100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2017
 
Introduced 2/10/2017, by Sen. Mr. Dan McConchie
 
SYNOPSIS AS INTRODUCED:



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

 Amends the Illinois Income Tax Act. Creates a deduction in an amount equal to the amount contributed by taxpayer during the taxable year to an ABLE account. Provides that the deduction shall not exceed $10,000 per taxpayer in any taxable year. Provides that the deduction is exempt from the Act's automatic sunset provision. Effective immediately.



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FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


SB2017LRB100 09276 HLH 21584 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 subparagraph (E) are 
21 exempt
from the provisions of Section 250;
22   (F) An amount equal to all amounts included in such 
23 total pursuant
to the provisions of Sections 402(a), 
24 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the 
25 Internal Revenue Code, or included in such total as

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

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

5 shall not be eligible for the deduction provided under 
6 this subparagraph
(K);
7   (L) For taxable years ending after December 31, 
8 1983, an amount equal to
all social security benefits 
9 and railroad retirement benefits included in
such 
10 total pursuant to Sections 72(r) and 86 of the Internal 
11 Revenue Code;
12   (M) With the exception of any amounts subtracted 
13 under subparagraph
(N), an amount equal to the sum of 
14 all amounts disallowed as
deductions by (i) Sections 
15 171(a) (2), and 265(2) of the Internal Revenue Code, 
16 and all amounts of expenses allocable
to interest and 
17 disallowed as deductions by Section 265(1) of the 
18 Internal
Revenue Code;
and (ii) for taxable years

19 ending on or after August 13, 1999, Sections 171(a)(2), 
20 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
21 Code, plus, for taxable years ending on or after 
22 December 31, 2011, Section 45G(e)(3) of the Internal 
23 Revenue Code and, for taxable years ending on or after 
24 December 31, 2008, any amount included in gross income 
25 under Section 87 of the Internal Revenue Code; the 
26 provisions of this
subparagraph are exempt from the 
 
 
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1 provisions of Section 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 or of any itemized deduction 
19 taken from adjusted gross income in the computation of 
20 taxable income for restoration of substantial amounts 
21 held under claim of right for the taxable year;
22   (Q) An amount equal to any amounts included in such 
23 total, received by
the taxpayer as an acceleration in 
24 the payment of life, endowment or annuity
benefits in 
25 advance of the time they would otherwise be payable as 
26 an indemnity
for a terminal illness;
 
 
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1   (R) An amount equal to the amount of any federal or 
2 State bonus paid
to veterans of the Persian Gulf War;
3   (S) An amount, to the extent included in adjusted 
4 gross income, equal
to the amount of a contribution 
5 made in the taxable year on behalf of the
taxpayer to a 
6 medical care savings account established under the 
7 Medical Care
Savings Account Act or the Medical Care 
8 Savings Account Act of 2000 to the
extent the 
9 contribution is accepted by the account
administrator 
10 as provided in that Act;
11   (T) An amount, to the extent included in adjusted 
12 gross income, equal to
the amount of interest earned in 
13 the taxable year on a medical care savings
account 
14 established under the Medical Care Savings Account Act 
15 or the Medical
Care Savings Account Act of 2000 on 
16 behalf of the
taxpayer, other than interest added 
17 pursuant to item (D-5) of this paragraph
(2);
18   (U) For one taxable year beginning on or after 
19 January 1,
1994, an
amount equal to the total amount of 
20 tax imposed and paid under subsections (a)
and (b) of 
21 Section 201 of this Act on grant amounts received by 
22 the taxpayer
under the Nursing Home Grant Assistance 
23 Act during the taxpayer's taxable years
1992 and 1993;
24   (V) Beginning with tax years ending on or after 
25 December 31, 1995 and
ending with tax years ending on 
26 or before December 31, 2004, an amount equal to
the 
 
 
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1 amount paid by a taxpayer who is a
self-employed 
2 taxpayer, a partner of a partnership, or a
shareholder 
3 in a Subchapter S corporation for health insurance or 
4 long-term
care insurance for that taxpayer or that 
5 taxpayer's spouse or dependents, to
the extent that the 
6 amount paid for that health insurance or long-term care

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

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

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

21 times a number that represents the fractional 
22 percentage of eligible medical
expenses under Section 
23 213 of the Internal Revenue Code of 1986 not actually

24 deducted on the taxpayer's federal income tax return;
25   (W) For taxable years beginning on or after January 
26 1, 1998,
all amounts included in the taxpayer's federal 
 
 
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1 gross income
in the taxable year from amounts converted 
2 from a regular IRA to a Roth IRA.
This paragraph is 
3 exempt from the provisions of Section
250;
4   (X) 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 
 
 
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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   (Y) For taxable years beginning on or after January 
12 1, 2002
and ending
on or before December 31, 2004, 
13 moneys contributed in the taxable year to a College 
14 Savings Pool account under
Section 16.5 of the State 
15 Treasurer Act, except that amounts excluded from
gross 
16 income under Section 529(c)(3)(C)(i) of the Internal 
17 Revenue Code
shall not be considered moneys 
18 contributed under this subparagraph (Y). For taxable 
19 years beginning on or after January 1, 2005, a maximum 
20 of $10,000
contributed
in the
taxable year to (i) a 
21 College Savings Pool account under Section 16.5 of the

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

25 Internal
Revenue Code shall not be considered moneys 
26 contributed under this subparagraph
(Y). For purposes 
 
 
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1 of this subparagraph, contributions made by an 
2 employer on behalf of an employee, or matching 
3 contributions made by an employee, shall be treated as 
4 made by the employee. This
subparagraph (Y) is exempt 
5 from the provisions of Section 250;
6   (Z) For taxable years 2001 and thereafter, for the 
7 taxable year in
which the bonus depreciation deduction

8 is taken on the taxpayer's federal income tax return 
9 under
subsection (k) of Section 168 of the Internal 
10 Revenue Code and for each
applicable taxable year 
11 thereafter, an amount equal to "x", where:
12    (1) "y" equals the amount of the depreciation 
13 deduction taken for the
taxable year
on the 
14 taxpayer's federal income tax return on property 
15 for which the bonus
depreciation deduction
was 
16 taken in any year under subsection (k) of Section 
17 168 of the Internal
Revenue Code, but not including 
18 the bonus depreciation deduction;
19    (2) for taxable years ending on or before 
20 December 31, 2005, "x" equals "y" multiplied by 30 
21 and then divided by 70 (or "y"
multiplied by 
22 0.429); and
23    (3) for taxable years ending after December 
24 31, 2005:
25     (i) for property on which a bonus 
26 depreciation deduction of 30% of the adjusted 
 
 
SB2017- 23 -LRB100 09276 HLH 21584 b


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

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

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

21   If the taxpayer continues to own property through 
22 the last day of the last tax year for which the 
23 taxpayer may claim a depreciation deduction for 
24 federal income tax purposes and for which the taxpayer 
25 was required in any taxable year to make an addition 
26 modification under subparagraph (D-15), then an amount 
 
 
SB2017- 24 -LRB100 09276 HLH 21584 b


1 equal to that addition modification.

2   The taxpayer is allowed to take the deduction under 
3 this subparagraph
only once with respect to any one 
4 piece of property.
5   This subparagraph (AA) is exempt from the 
6 provisions of Section 250;
7   (BB) Any amount included in adjusted gross income, 
8 other
than
salary,
received by a driver in a 
9 ridesharing arrangement using a motor vehicle;
10   (CC) The amount of (i) any interest income (net of 
11 the deductions allocable thereto) taken into account 
12 for the taxable year with respect to a transaction with 
13 a taxpayer that is required to make an addition 
14 modification with respect to such transaction under 
15 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
16 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
17 the amount of that addition modification, and
(ii) any 
18 income from intangible property (net of the deductions 
19 allocable thereto) taken into account for the taxable 
20 year with respect to a transaction with a taxpayer that 
21 is required to make an addition modification with 
22 respect to such transaction under Section 
23 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
24 203(d)(2)(D-8), but not to exceed the amount of that 
25 addition modification. This subparagraph (CC) is 
26 exempt from the provisions of Section 250;
 
 
SB2017- 25 -LRB100 09276 HLH 21584 b


1   (DD) 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(a)(2)(D-17) for 
18 interest paid, accrued, or incurred, directly or 
19 indirectly, to the same person. This subparagraph (DD) 
20 is exempt from the provisions of Section 250; 
21   (EE) 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 
 
 
SB2017- 26 -LRB100 09276 HLH 21584 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(a)(2)(D-18) for 
12 intangible expenses and costs paid, accrued, or 
13 incurred, directly or indirectly, to the same foreign 
14 person. This subparagraph (EE) is exempt from the 
15 provisions of Section 250;
16   (FF) An amount equal to any amount awarded to the 
17 taxpayer during the taxable year by the Court of Claims 
18 under subsection (c) of Section 8 of the Court of 
19 Claims Act for time unjustly served in a State prison. 
20 This subparagraph (FF) is exempt from the provisions of 
21 Section 250; and 
22   (GG) For taxable years ending on or after December 
23 31, 2011, in the case of a taxpayer who was required to 
24 add back any insurance premiums under Section 
25 203(a)(2)(D-19), such taxpayer may elect to subtract 
26 that part of a reimbursement received from the 
 
 
SB2017- 27 -LRB100 09276 HLH 21584 b


1 insurance company equal to the amount of the expense or 
2 loss (including expenses incurred by the insurance 
3 company) that would have been taken into account as a 
4 deduction for federal income tax purposes if the 
5 expense or loss had been uninsured. If a taxpayer makes 
6 the election provided for by this subparagraph (GG), 
7 the insurer to which the premiums were paid must add 
8 back to income the amount subtracted by the taxpayer 
9 pursuant to this subparagraph (GG). This subparagraph 
10 (GG) is exempt from the provisions of Section 250; and 
11 . 
12   (HH) For taxable years beginning on or after 
13 January 1, 2017, an amount equal to the amount 
14 contributed by taxpayer during the taxable year to an 
15 ABLE account, as provided in Section 16.6 of the State 
16 Treasurer Act; provided that the deduction under this 
17 subparagraph may not exceed $10,000 per taxpayer per 
18 taxable year; this subparagraph (HH) is exempt from the 
19 provisions of Section 250. 

