Rep. William Davis
Filed: 5/22/2013
 
 


 




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1
AMENDMENT TO HOUSE BILL 390




2 AMENDMENT NO. ______. Amend House Bill 390 by replacing 
3everything after the enacting clause with the following:


4 "Section 5. The Illinois Income Tax Act is amended by 
5changing Sections 203, 901, and 1501 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 
 
 
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1 to the taxpayer
as interest or dividends during the 
2 taxable year to the extent excluded
from gross income 
3 in the computation of adjusted gross income, except 
4 stock
dividends of qualified public utilities 
5 described in Section 305(e) of the
Internal Revenue 
6 Code;
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 adjusted gross
income for the 
10 taxable year;
11   (C) An amount equal to the amount received during 
12 the taxable year
as a recovery or refund of real 
13 property taxes paid with respect to the
taxpayer's 
14 principal residence under the Revenue Act of
1939 and 
15 for which a deduction was previously taken under 
16 subparagraph (L) of
this paragraph (2) prior to July 1, 
17 1991, the retrospective application date of
Article 4 
18 of Public Act 87-17. In the case of multi-unit or 
19 multi-use
structures and farm dwellings, the taxes on 
20 the taxpayer's principal residence
shall be that 
21 portion of the total taxes for the entire property 
22 which is
attributable to such principal residence;
23   (D) An amount equal to the amount of the capital 
24 gain deduction
allowable under the Internal Revenue 
25 Code, to the extent deducted from gross
income in the 
26 computation of adjusted gross income;
 
 
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1   (D-5) An amount, to the extent not included in 
2 adjusted gross income,
equal to the amount of money 
3 withdrawn by the taxpayer in the taxable year from
a 
4 medical care savings account and the interest earned on 
5 the account in the
taxable year of a withdrawal 
6 pursuant to subsection (b) of Section 20 of the
Medical 
7 Care Savings Account Act or subsection (b) of Section 
8 20 of the
Medical Care Savings Account Act of 2000;
9   (D-10) For taxable years ending after December 31, 
10 1997, an
amount equal to any eligible remediation costs 
11 that the individual
deducted in computing adjusted 
12 gross income and for which the
individual claims a 
13 credit under subsection (l) of Section 201;
14   (D-15) For taxable years 2001 and thereafter, an 
15 amount equal to the
bonus depreciation deduction taken 
16 on the taxpayer's federal income tax return for the 
17 taxable
year under subsection (k) of Section 168 of the 
18 Internal Revenue Code;
19   (D-16) If the taxpayer sells, transfers, abandons, 
20 or otherwise disposes of property for which the 
21 taxpayer was required in any taxable year to
make an 
22 addition modification under subparagraph (D-15), then 
23 an amount equal
to the aggregate amount of the 
24 deductions taken in all taxable
years under 
25 subparagraph (Z) with respect to that property.
26   If the taxpayer continues to own property through 
 
 
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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 allowed in any taxable year to make a subtraction 
5 modification under subparagraph (Z), then an amount 
6 equal to that subtraction modification.

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

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

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

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

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

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

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

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

10   (D-20) For taxable years beginning on or after 
11 January 1,
2002 and ending on or before December 31, 
12 2006, in
the
case of a distribution from a qualified 
13 tuition program under Section 529 of
the Internal 
14 Revenue Code, other than (i) a distribution from a 
15 College Savings
Pool created under Section 16.5 of the 
16 State Treasurer Act or (ii) a
distribution from the 
17 Illinois Prepaid Tuition Trust Fund, an amount equal to

18 the amount excluded from gross income under Section 
19 529(c)(3)(B). For taxable years beginning on or after 
20 January 1, 2007, in the case of a distribution from a 
21 qualified tuition program under Section 529 of the 
22 Internal Revenue Code, other than (i) a distribution 
23 from a College Savings Pool created under Section 16.5 
24 of the State Treasurer Act, (ii) a distribution from 
25 the Illinois Prepaid Tuition Trust Fund, or (iii) a 
26 distribution from a qualified tuition program under 
 
 
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1 Section 529 of the Internal Revenue Code that (I) 
2 adopts and determines that its offering materials 
3 comply with the College Savings Plans Network's 
4 disclosure principles and (II) has made reasonable 
5 efforts to inform in-state residents of the existence 
6 of in-state qualified tuition programs by informing 
7 Illinois residents directly and, where applicable, to 
8 inform financial intermediaries distributing the 
9 program to inform in-state residents of the existence 
10 of in-state qualified tuition programs at least 
11 annually, an amount equal to the amount excluded from 
12 gross income under Section 529(c)(3)(B).
13   For the purposes of this subparagraph (D-20), a 
14 qualified tuition program has made reasonable efforts 
15 if it makes disclosures (which may use the term 
16 "in-state program" or "in-state plan" and need not 
17 specifically refer to Illinois or its qualified 
18 programs by name) (i) directly to prospective 
19 participants in its offering materials or makes a 
20 public disclosure, such as a website posting; and (ii) 
21 where applicable, to intermediaries selling the 
22 out-of-state program in the same manner that the 
23 out-of-state program distributes its offering 
24 materials;
25   (D-21) For taxable years beginning on or after 
26 January 1, 2007, in the case of transfer of moneys from 
 
 
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1 a qualified tuition program under Section 529 of the 
2 Internal Revenue Code that is administered by the State 
3 to an out-of-state program, an amount equal to the 
4 amount of moneys previously deducted from base income 
5 under subsection (a)(2)(Y) of this Section;
6   (D-22) For taxable years beginning on or after 
7 January 1, 2009, in the case of a nonqualified 
8 withdrawal or refund of moneys from a qualified tuition 
9 program under Section 529 of the Internal Revenue Code 
10 administered by the State that is not used for 
11 qualified expenses at an eligible education 
12 institution, an amount equal to the contribution 
13 component of the nonqualified withdrawal or refund 
14 that was previously deducted from base income under 
15 subsection (a)(2)(y) of this Section, provided that 
16 the withdrawal or refund did not result from the 
17 beneficiary's death or disability;
18   (D-23) An amount equal to the credit allowable to 
19 the taxpayer under Section 218(a) of this Act, 
20 determined without regard to Section 218(c) of this 
21 Act;
22   (D-24) For taxable years ending on or after 
23 December 31, 2013, an amount equal to the deduction 
24 allowed under Section 199 of the Internal Revenue Code 
25 for the taxable year; 
26 and by deducting from the total so obtained the
sum of the 
 
 
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1 following amounts:
2   (E) For taxable years ending before December 31, 
3 2001,
any amount included in such total in respect of 
4 any compensation
(including but not limited to any 
5 compensation paid or accrued to a
serviceman while a 
6 prisoner of war or missing in action) paid to a 
7 resident
by reason of being on active duty in the Armed 
8 Forces of the United States
and in respect of any 
9 compensation paid or accrued to a resident who as a

10 governmental employee was a prisoner of war or missing 
11 in action, and in
respect of any compensation paid to a 
12 resident in 1971 or thereafter for
annual training 
13 performed pursuant to Sections 502 and 503, Title 32,

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

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

6 substantially all of its operations in a River Edge 
7 Redevelopment Zone or zones. This subparagraph (J) is 
8 exempt from the provisions of Section 250;
9   (K) 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 (J) of paragraph (2) of this subsection

16 shall not be eligible for the deduction provided under 
17 this subparagraph
(K);
18   (L) For taxable years ending after December 31, 
19 1983, an amount equal to
all social security benefits 
20 and railroad retirement benefits included in
such 
21 total pursuant to Sections 72(r) and 86 of the Internal 
22 Revenue Code;
23   (M) With the exception of any amounts subtracted 
24 under subparagraph
(N), an amount equal to the sum of 
25 all amounts disallowed as
deductions by (i) Sections 
26 171(a) (2), and 265(2) of the Internal Revenue Code, 
 
 
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1 and all amounts of expenses allocable
to interest and 
2 disallowed as deductions by Section 265(1) of the 
3 Internal
Revenue Code;
and (ii) for taxable years

