97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB0015
 
Introduced 1/27/2011, by Sen. Jacqueline Y. Collins
 
SYNOPSIS AS INTRODUCED:



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

 Amends the Illinois Income Tax Act. For taxable years ending on or after December 31, 2009, creates a deduction for financial organizations in an amount equal to the amount included in the organization's adjusted gross income as
interest income from a residential mortgage loan if the mortgagor is a person with at least a 50% ownership interest in a business located in an Enterprise Zone or a River Edge Redevelopment Zone. Provides that the financial organization must apply the Illinois income tax savings to the principal of the loan. Allows the organization to file amended returns. Effective immediately.



LRB097 06652 HLH 46738 b


FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


SB0015LRB097 06652 HLH 46738 b



1 AN ACT concerning revenue.


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

3represented in the General Assembly:



4 Section 5. The Illinois Income Tax Act is amended by 
5changing Section 203 as follows:

6 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
7 Sec. 203. Base income defined. 
8 (a) Individuals.
9  (1) In general. In the case of an individual, base 
10 income means an
amount equal to the taxpayer's adjusted 
11 gross income for the taxable
year as modified by paragraph 
12 (2).
13  (2) Modifications. The adjusted gross income referred 
14 to in
paragraph (1) shall be modified by adding thereto the 
15 sum of the
following amounts:
16   (A) An amount equal to all amounts paid or accrued 
17 to the taxpayer
as interest or dividends during the 
18 taxable year to the extent excluded
from gross income 
19 in the computation of adjusted gross income, except 
20 stock
dividends of qualified public utilities 
21 described in Section 305(e) of the
Internal Revenue 
22 Code;
23   (B) An amount equal to the amount of tax imposed by 
 
 
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1 this Act to the
extent deducted from gross income in 
2 the computation of adjusted gross
income for the 
3 taxable year;
4   (C) An amount equal to the amount received during 
5 the taxable year
as a recovery or refund of real 
6 property taxes paid with respect to the
taxpayer's 
7 principal residence under the Revenue Act of
1939 and 
8 for which a deduction was previously taken under 
9 subparagraph (L) of
this paragraph (2) prior to July 1, 
10 1991, the retrospective application date of
Article 4 
11 of Public Act 87-17. In the case of multi-unit or 
12 multi-use
structures and farm dwellings, the taxes on 
13 the taxpayer's principal residence
shall be that 
14 portion of the total taxes for the entire property 
15 which is
attributable to such principal residence;
16   (D) An amount equal to the amount of the capital 
17 gain deduction
allowable under the Internal Revenue 
18 Code, to the extent deducted from gross
income in the 
19 computation of adjusted gross income;
20   (D-5) An amount, to the extent not included in 
21 adjusted gross income,
equal to the amount of money 
22 withdrawn by the taxpayer in the taxable year from
a 
23 medical care savings account and the interest earned on 
24 the account in the
taxable year of a withdrawal 
25 pursuant to subsection (b) of Section 20 of the
Medical 
26 Care Savings Account Act or subsection (b) of Section 
 
 
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1 20 of the
Medical Care Savings Account Act of 2000;
2   (D-10) For taxable years ending after December 31, 
3 1997, an
amount equal to any eligible remediation costs 
4 that the individual
deducted in computing adjusted 
5 gross income and for which the
individual claims a 
6 credit under subsection (l) of Section 201;
7   (D-15) For taxable years 2001 and thereafter, an 
8 amount equal to the
bonus depreciation deduction taken 
9 on the taxpayer's federal income tax return for the 
10 taxable
year under subsection (k) of Section 168 of the 
11 Internal Revenue Code;
12   (D-16) If the taxpayer sells, transfers, abandons, 
13 or otherwise disposes of property for which the 
14 taxpayer was required in any taxable year to
make an 
15 addition modification under subparagraph (D-15), then 
16 an amount equal
to the aggregate amount of the 
17 deductions taken in all taxable
years under 
18 subparagraph (Z) with respect to that property.
19   If the taxpayer continues to own property through 
20 the last day of the last tax year for which the 
21 taxpayer may claim a depreciation deduction for 
22 federal income tax purposes and for which the taxpayer 
23 was allowed in any taxable year to make a subtraction 
24 modification under subparagraph (Z), then an amount 
25 equal to that subtraction modification.

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

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

25    (iii) the taxpayer can establish, based on 
26 clear and convincing evidence, that the interest 
 
 
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1 paid, accrued, or incurred relates to a contract or 
2 agreement entered into at arm's-length rates and 
3 terms and the principal purpose for the payment is 
4 not federal or Illinois tax avoidance; or

5    (iv) an item of interest paid, accrued, or 
6 incurred, directly or indirectly, to a person if 
7 the taxpayer establishes by clear and convincing 
8 evidence that the adjustments are unreasonable; or 
9 if the taxpayer and the Director agree in writing 
10 to the application or use of an alternative method 
11 of apportionment under Section 304(f).

12    Nothing in this subsection shall preclude the 
13 Director from making any other adjustment 
14 otherwise allowed under Section 404 of this Act for 
15 any tax year beginning after the effective date of 
16 this amendment provided such adjustment is made 
17 pursuant to regulation adopted by the Department 
18 and such regulations provide methods and standards 
19 by which the Department will utilize its authority 
20 under Section 404 of this Act;

21   (D-18) An amount equal to the amount of intangible 
22 expenses and costs otherwise allowed as a deduction in 
23 computing base income, and that were paid, accrued, or 
24 incurred, directly or indirectly, (i) for taxable 
25 years ending on or after December 31, 2004, to a 
26 foreign person who would be a member of the same 
 
 
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1 unitary business group but for the fact that the 
2 foreign person's business activity outside the United 
3 States is 80% or more of that person's total business 
4 activity and (ii) for taxable years ending on or after 
5 December 31, 2008, to a person who would be a member of 
6 the same unitary business group but for the fact that 
7 the person is prohibited under Section 1501(a)(27) 
8 from being included in the unitary business group 
9 because he or she is ordinarily required to apportion 
10 business income under different subsections of Section 
11 304. The addition modification required by this 
12 subparagraph shall be reduced to the extent that 
13 dividends were included in base income of the unitary 
14 group for the same taxable year and received by the 
15 taxpayer or by a member of the taxpayer's unitary 
16 business group (including amounts included in gross 
17 income under Sections 951 through 964 of the Internal 
18 Revenue Code and amounts included in gross income under 
19 Section 78 of the Internal Revenue Code) with respect 
20 to the stock of the same person to whom the intangible 
21 expenses and costs were directly or indirectly paid, 
22 incurred, or accrued. The preceding sentence does not 
23 apply to the extent that the same dividends caused a 
24 reduction to the addition modification required under 
25 Section 203(a)(2)(D-17) of this Act. As used in this 
26 subparagraph, the term "intangible expenses and costs" 
 
 
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1 includes (1) expenses, losses, and costs for, or 
2 related to, the direct or indirect acquisition, use, 
3 maintenance or management, ownership, sale, exchange, 
4 or any other disposition of intangible property; (2) 
5 losses incurred, directly or indirectly, from 
6 factoring transactions or discounting transactions; 
7 (3) royalty, patent, technical, and copyright fees; 
8 (4) licensing fees; and (5) other similar expenses and 
9 costs.
For purposes of this subparagraph, "intangible 
10 property" includes patents, patent applications, trade 
11 names, trademarks, service marks, copyrights, mask 
12 works, trade secrets, and similar types of intangible 
13 assets.
14   This paragraph shall not apply to the following:
15    (i) any item of intangible expenses or costs 
16 paid, accrued, or incurred, directly or 
17 indirectly, from a transaction with a person who is 
18 subject in a foreign country or state, other than a 
19 state which requires mandatory unitary reporting, 
20 to a tax on or measured by net income with respect 
21 to such item; or
22    (ii) any item of intangible expense or cost 
23 paid, accrued, or incurred, directly or 
24 indirectly, if the taxpayer can establish, based 
25 on a preponderance of the evidence, both of the 
26 following:
 
 
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1     (a) the person during the same taxable 
2 year paid, accrued, or incurred, the 
3 intangible expense or cost to a person that is 
4 not a related member, and
5     (b) the transaction giving rise to the 
6 intangible expense or cost between the 
7 taxpayer and the person did not have as a 
8 principal purpose the avoidance of Illinois 
9 income tax, and is paid pursuant to a contract 
10 or agreement that reflects arm's-length terms; 
11 or
12    (iii) any item of intangible expense or cost 
13 paid, accrued, or incurred, directly or 
14 indirectly, from a transaction with a person if the 
15 taxpayer establishes by clear and convincing 
16 evidence, that the adjustments are unreasonable; 
17 or if the taxpayer and the Director agree in 
18 writing to the application or use of an alternative 
19 method of apportionment under Section 304(f);

20    Nothing in this subsection shall preclude the 
21 Director from making any other adjustment 
22 otherwise allowed under Section 404 of this Act for 
23 any tax year beginning after the effective date of 
24 this amendment provided such adjustment is made 
25 pursuant to regulation adopted by the Department 
26 and such regulations provide methods and standards 
 
 
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1 by which the Department will utilize its authority 
2 under Section 404 of this Act;

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

3   (D-20) For taxable years beginning on or after 
4 January 1,
2002 and ending on or before December 31, 
5 2006, in
the
case of a distribution from a qualified 
6 tuition program under Section 529 of
the Internal 
7 Revenue Code, other than (i) a distribution from a 
8 College Savings
Pool created under Section 16.5 of the 
9 State Treasurer Act or (ii) a
distribution from the 
10 Illinois Prepaid Tuition Trust Fund, an amount equal to

11 the amount excluded from gross income under Section 
12 529(c)(3)(B). For taxable years beginning on or after 
13 January 1, 2007, in the case of a distribution from a 
14 qualified tuition program under Section 529 of the 
15 Internal Revenue Code, other than (i) a distribution 
16 from a College Savings Pool created under Section 16.5 
17 of the State Treasurer Act, (ii) a distribution from 
18 the Illinois Prepaid Tuition Trust Fund, or (iii) a 
19 distribution from a qualified tuition program under 
20 Section 529 of the Internal Revenue Code that (I) 
21 adopts and determines that its offering materials 
22 comply with the College Savings Plans Network's 
23 disclosure principles and (II) has made reasonable 
24 efforts to inform in-state residents of the existence 
25 of in-state qualified tuition programs by informing 
26 Illinois residents directly and, where applicable, to 
 
 
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1 inform financial intermediaries distributing the 
2 program to inform in-state residents of the existence 
3 of in-state qualified tuition programs at least 
4 annually, an amount equal to the amount excluded from 
5 gross income under Section 529(c)(3)(B).
6   For the purposes of this subparagraph (D-20), a 
7 qualified tuition program has made reasonable efforts 
8 if it makes disclosures (which may use the term 
9 "in-state program" or "in-state plan" and need not 
10 specifically refer to Illinois or its qualified 
11 programs by name) (i) directly to prospective 
12 participants in its offering materials or makes a 
13 public disclosure, such as a website posting; and (ii) 
14 where applicable, to intermediaries selling the 
15 out-of-state program in the same manner that the 
16 out-of-state program distributes its offering 
17 materials;
18   (D-21) For taxable years beginning on or after 
19 January 1, 2007, in the case of transfer of moneys from 
20 a qualified tuition program under Section 529 of the 
21 Internal Revenue Code that is administered by the State 
22 to an out-of-state program, an amount equal to the 
23 amount of moneys previously deducted from base income 
24 under subsection (a)(2)(Y) of this Section;
25   (D-22) For taxable years beginning on or after 
26 January 1, 2009, in the case of a nonqualified 
 
 
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1 withdrawal or refund of moneys from a qualified tuition 
2 program under Section 529 of the Internal Revenue Code 
3 administered by the State that is not used for 
4 qualified expenses at an eligible education 
5 institution, an amount equal to the contribution 
6 component of the nonqualified withdrawal or refund 
7 that was previously deducted from base income under 
8 subsection (a)(2)(y) of this Section, provided that 
9 the withdrawal or refund did not result from the 
10 beneficiary's death or disability;
11   (D-23) An amount equal to the credit allowable to 
12 the taxpayer under Section 218(a) of this Act, 
13 determined without regard to Section 218(c) of this 
14 Act;
15 and by deducting from the total so obtained the
sum of the 
16 following amounts:
17   (E) For taxable years ending before December 31, 
18 2001,
any amount included in such total in respect of 
19 any compensation
(including but not limited to any 
20 compensation paid or accrued to a
serviceman while a 
21 prisoner of war or missing in action) paid to a 
22 resident
by reason of being on active duty in the Armed 
23 Forces of the United States
and in respect of any 
24 compensation paid or accrued to a resident who as a

25 governmental employee was a prisoner of war or missing 
26 in action, and in
respect of any compensation paid to a 
 
 
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1 resident in 1971 or thereafter for
annual training 
2 performed pursuant to Sections 502 and 503, Title 32,

3 United States Code as a member of the Illinois National 
4 Guard or, beginning with taxable years ending on or 
5 after December 31, 2007, the National Guard of any 
6 other state.
For taxable years ending on or after 
7 December 31, 2001, any amount included in
such total in 
8 respect of any compensation (including but not limited 
9 to any
compensation paid or accrued to a serviceman 
10 while a prisoner of war or missing
in action) paid to a 
11 resident by reason of being a member of any component 
12 of
the Armed Forces of the United States and in respect 
13 of any compensation paid
or accrued to a resident who 
14 as a governmental employee was a prisoner of war
or 
15 missing in action, and in respect of any compensation 
16 paid to a resident in
2001 or thereafter by reason of 
17 being a member of the Illinois National Guard or, 
18 beginning with taxable years ending on or after 
19 December 31, 2007, the National Guard of any other 
20 state.
The provisions of this amendatory Act of the 
21 92nd General Assembly are exempt
from the provisions of 
22 Section 250;
23   (F) An amount equal to all amounts included in such 
24 total pursuant
to the provisions of Sections 402(a), 
25 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the 
26 Internal Revenue Code, or included in such total as

