
the United States Copyright Office.
"Sound recording" means a recording of music, poetry, or a
spoken-word performance made, in whole or in part, in
Illinois. "Sound recording" does not include the audio
portions of dialogue or words spoken and recorded as part of
television news coverage or athletic events.
"Sound recording production company" means a company
engaged in the business of producing sound recordings. "Sound
recording production company" does not include any person or

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company, or any company owned, affiliated, or controlled, in
whole or in part, by any company or person, that is in default
on a loan made by the State or a loan guaranteed by the State,
nor which has ever declared bankruptcy under which an
obligation of the company or person to pay or repay public
funds or moneys was discharged as a part of the bankruptcy.
"State-certified production" means a sound recording
production, or a series of productions, including but not
limited to master and demonstration recordings, occurring over
the course of a 12-month period, and the base
production-related investment that is approved by the
Department within 180 days after receipt by the Department of
a complete application for initial certification of a
production. If the production is not approved within 180 days,
the Department shall provide a written report to the Senate
Executive Committee and the House Executive Committee that
states the reason why the production has not been approved.
"Tax credit award" means the issuance to a taxpayer by the
Department of a tax credit award in conformance with Sections
10-40 and 10-45 of this Act.
Section 5-15. Powers of the Department. The Department, in
addition to those powers granted under the Civil
Administrative Code of Illinois, is granted and has all the
powers necessary or convenient to carry out and effectuate the
purposes and provisions of this Act, including, but not

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limited to, the power and authority to:
(1) adopt rules that are necessary and appropriate for
the administration of this Act;
(2) establish forms for applications, notifications,
contracts, or any other agreements with respect to tax
credits under this Act and to accept applications for tax
credits under this Act at any time during the year;
(3) assist applicants for tax credits under this Act
to promote, foster, and support sound recording and live
theater development and production and its related job
creation or retention within the State;
(3) gather information and conduct inquiries, as
provided in this Act, required for the Department to
comply with the provisions of this Act and, without
limitation, to obtain information with respect to
applicants for the purpose of making any designations or
certifications necessary or desirable to assist the
Department with any recommendation or guidance in the
furtherance of the purposes of this Act and relating to
applicants' participation in training, education, and
recruitment programs that are organized in cooperation
with Illinois colleges and universities or labor
organizations designed to promote and encourage the
training and hiring of Illinois residents who represent
the diversity of the Illinois population;
(4) provide for sufficient personnel to permit

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administrative, staffing, operating, and related support
required to adequately discharge the Department's duties
and responsibilities under this Act from funds as may be
appropriated by the General Assembly for the
administration of this Act; and
(5) require that the applicant at all times keep
proper books and records of accounts relating to the tax
credit award, in accordance with generally accepted
accounting principles consistently applied, and make those
books and records available for reasonable Department
inspection and audit, upon reasonable written request by
the Department, during the applicant's normal business
hours. Any documents or data made available to the
Department or received by the Department from the
applicant by any agent, employee, officer, or service
provider shall be deemed confidential and shall not
constitute public records to the extent that the documents
or data consist of commercial or financial information
regarding the operation by the applicant of any theater or
any accredited theater production or any recipient of any
tax credit award under this Act.
Section 5-20. Application for certification of qualified
music company. Any applicant that operates a qualified music
company located in the State or is proposing to operate a
qualified music company in the State may apply to the

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Department to have the qualified music company certified by
the Department as a qualified music company.
Section 5-25. Review of applications for qualified music
company certificates.
(a) The Department shall issue a qualified music company
certificate to an applicant if it finds that a preponderance
of the following conditions exists:
(1) the applicant is engaged directly or indirectly in
the production, distribution, and promotion of music;
(2) the applicant intends to make the expenditure in
the State required for certification of the qualified
music company;
(3) the applicant's qualified music company is
economically sound and will benefit the people of the
State of Illinois by increasing opportunities for
employment and will strengthen the economy of Illinois;
(4) the following requirements related to the
implementation of a diversity plan have been met:
(A) the applicant has filed with the Department a
diversity plan outlining specific goals for hiring
Illinois labor expenditure eligible minority persons
and women, as defined in the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act,
and for using vendors receiving certification under
the Business Enterprise for Minorities, Women, and

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Persons with Disabilities Act;
(B) the Department has approved the plan as
meeting the requirements established by the Department
and verified that the applicant has met or made good
faith efforts in achieving those goals; and
(C) the Department has adopted any rules that are
necessary to ensure compliance with the provisions set
forth in this paragraph (4) and any rules that are
necessary to show that the applicant's plan reflects
the diversity of the population of this State;
(5) the applicant's qualified music company
application indicates whether the applicant intends to
participate in training, education, and recruitment
programs that are organized in cooperation with Illinois
colleges and universities, labor organizations, and the
holders of qualified music company certificates and are
designed to promote and encourage the training and hiring
of Illinois residents who represent the diversity of
Illinois; and
(6) the tax credit award will result in an overall
positive impact to the State, as determined by the
Department using the best available data.
(b) If any of the provisions in this Section conflict with
any existing collective bargaining agreements, the terms and
conditions of those collective bargaining agreements shall
control.

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(c) The Department shall act expeditiously regarding
approval of applications for qualified music companies so as
to accommodate the operations and needs of those companies.
Section 5-30. Training programs for skills in critical
demand. To accomplish the purposes of this Act, the Department
may use the training programs provided under Section 605-800
of the Department of Commerce and Economic Opportunity Law of
the Civil Administrative Code of Illinois.
Section 5-35. Issuance of tax credit award certificate.
(a) In order to qualify for a tax credit award under this
Act, an applicant must file an application for each qualified
music company at each of the applicant's qualified facilities,
on forms prescribed by the Department, providing information
necessary to calculate the tax credit award and any additional
information as reasonably required by the Department.
(b) Upon satisfactory review of the application, the
Department shall issue a tax credit award certificate stating
the amount of the tax credit award to which the applicant is
entitled for that tax year and shall contemporaneously notify
the applicant and the Department of Revenue.
Section 5-40. Amount and payment of the tax credit award.
(a) For taxable years beginning on or after January 1,
2025, the Department may award tax credit awards to qualified

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music companies. The award may not exceed 10% of the Illinois
labor expenditures for the State-certified production if the
QMC payroll of the qualified music company for the taxable
year does not exceed $150,000 or 15% of the Illinois labor
expenditures for the State-certified production if the QMC
payroll of the qualified music company for the taxable year
exceeds $150,000, plus all of the following::
(1) an additional 15% of the Illinois labor
expenditures for the State-certified production generated
by the employment of Illinois residents in geographic
areas of high poverty or high unemployment in each tax
year, as determined by the Department; and
(2) an additional 7% of the Illinois labor
expenditures for the State-certified production generated
by the employment of individuals who are employed at a
wage of no less than the general prevailing hourly rate as
paid for work of a similar character in the locality in
which the work is performed; and
(3) an additional 7% of the Illinois labor
expenditures for the State-certified production incurred
by a qualified music company and spent on post-production
sound recording for television or film work completed in
Illinois.
(b) To the extent that the base investment by a qualified
music company is expended on a sound recording production of a
resident copyright, the investor shall be allowed an

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additional 10% increase in the base investment rate.
(c) The aggregate amount of credits certified for all
investors pursuant to this Section during any calendar year
shall not exceed $25,000,000. No more than $500,000 in tax
credits may be granted per calendar year for any single
qualified music company.
(d) Company-based QMC payroll credit. A business shall be
eligible for participation in the program if the business
meets all of the following criteria:
(1) The business is engaged directly or indirectly in
the production, distribution, and promotion of music.
(2) The business is approved by the Director of
Commerce and Economic Opportunity.
(e) Upon approval of a tax credit award under this Act, the
Department shall issue a tax credit certificate to the
applicant.
Section 5-45. Qualified music program evaluation and
reports.
(a) The Department's qualified music program tax credit
award evaluation must include:
(1) an assessment of the effectiveness of the program
in creating and retaining new jobs in Illinois;
(2) an assessment of the revenue impact of the
program;
(3) in the discretion of the Department, a review of