20 (b) Corporations.
21  (1) In general. In the case of a corporation, 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. The taxable income referred to in 
25 paragraph (1)
shall be modified by adding thereto the sum 
 
 
SB2017- 28 -LRB100 09276 HLH 21584 b


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

6 income in the computation of taxable income;
7   (B) An amount equal to the amount of tax imposed by 
8 this Act to the
extent deducted from gross income in 
9 the computation of taxable income
for the taxable year;
10   (C) In the case of a regulated investment company, 
11 an amount equal to
the excess of (i) the net long-term 
12 capital gain for the taxable year, over
(ii) the amount 
13 of the capital gain dividends designated as such in 
14 accordance
with Section 852(b)(3)(C) of the Internal 
15 Revenue Code and any amount
designated under Section 
16 852(b)(3)(D) of the Internal Revenue Code,

17 attributable to the taxable year (this amendatory Act 
18 of 1995
(Public Act 89-89) is declarative of existing 
19 law and is not a new
enactment);
20   (D) The amount of any net operating loss deduction 
21 taken in arriving
at taxable income, other than a net 
22 operating loss carried forward from a
taxable year 
23 ending prior to December 31, 1986;
24   (E) For taxable years in which a net operating loss 
25 carryback or
carryforward from a taxable year ending 
26 prior to December 31, 1986 is an
element of taxable 
 
 
SB2017- 29 -LRB100 09276 HLH 21584 b


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

2 subparagraph (E) of paragraph (2) of subsection (e), 
3 the amount by which
addition modifications other than 
4 those provided by this subparagraph (E)
exceeded 
5 subtraction modifications in such earlier taxable 
6 year, with the
following limitations applied in the 
7 order that they are listed:
8    (i) the addition modification relating to the 
9 net operating loss
carried back or forward to the 
10 taxable year from any taxable year ending
prior to 
11 December 31, 1986 shall be reduced by the amount of 
12 addition
modification under this subparagraph (E) 
13 which related to that net operating
loss and which 
14 was taken into account in calculating the base 
15 income of an
earlier taxable year, and
16    (ii) the addition modification relating to the 
17 net operating loss
carried back or forward to the 
18 taxable year from any taxable year ending
prior to 
19 December 31, 1986 shall not exceed the amount of 
20 such carryback or
carryforward;
21   For taxable years in which there is a net operating 
22 loss carryback or
carryforward from more than one other 
23 taxable year ending prior to December
31, 1986, the 
24 addition modification provided in this subparagraph 
25 (E) shall
be the sum of the amounts computed 
26 independently under the preceding
provisions of this 
 
 
SB2017- 30 -LRB100 09276 HLH 21584 b


1 subparagraph (E) for each such taxable year;
2   (E-5) For taxable years ending after December 31, 
3 1997, an
amount equal to any eligible remediation costs 
4 that the corporation
deducted in computing adjusted 
5 gross income and for which the
corporation claims a 
6 credit under subsection (l) of Section 201;
7   (E-10) 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   (E-11) 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 (E-10), then 
16 an amount equal
to the aggregate amount of the 
17 deductions taken in all taxable
years under 
18 subparagraph (T) 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 (T), then an amount 
25 equal to that subtraction modification.

26   The taxpayer is required to make the addition 
 
 
SB2017- 31 -LRB100 09276 HLH 21584 b


1 modification under this
subparagraph
only once with 
2 respect to any one piece of property;
3   (E-12) 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 the 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 pursuant to Sections 951 
25 through 964 of the Internal Revenue Code and amounts 
26 included in gross income under Section 78 of the 
 
 
SB2017- 32 -LRB100 09276 HLH 21584 b


1 Internal Revenue Code) with respect to the stock of the 
2 same person to whom the interest was paid, accrued, or 
3 incurred.

4   This paragraph shall not apply to the following:

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

26    (iii) the taxpayer can establish, based on 
 
 
SB2017- 33 -LRB100 09276 HLH 21584 b


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

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

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

22   (E-13) An amount equal to the amount of intangible 
23 expenses and costs otherwise allowed as a deduction in 
24 computing base income, and that were paid, accrued, or 
25 incurred, directly or indirectly, (i) for taxable 
26 years ending on or after December 31, 2004, to a 
 
 
SB2017- 34 -LRB100 09276 HLH 21584 b


1 foreign person who would be a member of the same 
2 unitary business group but for the fact that the 
3 foreign person's business activity outside the United 
4 States is 80% or more of that person's total business 
5 activity and (ii) for taxable years ending on or after 
6 December 31, 2008, to a person who would be a member of 
7 the same unitary business group but for the fact that 
8 the person is prohibited under Section 1501(a)(27) 
9 from being included in the unitary business group 
10 because he or she is ordinarily required to apportion 
11 business income under different subsections of Section 
12 304. The addition modification required by this 
13 subparagraph shall be reduced to the extent that 
14 dividends were included in base income of the unitary 
15 group for the same taxable year and received by the 
16 taxpayer or by a member of the taxpayer's unitary 
17 business group (including amounts included in gross 
18 income pursuant to Sections 951 through 964 of the 
19 Internal Revenue Code and amounts included in gross 
20 income under Section 78 of the Internal Revenue Code) 
21 with respect to the stock of the same person to whom 
22 the intangible expenses and costs were directly or 
23 indirectly paid, incurred, or accrued. The preceding 
24 sentence shall not apply to the extent that the same 
25 dividends caused a reduction to the addition 
26 modification required under Section 203(b)(2)(E-12) of 
 
 
SB2017- 35 -LRB100 09276 HLH 21584 b


1 this Act.
As used in this subparagraph, the term 
2 "intangible expenses and costs" includes (1) expenses, 
3 losses, and costs for, or related to, the direct or 
4 indirect acquisition, use, maintenance or management, 
5 ownership, sale, exchange, or any other disposition of 
6 intangible property; (2) losses incurred, directly or 
7 indirectly, from factoring transactions or discounting 
8 transactions; (3) royalty, patent, technical, and 
9 copyright fees; (4) licensing fees; and (5) other 
10 similar expenses and costs.
For purposes of this 
11 subparagraph, "intangible property" includes patents, 
12 patent applications, trade names, trademarks, service 
13 marks, copyrights, mask works, trade secrets, and 
14 similar types of intangible assets.
15   This paragraph shall not apply to the following:
16    (i) any item of intangible expenses or costs 
17 paid, accrued, or incurred, directly or 
18 indirectly, from a transaction with a person who is 
19 subject in a foreign country or state, other than a 
20 state which requires mandatory unitary reporting, 
21 to a tax on or measured by net income with respect 
22 to such item; or
23    (ii) any item of intangible expense or cost 
24 paid, accrued, or incurred, directly or 
25 indirectly, if the taxpayer can establish, based 
26 on a preponderance of the evidence, both of the 
 
 
SB2017- 36 -LRB100 09276 HLH 21584 b


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

21    Nothing in this subsection shall preclude the 
22 Director from making any other adjustment 
23 otherwise allowed under Section 404 of this Act for 
24 any tax year beginning after the effective date of 
25 this amendment provided such adjustment is made 
26 pursuant to regulation adopted by the Department 
 
 
SB2017- 37 -LRB100 09276 HLH 21584 b


1 and such regulations provide methods and standards 
2 by which the Department will utilize its authority 
3 under Section 404 of this Act;

4   (E-14) For taxable years ending on or after 
5 December 31, 2008, an amount equal to the amount of 
6 insurance premium expenses and costs otherwise allowed 
7 as a deduction in computing base income, and that were 
8 paid, accrued, or incurred, directly or indirectly, to 
9 a person who would be a member of the same unitary 
10 business group but for the fact that the person is 
11 prohibited under Section 1501(a)(27) from being 
12 included in the unitary business group because he or 
13 she is ordinarily required to apportion business 
14 income under different subsections of Section 304. The 
15 addition modification required by this subparagraph 
16 shall be reduced to the extent that dividends were 
17 included in base income of the unitary group for the 
18 same taxable year and received by the taxpayer or by a 
19 member of the taxpayer's unitary business group 
20 (including amounts included in gross income under 
21 Sections 951 through 964 of the Internal Revenue Code 
22 and amounts included in gross income under Section 78 
23 of the Internal Revenue Code) with respect to the stock 
24 of the same person to whom the premiums and costs were 
25 directly or indirectly paid, incurred, or accrued. The 
26 preceding sentence does not apply to the extent that 
 
 
SB2017- 38 -LRB100 09276 HLH 21584 b


1 the same dividends caused a reduction to the addition 
2 modification required under Section 203(b)(2)(E-12) or 
3 Section 203(b)(2)(E-13) of this Act;

4   (E-15) For taxable years beginning after December 
5 31, 2008, any deduction for dividends paid by a captive 
6 real estate investment trust that is allowed to a real 
7 estate investment trust under Section 857(b)(2)(B) of 
8 the Internal Revenue Code for dividends paid;
9   (E-16) An amount equal to the credit allowable to 
10 the taxpayer under Section 218(a) of this Act, 
11 determined without regard to Section 218(c) of this 
12 Act;
13 and by deducting from the total so obtained the sum of the 
14 following
amounts:
15   (F) An amount equal to the amount of any tax 
16 imposed by this Act
which was refunded to the taxpayer 
17 and included in such total for the
taxable year;
18   (G) An amount equal to any amount included in such 
19 total under
Section 78 of the Internal Revenue Code;
20   (H) In the case of a regulated investment company, 
21 an amount equal
to the amount of exempt interest 
22 dividends as defined in subsection (b)
(5) of Section 
23 852 of the Internal Revenue Code, paid to shareholders