4 ending on or after August 13, 1999, Sections 171(a)(2), 
5 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
6 Code, plus, for taxable years ending on or after 
7 December 31, 2011, Section 45G(e)(3) of the Internal 
8 Revenue Code and, for taxable years ending on or after 
9 December 31, 2008, any amount included in gross income 
10 under Section 87 of the Internal Revenue Code; the 
11 provisions of this
subparagraph are exempt from the 
12 provisions of Section 250;
13   (N) An amount equal to all amounts included in such 
14 total which are
exempt from taxation by this State 
15 either by reason of its statutes or
Constitution
or by 
16 reason of the Constitution, treaties or statutes of the 
17 United States;
provided that, in the case of any 
18 statute of this State that exempts income
derived from 
19 bonds or other obligations from the tax imposed under 
20 this Act,
the amount exempted shall be the interest net 
21 of bond premium amortization;
22   (O) An amount equal to any contribution made to a 
23 job training
project established pursuant to the Tax 
24 Increment Allocation Redevelopment Act;
25   (P) An amount equal to the amount of the deduction 
26 used to compute the
federal income tax credit for 
 
 
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1 restoration of substantial amounts held under
claim of 
2 right for the taxable year pursuant to Section 1341 of 
3 the
Internal Revenue Code or of any itemized deduction 
4 taken from adjusted gross income in the computation of 
5 taxable income for restoration of substantial amounts 
6 held under claim of right for the taxable year;
7   (Q) An amount equal to any amounts included in such 
8 total, received by
the taxpayer as an acceleration in 
9 the payment of life, endowment or annuity
benefits in 
10 advance of the time they would otherwise be payable as 
11 an indemnity
for a terminal illness;
12   (R) An amount equal to the amount of any federal or 
13 State bonus paid
to veterans of the Persian Gulf War;
14   (S) An amount, to the extent included in adjusted 
15 gross income, equal
to the amount of a contribution 
16 made in the taxable year on behalf of the
taxpayer to a 
17 medical care savings account established under the 
18 Medical Care
Savings Account Act or the Medical Care 
19 Savings Account Act of 2000 to the
extent the 
20 contribution is accepted by the account
administrator 
21 as provided in that Act;
22   (T) An amount, to the extent included in adjusted 
23 gross income, equal to
the amount of interest earned in 
24 the taxable year on a medical care savings
account 
25 established under the Medical Care Savings Account Act 
26 or the Medical
Care Savings Account Act of 2000 on 
 
 
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1 behalf of the
taxpayer, other than interest added 
2 pursuant to item (D-5) of this paragraph
(2);
3   (U) For one taxable year beginning on or after 
4 January 1,
1994, an
amount equal to the total amount of 
5 tax imposed and paid under subsections (a)
and (b) of 
6 Section 201 of this Act on grant amounts received by 
7 the taxpayer
under the Nursing Home Grant Assistance 
8 Act during the taxpayer's taxable years
1992 and 1993;
9   (V) Beginning with tax years ending on or after 
10 December 31, 1995 and
ending with tax years ending on 
11 or before December 31, 2004, an amount equal to
the 
12 amount paid by a taxpayer who is a
self-employed 
13 taxpayer, a partner of a partnership, or a
shareholder 
14 in a Subchapter S corporation for health insurance or 
15 long-term
care insurance for that taxpayer or that 
16 taxpayer's spouse or dependents, to
the extent that the 
17 amount paid for that health insurance or long-term care

18 insurance may be deducted under Section 213 of the 
19 Internal Revenue Code, has not been deducted on the 
20 federal income tax return of the taxpayer,
and does not 
21 exceed the taxable income attributable to that 
22 taxpayer's income,
self-employment income, or 
23 Subchapter S corporation income; except that no

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

 
 
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1 employer of the taxpayer or the taxpayer's
spouse. The 
2 amount of the health insurance and long-term care 
3 insurance
subtracted under this item (V) shall be 
4 determined by multiplying total
health insurance and 
5 long-term care insurance premiums paid by the taxpayer

6 times a number that represents the fractional 
7 percentage of eligible medical
expenses under Section 
8 213 of the Internal Revenue Code of 1986 not actually

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

26 persecution for racial or religious reasons by Nazi 
 
 
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1 Germany or any other Axis
regime immediately prior to, 
2 during, and immediately after World War II,
including, 
3 but
not limited to, interest on the proceeds receivable 
4 as insurance
under policies issued to a victim of 
5 persecution for racial or religious
reasons
by Nazi 
6 Germany or any other Axis regime by European insurance 
7 companies
immediately prior to and during World War II;

8 provided, however, this subtraction from federal 
9 adjusted gross income does not
apply to assets acquired 
10 with such assets or with the proceeds from the sale of

11 such assets; provided, further, this paragraph shall 
12 only apply to a taxpayer
who was the first recipient of 
13 such assets after their recovery and who is a
victim of 
14 persecution for racial or religious reasons
by Nazi 
15 Germany or any other Axis regime or as an heir of the 
16 victim. The
amount of and the eligibility for any 
17 public assistance, benefit, or
similar entitlement is 
18 not affected by the inclusion of items (i) and (ii) of

19 this paragraph in gross income for federal income tax 
20 purposes.
This paragraph is exempt from the provisions 
21 of Section 250;
22   (Y) For taxable years beginning on or after January 
23 1, 2002
and ending
on or before December 31, 2004, 
24 moneys contributed in the taxable year to a College 
25 Savings Pool account under
Section 16.5 of the State 
26 Treasurer Act, except that amounts excluded from
gross 
 
 
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1 income under Section 529(c)(3)(C)(i) of the Internal 
2 Revenue Code
shall not be considered moneys 
3 contributed under this subparagraph (Y). For taxable 
4 years beginning on or after January 1, 2005, a maximum 
5 of $10,000
contributed
in the
taxable year to (i) a 
6 College Savings Pool account under Section 16.5 of the

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

10 Internal
Revenue Code shall not be considered moneys 
11 contributed under this subparagraph
(Y). For purposes 
12 of this subparagraph, contributions made by an 
13 employer on behalf of an employee, or matching 
14 contributions made by an employee, shall be treated as 
15 made by the employee. This
subparagraph (Y) is exempt 
16 from the provisions of Section 250;
17   (Z) For taxable years 2001 and thereafter, for the 
18 taxable year in
which the bonus depreciation deduction

19 is taken on the taxpayer's federal income tax return 
20 under
subsection (k) of Section 168 of the Internal 
21 Revenue Code and for each
applicable taxable year 
22 thereafter, an amount equal to "x", where:
23    (1) "y" equals the amount of the depreciation 
24 deduction taken for the
taxable year
on the 
25 taxpayer's federal income tax return on property 
26 for which the bonus
depreciation deduction
was 
 
 
09800HB0390ham001- 23 -LRB098 03196 HLH 46276 a


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

22 depreciation deduction
taken on that property on the 
23 taxpayer's federal income tax return under
subsection 
24 (k) of Section 168 of the Internal Revenue Code. This 
25 subparagraph (Z) is exempt from the provisions of 
26 Section 250;
 
 
09800HB0390ham001- 24 -LRB098 03196 HLH 46276 a


1   (AA) If the taxpayer sells, transfers, abandons, 
2 or otherwise disposes of
property for which the 
3 taxpayer was required in any taxable year to make an

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

6   If the taxpayer continues to own property through 
7 the last day of the last tax year for which the 
8 taxpayer may claim a depreciation deduction for 
9 federal income tax purposes and for which the taxpayer 
10 was required in any taxable year to make an addition 
11 modification under subparagraph (D-15), then an amount 
12 equal to that addition modification.