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the practices and experiences of other states or nations
with similar programs; and
(4) an assessment of the overall success of the
program.
The Department may make a recommendation to extend, modify, or
not extend the program based on the evaluation.
(b) At the end of each fiscal quarter, the Department
shall submit to the General Assembly a report that includes,
without limitation:
(1) an assessment of the economic impact of the
program, including the number of jobs created and
retained, and whether the job positions are entry level,
management, vendor, or production related;
(2) the amount of qualified music company spending
brought to Illinois, including the amount of spending and
type of Illinois vendors hired in connection with a
qualified music company; and
(3) a determination of whether those receiving
qualifying Illinois labor expenditure salaries or wages
reflect the geographic, racial and ethnic, gender, and
income level diversity of the State of Illinois.
(c) At the end of each fiscal year, the Department shall
submit to the General Assembly a report that includes, without
limitation:
(1) the identification of each vendor that provided
goods or services that were included in an qualified music

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company's Illinois spending;
(2) a statement of the amount paid to each identified
vendor by the qualified music program and whether the
vendor is a minority-owned or women-owned business as
defined in Section 2 of the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act; and
(3) a description of the steps taken by the Department
to encourage qualified music company to use vendors who
are minority-owned or women-owned businesses.
Section 5-50. Program terms and conditions. Any
documentary materials or data made available or received from
an applicant by any agent or employee of the Department are
confidential and are not public records to the extent that the
materials or data consist of commercial or financial
information regarding the operation of or the production of
the applicant or recipient of any tax credit award under this
Act.
ARTICLE 10. MUSIC EDUCATION SCHOLARSHIP ACT
Section 10-1. Short title. This Act may be cited as the
Music Education Scholarship Act. References in this Article to
"this Act" mean this Article.
Section 10-5. Definitions. As used in this Act:

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"Academic year" means the period of time from September 1
of one year through August 31 of the next year or as otherwise
defined by the academic institution.
"Approved institution" means a public community college,
private junior college, or public or private college or
university with a pre-licensure music education program
located in this State.
"Board" means the Board of Higher Education created by the
Board of Higher Education Act.
"Enrollment" means the establishment and maintenance of an
individual's status as a student in an approved institution,
regardless of the terms used at the institution to describe
such status.
"Fees" means those mandatory charges, in addition to
tuition, that all enrolled students must pay, including
required course or lab fees.
"Full-time student" means a student enrolled for at least
12 hours per term or as otherwise determined by the academic
institution.
"Graduate degree in music program" means a program offered
by an approved institution and leading to a master's degree in
music education or any other graduate degree in music
education.
"Music education employment obligation" means employment
in this State as a certified teacher with a music education
specialization, for at least one year for each year of

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scholarship assistance received through the program under this
Act.
"Part-time student" means a person who is enrolled for at
least one-third of the number of hours required per term by a
school for its full-time students.
"Student in good standing" means a student maintaining a
cumulative grade point average equivalent to at least the
academic grade of a "C".
"Tuition" means the established charges of an institution
of higher learning for instruction at that institution.
Section 10-10. Music education scholarships.
(a) Beginning with the fall term of the 2024-2025 academic
year, the Board, in accordance with rules adopted by it for the
purposes of this Act, shall provide scholarships to
individuals selected from among those applicants who qualify
for scholarships under this Act. An applicant qualifies for a
scholarship under this Act if:
(1) the applicant has been a resident of this State
for at least one year prior to application and is a citizen
or a lawful permanent resident of the United States;
(2) the applicant is enrolled in or accepted for
admission to an associate, baccalaureate, or graduate
degree program in music education at an approved
institution; and
(3) the applicant agrees to meet the music education

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employment obligation.
(b) If, in any year, the number of qualified applicants
exceeds the number of scholarships to be awarded, the Board
shall consider the following factors in granting priority in
awarding scholarships:
(1) the applicant's financial need, as shown on a
standardized financial needs assessment form used by the
approved institution for students who will pursue their
education on a full-time basis;
(2) whether the applicant is already employed as a
music educator and is pursuing a graduate degree in music
education to pursue employment in an approved institution
that educates music educators in undergraduate and
graduate programs;
(3) the applicant's merit, as shown through the
applicant's grade point average, class rank, and other
academic and extracurricular activities; and
(4) any other criteria set by the Board by rule.
Unless otherwise indicated, scholarships shall be awarded
to recipients at approved institutions for a period of up to 2
years if the recipient is enrolled in an associate degree in
music educator, up to 4 years if the recipient is enrolled in a
baccalaureate degree in music education program, and up to 5
years if the recipient is enrolled in a graduate degree in
music education program. At least 40% of the scholarships
awarded shall be for recipients who are pursuing baccalaureate

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degrees; 30% of the scholarships awarded shall be for
recipients who are pursuing associate degrees; and 30% of the
scholarships awarded shall be for recipients who are pursuing
a graduate degree.
During the 2024-2025 academic year, subject to
appropriation, the Board may award a total of $500,000 in
scholarships under this Section.
Section 10-15. Amount of scholarships. In determining the
amount of the scholarships awarded under this Act, the Board
shall consider tuition and fee charges at approved
institutions as well as projected living expenses for
students. Seventy-five percent of the weighted tuition and
fees charged by community colleges in Illinois shall be added
to the uniform living allowance reported in the weighted
Monetary Award Program (MAP) budget to determine the full-time
scholarship amount for students pursuing an associate degree
at an Illinois community college. Scholarship amounts for
students pursuing associate, baccalaureate, or graduate
degrees at a college or university shall include 75% of the
weighted tuition and fees charged by public universities in
Illinois, plus the uniform living allowance reported in the
weighted MAP budget. The Board may provide that scholarships
shall be awarded on a quarterly or semi-annual basis and shall
be contingent upon the student diligently pursuing music
education studies and being a student in good standing.

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Scholarship awards may be provided to part-time students; for
part-time students, the amount of the scholarship shall be
determined by applying the proportion represented by the
part-time enrollment to full-time enrollment ratio to the
average per-term scholarship amount for a student in the same
degree category.
Section 10-20. Approved institutions. An approved
institution must maintain compliance with all applicable State
and federal laws. An approved institution is not eligible for
other programs administered by the Board and is not required
to meet the definition of "institution of higher learning",
"qualified institution", or "institution", as defined in
Section 10 of the Higher Education Student Assistance Act. The
Board may establish, by rule, additional requirements for
approved institutions.
Section 10-25. Duties of the Board. The Board shall:
(1) prepare and supervise the issuance of public
information about this Act;
(2) prescribe the form and regulate the submission of
applications for scholarships under this Act;
(3) determine the eligibility of applicants for
scholarships under this Act;
(4) award the appropriate scholarships under this Act;
(5) prescribe the contracts or other acknowledgments

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of scholarship that an applicant is required to execute;
and
(6) determine whether all or any part of a recipient's
scholarship must be monetarily repaid, or has been excused
from repayment, and the extent of any repayment or excused
repayment.
The Board may require a recipient to reimburse the State
for expenses, including, but not limited to, attorney's fees,
incurred by the Board or any other agent of the State for a
successful legal action against the recipient for a breach of
any provision of the scholarship contract. The Board may adopt
rules to carry out the duties set forth in this Act.
ARTICLE 15. AMENDATORY PROVISIONS
Section 15-3. The Freedom of Information Act is amended by
changing Section 7.5 as follows:
(5 ILCS 140/7.5)
(Text of Section before amendment by P.A. 103-472)
Sec. 7.5. Statutory exemptions. To the extent provided for
by the statutes referenced below, the following shall be
exempt from inspection and copying:
(a) All information determined to be confidential
under Section 4002 of the Technology Advancement and
Development Act.