24 for the taxable year;
25   (I) With the exception of any amounts subtracted 
26 under subparagraph
(J),
an amount equal to the sum of 
 
 
SB2017- 39 -LRB100 09276 HLH 21584 b


1 all amounts disallowed as
deductions by (i) Sections 
2 171(a) (2), and 265(a)(2) and amounts disallowed as

3 interest expense by Section 291(a)(3) of the Internal 
4 Revenue Code, and all amounts of expenses allocable to 
5 interest and
disallowed as deductions by Section 
6 265(a)(1) of the Internal Revenue Code;
and (ii) for 
7 taxable years
ending on or after August 13, 1999, 
8 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
9 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
10 for tax years ending on or after December 31, 2011, 
11 amounts disallowed as deductions by Section 45G(e)(3) 
12 of the Internal Revenue Code and, for taxable years 
13 ending on or after December 31, 2008, any amount 
14 included in gross income under Section 87 of the 
15 Internal Revenue Code and the policyholders' share of 
16 tax-exempt interest of a life insurance company under 
17 Section 807(a)(2)(B) of the Internal Revenue Code (in 
18 the case of a life insurance company with gross income 
19 from a decrease in reserves for the tax year) or 
20 Section 807(b)(1)(B) of the Internal Revenue Code (in 
21 the case of a life insurance company allowed a 
22 deduction for an increase in reserves for the tax 
23 year); the
provisions of this
subparagraph are exempt 
24 from the provisions of Section 250;
25   (J) An amount equal to all amounts included in such 
26 total which are
exempt from taxation by this State 
 
 
SB2017- 40 -LRB100 09276 HLH 21584 b


1 either by reason of its statutes or
Constitution
or by 
2 reason of the Constitution, treaties or statutes of the 
3 United States;
provided that, in the case of any 
4 statute of this State that exempts income
derived from 
5 bonds or other obligations from the tax imposed under 
6 this Act,
the amount exempted shall be the interest net 
7 of bond premium amortization;
8   (K) An amount equal to those dividends included in 
9 such total
which were paid by a corporation which 
10 conducts
business operations in a River Edge 
11 Redevelopment Zone or zones created under the River 
12 Edge Redevelopment Zone Act and conducts substantially 
13 all of its
operations in a River Edge Redevelopment 
14 Zone or zones. This subparagraph (K) is exempt from the 
15 provisions of Section 250;
16   (L) 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 (K) of paragraph 2 of this subsection

23 shall not be eligible for the deduction provided under 
24 this subparagraph
(L);
25   (M) For any taxpayer that is a financial 
26 organization within the meaning
of Section 304(c) of 
 
 
SB2017- 41 -LRB100 09276 HLH 21584 b


1 this Act, an amount included in such total as interest

2 income from a loan or loans made by such taxpayer to a 
3 borrower, to the extent
that such a loan is secured by 
4 property which is eligible for the River Edge 
5 Redevelopment Zone Investment Credit. To determine the 
6 portion of a loan or loans that is
secured by property 
7 eligible for a Section 201(f) investment
credit to the 
8 borrower, the entire principal amount of the loan or 
9 loans
between the taxpayer and the borrower should be 
10 divided into the basis of the
Section 201(f) investment 
11 credit property which secures the
loan or loans, using 
12 for this purpose the original basis of such property on

13 the date that it was placed in service in the River 
14 Edge Redevelopment Zone. The subtraction modification 
15 available to taxpayer in any
year under this subsection 
16 shall be that portion of the total interest paid
by the 
17 borrower with respect to such loan attributable to the 
18 eligible
property as calculated under the previous 
19 sentence. This subparagraph (M) is exempt from the 
20 provisions of Section 250;
21   (M-1) For any taxpayer that is a financial 
22 organization within the
meaning of Section 304(c) of 
23 this Act, an amount included in such total as
interest 
24 income from a loan or loans made by such taxpayer to a 
25 borrower,
to the extent that such a loan is secured by 
26 property which is eligible for
the High Impact Business 
 
 
SB2017- 42 -LRB100 09276 HLH 21584 b


1 Investment Credit. To determine the portion of a
loan 
2 or loans that is secured by property eligible for a 
3 Section 201(h) investment credit to the borrower, the 
4 entire principal amount of
the loan or loans between 
5 the taxpayer and the borrower should be divided into

6 the basis of the Section 201(h) investment credit 
7 property which
secures the loan or loans, using for 
8 this purpose the original basis of such
property on the 
9 date that it was placed in service in a federally 
10 designated
Foreign Trade Zone or Sub-Zone located in 
11 Illinois. No taxpayer that is
eligible for the 
12 deduction provided in subparagraph (M) of paragraph 
13 (2) of
this subsection shall be eligible for the 
14 deduction provided under this
subparagraph (M-1). The 
15 subtraction modification available to taxpayers in
any 
16 year under this subsection shall be that portion of the 
17 total interest
paid by the borrower with respect to 
18 such loan attributable to the eligible
property as 
19 calculated under the previous sentence;
20   (N) Two times any contribution made during the 
21 taxable year to a
designated zone organization to the 
22 extent that the contribution (i)
qualifies as a 
23 charitable contribution under subsection (c) of 
24 Section 170
of the Internal Revenue Code and (ii) must, 
25 by its terms, be used for a
project approved by the 
26 Department of Commerce and Economic Opportunity under 
 
 
SB2017- 43 -LRB100 09276 HLH 21584 b


1 Section 11 of the Illinois Enterprise Zone Act or under 
2 Section 10-10 of the River Edge Redevelopment Zone Act. 
3 This subparagraph (N) is exempt from the provisions of 
4 Section 250;
5   (O) An amount equal to: (i) 85% for taxable years 
6 ending on or before
December 31, 1992, or, a percentage 
7 equal to the percentage allowable under
Section 
8 243(a)(1) of the Internal Revenue Code of 1986 for 
9 taxable years ending
after December 31, 1992, of the 
10 amount by which dividends included in taxable
income 
11 and received from a corporation that is not created or 
12 organized under
the laws of the United States or any 
13 state or political subdivision thereof,
including, for 
14 taxable years ending on or after December 31, 1988, 
15 dividends
received or deemed received or paid or deemed 
16 paid under Sections 951 through
965 of the Internal 
17 Revenue Code, exceed the amount of the modification

18 provided under subparagraph (G) of paragraph (2) of 
19 this subsection (b) which
is related to such dividends, 
20 and including, for taxable years ending on or after 
21 December 31, 2008, dividends received from a captive 
22 real estate investment trust; plus (ii) 100% of the 
23 amount by which dividends,
included in taxable income 
24 and received, including, for taxable years ending on
or 
25 after December 31, 1988, dividends received or deemed 
26 received or paid or
deemed paid under Sections 951 
 
 
SB2017- 44 -LRB100 09276 HLH 21584 b


1 through 964 of the Internal Revenue Code and including, 
2 for taxable years ending on or after December 31, 2008, 
3 dividends received from a captive real estate 
4 investment trust, from
any such corporation specified 
5 in clause (i) that would but for the provisions
of 
6 Section 1504 (b) (3) of the Internal Revenue Code be 
7 treated as a member of
the affiliated group which 
8 includes the dividend recipient, exceed the amount
of 
9 the modification provided under subparagraph (G) of 
10 paragraph (2) of this
subsection (b) which is related 
11 to such dividends. This subparagraph (O) is exempt from 
12 the provisions of Section 250 of this Act;
13   (P) An amount equal to any contribution made to a 
14 job training project
established pursuant to the Tax 
15 Increment Allocation Redevelopment Act;
16   (Q) An amount equal to the amount of the deduction 
17 used to compute the
federal income tax credit for 
18 restoration of substantial amounts held under
claim of 
19 right for the taxable year pursuant to Section 1341 of 
20 the
Internal Revenue Code;
21   (R) On and after July 20, 1999, in the case of an 
22 attorney-in-fact with respect to whom an
interinsurer 
23 or a reciprocal insurer has made the election under 
24 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
25 835, an amount equal to the excess, if
any, of the 
26 amounts paid or incurred by that interinsurer or 
 
 
SB2017- 45 -LRB100 09276 HLH 21584 b


1 reciprocal insurer
in the taxable year to the 
2 attorney-in-fact over the deduction allowed to that

3 interinsurer or reciprocal insurer with respect to the 
4 attorney-in-fact under
Section 835(b) of the Internal 
5 Revenue Code for the taxable year; the provisions of 
6 this subparagraph are exempt from the provisions of 
7 Section 250;
8   (S) For taxable years ending on or after December 
9 31, 1997, in the
case of a Subchapter
S corporation, an 
10 amount equal to all amounts of income allocable to a

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

14 allocable to organizations exempt from federal income 
15 tax by reason of Section
501(a) of the Internal Revenue 
16 Code. This subparagraph (S) is exempt from
the 
17 provisions of Section 250;
18   (T) For taxable years 2001 and thereafter, for the 
19 taxable year in
which the bonus depreciation deduction

20 is taken on the taxpayer's federal income tax return 
21 under
subsection (k) of Section 168 of the Internal 
22 Revenue Code and for each
applicable taxable year 
23 thereafter, an amount equal to "x", where:
24    (1) "y" equals the amount of the depreciation 
25 deduction taken for the
taxable year
on the 
26 taxpayer's federal income tax return on property 
 
 
SB2017- 46 -LRB100 09276 HLH 21584 b


1 for which the bonus
depreciation deduction
was 
2 taken in any year under subsection (k) of Section 
3 168 of the Internal
Revenue Code, but not including 
4 the bonus depreciation deduction;
5    (2) for taxable years ending on or before 
6 December 31, 2005, "x" equals "y" multiplied by 30 
7 and then divided by 70 (or "y"
multiplied by 
8 0.429); and
9    (3) for taxable years ending after December 
10 31, 2005:
11     (i) for property on which a bonus 
12 depreciation deduction of 30% of the adjusted 
13 basis was taken, "x" equals "y" multiplied by 
14 30 and then divided by 70 (or "y"
multiplied by 
15 0.429); and
16     (ii) for property on which a bonus 
17 depreciation deduction of 50% of the adjusted 
18 basis was taken, "x" equals "y" multiplied by 
19 1.0.
20   The aggregate amount deducted under this 
21 subparagraph in all taxable
years for any one piece of 
22 property may not exceed the amount of the bonus

23 depreciation deduction
taken on that property on the 
24 taxpayer's federal income tax return under
subsection 
25 (k) of Section 168 of the Internal Revenue Code. This 
26 subparagraph (T) is exempt from the provisions of 
 
 
SB2017- 47 -LRB100 09276 HLH 21584 b


1 Section 250;
2   (U) If the taxpayer sells, transfers, abandons, or 
3 otherwise disposes of
property for which the taxpayer 
4 was required in any taxable year to make an
addition 
5 modification under subparagraph (E-10), then an amount 
6 equal to that
addition modification.
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 required in any taxable year to make an addition 
12 modification under subparagraph (E-10), then an amount 
13 equal to that addition modification.