 
 
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1 distributions under the provisions of any retirement 
2 or disability plan for
employees of any governmental 
3 agency or unit, or retirement payments to
retired 
4 partners, which payments are excluded in computing net 
5 earnings
from self employment by Section 1402 of the 
6 Internal Revenue Code and
regulations adopted pursuant 
7 thereto;
8   (G) The valuation limitation amount;
9   (H) An amount equal to the amount of any tax 
10 imposed by this Act
which was refunded to the taxpayer 
11 and included in such total for the
taxable year;
12   (I) An amount equal to all amounts included in such 
13 total pursuant
to the provisions of Section 111 of the 
14 Internal Revenue Code as a
recovery of items previously 
15 deducted from adjusted gross income in the
computation 
16 of taxable income;
17   (J) An amount equal to those dividends included in 
18 such total which were
paid by a corporation which 
19 conducts business operations in an Enterprise
Zone or 
20 zones created under the Illinois Enterprise Zone Act or 
21 a River Edge Redevelopment Zone or zones created under 
22 the River Edge Redevelopment Zone Act, and conducts

23 substantially all of its operations in an Enterprise 
24 Zone or zones or a River Edge Redevelopment Zone or 
25 zones. This subparagraph (J) is exempt from the 
26 provisions of Section 250;
 
 
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1   (K) An amount equal to those dividends included in 
2 such total that
were paid by a corporation that 
3 conducts business operations in a federally
designated 
4 Foreign Trade Zone or Sub-Zone and that is designated a 
5 High Impact
Business located in Illinois; provided 
6 that dividends eligible for the
deduction provided in 
7 subparagraph (J) of paragraph (2) of this subsection

8 shall not be eligible for the deduction provided under 
9 this subparagraph
(K);
10   (L) For taxable years ending after December 31, 
11 1983, an amount equal to
all social security benefits 
12 and railroad retirement benefits included in
such 
13 total pursuant to Sections 72(r) and 86 of the Internal 
14 Revenue Code;
15   (M) With the exception of any amounts subtracted 
16 under subparagraph
(N), an amount equal to the sum of 
17 all amounts disallowed as
deductions by (i) Sections 
18 171(a) (2), and 265(2) of the Internal Revenue Code
of 
19 1954, as now or hereafter amended, and all amounts of 
20 expenses allocable
to interest and disallowed as 
21 deductions by Section 265(1) of the Internal
Revenue 
22 Code of 1954, as now or hereafter amended;
and (ii) for 
23 taxable years
ending on or after August 13, 1999, 
24 Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of 
25 the Internal Revenue Code; the provisions of this

26 subparagraph are exempt from the provisions of Section 
 
 
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1 250;
2   (N) An amount equal to all amounts included in such 
3 total which are
exempt from taxation by this State 
4 either by reason of its statutes or
Constitution
or by 
5 reason of the Constitution, treaties or statutes of the 
6 United States;
provided that, in the case of any 
7 statute of this State that exempts income
derived from 
8 bonds or other obligations from the tax imposed under 
9 this Act,
the amount exempted shall be the interest net 
10 of bond premium amortization;
11   (O) An amount equal to any contribution made to a 
12 job training
project established pursuant to the Tax 
13 Increment Allocation Redevelopment Act;
14   (P) An amount equal to the amount of the deduction 
15 used to compute the
federal income tax credit for 
16 restoration of substantial amounts held under
claim of 
17 right for the taxable year pursuant to Section 1341 of 
18 the
Internal Revenue Code of 1986;
19   (Q) An amount equal to any amounts included in such 
20 total, received by
the taxpayer as an acceleration in 
21 the payment of life, endowment or annuity
benefits in 
22 advance of the time they would otherwise be payable as 
23 an indemnity
for a terminal illness;
24   (R) An amount equal to the amount of any federal or 
25 State bonus paid
to veterans of the Persian Gulf War;
26   (S) An amount, to the extent included in adjusted 
 
 
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1 gross income, equal
to the amount of a contribution 
2 made in the taxable year on behalf of the
taxpayer to a 
3 medical care savings account established under the 
4 Medical Care
Savings Account Act or the Medical Care 
5 Savings Account Act of 2000 to the
extent the 
6 contribution is accepted by the account
administrator 
7 as provided in that Act;
8   (T) An amount, to the extent included in adjusted 
9 gross income, equal to
the amount of interest earned in 
10 the taxable year on a medical care savings
account 
11 established under the Medical Care Savings Account Act 
12 or the Medical
Care Savings Account Act of 2000 on 
13 behalf of the
taxpayer, other than interest added 
14 pursuant to item (D-5) of this paragraph
(2);
15   (U) For one taxable year beginning on or after 
16 January 1,
1994, an
amount equal to the total amount of 
17 tax imposed and paid under subsections (a)
and (b) of 
18 Section 201 of this Act on grant amounts received by 
19 the taxpayer
under the Nursing Home Grant Assistance 
20 Act during the taxpayer's taxable years
1992 and 1993;
21   (V) Beginning with tax years ending on or after 
22 December 31, 1995 and
ending with tax years ending on 
23 or before December 31, 2004, an amount equal to
the 
24 amount paid by a taxpayer who is a
self-employed 
25 taxpayer, a partner of a partnership, or a
shareholder 
26 in a Subchapter S corporation for health insurance or 
 
 
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1 long-term
care insurance for that taxpayer or that 
2 taxpayer's spouse or dependents, to
the extent that the 
3 amount paid for that health insurance or long-term care

4 insurance may be deducted under Section 213 of the 
5 Internal Revenue Code of
1986, has not been deducted on 
6 the federal income tax return of the taxpayer,
and does 
7 not exceed the taxable income attributable to that 
8 taxpayer's income,
self-employment income, or 
9 Subchapter S corporation income; except that no

10 deduction shall be allowed under this item (V) if the 
11 taxpayer is eligible to
participate in any health 
12 insurance or long-term care insurance plan of an

13 employer of the taxpayer or the taxpayer's
spouse. The 
14 amount of the health insurance and long-term care 
15 insurance
subtracted under this item (V) shall be 
16 determined by multiplying total
health insurance and 
17 long-term care insurance premiums paid by the taxpayer

18 times a number that represents the fractional 
19 percentage of eligible medical
expenses under Section 
20 213 of the Internal Revenue Code of 1986 not actually

21 deducted on the taxpayer's federal income tax return;
22   (W) For taxable years beginning on or after January 
23 1, 1998,
all amounts included in the taxpayer's federal 
24 gross income
in the taxable year from amounts converted 
25 from a regular IRA to a Roth IRA.
This paragraph is 
26 exempt from the provisions of Section
250;
 
 
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1   (X) For taxable year 1999 and thereafter, an amount 
2 equal to the
amount of any (i) distributions, to the 
3 extent includible in gross income for
federal income 
4 tax purposes, made to the taxpayer because of his or 
5 her status
as a victim of persecution for racial or 
6 religious reasons by Nazi Germany or
any other Axis 
7 regime or as an heir of the victim and (ii) items
of 
8 income, to the extent
includible in gross income for 
9 federal income tax purposes, attributable to,
derived 
10 from or in any way related to assets stolen from, 
11 hidden from, or
otherwise lost to a victim of

12 persecution for racial or religious reasons by Nazi 
13 Germany or any other Axis
regime immediately prior to, 
14 during, and immediately after World War II,
including, 
15 but
not limited to, interest on the proceeds receivable 
16 as insurance
under policies issued to a victim of 
17 persecution for racial or religious
reasons
by Nazi 
18 Germany or any other Axis regime by European insurance 
19 companies
immediately prior to and during World War II;

20 provided, however, this subtraction from federal 
21 adjusted gross income does not
apply to assets acquired 
22 with such assets or with the proceeds from the sale of

23 such assets; provided, further, this paragraph shall 
24 only apply to a taxpayer
who was the first recipient of 
25 such assets after their recovery and who is a
victim of 
26 persecution for racial or religious reasons
by Nazi 
 
 
SB0015- 21 -LRB097 06652 HLH 46738 b


1 Germany or any other Axis regime or as an heir of the 
2 victim. The
amount of and the eligibility for any 
3 public assistance, benefit, or
similar entitlement is 
4 not affected by the inclusion of items (i) and (ii) of

5 this paragraph in gross income for federal income tax 
6 purposes.
This paragraph is exempt from the provisions 
7 of Section 250;
8   (Y) For taxable years beginning on or after January 
9 1, 2002
and ending
on or before December 31, 2004, 
10 moneys contributed in the taxable year to a College 
11 Savings Pool account under
Section 16.5 of the State 
12 Treasurer Act, except that amounts excluded from
gross 
13 income under Section 529(c)(3)(C)(i) of the Internal 
14 Revenue Code
shall not be considered moneys 
15 contributed under this subparagraph (Y). For taxable 
16 years beginning on or after January 1, 2005, a maximum 
17 of $10,000
contributed
in the
taxable year to (i) a 
18 College Savings Pool account under Section 16.5 of the

19 State
Treasurer Act or (ii) the Illinois Prepaid 
20 Tuition Trust Fund,
except that
amounts excluded from 
21 gross income under Section 529(c)(3)(C)(i) of the

22 Internal
Revenue Code shall not be considered moneys 
23 contributed under this subparagraph
(Y). For purposes 
24 of this subparagraph, contributions made by an 
25 employer on behalf of an employee, or matching 
26 contributions made by an employee, shall be treated as 
 
 
SB0015- 22 -LRB097 06652 HLH 46738 b


1 made by the employee. This
subparagraph (Y) is exempt 
2 from the provisions of Section 250;
3   (Z) For taxable years 2001 and thereafter, for the 
4 taxable year in
which the bonus depreciation deduction

5 is taken on the taxpayer's federal income tax return 
6 under
subsection (k) of Section 168 of the Internal 
7 Revenue Code and for each
applicable taxable year 
8 thereafter, an amount equal to "x", where:
9    (1) "y" equals the amount of the depreciation 
10 deduction taken for the
taxable year
on the 
11 taxpayer's federal income tax return on property 
12 for which the bonus
depreciation deduction
was 
13 taken in any year under subsection (k) of Section 
14 168 of the Internal
Revenue Code, but not including 
15 the bonus depreciation deduction;
16    (2) for taxable years ending on or before 
17 December 31, 2005, "x" equals "y" multiplied by 30 
18 and then divided by 70 (or "y"
multiplied by 
19 0.429); and
20    (3) for taxable years ending after December 
21 31, 2005:
22     (i) for property on which a bonus 
23 depreciation deduction of 30% of the adjusted 
24 basis was taken, "x" equals "y" multiplied by 
25 30 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
SB0015- 23 -LRB097 06652 HLH 46738 b


1     (ii) for property on which a bonus 
2 depreciation deduction of 50% of the adjusted 
3 basis was taken, "x" equals "y" multiplied by 
4 1.0.
5   The aggregate amount deducted under this 
6 subparagraph in all taxable
years for any one piece of 
7 property may not exceed the amount of the bonus

8 depreciation deduction
taken on that property on the 
9 taxpayer's federal income tax return under
subsection 
10 (k) of Section 168 of the Internal Revenue Code. This 
11 subparagraph (Z) is exempt from the provisions of 
12 Section 250;
13   (AA) If the taxpayer sells, transfers, abandons, 
14 or otherwise disposes of
property for which the 
15 taxpayer was required in any taxable year to make an

16 addition modification under subparagraph (D-15), then 
17 an amount equal to that
addition modification.

18   If the taxpayer continues to own property through 
19 the last day of the last tax year for which the 
20 taxpayer may claim a depreciation deduction for 
21 federal income tax purposes and for which the taxpayer 
22 was required in any taxable year to make an addition 
23 modification under subparagraph (D-15), then an amount 
24 equal to that addition modification.