13   The taxpayer is allowed to take the deduction under 
14 this subparagraph
only once with respect to any one 
15 piece of property.
16   This subparagraph (AA) is exempt from the 
17 provisions of Section 250;
18   (BB) Any amount included in adjusted gross income, 
19 other
than
salary,
received by a driver in a 
20 ridesharing arrangement using a motor vehicle;
21   (CC) The amount of (i) any interest income (net of 
22 the deductions allocable thereto) taken into account 
23 for the taxable year with respect to a transaction with 
24 a taxpayer that is required to make an addition 
25 modification with respect to such transaction under 
26 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
 
 
09800HB0390ham001- 25 -LRB098 03196 HLH 46276 a


1 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
2 the amount of that addition modification, and
(ii) any 
3 income from intangible property (net of the deductions 
4 allocable thereto) taken into account for the taxable 
5 year with respect to a transaction with a taxpayer that 
6 is required to make an addition modification with 
7 respect to such transaction under Section 
8 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
9 203(d)(2)(D-8), but not to exceed the amount of that 
10 addition modification. This subparagraph (CC) is 
11 exempt from the provisions of Section 250;
12   (DD) An amount equal to the interest income taken 
13 into account for the taxable year (net of the 
14 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 
 
 
09800HB0390ham001- 26 -LRB098 03196 HLH 46276 a


1 addition modification required to be made for the same 
2 taxable year under Section 203(a)(2)(D-17) for 
3 interest paid, accrued, or incurred, directly or 
4 indirectly, to the same person. This subparagraph (DD) 
5 is exempt from the provisions of Section 250; 
6   (EE) An amount equal to the income from intangible 
7 property taken into account for the taxable year (net 
8 of the deductions allocable thereto) with respect to 
9 transactions with (i) a foreign person who would be a 
10 member of the taxpayer's unitary business group but for 
11 the fact that the foreign person's business activity 
12 outside the United States is 80% or more of that 
13 person's total business activity and (ii) for taxable 
14 years ending on or after December 31, 2008, to a person 
15 who would be a member of the same unitary business 
16 group but for the fact that the person is prohibited 
17 under Section 1501(a)(27) from being included in the 
18 unitary business group because he or she is ordinarily 
19 required to apportion business income under different 
20 subsections of Section 304, but not to exceed the 
21 addition modification required to be made for the same 
22 taxable year under Section 203(a)(2)(D-18) for 
23 intangible expenses and costs paid, accrued, or 
24 incurred, directly or indirectly, to the same foreign 
25 person. This subparagraph (EE) is exempt from the 
26 provisions of Section 250;
 
 
09800HB0390ham001- 27 -LRB098 03196 HLH 46276 a


1   (FF) An amount equal to any amount awarded to the 
2 taxpayer during the taxable year by the Court of Claims 
3 under subsection (c) of Section 8 of the Court of 
4 Claims Act for time unjustly served in a State prison. 
5 This subparagraph (FF) is exempt from the provisions of 
6 Section 250; and 
7   (GG) 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(a)(2)(D-19), 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 (GG), 
18 the insurer to which the premiums were paid must add 
19 back to income the amount subtracted by the taxpayer 
20 pursuant to this subparagraph (GG). This subparagraph 
21 (GG) is exempt from the provisions of Section 250. 

22 (b) Corporations.
23  (1) In general. In the case of a corporation, base 
24 income means an
amount equal to the taxpayer's taxable 
25 income for the taxable year as
modified by paragraph (2).
 
 
09800HB0390ham001- 28 -LRB098 03196 HLH 46276 a


1  (2) Modifications. The taxable income referred to in 
2 paragraph (1)
shall be modified by adding thereto the sum 
3 of the following amounts:
4   (A) An amount equal to all amounts paid or accrued 
5 to the taxpayer
as interest and all distributions 
6 received from regulated investment
companies during 
7 the taxable year to the extent excluded from gross

8 income in the computation of taxable income;
9   (B) An amount equal to the amount of tax imposed by 
10 this Act to the
extent deducted from gross income in 
11 the computation of taxable income
for the taxable year;
12   (C) In the case of a regulated investment company, 
13 an amount equal to
the excess of (i) the net long-term 
14 capital gain for the taxable year, over
(ii) the amount 
15 of the capital gain dividends designated as such in 
16 accordance
with Section 852(b)(3)(C) of the Internal 
17 Revenue Code and any amount
designated under Section 
18 852(b)(3)(D) of the Internal Revenue Code,

19 attributable to the taxable year (this amendatory Act 
20 of 1995
(Public Act 89-89) is declarative of existing 
21 law and is not a new
enactment);
22   (D) The amount of any net operating loss deduction 
23 taken in arriving
at taxable income, other than a net 
24 operating loss carried forward from a
taxable year 
25 ending prior to December 31, 1986;
26   (E) For taxable years in which a net operating loss 
 
 
09800HB0390ham001- 29 -LRB098 03196 HLH 46276 a


1 carryback or
carryforward from a taxable year ending 
2 prior to December 31, 1986 is an
element of taxable 
3 income under paragraph (1) of subsection (e) or

4 subparagraph (E) of paragraph (2) of subsection (e), 
5 the amount by which
addition modifications other than 
6 those provided by this subparagraph (E)
exceeded 
7 subtraction modifications in such earlier taxable 
8 year, with the
following limitations applied in the 
9 order that they are listed:
10    (i) the addition modification relating to the 
11 net operating loss
carried back or forward to the 
12 taxable year from any taxable year ending
prior to 
13 December 31, 1986 shall be reduced by the amount of 
14 addition
modification under this subparagraph (E) 
15 which related to that net operating
loss and which 
16 was taken into account in calculating the base 
17 income of an
earlier taxable year, and
18    (ii) the addition modification relating to the 
19 net operating loss
carried back or forward to the 
20 taxable year from any taxable year ending
prior to 
21 December 31, 1986 shall not exceed the amount of 
22 such carryback or
carryforward;
23   For taxable years in which there is a net operating 
24 loss carryback or
carryforward from more than one other 
25 taxable year ending prior to December
31, 1986, the 
26 addition modification provided in this subparagraph 
 
 
09800HB0390ham001- 30 -LRB098 03196 HLH 46276 a


1 (E) shall
be the sum of the amounts computed 
2 independently under the preceding
provisions of this 
3 subparagraph (E) for each such taxable year;
4   (E-5) For taxable years ending after December 31, 
5 1997, an
amount equal to any eligible remediation costs 
6 that the corporation
deducted in computing adjusted 
7 gross income and for which the
corporation claims a 
8 credit under subsection (l) of Section 201;
9   (E-10) For taxable years 2001 and thereafter, an 
10 amount equal to the
bonus depreciation deduction taken 
11 on the taxpayer's federal income tax return for the 
12 taxable
year under subsection (k) of Section 168 of the 
13 Internal Revenue Code;
14   (E-11) If the taxpayer sells, transfers, abandons, 
15 or otherwise disposes of property for which the 
16 taxpayer was required in any taxable year to
make an 
17 addition modification under subparagraph (E-10), then 
18 an amount equal
to the aggregate amount of the 
19 deductions taken in all taxable
years under 
20 subparagraph (T) with respect to that property.
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 allowed in any taxable year to make a subtraction 
26 modification under subparagraph (T), then an amount 
 
 
09800HB0390ham001- 31 -LRB098 03196 HLH 46276 a


1 equal to that subtraction modification.

2   The taxpayer is required to make the addition 
3 modification under this
subparagraph
only once with 
4 respect to any one piece of property;
5   (E-12) An amount equal to the amount otherwise 
6 allowed as a deduction in computing base income for 
7 interest paid, accrued, or incurred, directly or 
8 indirectly, (i) for taxable years ending on or after 
9 December 31, 2004, to a foreign person who would be a 
10 member of the same unitary business group but for the 
11 fact the foreign person's business activity outside 
12 the United States is 80% or more of the foreign 
13 person's total business activity and (ii) for taxable 
14 years ending on or after December 31, 2008, to a person 
15 who would be a member of the same unitary business 
16 group but for the fact that the person is prohibited 
17 under Section 1501(a)(27) from being included in the 
18 unitary business group because he or she is ordinarily 
19 required to apportion business income under different 
20 subsections of Section 304. The addition modification 
21 required by this subparagraph shall be reduced to the 
22 extent that dividends were included in base income of 
23 the unitary group for the same taxable year and 
24 received by the taxpayer or by a member of the 
25 taxpayer's unitary business group (including amounts 
26 included in gross income pursuant to Sections 951 
 
 
09800HB0390ham001- 32 -LRB098 03196 HLH 46276 a


1 through 964 of the Internal Revenue Code and amounts 
2 included in gross income under Section 78 of the 
3 Internal Revenue Code) with respect to the stock of the 
4 same person to whom the interest was paid, accrued, or 
5 incurred.

