Public Act 100-0905

HB4751 Enrolled LRB100 17260 RJF 32419 b

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois,

represented in the General Assembly:

Section 5. The State Treasurer Act is amended by changing

Section 16.5 as follows:

(15 ILCS 505/16.5)

Sec. 16.5. College Savings Pool.

(a) Definitions. As used in this Section:

"Account owner" means any person or entity who has opened

an account or to whom ownership of an account has been

transferred, as allowed by the Internal Revenue Code, and who

has authority to withdraw funds, direct withdrawal of funds,

change the designated beneficiary, or otherwise exercise

control over an account in the College Savings Pool.

"Donor" means any person or entity who makes contributions

to an account in the College Savings Pool.

"Designated beneficiary" means any individual designated

as the beneficiary of an account in the College Savings Pool by

an account owner. A designated beneficiary must have a valid

social security number or taxpayer identification number. In

the case of an account established as part of a scholarship

program permitted under Section 529 of the Internal Revenue

Code, the designated beneficiary is any individual receiving

benefits accumulated in the account as a scholarship.

"Member of the family" has the same meaning ascribed to

that term under Section 529 of the Internal Revenue Code.

"Nonqualified withdrawal" means a distribution from an

account other than a distribution that (i) is used for the

qualified expenses of the designated beneficiary; (ii) results

from the beneficiary's death or disability; (iii) is a rollover

to another account in the College Savings Pool; or (iv) is a

rollover to an ABLE account, as defined in Section 16.6 of this

Act, or any distribution that, within 60 days after such

distribution, is transferred to an ABLE account of the

designated beneficiary or a member of the family of the

designated beneficiary to the extent that the distribution,

when added to all other contributions made to the ABLE account

for the taxable year, does not exceed the limitation under

Section 529A(b)(2)(B)(i) of the Internal Revenue Code.

"Program manager" means any financial institution or

entity lawfully doing business in the State of Illinois

selected by the State Treasurer to oversee the recordkeeping,

custody, customer service, investment management, and

marketing for one or more of the programs in the College

Savings Pool.

"Qualified expenses" means: (i) tuition, fees, and the

costs of books, supplies, and equipment required for enrollment

or attendance at an eligible educational institution; (ii)

expenses for special needs services, in the case of a special

needs beneficiary, which are incurred in connection with such

enrollment or attendance; (iii) certain expenses for the

purchase of computer or peripheral equipment, as defined in

Section 168 of the federal Internal Revenue Code (26 U.S.C.

168), computer software, as defined in Section 197 of the

federal Internal Revenue Code (26 U.S.C. 197), or Internet

access and related services, if such equipment, software, or

services are to be used primarily by the beneficiary during any

of the years the beneficiary is enrolled at an eligible

educational institution, except that, such expenses shall not

include expenses for computer software designed for sports,

games, or hobbies, unless the software is predominantly

educational in nature; and (iv) room and board expenses

incurred while attending an eligible educational institution

at least half-time. "Eligible educational institutions", as

used in this Section, means public and private colleges, junior

colleges, graduate schools, and certain vocational

institutions that are described in Section 481 of the Higher

Education Act of 1965 (20 U.S.C. 1088) and that are eligible to

participate in Department of Education student aid programs. A

student shall be considered to be enrolled at least half-time

if the student is enrolled for at least half the full-time

academic workload for the course of study the student is

pursuing as determined under the standards of the institution

at which the student is enrolled.

(b) Establishment of the Pool. The State Treasurer may

establish and administer a College Savings Pool as a qualified

tuition program under Section 529 of the Internal Revenue Code.

The Pool may consist of one or more college savings programs to

supplement and enhance the investment opportunities otherwise

available to persons seeking to finance the costs of higher

education. The State Treasurer, in administering the College

Savings Pool, may receive, hold, and invest moneys paid into

the Pool and perform such other actions as are necessary to

ensure that the Pool operates as a qualified tuition program in

accordance with Section 529 of the Internal Revenue Code pool

by a participant and may serve as the fiscal agent of that

participant for the purpose of holding and investing those

moneys.

(c) Administration of the College Savings Pool. The State

Treasurer may engage one or more financial institutions to

handle the overall administration, investment management,

recordkeeping, and marketing of the programs in the College

Savings Pool. The contributions deposited in the Pool, and any

earnings thereon, shall not constitute property of the State or

be commingled with State funds and the State shall have no

claim to or against, or interest in, such funds.

"Participant", as used in this Section, means any person

who has authority to withdraw funds, change the designated

beneficiary, or otherwise exercise control over an account.

"Donor", as used in this Section, means any person who makes

investments in the pool. "Designated beneficiary", as used in

this Section, means any person on whose behalf an account is

established in the College Savings Pool by a participant. Both

in-state and out-of-state persons may be participants, donors,

and designated beneficiaries in the College Savings Pool. The

College Savings Pool must be available to any individual with a

valid social security number or taxpayer identification number

for the benefit of any individual with a valid social security

number or taxpayer identification number, unless a contract in

effect on August 1, 2011 (the effective date of Public Act

97-233) does not allow for taxpayer identification numbers, in

which case taxpayer identification numbers must be allowed upon

the expiration of the contract.

New accounts in the College Savings Pool may be processed

through participating financial institutions. "Participating

financial institution", as used in this Section, means any

financial institution insured by the Federal Deposit Insurance

Corporation and lawfully doing business in the State of

Illinois and any credit union approved by the State Treasurer

and lawfully doing business in the State of Illinois that

agrees to process new accounts in the College Savings Pool.

Participating financial institutions may charge a processing

fee to participants to open an account in the pool that shall

not exceed $30 until the year 2001. Beginning in 2001 and every

year thereafter, the maximum fee limit shall be adjusted by the

Treasurer based on the Consumer Price Index for the North

Central Region as published by the United States Department of

Labor, Bureau of Labor Statistics for the immediately preceding

calendar year. Every contribution received by a financial

institution for investment in the College Savings Pool shall be

transferred from the financial institution to a location

selected by the State Treasurer within one business day

following the day that the funds must be made available in

accordance with federal law. All communications from the State

Treasurer to participants and donors shall reference the

participating financial institution at which the account was

processed.

The Treasurer may invest the moneys in the College Savings

Pool in the same manner and in the same types of investments

provided for the investment of moneys by the Illinois State

Board of Investment.

(d) Availability of the College Savings Pool. The State

Treasurer may permit persons, including trustees of trusts and

custodians under a Uniform Transfers to Minors Act or Uniform

Gifts to Minors Act account, and certain legal entities to be

account owners, including as part of a scholarship program,

provided that: (1) an individual, trustee or custodian must

have a valid social security number or taxpayer identification

number, be at least 18 years of age, and have a valid United

States street address; and (2) a legal entity must have a valid

taxpayer identification number and a valid United States street

address. Both in-state and out-of-state persons may be account

owners and donors, and both in-state and out-of-state

individuals may be designated beneficiaries in the College

Savings Pool.

(e) Fees. The State Treasurer shall establish fees to be

imposed on accounts to recover the costs of administration,

recordkeeping, and investment management. The Treasurer must

use his or her best efforts to keep these fees as low as

possible and consistent with administration of high quality

competitive college savings programs.

(f) Investments in the State. To enhance the safety and

liquidity of the College Savings Pool, to ensure the

diversification of the investment portfolio of the College

Savings Pool pool, and in an effort to keep investment dollars

in the State of Illinois, the State Treasurer may make a

percentage of each account available for investment in

participating financial institutions doing business in the

State. The State Treasurer may deposit with the participating

financial institution at which the account was processed the

following percentage of each account at a prevailing rate

offered by the institution, provided that the deposit is

federally insured or fully collateralized and the institution

accepts the deposit: 10% of the total amount of each account

for which the current age of the beneficiary is less than 7

years of age, 20% of the total amount of each account for which

the beneficiary is at least 7 years of age and less than 12

years of age, and 50% of the total amount of each account for

which the current age of the beneficiary is at least 12 years

of age.