25   The taxpayer is allowed to take the deduction under 
26 this subparagraph
only once with respect to any one 
 
 
SB0015- 24 -LRB097 06652 HLH 46738 b


1 piece of property.
2   This subparagraph (AA) is exempt from the 
3 provisions of Section 250;
4   (BB) Any amount included in adjusted gross income, 
5 other
than
salary,
received by a driver in a 
6 ridesharing arrangement using a motor vehicle;
7   (CC) The amount of (i) any interest income (net of 
8 the deductions allocable thereto) taken into account 
9 for the taxable year with respect to a transaction with 
10 a taxpayer that is required to make an addition 
11 modification with respect to such transaction under 
12 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
13 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
14 the amount of that addition modification, and
(ii) any 
15 income from intangible property (net of the deductions 
16 allocable thereto) taken into account for the taxable 
17 year with respect to a transaction with a taxpayer that 
18 is required to make an addition modification with 
19 respect to such transaction under Section 
20 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
21 203(d)(2)(D-8), but not to exceed the amount of that 
22 addition modification. This subparagraph (CC) is 
23 exempt from the provisions of Section 250;
24   (DD) An amount equal to the interest income taken 
25 into account for the taxable year (net of the 
26 deductions allocable thereto) with respect to 
 
 
SB0015- 25 -LRB097 06652 HLH 46738 b


1 transactions with (i) a foreign person who would be a 
2 member of the taxpayer's unitary business group but for 
3 the fact that the foreign person's business activity 
4 outside the United States is 80% or more of that 
5 person's total business activity and (ii) for taxable 
6 years ending on or after December 31, 2008, to a person 
7 who would be a member of the same unitary business 
8 group but for the fact that the person is prohibited 
9 under Section 1501(a)(27) from being included in the 
10 unitary business group because he or she is ordinarily 
11 required to apportion business income under different 
12 subsections of Section 304, but not to exceed the 
13 addition modification required to be made for the same 
14 taxable year under Section 203(a)(2)(D-17) for 
15 interest paid, accrued, or incurred, directly or 
16 indirectly, to the same person. This subparagraph (DD) 
17 is exempt from the provisions of Section 250; 
18   (EE) An amount equal to the income from intangible 
19 property taken into account for the taxable year (net 
20 of the deductions allocable thereto) with respect to 
21 transactions with (i) a foreign person who would be a 
22 member of the taxpayer's unitary business group but for 
23 the fact that the foreign person's business activity 
24 outside the United States is 80% or more of that 
25 person's total business activity and (ii) for taxable 
26 years ending on or after December 31, 2008, to a person 
 
 
SB0015- 26 -LRB097 06652 HLH 46738 b


1 who would be a member of the same unitary business 
2 group but for the fact that the person is prohibited 
3 under Section 1501(a)(27) from being included in the 
4 unitary business group because he or she is ordinarily 
5 required to apportion business income under different 
6 subsections of Section 304, but not to exceed the 
7 addition modification required to be made for the same 
8 taxable year under Section 203(a)(2)(D-18) for 
9 intangible expenses and costs paid, accrued, or 
10 incurred, directly or indirectly, to the same foreign 
11 person. This subparagraph (EE) is exempt from the 
12 provisions of Section 250; and
13   (FF) An amount equal to any amount awarded to the 
14 taxpayer during the taxable year by the Court of Claims 
15 under subsection (c) of Section 8 of the Court of 
16 Claims Act for time unjustly served in a State prison. 
17 This subparagraph (FF) is exempt from the provisions of 
18 Section 250. 

19 (b) Corporations.
20  (1) In general. In the case of a corporation, base 
21 income means an
amount equal to the taxpayer's taxable 
22 income for the taxable year as
modified by paragraph (2).
23  (2) Modifications. The taxable income referred to in 
24 paragraph (1)
shall be modified by adding thereto the sum 
25 of the following amounts:
 
 
SB0015- 27 -LRB097 06652 HLH 46738 b


1   (A) An amount equal to all amounts paid or accrued 
2 to the taxpayer
as interest and all distributions 
3 received from regulated investment
companies during 
4 the taxable year to the extent excluded from gross

5 income in the computation of taxable income;
6   (B) An amount equal to the amount of tax imposed by 
7 this Act to the
extent deducted from gross income in 
8 the computation of taxable income
for the taxable year;
9   (C) In the case of a regulated investment company, 
10 an amount equal to
the excess of (i) the net long-term 
11 capital gain for the taxable year, over
(ii) the amount 
12 of the capital gain dividends designated as such in 
13 accordance
with Section 852(b)(3)(C) of the Internal 
14 Revenue Code and any amount
designated under Section 
15 852(b)(3)(D) of the Internal Revenue Code,

16 attributable to the taxable year (this amendatory Act 
17 of 1995
(Public Act 89-89) is declarative of existing 
18 law and is not a new
enactment);
19   (D) The amount of any net operating loss deduction 
20 taken in arriving
at taxable income, other than a net 
21 operating loss carried forward from a
taxable year 
22 ending prior to December 31, 1986;
23   (E) For taxable years in which a net operating loss 
24 carryback or
carryforward from a taxable year ending 
25 prior to December 31, 1986 is an
element of taxable 
26 income under paragraph (1) of subsection (e) or

 
 
SB0015- 28 -LRB097 06652 HLH 46738 b


1 subparagraph (E) of paragraph (2) of subsection (e), 
2 the amount by which
addition modifications other than 
3 those provided by this subparagraph (E)
exceeded 
4 subtraction modifications in such earlier taxable 
5 year, with the
following limitations applied in the 
6 order that they are listed:
7    (i) the addition modification relating to the 
8 net operating loss
carried back or forward to the 
9 taxable year from any taxable year ending
prior to 
10 December 31, 1986 shall be reduced by the amount of 
11 addition
modification under this subparagraph (E) 
12 which related to that net operating
loss and which 
13 was taken into account in calculating the base 
14 income of an
earlier taxable year, and
15    (ii) the addition modification relating to the 
16 net operating loss
carried back or forward to the 
17 taxable year from any taxable year ending
prior to 
18 December 31, 1986 shall not exceed the amount of 
19 such carryback or
carryforward;
20   For taxable years in which there is a net operating 
21 loss carryback or
carryforward from more than one other 
22 taxable year ending prior to December
31, 1986, the 
23 addition modification provided in this subparagraph 
24 (E) shall
be the sum of the amounts computed 
25 independently under the preceding
provisions of this 
26 subparagraph (E) for each such taxable year;
 
 
SB0015- 29 -LRB097 06652 HLH 46738 b


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

25   The taxpayer is required to make the addition 
26 modification under this
subparagraph
only once with 
 
 
SB0015- 30 -LRB097 06652 HLH 46738 b


1 respect to any one piece of property;
2   (E-12) An amount equal to the amount otherwise 
3 allowed as a deduction in computing base income for 
4 interest paid, accrued, or incurred, directly or 
5 indirectly, (i) for taxable years ending on or after 
6 December 31, 2004, to a foreign person who would be a 
7 member of the same unitary business group but for the 
8 fact the foreign person's business activity outside 
9 the United States is 80% or more of the foreign 
10 person's total business activity and (ii) for taxable 
11 years ending on or after December 31, 2008, to a person 
12 who would be a member of the same unitary business 
13 group but for the fact that the person is prohibited 
14 under Section 1501(a)(27) from being included in the 
15 unitary business group because he or she is ordinarily 
16 required to apportion business income under different 
17 subsections of Section 304. The addition modification 
18 required by this subparagraph shall be reduced to the 
19 extent that dividends were included in base income of 
20 the unitary group for the same taxable year and 
21 received by the taxpayer or by a member of the 
22 taxpayer's unitary business group (including amounts 
23 included in gross income pursuant to Sections 951 
24 through 964 of the Internal Revenue Code and amounts 
25 included in gross income under Section 78 of the 
26 Internal Revenue Code) with respect to the stock of the 
 
 
SB0015- 31 -LRB097 06652 HLH 46738 b


1 same person to whom the interest was paid, accrued, or 
2 incurred.

3   This paragraph shall not apply to the following:

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

25    (iii) the taxpayer can establish, based on 
26 clear and convincing evidence, that the interest 
 
 
SB0015- 32 -LRB097 06652 HLH 46738 b


1 paid, accrued, or incurred relates to a contract or 
2 agreement entered into at arm's-length rates and 
3 terms and the principal purpose for the payment is 
4 not federal or Illinois tax avoidance; or

5    (iv) an item of interest paid, accrued, or 
6 incurred, directly or indirectly, to a person if 
7 the taxpayer establishes by clear and convincing 
8 evidence that the adjustments are unreasonable; or 
9 if the taxpayer and the Director agree in writing 
10 to the application or use of an alternative method 
11 of apportionment under Section 304(f).

12    Nothing in this subsection shall preclude the 
13 Director from making any other adjustment 
14 otherwise allowed under Section 404 of this Act for 
15 any tax year beginning after the effective date of 
16 this amendment provided such adjustment is made 
17 pursuant to regulation adopted by the Department 
18 and such regulations provide methods and standards 
19 by which the Department will utilize its authority 
20 under Section 404 of this Act;

21   (E-13) An amount equal to the amount of intangible 
22 expenses and costs otherwise allowed as a deduction in 
23 computing base income, and that were paid, accrued, or 
24 incurred, directly or indirectly, (i) for taxable 
25 years ending on or after December 31, 2004, to a 
26 foreign person who would be a member of the same 
 
 
SB0015- 33 -LRB097 06652 HLH 46738 b


1 unitary business group but for the fact that the 
2 foreign person's business activity outside the United 
3 States is 80% or more of that person's total business 
4 activity and (ii) for taxable years ending on or after 
5 December 31, 2008, to a person who would be a member of 
6 the same unitary business group but for the fact that 
7 the person is prohibited under Section 1501(a)(27) 
8 from being included in the unitary business group 
9 because he or she is ordinarily required to apportion 
10 business income under different subsections of Section 
11 304. The addition modification required by this 
12 subparagraph shall be reduced to the extent that 
13 dividends were included in base income of the unitary 
14 group for the same taxable year and received by the 
15 taxpayer or by a member of the taxpayer's unitary 
16 business group (including amounts included in gross 
17 income pursuant to Sections 951 through 964 of the 
18 Internal Revenue Code and amounts included in gross 
19 income under Section 78 of the Internal Revenue Code) 
20 with respect to the stock of the same person to whom 
21 the intangible expenses and costs were directly or 
22 indirectly paid, incurred, or accrued. The preceding 
23 sentence shall not apply to the extent that the same 
24 dividends caused a reduction to the addition 
25 modification required under Section 203(b)(2)(E-12) of 
26 this Act.
As used in this subparagraph, the term 
 
 
SB0015- 34 -LRB097 06652 HLH 46738 b


1 "intangible expenses and costs" includes (1) expenses, 
2 losses, and costs for, or related to, the direct or 
3 indirect acquisition, use, maintenance or management, 
4 ownership, sale, exchange, or any other disposition of 
5 intangible property; (2) losses incurred, directly or 
6 indirectly, from factoring transactions or discounting 
7 transactions; (3) royalty, patent, technical, and 
8 copyright fees; (4) licensing fees; and (5) other 
9 similar expenses and costs.
For purposes of this 
10 subparagraph, "intangible property" includes patents, 
11 patent applications, trade names, trademarks, service 
12 marks, copyrights, mask works, trade secrets, and 
13 similar types of intangible assets.
14   This paragraph shall not apply to the following:
15    (i) any item of intangible expenses or costs 
16 paid, accrued, or incurred, directly or 
17 indirectly, from a transaction with a person who is 
18 subject in a foreign country or state, other than a 
19 state which requires mandatory unitary reporting, 
20 to a tax on or measured by net income with respect 
21 to such item; or
22    (ii) any item of intangible expense or cost 
23 paid, accrued, or incurred, directly or 
24 indirectly, if the taxpayer can establish, based 
25 on a preponderance of the evidence, both of the 
26 following:
 
 
SB0015- 35 -LRB097 06652 HLH 46738 b


1     (a) the person during the same taxable 
2 year paid, accrued, or incurred, the 
3 intangible expense or cost to a person that is 
4 not a related member, and
5     (b) the transaction giving rise to the 
6 intangible expense or cost between the 
7 taxpayer and the person did not have as a 
8 principal purpose the avoidance of Illinois 
9 income tax, and is paid pursuant to a contract 
10 or agreement that reflects arm's-length terms; 
11 or
12    (iii) any item of intangible expense or cost 
13 paid, accrued, or incurred, directly or 
14 indirectly, from a transaction with a person if the 
15 taxpayer establishes by clear and convincing 
16 evidence, that the adjustments are unreasonable; 
17 or if the taxpayer and the Director agree in 
18 writing to the application or use of an alternative 
19 method of apportionment under Section 304(f);

20    Nothing in this subsection shall preclude the 
21 Director from making any other adjustment 
22 otherwise allowed under Section 404 of this Act for 
23 any tax year beginning after the effective date of 
24 this amendment provided such adjustment is made 
25 pursuant to regulation adopted by the Department 
26 and such regulations provide methods and standards 
 
 
SB0015- 36 -LRB097 06652 HLH 46738 b


1 by which the Department will utilize its authority 
2 under Section 404 of this Act;

3   (E-14) For taxable years ending on or after 
4 December 31, 2008, an amount equal to the amount of 
5 insurance premium expenses and costs otherwise allowed 
6 as a deduction in computing base income, and that were 
7 paid, accrued, or incurred, directly or indirectly, to 
8 a person who would be a member of the same unitary 
9 business group but for the fact that the person is 
10 prohibited under Section 1501(a)(27) from being 
11 included in the unitary business group because he or 
12 she is ordinarily required to apportion business 
13 income under different subsections of Section 304. The 
14 addition modification required by this subparagraph 
15 shall be reduced to the extent that dividends were 
16 included in base income of the unitary group for the 
17 same taxable year and received by the taxpayer or by a 
18 member of the taxpayer's unitary business group 
19 (including amounts included in gross income under 
20 Sections 951 through 964 of the Internal Revenue Code 
21 and amounts included in gross income under Section 78 
22 of the Internal Revenue Code) with respect to the stock 
23 of the same person to whom the premiums and costs were 
24 directly or indirectly paid, incurred, or accrued. The 
25 preceding sentence does not apply to the extent that 
26 the same dividends caused a reduction to the addition 
 
 
SB0015- 37 -LRB097 06652 HLH 46738 b


1 modification required under Section 203(b)(2)(E-12) or 
2 Section 203(b)(2)(E-13) of this Act;

3   (E-15) For taxable years beginning after December 
4 31, 2008, any deduction for dividends paid by a captive 
5 real estate investment trust that is allowed to a real 
6 estate investment trust under Section 857(b)(2)(B) of 
7 the Internal Revenue Code for dividends paid;
8   (E-16) An amount equal to the credit allowable to 
9 the taxpayer under Section 218(a) of this Act, 
10 determined without regard to Section 218(c) of this 
11 Act;
12 and by deducting from the total so obtained the sum of the 
13 following
amounts:
14   (F) An amount equal to the amount of any tax 
15 imposed by this Act
which was refunded to the taxpayer 
16 and included in such total for the
taxable year;
17   (G) An amount equal to any amount included in such 
18 total under
Section 78 of the Internal Revenue Code;
19   (H) In the case of a regulated investment company, 
20 an amount equal
to the amount of exempt interest 
21 dividends as defined in subsection (b)
(5) of Section 
22 852 of the Internal Revenue Code, paid to shareholders