6   This paragraph shall not apply to the following:

7    (i) an item of interest paid, accrued, or 
8 incurred, directly or indirectly, to a person who 
9 is subject in a foreign country or state, other 
10 than a state which requires mandatory unitary 
11 reporting, to a tax on or measured by net income 
12 with respect to such interest; or
13    (ii) an item of interest paid, accrued, or 
14 incurred, directly or indirectly, to a person if 
15 the taxpayer can establish, based on a 
16 preponderance of the evidence, both of the 
17 following:
18     (a) the person, during the same taxable 
19 year, paid, accrued, or incurred, the interest 
20 to a person that is not a related member, and
21     (b) the transaction giving rise to the 
22 interest expense between the taxpayer and the 
23 person did not have as a principal purpose the 
24 avoidance of Illinois income tax, and is paid 
25 pursuant to a contract or agreement that 
26 reflects an arm's-length interest rate and 
 
 
09800HB0390ham001- 33 -LRB098 03196 HLH 46276 a


1 terms; or

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

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

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

24   (E-13) An amount equal to the amount of intangible 
25 expenses and costs otherwise allowed as a deduction in 
26 computing base income, and that were paid, accrued, or 
 
 
09800HB0390ham001- 34 -LRB098 03196 HLH 46276 a


1 incurred, directly or indirectly, (i) for taxable 
2 years ending on or after December 31, 2004, to a 
3 foreign person who would be a member of the same 
4 unitary business group but for the fact that the 
5 foreign person's business activity outside the United 
6 States is 80% or more of that person's total business 
7 activity and (ii) for taxable years ending on or after 
8 December 31, 2008, to a person who would be a member of 
9 the same unitary business group but for the fact that 
10 the person is prohibited under Section 1501(a)(27) 
11 from being included in the unitary business group 
12 because he or she is ordinarily required to apportion 
13 business income under different subsections of Section 
14 304. The addition modification required by this 
15 subparagraph shall be reduced to the extent that 
16 dividends were included in base income of the unitary 
17 group for the same taxable year and received by the 
18 taxpayer or by a member of the taxpayer's unitary 
19 business group (including amounts included in gross 
20 income pursuant to Sections 951 through 964 of the 
21 Internal Revenue Code and amounts included in gross 
22 income under Section 78 of the Internal Revenue Code) 
23 with respect to the stock of the same person to whom 
24 the intangible expenses and costs were directly or 
25 indirectly paid, incurred, or accrued. The preceding 
26 sentence shall not apply to the extent that the same 
 
 
09800HB0390ham001- 35 -LRB098 03196 HLH 46276 a


1 dividends caused a reduction to the addition 
2 modification required under Section 203(b)(2)(E-12) of 
3 this Act.
As used in this subparagraph, the term 
4 "intangible expenses and costs" includes (1) expenses, 
5 losses, and costs for, or related to, the direct or 
6 indirect acquisition, use, maintenance or management, 
7 ownership, sale, exchange, or any other disposition of 
8 intangible property; (2) losses incurred, directly or 
9 indirectly, from factoring transactions or discounting 
10 transactions; (3) royalty, patent, technical, and 
11 copyright fees; (4) licensing fees; and (5) other 
12 similar expenses and costs.
For purposes of this 
13 subparagraph, "intangible property" includes patents, 
14 patent applications, trade names, trademarks, service 
15 marks, copyrights, mask works, trade secrets, and 
16 similar types of intangible assets.
17   This paragraph shall not apply to the following:
18    (i) any item of intangible expenses or costs 
19 paid, accrued, or incurred, directly or 
20 indirectly, from a transaction with a person who is 
21 subject in a foreign country or state, other than a 
22 state which requires mandatory unitary reporting, 
23 to a tax on or measured by net income with respect 
24 to such item; or
25    (ii) any item of intangible expense or cost 
26 paid, accrued, or incurred, directly or 
 
 
09800HB0390ham001- 36 -LRB098 03196 HLH 46276 a


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

23    Nothing in this subsection shall preclude the 
24 Director from making any other adjustment 
25 otherwise allowed under Section 404 of this Act for 
26 any tax year beginning after the effective date of 
 
 
09800HB0390ham001- 37 -LRB098 03196 HLH 46276 a


1 this amendment provided such adjustment is made 
2 pursuant to regulation adopted by the Department 
3 and such regulations provide methods and standards 
4 by which the Department will utilize its authority 
5 under Section 404 of this Act;

6   (E-14) For taxable years ending on or after 
7 December 31, 2008, an amount equal to the amount of 
8 insurance premium expenses and costs otherwise allowed 
9 as a deduction in computing base income, and that were 
10 paid, accrued, or incurred, directly or indirectly, to 
11 a person who would be a member of the same unitary 
12 business group but for the fact that the person is 
13 prohibited under Section 1501(a)(27) from being 
14 included in the unitary business group because he or 
15 she is ordinarily required to apportion business 
16 income under different subsections of Section 304. The 
17 addition modification required by this subparagraph 
18 shall be reduced to the extent that dividends were 
19 included in base income of the unitary group for the 
20 same taxable year and received by the taxpayer or by a 
21 member of the taxpayer's unitary business group 
22 (including amounts included in gross income under 
23 Sections 951 through 964 of the Internal Revenue Code 
24 and amounts included in gross income under Section 78 
25 of the Internal Revenue Code) with respect to the stock 
26 of the same person to whom the premiums and costs were 
 
 
09800HB0390ham001- 38 -LRB098 03196 HLH 46276 a


1 directly or indirectly paid, incurred, or accrued. The 
2 preceding sentence does not apply to the extent that 
3 the same dividends caused a reduction to the addition 
4 modification required under Section 203(b)(2)(E-12) or 
5 Section 203(b)(2)(E-13) of this Act;

6   (E-15) For taxable years beginning after December 
7 31, 2008, any deduction for dividends paid by a captive 
8 real estate investment trust that is allowed to a real 
9 estate investment trust under Section 857(b)(2)(B) of 
10 the Internal Revenue Code for dividends paid;
11   (E-16) 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   (E-17) For taxable years ending on or after 
16 December 31, 2013, an amount equal to the deduction 
17 allowed under Section 199 of the Internal Revenue Code 
18 for the taxable year; 
19   (E-18) For taxable years ending on or after 
20 December 31, 2013, any deduction allowed to the 
21 taxpayer under Sections 243 through 246A of the 
22 Internal Revenue Code; 
23 and by deducting from the total so obtained the sum of the 
24 following
amounts:
25   (F) An amount equal to the amount of any tax 
26 imposed by this Act
which was refunded to the taxpayer 
 
 
09800HB0390ham001- 39 -LRB098 03196 HLH 46276 a


1 and included in such total for the
taxable year;
2   (G) An amount equal to any amount included in such 
3 total under
Section 78 of the Internal Revenue Code;
4   (H) In the case of a regulated investment company, 
5 an amount equal
to the amount of exempt interest 
6 dividends as defined in subsection (b)
(5) of Section 
7 852 of the Internal Revenue Code, paid to shareholders

8 for the taxable year;
9   (I) With the exception of any amounts subtracted 
10 under subparagraph
(J),
an amount equal to the sum of 
11 all amounts disallowed as
deductions by (i) Sections 
12 171(a) (2), and 265(a)(2) and amounts disallowed as

13 interest expense by Section 291(a)(3) of the Internal 
14 Revenue Code, and all amounts of expenses allocable to 
15 interest and
disallowed as deductions by Section 
16 265(a)(1) of the Internal Revenue Code;
and (ii) for 
17 taxable years
ending on or after August 13, 1999, 
18 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
19 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
20 for tax years ending on or after December 31, 2011, 
21 amounts disallowed as deductions by Section 45G(e)(3) 
22 of the Internal Revenue Code and, for taxable years 
23 ending on or after December 31, 2008, any amount 
24 included in gross income under Section 87 of the 
25 Internal Revenue Code and the policyholders' share of 
26 tax-exempt interest of a life insurance company under 
 
 
09800HB0390ham001- 40 -LRB098 03196 HLH 46276 a


1 Section 807(a)(2)(B) of the Internal Revenue Code (in 
2 the case of a life insurance company with gross income 
3 from a decrease in reserves for the tax year) or 
4 Section 807(b)(1)(B) of the Internal Revenue Code (in 
5 the case of a life insurance company allowed a 
6 deduction for an increase in reserves for the tax 
7 year); the
provisions of this
subparagraph are exempt 
8 from the provisions of Section 250;
9   (J) An amount equal to all amounts included in such 
10 total which are
exempt from taxation by this State 
11 either by reason of its statutes or
Constitution
or by 
12 reason of the Constitution, treaties or statutes of the 
13 United States;
provided that, in the case of any 
14 statute of this State that exempts income
derived from 
15 bonds or other obligations from the tax imposed under 
16 this Act,
the amount exempted shall be the interest net 
17 of bond premium amortization;
18   (K) An amount equal to those dividends included in 
19 such total
which were paid by a corporation which 
20 conducts
business operations in a River Edge 
21 Redevelopment Zone or zones created under the River 
22 Edge Redevelopment Zone Act and conducts substantially 
23 all of its
operations in a River Edge Redevelopment 
24 Zone or zones. This subparagraph (K) is exempt from the 
25 provisions of Section 250;
26   (L) An amount equal to those dividends included in 
 