(g) Investment policy. The Treasurer shall develop,

publish, and implement an investment policy covering the

investment of the moneys in each of the programs in the College

Savings Pool. The policy shall be published each year as part

of the audit of the College Savings Pool by the Auditor

General, which shall be distributed to all account owners in

such program participants. The Treasurer shall notify all

account owners in such program participants in writing, and the

Treasurer shall publish in a newspaper of general circulation

in both Chicago and Springfield, any changes to the previously

published investment policy at least 30 calendar days before

implementing the policy. Any investment policy adopted by the

Treasurer shall be reviewed and updated if necessary within 90

days following the date that the State Treasurer takes office.

(h) Investment restrictions. An account owner may,

directly or indirectly, direct the investment of any

contributions to the College Savings Pool (or any earnings

thereon) only as provided in Section 529(b)(4) of the Internal

Revenue Code. Donors and designated beneficiaries, in those

capacities, may not, directly or indirectly, direct the

investment of any contributions to the Pool (or any earnings

thereon).

(i) Distributions. Distributions Participants shall be

required to use moneys distributed from an account in the

College Savings Pool may be used for the designated

beneficiary's qualified expenses at eligible educational

institutions. Funds contained in a College Savings Pool account

may be rolled over into an eligible ABLE account, as defined in

Section 16.6 of this Act, to the extent permitted by Section

529(c)(3)(C) of the Internal Revenue Code. To the extent a

nonqualified withdrawal is made from an account, the earnings

portion of such distribution may be treated by the Internal

Revenue Service as income subject to income tax and a 10%

federal penalty tax. "Qualified expenses", as used in this

Section, means the following: (i) tuition, fees, and the costs

of books, supplies, and equipment required for enrollment or

attendance at an eligible educational institution; (ii)

expenses for special needs services, in the case of a special

needs beneficiary, which are incurred in connection with such

enrollment or attendance; (iii) certain expenses for the

purchase of computer or peripheral equipment, as defined in

Section 168 of the federal Internal Revenue Code (26 U.S.C.

168), computer software, as defined in Section 197 of the

federal Internal Revenue Code (26 U.S.C. 197), or internet

access and related services, if such equipment, software, or

services are to be used primarily by the beneficiary during any

of the years the beneficiary is enrolled at an eligible

educational institution, except that, such expenses shall not

include expenses for computer software designed for sports,

games, or hobbies, unless the software is predominantly

educational in nature; and (iv) certain room and board expenses

incurred while attending an eligible educational institution

at least half-time. "Eligible educational institutions", as

used in this Section, means public and private colleges, junior

colleges, graduate schools, and certain vocational

institutions that are described in Section 481 of the Higher

Education Act of 1965 (20 U.S.C. 1088) and that are eligible to

participate in Department of Education student aid programs. A

student shall be considered to be enrolled at least half-time

if the student is enrolled for at least half the full-time

academic work load for the course of study the student is

pursuing as determined under the standards of the institution

at which the student is enrolled.

Distributions made from the College Savings Pool may pool

for qualified expenses shall be made directly to the eligible

educational institution, directly to a vendor, in the form of a

check payable to both the designated beneficiary and the

institution or vendor, or directly to the designated

beneficiary or account owner, or in any other a manner that is

permissible under Section 529 of the Internal Revenue Code. Any

moneys that are distributed in any other manner or that are

used for expenses other than qualified expenses at an eligible

educational institution shall be subject to a penalty of 10% of

the earnings unless the beneficiary dies, becomes a person with

a disability, or receives a scholarship that equals or exceeds

the distribution. Penalties shall be withheld at the time the

distribution is made.

(j) Contributions. Contributions to the College Savings

Pool shall be as follows:

(1) Contributions to an account in the College Savings

Pool may be made only in cash.

(2) The Treasurer shall limit the contributions that

may be made to the College Savings Pool on behalf of a

designated beneficiary, as required under Section 529 of

the Internal Revenue Code, to prevent contributions for the

benefit of a designated beneficiary in excess of those

necessary to provide for the qualified expenses of the

designated beneficiary based on the limitations

established by the Internal Revenue Service. The Pool shall

not permit any additional contributions to an account as

soon as the aggregate accounts for the designated

beneficiary in the Pool reach a specified account balance

limit applicable to all designated beneficiaries.

(3) The contributions made on behalf of a designated

beneficiary who is also a beneficiary under the Illinois

Prepaid Tuition Program shall be further restricted to

ensure that the contributions in both programs combined do

not exceed the limit established for the College Savings

Pool.

(k) Illinois Student Assistance Commission. The Treasurer

shall provide the Illinois Student Assistance Commission each

year at a time designated by the Commission, an electronic

report of all account owner participant accounts in the

Treasurer's College Savings Pool, listing total contributions

and disbursements from each individual account during the

previous calendar year. As soon thereafter as is possible

following receipt of the Treasurer's report, the Illinois

Student Assistance Commission shall, in turn, provide the

Treasurer with an electronic report listing those College

Savings Pool account owners participants who also participate

in the State's prepaid tuition program, administered by the

Commission. The Commission shall be responsible for filing any

combined tax reports regarding State qualified savings

programs required by the United States Internal Revenue

Service.

The Treasurer shall work with the Illinois Student

Assistance Commission to coordinate the marketing of the

College Savings Pool and the Illinois Prepaid Tuition Program

when considered beneficial by the Treasurer and the Director of

the Illinois Student Assistance Commission. The Treasurer's

office shall not publicize or otherwise market the College

Savings Pool or accept any moneys into the College Savings Pool

prior to March 1, 2000. The Treasurer shall provide a separate

accounting for each designated beneficiary to each account

owner participant, the Illinois Student Assistance Commission,

and the participating financial institution at which the

account was processed.

(l) Prohibition; exemption. No interest in the program, or

any portion thereof, may be used pledged as security for a

loan. Moneys held in an account invested in the Illinois

College Savings Pool shall be exempt from all claims of the

creditors of the account owner participant, donor, or

designated beneficiary of that account, except for the

non-exempt College Savings Pool transfers to or from the

account as defined under subsection (j) of Section 12-1001 of

the Code of Civil Procedure (735 ILCS 5/12-1001(j)).

(m) Taxation. The assets of the College Savings Pool and

its income and operation shall be exempt from all taxation by

the State of Illinois and any of its subdivisions. The accrued

earnings on investments in the Pool once disbursed on behalf of

a designated beneficiary shall be similarly exempt from all

taxation by the State of Illinois and its subdivisions, so long

as they are used for qualified expenses. Contributions to a

College Savings Pool account during the taxable year may be

deducted from adjusted gross income as provided in Section 203

of the Illinois Income Tax Act. The provisions of this

paragraph are exempt from Section 250 of the Illinois Income

Tax Act.

(n) Rules. The Treasurer shall adopt rules he or she

considers necessary for the efficient administration of the

College Savings Pool. The rules shall provide whatever

additional parameters and restrictions are necessary to ensure

that the College Savings Pool meets all of the requirements for

a qualified state tuition program under Section 529 of the

Internal Revenue Code (26 U.S.C. 529).

The rules shall provide for the administration expenses of

the Pool pool to be paid from its earnings and for the

investment earnings in excess of the expenses and all moneys

collected as penalties to be credited at least or paid monthly

to the account owners several participants in the Pool pool in

a manner which equitably reflects the differing amounts of

their respective investments in the Pool pool and the differing

periods of time for which those amounts were in the custody of

the Pool pool.

The Also, the rules shall require the maintenance of

records that enable the Treasurer's office to produce a report

for each account in the Pool pool at least annually that

documents the account balance and investment earnings.

Notice of any proposed amendments to the rules and

regulations shall be provided to all account owners

participants prior to adoption. Amendments to rules and

regulations shall apply only to contributions made after the

adoption of the amendment.

(o) Bond. The Upon creating the College Savings Pool, the

State Treasurer shall give bond with at least one surety 2 or

more sufficient sureties, payable to and for the benefit of the

account owners participants in the College Savings Pool, in the

penal sum of $10,000,000 $1,000,000, conditioned upon the

faithful discharge of his or her duties in relation to the

College Savings Pool.

(Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 91-943,

eff. 2-9-01; 92-16, eff. 6-28-01; 92-439, eff. 8-17-01; 92-626,

eff 7-11-02; 93-812, eff. 1-1-05; 95-23, eff. 8-3-07; 95-306,

eff. 1-1-08; 95-521, eff. 8-28-07; 95-876, eff. 8-21-08;

97-233, eff. 8-1-11; 97-537, eff. 8-23-11; 97-813, eff.