23 for the taxable year;
24   (I) With the exception of any amounts subtracted 
25 under subparagraph
(J),
an amount equal to the sum of 
26 all amounts disallowed as
deductions by (i) Sections 
 
 
SB0015- 38 -LRB097 06652 HLH 46738 b


1 171(a) (2), and 265(a)(2) and amounts disallowed as

2 interest expense by Section 291(a)(3) of the Internal 
3 Revenue Code, as now
or hereafter amended, and all 
4 amounts of expenses allocable to interest and

5 disallowed as deductions by Section 265(a)(1) of the 
6 Internal Revenue Code,
as now or hereafter amended;
and 
7 (ii) for taxable years
ending on or after August 13, 
8 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and 
9 832(b)(5)(B)(i) of the Internal Revenue Code; the

10 provisions of this
subparagraph are exempt from the 
11 provisions of Section 250;
12   (J) An amount equal to all amounts included in such 
13 total which are
exempt from taxation by this State 
14 either by reason of its statutes or
Constitution
or by 
15 reason of the Constitution, treaties or statutes of the 
16 United States;
provided that, in the case of any 
17 statute of this State that exempts income
derived from 
18 bonds or other obligations from the tax imposed under 
19 this Act,
the amount exempted shall be the interest net 
20 of bond premium amortization;
21   (K) An amount equal to those dividends included in 
22 such total
which were paid by a corporation which 
23 conducts
business operations in an Enterprise Zone or 
24 zones created under
the Illinois Enterprise Zone Act or 
25 a River Edge Redevelopment Zone or zones created under 
26 the River Edge Redevelopment Zone Act and conducts 
 
 
SB0015- 39 -LRB097 06652 HLH 46738 b


1 substantially all of its
operations in an Enterprise 
2 Zone or zones or a River Edge Redevelopment Zone or 
3 zones. This subparagraph (K) is exempt from the 
4 provisions of Section 250;
5   (L) An amount equal to those dividends included in 
6 such total that
were paid by a corporation that 
7 conducts business operations in a federally
designated 
8 Foreign Trade Zone or Sub-Zone and that is designated a 
9 High Impact
Business located in Illinois; provided 
10 that dividends eligible for the
deduction provided in 
11 subparagraph (K) of paragraph 2 of this subsection

12 shall not be eligible for the deduction provided under 
13 this subparagraph
(L);
14   (M) For any taxpayer that is a financial 
15 organization within the meaning
of Section 304(c) of 
16 this Act, an amount included in such total as interest

17 income from a loan or loans made by such taxpayer to a 
18 borrower, to the extent
that such a loan is secured by 
19 property which is eligible for the Enterprise
Zone 
20 Investment Credit or the River Edge Redevelopment Zone 
21 Investment Credit. To determine the portion of a loan 
22 or loans that is
secured by property eligible for a 
23 Section 201(f) investment
credit to the borrower, the 
24 entire principal amount of the loan or loans
between 
25 the taxpayer and the borrower should be divided into 
26 the basis of the
Section 201(f) investment credit 
 
 
SB0015- 40 -LRB097 06652 HLH 46738 b


1 property which secures the
loan or loans, using for 
2 this purpose the original basis of such property on
the 
3 date that it was placed in service in the
Enterprise 
4 Zone or the River Edge Redevelopment Zone. The 
5 subtraction modification available to taxpayer in any

6 year under this subsection shall be that portion of the 
7 total interest paid
by the borrower with respect to 
8 such loan attributable to the eligible
property as 
9 calculated under the previous sentence. This 
10 subparagraph (M) is exempt from the provisions of 
11 Section 250;
12   (M-1) For any taxpayer that is a financial 
13 organization within the
meaning of Section 304(c) of 
14 this Act, an amount included in such total as
interest 
15 income from a loan or loans made by such taxpayer to a 
16 borrower,
to the extent that such a loan is secured by 
17 property which is eligible for
the High Impact Business 
18 Investment Credit. To determine the portion of a
loan 
19 or loans that is secured by property eligible for a 
20 Section 201(h) investment credit to the borrower, the 
21 entire principal amount of
the loan or loans between 
22 the taxpayer and the borrower should be divided into

23 the basis of the Section 201(h) investment credit 
24 property which
secures the loan or loans, using for 
25 this purpose the original basis of such
property on the 
26 date that it was placed in service in a federally 
 
 
SB0015- 41 -LRB097 06652 HLH 46738 b


1 designated
Foreign Trade Zone or Sub-Zone located in 
2 Illinois. No taxpayer that is
eligible for the 
3 deduction provided in subparagraph (M) of paragraph 
4 (2) of
this subsection shall be eligible for the 
5 deduction provided under this
subparagraph (M-1). The 
6 subtraction modification available to taxpayers in
any 
7 year under this subsection shall be that portion of the 
8 total interest
paid by the borrower with respect to 
9 such loan attributable to the eligible
property as 
10 calculated under the previous sentence;
11   (M-2) For taxable years ending on or after December 
12 31, 2009, for any taxpayer that is a financial 
13 organization within the
meaning of Section 304(c) of 
14 this Act, an amount included in such total as
interest 
15 income from a residential mortgage loan if the 
16 mortgagor is a person with at least a 50% ownership 
17 interest in a business located in an Enterprise Zone or 
18 a River Edge Redevelopment Zone. Taxpayers who are 
19 eligible for a deduction under this subparagraph (M-2) 
20 for taxable years ending on or after December 31, 2009 
21 and prior to December 31, 2011 may file amended returns 
22 for those taxable years with the Department. The 
23 financial institution must apply the amount of its 
24 Illinois income tax savings attributable to a 
25 deduction under this subparagraph (M-2) to the 
26 principal of the loan within 90 days after the 
 
 
SB0015- 42 -LRB097 06652 HLH 46738 b


1 organization files its Illinois income tax return, or 
2 amended return, for that taxable year; 
3   (N) Two times any contribution made during the 
4 taxable year to a
designated zone organization to the 
5 extent that the contribution (i)
qualifies as a 
6 charitable contribution under subsection (c) of 
7 Section 170
of the Internal Revenue Code and (ii) must, 
8 by its terms, be used for a
project approved by the 
9 Department of Commerce and Economic Opportunity under 
10 Section 11 of the Illinois Enterprise Zone Act or under 
11 Section 10-10 of the River Edge Redevelopment Zone Act. 
12 This subparagraph (N) is exempt from the provisions of 
13 Section 250;
14   (O) An amount equal to: (i) 85% for taxable years 
15 ending on or before
December 31, 1992, or, a percentage 
16 equal to the percentage allowable under
Section 
17 243(a)(1) of the Internal Revenue Code of 1986 for 
18 taxable years ending
after December 31, 1992, of the 
19 amount by which dividends included in taxable
income 
20 and received from a corporation that is not created or 
21 organized under
the laws of the United States or any 
22 state or political subdivision thereof,
including, for 
23 taxable years ending on or after December 31, 1988, 
24 dividends
received or deemed received or paid or deemed 
25 paid under Sections 951 through
964 of the Internal 
26 Revenue Code, exceed the amount of the modification

 
 
SB0015- 43 -LRB097 06652 HLH 46738 b


1 provided under subparagraph (G) of paragraph (2) of 
2 this subsection (b) which
is related to such dividends, 
3 and including, for taxable years ending on or after 
4 December 31, 2008, dividends received from a captive 
5 real estate investment trust; plus (ii) 100% of the 
6 amount by which dividends,
included in taxable income 
7 and received, including, for taxable years ending on
or 
8 after December 31, 1988, dividends received or deemed 
9 received or paid or
deemed paid under Sections 951 
10 through 964 of the Internal Revenue Code and including, 
11 for taxable years ending on or after December 31, 2008, 
12 dividends received from a captive real estate 
13 investment trust, from
any such corporation specified 
14 in clause (i) that would but for the provisions
of 
15 Section 1504 (b) (3) of the Internal Revenue Code be 
16 treated as a member of
the affiliated group which 
17 includes the dividend recipient, exceed the amount
of 
18 the modification provided under subparagraph (G) of 
19 paragraph (2) of this
subsection (b) which is related 
20 to such dividends. This subparagraph (O) is exempt from 
21 the provisions of Section 250 of this Act;
22   (P) An amount equal to any contribution made to a 
23 job training project
established pursuant to the Tax 
24 Increment Allocation Redevelopment Act;
25   (Q) An amount equal to the amount of the deduction 
26 used to compute the
federal income tax credit for 
 
 
SB0015- 44 -LRB097 06652 HLH 46738 b


1 restoration of substantial amounts held under
claim of 
2 right for the taxable year pursuant to Section 1341 of 
3 the
Internal Revenue Code of 1986;
4   (R) On and after July 20, 1999, in the case of an 
5 attorney-in-fact with respect to whom an
interinsurer 
6 or a reciprocal insurer has made the election under 
7 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
8 835, an amount equal to the excess, if
any, of the 
9 amounts paid or incurred by that interinsurer or 
10 reciprocal insurer
in the taxable year to the 
11 attorney-in-fact over the deduction allowed to that

12 interinsurer or reciprocal insurer with respect to the 
13 attorney-in-fact under
Section 835(b) of the Internal 
14 Revenue Code for the taxable year; the provisions of 
15 this subparagraph are exempt from the provisions of 
16 Section 250;
17   (S) For taxable years ending on or after December 
18 31, 1997, in the
case of a Subchapter
S corporation, an 
19 amount equal to all amounts of income allocable to a

20 shareholder subject to the Personal Property Tax 
21 Replacement Income Tax imposed
by subsections (c) and 
22 (d) of Section 201 of this Act, including amounts

23 allocable to organizations exempt from federal income 
24 tax by reason of Section
501(a) of the Internal Revenue 
25 Code. This subparagraph (S) is exempt from
the 
26 provisions of Section 250;
 
 
SB0015- 45 -LRB097 06652 HLH 46738 b


1   (T) For taxable years 2001 and thereafter, for the 
2 taxable year in
which the bonus depreciation deduction

3 is taken on the taxpayer's federal income tax return 
4 under
subsection (k) of Section 168 of the Internal 
5 Revenue Code and for each
applicable taxable year 
6 thereafter, an amount equal to "x", where:
7    (1) "y" equals the amount of the depreciation 
8 deduction taken for the
taxable year
on the 
9 taxpayer's federal income tax return on property 
10 for which the bonus
depreciation deduction
was 
11 taken in any year under subsection (k) of Section 
12 168 of the Internal
Revenue Code, but not including 
13 the bonus depreciation deduction;
14    (2) for taxable years ending on or before 
15 December 31, 2005, "x" equals "y" multiplied by 30 
16 and then divided by 70 (or "y"
multiplied by 
17 0.429); and
18    (3) for taxable years ending after December 
19 31, 2005:
20     (i) for property on which a bonus 
21 depreciation deduction of 30% of the adjusted 
22 basis was taken, "x" equals "y" multiplied by 
23 30 and then divided by 70 (or "y"
multiplied by 
24 0.429); and
25     (ii) for property on which a bonus 
26 depreciation deduction of 50% of the adjusted 
 
 
SB0015- 46 -LRB097 06652 HLH 46738 b


1 basis was taken, "x" equals "y" multiplied by 
2 1.0.
3   The aggregate amount deducted under this 
4 subparagraph in all taxable
years for any one piece of 
5 property may not exceed the amount of the bonus

6 depreciation deduction
taken on that property on the 
7 taxpayer's federal income tax return under
subsection 
8 (k) of Section 168 of the Internal Revenue Code. This 
9 subparagraph (T) is exempt from the provisions of 
10 Section 250;
11   (U) If the taxpayer sells, transfers, abandons, or 
12 otherwise disposes of
property for which the taxpayer 
13 was required in any taxable year to make an
addition 
14 modification under subparagraph (E-10), then an amount 
15 equal to that
addition modification.
16   If the taxpayer continues to own property through 
17 the last day of the last tax year for which the 
18 taxpayer may claim a depreciation deduction for 
19 federal income tax purposes and for which the taxpayer 
20 was required in any taxable year to make an addition 
21 modification under subparagraph (E-10), then an amount 
22 equal to that addition modification.

23   The taxpayer is allowed to take the deduction under 
24 this subparagraph
only once with respect to any one 
25 piece of property.
26   This subparagraph (U) is exempt from the 
 
 
SB0015- 47 -LRB097 06652 HLH 46738 b


1 provisions of Section 250;
2   (V) The amount of: (i) any interest income (net of 
3 the deductions allocable thereto) taken into account 
4 for the taxable year with respect to a transaction with 
5 a taxpayer that is required to make an addition 
6 modification with respect to such transaction under 
7 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
8 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
9 the amount of such addition modification,
(ii) any 
10 income from intangible property (net of the deductions 
11 allocable thereto) taken into account for the taxable 
12 year with respect to a transaction with a taxpayer that 
13 is required to make an addition modification with 
14 respect to such transaction under Section 
15 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
16 203(d)(2)(D-8), but not to exceed the amount of such 
17 addition modification, and (iii) any insurance premium 
18 income (net of deductions allocable thereto) taken 
19 into account for the taxable year with respect to a 
20 transaction with a taxpayer that is required to make an 
21 addition modification with respect to such transaction 
22 under Section 203(a)(2)(D-19), Section 
23 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section 
24 203(d)(2)(D-9), but not to exceed the amount of that 
25 addition modification. This subparagraph (V) is exempt 
26 from the provisions of Section 250;

 
 
SB0015- 48 -LRB097 06652 HLH 46738 b


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

21   (X) An amount equal to the income from intangible 
22 property taken into account for the taxable year (net 
23 of the deductions allocable thereto) with respect to 
24 transactions with (i) a foreign person who would be a 
25 member of the taxpayer's unitary business group but for 
26 the fact that the foreign person's business activity 
 
 
SB0015- 49 -LRB097 06652 HLH 46738 b


1 outside the United States is 80% or more of that 
2 person's total business activity and (ii) for taxable 
3 years ending on or after December 31, 2008, to a person 
4 who would be a member of the same unitary business 
5 group but for the fact that the person is prohibited 
6 under Section 1501(a)(27) from being included in the 
7 unitary business group because he or she is ordinarily 
8 required to apportion business income under different 
9 subsections of Section 304, but not to exceed the 
10 addition modification required to be made for the same 
11 taxable year under Section 203(b)(2)(E-13) for 
12 intangible expenses and costs paid, accrued, or 
13 incurred, directly or indirectly, to the same foreign 
14 person. This subparagraph (X) is exempt from the 
15 provisions of Section 250.