 
09800HB0390ham001- 41 -LRB098 03196 HLH 46276 a


1 such total that
were paid by a corporation that 
2 conducts business operations in a federally
designated 
3 Foreign Trade Zone or Sub-Zone and that is designated a 
4 High Impact
Business located in Illinois; provided 
5 that dividends eligible for the
deduction provided in 
6 subparagraph (K) of paragraph 2 of this subsection

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

12 income from a loan or loans made by such taxpayer to a 
13 borrower, to the extent
that such a loan is secured by 
14 property which is eligible for the River Edge 
15 Redevelopment Zone Investment Credit. To determine the 
16 portion of a loan or loans that is
secured by property 
17 eligible for a Section 201(f) investment
credit to the 
18 borrower, the entire principal amount of the loan or 
19 loans
between the taxpayer and the borrower should be 
20 divided into the basis of the
Section 201(f) investment 
21 credit property which secures the
loan or loans, using 
22 for this purpose the original basis of such property on

23 the date that it was placed in service in the River 
24 Edge Redevelopment Zone. The subtraction modification 
25 available to taxpayer in any
year under this subsection 
26 shall be that portion of the total interest paid
by the 
 
 
09800HB0390ham001- 42 -LRB098 03196 HLH 46276 a


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

16 the basis of the Section 201(h) investment credit 
17 property which
secures the loan or loans, using for 
18 this purpose the original basis of such
property on the 
19 date that it was placed in service in a federally 
20 designated
Foreign Trade Zone or Sub-Zone located in 
21 Illinois. No taxpayer that is
eligible for the 
22 deduction provided in subparagraph (M) of paragraph 
23 (2) of
this subsection shall be eligible for the 
24 deduction provided under this
subparagraph (M-1). The 
25 subtraction modification available to taxpayers in
any 
26 year under this subsection shall be that portion of the 
 
 
09800HB0390ham001- 43 -LRB098 03196 HLH 46276 a


1 total interest
paid by the borrower with respect to 
2 such loan attributable to the eligible
property as 
3 calculated under the previous sentence;
4   (N) Two times any contribution made during the 
5 taxable year to a
designated zone organization to the 
6 extent that the contribution (i)
qualifies as a 
7 charitable contribution under subsection (c) of 
8 Section 170
of the Internal Revenue Code and (ii) must, 
9 by its terms, be used for a
project approved by the 
10 Department of Commerce and Economic Opportunity under 
11 Section 11 of the Illinois Enterprise Zone Act or under 
12 Section 10-10 of the River Edge Redevelopment Zone Act. 
13 This subparagraph (N) is exempt from the provisions of 
14 Section 250;
15   (O) An amount equal to: (i) 85% for taxable years 
16 ending on or before
December 31, 1992, or, a percentage 
17 equal to the percentage allowable under
Section 
18 243(a)(1) of the Internal Revenue Code of 1986 for 
19 taxable years ending
after December 31, 1992, of the 
20 amount by which dividends included in taxable
income 
21 and received from a corporation that is not created or 
22 organized under
the laws of the United States or any 
23 state or political subdivision thereof,
including, for 
24 taxable years ending on or after December 31, 1988, 
25 dividends
received or deemed received or paid or deemed 
26 paid under Sections 951 through
965 of the Internal 
 
 
09800HB0390ham001- 44 -LRB098 03196 HLH 46276 a


1 Revenue Code, exceed the amount of the modification

2 provided under subparagraph (G) of paragraph (2) of 
3 this subsection (b) which
is related to such dividends, 
4 and including, for taxable years ending on or after 
5 December 31, 2008, dividends received from a captive 
6 real estate investment trust; plus (ii) 100% of the 
7 amount by which dividends,
included in taxable income 
8 and received, including, for taxable years ending on
or 
9 after December 31, 1988, dividends received or deemed 
10 received or paid or
deemed paid under Sections 951 
11 through 964 of the Internal Revenue Code and including, 
12 for taxable years ending on or after December 31, 2008, 
13 dividends received from a captive real estate 
14 investment trust, from
any such corporation specified 
15 in clause (i) that would but for the provisions
of 
16 Section 1504 (b) (3) of the Internal Revenue Code be 
17 treated as a member of
the affiliated group which 
18 includes the dividend recipient, exceed the amount
of 
19 the modification provided under subparagraph (G) of 
20 paragraph (2) of this
subsection (b) which is related 
21 to such dividends. This subparagraph (O) shall not 
22 apply to taxable years ending on or after December 31, 
23 2013 is exempt from the provisions of Section 250 of 
24 this Act;
25   (P) An amount equal to any contribution made to a 
26 job training project
established pursuant to the Tax 
 
 
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1 Increment Allocation Redevelopment Act;
2   (Q) An amount equal to the amount of the deduction 
3 used to compute the
federal income tax credit for 
4 restoration of substantial amounts held under
claim of 
5 right for the taxable year pursuant to Section 1341 of 
6 the
Internal Revenue Code;
7   (R) On and after July 20, 1999, in the case of an 
8 attorney-in-fact with respect to whom an
interinsurer 
9 or a reciprocal insurer has made the election under 
10 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
11 835, an amount equal to the excess, if
any, of the 
12 amounts paid or incurred by that interinsurer or 
13 reciprocal insurer
in the taxable year to the 
14 attorney-in-fact over the deduction allowed to that

15 interinsurer or reciprocal insurer with respect to the 
16 attorney-in-fact under
Section 835(b) of the Internal 
17 Revenue Code for the taxable year; the provisions of 
18 this subparagraph are exempt from the provisions of 
19 Section 250;
20   (S) For taxable years ending on or after December 
21 31, 1997, in the
case of a Subchapter
S corporation, an 
22 amount equal to all amounts of income allocable to a

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

26 allocable to organizations exempt from federal income 
 
 
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1 tax by reason of Section
501(a) of the Internal Revenue 
2 Code. This subparagraph (S) is exempt from
the 
3 provisions of Section 250;
4   (T) 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 
 
 
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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 (T) is exempt from the provisions of 
13 Section 250;
14   (U) 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 (E-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 (E-10), then an amount 
25 equal to that addition modification.

26   The taxpayer is allowed to take the deduction under 
 
 
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1 this subparagraph
only once with respect to any one 
2 piece of property.
3   This subparagraph (U) is exempt from the 
4 provisions of Section 250;
5   (V) 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,
(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, and (iii) any insurance premium 
21 income (net of deductions allocable thereto) taken 
22 into account for the taxable year with respect to a 
23 transaction with a taxpayer that is required to make an 
24 addition modification with respect to such transaction 
25 under Section 203(a)(2)(D-19), Section 
26 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section 
 
 
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1 203(d)(2)(D-9), but not to exceed the amount of that 
2 addition modification. This subparagraph (V) is exempt 
3 from the provisions of Section 250;

4   (W) An amount equal to the interest income taken 
5 into account for the taxable year (net of the 
6 deductions allocable thereto) with respect to 
7 transactions with (i) a foreign person who would be a 
8 member of the taxpayer's unitary business group but for 
9 the fact that the foreign person's business activity 
10 outside the United States is 80% or more of that 
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, but not to exceed the 
19 addition modification required to be made for the same 
20 taxable year under Section 203(b)(2)(E-12) for 
21 interest paid, accrued, or incurred, directly or 
22 indirectly, to the same person. This subparagraph (W) 
23 is exempt from the provisions of Section 250;

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

19   (Y) For taxable years ending on or after December 
20 31, 2011, in the case of a taxpayer who was required to 
21 add back any insurance premiums under Section 
22 203(b)(2)(E-14), such taxpayer may elect to subtract 
23 that part of a reimbursement received from the 
24 insurance company equal to the amount of the expense or 
25 loss (including expenses incurred by the insurance 
26 company) that would have been taken into account as a 
 
 
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1 deduction for federal income tax purposes if the 
2 expense or loss had been uninsured. If a taxpayer makes 
3 the election provided for by this subparagraph (Y), the 
4 insurer to which the premiums were paid must add back 
5 to income the amount subtracted by the taxpayer 
6 pursuant to this subparagraph (Y). This subparagraph 
7 (Y) is exempt from the provisions of Section 250; and 
8   (Z) The difference between the nondeductible 
9 controlled foreign corporation dividends under Section 
10 965(e)(3) of the Internal Revenue Code over the taxable 
11 income of the taxpayer, computed without regard to 
12 Section 965(e)(2)(A) of the Internal Revenue Code, and 
13 without regard to any net operating loss deduction. 
14 This subparagraph (Z) is exempt from the provisions of 
15 Section 250. 
16  (3) Special rule. For purposes of paragraph (2) (A), 
17 "gross income"
in the case of a life insurance company, for 
18 tax years ending on and after
December 31, 1994,
and prior 
19 to December 31, 2011, shall mean the gross investment 
20 income for the taxable year and, for tax years ending on or 
21 after December 31, 2011, shall mean all amounts included in 
22 life insurance gross income under Section 803(a)(3) of the 
23 Internal Revenue Code.