7-13-12; 99-143, eff. 7-27-15; 100-161, eff. 8-18-17; revised

10-2-17.)

Section 10. The Illinois Income Tax Act is amended by

changing Section 203 as follows:

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

Sec. 203. Base income defined.

(a) Individuals.

(1) In general. In the case of an individual, base

income means an amount equal to the taxpayer's adjusted

gross income for the taxable year as modified by paragraph

(2).

(2) Modifications. The adjusted gross income referred

to in paragraph (1) shall be modified by adding thereto the

sum of the following amounts:

(A) An amount equal to all amounts paid or accrued

to the taxpayer as interest or dividends during the

taxable year to the extent excluded from gross income

in the computation of adjusted gross income, except

stock dividends of qualified public utilities

described in Section 305(e) of the Internal Revenue

Code;

(B) An amount equal to the amount of tax imposed by

this Act to the extent deducted from gross income in

the computation of adjusted gross income for the

taxable year;

(C) An amount equal to the amount received during

the taxable year as a recovery or refund of real

property taxes paid with respect to the taxpayer's

principal residence under the Revenue Act of 1939 and

for which a deduction was previously taken under

subparagraph (L) of this paragraph (2) prior to July 1,

1991, the retrospective application date of Article 4

of Public Act 87-17. In the case of multi-unit or

multi-use structures and farm dwellings, the taxes on

the taxpayer's principal residence shall be that

portion of the total taxes for the entire property

which is attributable to such principal residence;

(D) An amount equal to the amount of the capital

gain deduction allowable under the Internal Revenue

Code, to the extent deducted from gross income in the

computation of adjusted gross income;

(D-5) An amount, to the extent not included in

adjusted gross income, equal to the amount of money

withdrawn by the taxpayer in the taxable year from a

medical care savings account and the interest earned on

the account in the taxable year of a withdrawal

pursuant to subsection (b) of Section 20 of the Medical

Care Savings Account Act or subsection (b) of Section

20 of the Medical Care Savings Account Act of 2000;

(D-10) For taxable years ending after December 31,

1997, an amount equal to any eligible remediation costs

that the individual deducted in computing adjusted

gross income and for which the individual claims a

credit under subsection (l) of Section 201;

(D-15) For taxable years 2001 and thereafter, an

amount equal to the bonus depreciation deduction taken

on the taxpayer's federal income tax return for the

taxable year under subsection (k) of Section 168 of the

Internal Revenue Code;

(D-16) If the taxpayer sells, transfers, abandons,

or otherwise disposes of property for which the

taxpayer was required in any taxable year to make an

addition modification under subparagraph (D-15), then

an amount equal to the aggregate amount of the

deductions taken in all taxable years under

subparagraph (Z) with respect to that property.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes 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

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

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

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

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 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

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

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

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

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 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 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;

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 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 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;

(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(2) of the Internal Revenue Code,

and all amounts of expenses allocable to interest and

disallowed as deductions by Section 265(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;

(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

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 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 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 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

under subsection (k) of Section 168 of the Internal

Revenue Code and for each applicable taxable year

thereafter, an amount equal to "x", where:

(1) "y" equals the amount of the depreciation

deduction taken for the taxable year on the

taxpayer's federal income tax return on property

for which the bonus depreciation deduction was

taken in any year under subsection (k) of Section

168 of the Internal Revenue Code, but not including

the bonus depreciation deduction;

(2) for taxable years ending on or before

December 31, 2005, "x" equals "y" multiplied by 30

and then divided by 70 (or "y" multiplied by

0.429); and

(3) for taxable years ending after December

31, 2005:

(i) for property on which a bonus

depreciation deduction of 30% of the adjusted

basis was taken, "x" equals "y" multiplied by

30 and then divided by 70 (or "y" multiplied by

0.429); and

(ii) for property on which a bonus

depreciation deduction of 50% of the adjusted

basis was taken, "x" equals "y" multiplied by

1.0.

The aggregate amount deducted under this

subparagraph in all taxable years for any one piece of

property may not exceed the amount of the bonus

depreciation deduction taken on that property on the

taxpayer's federal income tax return under subsection

(k) of Section 168 of the Internal Revenue Code. This

subparagraph (Z) is exempt from the provisions of

Section 250;

(AA) If the taxpayer sells, transfers, abandons,

or otherwise disposes of property for which the

taxpayer was required in any taxable year to make an

addition modification under subparagraph (D-15), then

an amount equal to that addition modification.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes 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),

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 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 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; and

(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;and .

(HH) For taxable years beginning on or after

January 1, 2018 and prior to January 1, 2023, a maximum

of $10,000 contributed in the taxable year to a

qualified ABLE account under Section 16.6 of the State

Treasurer Act, except that amounts excluded from gross

income under Section 529(c)(3)(C)(i) or Section

529A(c)(1)(C) of the Internal Revenue Code shall not be

considered moneys contributed under this subparagraph

(HH). For purposes of this subparagraph (HH),

contributions made by an employer on behalf of an

employee, or matching contributions made by an

employee, shall be treated as made by the employee.

(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

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

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

subparagraph (T) with respect to that property.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes 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

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

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 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

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

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

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

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

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:

(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

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

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

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 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

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

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 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. This subparagraph (O) is exempt from

the provisions of Section 250 of this Act;

(P) An amount equal to any contribution made to a

job training project established pursuant to the Tax

Increment Allocation Redevelopment Act;

(Q) An amount equal to the amount of the deduction

used to compute the federal income tax credit for

restoration of substantial amounts held under claim of

right for the taxable year pursuant to Section 1341 of

the Internal Revenue Code;

(R) On and after July 20, 1999, in the case of an

attorney-in-fact with respect to whom an interinsurer

or a reciprocal insurer has made the election under

Section 835 of the Internal Revenue Code, 26 U.S.C.

835, an amount equal to the excess, if any, of the

amounts paid or incurred by that interinsurer or

reciprocal insurer in the taxable year to the

attorney-in-fact over the deduction allowed to that

interinsurer or reciprocal insurer with respect to the

attorney-in-fact under Section 835(b) of the Internal

Revenue Code for the taxable year; the provisions of

this subparagraph are exempt from the provisions of

Section 250;

(S) For taxable years ending on or after December

31, 1997, in the case of a Subchapter S corporation, an

amount equal to all amounts of income allocable to a

shareholder subject to the Personal Property Tax

Replacement Income Tax imposed by subsections (c) and

(d) of Section 201 of this Act, including amounts

allocable to organizations exempt from federal income

tax by reason of Section 501(a) of the Internal Revenue

Code. This subparagraph (S) is exempt from the

provisions of Section 250;

(T) For taxable years 2001 and thereafter, for the

taxable year in which the bonus depreciation deduction

is taken on the taxpayer's federal income tax return

under subsection (k) of Section 168 of the Internal

Revenue Code and for each applicable taxable year

thereafter, an amount equal to "x", where:

(1) "y" equals the amount of the depreciation

deduction taken for the taxable year on the

taxpayer's federal income tax return on property

for which the bonus depreciation deduction was

taken in any year under subsection (k) of Section

168 of the Internal Revenue Code, but not including

the bonus depreciation deduction;

(2) for taxable years ending on or before

December 31, 2005, "x" equals "y" multiplied by 30

and then divided by 70 (or "y" multiplied by

0.429); and

(3) for taxable years ending after December

31, 2005:

(i) for property on which a bonus

depreciation deduction of 30% of the adjusted

basis was taken, "x" equals "y" multiplied by

30 and then divided by 70 (or "y" multiplied by

0.429); and

(ii) for property on which a bonus

depreciation deduction of 50% of the adjusted

basis was taken, "x" equals "y" multiplied by

1.0.