14   The taxpayer is allowed to take the deduction under 
15 this subparagraph
only once with respect to any one 
16 piece of property.
17   This subparagraph (U) is exempt from the 
18 provisions of Section 250;
19   (V) The amount of: (i) any interest income (net of 
20 the deductions allocable thereto) taken into account 
21 for the taxable year with respect to a transaction with 
22 a taxpayer that is required to make an addition 
23 modification with respect to such transaction under 
24 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
25 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
26 the amount of such addition modification,
(ii) any 
 
 
SB2017- 48 -LRB100 09276 HLH 21584 b


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

18   (W) An amount equal to the interest income taken 
19 into account for the taxable year (net of the 
20 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 
 
 
SB2017- 49 -LRB100 09276 HLH 21584 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(b)(2)(E-12) for 
9 interest paid, accrued, or incurred, directly or 
10 indirectly, to the same person. This subparagraph (W) 
11 is exempt from the provisions of Section 250;

12   (X) An amount equal to the income from intangible 
13 property taken into account for the taxable year (net 
14 of the deductions allocable thereto) with respect to 
15 transactions with (i) a foreign person who would be a 
16 member of the taxpayer's unitary business group but for 
17 the fact that the foreign person's business activity 
18 outside the United States is 80% or more of that 
19 person's total business activity and (ii) for taxable 
20 years ending on or after December 31, 2008, to a person 
21 who would be a member of the same unitary business 
22 group but for the fact that the person is prohibited 
23 under Section 1501(a)(27) from being included in the 
24 unitary business group because he or she is ordinarily 
25 required to apportion business income under different 
26 subsections of Section 304, but not to exceed the 
 
 
SB2017- 50 -LRB100 09276 HLH 21584 b


1 addition modification required to be made for the same 
2 taxable year under Section 203(b)(2)(E-13) for 
3 intangible expenses and costs paid, accrued, or 
4 incurred, directly or indirectly, to the same foreign 
5 person. This subparagraph (X) is exempt from the 
6 provisions of Section 250;

7   (Y) For taxable years ending on or after December 
8 31, 2011, in the case of a taxpayer who was required to 
9 add back any insurance premiums under Section 
10 203(b)(2)(E-14), such taxpayer may elect to subtract 
11 that part of a reimbursement received from the 
12 insurance company equal to the amount of the expense or 
13 loss (including expenses incurred by the insurance 
14 company) that would have been taken into account as a 
15 deduction for federal income tax purposes if the 
16 expense or loss had been uninsured. If a taxpayer makes 
17 the election provided for by this subparagraph (Y), the 
18 insurer to which the premiums were paid must add back 
19 to income the amount subtracted by the taxpayer 
20 pursuant to this subparagraph (Y). This subparagraph 
21 (Y) is exempt from the provisions of Section 250; and 
22   (Z) The difference between the nondeductible 
23 controlled foreign corporation dividends under Section 
24 965(e)(3) of the Internal Revenue Code over the taxable 
25 income of the taxpayer, computed without regard to 
26 Section 965(e)(2)(A) of the Internal Revenue Code, and 
 
 
SB2017- 51 -LRB100 09276 HLH 21584 b


1 without regard to any net operating loss deduction. 
2 This subparagraph (Z) is exempt from the provisions of 
3 Section 250. 
4  (3) Special rule. For purposes of paragraph (2) (A), 
5 "gross income"
in the case of a life insurance company, for 
6 tax years ending on and after
December 31, 1994,
and prior 
7 to December 31, 2011, shall mean the gross investment 
8 income for the taxable year and, for tax years ending on or 
9 after December 31, 2011, shall mean all amounts included in 
10 life insurance gross income under Section 803(a)(3) of the 
11 Internal Revenue Code.

12 (c) Trusts and estates.
13  (1) In general. In the case of a trust or estate, base 
14 income means
an amount equal to the taxpayer's taxable 
15 income for the taxable year as
modified by paragraph (2).
16  (2) Modifications. Subject to the provisions of 
17 paragraph (3), the
taxable income referred to in paragraph 
18 (1) shall be modified by adding
thereto the sum of the 
19 following amounts:
20   (A) An amount equal to all amounts paid or accrued 
21 to the taxpayer
as interest or dividends during the 
22 taxable year to the extent excluded
from gross income 
23 in the computation of taxable income;
24   (B) In the case of (i) an estate, $600; (ii) a 
25 trust which, under
its governing instrument, is 
 
 
SB2017- 52 -LRB100 09276 HLH 21584 b


1 required to distribute all of its income
currently, 
2 $300; and (iii) any other trust, $100, but in each such 
3 case,
only to the extent such amount was deducted in 
4 the computation of
taxable income;
5   (C) An amount equal to the amount of tax imposed by 
6 this Act to the
extent deducted from gross income in 
7 the computation of taxable income
for the taxable year;
8   (D) The amount of any net operating loss deduction 
9 taken in arriving at
taxable income, other than a net 
10 operating loss carried forward from a
taxable year 
11 ending prior to December 31, 1986;
12   (E) For taxable years in which a net operating loss 
13 carryback or
carryforward from a taxable year ending 
14 prior to December 31, 1986 is an
element of taxable 
15 income under paragraph (1) of subsection (e) or 
16 subparagraph
(E) of paragraph (2) of subsection (e), 
17 the amount by which addition
modifications other than 
18 those provided by this subparagraph (E) exceeded

19 subtraction modifications in such taxable year, with 
20 the following limitations
applied in the order that 
21 they are listed:
22    (i) the addition modification relating to the 
23 net operating loss
carried back or forward to the 
24 taxable year from any taxable year ending
prior to 
25 December 31, 1986 shall be reduced by the amount of 
26 addition
modification under this subparagraph (E) 
 
 
SB2017- 53 -LRB100 09276 HLH 21584 b


1 which related to that net
operating loss and which 
2 was taken into account in calculating the base

3 income of an earlier taxable year, and
4    (ii) 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 not exceed the amount of 
8 such carryback or
carryforward;
9   For taxable years in which there is a net operating 
10 loss carryback or
carryforward from more than one other 
11 taxable year ending prior to December
31, 1986, the 
12 addition modification provided in this subparagraph 
13 (E) shall
be the sum of the amounts computed 
14 independently under the preceding
provisions of this 
15 subparagraph (E) for each such taxable year;
16   (F) For taxable years ending on or after January 1, 
17 1989, an amount
equal to the tax deducted pursuant to 
18 Section 164 of the Internal Revenue
Code if the trust 
19 or estate is claiming the same tax for purposes of the

20 Illinois foreign tax credit under Section 601 of this 
21 Act;
22   (G) An amount equal to the amount of the capital 
23 gain deduction
allowable under the Internal Revenue 
24 Code, to the extent deducted from
gross income in the 
25 computation of taxable income;
26   (G-5) For taxable years ending after December 31, 
 
 
SB2017- 54 -LRB100 09276 HLH 21584 b


1 1997, an
amount equal to any eligible remediation costs 
2 that the trust or estate
deducted in computing adjusted 
3 gross income and for which the trust
or estate claims a 
4 credit under subsection (l) of Section 201;
5   (G-10) For taxable years 2001 and thereafter, an 
6 amount equal to the
bonus depreciation deduction taken 
7 on the taxpayer's federal income tax return for the 
8 taxable
year under subsection (k) of Section 168 of the 
9 Internal Revenue Code; and
10   (G-11) If the taxpayer sells, transfers, abandons, 
11 or otherwise disposes of property for which the 
12 taxpayer was required in any taxable year to
make an 
13 addition modification under subparagraph (G-10), then 
14 an amount equal
to the aggregate amount of the 
15 deductions taken in all taxable
years under 
16 subparagraph (R) with respect to that property.
17   If the taxpayer continues to own property through 
18 the last day of the last tax year for which the 
19 taxpayer may claim a depreciation deduction for 
20 federal income tax purposes and for which the taxpayer 
21 was allowed in any taxable year to make a subtraction 
22 modification under subparagraph (R), then an amount 
23 equal to that subtraction modification.