24 (c) Trusts and estates.
25  (1) In general. In the case of a trust or estate, base 
 
 
09800HB0390ham001- 52 -LRB098 03196 HLH 46276 a


1 income means
an amount equal to the taxpayer's taxable 
2 income for the taxable year as
modified by paragraph (2).
3  (2) Modifications. Subject to the provisions of 
4 paragraph (3), the
taxable income referred to in paragraph 
5 (1) shall be modified by adding
thereto the sum of the 
6 following amounts:
7   (A) An amount equal to all amounts paid or accrued 
8 to the taxpayer
as interest or dividends during the 
9 taxable year to the extent excluded
from gross income 
10 in the computation of taxable income;
11   (B) In the case of (i) an estate, $600; (ii) a 
12 trust which, under
its governing instrument, is 
13 required to distribute all of its income
currently, 
14 $300; and (iii) any other trust, $100, but in each such 
15 case,
only to the extent such amount was deducted in 
16 the computation of
taxable income;
17   (C) An amount equal to the amount of tax imposed by 
18 this Act to the
extent deducted from gross income in 
19 the computation of taxable income
for the taxable year;
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 
 
 
09800HB0390ham001- 53 -LRB098 03196 HLH 46276 a


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 taxable year, with 
6 the following limitations
applied in the order that 
7 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 
 
 
09800HB0390ham001- 54 -LRB098 03196 HLH 46276 a


1 subparagraph (E) for each such taxable year;
2   (F) For taxable years ending on or after January 1, 
3 1989, an amount
equal to the tax deducted pursuant to 
4 Section 164 of the Internal Revenue
Code if the trust 
5 or estate is claiming the same tax for purposes of the

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

10   The taxpayer is required to make the addition 
11 modification under this
subparagraph
only once with 
12 respect to any one piece of property;
13   (G-12) An amount equal to the amount otherwise 
14 allowed as a deduction in computing base income for 
15 interest paid, accrued, or incurred, directly or 
16 indirectly, (i) for taxable years ending on or after 
17 December 31, 2004, to a foreign person who would be a 
18 member of the same unitary business group but for the 
19 fact that the foreign person's business activity 
20 outside the United States is 80% or more of the foreign 
21 person's total business activity and (ii) for taxable 
22 years ending on or after December 31, 2008, to a person 
23 who would be a member of the same unitary business 
24 group but for the fact that the person is prohibited 
25 under Section 1501(a)(27) from being included in the 
26 unitary business group because he or she is ordinarily 
 
 
09800HB0390ham001- 56 -LRB098 03196 HLH 46276 a


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

14   This paragraph shall not apply to the following:

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

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

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

23    Nothing in this subsection shall preclude the 
24 Director from making any other adjustment 
25 otherwise allowed under Section 404 of this Act for 
26 any tax year beginning after the effective date of 
 
 
09800HB0390ham001- 58 -LRB098 03196 HLH 46276 a


1 this amendment provided such adjustment is made 
2 pursuant to regulation adopted by the Department 
3 and such regulations provide methods and standards 
4 by which the Department will utilize its authority 
5 under Section 404 of this Act;

6   (G-13) An amount equal to the amount of intangible 
7 expenses and costs otherwise allowed as a deduction in 
8 computing base income, and that were paid, accrued, or 
9 incurred, directly or indirectly, (i) for taxable 
10 years ending on or after December 31, 2004, to a 
11 foreign person who would be a member of the same 
12 unitary business group but for the fact that the 
13 foreign person's business activity outside the United 
14 States is 80% or more of that person's total business 
15 activity and (ii) for taxable years ending on or after 
16 December 31, 2008, to a person who would be a member of 
17 the same unitary business group but for the fact that 
18 the person is prohibited under Section 1501(a)(27) 
19 from being included in the unitary business group 
20 because he or she is ordinarily required to apportion 
21 business income under different subsections of Section 
22 304. The addition modification required by this 
23 subparagraph shall be reduced to the extent that 
24 dividends were included in base income of the unitary 
25 group for the same taxable year and received by the 
26 taxpayer or by a member of the taxpayer's unitary 
 
 
09800HB0390ham001- 59 -LRB098 03196 HLH 46276 a


1 business group (including amounts included in gross 
2 income pursuant to Sections 951 through 964 of the 
3 Internal Revenue Code and amounts included in gross 
4 income under Section 78 of the Internal Revenue Code) 
5 with respect to the stock of the same person to whom 
6 the intangible expenses and costs were directly or 
7 indirectly paid, incurred, or accrued. The preceding 
8 sentence shall not apply to the extent that the same 
9 dividends caused a reduction to the addition 
10 modification required under Section 203(c)(2)(G-12) of 
11 this Act. As used in this subparagraph, the term 
12 "intangible expenses and costs" includes: (1) 
13 expenses, losses, and costs for or related to the 
14 direct or indirect acquisition, use, maintenance or 
15 management, ownership, sale, exchange, or any other 
16 disposition of intangible property; (2) losses 
17 incurred, directly or indirectly, from factoring 
18 transactions or discounting transactions; (3) royalty, 
19 patent, technical, and copyright fees; (4) licensing 
20 fees; and (5) other similar expenses and costs. For 
21 purposes of this subparagraph, "intangible property" 
22 includes patents, patent applications, trade names, 
23 trademarks, service marks, copyrights, mask works, 
24 trade secrets, and similar types of intangible assets.
25   This paragraph shall not apply to the following:
26    (i) any item of intangible expenses or costs 
 
 
09800HB0390ham001- 60 -LRB098 03196 HLH 46276 a


1 paid, accrued, or incurred, directly or 
2 indirectly, from a transaction with a person who is 
3 subject in a foreign country or state, other than a 
4 state which requires mandatory unitary reporting, 
5 to a tax on or measured by net income with respect 
6 to such item; or
7    (ii) any item of intangible expense or cost 
8 paid, accrued, or incurred, directly or 
9 indirectly, if the taxpayer can establish, based 
10 on a preponderance of the evidence, both of the 
11 following:
12     (a) the person during the same taxable 
13 year paid, accrued, or incurred, the 
14 intangible expense or cost to a person that is 
15 not a related member, and
16     (b) the transaction giving rise to the 
17 intangible expense or cost between the 
18 taxpayer and the person did not have as a 
19 principal purpose the avoidance of Illinois 
20 income tax, and is paid pursuant to a contract 
21 or agreement that reflects arm's-length terms; 
22 or
23    (iii) any item of intangible expense or cost 
24 paid, accrued, or incurred, directly or 
25 indirectly, from a transaction with a person if the 
26 taxpayer establishes by clear and convincing 
 
 
09800HB0390ham001- 61 -LRB098 03196 HLH 46276 a


1 evidence, that the adjustments are unreasonable; 
2 or if the taxpayer and the Director agree in 
3 writing to the application or use of an alternative 
4 method of apportionment under Section 304(f);

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

14   (G-14) For taxable years ending on or after 
15 December 31, 2008, an amount equal to the amount of 
16 insurance premium expenses and costs otherwise allowed 
17 as a deduction in computing base income, and that were 
18 paid, accrued, or incurred, directly or indirectly, to 
19 a person who would be a member of the same unitary 
20 business group but for the fact that the person is 
21 prohibited under Section 1501(a)(27) from being 
22 included in the unitary business group because he or 
23 she is ordinarily required to apportion business 
24 income under different subsections of Section 304. The 
25 addition modification required by this subparagraph 
26 shall be reduced to the extent that dividends were 
 