The aggregate amount deducted under this

subparagraph in all taxable years for any one piece of

property may not exceed the amount of the bonus

depreciation deduction taken on that property on the

taxpayer's federal income tax return under subsection

(k) of Section 168 of the Internal Revenue Code. This

subparagraph (T) is exempt from the provisions of

Section 250;

(U) If the taxpayer sells, transfers, abandons, or

otherwise disposes of property for which the taxpayer

was required in any taxable year to make an addition

modification under subparagraph (E-10), then an amount

equal to that addition modification.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes 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

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

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 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 taxpayer

pursuant to this subparagraph (Y). This subparagraph

(Y) is exempt from the provisions of Section 250; and

(Z) The difference between the nondeductible

controlled foreign corporation dividends under Section

965(e)(3) of the Internal Revenue Code over the taxable

income of the taxpayer, computed without regard to

Section 965(e)(2)(A) of the Internal Revenue Code, and

without regard to any net operating loss deduction.

This subparagraph (Z) is exempt from the provisions of

Section 250.

(3) Special rule. For purposes of paragraph (2) (A),

"gross income" in the case of a life insurance company, for

tax years ending on and after December 31, 1994, and prior

to December 31, 2011, shall mean the gross investment

income for the taxable year and, for tax years ending on or

after December 31, 2011, shall mean all amounts included in

life insurance gross income under Section 803(a)(3) of the

Internal Revenue Code.

(c) Trusts and estates.

(1) In general. In the case of a trust or estate, base

income means an amount equal to the taxpayer's taxable

income for the taxable year as modified by paragraph (2).

(2) Modifications. Subject to the provisions of

paragraph (3), the taxable income referred to in paragraph

(1) shall be modified by adding thereto the sum of the

following amounts:

(A) An amount equal to all amounts paid or accrued

to the taxpayer as interest or dividends during the

taxable year to the extent excluded from gross income

in the computation of taxable income;

(B) In the case of (i) an estate, $600; (ii) a

trust which, under its governing instrument, is

required to distribute all of its income currently,

$300; and (iii) any other trust, $100, but in each such

case, only to the extent such amount was deducted in

the computation of taxable income;

(C) An amount equal to the amount of tax imposed by

this Act to the extent deducted from gross income in

the computation of taxable income for the taxable year;

(D) The amount of any net operating loss deduction

taken in arriving at taxable income, other than a net

operating loss carried forward from a taxable year

ending prior to December 31, 1986;

(E) For taxable years in which a net operating loss

carryback or carryforward from a taxable year ending

prior to December 31, 1986 is an element of taxable

income under paragraph (1) of subsection (e) or

subparagraph (E) of paragraph (2) of subsection (e),

the amount by which addition modifications other than

those provided by this subparagraph (E) exceeded

subtraction modifications in such taxable year, with

the following limitations applied in the order that

they are listed:

(i) the addition modification relating to the

net operating loss carried back or forward to the

taxable year from any taxable year ending prior to

December 31, 1986 shall be reduced by the amount of

addition modification under this subparagraph (E)

which related to that net operating loss and which

was taken into account in calculating the base

income of an earlier taxable year, and

(ii) the addition modification relating to the

net operating loss carried back or forward to the

taxable year from any taxable year ending prior to

December 31, 1986 shall not exceed the amount of

such carryback or carryforward;

For taxable years in which there is a net operating

loss carryback or carryforward from more than one other

taxable year ending prior to December 31, 1986, the

addition modification provided in this subparagraph

(E) shall be the sum of the amounts computed

independently under the preceding provisions of this

subparagraph (E) for each such taxable year;

(F) For taxable years ending on or after January 1,

1989, an amount equal to the tax deducted pursuant to

Section 164 of the Internal Revenue Code if the trust

or estate is claiming the same tax for purposes of the

Illinois foreign tax credit under Section 601 of this

Act;

(G) An amount equal to the amount of the capital

gain deduction allowable under the Internal Revenue

Code, to the extent deducted from gross income in the

computation of taxable income;

(G-5) For taxable years ending after December 31,

1997, an amount equal to any eligible remediation costs

that the trust or estate deducted in computing adjusted

gross income and for which the trust or estate claims a

credit under subsection (l) of Section 201;

(G-10) For taxable years 2001 and thereafter, an

amount equal to the bonus depreciation deduction taken

on the taxpayer's federal income tax return for the

taxable year under subsection (k) of Section 168 of the

Internal Revenue Code; and

(G-11) If the taxpayer sells, transfers, abandons,

or otherwise disposes of property for which the

taxpayer was required in any taxable year to make an

addition modification under subparagraph (G-10), then

an amount equal to the aggregate amount of the

deductions taken in all taxable years under

subparagraph (R) with respect to that property.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes and for which the taxpayer

was allowed in any taxable year to make a subtraction

modification under subparagraph (R), then an amount

equal to that subtraction modification.

The taxpayer is required to make the addition

modification under this subparagraph only once with

respect to any one piece of property;

(G-12) An amount equal to the amount otherwise

allowed as a deduction in computing base income for

interest paid, accrued, or incurred, directly or

indirectly, (i) for taxable years ending on or after

December 31, 2004, to a foreign person who would be a

member of the same unitary business group but for the

fact that the foreign person's business activity

outside the United States is 80% or more of the foreign

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business income under different

subsections of Section 304. The addition modification

required by this subparagraph shall be reduced to the

extent that dividends were included in base income of

the unitary group for the same taxable year and

received by the taxpayer or by a member of the

taxpayer's unitary business group (including amounts

included in gross income pursuant to Sections 951

through 964 of the Internal Revenue Code and amounts

included in gross income under Section 78 of the

Internal Revenue Code) with respect to the stock of the

same person to whom the interest was paid, accrued, or

incurred.

This paragraph shall not apply to the following:

(i) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person who

is subject in a foreign country or state, other

than a state which requires mandatory unitary

reporting, to a tax on or measured by net income

with respect to such interest; or

(ii) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person if

the taxpayer can establish, based on a

preponderance of the evidence, both of the

following:

(a) the person, during the same taxable

year, paid, accrued, or incurred, the interest

to a person that is not a related member, and

(b) the transaction giving rise to the

interest expense between the taxpayer and the

person did not have as a principal purpose the

avoidance of Illinois income tax, and is paid

pursuant to a contract or agreement that

reflects an arm's-length interest rate and

terms; or

(iii) the taxpayer can establish, based on

clear and convincing evidence, that the interest

paid, accrued, or incurred relates to a contract or

agreement entered into at arm's-length rates and

terms and the principal purpose for the payment is

not federal or Illinois tax avoidance; or

(iv) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person if

the taxpayer establishes by clear and convincing

evidence that the adjustments are unreasonable; or

if the taxpayer and the Director agree in writing

to the application or use of an alternative method

of apportionment under Section 304(f).

Nothing in this subsection shall preclude the

Director from making any other adjustment

otherwise allowed under Section 404 of this Act for

any tax year beginning after the effective date of

this amendment provided such adjustment is made

pursuant to regulation adopted by the Department

and such regulations provide methods and standards

by which the Department will utilize its authority

under Section 404 of this Act;

(G-13) An amount equal to the amount of intangible

expenses and costs otherwise allowed as a deduction in

computing base income, and that were paid, accrued, or

incurred, directly or indirectly, (i) for taxable

years ending on or after December 31, 2004, to a

foreign person who would be a member of the same

unitary business group but for the fact that the

foreign person's business activity outside the United

States is 80% or more of that person's total business

activity and (ii) for taxable years ending on or after

December 31, 2008, to a person who would be a member of

the same unitary business group but for the fact that

the person is prohibited under Section 1501(a)(27)

from being included in the unitary business group

because he or she is ordinarily required to apportion

business income under different subsections of Section

304. The addition modification required by this

subparagraph shall be reduced to the extent that

dividends were included in base income of the unitary

group for the same taxable year and received by the

taxpayer or by a member of the taxpayer's unitary

business group (including amounts included in gross

income pursuant to Sections 951 through 964 of the

Internal Revenue Code and amounts included in gross

income under Section 78 of the Internal Revenue Code)

with respect to the stock of the same person to whom

the intangible expenses and costs were directly or

indirectly paid, incurred, or accrued. The preceding

sentence shall not apply to the extent that the same

dividends caused a reduction to the addition

modification required under Section 203(c)(2)(G-12) of

this Act. As used in this subparagraph, the term

"intangible expenses and costs" includes: (1)

expenses, losses, and costs for or related to the

direct or indirect acquisition, use, maintenance or

management, ownership, sale, exchange, or any other

disposition of intangible property; (2) losses

incurred, directly or indirectly, from factoring

transactions or discounting transactions; (3) royalty,

patent, technical, and copyright fees; (4) licensing

fees; and (5) other similar expenses and costs. For

purposes of this subparagraph, "intangible property"

includes patents, patent applications, trade names,

trademarks, service marks, copyrights, mask works,

trade secrets, and similar types of intangible assets.