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(b) Library circulation and order records identifying
library users with specific materials under the Library
Records Confidentiality Act.
(c) Applications, related documents, and medical
records received by the Experimental Organ Transplantation
Procedures Board and any and all documents or other
records prepared by the Experimental Organ Transplantation
Procedures Board or its staff relating to applications it
has received.
(d) Information and records held by the Department of
Public Health and its authorized representatives relating
to known or suspected cases of sexually transmissible
disease or any information the disclosure of which is
restricted under the Illinois Sexually Transmissible
Disease Control Act.
(e) Information the disclosure of which is exempted
under Section 30 of the Radon Industry Licensing Act.
(f) Firm performance evaluations under Section 55 of
the Architectural, Engineering, and Land Surveying
Qualifications Based Selection Act.
(g) Information the disclosure of which is restricted
and exempted under Section 50 of the Illinois Prepaid
Tuition Act.
(h) Information the disclosure of which is exempted
under the State Officials and Employees Ethics Act, and
records of any lawfully created State or local inspector

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general's office that would be exempt if created or
obtained by an Executive Inspector General's office under
that Act.
(i) Information contained in a local emergency energy
plan submitted to a municipality in accordance with a
local emergency energy plan ordinance that is adopted
under Section 11-21.5-5 of the Illinois Municipal Code.
(j) Information and data concerning the distribution
of surcharge moneys collected and remitted by carriers
under the Emergency Telephone System Act.
(k) Law enforcement officer identification information
or driver identification information compiled by a law
enforcement agency or the Department of Transportation
under Section 11-212 of the Illinois Vehicle Code.
(l) Records and information provided to a residential
health care facility resident sexual assault and death
review team or the Executive Council under the Abuse
Prevention Review Team Act.
(m) Information provided to the predatory lending
database created pursuant to Article 3 of the Residential
Real Property Disclosure Act, except to the extent
authorized under that Article.
(n) Defense budgets and petitions for certification of
compensation and expenses for court appointed trial
counsel as provided under Sections 10 and 15 of the
Capital Crimes Litigation Act (repealed). This subsection

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(n) shall apply until the conclusion of the trial of the
case, even if the prosecution chooses not to pursue the
death penalty prior to trial or sentencing.
(o) Information that is prohibited from being
disclosed under Section 4 of the Illinois Health and
Hazardous Substances Registry Act.
(p) Security portions of system safety program plans,
investigation reports, surveys, schedules, lists, data, or
information compiled, collected, or prepared by or for the
Department of Transportation under Sections 2705-300 and
2705-616 of the Department of Transportation Law of the
Civil Administrative Code of Illinois, the Regional
Transportation Authority under Section 2.11 of the
Regional Transportation Authority Act, or the St. Clair
County Transit District under the Bi-State Transit Safety
Act (repealed).
(q) Information prohibited from being disclosed by the
Personnel Record Review Act.
(r) Information prohibited from being disclosed by the
Illinois School Student Records Act.
(s) Information the disclosure of which is restricted
under Section 5-108 of the Public Utilities Act.
(t) (Blank).
(u) Records and information provided to an independent
team of experts under the Developmental Disability and
Mental Health Safety Act (also known as Brian's Law).

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(v) Names and information of people who have applied
for or received Firearm Owner's Identification Cards under
the Firearm Owners Identification Card Act or applied for
or received a concealed carry license under the Firearm
Concealed Carry Act, unless otherwise authorized by the
Firearm Concealed Carry Act; and databases under the
Firearm Concealed Carry Act, records of the Concealed
Carry Licensing Review Board under the Firearm Concealed
Carry Act, and law enforcement agency objections under the
Firearm Concealed Carry Act.
(v-5) Records of the Firearm Owner's Identification
Card Review Board that are exempted from disclosure under
Section 10 of the Firearm Owners Identification Card Act.
(w) Personally identifiable information which is
exempted from disclosure under subsection (g) of Section
19.1 of the Toll Highway Act.
(x) Information which is exempted from disclosure
under Section 5-1014.3 of the Counties Code or Section
8-11-21 of the Illinois Municipal Code.
(y) Confidential information under the Adult
Protective Services Act and its predecessor enabling
statute, the Elder Abuse and Neglect Act, including
information about the identity and administrative finding
against any caregiver of a verified and substantiated
decision of abuse, neglect, or financial exploitation of
an eligible adult maintained in the Registry established

SB3395 - 25 - LRB103 36174 HLH 66266 b
under Section 7.5 of the Adult Protective Services Act.
(z) Records and information provided to a fatality
review team or the Illinois Fatality Review Team Advisory
Council under Section 15 of the Adult Protective Services
Act.
(aa) Information which is exempted from disclosure
under Section 2.37 of the Wildlife Code.
(bb) Information which is or was prohibited from
disclosure by the Juvenile Court Act of 1987.
(cc) Recordings made under the Law Enforcement
Officer-Worn Body Camera Act, except to the extent
authorized under that Act.
(dd) Information that is prohibited from being
disclosed under Section 45 of the Condominium and Common
Interest Community Ombudsperson Act.
(ee) Information that is exempted from disclosure
under Section 30.1 of the Pharmacy Practice Act.
(ff) Information that is exempted from disclosure
under the Revised Uniform Unclaimed Property Act.
(gg) Information that is prohibited from being
disclosed under Section 7-603.5 of the Illinois Vehicle
Code.
(hh) Records that are exempt from disclosure under
Section 1A-16.7 of the Election Code.
(ii) Information which is exempted from disclosure
under Section 2505-800 of the Department of Revenue Law of

SB3395 - 26 - LRB103 36174 HLH 66266 b
the Civil Administrative Code of Illinois.
(jj) Information and reports that are required to be
submitted to the Department of Labor by registering day
and temporary labor service agencies but are exempt from
disclosure under subsection (a-1) of Section 45 of the Day
and Temporary Labor Services Act.
(kk) Information prohibited from disclosure under the
Seizure and Forfeiture Reporting Act.
(ll) Information the disclosure of which is restricted
and exempted under Section 5-30.8 of the Illinois Public
Aid Code.
(mm) Records that are exempt from disclosure under
Section 4.2 of the Crime Victims Compensation Act.
(nn) Information that is exempt from disclosure under
Section 70 of the Higher Education Student Assistance Act.
(oo) Communications, notes, records, and reports
arising out of a peer support counseling session
prohibited from disclosure under the First Responders
Suicide Prevention Act.
(pp) Names and all identifying information relating to
an employee of an emergency services provider or law
enforcement agency under the First Responders Suicide
Prevention Act.
(qq) Information and records held by the Department of
Public Health and its authorized representatives collected
under the Reproductive Health Act.