24   The taxpayer is required to make the addition 
25 modification under this
subparagraph
only once with 
26 respect to any one piece of property;
 
 
SB2017- 55 -LRB100 09276 HLH 21584 b


1   (G-12) An amount equal to the amount otherwise 
2 allowed as a deduction in computing base income for 
3 interest paid, accrued, or incurred, directly or 
4 indirectly, (i) for taxable years ending on or after 
5 December 31, 2004, to a foreign person who would be a 
6 member of the same unitary business group but for the 
7 fact that the foreign person's business activity 
8 outside the United States is 80% or more of the foreign 
9 person's total business activity and (ii) for taxable 
10 years ending on or after December 31, 2008, to a person 
11 who would be a member of the same unitary business 
12 group but for the fact that the person is prohibited 
13 under Section 1501(a)(27) from being included in the 
14 unitary business group because he or she is ordinarily 
15 required to apportion business income under different 
16 subsections of Section 304. The addition modification 
17 required by this subparagraph shall be reduced to the 
18 extent that dividends were included in base income of 
19 the unitary group for the same taxable year and 
20 received by the taxpayer or by a member of the 
21 taxpayer's unitary business group (including amounts 
22 included in gross income pursuant to Sections 951 
23 through 964 of the Internal Revenue Code and amounts 
24 included in gross income under Section 78 of the 
25 Internal Revenue Code) with respect to the stock of the 
26 same person to whom the interest was paid, accrued, or 
 
 
SB2017- 56 -LRB100 09276 HLH 21584 b


1 incurred.

2   This paragraph shall not apply to the following:

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

24    (iii) the taxpayer can establish, based on 
25 clear and convincing evidence, that the interest 
26 paid, accrued, or incurred relates to a contract or 
 
 
SB2017- 57 -LRB100 09276 HLH 21584 b


1 agreement entered into at arm's-length rates and 
2 terms and the principal purpose for the payment is 
3 not federal or Illinois tax avoidance; or

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

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

20   (G-13) An amount equal to the amount of intangible 
21 expenses and costs otherwise allowed as a deduction in 
22 computing base income, and that were paid, accrued, or 
23 incurred, directly or indirectly, (i) for taxable 
24 years ending on or after December 31, 2004, to a 
25 foreign person who would be a member of the same 
26 unitary business group but for the fact that the 
 
 
SB2017- 58 -LRB100 09276 HLH 21584 b


1 foreign person's business activity outside the United 
2 States is 80% or more of that person's total business 
3 activity and (ii) for taxable years ending on or after 
4 December 31, 2008, to a person who would be a member of 
5 the same unitary business group but for the fact that 
6 the person is prohibited under Section 1501(a)(27) 
7 from being included in the unitary business group 
8 because he or she is ordinarily required to apportion 
9 business income under different subsections of Section 
10 304. The addition modification required by this 
11 subparagraph shall be reduced to the extent that 
12 dividends were included in base income of the unitary 
13 group for the same taxable year and received by the 
14 taxpayer or by a member of the taxpayer's unitary 
15 business group (including amounts included in gross 
16 income pursuant to Sections 951 through 964 of the 
17 Internal Revenue Code and amounts included in gross 
18 income under Section 78 of the Internal Revenue Code) 
19 with respect to the stock of the same person to whom 
20 the intangible expenses and costs were directly or 
21 indirectly paid, incurred, or accrued. The preceding 
22 sentence shall not apply to the extent that the same 
23 dividends caused a reduction to the addition 
24 modification required under Section 203(c)(2)(G-12) of 
25 this Act. As used in this subparagraph, the term 
26 "intangible expenses and costs" includes: (1) 
 
 
SB2017- 59 -LRB100 09276 HLH 21584 b


1 expenses, losses, and costs for or related to the 
2 direct or indirect acquisition, use, maintenance or 
3 management, ownership, sale, exchange, or any other 
4 disposition of intangible property; (2) losses 
5 incurred, directly or indirectly, from factoring 
6 transactions or discounting transactions; (3) royalty, 
7 patent, technical, and copyright fees; (4) licensing 
8 fees; and (5) other similar expenses and costs. For 
9 purposes of this subparagraph, "intangible property" 
10 includes patents, patent applications, trade names, 
11 trademarks, service marks, copyrights, mask works, 
12 trade secrets, and similar types of intangible assets.
13   This paragraph shall not apply to the following:
14    (i) any item of intangible expenses or costs 
15 paid, accrued, or incurred, directly or 
16 indirectly, from a transaction with a person who is 
17 subject in a foreign country or state, other than a 
18 state which requires mandatory unitary reporting, 
19 to a tax on or measured by net income with respect 
20 to such item; or
21    (ii) any item of intangible expense or cost 
22 paid, accrued, or incurred, directly or 
23 indirectly, if the taxpayer can establish, based 
24 on a preponderance of the evidence, both of the 
25 following:
26     (a) the person during the same taxable 
 
 
SB2017- 60 -LRB100 09276 HLH 21584 b


1 year paid, accrued, or incurred, the 
2 intangible expense or cost to a person that is 
3 not a related member, and
4     (b) the transaction giving rise to the 
5 intangible expense or cost between the 
6 taxpayer and the person did not have as a 
7 principal purpose the avoidance of Illinois 
8 income tax, and is paid pursuant to a contract 
9 or agreement that reflects arm's-length terms; 
10 or
11    (iii) any item of intangible expense or cost 
12 paid, accrued, or incurred, directly or 
13 indirectly, from a transaction with a person if the 
14 taxpayer establishes by clear and convincing 
15 evidence, that the adjustments are unreasonable; 
16 or if the taxpayer and the Director agree in 
17 writing to the application or use of an alternative 
18 method 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 
 
 
SB2017- 61 -LRB100 09276 HLH 21584 b


1 under Section 404 of this Act;

2   (G-14) For taxable years ending on or after 
3 December 31, 2008, an amount equal to the amount of 
4 insurance premium expenses and costs otherwise allowed 
5 as a deduction in computing base income, and that were 
6 paid, accrued, or incurred, directly or indirectly, to 
7 a person who would be a member of the same unitary 
8 business group but for the fact that the person is 
9 prohibited under Section 1501(a)(27) from being 
10 included in the unitary business group because he or 
11 she is ordinarily required to apportion business 
12 income under different subsections of Section 304. The 
13 addition modification required by this subparagraph 
14 shall be reduced to the extent that dividends were 
15 included in base income of the unitary group for the 
16 same taxable year and received by the taxpayer or by a 
17 member of the taxpayer's unitary business group 
18 (including amounts included in gross income under 
19 Sections 951 through 964 of the Internal Revenue Code 
20 and amounts included in gross income under Section 78 
21 of the Internal Revenue Code) with respect to the stock 
22 of the same person to whom the premiums and costs were 
23 directly or indirectly paid, incurred, or accrued. The 
24 preceding sentence does not apply to the extent that 
25 the same dividends caused a reduction to the addition 
26 modification required under Section 203(c)(2)(G-12) or 
 
 
SB2017- 62 -LRB100 09276 HLH 21584 b


1 Section 203(c)(2)(G-13) of this Act;
2   (G-15) An amount equal to the credit allowable to 
3 the taxpayer under Section 218(a) of this Act, 
4 determined without regard to Section 218(c) of this 
5 Act;
6 and by deducting from the total so obtained the sum of the 
7 following
amounts:
8   (H) An amount equal to all amounts included in such 
9 total pursuant
to the provisions of Sections 402(a), 
10 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the 
11 Internal Revenue Code or included in such total as

12 distributions under the provisions of any retirement 
13 or disability plan for
employees of any governmental 
14 agency or unit, or retirement payments to
retired 
15 partners, which payments are excluded in computing net 
16 earnings
from self employment by Section 1402 of the 
17 Internal Revenue Code and
regulations adopted pursuant 
18 thereto;
19   (I) The valuation limitation amount;
20   (J) An amount equal to the amount of any tax 
21 imposed by this Act
which was refunded to the taxpayer 
22 and included in such total for the
taxable year;
23   (K) An amount equal to all amounts included in 
24 taxable income as
modified by subparagraphs (A), (B), 
25 (C), (D), (E), (F) and (G) which
are exempt from 
26 taxation by this State either by reason of its statutes 
 
 
SB2017- 63 -LRB100 09276 HLH 21584 b


1 or
Constitution
or by reason of the Constitution, 
2 treaties or statutes of the United States;
provided 
3 that, in the case of any statute of this State that 
4 exempts income
derived from bonds or other obligations 
5 from the tax imposed under this Act,
the amount 
6 exempted shall be the interest net of bond premium 
7 amortization;
8   (L) With the exception of any amounts subtracted 
9 under subparagraph
(K),
an amount equal to the sum of 
10 all amounts disallowed as
deductions by (i) Sections 
11 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, 
12 and all amounts of expenses allocable
to interest and 
13 disallowed as deductions by Section 265(1) of the 
14 Internal
Revenue Code;
and (ii) for taxable years

15 ending on or after August 13, 1999, Sections
171(a)(2), 
16 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
17 Code, plus, (iii) for taxable years ending on or after 
18 December 31, 2011, Section 45G(e)(3) of the Internal 
19 Revenue Code and, for taxable years ending on or after 
20 December 31, 2008, any amount included in gross income 
21 under Section 87 of the Internal Revenue Code; the 
22 provisions of this
subparagraph are exempt from the 
23 provisions of Section 250;
24   (M) An amount equal to those dividends included in 
25 such total
which were paid by a corporation which 
26 conducts business operations in a River Edge 
 