This paragraph shall not apply to the following:

(i) any item of intangible expenses or costs

paid, accrued, or incurred, directly or

indirectly, from a transaction with a person who is

subject in a foreign country or state, other than a

state which requires mandatory unitary reporting,

to a tax on or measured by net income with respect

to such item; or

(ii) any item of intangible expense or cost

paid, accrued, or incurred, directly or

indirectly, if the taxpayer can establish, based

on a preponderance of the evidence, both of the

following:

(a) the person during the same taxable

year paid, accrued, or incurred, the

intangible expense or cost to a person that is

not a related member, and

(b) the transaction giving rise to the

intangible expense or cost between the

taxpayer and the person did not have as a

principal purpose the avoidance of Illinois

income tax, and is paid pursuant to a contract

or agreement that reflects arm's-length terms;

or

(iii) any item of intangible expense or cost

paid, accrued, or incurred, directly or

indirectly, from a transaction with a person if the

taxpayer establishes by clear and convincing

evidence, that the adjustments are unreasonable;

or if the taxpayer and the Director agree in

writing to the application or use of an alternative

method of apportionment under Section 304(f);

Nothing in this subsection shall preclude the

Director from making any other adjustment

otherwise allowed under Section 404 of this Act for

any tax year beginning after the effective date of

this amendment provided such adjustment is made

pursuant to regulation adopted by the Department

and such regulations provide methods and standards

by which the Department will utilize its authority

under Section 404 of this Act;

(G-14) For taxable years ending on or after

December 31, 2008, an amount equal to the amount of

insurance premium expenses and costs otherwise allowed

as a deduction in computing base income, and that were

paid, accrued, or incurred, directly or indirectly, to

a person who would be a member of the same unitary

business group but for the fact that the person is

prohibited under Section 1501(a)(27) from being

included in the unitary business group because he or

she is ordinarily required to apportion business

income under different subsections of Section 304. The

addition modification required by this subparagraph

shall be reduced to the extent that dividends were

included in base income of the unitary group for the

same taxable year and received by the taxpayer or by a

member of the taxpayer's unitary business group

(including amounts included in gross income under

Sections 951 through 964 of the Internal Revenue Code

and amounts included in gross income under Section 78

of the Internal Revenue Code) with respect to the stock

of the same person to whom the premiums and costs were

directly or indirectly paid, incurred, or accrued. The

preceding sentence does not apply to the extent that

the same dividends caused a reduction to the addition

modification required under Section 203(c)(2)(G-12) or

Section 203(c)(2)(G-13) of this Act;

(G-15) An amount equal to the credit allowable to

the taxpayer under Section 218(a) of this Act,

determined without regard to Section 218(c) of this

Act;

(G-16) For taxable years ending on or after

December 31, 2017, an amount equal to the deduction

allowed under Section 199 of the Internal Revenue Code

for the taxable year;

and by deducting from the total so obtained the sum of the

following amounts:

(H) An amount equal to all amounts included in such

total pursuant to the provisions of Sections 402(a),

402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the

Internal Revenue Code or included in such total as

distributions under the provisions of any retirement

or disability plan for employees of any governmental

agency or unit, or retirement payments to retired

partners, which payments are excluded in computing net

earnings from self employment by Section 1402 of the

Internal Revenue Code and regulations adopted pursuant

thereto;

(I) The valuation limitation amount;

(J) An amount equal to the amount of any tax

imposed by this Act which was refunded to the taxpayer

and included in such total for the taxable year;

(K) An amount equal to all amounts included in

taxable income as modified by subparagraphs (A), (B),

(C), (D), (E), (F) and (G) which are exempt from

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(1) of the

Internal Revenue Code; and (ii) for taxable years

ending on or after August 13, 1999, Sections 171(a)(2),

265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

Code, plus, (iii) for taxable years ending on or after

December 31, 2011, Section 45G(e)(3) of the Internal

Revenue Code and, for taxable years ending on or after

December 31, 2008, any amount included in gross income

under Section 87 of the Internal Revenue Code; the

provisions of this subparagraph are exempt from the

provisions of Section 250;

(M) An amount equal to those dividends included in

such total which were paid by a corporation which

conducts business operations in a River Edge

Redevelopment Zone or zones created under the River

Edge Redevelopment Zone Act and conducts substantially

all of its operations in a River Edge Redevelopment

Zone or zones. This subparagraph (M) is exempt from the

provisions of Section 250;

(N) An amount equal to any contribution made to a

job training project established pursuant to the Tax

Increment Allocation Redevelopment Act;

(O) An amount equal to those dividends included in

such total that were paid by a corporation that

conducts business operations in a federally designated

Foreign Trade Zone or Sub-Zone and that is designated a

High Impact Business located in Illinois; provided

that dividends eligible for the deduction provided in

subparagraph (M) of paragraph (2) of this subsection

shall not be eligible for the deduction provided under

this subparagraph (O);

(P) An amount equal to the amount of the deduction

used to compute the federal income tax credit for

restoration of substantial amounts held under claim of

right for the taxable year pursuant to Section 1341 of

the Internal Revenue Code;

(Q) For taxable year 1999 and thereafter, an amount

equal to the amount of any (i) distributions, to the

extent includible in gross income for federal income

tax purposes, made to the taxpayer because of his or

her status as a victim of persecution for racial or

religious reasons by Nazi Germany or any other Axis

regime or as an heir of the victim and (ii) items of

income, to the extent includible in gross income for

federal income tax purposes, attributable to, derived

from or in any way related to assets stolen from,

hidden from, or otherwise lost to a victim of

persecution for racial or religious reasons by Nazi

Germany or any other Axis regime immediately prior to,

during, and immediately after World War II, including,

but not limited to, interest on the proceeds receivable

as insurance under policies issued to a victim of

persecution for racial or religious reasons by Nazi

Germany or any other Axis regime by European insurance

companies immediately prior to and during World War II;

provided, however, this subtraction from federal

adjusted gross income does not apply to assets acquired

with such assets or with the proceeds from the sale of

such assets; provided, further, this paragraph shall

only apply to a taxpayer who was the first recipient of

such assets after their recovery and who is a victim of

persecution for racial or religious reasons by Nazi

Germany or any other Axis regime or as an heir of the

victim. The amount of and the eligibility for any

public assistance, benefit, or similar entitlement is

not affected by the inclusion of items (i) and (ii) of

this paragraph in gross income for federal income tax

purposes. This paragraph is exempt from the provisions

of Section 250;

(R) For taxable years 2001 and thereafter, for the

taxable year in which the bonus depreciation deduction

is taken on the taxpayer's federal income tax return

under subsection (k) of Section 168 of the Internal

Revenue Code and for each applicable taxable year

thereafter, an amount equal to "x", where:

(1) "y" equals the amount of the depreciation

deduction taken for the taxable year on the

taxpayer's federal income tax return on property

for which the bonus depreciation deduction was

taken in any year under subsection (k) of Section

168 of the Internal Revenue Code, but not including

the bonus depreciation deduction;

(2) for taxable years ending on or before

December 31, 2005, "x" equals "y" multiplied by 30

and then divided by 70 (or "y" multiplied by

0.429); and

(3) for taxable years ending after December

31, 2005:

(i) for property on which a bonus

depreciation deduction of 30% of the adjusted

basis was taken, "x" equals "y" multiplied by

30 and then divided by 70 (or "y" multiplied by

0.429); and

(ii) for property on which a bonus

depreciation deduction of 50% of the adjusted

basis was taken, "x" equals "y" multiplied by

1.0.