16  (3) Special rule. For purposes of paragraph (2) (A), 
17 "gross income"
in the case of a life insurance company, for 
18 tax years ending on and after
December 31, 1994,
shall mean 
19 the gross investment income for the taxable year.

20 (c) Trusts and estates.
21  (1) In general. In the case of a trust or estate, base 
22 income means
an amount equal to the taxpayer's taxable 
23 income for the taxable year as
modified by paragraph (2).
24  (2) Modifications. Subject to the provisions of 
25 paragraph (3), the
taxable income referred to in paragraph 
 
 
SB0015- 50 -LRB097 06652 HLH 46738 b


1 (1) shall be modified by adding
thereto the sum of the 
2 following amounts:
3   (A) An amount equal to all amounts paid or accrued 
4 to the taxpayer
as interest or dividends during the 
5 taxable year to the extent excluded
from gross income 
6 in the computation of taxable income;
7   (B) In the case of (i) an estate, $600; (ii) a 
8 trust which, under
its governing instrument, is 
9 required to distribute all of its income
currently, 
10 $300; and (iii) any other trust, $100, but in each such 
11 case,
only to the extent such amount was deducted in 
12 the computation of
taxable income;
13   (C) An amount equal to the amount of tax imposed by 
14 this Act to the
extent deducted from gross income in 
15 the computation of taxable income
for the taxable year;
16   (D) The amount of any net operating loss deduction 
17 taken in arriving at
taxable income, other than a net 
18 operating loss carried forward from a
taxable year 
19 ending prior to December 31, 1986;
20   (E) For taxable years in which a net operating loss 
21 carryback or
carryforward from a taxable year ending 
22 prior to December 31, 1986 is an
element of taxable 
23 income under paragraph (1) of subsection (e) or 
24 subparagraph
(E) of paragraph (2) of subsection (e), 
25 the amount by which addition
modifications other than 
26 those provided by this subparagraph (E) exceeded

 
 
SB0015- 51 -LRB097 06652 HLH 46738 b


1 subtraction modifications in such taxable year, with 
2 the following limitations
applied in the order that 
3 they are listed:
4    (i) the addition modification relating to the 
5 net operating loss
carried back or forward to the 
6 taxable year from any taxable year ending
prior to 
7 December 31, 1986 shall be reduced by the amount of 
8 addition
modification under this subparagraph (E) 
9 which related to that net
operating loss and which 
10 was taken into account in calculating the base

11 income of an earlier taxable year, and
12    (ii) the addition modification relating to the 
13 net operating loss
carried back or forward to the 
14 taxable year from any taxable year ending
prior to 
15 December 31, 1986 shall not exceed the amount of 
16 such carryback or
carryforward;
17   For taxable years in which there is a net operating 
18 loss carryback or
carryforward from more than one other 
19 taxable year ending prior to December
31, 1986, the 
20 addition modification provided in this subparagraph 
21 (E) shall
be the sum of the amounts computed 
22 independently under the preceding
provisions of this 
23 subparagraph (E) for each such taxable year;
24   (F) For taxable years ending on or after January 1, 
25 1989, an amount
equal to the tax deducted pursuant to 
26 Section 164 of the Internal Revenue
Code if the trust 
 
 
SB0015- 52 -LRB097 06652 HLH 46738 b


1 or estate is claiming the same tax for purposes of the

2 Illinois foreign tax credit under Section 601 of this 
3 Act;
4   (G) An amount equal to the amount of the capital 
5 gain deduction
allowable under the Internal Revenue 
6 Code, to the extent deducted from
gross income in the 
7 computation of taxable income;
8   (G-5) For taxable years ending after December 31, 
9 1997, an
amount equal to any eligible remediation costs 
10 that the trust or estate
deducted in computing adjusted 
11 gross income and for which the trust
or estate claims a 
12 credit under subsection (l) of Section 201;
13   (G-10) For taxable years 2001 and thereafter, an 
14 amount equal to the
bonus depreciation deduction taken 
15 on the taxpayer's federal income tax return for the 
16 taxable
year under subsection (k) of Section 168 of the 
17 Internal Revenue Code; and
18   (G-11) If the taxpayer sells, transfers, abandons, 
19 or otherwise disposes of property for which the 
20 taxpayer was required in any taxable year to
make an 
21 addition modification under subparagraph (G-10), then 
22 an amount equal
to the aggregate amount of the 
23 deductions taken in all taxable
years under 
24 subparagraph (R) with respect to that property.
25   If the taxpayer continues to own property through 
26 the last day of the last tax year for which the 
 
 
SB0015- 53 -LRB097 06652 HLH 46738 b


1 taxpayer may claim a depreciation deduction for 
2 federal income tax purposes and for which the taxpayer 
3 was allowed in any taxable year to make a subtraction 
4 modification under subparagraph (R), then an amount 
5 equal to that subtraction modification.

6   The taxpayer is required to make the addition 
7 modification under this
subparagraph
only once with 
8 respect to any one piece of property;
9   (G-12) An amount equal to the amount otherwise 
10 allowed as a deduction in computing base income for 
11 interest paid, accrued, or incurred, directly or 
12 indirectly, (i) for taxable years ending on or after 
13 December 31, 2004, to a foreign person who would be a 
14 member of the same unitary business group but for the 
15 fact that the foreign person's business activity 
16 outside the United States is 80% or more of the foreign 
17 person's total business activity and (ii) for taxable 
18 years ending on or after December 31, 2008, to a person 
19 who would be a member of the same unitary business 
20 group but for the fact that the person is prohibited 
21 under Section 1501(a)(27) from being included in the 
22 unitary business group because he or she is ordinarily 
23 required to apportion business income under different 
24 subsections of Section 304. The addition modification 
25 required by this subparagraph shall be reduced to the 
26 extent that dividends were included in base income of 
 
 
SB0015- 54 -LRB097 06652 HLH 46738 b


1 the unitary group for the same taxable year and 
2 received by the taxpayer or by a member of the 
3 taxpayer's unitary business group (including amounts 
4 included in gross income pursuant to Sections 951 
5 through 964 of the Internal Revenue Code and amounts 
6 included in gross income under Section 78 of the 
7 Internal Revenue Code) with respect to the stock of the 
8 same person to whom the interest was paid, accrued, or 
9 incurred.

10   This paragraph shall not apply to the following:

11    (i) an item of interest paid, accrued, or 
12 incurred, directly or indirectly, to a person who 
13 is subject in a foreign country or state, other 
14 than a state which requires mandatory unitary 
15 reporting, to a tax on or measured by net income 
16 with respect to such interest; or
17    (ii) an item of interest paid, accrued, or 
18 incurred, directly or indirectly, to a person if 
19 the taxpayer can establish, based on a 
20 preponderance of the evidence, both of the 
21 following:
22     (a) the person, during the same taxable 
23 year, paid, accrued, or incurred, the interest 
24 to a person that is not a related member, and
25     (b) the transaction giving rise to the 
26 interest expense between the taxpayer and the 
 
 
SB0015- 55 -LRB097 06652 HLH 46738 b


1 person did not have as a principal purpose the 
2 avoidance of Illinois income tax, and is paid 
3 pursuant to a contract or agreement that 
4 reflects an arm's-length interest rate and 
5 terms; or

6    (iii) the taxpayer can establish, based on 
7 clear and convincing evidence, that the interest 
8 paid, accrued, or incurred relates to a contract or 
9 agreement entered into at arm's-length rates and 
10 terms and the principal purpose for the payment is 
11 not federal or Illinois tax avoidance; or

12    (iv) an item of interest paid, accrued, or 
13 incurred, directly or indirectly, to a person if 
14 the taxpayer establishes by clear and convincing 
15 evidence that the adjustments are unreasonable; or 
16 if the taxpayer and the Director agree in writing 
17 to the application or use of an alternative method 
18 of apportionment under Section 304(f).

19    Nothing in this subsection shall preclude the 
20 Director from making any other adjustment 
21 otherwise allowed under Section 404 of this Act for 
22 any tax year beginning after the effective date of 
23 this amendment provided such adjustment is made 
24 pursuant to regulation adopted by the Department 
25 and such regulations provide methods and standards 
26 by which the Department will utilize its authority 
 
 
SB0015- 56 -LRB097 06652 HLH 46738 b


1 under Section 404 of this Act;

2   (G-13) An amount equal to the amount of intangible 
3 expenses and costs otherwise allowed as a deduction in 
4 computing base income, and that were paid, accrued, or 
5 incurred, directly or indirectly, (i) for taxable 
6 years ending on or after December 31, 2004, to a 
7 foreign person who would be a member of the same 
8 unitary business group but for the fact that the 
9 foreign person's business activity outside the United 
10 States is 80% or more of that person's total business 
11 activity and (ii) for taxable years ending on or after 
12 December 31, 2008, to a person who would be a member of 
13 the same unitary business group but for the fact that 
14 the person is prohibited under Section 1501(a)(27) 
15 from being included in the unitary business group 
16 because he or she is ordinarily required to apportion 
17 business income under different subsections of Section 
18 304. The addition modification required by this 
19 subparagraph shall be reduced to the extent that 
20 dividends were included in base income of the unitary 
21 group for the same taxable year and received by the 
22 taxpayer or by a member of the taxpayer's unitary 
23 business group (including amounts included in gross 
24 income pursuant to Sections 951 through 964 of the 
25 Internal Revenue Code and amounts included in gross 
26 income under Section 78 of the Internal Revenue Code) 
 
 
SB0015- 57 -LRB097 06652 HLH 46738 b


1 with respect to the stock of the same person to whom 
2 the intangible expenses and costs were directly or 
3 indirectly paid, incurred, or accrued. The preceding 
4 sentence shall not apply to the extent that the same 
5 dividends caused a reduction to the addition 
6 modification required under Section 203(c)(2)(G-12) of 
7 this Act. As used in this subparagraph, the term 
8 "intangible expenses and costs" includes: (1) 
9 expenses, losses, and costs for or related to the 
10 direct or indirect acquisition, use, maintenance or 
11 management, ownership, sale, exchange, or any other 
12 disposition of intangible property; (2) losses 
13 incurred, directly or indirectly, from factoring 
14 transactions or discounting transactions; (3) royalty, 
15 patent, technical, and copyright fees; (4) licensing 
16 fees; and (5) other similar expenses and costs. For 
17 purposes of this subparagraph, "intangible property" 
18 includes patents, patent applications, trade names, 
19 trademarks, service marks, copyrights, mask works, 
20 trade secrets, and similar types of intangible assets.
21   This paragraph shall not apply to the following:
22    (i) any item of intangible expenses or costs 
23 paid, accrued, or incurred, directly or 
24 indirectly, from a transaction with a person who is 
25 subject in a foreign country or state, other than a 
26 state which requires mandatory unitary reporting, 
 
 
SB0015- 58 -LRB097 06652 HLH 46738 b


1 to a tax on or measured by net income with respect 
2 to such item; or
3    (ii) any item of intangible expense or cost 
4 paid, accrued, or incurred, directly or 
5 indirectly, if the taxpayer can establish, based 
6 on a preponderance of the evidence, both of the 
7 following:
8     (a) the person during the same taxable 
9 year paid, accrued, or incurred, the 
10 intangible expense or cost to a person that is 
11 not a related member, and
12     (b) the transaction giving rise to the 
13 intangible expense or cost between the 
14 taxpayer and the person did not have as a 
15 principal purpose the avoidance of Illinois 
16 income tax, and is paid pursuant to a contract 
17 or agreement that reflects arm's-length terms; 
18 or
19    (iii) any item of intangible expense or cost 
20 paid, accrued, or incurred, directly or 
21 indirectly, from a transaction with a person if the 
22 taxpayer establishes by clear and convincing 
23 evidence, that the adjustments are unreasonable; 
24 or if the taxpayer and the Director agree in 
25 writing to the application or use of an alternative 
26 method of apportionment under Section 304(f);

 
 
SB0015- 59 -LRB097 06652 HLH 46738 b


1    Nothing in this subsection shall preclude the 
2 Director from making any other adjustment 
3 otherwise allowed under Section 404 of this Act for 
4 any tax year beginning after the effective date of 
5 this amendment provided such adjustment is made 
6 pursuant to regulation adopted by the Department 
7 and such regulations provide methods and standards 
8 by which the Department will utilize its authority 
9 under Section 404 of this Act;