 
09800HB0390ham001- 62 -LRB098 03196 HLH 46276 a


1 included in base income of the unitary group for the 
2 same taxable year and received by the taxpayer or by a 
3 member of the taxpayer's unitary business group 
4 (including amounts included in gross income under 
5 Sections 951 through 964 of the Internal Revenue Code 
6 and amounts included in gross income under Section 78 
7 of the Internal Revenue Code) with respect to the stock 
8 of the same person to whom the premiums and costs were 
9 directly or indirectly paid, incurred, or accrued. The 
10 preceding sentence does not apply to the extent that 
11 the same dividends caused a reduction to the addition 
12 modification required under Section 203(c)(2)(G-12) or 
13 Section 203(c)(2)(G-13) of this Act;
14   (G-15) An amount equal to the credit allowable to 
15 the taxpayer under Section 218(a) of this Act, 
16 determined without regard to Section 218(c) of this 
17 Act;
18   (G-16) For taxable years ending on or after 
19 December 31, 2013, an amount equal to the deduction 
20 allowed under Section 199 of the Internal Revenue Code 
21 for the taxable year; 
22 and by deducting from the total so obtained the sum of the 
23 following
amounts:
24   (H) An amount equal to all amounts included in such 
25 total pursuant
to the provisions of Sections 402(a), 
26 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the 
 
 
09800HB0390ham001- 63 -LRB098 03196 HLH 46276 a


1 Internal Revenue Code or included in such total as

2 distributions under the provisions of any retirement 
3 or disability plan for
employees of any governmental 
4 agency or unit, or retirement payments to
retired 
5 partners, which payments are excluded in computing net 
6 earnings
from self employment by Section 1402 of the 
7 Internal Revenue Code and
regulations adopted pursuant 
8 thereto;
9   (I) The valuation limitation amount;
10   (J) An amount equal to the amount of any tax 
11 imposed by this Act
which was refunded to the taxpayer 
12 and included in such total for the
taxable year;
13   (K) An amount equal to all amounts included in 
14 taxable income as
modified by subparagraphs (A), (B), 
15 (C), (D), (E), (F) and (G) which
are exempt from 
16 taxation by this State either by reason of its statutes 
17 or
Constitution
or by reason of the Constitution, 
18 treaties or statutes of the United States;
provided 
19 that, in the case of any statute of this State that 
20 exempts income
derived from bonds or other obligations 
21 from the tax imposed under this Act,
the amount 
22 exempted shall be the interest net of bond premium 
23 amortization;
24   (L) With the exception of any amounts subtracted 
25 under subparagraph
(K),
an amount equal to the sum of 
26 all amounts disallowed as
deductions by (i) Sections 
 
 
09800HB0390ham001- 64 -LRB098 03196 HLH 46276 a


1 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, 
2 and all amounts of expenses allocable
to interest and 
3 disallowed as deductions by Section 265(1) of the 
4 Internal
Revenue Code;
and (ii) for taxable years

5 ending on or after August 13, 1999, Sections
171(a)(2), 
6 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
7 Code, plus, (iii) for taxable years ending on or after 
8 December 31, 2011, Section 45G(e)(3) of the Internal 
9 Revenue Code and, for taxable years ending on or after 
10 December 31, 2008, any amount included in gross income 
11 under Section 87 of the Internal Revenue Code; the 
12 provisions of this
subparagraph are exempt from the 
13 provisions of Section 250;
14   (M) An amount equal to those dividends included in 
15 such total
which were paid by a corporation which 
16 conducts business operations in a River Edge 
17 Redevelopment Zone or zones created under the River 
18 Edge Redevelopment Zone Act and
conducts substantially 
19 all of its operations in a River Edge Redevelopment 
20 Zone or zones. This subparagraph (M) is exempt from the 
21 provisions of Section 250;
22   (N) An amount equal to any contribution made to a 
23 job training
project established pursuant to the Tax 
24 Increment Allocation
Redevelopment Act;
25   (O) An amount equal to those dividends included in 
26 such total
that were paid by a corporation that 
 
 
09800HB0390ham001- 65 -LRB098 03196 HLH 46276 a


1 conducts business operations in a
federally designated 
2 Foreign Trade Zone or Sub-Zone and that is designated
a 
3 High Impact Business located in Illinois; provided 
4 that dividends eligible
for the deduction provided in 
5 subparagraph (M) of paragraph (2) of this
subsection 
6 shall not be eligible for the deduction provided under 
7 this
subparagraph (O);
8   (P) An amount equal to the amount of the deduction 
9 used to compute the
federal income tax credit for 
10 restoration of substantial amounts held under
claim of 
11 right for the taxable year pursuant to Section 1341 of 
12 the
Internal Revenue Code;
13   (Q) For taxable year 1999 and thereafter, an amount 
14 equal to the
amount of any
(i) distributions, to the 
15 extent includible in gross income for
federal income 
16 tax purposes, made to the taxpayer because of
his or 
17 her status as a victim of
persecution for racial or 
18 religious reasons by Nazi Germany or any other Axis

19 regime or as an heir of the victim and (ii) items
of 
20 income, to the extent
includible in gross income for 
21 federal income tax purposes, attributable to,
derived 
22 from or in any way related to assets stolen from, 
23 hidden from, or
otherwise lost to a victim of

24 persecution for racial or religious reasons by Nazi

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

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

5 companies
immediately prior to and during World War II;

6 provided, however, this subtraction from federal 
7 adjusted gross income does not
apply to assets acquired 
8 with such assets or with the proceeds from the sale of

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

12 persecution for racial or religious reasons
by Nazi 
13 Germany or any other Axis regime or as an heir of the 
14 victim. The
amount of and the eligibility for any 
15 public assistance, benefit, or
similar entitlement is 
16 not affected by the inclusion of items (i) and (ii) of

17 this paragraph in gross income for federal income tax 
18 purposes.
This paragraph is exempt from the provisions 
19 of Section 250;
20   (R) For taxable years 2001 and thereafter, for the 
21 taxable year in
which the bonus depreciation deduction

22 is taken on the taxpayer's federal income tax return 
23 under
subsection (k) of Section 168 of the Internal 
24 Revenue Code and for each
applicable taxable year 
25 thereafter, an amount equal to "x", where:
26    (1) "y" equals the amount of the depreciation 
 
 
09800HB0390ham001- 67 -LRB098 03196 HLH 46276 a


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

25 depreciation deduction
taken on that property on the 
26 taxpayer's federal income tax return under
subsection 
 
 
09800HB0390ham001- 68 -LRB098 03196 HLH 46276 a


1 (k) of Section 168 of the Internal Revenue Code. This 
2 subparagraph (R) is exempt from the provisions of 
3 Section 250;
4   (S) If the taxpayer sells, transfers, abandons, or 
5 otherwise disposes of
property for which the taxpayer 
6 was required in any taxable year to make an
addition 
7 modification under subparagraph (G-10), then an amount 
8 equal to that
addition modification.
9   If the taxpayer continues to own property through 
10 the last day of the last tax year for which the 
11 taxpayer may claim a depreciation deduction for 
12 federal income tax purposes and for which the taxpayer 
13 was required in any taxable year to make an addition 
14 modification under subparagraph (G-10), then an amount 
15 equal to that addition modification.