The aggregate amount deducted under this

subparagraph in all taxable years for any one piece of

property may not exceed the amount of the bonus

depreciation deduction taken on that property on the

taxpayer's federal income tax return under subsection

(k) of Section 168 of the Internal Revenue Code. This

subparagraph (R) is exempt from the provisions of

Section 250;

(S) If the taxpayer sells, transfers, abandons, or

otherwise disposes of property for which the taxpayer

was required in any taxable year to make an addition

modification under subparagraph (G-10), then an amount

equal to that addition modification.

If the taxpayer continues to own property through

the last day of the last tax year for which the

taxpayer may claim a depreciation deduction for

federal income tax purposes and for which the taxpayer

was required in any taxable year to make an addition

modification under subparagraph (G-10), then an amount

equal to that addition modification.

The taxpayer is allowed to take the deduction under

this subparagraph only once with respect to any one

piece of property.

This subparagraph (S) is exempt from the

provisions of Section 250;

(T) The amount of (i) any interest income (net of

the deductions allocable thereto) taken into account

for the taxable year with respect to a transaction with

a taxpayer that is required to make an addition

modification with respect to such transaction under

Section 203(a)(2)(D-17), 203(b)(2)(E-12),

203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

the amount of such addition modification and (ii) any

income from intangible property (net of the deductions

allocable thereto) taken into account for the taxable

year with respect to a transaction with a taxpayer that

is required to make an addition modification with

respect to such transaction under Section

203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

203(d)(2)(D-8), but not to exceed the amount of such

addition modification. This subparagraph (T) is exempt

from the provisions of Section 250;

(U) An amount equal to the interest income taken

into account for the taxable year (net of the

deductions allocable thereto) with respect to

transactions with (i) a foreign person who would be a

member of the taxpayer's unitary business group but for

the fact the foreign person's business activity

outside the United States is 80% or more of that

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business income under different

subsections of Section 304, but not to exceed the

addition modification required to be made for the same

taxable year under Section 203(c)(2)(G-12) for

interest paid, accrued, or incurred, directly or

indirectly, to the same person. This subparagraph (U)

is exempt from the provisions of Section 250;

(V) An amount equal to the income from intangible

property taken into account for the taxable year (net

of the deductions allocable thereto) with respect to

transactions with (i) a foreign person who would be a

member of the taxpayer's unitary business group but for

the fact that the foreign person's business activity

outside the United States is 80% or more of that

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business 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; and

(Y) For taxable years ending on or after December

31, 2011, in the case of a taxpayer who was required to

add back any insurance premiums under Section

203(c)(2)(G-14), such taxpayer may elect to subtract

that part of a reimbursement received from the

insurance company equal to the amount of the expense or

loss (including expenses incurred by the insurance

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.

(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 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 the

taxpayer may claim a depreciation deduction for

federal income tax purposes and for which the taxpayer

was allowed in any taxable year to make a subtraction

modification under subparagraph (O), then an amount

equal to that subtraction modification.

The taxpayer is required to make the addition

modification under this subparagraph only once with

respect to any one piece of property;

(D-7) An amount equal to the amount otherwise

allowed as a deduction in computing base income for

interest paid, accrued, or incurred, directly or

indirectly, (i) for taxable years ending on or after

December 31, 2004, to a foreign person who would be a

member of the same unitary business group but for the

fact the foreign person's business activity outside

the United States is 80% or more of the foreign

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business income under different

subsections of Section 304. The addition modification

required by this subparagraph shall be reduced to the

extent that dividends were included in base income of

the unitary group for the same taxable year and

received by the taxpayer or by a member of the

taxpayer's unitary business group (including amounts

included in gross income pursuant to Sections 951

through 964 of the Internal Revenue Code and amounts

included in gross income under Section 78 of the

Internal Revenue Code) with respect to the stock of the

same person to whom the interest was paid, accrued, or

incurred.

This paragraph shall not apply to the following:

(i) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person who

is subject in a foreign country or state, other

than a state which requires mandatory unitary

reporting, to a tax on or measured by net income

with respect to such interest; or

(ii) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person if

the taxpayer can establish, based on a

preponderance of the evidence, both of the

following:

(a) the person, during the same taxable

year, paid, accrued, or incurred, the interest

to a person that is not a related member, and

(b) the transaction giving rise to the

interest expense between the taxpayer and the

person did not have as a principal purpose the

avoidance of Illinois income tax, and is paid

pursuant to a contract or agreement that

reflects an arm's-length interest rate and

terms; or

(iii) the taxpayer can establish, based on

clear and convincing evidence, that the interest

paid, accrued, or incurred relates to a contract or

agreement entered into at arm's-length rates and

terms and the principal purpose for the payment is

not federal or Illinois tax avoidance; or

(iv) an item of interest paid, accrued, or

incurred, directly or indirectly, to a person if

the taxpayer establishes by clear and convincing

evidence that the adjustments are unreasonable; or

if the taxpayer and the Director agree in writing

to the application or use of an alternative method

of apportionment under Section 304(f).

Nothing in this subsection shall preclude the

Director from making any other adjustment

otherwise allowed under Section 404 of this Act for

any tax year beginning after the effective date of

this amendment provided such adjustment is made

pursuant to regulation adopted by the Department

and such regulations provide methods and standards

by which the Department will utilize its authority

under Section 404 of this Act; and

(D-8) An amount equal to the amount of intangible

expenses and costs otherwise allowed as a deduction in

computing base income, and that were paid, accrued, or

incurred, directly or indirectly, (i) for taxable

years ending on or after December 31, 2004, to a

foreign person who would be a member of the same

unitary business group but for the fact that the

foreign person's business activity outside the United

States is 80% or more of that person's total business

activity and (ii) for taxable years ending on or after

December 31, 2008, to a person who would be a member of

the same unitary business group but for the fact that

the person is prohibited under Section 1501(a)(27)

from being included in the unitary business group

because he or she is ordinarily required to apportion

business income under different subsections of Section

304. The addition modification required by this

subparagraph shall be reduced to the extent that

dividends were included in base income of the unitary

group for the same taxable year and received by the

taxpayer or by a member of the taxpayer's unitary

business group (including amounts included in gross

income pursuant to Sections 951 through 964 of the

Internal Revenue Code and amounts included in gross

income under Section 78 of the Internal Revenue Code)

with respect to the stock of the same person to whom

the intangible expenses and costs were directly or

indirectly paid, incurred or accrued. The preceding

sentence shall not apply to the extent that the same

dividends caused a reduction to the addition

modification required under Section 203(d)(2)(D-7) of

this Act. As used in this subparagraph, the term

"intangible expenses and costs" includes (1) expenses,

losses, and costs for, or related to, the direct or

indirect acquisition, use, maintenance or management,

ownership, sale, exchange, or any other disposition of

intangible property; (2) losses incurred, directly or

indirectly, from factoring transactions or discounting

transactions; (3) royalty, patent, technical, and

copyright fees; (4) licensing fees; and (5) other

similar expenses and costs. For purposes of this

subparagraph, "intangible property" includes patents,

patent applications, trade names, trademarks, service

marks, copyrights, mask works, trade secrets, and

similar types of intangible assets;

This paragraph shall not apply to the following:

(i) any item of intangible expenses or costs

paid, accrued, or incurred, directly or

indirectly, from a transaction with a person who is

subject in a foreign country or state, other than a

state which requires mandatory unitary reporting,

to a tax on or measured by net income with respect

to such item; or

(ii) any item of intangible expense or cost

paid, accrued, or incurred, directly or

indirectly, if the taxpayer can establish, based

on a preponderance of the evidence, both of the

following:

(a) the person during the same taxable

year paid, accrued, or incurred, the

intangible expense or cost to a person that is

not a related member, and

(b) the transaction giving rise to the

intangible expense or cost between the

taxpayer and the person did not have as a

principal purpose the avoidance of Illinois

income tax, and is paid pursuant to a contract

or agreement that reflects arm's-length terms;

or

(iii) any item of intangible expense or cost

paid, accrued, or incurred, directly or

indirectly, from a transaction with a person if the

taxpayer establishes by clear and convincing

evidence, that the adjustments are unreasonable;

or if the taxpayer and the Director agree in

writing to the application or use of an alternative

method of apportionment under Section 304(f);