SB3395 - 27 - LRB103 36174 HLH 66266 b
(rr) Information that is exempt from disclosure under
the Cannabis Regulation and Tax Act.
(ss) Data reported by an employer to the Department of
Human Rights pursuant to Section 2-108 of the Illinois
Human Rights Act.
(tt) Recordings made under the Children's Advocacy
Center Act, except to the extent authorized under that
Act.
(uu) Information that is exempt from disclosure under
Section 50 of the Sexual Assault Evidence Submission Act.
(vv) Information that is exempt from disclosure under
subsections (f) and (j) of Section 5-36 of the Illinois
Public Aid Code.
(ww) Information that is exempt from disclosure under
Section 16.8 of the State Treasurer Act.
(xx) Information that is exempt from disclosure or
information that shall not be made public under the
Illinois Insurance Code.
(yy) Information prohibited from being disclosed under
the Illinois Educational Labor Relations Act.
(zz) Information prohibited from being disclosed under
the Illinois Public Labor Relations Act.
(aaa) Information prohibited from being disclosed
under Section 1-167 of the Illinois Pension Code.
(bbb) Information that is prohibited from disclosure
by the Illinois Police Training Act and the Illinois State

SB3395 - 28 - LRB103 36174 HLH 66266 b
Police Act.
(ccc) Records exempt from disclosure under Section
2605-304 of the Illinois State Police Law of the Civil
Administrative Code of Illinois.
(ddd) Information prohibited from being disclosed
under Section 35 of the Address Confidentiality for
Victims of Domestic Violence, Sexual Assault, Human
Trafficking, or Stalking Act.
(eee) Information prohibited from being disclosed
under subsection (b) of Section 75 of the Domestic
Violence Fatality Review Act.
(fff) Images from cameras under the Expressway Camera
Act. This subsection (fff) is inoperative on and after
July 1, 2025.
(ggg) Information prohibited from disclosure under
paragraph (3) of subsection (a) of Section 14 of the Nurse
Agency Licensing Act.
(hhh) Information submitted to the Illinois State
Police in an affidavit or application for an assault
weapon endorsement, assault weapon attachment endorsement,
.50 caliber rifle endorsement, or .50 caliber cartridge
endorsement under the Firearm Owners Identification Card
Act.
(iii) Data exempt from disclosure under Section 50 of
the School Safety Drill Act.
(jjj) (hhh) Information exempt from disclosure under

SB3395 - 29 - LRB103 36174 HLH 66266 b
Section 30 of the Insurance Data Security Law.
(kkk) (iii) Confidential business information
prohibited from disclosure under Section 45 of the Paint
Stewardship Act.
(lll) (Reserved).
(mmm) (iii) Information prohibited from being
disclosed under subsection (e) of Section 1-129 of the
Illinois Power Agency Act.
(nnn) Materials received by the Department of Commerce
and Economic Opportunity that are confidential under
Section 5-50 of the Music and Musicians Tax Credit and
Jobs Act.
(Source: P.A. 102-36, eff. 6-25-21; 102-237, eff. 1-1-22;
102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff.
8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22;
102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; 103-8, eff.
6-7-23; 103-34, eff. 6-9-23; 103-142, eff. 1-1-24; 103-372,
eff. 1-1-24; 103-508, eff. 8-4-23; 103-580, eff. 12-8-23;
revised 1-2-24.)
(Text of Section after amendment by P.A. 103-472)
Sec. 7.5. Statutory exemptions. To the extent provided for
by the statutes referenced below, the following shall be
exempt from inspection and copying:
(a) All information determined to be confidential
under Section 4002 of the Technology Advancement and

SB3395 - 30 - LRB103 36174 HLH 66266 b
Development Act.
(b) Library circulation and order records identifying
library users with specific materials under the Library
Records Confidentiality Act.
(c) Applications, related documents, and medical
records received by the Experimental Organ Transplantation
Procedures Board and any and all documents or other
records prepared by the Experimental Organ Transplantation
Procedures Board or its staff relating to applications it
has received.
(d) Information and records held by the Department of
Public Health and its authorized representatives relating
to known or suspected cases of sexually transmissible
disease or any information the disclosure of which is
restricted under the Illinois Sexually Transmissible
Disease Control Act.
(e) Information the disclosure of which is exempted
under Section 30 of the Radon Industry Licensing Act.
(f) Firm performance evaluations under Section 55 of
the Architectural, Engineering, and Land Surveying
Qualifications Based Selection Act.
(g) Information the disclosure of which is restricted
and exempted under Section 50 of the Illinois Prepaid
Tuition Act.
(h) Information the disclosure of which is exempted
under the State Officials and Employees Ethics Act, and

SB3395 - 31 - LRB103 36174 HLH 66266 b
records of any lawfully created State or local inspector
general's office that would be exempt if created or
obtained by an Executive Inspector General's office under
that Act.
(i) Information contained in a local emergency energy
plan submitted to a municipality in accordance with a
local emergency energy plan ordinance that is adopted
under Section 11-21.5-5 of the Illinois Municipal Code.
(j) Information and data concerning the distribution
of surcharge moneys collected and remitted by carriers
under the Emergency Telephone System Act.
(k) Law enforcement officer identification information
or driver identification information compiled by a law
enforcement agency or the Department of Transportation
under Section 11-212 of the Illinois Vehicle Code.
(l) Records and information provided to a residential
health care facility resident sexual assault and death
review team or the Executive Council under the Abuse
Prevention Review Team Act.
(m) Information provided to the predatory lending
database created pursuant to Article 3 of the Residential
Real Property Disclosure Act, except to the extent
authorized under that Article.
(n) Defense budgets and petitions for certification of
compensation and expenses for court appointed trial
counsel as provided under Sections 10 and 15 of the

SB3395 - 32 - LRB103 36174 HLH 66266 b
Capital Crimes Litigation Act (repealed). This subsection
(n) shall apply until the conclusion of the trial of the
case, even if the prosecution chooses not to pursue the
death penalty prior to trial or sentencing.
(o) Information that is prohibited from being
disclosed under Section 4 of the Illinois Health and
Hazardous Substances Registry Act.
(p) Security portions of system safety program plans,
investigation reports, surveys, schedules, lists, data, or
information compiled, collected, or prepared by or for the
Department of Transportation under Sections 2705-300 and
2705-616 of the Department of Transportation Law of the
Civil Administrative Code of Illinois, the Regional
Transportation Authority under Section 2.11 of the
Regional Transportation Authority Act, or the St. Clair
County Transit District under the Bi-State Transit Safety
Act (repealed).
(q) Information prohibited from being disclosed by the
Personnel Record Review Act.
(r) Information prohibited from being disclosed by the
Illinois School Student Records Act.
(s) Information the disclosure of which is restricted
under Section 5-108 of the Public Utilities Act.
(t) (Blank).
(u) Records and information provided to an independent
team of experts under the Developmental Disability and

SB3395 - 33 - LRB103 36174 HLH 66266 b
Mental Health Safety Act (also known as Brian's Law).
(v) Names and information of people who have applied
for or received Firearm Owner's Identification Cards under
the Firearm Owners Identification Card Act or applied for
or received a concealed carry license under the Firearm
Concealed Carry Act, unless otherwise authorized by the
Firearm Concealed Carry Act; and databases under the
Firearm Concealed Carry Act, records of the Concealed
Carry Licensing Review Board under the Firearm Concealed
Carry Act, and law enforcement agency objections under the
Firearm Concealed Carry Act.
(v-5) Records of the Firearm Owner's Identification
Card Review Board that are exempted from disclosure under
Section 10 of the Firearm Owners Identification Card Act.
(w) Personally identifiable information which is
exempted from disclosure under subsection (g) of Section
19.1 of the Toll Highway Act.
(x) Information which is exempted from disclosure
under Section 5-1014.3 of the Counties Code or Section
8-11-21 of the Illinois Municipal Code.
(y) Confidential information under the Adult
Protective Services Act and its predecessor enabling
statute, the Elder Abuse and Neglect Act, including
information about the identity and administrative finding
against any caregiver of a verified and substantiated
decision of abuse, neglect, or financial exploitation of