 
SB2017- 64 -LRB100 09276 HLH 21584 b


1 Redevelopment Zone or zones created under the River 
2 Edge Redevelopment Zone Act and
conducts substantially 
3 all of its operations in a River Edge Redevelopment 
4 Zone or zones. This subparagraph (M) is exempt from the 
5 provisions of Section 250;
6   (N) An amount equal to any contribution made to a 
7 job training
project established pursuant to the Tax 
8 Increment Allocation
Redevelopment Act;
9   (O) An amount equal to those dividends included in 
10 such total
that were paid by a corporation that 
11 conducts business operations in a
federally designated 
12 Foreign Trade Zone or Sub-Zone and that is designated
a 
13 High Impact Business located in Illinois; provided 
14 that dividends eligible
for the deduction provided in 
15 subparagraph (M) of paragraph (2) of this
subsection 
16 shall not be eligible for the deduction provided under 
17 this
subparagraph (O);
18   (P) An amount equal to the amount of the deduction 
19 used to compute the
federal income tax credit for 
20 restoration of substantial amounts held under
claim of 
21 right for the taxable year pursuant to Section 1341 of 
22 the
Internal Revenue Code;
23   (Q) For taxable year 1999 and thereafter, an amount 
24 equal to the
amount of any
(i) distributions, to the 
25 extent includible in gross income for
federal income 
26 tax purposes, made to the taxpayer because of
his or 
 
 
SB2017- 65 -LRB100 09276 HLH 21584 b


1 her status as a victim of
persecution for racial or 
2 religious reasons by Nazi Germany or any other Axis

3 regime or as an heir of the victim and (ii) items
of 
4 income, to the extent
includible in gross income for 
5 federal income tax purposes, attributable to,
derived 
6 from or in any way related to assets stolen from, 
7 hidden from, or
otherwise lost to a victim of

8 persecution for racial or religious reasons by Nazi

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

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

15 companies
immediately prior to and during World War II;

16 provided, however, this subtraction from federal 
17 adjusted gross income does not
apply to assets acquired 
18 with such assets or with the proceeds from the sale of

19 such assets; provided, further, this paragraph shall 
20 only apply to a taxpayer
who was the first recipient of 
21 such assets after their recovery and who is a
victim of

22 persecution for racial or religious reasons
by Nazi 
23 Germany or any other Axis regime or as an heir of the 
24 victim. The
amount of and the eligibility for any 
25 public assistance, benefit, or
similar entitlement is 
26 not affected by the inclusion of items (i) and (ii) of

 
 
SB2017- 66 -LRB100 09276 HLH 21584 b


1 this paragraph in gross income for federal income tax 
2 purposes.
This paragraph is exempt from the provisions 
3 of Section 250;
4   (R) For taxable years 2001 and thereafter, for the 
5 taxable year in
which the bonus depreciation deduction

6 is taken on the taxpayer's federal income tax return 
7 under
subsection (k) of Section 168 of the Internal 
8 Revenue Code and for each
applicable taxable year 
9 thereafter, an amount equal to "x", where:
10    (1) "y" equals the amount of the depreciation 
11 deduction taken for the
taxable year
on the 
12 taxpayer's federal income tax return on property 
13 for which the bonus
depreciation deduction
was 
14 taken in any year under subsection (k) of Section 
15 168 of the Internal
Revenue Code, but not including 
16 the bonus depreciation deduction;
17    (2) for taxable years ending on or before 
18 December 31, 2005, "x" equals "y" multiplied by 30 
19 and then divided by 70 (or "y"
multiplied by 
20 0.429); and
21    (3) for taxable years ending after December 
22 31, 2005:
23     (i) for property on which a bonus 
24 depreciation deduction of 30% of the adjusted 
25 basis was taken, "x" equals "y" multiplied by 
26 30 and then divided by 70 (or "y"
multiplied by 
 
 
SB2017- 67 -LRB100 09276 HLH 21584 b


1 0.429); and
2     (ii) for property on which a bonus 
3 depreciation deduction of 50% of the adjusted 
4 basis was taken, "x" equals "y" multiplied by 
5 1.0.
6   The aggregate amount deducted under this 
7 subparagraph in all taxable
years for any one piece of 
8 property may not exceed the amount of the bonus

9 depreciation deduction
taken on that property on the 
10 taxpayer's federal income tax return under
subsection 
11 (k) of Section 168 of the Internal Revenue Code. This 
12 subparagraph (R) is exempt from the provisions of 
13 Section 250;
14   (S) If the taxpayer sells, transfers, abandons, or 
15 otherwise disposes of
property for which the taxpayer 
16 was required in any taxable year to make an
addition 
17 modification under subparagraph (G-10), then an amount 
18 equal to that
addition modification.
19   If the taxpayer continues to own property through 
20 the last day of the last tax year for which the 
21 taxpayer may claim a depreciation deduction for 
22 federal income tax purposes and 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   The taxpayer is allowed to take the deduction under 
 
 
SB2017- 68 -LRB100 09276 HLH 21584 b


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

22   (U) An amount equal to the interest income taken 
23 into account for the taxable year (net of the 
24 deductions allocable thereto) with respect to 
25 transactions with (i) a foreign person who would be a 
26 member of the taxpayer's unitary business group but for 
 
 
SB2017- 69 -LRB100 09276 HLH 21584 b


1 the fact the foreign person's business activity 
2 outside the United States is 80% or more of that 
3 person's total business activity and (ii) for taxable 
4 years ending on or after December 31, 2008, to a person 
5 who would be a member of the same unitary business 
6 group but for the fact that the person is prohibited 
7 under Section 1501(a)(27) from being included in the 
8 unitary business group because he or she is ordinarily 
9 required to apportion business income under different 
10 subsections of Section 304, but not to exceed the 
11 addition modification required to be made for the same 
12 taxable year under Section 203(c)(2)(G-12) for 
13 interest paid, accrued, or incurred, directly or 
14 indirectly, to the same person. This subparagraph (U) 
15 is exempt from the provisions of Section 250; 
16   (V) An amount equal to the income from intangible 
17 property taken into account for the taxable year (net 
18 of the deductions allocable thereto) with respect to 
19 transactions with (i) a foreign person who would be a 
20 member of the taxpayer's unitary business group but for 
21 the fact that the foreign person's business activity 
22 outside the United States is 80% or more of that 
23 person's total business activity and (ii) for taxable 
24 years ending on or after December 31, 2008, to a person 
25 who would be a member of the same unitary business 
26 group but for the fact that the person is prohibited 
 
 
SB2017- 70 -LRB100 09276 HLH 21584 b


1 under Section 1501(a)(27) from being included in the 
2 unitary business group because he or she is ordinarily 
3 required to apportion business income under different 
4 subsections of Section 304, but not to exceed the 
5 addition modification required to be made for the same 
6 taxable year under Section 203(c)(2)(G-13) for 
7 intangible expenses and costs paid, accrued, or 
8 incurred, directly or indirectly, to the same foreign 
9 person. This subparagraph (V) is exempt from the 
10 provisions of Section 250;

11   (W) in the case of an estate, an amount equal to 
12 all amounts included in such total pursuant to the 
13 provisions of Section 111 of the Internal Revenue Code 
14 as a recovery of items previously deducted by the 
15 decedent from adjusted gross income in the computation 
16 of taxable income. This subparagraph (W) is exempt from 
17 Section 250; 
18   (X) an amount equal to the refund included in such 
19 total of any tax deducted for federal income tax 
20 purposes, to the extent that deduction was added back 
21 under subparagraph (F). This subparagraph (X) is 
22 exempt from the provisions of Section 250; and
23   (Y) For taxable years ending on or after December 
24 31, 2011, in the case of a taxpayer who was required to 
25 add back any insurance premiums under Section 
26 203(c)(2)(G-14), such taxpayer may elect to subtract 
 
 
SB2017- 71 -LRB100 09276 HLH 21584 b


1 that part of a reimbursement received from the 
2 insurance company equal to the amount of the expense or 
3 loss (including expenses incurred by the insurance 
4 company) that would have been taken into account as a 
5 deduction for federal income tax purposes if the 
6 expense or loss had been uninsured. If a taxpayer makes 
7 the election provided for by this subparagraph (Y), the 
8 insurer to which the premiums were paid must add back 
9 to income the amount subtracted by the taxpayer 
10 pursuant to this subparagraph (Y). This subparagraph 
11 (Y) is exempt from the provisions of Section 250.
12  (3) Limitation. The amount of any modification 
13 otherwise required
under this subsection shall, under 
14 regulations prescribed by the
Department, be adjusted by 
15 any amounts included therein which were
properly paid, 
16 credited, or required to be distributed, or permanently set

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

19 (d) Partnerships.
20  (1) In general. In the case of a partnership, 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:
 
 
SB2017- 72 -LRB100 09276 HLH 21584 b


1   (A) An amount equal to all amounts paid or accrued 
2 to the taxpayer as
interest or dividends during the 
3 taxable year to the extent excluded from
gross income 
4 in the computation of taxable income;
5   (B) An amount equal to the amount of tax imposed by 
6 this Act to the
extent deducted from gross income for 
7 the taxable year;
8   (C) The amount of deductions allowed to the 
9 partnership pursuant to
Section 707 (c) of the Internal 
10 Revenue Code in calculating its taxable income;
11   (D) An amount equal to the amount of the capital 
12 gain deduction
allowable under the Internal Revenue 
13 Code, to the extent deducted from
gross income in the 
14 computation of taxable income;
15   (D-5) For taxable years 2001 and thereafter, an 
16 amount equal to the
bonus depreciation deduction taken 
17 on the taxpayer's federal income tax return for the 
18 taxable
year under subsection (k) of Section 168 of the 
19 Internal Revenue Code;
20   (D-6) If the taxpayer sells, transfers, abandons, 
21 or otherwise disposes of
property for which the 
22 taxpayer was required in any taxable year to make an

23 addition modification under subparagraph (D-5), then 
24 an amount equal to the
aggregate amount of the 
25 deductions taken in all taxable years
under 
26 subparagraph (O) with respect to that property.
 