Nothing in this subsection shall preclude the

Director from making any other adjustment

otherwise allowed under Section 404 of this Act for

any tax year beginning after the effective date of

this amendment provided such adjustment is made

pursuant to regulation adopted by the Department

and such regulations provide methods and standards

by which the Department will utilize its authority

under Section 404 of this Act;

(D-9) For taxable years ending on or after December

31, 2008, an amount equal to the amount of insurance

premium expenses and costs otherwise allowed as a

deduction in computing base income, and that were paid,

accrued, or incurred, directly or indirectly, to a

person who would be a member of the same unitary

business group but for the fact that the person is

prohibited under Section 1501(a)(27) from being

included in the unitary business group because he or

she is ordinarily required to apportion business

income under different subsections of Section 304. The

addition modification required by this subparagraph

shall be reduced to the extent that dividends were

included in base income of the unitary group for the

same taxable year and received by the taxpayer or by a

member of the taxpayer's unitary business group

(including amounts included in gross income under

Sections 951 through 964 of the Internal Revenue Code

and amounts included in gross income under Section 78

of the Internal Revenue Code) with respect to the stock

of the same person to whom the premiums and costs were

directly or indirectly paid, incurred, or accrued. The

preceding sentence does not apply to the extent that

the same dividends caused a reduction to the addition

modification required under Section 203(d)(2)(D-7) or

Section 203(d)(2)(D-8) of this Act;

(D-10) An amount equal to the credit allowable to

the taxpayer under Section 218(a) of this Act,

determined without regard to Section 218(c) of this

Act;

(D-11) For taxable years ending on or after

December 31, 2017, an amount equal to the deduction

allowed under Section 199 of the Internal Revenue Code

for the taxable year;

and by deducting from the total so obtained the following

amounts:

(E) The valuation limitation amount;

(F) An amount equal to the amount of any tax

imposed by this Act which was refunded to the taxpayer

and included in such total for the taxable year;

(G) An amount equal to all amounts included in

taxable income as modified by subparagraphs (A), (B),

(C) and (D) which are exempt from taxation by this

State either by reason of its statutes or Constitution

or by reason of the Constitution, treaties or statutes

of the United States; provided that, in the case of any

statute of this State that exempts income derived from

bonds or other obligations from the tax imposed under

this Act, the amount exempted shall be the interest net

of bond premium amortization;

(H) Any income of the partnership which

constitutes personal service income as defined in

Section 1348 (b) (1) of the Internal Revenue Code (as

in effect December 31, 1981) or a reasonable allowance

for compensation paid or accrued for services rendered

by partners to the partnership, whichever is greater;

this subparagraph (H) is exempt from the provisions of

Section 250;

(I) An amount equal to all amounts of income

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(2) of the Internal Revenue Code,

and all amounts of expenses allocable to interest and

disallowed as deductions by Section 265(1) of the

Internal Revenue Code; and (ii) for taxable years

ending on or after August 13, 1999, Sections 171(a)(2),

265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

Code, plus, (iii) for taxable years ending on or after

December 31, 2011, Section 45G(e)(3) of the Internal

Revenue Code and, for taxable years ending on or after

December 31, 2008, any amount included in gross income

under Section 87 of the Internal Revenue Code; the

provisions of this subparagraph are exempt from the

provisions of Section 250;

(K) An amount equal to those dividends included in

such total which were paid by a corporation which

conducts business operations in a River Edge

Redevelopment Zone or zones created under the River

Edge Redevelopment Zone Act and conducts substantially

all of its operations from a River Edge Redevelopment

Zone or zones. This subparagraph (K) is exempt from the

provisions of Section 250;

(L) An amount equal to any contribution made to a

job training project established pursuant to the Real

Property Tax Increment Allocation Redevelopment Act;

(M) An amount equal to those dividends included in

such total that were paid by a corporation that

conducts business operations in a federally designated

Foreign Trade Zone or Sub-Zone and that is designated a

High Impact Business located in Illinois; provided

that dividends eligible for the deduction provided in

subparagraph (K) of paragraph (2) of this subsection

shall not be eligible for the deduction provided under

this subparagraph (M);

(N) An amount equal to the amount of the deduction

used to compute the federal income tax credit for

restoration of substantial amounts held under claim of

right for the taxable year pursuant to Section 1341 of

the Internal Revenue Code;

(O) For taxable years 2001 and thereafter, for the

taxable year in which the bonus depreciation deduction

is taken on the taxpayer's federal income tax return

under subsection (k) of Section 168 of the Internal

Revenue Code and for each applicable taxable year

thereafter, an amount equal to "x", where:

(1) "y" equals the amount of the depreciation

deduction taken for the taxable year on the

taxpayer's federal income tax return on property

for which the bonus depreciation deduction was

taken in any year under subsection (k) of Section

168 of the Internal Revenue Code, but not including

the bonus depreciation deduction;

(2) for taxable years ending on or before

December 31, 2005, "x" equals "y" multiplied by 30

and then divided by 70 (or "y" multiplied by

0.429); and

(3) for taxable years ending after December

31, 2005:

(i) for property on which a bonus

depreciation deduction of 30% of the adjusted

basis was taken, "x" equals "y" multiplied by

30 and then divided by 70 (or "y" multiplied by

0.429); and

(ii) for property on which a bonus

depreciation deduction of 50% of the adjusted

basis was taken, "x" equals "y" multiplied by

1.0.

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 the

taxpayer may claim a depreciation deduction for

federal income tax purposes and for which the taxpayer

was required in any taxable year to make an addition

modification under subparagraph (D-5), then an amount

equal to that addition modification.

The taxpayer is allowed to take the deduction under

this subparagraph only once with respect to any one

piece of property.

This subparagraph (P) is exempt from the

provisions of Section 250;

(Q) The amount of (i) any interest income (net of

the deductions allocable thereto) taken into account

for the taxable year with respect to a transaction with

a taxpayer that is required to make an addition

modification with respect to such transaction under

Section 203(a)(2)(D-17), 203(b)(2)(E-12),

203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

the amount of such addition modification and (ii) any

income from intangible property (net of the deductions

allocable thereto) taken into account for the taxable

year with respect to a transaction with a taxpayer that

is required to make an addition modification with

respect to such transaction under Section

203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

203(d)(2)(D-8), but not to exceed the amount of such

addition modification. This subparagraph (Q) is exempt

from Section 250;

(R) An amount equal to the interest income taken

into account for the taxable year (net of the

deductions allocable thereto) with respect to

transactions with (i) a foreign person who would be a

member of the taxpayer's unitary business group but for

the fact that the foreign person's business activity

outside the United States is 80% or more of that

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business income under different

subsections of Section 304, but not to exceed the

addition modification required to be made for the same

taxable year under Section 203(d)(2)(D-7) for interest

paid, accrued, or incurred, directly or indirectly, to

the same person. This subparagraph (R) is exempt from

Section 250;

(S) An amount equal to the income from intangible

property taken into account for the taxable year (net

of the deductions allocable thereto) with respect to

transactions with (i) a foreign person who would be a

member of the taxpayer's unitary business group but for

the fact that the foreign person's business activity

outside the United States is 80% or more of that

person's total business activity and (ii) for taxable

years ending on or after December 31, 2008, to a person

who would be a member of the same unitary business

group but for the fact that the person is prohibited

under Section 1501(a)(27) from being included in the

unitary business group because he or she is ordinarily

required to apportion business income under different

subsections of Section 304, but not to exceed the

addition modification required to be made for the same

taxable year under Section 203(d)(2)(D-8) for

intangible expenses and costs paid, accrued, or

incurred, directly or indirectly, to the same person.

This subparagraph (S) is exempt from Section 250; and

(T) For taxable years ending on or after December

31, 2011, in the case of a taxpayer who was required to

add back any insurance premiums under Section

203(d)(2)(D-9), such taxpayer may elect to subtract

that part of a reimbursement received from the

insurance company equal to the amount of the expense or

loss (including expenses incurred by the insurance

company) that would have been taken into account as a

deduction for federal income tax purposes if the

expense or loss had been uninsured. If a taxpayer makes

the election provided for by this subparagraph (T), the

insurer to which the premiums were paid must add back

to income the amount subtracted by the taxpayer

pursuant to this subparagraph (T). This subparagraph

(T) is exempt from the provisions of Section 250.