10   (G-14) For taxable years ending on or after 
11 December 31, 2008, an amount equal to the amount of 
12 insurance premium expenses and costs otherwise allowed 
13 as a deduction in computing base income, and that were 
14 paid, accrued, or incurred, directly or indirectly, to 
15 a person who would be a member of the same unitary 
16 business group but for the fact that the person is 
17 prohibited under Section 1501(a)(27) from being 
18 included in the unitary business group because he or 
19 she is ordinarily required to apportion business 
20 income under different subsections of Section 304. The 
21 addition modification required by this subparagraph 
22 shall be reduced to the extent that dividends were 
23 included in base income of the unitary group for the 
24 same taxable year and received by the taxpayer or by a 
25 member of the taxpayer's unitary business group 
26 (including amounts included in gross income under 
 
 
SB0015- 60 -LRB097 06652 HLH 46738 b


1 Sections 951 through 964 of the Internal Revenue Code 
2 and amounts included in gross income under Section 78 
3 of the Internal Revenue Code) with respect to the stock 
4 of the same person to whom the premiums and costs were 
5 directly or indirectly paid, incurred, or accrued. The 
6 preceding sentence does not apply to the extent that 
7 the same dividends caused a reduction to the addition 
8 modification required under Section 203(c)(2)(G-12) or 
9 Section 203(c)(2)(G-13) of this Act;
10   (G-15) An amount equal to the credit allowable to 
11 the taxpayer under Section 218(a) of this Act, 
12 determined without regard to Section 218(c) of this 
13 Act;
14 and by deducting from the total so obtained the sum of the 
15 following
amounts:
16   (H) An amount equal to all amounts included in such 
17 total pursuant
to the provisions of Sections 402(a), 
18 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the 
19 Internal Revenue Code or included in such total as

20 distributions under the provisions of any retirement 
21 or disability plan for
employees of any governmental 
22 agency or unit, or retirement payments to
retired 
23 partners, which payments are excluded in computing net 
24 earnings
from self employment by Section 1402 of the 
25 Internal Revenue Code and
regulations adopted pursuant 
26 thereto;
 
 
SB0015- 61 -LRB097 06652 HLH 46738 b


1   (I) The valuation limitation amount;
2   (J) An amount equal to the amount of any tax 
3 imposed by this Act
which was refunded to the taxpayer 
4 and included in such total for the
taxable year;
5   (K) An amount equal to all amounts included in 
6 taxable income as
modified by subparagraphs (A), (B), 
7 (C), (D), (E), (F) and (G) which
are exempt from 
8 taxation by this State either by reason of its statutes 
9 or
Constitution
or by reason of the Constitution, 
10 treaties or statutes of the United States;
provided 
11 that, in the case of any statute of this State that 
12 exempts income
derived from bonds or other obligations 
13 from the tax imposed under this Act,
the amount 
14 exempted shall be the interest net of bond premium 
15 amortization;
16   (L) With the exception of any amounts subtracted 
17 under subparagraph
(K),
an amount equal to the sum of 
18 all amounts disallowed as
deductions by (i) Sections 
19 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, 
20 as now or hereafter amended, and all amounts of 
21 expenses allocable
to interest and disallowed as 
22 deductions by Section 265(1) of the Internal
Revenue 
23 Code of 1954, as now or hereafter amended;
and (ii) for 
24 taxable years
ending on or after August 13, 1999, 
25 Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of 
26 the Internal Revenue Code; the provisions of this

 
 
SB0015- 62 -LRB097 06652 HLH 46738 b


1 subparagraph are exempt from the provisions of Section 
2 250;
3   (M) An amount equal to those dividends included in 
4 such total
which were paid by a corporation which 
5 conducts business operations in an
Enterprise Zone or 
6 zones created under the Illinois Enterprise Zone Act or 
7 a River Edge Redevelopment Zone or zones created under 
8 the River Edge Redevelopment Zone Act and
conducts 
9 substantially all of its operations in an Enterprise 
10 Zone or Zones or a River Edge Redevelopment Zone or 
11 zones. This subparagraph (M) is exempt from the 
12 provisions of Section 250;
13   (N) An amount equal to any contribution made to a 
14 job training
project established pursuant to the Tax 
15 Increment Allocation
Redevelopment Act;
16   (O) An amount equal to those dividends included in 
17 such total
that were paid by a corporation that 
18 conducts business operations in a
federally designated 
19 Foreign Trade Zone or Sub-Zone and that is designated
a 
20 High Impact Business located in Illinois; provided 
21 that dividends eligible
for the deduction provided in 
22 subparagraph (M) of paragraph (2) of this
subsection 
23 shall not be eligible for the deduction provided under 
24 this
subparagraph (O);
25   (P) An amount equal to the amount of the deduction 
26 used to compute the
federal income tax credit for 
 
 
SB0015- 63 -LRB097 06652 HLH 46738 b


1 restoration of substantial amounts held under
claim of 
2 right for the taxable year pursuant to Section 1341 of 
3 the
Internal Revenue Code of 1986;
4   (Q) For taxable year 1999 and thereafter, an amount 
5 equal to the
amount of any
(i) distributions, to the 
6 extent includible in gross income for
federal income 
7 tax purposes, made to the taxpayer because of
his or 
8 her status as a victim of
persecution for racial or 
9 religious reasons by Nazi Germany or any other Axis

10 regime or as an heir of the victim and (ii) items
of 
11 income, to the extent
includible in gross income for 
12 federal income tax purposes, attributable to,
derived 
13 from or in any way related to assets stolen from, 
14 hidden from, or
otherwise lost to a victim of

15 persecution for racial or religious reasons by Nazi

16 Germany or any other Axis regime
immediately prior to, 
17 during, and immediately after World War II, including,

18 but
not limited to, interest on the proceeds receivable 
19 as insurance
under policies issued to a victim of 
20 persecution for racial or religious
reasons by Nazi 
21 Germany or any other Axis regime by European insurance

22 companies
immediately prior to and during World War II;

23 provided, however, this subtraction from federal 
24 adjusted gross income does not
apply to assets acquired 
25 with such assets or with the proceeds from the sale of

26 such assets; provided, further, this paragraph shall 
 
 
SB0015- 64 -LRB097 06652 HLH 46738 b


1 only apply to a taxpayer
who was the first recipient of 
2 such assets after their recovery and who is a
victim of

3 persecution for racial or religious reasons
by Nazi 
4 Germany or any other Axis regime or as an heir of the 
5 victim. The
amount of and the eligibility for any 
6 public assistance, benefit, or
similar entitlement is 
7 not affected by the inclusion of items (i) and (ii) of

8 this paragraph in gross income for federal income tax 
9 purposes.
This paragraph is exempt from the provisions 
10 of Section 250;
11   (R) For taxable years 2001 and thereafter, for the 
12 taxable year in
which the bonus depreciation deduction

13 is taken on the taxpayer's federal income tax return 
14 under
subsection (k) of Section 168 of the Internal 
15 Revenue Code and for each
applicable taxable year 
16 thereafter, an amount equal to "x", where:
17    (1) "y" equals the amount of the depreciation 
18 deduction taken for the
taxable year
on the 
19 taxpayer's federal income tax return on property 
20 for which the bonus
depreciation deduction
was 
21 taken in any year under subsection (k) of Section 
22 168 of the Internal
Revenue Code, but not including 
23 the bonus depreciation deduction;
24    (2) for taxable years ending on or before 
25 December 31, 2005, "x" equals "y" multiplied by 30 
26 and then divided by 70 (or "y"
multiplied by 
 
 
SB0015- 65 -LRB097 06652 HLH 46738 b


1 0.429); and
2    (3) for taxable years ending after December 
3 31, 2005:
4     (i) for property on which a bonus 
5 depreciation deduction of 30% of the adjusted 
6 basis was taken, "x" equals "y" multiplied by 
7 30 and then divided by 70 (or "y"
multiplied by 
8 0.429); and
9     (ii) for property on which a bonus 
10 depreciation deduction of 50% of the adjusted 
11 basis was taken, "x" equals "y" multiplied by 
12 1.0.
13   The aggregate amount deducted under this 
14 subparagraph in all taxable
years for any one piece of 
15 property may not exceed the amount of the bonus

16 depreciation deduction
taken on that property on the 
17 taxpayer's federal income tax return under
subsection 
18 (k) of Section 168 of the Internal Revenue Code. This 
19 subparagraph (R) is exempt from the provisions of 
20 Section 250;
21   (S) If the taxpayer sells, transfers, abandons, or 
22 otherwise disposes of
property for which the taxpayer 
23 was required in any taxable year to make an
addition 
24 modification under subparagraph (G-10), then an amount 
25 equal to that
addition modification.
26   If the taxpayer continues to own property through 
 
 
SB0015- 66 -LRB097 06652 HLH 46738 b


1 the last day of the last tax year for which the 
2 taxpayer may claim a depreciation deduction for 
3 federal income tax purposes and for which the taxpayer 
4 was required in any taxable year to make an addition 
5 modification under subparagraph (G-10), then an amount 
6 equal to that addition modification.

7   The taxpayer is allowed to take the deduction under 
8 this subparagraph
only once with respect to any one 
9 piece of property.
10   This subparagraph (S) is exempt from the 
11 provisions of Section 250;
12   (T) The amount of (i) any interest income (net of 
13 the deductions allocable thereto) taken into account 
14 for the taxable year with respect to a transaction with 
15 a taxpayer that is required to make an addition 
16 modification with respect to such transaction under 
17 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
18 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
19 the amount of such addition modification and
(ii) any 
20 income from intangible property (net of the deductions 
21 allocable thereto) taken into account for the taxable 
22 year with respect to a transaction with a taxpayer that 
23 is required to make an addition modification with 
24 respect to such transaction under Section 
25 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
26 203(d)(2)(D-8), but not to exceed the amount of such 
 
 
SB0015- 67 -LRB097 06652 HLH 46738 b


1 addition modification. This subparagraph (T) is exempt 
2 from the provisions of Section 250;

3   (U) An amount equal to the interest income taken 
4 into account for the taxable year (net of the 
5 deductions allocable thereto) with respect to 
6 transactions with (i) a foreign person who would be a 
7 member of the taxpayer's unitary business group but for 
8 the fact the foreign person's business activity 
9 outside the United States is 80% or more of that 
10 person's total business activity and (ii) for taxable 
11 years ending on or after December 31, 2008, to a person 
12 who would be a member of the same unitary business 
13 group but for the fact that the person is prohibited 
14 under Section 1501(a)(27) from being included in the 
15 unitary business group because he or she is ordinarily 
16 required to apportion business income under different 
17 subsections of Section 304, but not to exceed the 
18 addition modification required to be made for the same 
19 taxable year under Section 203(c)(2)(G-12) for 
20 interest paid, accrued, or incurred, directly or 
21 indirectly, to the same person. This subparagraph (U) 
22 is exempt from the provisions of Section 250; and 
23   (V) An amount equal to the income from intangible 
24 property taken into account for the taxable year (net 
25 of the deductions allocable thereto) with respect to 
26 transactions with (i) a foreign person who would be a 
 
 
SB0015- 68 -LRB097 06652 HLH 46738 b


1 member of the taxpayer's unitary business group but for 
2 the fact that the foreign person's business activity 
3 outside the United States is 80% or more of that 
4 person's total business activity and (ii) for taxable 
5 years ending on or after December 31, 2008, to a person 
6 who would be a member of the same unitary business 
7 group but for the fact that the person is prohibited 
8 under Section 1501(a)(27) from being included in the 
9 unitary business group because he or she is ordinarily 
10 required to apportion business income under different 
11 subsections of Section 304, but not to exceed the 
12 addition modification required to be made for the same 
13 taxable year under Section 203(c)(2)(G-13) for 
14 intangible expenses and costs paid, accrued, or 
15 incurred, directly or indirectly, to the same foreign 
16 person. This subparagraph (V) is exempt from the 
17 provisions of Section 250.

18  (3) Limitation. The amount of any modification 
19 otherwise required
under this subsection shall, under 
20 regulations prescribed by the
Department, be adjusted by 
21 any amounts included therein which were
properly paid, 
22 credited, or required to be distributed, or permanently set

23 aside for charitable purposes pursuant to Internal Revenue 
24 Code Section
642(c) during the taxable year.

25 (d) Partnerships.
 
 
SB0015- 69 -LRB097 06652 HLH 46738 b


1  (1) In general. In the case of a partnership, base 
2 income means an
amount equal to the taxpayer's taxable 
3 income for the taxable year as
modified by paragraph (2).
4  (2) Modifications. The taxable income referred to in 
5 paragraph (1)
shall be modified by adding thereto the sum 
6 of the following amounts:
7   (A) An amount equal to all amounts paid or accrued 
8 to the taxpayer as
interest or dividends during the 
9 taxable year to the extent excluded from
gross income 
10 in the computation of taxable income;
11   (B) An amount equal to the amount of tax imposed by 
12 this Act to the
extent deducted from gross income for 
13 the taxable year;
14   (C) The amount of deductions allowed to the 
15 partnership pursuant to
Section 707 (c) of the Internal 
16 Revenue Code in calculating its taxable income;
17   (D) An amount equal to the amount of the capital 
18 gain deduction
allowable under the Internal Revenue 
19 Code, to the extent deducted from
gross income in the 
20 computation of taxable income;
21   (D-5) For taxable years 2001 and thereafter, an 
22 amount equal to the
bonus depreciation deduction taken 
23 on the taxpayer's federal income tax return for the 
24 taxable
year under subsection (k) of Section 168 of the 
25 Internal Revenue Code;
26   (D-6) If the taxpayer sells, transfers, abandons, 
 
 
SB0015- 70 -LRB097 06652 HLH 46738 b


1 or otherwise disposes of
property for which the 
2 taxpayer was required in any taxable year to make an

3 addition modification under subparagraph (D-5), then 
4 an amount equal to the
aggregate amount of the 
5 deductions taken in all taxable years
under 
6 subparagraph (O) with respect to that property.
7   If the taxpayer continues to own property through 
8 the last day of the last tax year for which the 
9 taxpayer may claim a depreciation deduction for 
10 federal income tax purposes and for which the taxpayer 
11 was allowed in any taxable year to make a subtraction 
12 modification under subparagraph (O), then an amount 
13 equal to that subtraction modification.