 
SB2017- 73 -LRB100 09276 HLH 21584 b


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

8   The taxpayer is required to make the addition 
9 modification under this
subparagraph
only once with 
10 respect to any one piece of property;
11   (D-7) An amount equal to the amount otherwise 
12 allowed as a deduction in computing base income for 
13 interest paid, accrued, or incurred, directly or 
14 indirectly, (i) for taxable years ending on or after 
15 December 31, 2004, to a foreign person who would be a 
16 member of the same unitary business group but for the 
17 fact the foreign person's business activity outside 
18 the United States is 80% or more of the foreign 
19 person's total business activity and (ii) for taxable 
20 years ending on or after December 31, 2008, to a person 
21 who would be a member of the same unitary business 
22 group but for the fact that the person is prohibited 
23 under Section 1501(a)(27) from being included in the 
24 unitary business group because he or she is ordinarily 
25 required to apportion business income under different 
26 subsections of Section 304. The addition modification 
 
 
SB2017- 74 -LRB100 09276 HLH 21584 b


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

12   This paragraph shall not apply to the following:

13    (i) an item of interest paid, accrued, or 
14 incurred, directly or indirectly, to a person who 
15 is subject in a foreign country or state, other 
16 than a state which requires mandatory unitary 
17 reporting, to a tax on or measured by net income 
18 with respect to such interest; or
19    (ii) an item of interest paid, accrued, or 
20 incurred, directly or indirectly, to a person if 
21 the taxpayer can establish, based on a 
22 preponderance of the evidence, both of the 
23 following:
24     (a) the person, during the same taxable 
25 year, paid, accrued, or incurred, the interest 
26 to a person that is not a related member, and
 
 
SB2017- 75 -LRB100 09276 HLH 21584 b


1     (b) the transaction giving rise to the 
2 interest expense between the taxpayer and the 
3 person did not have as a principal purpose the 
4 avoidance of Illinois income tax, and is paid 
5 pursuant to a contract or agreement that 
6 reflects an arm's-length interest rate and 
7 terms; or

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

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

21    Nothing in this subsection shall preclude the 
22 Director from making any other adjustment 
23 otherwise allowed under Section 404 of this Act for 
24 any tax year beginning after the effective date of 
25 this amendment provided such adjustment is made 
26 pursuant to regulation adopted by the Department 
 
 
SB2017- 76 -LRB100 09276 HLH 21584 b


1 and such regulations provide methods and standards 
2 by which the Department will utilize its authority 
3 under Section 404 of this Act; and

4   (D-8) An amount equal to the amount of intangible 
5 expenses and costs otherwise allowed as a deduction in 
6 computing base income, and that were paid, accrued, or 
7 incurred, directly or indirectly, (i) for taxable 
8 years ending on or after December 31, 2004, to a 
9 foreign person who would be a member of the same 
10 unitary business group but for the fact that the 
11 foreign person's business activity outside the United 
12 States is 80% or more of that person's total business 
13 activity and (ii) for taxable years ending on or after 
14 December 31, 2008, to a person who would be a member of 
15 the same unitary business group but for the fact that 
16 the person is prohibited under Section 1501(a)(27) 
17 from being included in the unitary business group 
18 because he or she is ordinarily required to apportion 
19 business income under different subsections of Section 
20 304. The addition modification required by this 
21 subparagraph shall be reduced to the extent that 
22 dividends were included in base income of the unitary 
23 group for the same taxable year and received by the 
24 taxpayer or by a member of the taxpayer's unitary 
25 business group (including amounts included in gross 
26 income pursuant to Sections 951 through 964 of the 
 
 
SB2017- 77 -LRB100 09276 HLH 21584 b


1 Internal Revenue Code and amounts included in gross 
2 income under Section 78 of the Internal Revenue Code) 
3 with respect to the stock of the same person to whom 
4 the intangible expenses and costs were directly or 
5 indirectly paid, incurred or accrued. The preceding 
6 sentence shall not apply to the extent that the same 
7 dividends caused a reduction to the addition 
8 modification required under Section 203(d)(2)(D-7) of 
9 this Act. As used in this subparagraph, the term 
10 "intangible expenses and costs" includes (1) expenses, 
11 losses, and costs for, or related to, the direct or 
12 indirect acquisition, use, maintenance or management, 
13 ownership, sale, exchange, or any other disposition of 
14 intangible property; (2) losses incurred, directly or 
15 indirectly, from factoring transactions or discounting 
16 transactions; (3) royalty, patent, technical, and 
17 copyright fees; (4) licensing fees; and (5) other 
18 similar expenses and costs. For purposes of this 
19 subparagraph, "intangible property" includes patents, 
20 patent applications, trade names, trademarks, service 
21 marks, copyrights, mask works, trade secrets, and 
22 similar types of intangible assets;
23   This paragraph shall not apply to the following:
24    (i) any item of intangible expenses or costs 
25 paid, accrued, or incurred, directly or 
26 indirectly, from a transaction with a person who is 
 
 
SB2017- 78 -LRB100 09276 HLH 21584 b


1 subject in a foreign country or state, other than a 
2 state which requires mandatory unitary reporting, 
3 to a tax on or measured by net income with respect 
4 to such item; or
5    (ii) any item of intangible expense or cost 
6 paid, accrued, or incurred, directly or 
7 indirectly, if the taxpayer can establish, based 
8 on a preponderance of the evidence, both of the 
9 following:
10     (a) the person during the same taxable 
11 year paid, accrued, or incurred, the 
12 intangible expense or cost to a person that is 
13 not a related member, and
14     (b) the transaction giving rise to the 
15 intangible expense or cost between the 
16 taxpayer and the person did not have as a 
17 principal purpose the avoidance of Illinois 
18 income tax, and is paid pursuant to a contract 
19 or agreement that reflects arm's-length terms; 
20 or
21    (iii) any item of intangible expense or cost 
22 paid, accrued, or incurred, directly or 
23 indirectly, from a transaction with a person if the 
24 taxpayer establishes by clear and convincing 
25 evidence, that the adjustments are unreasonable; 
26 or if the taxpayer and the Director agree in 
 
 
SB2017- 79 -LRB100 09276 HLH 21584 b


1 writing to the application or use of an alternative 
2 method of apportionment under Section 304(f);

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

12   (D-9) For taxable years ending on or after December 
13 31, 2008, an amount equal to the amount of insurance 
14 premium expenses and costs otherwise allowed as a 
15 deduction in computing base income, and that were paid, 
16 accrued, or incurred, directly or indirectly, to a 
17 person who would be a member of the same unitary 
18 business group but for the fact that the person is 
19 prohibited under Section 1501(a)(27) from being 
20 included in the unitary business group because he or 
21 she is ordinarily required to apportion business 
22 income under different subsections of Section 304. The 
23 addition modification required by this subparagraph 
24 shall be reduced to the extent that dividends were 
25 included in base income of the unitary group for the 
26 same taxable year and received by the taxpayer or by a 
 
 
SB2017- 80 -LRB100 09276 HLH 21584 b


1 member of the taxpayer's unitary business group 
2 (including amounts included in gross income under 
3 Sections 951 through 964 of the Internal Revenue Code 
4 and amounts included in gross income under Section 78 
5 of the Internal Revenue Code) with respect to the stock 
6 of the same person to whom the premiums and costs were 
7 directly or indirectly paid, incurred, or accrued. The 
8 preceding sentence does not apply to the extent that 
9 the same dividends caused a reduction to the addition 
10 modification required under Section 203(d)(2)(D-7) or 
11 Section 203(d)(2)(D-8) of this Act;
12   (D-10) An amount equal to the credit allowable to 
13 the taxpayer under Section 218(a) of this Act, 
14 determined without regard to Section 218(c) of this 
15 Act;
16 and by deducting from the total so obtained the following 
17 amounts:
18   (E) The valuation limitation amount;
19   (F) An amount equal to the amount of any tax 
20 imposed by this Act which
was refunded to the taxpayer 
21 and included in such total for the taxable year;
22   (G) An amount equal to all amounts included in 
23 taxable income as
modified by subparagraphs (A), (B), 
24 (C) and (D) which are exempt from
taxation by this 
25 State either by reason of its statutes or Constitution 
26 or
by reason of
the Constitution, treaties or statutes 
 
 
SB2017- 81 -LRB100 09276 HLH 21584 b


1 of the United States;
provided that, in the case of any 
2 statute of this State that exempts income
derived from 
3 bonds or other obligations from the tax imposed under 
4 this Act,
the amount exempted shall be the interest net 
5 of bond premium amortization;
6   (H) Any income of the partnership which 
7 constitutes personal service
income as defined in 
8 Section 1348 (b) (1) of the Internal Revenue Code (as

9 in effect December 31, 1981) or a reasonable allowance 
10 for compensation
paid or accrued for services rendered 
11 by partners to the partnership,
whichever is greater; 
12 this subparagraph (H) is exempt from the provisions of 
13 Section 250;
14   (I) An amount equal to all amounts of income 
15 distributable to an entity
subject to the Personal 
16 Property Tax Replacement Income Tax imposed by

17 subsections (c) and (d) of Section 201 of this Act 
18 including amounts
distributable to organizations 
19 exempt from federal income tax by reason of
Section 
20 501(a) of the Internal Revenue Code; this subparagraph 
21 (I) is exempt from the provisions of Section 250;
22   (J) With the exception of any amounts subtracted 
23 under subparagraph
(G),
an amount equal to the sum of 
24 all amounts disallowed as deductions
by (i) Sections 
25 171(a) (2), and 265(2) of the Internal Revenue Code, 
26 and all amounts of expenses allocable to
interest and 
 
 
SB2017- 82 -LRB100 09276 HLH 21584 b


1 disallowed as deductions by Section 265(1) of the 
2 Internal
Revenue Code;
and (ii) for taxable years