SB3395 - 34 - LRB103 36174 HLH 66266 b
an eligible adult maintained in the Registry established
under Section 7.5 of the Adult Protective Services Act.
(z) Records and information provided to a fatality
review team or the Illinois Fatality Review Team Advisory
Council under Section 15 of the Adult Protective Services
Act.
(aa) Information which is exempted from disclosure
under Section 2.37 of the Wildlife Code.
(bb) Information which is or was prohibited from
disclosure by the Juvenile Court Act of 1987.
(cc) Recordings made under the Law Enforcement
Officer-Worn Body Camera Act, except to the extent
authorized under that Act.
(dd) Information that is prohibited from being
disclosed under Section 45 of the Condominium and Common
Interest Community Ombudsperson Act.
(ee) Information that is exempted from disclosure
under Section 30.1 of the Pharmacy Practice Act.
(ff) Information that is exempted from disclosure
under the Revised Uniform Unclaimed Property Act.
(gg) Information that is prohibited from being
disclosed under Section 7-603.5 of the Illinois Vehicle
Code.
(hh) Records that are exempt from disclosure under
Section 1A-16.7 of the Election Code.
(ii) Information which is exempted from disclosure

SB3395 - 35 - LRB103 36174 HLH 66266 b
under Section 2505-800 of the Department of Revenue Law of
the Civil Administrative Code of Illinois.
(jj) Information and reports that are required to be
submitted to the Department of Labor by registering day
and temporary labor service agencies but are exempt from
disclosure under subsection (a-1) of Section 45 of the Day
and Temporary Labor Services Act.
(kk) Information prohibited from disclosure under the
Seizure and Forfeiture Reporting Act.
(ll) Information the disclosure of which is restricted
and exempted under Section 5-30.8 of the Illinois Public
Aid Code.
(mm) Records that are exempt from disclosure under
Section 4.2 of the Crime Victims Compensation Act.
(nn) Information that is exempt from disclosure under
Section 70 of the Higher Education Student Assistance Act.
(oo) Communications, notes, records, and reports
arising out of a peer support counseling session
prohibited from disclosure under the First Responders
Suicide Prevention Act.
(pp) Names and all identifying information relating to
an employee of an emergency services provider or law
enforcement agency under the First Responders Suicide
Prevention Act.
(qq) Information and records held by the Department of
Public Health and its authorized representatives collected

SB3395 - 36 - LRB103 36174 HLH 66266 b
under the Reproductive Health Act.
(rr) Information that is exempt from disclosure under
the Cannabis Regulation and Tax Act.
(ss) Data reported by an employer to the Department of
Human Rights pursuant to Section 2-108 of the Illinois
Human Rights Act.
(tt) Recordings made under the Children's Advocacy
Center Act, except to the extent authorized under that
Act.
(uu) Information that is exempt from disclosure under
Section 50 of the Sexual Assault Evidence Submission Act.
(vv) Information that is exempt from disclosure under
subsections (f) and (j) of Section 5-36 of the Illinois
Public Aid Code.
(ww) Information that is exempt from disclosure under
Section 16.8 of the State Treasurer Act.
(xx) Information that is exempt from disclosure or
information that shall not be made public under the
Illinois Insurance Code.
(yy) Information prohibited from being disclosed under
the Illinois Educational Labor Relations Act.
(zz) Information prohibited from being disclosed under
the Illinois Public Labor Relations Act.
(aaa) Information prohibited from being disclosed
under Section 1-167 of the Illinois Pension Code.
(bbb) Information that is prohibited from disclosure

SB3395 - 37 - LRB103 36174 HLH 66266 b
by the Illinois Police Training Act and the Illinois State
Police Act.
(ccc) Records exempt from disclosure under Section
2605-304 of the Illinois State Police Law of the Civil
Administrative Code of Illinois.
(ddd) Information prohibited from being disclosed
under Section 35 of the Address Confidentiality for
Victims of Domestic Violence, Sexual Assault, Human
Trafficking, or Stalking Act.
(eee) Information prohibited from being disclosed
under subsection (b) of Section 75 of the Domestic
Violence Fatality Review Act.
(fff) Images from cameras under the Expressway Camera
Act. This subsection (fff) is inoperative on and after
July 1, 2025.
(ggg) Information prohibited from disclosure under
paragraph (3) of subsection (a) of Section 14 of the Nurse
Agency Licensing Act.
(hhh) Information submitted to the Illinois State
Police in an affidavit or application for an assault
weapon endorsement, assault weapon attachment endorsement,
.50 caliber rifle endorsement, or .50 caliber cartridge
endorsement under the Firearm Owners Identification Card
Act.
(iii) Data exempt from disclosure under Section 50 of
the School Safety Drill Act.

SB3395 - 38 - LRB103 36174 HLH 66266 b
(jjj) (hhh) Information exempt from disclosure under
Section 30 of the Insurance Data Security Law.
(kkk) (iii) Confidential business information
prohibited from disclosure under Section 45 of the Paint
Stewardship Act.
(lll) (iii) Data exempt from disclosure under Section
2-3.196 of the School Code.
(mmm) (iii) Information prohibited from being
disclosed under subsection (e) of Section 1-129 of the
Illinois Power Agency Act.
(nnn) Materials received by the Department of Commerce
and Economic Opportunity that are confidential under
Section 5-50 of the Music and Musicians Tax Credit and
Jobs Act.
(Source: P.A. 102-36, eff. 6-25-21; 102-237, eff. 1-1-22;
102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff.
8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22;
102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; 103-8, eff.
6-7-23; 103-34, eff. 6-9-23; 103-142, eff. 1-1-24; 103-372,
eff. 1-1-24; 103-472, eff. 8-1-24; 103-508, eff. 8-4-23;
103-580, eff. 12-8-23; revised 1-2-24.)
Section 15-5. The Illinois Income Tax Act is amended by
changing Sections 203 and 222 and by adding Sections 241 and
242 as follows:

SB3395 - 39 - LRB103 36174 HLH 66266 b
(35 ILCS 5/203)
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
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

SB3395 - 40 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 41 - LRB103 36174 HLH 66266 b
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 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 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

SB3395 - 42 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 43 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 44 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 45 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 46 - LRB103 36174 HLH 66266 b
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
(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

SB3395 - 47 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 48 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 49 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 50 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 51 - LRB103 36174 HLH 66266 b
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
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

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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)
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

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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,
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

SB3395 - 54 - LRB103 36174 HLH 66266 b
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
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

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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
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;

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(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
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;

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(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
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

SB3395 - 58 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 59 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 60 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 61 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 62 - LRB103 36174 HLH 66266 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);
(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) for property on which a bonus

SB3395 - 63 - LRB103 36174 HLH 66266 b
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) 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 (Z) is exempt from the provisions of
Section 250;

SB3395 - 64 - LRB103 36174 HLH 66266 b
(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 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
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),

SB3395 - 65 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 66 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 67 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 68 - LRB103 36174 HLH 66266 b
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;
(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
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; and
(JJ) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that

SB3395 - 69 - LRB103 36174 HLH 66266 b
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (JJ) are exempt from the provisions
of Section 250; .
(KK) (JJ) To the extent includible in gross income
for federal income tax purposes, any amount awarded or
paid to the taxpayer as a result of a judgment or
settlement for fertility fraud as provided in Section
15 of the Illinois Fertility Fraud Act, donor
fertility fraud as provided in Section 20 of the
Illinois Fertility Fraud Act, or similar action in
another state; and .
(LL) For taxable years beginning on or after
January 1, 2024, an amount equal to the qualified
expenses paid or incurred by a qualified artist
educator in connection with teaching or conducting
music lessons; this subparagraph (LL) is exempt from
the provisions of Section 250. As used in this
subparagraph (LL):
"Qualified expenses" means deductions allowed
by Section 162 of the federal Internal Revenue
Code; and
"Qualified artist educator" means a musician
who offers private or public music lessons for
amateur or professional artists in any setting or

SB3395 - 70 - LRB103 36174 HLH 66266 b
any capacity, regardless of the size of the class.
(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
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