(e) Gross income; adjusted gross income; taxable income.

(1) In general. Subject to the provisions of paragraph

(2) and subsection (b) (3), for purposes of this Section

and Section 803(e), a taxpayer's gross income, adjusted

gross income, or taxable income for the taxable year shall

mean the amount of gross income, adjusted gross income or

taxable income properly reportable for federal income tax

purposes for the taxable year under the provisions of the

Internal Revenue Code. Taxable income may be less than

zero. However, for taxable years ending on or after

December 31, 1986, net operating loss carryforwards from

taxable years ending prior to December 31, 1986, may not

exceed the sum of federal taxable income for the taxable

year before net operating loss deduction, plus the excess

of addition modifications over subtraction modifications

for the taxable year. For taxable years ending prior to

December 31, 1986, taxable income may never be an amount in

excess of the net operating loss for the taxable year as

defined in subsections (c) and (d) of Section 172 of the

Internal Revenue Code, provided that when taxable income of

a corporation (other than a Subchapter S corporation),

trust, or estate is less than zero and addition

modifications, other than those provided by subparagraph

(E) of paragraph (2) of subsection (b) for corporations or

subparagraph (E) of paragraph (2) of subsection (c) for

trusts and estates, exceed subtraction modifications, an

addition modification must be made under those

subparagraphs for any other taxable year to which the

taxable income less than zero (net operating loss) is

applied under Section 172 of the Internal Revenue Code or

under subparagraph (E) of paragraph (2) of this subsection

(e) applied in conjunction with Section 172 of the Internal

Revenue Code.

(2) Special rule. For purposes of paragraph (1) of this

subsection, the taxable income properly reportable for

federal income tax purposes shall mean:

(A) Certain life insurance companies. In the case

of a life insurance company subject to the tax imposed

by Section 801 of the Internal Revenue Code, life

insurance company taxable income, plus the amount of

distribution from pre-1984 policyholder surplus

accounts as calculated under Section 815a of the

Internal Revenue Code;

(B) Certain other insurance companies. In the case

of mutual insurance companies subject to the tax

imposed by Section 831 of the Internal Revenue Code,

insurance company taxable income;

(C) Regulated investment companies. In the case of

a regulated investment company subject to the tax

imposed by Section 852 of the Internal Revenue Code,

investment company taxable income;

(D) Real estate investment trusts. In the case of a

real estate investment trust subject to the tax imposed

by Section 857 of the Internal Revenue Code, real

estate investment trust taxable income;

(E) Consolidated corporations. In the case of a

corporation which is a member of an affiliated group of

corporations filing a consolidated income tax return

for the taxable year for federal income tax purposes,

taxable income determined as if such corporation had

filed a separate return for federal income tax purposes

for the taxable year and each preceding taxable year

for which it was a member of an affiliated group. For

purposes of this subparagraph, the taxpayer's separate

taxable income shall be determined as if the election

provided by Section 243(b) (2) of the Internal Revenue

Code had been in effect for all such years;

(F) Cooperatives. In the case of a cooperative

corporation or association, the taxable income of such

organization determined in accordance with the

provisions of Section 1381 through 1388 of the Internal

Revenue Code, but without regard to the prohibition

against offsetting losses from patronage activities

against income from nonpatronage activities; except

that a cooperative corporation or association may make

an election to follow its federal income tax treatment

of patronage losses and nonpatronage losses. In the

event such election is made, such losses shall be

computed and carried over in a manner consistent with

subsection (a) of Section 207 of this Act and

apportioned by the apportionment factor reported by

the cooperative on its Illinois income tax return filed

for the taxable year in which the losses are incurred.

The election shall be effective for all taxable years

with original returns due on or after the date of the

election. In addition, the cooperative may file an

amended return or returns, as allowed under this Act,

to provide that the election shall be effective for

losses incurred or carried forward for taxable years

occurring prior to the date of the election. Once made,

the election may only be revoked upon approval of the

Director. The Department shall adopt rules setting

forth requirements for documenting the elections and

any resulting Illinois net loss and the standards to be

used by the Director in evaluating requests to revoke

elections. Public Act 96-932 is declaratory of

existing law;

(G) Subchapter S corporations. In the case of: (i)

a Subchapter S corporation for which there is in effect

an election for the taxable year under Section 1362 of

the Internal Revenue Code, the taxable income of such

corporation determined in accordance with Section

1363(b) of the Internal Revenue Code, except that

taxable income shall take into account those items

which are required by Section 1363(b)(1) of the

Internal Revenue Code to be separately stated; and (ii)

a Subchapter S corporation for which there is in effect

a federal election to opt out of the provisions of the

Subchapter S Revision Act of 1982 and have applied

instead the prior federal Subchapter S rules as in

effect on July 1, 1982, the taxable income of such

corporation determined in accordance with the federal

Subchapter S rules as in effect on July 1, 1982; and

(H) Partnerships. In the case of a partnership,

taxable income determined in accordance with Section

703 of the Internal Revenue Code, except that taxable

income shall take into account those items which are

required by Section 703(a)(1) to be separately stated

but which would be taken into account by an individual

in calculating his taxable income.

(3) Recapture of business expenses on disposition of

asset or business. Notwithstanding any other law to the

contrary, if in prior years income from an asset or

business has been classified as business income and in a

later year is demonstrated to be non-business income, then

all expenses, without limitation, deducted in such later

year and in the 2 immediately preceding taxable years

related to that asset or business that generated the

non-business income shall be added back and recaptured as

business income in the year of the disposition of the asset

or business. Such amount shall be apportioned to Illinois

using the greater of the apportionment fraction computed

for the business under Section 304 of this Act for the

taxable year or the average of the apportionment fractions

computed for the business under Section 304 of this Act for

the taxable year and for the 2 immediately preceding

taxable years.

(f) Valuation limitation amount.

(1) In general. The valuation limitation amount

referred to in subsections (a) (2) (G), (c) (2) (I) and

(d)(2) (E) is an amount equal to:

(A) The sum of the pre-August 1, 1969 appreciation

amounts (to the extent consisting of gain reportable

under the provisions of Section 1245 or 1250 of the

Internal Revenue Code) for all property in respect of

which such gain was reported for the taxable year; plus

(B) The lesser of (i) the sum of the pre-August 1,

1969 appreciation amounts (to the extent consisting of

capital gain) for all property in respect of which such

gain was reported for federal income tax purposes for

the taxable year, or (ii) the net capital gain for the

taxable year, reduced in either case by any amount of

such gain included in the amount determined under

subsection (a) (2) (F) or (c) (2) (H).

(2) Pre-August 1, 1969 appreciation amount.

(A) If the fair market value of property referred

to in paragraph (1) was readily ascertainable on August

1, 1969, the pre-August 1, 1969 appreciation amount for

such property is the lesser of (i) the excess of such

fair market value over the taxpayer's basis (for

determining gain) for such property on that date

(determined under the Internal Revenue Code as in

effect on that date), or (ii) the total gain realized

and reportable for federal income tax purposes in

respect of the sale, exchange or other disposition of

such property.

(B) If the fair market value of property referred

to in paragraph (1) was not readily ascertainable on

August 1, 1969, the pre-August 1, 1969 appreciation

amount for such property is that amount which bears the

same ratio to the total gain reported in respect of the

property for federal income tax purposes for the

taxable year, as the number of full calendar months in

that part of the taxpayer's holding period for the

property ending July 31, 1969 bears to the number of

full calendar months in the taxpayer's entire holding

period for the property.

(C) The Department shall prescribe such

regulations as may be necessary to carry out the

purposes of this paragraph.

(g) Double deductions. Unless specifically provided

otherwise, nothing in this Section shall permit the same item

to be deducted more than once.

(h) Legislative intention. Except as expressly provided by

this Section there shall be no modifications or limitations on

the amounts of income, gain, loss or deduction taken into

account in determining gross income, adjusted gross income or

taxable income for federal income tax purposes for the taxable

year, or in the amount of such items entering into the

computation of base income and net income under this Act for

such taxable year, whether in respect of property values as of

August 1, 1969 or otherwise.

(Source: P.A. 100-22, eff. 7-6-17.)

Section 99. Effective date. This Act takes effect upon

becoming law.