14   The taxpayer is required to make the addition 
15 modification under this
subparagraph
only once with 
16 respect to any one piece of property;
17   (D-7) An amount equal to the amount otherwise 
18 allowed as a deduction in computing base income for 
19 interest paid, accrued, or incurred, directly or 
20 indirectly, (i) for taxable years ending on or after 
21 December 31, 2004, to a foreign person who would be a 
22 member of the same unitary business group but for the 
23 fact the foreign person's business activity outside 
24 the United States is 80% or more of the foreign 
25 person's total business activity and (ii) for taxable 
26 years ending on or after December 31, 2008, to a person 
 
 
SB0015- 71 -LRB097 06652 HLH 46738 b


1 who would be a member of the same unitary business 
2 group but for the fact that the person is prohibited 
3 under Section 1501(a)(27) from being included in the 
4 unitary business group because he or she is ordinarily 
5 required to apportion business income under different 
6 subsections of Section 304. The addition modification 
7 required by this subparagraph shall be reduced to the 
8 extent that dividends were included in base income of 
9 the unitary group for the same taxable year and 
10 received by the taxpayer or by a member of the 
11 taxpayer's unitary business group (including amounts 
12 included in gross income pursuant to Sections 951 
13 through 964 of the Internal Revenue Code and amounts 
14 included in gross income under Section 78 of the 
15 Internal Revenue Code) with respect to the stock of the 
16 same person to whom the interest was paid, accrued, or 
17 incurred.

18   This paragraph shall not apply to the following:

19    (i) an item of interest paid, accrued, or 
20 incurred, directly or indirectly, to a person who 
21 is subject in a foreign country or state, other 
22 than a state which requires mandatory unitary 
23 reporting, to a tax on or measured by net income 
24 with respect to such interest; or
25    (ii) an item of interest paid, accrued, or 
26 incurred, directly or indirectly, to a person if 
 
 
SB0015- 72 -LRB097 06652 HLH 46738 b


1 the taxpayer can establish, based on a 
2 preponderance of the evidence, both of the 
3 following:
4     (a) the person, during the same taxable 
5 year, paid, accrued, or incurred, the interest 
6 to a person that is not a related member, and
7     (b) the transaction giving rise to the 
8 interest expense between the taxpayer and the 
9 person did not have as a principal purpose the 
10 avoidance of Illinois income tax, and is paid 
11 pursuant to a contract or agreement that 
12 reflects an arm's-length interest rate and 
13 terms; or

14    (iii) the taxpayer can establish, based on 
15 clear and convincing evidence, that the interest 
16 paid, accrued, or incurred relates to a contract or 
17 agreement entered into at arm's-length rates and 
18 terms and the principal purpose for the payment is 
19 not federal or Illinois tax avoidance; or

20    (iv) an item of interest paid, accrued, or 
21 incurred, directly or indirectly, to a person if 
22 the taxpayer establishes by clear and convincing 
23 evidence that the adjustments are unreasonable; or 
24 if the taxpayer and the Director agree in writing 
25 to the application or use of an alternative method 
26 of apportionment under Section 304(f).

 
 
SB0015- 73 -LRB097 06652 HLH 46738 b


1    Nothing in this subsection shall preclude the 
2 Director from making any other adjustment 
3 otherwise allowed under Section 404 of this Act for 
4 any tax year beginning after the effective date of 
5 this amendment provided such adjustment is made 
6 pursuant to regulation adopted by the Department 
7 and such regulations provide methods and standards 
8 by which the Department will utilize its authority 
9 under Section 404 of this Act; and

10   (D-8) An amount equal to the amount of intangible 
11 expenses and costs otherwise allowed as a deduction in 
12 computing base income, and that were paid, accrued, or 
13 incurred, directly or indirectly, (i) for taxable 
14 years ending on or after December 31, 2004, to a 
15 foreign person who would be a member of the same 
16 unitary business group but for the fact that the 
17 foreign person's business activity outside the United 
18 States is 80% or more of that person's total business 
19 activity and (ii) for taxable years ending on or after 
20 December 31, 2008, to a person who would be a member of 
21 the same unitary business group but for the fact that 
22 the person is prohibited under Section 1501(a)(27) 
23 from being included in the unitary business group 
24 because he or she is ordinarily required to apportion 
25 business income under different subsections of Section 
26 304. The addition modification required by this 
 
 
SB0015- 74 -LRB097 06652 HLH 46738 b


1 subparagraph shall be reduced to the extent that 
2 dividends were included in base income of the unitary 
3 group for the same taxable year and received by the 
4 taxpayer or by a member of the taxpayer's unitary 
5 business group (including amounts included in gross 
6 income pursuant to Sections 951 through 964 of the 
7 Internal Revenue Code and amounts included in gross 
8 income under Section 78 of the Internal Revenue Code) 
9 with respect to the stock of the same person to whom 
10 the intangible expenses and costs were directly or 
11 indirectly paid, incurred or accrued. The preceding 
12 sentence shall not apply to the extent that the same 
13 dividends caused a reduction to the addition 
14 modification required under Section 203(d)(2)(D-7) of 
15 this Act. As used in this subparagraph, the term 
16 "intangible expenses and costs" includes (1) expenses, 
17 losses, and costs for, or related to, the direct or 
18 indirect acquisition, use, maintenance or management, 
19 ownership, sale, exchange, or any other disposition of 
20 intangible property; (2) losses incurred, directly or 
21 indirectly, from factoring transactions or discounting 
22 transactions; (3) royalty, patent, technical, and 
23 copyright fees; (4) licensing fees; and (5) other 
24 similar expenses and costs. For purposes of this 
25 subparagraph, "intangible property" includes patents, 
26 patent applications, trade names, trademarks, service 
 
 
SB0015- 75 -LRB097 06652 HLH 46738 b


1 marks, copyrights, mask works, trade secrets, and 
2 similar types of intangible assets;
3   This paragraph shall not apply to the following:
4    (i) any item of intangible expenses or costs 
5 paid, accrued, or incurred, directly or 
6 indirectly, from a transaction with a person who is 
7 subject in a foreign country or state, other than a 
8 state which requires mandatory unitary reporting, 
9 to a tax on or measured by net income with respect 
10 to such item; or
11    (ii) any item of intangible expense or cost 
12 paid, accrued, or incurred, directly or 
13 indirectly, if the taxpayer can establish, based 
14 on a preponderance of the evidence, both of the 
15 following:
16     (a) the person during the same taxable 
17 year paid, accrued, or incurred, the 
18 intangible expense or cost to a person that is 
19 not a related member, and
20     (b) the transaction giving rise to the 
21 intangible expense or cost between the 
22 taxpayer and the person did not have as a 
23 principal purpose the avoidance of Illinois 
24 income tax, and is paid pursuant to a contract 
25 or agreement that reflects arm's-length terms; 
26 or
 
 
SB0015- 76 -LRB097 06652 HLH 46738 b


1    (iii) any item of intangible expense or cost 
2 paid, accrued, or incurred, directly or 
3 indirectly, from a transaction with a person if the 
4 taxpayer establishes by clear and convincing 
5 evidence, that the adjustments are unreasonable; 
6 or if the taxpayer and the Director agree in 
7 writing to the application or use of an alternative 
8 method of apportionment under Section 304(f);

9    Nothing in this subsection shall preclude the 
10 Director from making any other adjustment 
11 otherwise allowed under Section 404 of this Act for 
12 any tax year beginning after the effective date of 
13 this amendment provided such adjustment is made 
14 pursuant to regulation adopted by the Department 
15 and such regulations provide methods and standards 
16 by which the Department will utilize its authority 
17 under Section 404 of this Act;

18   (D-9) For taxable years ending on or after December 
19 31, 2008, an amount equal to the amount of insurance 
20 premium expenses and costs otherwise allowed as a 
21 deduction in computing base income, and that were paid, 
22 accrued, or incurred, directly or indirectly, to a 
23 person who would be a member of the same unitary 
24 business group but for the fact that the person is 
25 prohibited under Section 1501(a)(27) from being 
26 included in the unitary business group because he or 
 
 
SB0015- 77 -LRB097 06652 HLH 46738 b


1 she is ordinarily required to apportion business 
2 income under different subsections of Section 304. The 
3 addition modification required by this subparagraph 
4 shall be reduced to the extent that dividends were 
5 included in base income of the unitary group for the 
6 same taxable year and received by the taxpayer or by a 
7 member of the taxpayer's unitary business group 
8 (including amounts included in gross income under 
9 Sections 951 through 964 of the Internal Revenue Code 
10 and amounts included in gross income under Section 78 
11 of the Internal Revenue Code) with respect to the stock 
12 of the same person to whom the premiums and costs were 
13 directly or indirectly paid, incurred, or accrued. The 
14 preceding sentence does not apply to the extent that 
15 the same dividends caused a reduction to the addition 
16 modification required under Section 203(d)(2)(D-7) or 
17 Section 203(d)(2)(D-8) of this Act;
18   (D-10) An amount equal to the credit allowable to 
19 the taxpayer under Section 218(a) of this Act, 
20 determined without regard to Section 218(c) of this 
21 Act;
22 and by deducting from the total so obtained the following 
23 amounts:
24   (E) The valuation limitation amount;
25   (F) An amount equal to the amount of any tax 
26 imposed by this Act which
was refunded to the taxpayer 
 
 
SB0015- 78 -LRB097 06652 HLH 46738 b


1 and included in such total for the taxable year;
2   (G) An amount equal to all amounts included in 
3 taxable income as
modified by subparagraphs (A), (B), 
4 (C) and (D) which are exempt from
taxation by this 
5 State either by reason of its statutes or Constitution 
6 or
by reason of
the Constitution, treaties or statutes 
7 of the United States;
provided that, in the case of any 
8 statute of this State that exempts income
derived from 
9 bonds or other obligations from the tax imposed under 
10 this Act,
the amount exempted shall be the interest net 
11 of bond premium amortization;
12   (H) Any income of the partnership which 
13 constitutes personal service
income as defined in 
14 Section 1348 (b) (1) of the Internal Revenue Code (as

15 in effect December 31, 1981) or a reasonable allowance 
16 for compensation
paid or accrued for services rendered 
17 by partners to the partnership,
whichever is greater;
18   (I) An amount equal to all amounts of income 
19 distributable to an entity
subject to the Personal 
20 Property Tax Replacement Income Tax imposed by

21 subsections (c) and (d) of Section 201 of this Act 
22 including amounts
distributable to organizations 
23 exempt from federal income tax by reason of
Section 
24 501(a) of the Internal Revenue Code;
25   (J) With the exception of any amounts subtracted 
26 under subparagraph
(G),
an amount equal to the sum of 
 
 
SB0015- 79 -LRB097 06652 HLH 46738 b


1 all amounts disallowed as deductions
by (i) Sections 
2 171(a) (2), and 265(2) of the Internal Revenue Code of 
3 1954,
as now or hereafter amended, and all amounts of 
4 expenses allocable to
interest and disallowed as 
5 deductions by Section 265(1) of the Internal
Revenue 
6 Code, as now or hereafter amended;
and (ii) for taxable 
7 years
ending on or after August 13, 1999, Sections

8 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
9 Internal Revenue Code; the provisions of this

10 subparagraph are exempt from the provisions of Section 
11 250;
12   (K) An amount equal to those dividends included in 
13 such total which were
paid by a corporation which 
14 conducts business operations in an Enterprise
Zone or 
15 zones created under the Illinois Enterprise Zone Act, 
16 enacted by
the 82nd General Assembly, or a River Edge 
17 Redevelopment Zone or zones created under the River 
18 Edge Redevelopment Zone Act and
conducts substantially 
19 all of its operations
in an Enterprise Zone or Zones or 
20 from a River Edge Redevelopment Zone or zones. This 
21 subparagraph (K) is exempt from the provisions of 
22 Section 250;
23   (L) An amount equal to any contribution made to a 
24 job training project
established pursuant to the Real 
25 Property Tax Increment Allocation
Redevelopment Act;
26   (M) An amount equal to those dividends included in 
 
 
SB0015- 80 -LRB097 06652 HLH 46738 b


1 such total
that were paid by a corporation that 
2 conducts business operations in a
federally designated 
3 Foreign Trade Zone or Sub-Zone and that is designated a

4 High Impact Business located in Illinois; provided 
5 that dividends eligible
for the deduction provided in 
6 subparagraph (K) of paragraph (2) of this
subsection 
7 shall not be eligible for the deduction provided under 
8 this
subparagraph (M);
9   (N) An amount equal to the amount of the deduction 
10 used to compute the
federal income tax credit for 
11 restoration of substantial amounts held under
claim of 
12 right for the taxable year pursuant to Section 1341 of 
13 the
Internal Revenue Code of 1986;
14   (O) For taxable years 2001 and thereafter, for the 
15 taxable year in
which the bonus depreciation deduction

16 is taken on the taxpayer's federal income tax return 
17 under
subsection (k) of Section 168 of the Internal 
18 Revenue Code and for each
applicable taxable year 
19 thereafter, an amount equal to "x", where:
20    (1) "y" equals the amount of the depreciation 
21 deduction taken for the
taxable year
on the 
22 taxpayer's federal income tax return on property 
23 for which the bonus
depreciation deduction
was 
24 taken in any year under subsection (k) of Section 
25 168 of the Internal
Revenue Code, but not including 
26 the bonus depreciation deduction;
 
 
SB0015- 81 -LRB097 06652 HLH 46738 b


1    (2) for taxable years ending on or before 
2 December 31, 2005, "x" equals "y" multiplied by 30 
3 and then divided by 70 (or "y"
multiplied by 
4 0.429); and
5    (3) for taxable years ending after December 
6 31, 2005:
7     (i) for property on which a bonus 
8 depreciation deduction of 30% of the adjusted 
9 basis was taken, "x" equals "y" multiplied by 
10 30 and then divided by 70 (or "y"
multiplied by 
11 0.429); and
12     (ii) for property on which a bonus 
13 depreciation deduction of 50% of the adjusted 
14 basis was taken, "x" equals "y" multiplied by 
15 1.0.
16   The aggregate amount deducted under this 
17 subparagraph in all taxable
years for any one piece of 
18 property may not exceed the amount of the bonus

19 depreciation deduction
taken on that property on the 
20 taxpayer's federal income tax return under
subsection 
21 (k) of Section 168 of the Internal Revenue Code. This 
22 subparagraph (O) is exempt from the provisions of 
23 Section 250;
24   (P) If the taxpayer sells, transfers, abandons, or 
25 otherwise disposes of
property for which the taxpayer 
26 was required in any taxable year to make an
addition 
 
 
SB0015- 82 -LRB097 06652 HLH 46738 b


1 modification under subparagraph (D-5), then an amount 
2 equal to that
addition modification.
3   If the taxpayer continues to own property through 
4 the last day of the last tax year for which the 
5 taxpayer may claim a depreciation deduction for 
6 federal income tax purposes and for which the taxpayer 
7 was required in any taxable year to make an addition 
8 modification under subparagraph (D-5), then an amount 
9 equal to that addition modification.