SB3395 - 71 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 72 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 73 - LRB103 36174 HLH 66266 b
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 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
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

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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
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

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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
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

SB3395 - 76 - LRB103 36174 HLH 66266 b
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
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

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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
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

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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;
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

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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
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

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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
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

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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;
(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

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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
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

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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
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

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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
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

SB3395 - 85 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 86 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 87 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 88 - LRB103 36174 HLH 66266 b
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;
(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

SB3395 - 89 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 90 - LRB103 36174 HLH 66266 b
30 and then divided by 70 (or "y" multiplied
by 0.429);
(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) 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) 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

SB3395 - 91 - LRB103 36174 HLH 66266 b
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 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 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

SB3395 - 92 - LRB103 36174 HLH 66266 b
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
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

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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;
(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

SB3395 - 94 - LRB103 36174 HLH 66266 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(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
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

SB3395 - 95 - LRB103 36174 HLH 66266 b
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(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; and
(AA) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (AA) are 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,

SB3395 - 96 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 97 - LRB103 36174 HLH 66266 b
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
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

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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;
(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

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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
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 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

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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 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

SB3395 - 101 - LRB103 36174 HLH 66266 b
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
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;

SB3395 - 102 - LRB103 36174 HLH 66266 b
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;
(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

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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 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

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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
(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

SB3395 - 105 - LRB103 36174 HLH 66266 b
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
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;

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(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
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

SB3395 - 107 - LRB103 36174 HLH 66266 b
Act;
(G-15) 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;
(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;

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(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
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

SB3395 - 109 - LRB103 36174 HLH 66266 b
subparagraph are exempt from the provisions of Section
250;
(M) 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 (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

SB3395 - 110 - LRB103 36174 HLH 66266 b
the Internal Revenue Code;
(Q) 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
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

SB3395 - 111 - LRB103 36174 HLH 66266 b
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;
(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

SB3395 - 112 - LRB103 36174 HLH 66266 b
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);
(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) 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) 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

SB3395 - 113 - LRB103 36174 HLH 66266 b
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 (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 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.

SB3395 - 114 - LRB103 36174 HLH 66266 b
This subparagraph (S) is exempt from the
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

SB3395 - 115 - LRB103 36174 HLH 66266 b
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(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

SB3395 - 116 - LRB103 36174 HLH 66266 b
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-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

SB3395 - 117 - LRB103 36174 HLH 66266 b
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;
(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; and
(AA) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of

SB3395 - 118 - LRB103 36174 HLH 66266 b
this subparagraph (AA) are exempt from the provisions
of Section 250.
(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).
(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

SB3395 - 119 - LRB103 36174 HLH 66266 b
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
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 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

SB3395 - 120 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 121 - LRB103 36174 HLH 66266 b
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
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on

SB3395 - 122 - LRB103 36174 HLH 66266 b
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; 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

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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 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

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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,
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

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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
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective

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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
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

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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
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

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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
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

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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
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

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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
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

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(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);
(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) 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) 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

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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;
(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 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

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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
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

SB3395 - 134 - LRB103 36174 HLH 66266 b
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-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

SB3395 - 135 - LRB103 36174 HLH 66266 b
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;
(T) 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(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; and
(U) For taxable years beginning on or after

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January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (U) are 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
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

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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:
(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

SB3395 - 138 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 139 - LRB103 36174 HLH 66266 b
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,
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

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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
federal Subchapter S rules as in effect on July 1,
1982; and
(H) Partnerships. In the case of a partnership,

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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.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount

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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
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

SB3395 - 143 - LRB103 36174 HLH 66266 b
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
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

SB3395 - 144 - LRB103 36174 HLH 66266 b
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. 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; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
9-26-23.)
(35 ILCS 5/222)
Sec. 222. Live music and theater production credit.
(a) For tax years beginning on or after January 1, 2012 and
beginning prior to January 1, 2027, a taxpayer who has
received a tax credit award under the Live Music and Theater
Production Tax Credit Act is entitled to a credit against the
taxes imposed under subsections (a) and (b) of Section 201 of
this Act in an amount determined under that Act by the
Department of Commerce and Economic Opportunity.
(b) For taxable years ending before December 31, 2023, if
the taxpayer is a partnership, limited liability partnership,
limited liability company, or Subchapter S corporation, the
tax credit award is allowed to the partners, unit holders, or
shareholders in accordance with the determination of income
and distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. For taxable
years ending on or after December 31, 2023, if the taxpayer is

SB3395 - 145 - LRB103 36174 HLH 66266 b
a partnership or Subchapter S corporation, then the provisions
of Section 251 apply.
(c) A sale, assignment, or transfer of the tax credit
award may be made by the taxpayer earning the credit within one
year after the credit is awarded in accordance with rules
adopted by the Department of Commerce and Economic
Opportunity.
(d) The Department of Revenue, in cooperation with the
Department of Commerce and Economic Opportunity, shall adopt
rules to enforce and administer the provisions of this
Section.
(e) The tax credit award may not be carried back. If the
amount of the credit exceeds the tax liability for the year,
the excess may be carried forward and applied to the tax
liability of the 5 tax years following the excess credit year.
The tax credit award shall be applied to the earliest year for
which there is a tax liability. If there are credits from more
than one tax year that are available to offset liability, the
earlier credit shall be applied first. In no event may a credit
under this Section reduce the taxpayer's liability to less
than zero.
(Source: P.A. 102-16, eff. 6-17-21; 103-396, eff. 1-1-24.)
(35 ILCS 5/241 new)
Sec. 241. Music and Musicians Tax Credits and Jobs Act.
Taxpayers who have been awarded a credit under the Music and

SB3395 - 146 - LRB103 36174 HLH 66266 b
Musicians Tax Credits and Jobs Act are entitled to a credit
against the taxes imposed by subsections (a) and (b) of
Section 201 as provided in that Act.
(35 ILCS 5/242 new)
Sec. 242. Theater infrastructure projects.
(a) For taxable years beginning on or after January 1,
2025, the Department of Commerce and Economic Opportunity may
award the following credits against the taxes imposed by
subsections (a) and (b) of Section 201:
(1) Credits for investments in State-certified higher
education musical or theatrical infrastructure projects.
Investments in a State-certified higher education musical
or theatrical infrastructure project attributable to areas
other than where live performances will take place may
comprise no more than 25% of total qualifying
expenditures.
As used in this paragraph (1):
"State-certified higher education musical or
theatrical infrastructure project" means a project
certified by the Department of Commerce and Economic
Opportunity that involves the construction of a new
proscenium or black-box theater facility that:
(A) is primarily designed to host live
performances;
(B) is situated on a parcel of land that is located

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on the campus of a higher education institution in
this State;
(C) is owned by a higher education campus
institution or support foundation related to the
campus that is primarily designed to benefit and
support campus students and the higher education
facility; and
(D) has a minimum fixed seating capacity of 250.
(2) Credits for investments in State-certified musical
or theatrical facility infrastructure projects.
As used in this paragraph (2):
"State-certified musical or theatrical facility
infrastructure project" means a capital infrastructure
project in the State that is certified by the Department
of Commerce and Economic Opportunity and is directly
related to the production or performance of musical or
theatrical productions.
(3) Credits for investments in State-certified sound
scoring infrastructure projects.
As used in this paragraph (3):
"State-certified sound scoring infrastructure
project" means a sound scoring infrastructure project at a
new or rehabilitated facility in the State that is
primarily designed to record live music for film or
television.
(b) In no event shall a credit under this Section reduce