3 ending on or after August 13, 1999, Sections
171(a)(2), 
4 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
5 Code, plus, (iii) for taxable years ending on or after 
6 December 31, 2011, Section 45G(e)(3) of the Internal 
7 Revenue Code and, for taxable years ending on or after 
8 December 31, 2008, any amount included in gross income 
9 under Section 87 of the Internal Revenue Code; the 
10 provisions of this
subparagraph are exempt from the 
11 provisions of Section 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 a River Edge 
15 Redevelopment Zone or zones created under the River 
16 Edge Redevelopment Zone Act and
conducts substantially 
17 all of its operations
from a River Edge Redevelopment 
18 Zone or zones. This subparagraph (K) is exempt from the 
19 provisions of Section 250;
20   (L) An amount equal to any contribution made to a 
21 job training project
established pursuant to the Real 
22 Property Tax Increment Allocation
Redevelopment Act;
23   (M) An amount equal to those dividends included in 
24 such total
that were paid by a corporation that 
25 conducts business operations in a
federally designated 
26 Foreign Trade Zone or Sub-Zone and that is designated a

 
 
SB2017- 83 -LRB100 09276 HLH 21584 b


1 High Impact Business located in Illinois; provided 
2 that dividends eligible
for the deduction provided in 
3 subparagraph (K) of paragraph (2) of this
subsection 
4 shall not be eligible for the deduction provided under 
5 this
subparagraph (M);
6   (N) An amount equal to the amount of the deduction 
7 used to compute the
federal income tax credit for 
8 restoration of substantial amounts held under
claim of 
9 right for the taxable year pursuant to Section 1341 of 
10 the
Internal Revenue Code;
11   (O) 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 
 
 
SB2017- 84 -LRB100 09276 HLH 21584 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 (O) is exempt from the provisions of 
20 Section 250;
21   (P) 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 (D-5), then an amount 
25 equal to that
addition modification.
26   If the taxpayer continues to own property through 
 
 
SB2017- 85 -LRB100 09276 HLH 21584 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 (D-5), 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 (P) is exempt from the 
11 provisions of Section 250;
12   (Q) 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 
 
 
SB2017- 86 -LRB100 09276 HLH 21584 b


1 addition modification. This subparagraph (Q) is exempt 
2 from Section 250;

3   (R) 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 that 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(d)(2)(D-7) for interest 
20 paid, accrued, or incurred, directly or indirectly, to 
21 the same person. This subparagraph (R) is exempt from 
22 Section 250; 
23   (S) 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 
 
 
SB2017- 87 -LRB100 09276 HLH 21584 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(d)(2)(D-8) for 
14 intangible expenses and costs paid, accrued, or 
15 incurred, directly or indirectly, to the same person. 
16 This subparagraph (S) is exempt from Section 250; and

17   (T) For taxable years ending on or after December 
18 31, 2011, in the case of a taxpayer who was required to 
19 add back any insurance premiums under Section 
20 203(d)(2)(D-9), such taxpayer may elect to subtract 
21 that part of a reimbursement received from the 
22 insurance company equal to the amount of the expense or 
23 loss (including expenses incurred by the insurance 
24 company) that would have been taken into account as a 
25 deduction for federal income tax purposes if the 
26 expense or loss had been uninsured. If a taxpayer makes 
 
 
SB2017- 88 -LRB100 09276 HLH 21584 b


1 the election provided for by this subparagraph (T), the 
2 insurer to which the premiums were paid must add back 
3 to income the amount subtracted by the taxpayer 
4 pursuant to this subparagraph (T). This subparagraph 
5 (T) is exempt from the provisions of Section 250. 

6 (e) Gross income; adjusted gross income; taxable income.
7  (1) In general. Subject to the provisions of paragraph 
8 (2) and
subsection (b) (3), for purposes of this Section 
9 and Section 803(e), a
taxpayer's gross income, adjusted 
10 gross income, or taxable income for
the taxable year shall 
11 mean the amount of gross income, adjusted gross
income or 
12 taxable income properly reportable for federal income tax

13 purposes for the taxable year under the provisions of the 
14 Internal
Revenue Code. Taxable income may be less than 
15 zero. However, for taxable
years ending on or after 
16 December 31, 1986, net operating loss
carryforwards from 
17 taxable years ending prior to December 31, 1986, may not

18 exceed the sum of federal taxable income for the taxable 
19 year before net
operating loss deduction, plus the excess 
20 of addition modifications over
subtraction modifications 
21 for the taxable year. For taxable years ending
prior to 
22 December 31, 1986, taxable income may never be an amount in 
23 excess
of the net operating loss for the taxable year as 
24 defined in subsections
(c) and (d) of Section 172 of the 
25 Internal Revenue Code, provided that when
taxable income of 
 
 
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1 a corporation (other than a Subchapter S corporation),

2 trust, or estate is less than zero and addition 
3 modifications, other than
those provided by subparagraph 
4 (E) of paragraph (2) of subsection (b) for
corporations or 
5 subparagraph (E) of paragraph (2) of subsection (c) for

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

10 applied under Section 172 of the Internal Revenue Code or 
11 under
subparagraph (E) of paragraph (2) of this subsection 
12 (e) applied in
conjunction with Section 172 of the Internal 
13 Revenue Code.
14  (2) Special rule. For purposes of paragraph (1) of this 
15 subsection,
the taxable income properly reportable for 
16 federal income tax purposes
shall mean:
17   (A) Certain life insurance companies. In the case 
18 of a life
insurance company subject to the tax imposed 
19 by Section 801 of the
Internal Revenue Code, life 
20 insurance company taxable income, plus the
amount of 
21 distribution from pre-1984 policyholder surplus 
22 accounts as
calculated under Section 815a of the 
23 Internal Revenue Code;
24   (B) Certain other insurance companies. In the case 
25 of mutual
insurance companies subject to the tax 
26 imposed by Section 831 of the
Internal Revenue Code, 
 
 
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1 insurance company taxable income;
2   (C) Regulated investment companies. In the case of 
3 a regulated
investment company subject to the tax 
4 imposed by Section 852 of the
Internal Revenue Code, 
5 investment company taxable income;
6   (D) Real estate investment trusts. In the case of a 
7 real estate
investment trust subject to the tax imposed 
8 by Section 857 of the
Internal Revenue Code, real 
9 estate investment trust taxable income;
10   (E) Consolidated corporations. In the case of a 
11 corporation which
is a member of an affiliated group of 
12 corporations filing a consolidated
income tax return 
13 for the taxable year for federal income tax purposes,

14 taxable income determined as if such corporation had 
15 filed a separate
return for federal income tax purposes 
16 for the taxable year and each
preceding taxable year 
17 for which it was a member of an affiliated group.
For 
18 purposes of this subparagraph, the taxpayer's separate 
19 taxable
income shall be determined as if the election 
20 provided by Section
243(b) (2) of the Internal Revenue 
21 Code had been in effect for all such years;
22   (F) Cooperatives. In the case of a cooperative 
23 corporation or
association, the taxable income of such 
24 organization determined in
accordance with the 
25 provisions of Section 1381 through 1388 of the
Internal 
26 Revenue Code, but without regard to the prohibition 
 
 
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1 against offsetting losses from patronage activities 
2 against income from nonpatronage activities; except 
3 that a cooperative corporation or association may make 
4 an election to follow its federal income tax treatment 
5 of patronage losses and nonpatronage losses. In the 
6 event such election is made, such losses shall be 
7 computed and carried over in a manner consistent with 
8 subsection (a) of Section 207 of this Act and 
9 apportioned by the apportionment factor reported by 
10 the cooperative on its Illinois income tax return filed 
11 for the taxable year in which the losses are incurred. 
12 The election shall be effective for all taxable years 
13 with original returns due on or after the date of the 
14 election. In addition, the cooperative may file an 
15 amended return or returns, as allowed under this Act, 
16 to provide that the election shall be effective for 
17 losses incurred or carried forward for taxable years 
18 occurring prior to the date of the election. Once made, 
19 the election may only be revoked upon approval of the 
20 Director. The Department shall adopt rules setting 
21 forth requirements for documenting the elections and 
22 any resulting Illinois net loss and the standards to be 
23 used by the Director in evaluating requests to revoke 
24 elections. Public Act 96-932 is declaratory of 
25 existing law; 
26   (G) Subchapter S corporations. In the case of: (i) 
 
 
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1 a Subchapter S
corporation for which there is in effect 
2 an election for the taxable year
under Section 1362 of 
3 the Internal Revenue Code, the taxable income of such

4 corporation determined in accordance with Section 
5 1363(b) of the Internal
Revenue Code, except that 
6 taxable income shall take into
account those items 
7 which are required by Section 1363(b)(1) of the

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

12 instead the prior federal Subchapter S rules as in 
13 effect on July 1, 1982,
the taxable income of such 
14 corporation determined in accordance with the
federal 
15 Subchapter S rules as in effect on July 1, 1982; and
16   (H) Partnerships. In the case of a partnership, 
17 taxable income
determined in accordance with Section 
18 703 of the Internal Revenue Code,
except that taxable 
19 income shall take into account those items which are

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


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

26 property ending July 31, 1969 bears to the number of 
 
 
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1 full calendar
months in the taxpayer's entire holding 
2 period for the
property.
3   (C) The Department shall prescribe such 
4 regulations as may be
necessary to carry out the 
5 purposes of this paragraph.

6 (g) Double deductions. Unless specifically provided 
7otherwise, nothing
in this Section shall permit the same item 
8to be deducted more than once.

9 (h) Legislative intention. Except as expressly provided by 
10this
Section there shall be no modifications or limitations on 
11the amounts
of income, gain, loss or deduction taken into 
12account in determining
gross income, adjusted gross income or 
13taxable income for federal income
tax purposes for the taxable 
14year, or in the amount of such items
entering into the 
15computation of base income and net income under this
Act for 
16such taxable year, whether in respect of property values as of

17August 1, 1969 or otherwise.
18(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198, 
19eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09; 
2096-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff. 
216-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507, 
22eff. 8-23-11; 97-905, eff. 8-7-12.)


23 Section 99. Effective date. This Act takes effect upon 
24becoming law.