10   The taxpayer is allowed to take the deduction under 
11 this subparagraph
only once with respect to any one 
12 piece of property.
13   This subparagraph (P) is exempt from the 
14 provisions of Section 250;
15   (Q) The amount of (i) any interest income (net of 
16 the deductions allocable thereto) taken into account 
17 for the taxable year with respect to a transaction with 
18 a taxpayer that is required to make an addition 
19 modification with respect to such transaction under 
20 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
21 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
22 the amount of such addition modification and
(ii) any 
23 income from intangible property (net of the deductions 
24 allocable thereto) taken into account for the taxable 
25 year with respect to a transaction with a taxpayer that 
26 is required to make an addition modification with 
 
 
SB0015- 83 -LRB097 06652 HLH 46738 b


1 respect to such transaction under Section 
2 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
3 203(d)(2)(D-8), but not to exceed the amount of such 
4 addition modification. This subparagraph (Q) is exempt 
5 from Section 250;

6   (R) An amount equal to the interest income taken 
7 into account for the taxable year (net of the 
8 deductions allocable thereto) with respect to 
9 transactions with (i) a foreign person who would be a 
10 member of the taxpayer's unitary business group but for 
11 the fact that the foreign person's business activity 
12 outside the United States is 80% or more of that 
13 person's total business activity and (ii) for taxable 
14 years ending on or after December 31, 2008, to a person 
15 who would be a member of the same unitary business 
16 group but for the fact that the person is prohibited 
17 under Section 1501(a)(27) from being included in the 
18 unitary business group because he or she is ordinarily 
19 required to apportion business income under different 
20 subsections of Section 304, but not to exceed the 
21 addition modification required to be made for the same 
22 taxable year under Section 203(d)(2)(D-7) for interest 
23 paid, accrued, or incurred, directly or indirectly, to 
24 the same person. This subparagraph (R) is exempt from 
25 Section 250; and 
26   (S) An amount equal to the income from intangible 
 
 
SB0015- 84 -LRB097 06652 HLH 46738 b


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


20 (e) Gross income; adjusted gross income; taxable income.
21  (1) In general. Subject to the provisions of paragraph 
22 (2) and
subsection (b) (3), for purposes of this Section 
23 and Section 803(e), a
taxpayer's gross income, adjusted 
24 gross income, or taxable income for
the taxable year shall 
25 mean the amount of gross income, adjusted gross
income or 
 
 
SB0015- 85 -LRB097 06652 HLH 46738 b


1 taxable income properly reportable for federal income tax

2 purposes for the taxable year under the provisions of the 
3 Internal
Revenue Code. Taxable income may be less than 
4 zero. However, for taxable
years ending on or after 
5 December 31, 1986, net operating loss
carryforwards from 
6 taxable years ending prior to December 31, 1986, may not

7 exceed the sum of federal taxable income for the taxable 
8 year before net
operating loss deduction, plus the excess 
9 of addition modifications over
subtraction modifications 
10 for the taxable year. For taxable years ending
prior to 
11 December 31, 1986, taxable income may never be an amount in 
12 excess
of the net operating loss for the taxable year as 
13 defined in subsections
(c) and (d) of Section 172 of the 
14 Internal Revenue Code, provided that when
taxable income of 
15 a corporation (other than a Subchapter S corporation),

16 trust, or estate is less than zero and addition 
17 modifications, other than
those provided by subparagraph 
18 (E) of paragraph (2) of subsection (b) for
corporations or 
19 subparagraph (E) of paragraph (2) of subsection (c) for

20 trusts and estates, exceed subtraction modifications, an 
21 addition
modification must be made under those 
22 subparagraphs for any other taxable
year to which the 
23 taxable income less than zero (net operating loss) is

24 applied under Section 172 of the Internal Revenue Code or 
25 under
subparagraph (E) of paragraph (2) of this subsection 
26 (e) applied in
conjunction with Section 172 of the Internal 
 
 
SB0015- 86 -LRB097 06652 HLH 46738 b


1 Revenue Code.
2  (2) Special rule. For purposes of paragraph (1) of this 
3 subsection,
the taxable income properly reportable for 
4 federal income tax purposes
shall mean:
5   (A) Certain life insurance companies. In the case 
6 of a life
insurance company subject to the tax imposed 
7 by Section 801 of the
Internal Revenue Code, life 
8 insurance company taxable income, plus the
amount of 
9 distribution from pre-1984 policyholder surplus 
10 accounts as
calculated under Section 815a of the 
11 Internal Revenue Code;
12   (B) Certain other insurance companies. In the case 
13 of mutual
insurance companies subject to the tax 
14 imposed by Section 831 of the
Internal Revenue Code, 
15 insurance company taxable income;
16   (C) Regulated investment companies. In the case of 
17 a regulated
investment company subject to the tax 
18 imposed by Section 852 of the
Internal Revenue Code, 
19 investment company taxable income;
20   (D) Real estate investment trusts. In the case of a 
21 real estate
investment trust subject to the tax imposed 
22 by Section 857 of the
Internal Revenue Code, real 
23 estate investment trust taxable income;
24   (E) Consolidated corporations. In the case of a 
25 corporation which
is a member of an affiliated group of 
26 corporations filing a consolidated
income tax return 
 
 
SB0015- 87 -LRB097 06652 HLH 46738 b


1 for the taxable year for federal income tax purposes,

2 taxable income determined as if such corporation had 
3 filed a separate
return for federal income tax purposes 
4 for the taxable year and each
preceding taxable year 
5 for which it was a member of an affiliated group.
For 
6 purposes of this subparagraph, the taxpayer's separate 
7 taxable
income shall be determined as if the election 
8 provided by Section
243(b) (2) of the Internal Revenue 
9 Code had been in effect for all such years;
10   (F) Cooperatives. In the case of a cooperative 
11 corporation or
association, the taxable income of such 
12 organization determined in
accordance with the 
13 provisions of Section 1381 through 1388 of the
Internal 
14 Revenue Code, but without regard to the prohibition 
15 against offsetting losses from patronage activities 
16 against income from nonpatronage activities; except 
17 that a cooperative corporation or association may make 
18 an election to follow its federal income tax treatment 
19 of patronage losses and nonpatronage losses. In the 
20 event such election is made, such losses shall be 
21 computed and carried over in a manner consistent with 
22 subsection (a) of Section 207 of this Act and 
23 apportioned by the apportionment factor reported by 
24 the cooperative on its Illinois income tax return filed 
25 for the taxable year in which the losses are incurred. 
26 The election shall be effective for all taxable years 
 
 
SB0015- 88 -LRB097 06652 HLH 46738 b


1 with original returns due on or after the date of the 
2 election. In addition, the cooperative may file an 
3 amended return or returns, as allowed under this Act, 
4 to provide that the election shall be effective for 
5 losses incurred or carried forward for taxable years 
6 occurring prior to the date of the election. Once made, 
7 the election may only be revoked upon approval of the 
8 Director. The Department shall adopt rules setting 
9 forth requirements for documenting the elections and 
10 any resulting Illinois net loss and the standards to be 
11 used by the Director in evaluating requests to revoke 
12 elections. Public Act 96-932 This amendatory Act of the 
13 96th General Assembly is declaratory of existing law; 
14   (G) Subchapter S corporations. In the case of: (i) 
15 a Subchapter S
corporation for which there is in effect 
16 an election for the taxable year
under Section 1362 of 
17 the Internal Revenue Code, the taxable income of such

18 corporation determined in accordance with Section 
19 1363(b) of the Internal
Revenue Code, except that 
20 taxable income shall take into
account those items 
21 which are required by Section 1363(b)(1) of the

22 Internal Revenue Code to be separately stated; and (ii) 
23 a Subchapter
S corporation for which there is in effect 
24 a federal election to opt out of
the provisions of the 
25 Subchapter S Revision Act of 1982 and have applied

26 instead the prior federal Subchapter S rules as in 
 
 
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1 effect on July 1, 1982,
the taxable income of such 
2 corporation determined in accordance with the
federal 
3 Subchapter S rules as in effect on July 1, 1982; and
4   (H) Partnerships. In the case of a partnership, 
5 taxable income
determined in accordance with Section 
6 703 of the Internal Revenue Code,
except that taxable 
7 income shall take into account those items which are

8 required by Section 703(a)(1) to be separately stated 
9 but which would be
taken into account by an individual 
10 in calculating his taxable income.
11  (3) Recapture of business expenses on disposition of 
12 asset or business. Notwithstanding any other law to the 
13 contrary, if in prior years income from an asset or 
14 business has been classified as business income and in a 
15 later year is demonstrated to be non-business income, then 
16 all expenses, without limitation, deducted in such later 
17 year and in the 2 immediately preceding taxable years 
18 related to that asset or business that generated the 
19 non-business income shall be added back and recaptured as 
20 business income in the year of the disposition of the asset 
21 or business. Such amount shall be apportioned to Illinois 
22 using the greater of the apportionment fraction computed 
23 for the business under Section 304 of this Act for the 
24 taxable year or the average of the apportionment fractions 
25 computed for the business under Section 304 of this Act for 
26 the taxable year and for the 2 immediately preceding 
 
 
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1 taxable years.


2 (f) Valuation limitation amount.
3  (1) In general. The valuation limitation amount 
4 referred to in
subsections (a) (2) (G), (c) (2) (I) and 
5 (d)(2) (E) is an amount equal to:
6   (A) The sum of the pre-August 1, 1969 appreciation 
7 amounts (to the
extent consisting of gain reportable 
8 under the provisions of Section
1245 or 1250 of the 
9 Internal Revenue Code) for all property in respect
of 
10 which such gain was reported for the taxable year; plus
11   (B) The lesser of (i) the sum of the pre-August 1, 
12 1969 appreciation
amounts (to the extent consisting of 
13 capital gain) for all property in
respect of which such 
14 gain was reported for federal income tax purposes
for 
15 the taxable year, or (ii) the net capital gain for the 
16 taxable year,
reduced in either case by any amount of 
17 such gain included in the amount
determined under 
18 subsection (a) (2) (F) or (c) (2) (H).
19  (2) Pre-August 1, 1969 appreciation amount.
20   (A) If the fair market value of property referred 
21 to in paragraph
(1) was readily ascertainable on August 
22 1, 1969, the pre-August 1, 1969
appreciation amount for 
23 such property is the lesser of (i) the excess of
such 
24 fair market value over the taxpayer's basis (for 
25 determining gain)
for such property on that date 
 
 
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1 (determined under the Internal Revenue
Code as in 
2 effect on that date), or (ii) the total gain realized 
3 and
reportable for federal income tax purposes in 
4 respect of the sale,
exchange or other disposition of 
5 such property.
6   (B) If the fair market value of property referred 
7 to in paragraph
(1) was not readily ascertainable on 
8 August 1, 1969, the pre-August 1,
1969 appreciation 
9 amount for such property is that amount which bears
the 
10 same ratio to the total gain reported in respect of the 
11 property for
federal income tax purposes for the 
12 taxable year, as the number of full
calendar months in 
13 that part of the taxpayer's holding period for the

14 property ending July 31, 1969 bears to the number of 
15 full calendar
months in the taxpayer's entire holding 
16 period for the
property.
17   (C) The Department shall prescribe such 
18 regulations as may be
necessary to carry out the 
19 purposes of this paragraph.

20 (g) Double deductions. Unless specifically provided 
21otherwise, nothing
in this Section shall permit the same item 
22to be deducted more than once.

23 (h) Legislative intention. Except as expressly provided by 
24this
Section there shall be no modifications or limitations on 
 
 
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1the amounts
of income, gain, loss or deduction taken into 
2account in determining
gross income, adjusted gross income or 
3taxable income for federal income
tax purposes for the taxable 
4year, or in the amount of such items
entering into the 
5computation of base income and net income under this
Act for 
6such taxable year, whether in respect of property values as of

7August 1, 1969 or otherwise.
8(Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286, 
9eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08; 
1095-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 
1196-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 
128-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, 
13eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)


14 Section 99. Effective date. This Act takes effect upon 
15becoming law.