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the taxpayer's liability to less than zero. If the amount of
the credit exceeds the tax liability for the year, the excess
may be carried forward and applied to the tax liability of the
5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is
a tax liability. If there are credits for more than one year
that are available to offset a liability, the earlier credit
shall be applied first.
(c) For partners of partnerships and shareholders of
Subchapter S corporations, the provisions of Section 251 shall
apply with respect to the credit under this Section.
(d) This Section is exempt from the provisions of Section
250.
Section 15-10. The Live Theater Production Tax Credit Act
is amended by changing Sections 10-1, 10-5, 10-10, 10-15,
10-20, 10-25, 10-30, 10-40, and 10-50 as follows:
(35 ILCS 17/10-1)
Sec. 10-1. Short title. This Article may be cited as the
Live Music and Theater Production Tax Credit Act. References
in this Article to "this Act" mean this Article.
(Source: P.A. 97-636, eff. 6-1-12.)
(35 ILCS 17/10-5)
Sec. 10-5. Purpose. The Illinois economy depends heavily

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on the commercial for-profit live theater industry and the
accredited theater productions that are presented in Illinois.
As a result of intense competition from other prominent
theater cities in the United States and abroad in attracting
theater productions, Illinois must move aggressively with new
business development investment tools so that Illinois is more
competitive in site location decision making for show
producers. In an increasingly global economy, Illinois'
long-term development will benefit from the rational,
strategic use of State resources in support of accredited
theater productions. It is the purpose of this Act to preserve
and expand the existing work force used in live theater and
music and enhance the marketing of the presentation of live
theater and music in Illinois. It shall be the policy of this
State to promote and encourage the training and hiring of
Illinois residents who represent the diversity of the Illinois
population through the creation and implementation of
training, education, and recruitment programs organized in
cooperation with Illinois colleges and universities, labor
organizations, and the commercial for-profit live theater and
music industry.
(Source: P.A. 102-1112, eff. 12-21-22.)
(35 ILCS 17/10-10)
Sec. 10-10. Definitions. As used in this Act:
"Accredited theater production" means a for-profit live

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stage presentation in a qualified production facility, as
defined in this Section, that is either (i) a pre-Broadway
production; or (ii) a long-run production for which the
aggregate Illinois labor and marketing expenditures exceed
$100,000; or (iii) a musical production. For credits awarded
under this Act in State Fiscal Year 2023, "accredited theater
production" also includes any commercial Broadway touring
show.
"Commercial Broadway touring show" means a production that
(i) is performed in a qualified production facility and plays
in more than 2 other markets in North America outside of
Illinois within 12 months of its Illinois presentation and
(ii) has Illinois production spending of not less than
$100,000, as shown on the applicant's application for the
credit.
"Pre-Broadway production" means a live stage production
that, in its original or adaptive version, is performed in a
qualified production facility having a presentation scheduled
for Broadway's Theater District in New York City within 12
months after its Illinois presentation.
"Long-run production" means a live stage production that
is performed in a qualified production facility for longer
than 8 weeks, with at least 6 performances per week, and
includes a production that spans the end of one tax year and
the commencement of a new tax year that, in combination, meets
the criteria set forth in this definition making it a long-run

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production eligible for a theater tax credit award in each tax
year or portion thereof.
"Accredited theater production certificate" means a
certificate issued by the Department certifying that the
production is an accredited theater production that meets the
guidelines of this Act.
"Applicant" means a taxpayer that is a theater producer,
owner, licensee, operator, or presenter that is presenting or
has presented a live stage presentation located within the
State of Illinois who:
(1) owns or licenses the theatrical rights of the
stage presentation for the Illinois production period; or
(2) has contracted or will contract directly with the
owner or licensee of the theatrical rights or a person
acting on behalf of the owner or licensee to provide live
performances of the production.
An applicant that directly or indirectly owns, controls,
or operates multiple qualified production facilities shall be
presumed to be and considered for the purposes of this Act to
be a single applicant; provided, however, that as to each of
the applicant's qualified production facilities, the applicant
shall be eligible to separately and contemporaneously (i)
apply for and obtain accredited theater production
certificates, (ii) stage accredited theater productions, and
(iii) apply for and receive a tax credit award certificate for
each of the applicant's accredited theater productions

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performed at each of the applicant's qualified production
facilities.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of the Department.
"Illinois labor expenditure" means gross salary or wages
including, but not limited to, taxes, benefits, and any other
consideration incurred or paid to non-talent employees of the
applicant for services rendered to and on behalf of the
accredited theater production. To qualify as an Illinois labor
expenditure, the expenditure must be:
(1) incurred or paid by the applicant on or after the
effective date of the Act for services related to any
portion of an accredited theater production from its
pre-production stages, including, but not limited to, the
writing of the script, casting, hiring of service
providers, purchases from vendors, marketing, advertising,
public relations, load in, rehearsals, performances, other
accredited theater production related activities, and load
out;
(2) directly attributable to the accredited theater
production;
(3) limited to the first $100,000 of wages incurred or
paid to each employee of an accredited theater production
in each tax year;
(4) included in the federal income tax basis of the

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property;
(5) paid in the tax year for which the applicant is
claiming the tax credit award, or no later than 60 days
after the end of the tax year;
(6) paid to persons residing in Illinois at the time
payments were made; and
(7) reasonable in the circumstances.
"Illinois production spending" means any and all expenses
directly or indirectly incurred relating to an accredited
theater production presented in any qualified production
facility of the applicant, including, but not limited to,
expenditures for:
(1) national marketing, public relations, and the
creation and placement of print, electronic, television,
billboard, and other forms of advertising; and
(2) the construction and fabrication of scenic
materials and elements; provided, however, that the
maximum amount of expenditures attributable to the
construction and fabrication of scenic materials and
elements eligible for a tax credit award shall not exceed
$500,000 per applicant per production in any single tax
year.
"Musical production" means a live musical performance that
occurs in the State in front of a live audience, whether or not
there is a charge for admission, and includes the producing,
rehearsing, marketing, administration, recording, performing,

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or filming of that performance. "Musical production" includes,
but is not limited to, drama, comedy, comedy revue, opera,
ballet, jazz, cabaret, and variety entertainment.
"Qualified production facility" means a facility located
in the State in which live theatrical or musical productions
are, or are intended to be, exclusively presented that
contains at least one stage, a seating capacity of 1,200 or
more seats, and dressing rooms, storage areas, and other
ancillary amenities necessary for the accredited theater
production.
"Tax credit award" means the issuance to a taxpayer by the
Department of a tax credit award in conformance with Sections
10-40 and 10-45 of this Act.
"Tax year" means a calendar year for the period January 1
to and including December 31.
(Source: P.A. 102-1112, eff. 12-21-22.)
(35 ILCS 17/10-15)
Sec. 10-15. Powers of the Department. The Department, in
addition to those powers granted under the Civil
Administrative Code of Illinois, is granted and has all the
powers necessary or convenient to carry out and effectuate the
purposes and provisions of this Act, including, but not
limited to, the power and authority to:
(1) adopt rules deemed necessary and appropriate for
the administration of the Tax Credit Award program;

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establish forms for applications, notifications,
contracts, or any other agreements; and accept
applications at any time during the year;
(2) assist applicants pursuant to the provisions of
this Act to promote, foster, and support live theater
development and production and its related job creation or
retention within the State;
(3) gather information and conduct inquiries, in the
manner and by the methods set forth in this Act, required
for the Department to comply with Section 10-40 and,
without limitation, obtain information with respect to
applicants for the purpose of making any designations or
certifications necessary or desirable to assist the
Department with any recommendation or guidance in the
furtherance of the purposes of this Act and relating to
applicants' participation in training, education, and
recruitment programs that are organized in cooperation
with Illinois colleges and universities or labor
organizations designed to promote and encourage the
training and hiring of Illinois residents who represent
the diversity of the Illinois population;
(4) provide for sufficient personnel to permit
administrative, staffing, operating, and related support
required to adequately discharge its duties and
responsibilities described in this Act from funds as may
be appropriated by the General Assembly for the

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administration of this Act; and
(5) require that the applicant at all times keep
proper books and records of accounts relating to the tax
credit award, in accordance with generally accepted
accounting principles consistently applied, and make, upon
reasonable written request by the Department, those books
and records available for reasonable Department inspection
and audit during the applicant's normal business hours.
Any documents or data made available to or received from
the applicant by any agent, employee, officer, or service
provider to the Department shall be deemed confidential
and shall not constitute public records to the extent that
the documents or data consist of commercial or financial
information regarding the operation by the applicant of
any theater or any accredited theater production, or any
recipient of any tax credit award under this Act.
(Source: P.A. 97-636, eff. 6-1-12.)
(35 ILCS 17/10-20)
Sec. 10-20. Tax credit award. Subject to the conditions
set forth in this Act, an applicant is entitled to a tax credit
award as approved by the Department for qualifying Illinois
labor expenditures and Illinois production spending for each
tax year in which the applicant is awarded an accredited
theater production certificate issued by the Department. The
amount of tax credits awarded pursuant to this Act shall not

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exceed $2,000,000 in any State fiscal year, except that the
amount of tax credits awarded pursuant to this Act for the
State fiscal year ending on June 30, 2023 shall not exceed
$4,000,000. For the State fiscal year ending on June 30, 2023,
no more than $2,000,000 in credits may be awarded to
accredited theater productions that are not commercial
Broadway touring shows, and no more than $2,000,000 in credits
may be awarded to commercial Broadway touring shows. Credits
shall be awarded on a first-come, first-served basis.
Notwithstanding the foregoing, if the amount of credits
applied for in any fiscal year exceeds the amount authorized
to be awarded under this Section, the excess credit amount
shall be awarded in the next fiscal year in which credits
remain available for award and shall be treated as having been
applied for on the first day of that fiscal year.
(Source: P.A. 102-700, eff. 4-19-22; 102-1112, eff. 12-21-22.)
(35 ILCS 17/10-25)
Sec. 10-25. Application for certification of accredited
theater production. Any applicant proposing an accredited
theater production located or planned to be located in
Illinois may request an accredited theater production
certificate by application to the Department.
(Source: P.A. 97-636, eff. 6-1-12.)
(35 ILCS 17/10-30)

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Sec. 10-30. Review of application for accredited theater
production certificate.
(a) The Department shall issue an accredited theater
production certificate to an applicant if it finds that by a
preponderance the following conditions exist:
(1) the applicant intends to make the expenditure in
the State required for certification of the accredited
theater production;
(2) the applicant's accredited theater production is
economically sound and will benefit the people of the
State of Illinois by increasing opportunities for
employment and will strengthen the economy of Illinois;
(3) the following requirements related to the
implementation of a diversity plan have been met: (i) the
applicant has filed with the Department a diversity plan
outlining specific goals for hiring Illinois labor
expenditure eligible minority persons and women, as
defined in the Business Enterprise for Minorities, Women,
and Persons with Disabilities Act, and for using vendors
receiving certification under the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act; (ii)
the Department has approved the plan as meeting the
requirements established by the Department and verified
that the applicant has met or made good faith efforts in
achieving those goals; and (iii) the Department has
adopted any rules that are necessary to ensure compliance

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with the provisions set forth in this paragraph and
necessary to require that the applicant's plan reflects
the diversity of the population of this State;
(4) the applicant's accredited theater production
application indicates whether the applicant intends to
participate in training, education, and recruitment
programs that are organized in cooperation with Illinois
colleges and universities, labor organizations, and the
holders of accredited theater production certificates and
are designed to promote and encourage the training and
hiring of Illinois residents who represent the diversity
of Illinois;
(5) except for commercial Broadway touring shows
qualifying in the State fiscal year ending June 30, 2023,
if not for the tax credit award, the applicant's
accredited theater production would not occur in Illinois,
which may be demonstrated by any means, including, but not
limited to, evidence that: (i) the applicant, presenter,
owner, or licensee of the production rights has other
state or international location options at which to
present the production and could reasonably and
efficiently locate outside of the State, (ii) at least one
other state or nation could be considered for the
production, (iii) the receipt of the tax award credit is a
major factor in the decision of the applicant, presenter,
production owner or licensee as to where the production

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will be presented and that without the tax credit award
the applicant likely would not create or retain jobs in
Illinois, or (iv) receipt of the tax credit award is
essential to the applicant's decision to create or retain
new jobs in the State; and
(6) the production will contribute to establishing the
State as a leader in the live performance industry;
(7) the production will increase the availability and
utilization of federal and State incentives in the
financing or operation of the production; and
(8) (6) the tax credit award will result in an overall
positive impact to the State, as determined by the
Department using the best available data.
(b) If any of the provisions in this Section conflict with
any existing collective bargaining agreements, the terms and
conditions of those collective bargaining agreements shall
control.
(c) The Department shall act expeditiously regarding
approval of applications for accredited theater production
certificates so as to accommodate the pre-production work,
booking, commencement of ticket sales, determination of
performance dates, load in, and other matters relating to the
live theater productions for which approval is sought.
(Source: P.A. 102-1112, eff. 12-21-22.)
(35 ILCS 17/10-40)

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Sec. 10-40. Issuance of Tax Credit Award Certificate.
(a) In order to qualify for a tax credit award under this
Act, an applicant must file an application for each accredited
theater production at each of the applicant's qualified
production facilities, on forms prescribed by the Department,
providing information necessary to calculate the tax credit
award and any additional information as reasonably required by
the Department.
(b) Upon satisfactory review of the application, the
Department shall issue a tax credit award certificate stating
the amount of the tax credit award to which the applicant is
entitled for that tax year and shall contemporaneously notify
the applicant and Illinois Department of Revenue in accordance
with Section 222 of the Illinois Income Tax Act.
(Source: P.A. 97-636, eff. 6-1-12.)
(35 ILCS 17/10-50)
Sec. 10-50. Live theater and music tax credit award
program evaluation and reports.
(a) The Department's live theater and music tax credit
award evaluation must include:
(i) an assessment of the effectiveness of the program
in creating and retaining new jobs in Illinois;
(ii) an assessment of the revenue impact of the
program;
(iii) in the discretion of the Department, a review of

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the practices and experiences of other states or nations
with similar programs; and
(iv) an assessment of the overall success of the
program. The Department may make a recommendation to
extend, modify, or not extend the program based on the
evaluation.
(b) At the end of each fiscal quarter, the Department
shall submit to the General Assembly a report that includes,
without limitation:
(i) an assessment of the economic impact of the
program, including the number of jobs created and
retained, and whether the job positions are entry level,
management, vendor, or production related;
(ii) the amount of accredited theater production
spending brought to Illinois, including the amount of
spending and type of Illinois vendors hired in connection
with an accredited theater production; and
(iii) a determination of whether those receiving
qualifying Illinois labor expenditure salaries or wages
reflect the geographical, racial and ethnic, gender, and
income level diversity of the State of Illinois.
(c) At the end of each fiscal year, the Department shall
submit to the General Assembly a report that includes, without
limitation:
(i) the identification of each vendor that provided
goods or services that were included in an accredited

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theater production's Illinois production spending;
(ii) a statement of the amount paid to each identified
vendor by the accredited theater production and whether
the vendor is a minority-owned or women-owned business as
defined in Section 2 of the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act; and
(iii) a description of the steps taken by the
Department to encourage accredited theater productions to
use vendors who are minority-owned or women-owned
businesses.
(Source: P.A. 100-391, eff. 8-25-17.)
ARTICLE 95. NON-ACCELERATION