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

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

 
 
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1   (W) in the case of an estate, an amount equal to 
2 all amounts included in such total pursuant to the 
3 provisions of Section 111 of the Internal Revenue Code 
4 as a recovery of items previously deducted by the 
5 decedent from adjusted gross income in the computation 
6 of taxable income. This subparagraph (W) is exempt from 
7 Section 250; 
8   (X) an amount equal to the refund included in such 
9 total of any tax deducted for federal income tax 
10 purposes, to the extent that deduction was added back 
11 under subparagraph (F). This subparagraph (X) is 
12 exempt from the provisions of Section 250; and
13   (Y) For taxable years ending on or after December 
14 31, 2011, in the case of a taxpayer who was required to 
15 add back any insurance premiums under Section 
16 203(c)(2)(G-14), such taxpayer may elect to subtract 
17 that part of a reimbursement received from the 
18 insurance company equal to the amount of the expense or 
19 loss (including expenses incurred by the insurance 
20 company) that would have been taken into account as a 
21 deduction for federal income tax purposes if the 
22 expense or loss had been uninsured. If a taxpayer makes 
23 the election provided for by this subparagraph (Y), the 
24 insurer to which the premiums were paid must add back 
25 to income the amount subtracted by the taxpayer 
26 pursuant to this subparagraph (Y). This subparagraph 
 
 
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1 (Y) is exempt from the provisions of Section 250.
2  (3) Limitation. The amount of any modification 
3 otherwise required
under this subsection shall, under 
4 regulations prescribed by the
Department, be adjusted by 
5 any amounts included therein which were
properly paid, 
6 credited, or required to be distributed, or permanently set

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

9 (d) Partnerships.
10  (1) In general. In the case of a partnership, base 
11 income means an
amount equal to the taxpayer's taxable 
12 income for the taxable year as
modified by paragraph (2).
13  (2) Modifications. The taxable income referred to in 
14 paragraph (1)
shall be modified by adding thereto the sum 
15 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 taxable income;
20   (B) An amount equal to the amount of tax imposed by 
21 this Act to the
extent deducted from gross income for 
22 the taxable year;
23   (C) The amount of deductions allowed to the 
24 partnership pursuant to
Section 707 (c) of the Internal 
25 Revenue Code in calculating its taxable income;
 
 
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1   (D) An amount equal to the amount of the capital 
2 gain deduction
allowable under the Internal Revenue 
3 Code, to the extent deducted from
gross income in the 
4 computation of taxable income;
5   (D-5) 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;
10   (D-6) 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 (D-5), then 
14 an amount equal to the
aggregate amount of the 
15 deductions taken in all taxable years
under 
16 subparagraph (O) 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 (O), 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;
 
 
09800HB0390ham001- 74 -LRB098 03196 HLH 46276 a


1   (D-7) 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 the foreign person's business activity outside 
8 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 
 
 
09800HB0390ham001- 75 -LRB098 03196 HLH 46276 a


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 
 
 
09800HB0390ham001- 76 -LRB098 03196 HLH 46276 a


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; and

20   (D-8) 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 
 
 
09800HB0390ham001- 77 -LRB098 03196 HLH 46276 a


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(d)(2)(D-7) of 
25 this Act. As used in this subparagraph, the term 
26 "intangible expenses and costs" includes (1) expenses, 
 
 
09800HB0390ham001- 78 -LRB098 03196 HLH 46276 a


1 losses, and costs for, or related to, the direct or 
2 indirect acquisition, use, maintenance or management, 
3 ownership, sale, exchange, or any other disposition of 
4 intangible property; (2) losses incurred, directly or 
5 indirectly, from factoring transactions or discounting 
6 transactions; (3) royalty, patent, technical, and 
7 copyright fees; (4) licensing fees; and (5) other 
8 similar expenses and costs. For purposes of this 
9 subparagraph, "intangible property" includes patents, 
10 patent applications, trade names, trademarks, service 
11 marks, copyrights, mask works, trade secrets, and 
12 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 
 
 
09800HB0390ham001- 79 -LRB098 03196 HLH 46276 a


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 
 
 
09800HB0390ham001- 80 -LRB098 03196 HLH 46276 a


1 under Section 404 of this Act;

2   (D-9) For taxable years ending on or after December 
3 31, 2008, an amount equal to the amount of insurance 
4 premium expenses and costs otherwise allowed as a 
5 deduction in computing base income, and that were paid, 
6 accrued, or incurred, directly or indirectly, to a 
7 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(d)(2)(D-7) or 
 
 
09800HB0390ham001- 81 -LRB098 03196 HLH 46276 a


1 Section 203(d)(2)(D-8) of this Act;
2   (D-10) 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   (D-11) For taxable years ending on or after 
7 December 31, 2013, an amount equal to the deduction 
8 allowed under Section 199 of the Internal Revenue Code 
9 for the taxable year; 
10 and by deducting from the total so obtained the following 
11 amounts:
12   (E) The valuation limitation amount;
13   (F) An amount equal to the amount of any tax 
14 imposed by this Act which
was refunded to the taxpayer 
15 and included in such total for the taxable year;
16   (G) An amount equal to all amounts included in 
17 taxable income as
modified by subparagraphs (A), (B), 
18 (C) and (D) which are exempt from
taxation by this 
19 State either by reason of its statutes or Constitution 
20 or
by reason of
the Constitution, treaties or statutes 
21 of the United States;
provided that, in the case of any 
22 statute of this State that exempts income
derived from 
23 bonds or other obligations from the tax imposed under 
24 this Act,
the amount exempted shall be the interest net 
25 of bond premium amortization;
26   (H) Any income of the partnership which 
 
 
09800HB0390ham001- 82 -LRB098 03196 HLH 46276 a


1 constitutes personal service
income as defined in 
2 Section 1348 (b) (1) of the Internal Revenue Code (as

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

11 subsections (c) and (d) of Section 201 of this Act 
12 including amounts
distributable to organizations 
13 exempt from federal income tax by reason of
Section 
14 501(a) of the Internal Revenue Code; this subparagraph 
15 (I) is exempt from the provisions of Section 250;
16   (J) With the exception of any amounts subtracted 
17 under subparagraph
(G),
an amount equal to the sum of 
18 all amounts disallowed as deductions
by (i) Sections 
19 171(a) (2), and 265(2) of the Internal Revenue Code, 
20 and all amounts of expenses allocable to
interest and 
21 disallowed as deductions by Section 265(1) of the 
22 Internal
Revenue Code;
and (ii) for taxable years

23 ending on or after August 13, 1999, Sections
171(a)(2), 
24 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
25 Code, plus, (iii) for taxable years ending on or after 
26 December 31, 2011, Section 45G(e)(3) of the Internal 
 
 
09800HB0390ham001- 83 -LRB098 03196 HLH 46276 a


1 Revenue Code and, for taxable years ending on or after 
2 December 31, 2008, any amount included in gross income 
3 under Section 87 of the Internal Revenue Code; the 
4 provisions of this
subparagraph are exempt from the 
5 provisions of Section 250;
6   (K) An amount equal to those dividends included in 
7 such total which were
paid by a corporation which 
8 conducts business operations in a River Edge 
9 Redevelopment Zone or zones created under the River 
10 Edge Redevelopment Zone Act and
conducts substantially 
11 all of its operations
from a River Edge Redevelopment 
12 Zone or zones. This subparagraph (K) is exempt from the 
13 provisions of Section 250;
14   (L) An amount equal to any contribution made to a 
15 job training project
established pursuant to the Real 
16 Property Tax Increment Allocation
Redevelopment Act;
17   (M) An amount equal to those dividends included in 
18 such total
that were paid by a corporation that 
19 conducts business operations in a
federally designated 
20 Foreign Trade Zone or Sub-Zone and that is designated a

21 High Impact Business located in Illinois; provided 
22 that dividends eligible
for the deduction provided in 
23 subparagraph (K) of paragraph (2) of this
subsection 
24 shall not be eligible for the deduction provided under 
25 this
subparagraph (M);
26   (N) An amount equal to the amount of the deduction 
 
 
09800HB0390ham001- 84 -LRB098 03196 HLH 46276 a


1 used to compute the
federal income tax credit for 
2 restoration of substantial amounts held under
claim of 
3 right for the taxable year pursuant to Section 1341 of 
4 the
Internal Revenue Code;
5   (O) For taxable years 2001 and thereafter, for the 
6 taxable year in
which the bonus depreciation deduction

7 is taken on the taxpayer's federal income tax return 
8 under
subsection (k) of Section 168 of the Internal 
9 Revenue Code and for each
applicable taxable year 
10 thereafter, an amount equal to "x", where:
11    (1) "y" equals the amount of the depreciation 
12 deduction taken for the
taxable year
on the 
13 taxpayer's federal income tax return on property 
14 for which the bonus
depreciation deduction
was 
15 taken in any year under subsection (k) of Section 
16 168 of the Internal
Revenue Code, but not including 
17 the bonus depreciation deduction;
18    (2) for taxable years ending on or before 
19 December 31, 2005, "x" equals "y" multiplied by 30 
20 and then divided by 70 (or "y"
multiplied by 
21 0.429); and
22    (3) for taxable years ending after December 
23 31, 2005:
24     (i) for property on which a bonus 
25 depreciation deduction of 30% of the adjusted 
26 basis was taken, "x" equals "y" multiplied by 
 
 
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1 30 and then divided by 70 (or "y"
multiplied by 
2 0.429); and
3     (ii) for property on which a bonus 
4 depreciation deduction of 50% of the adjusted 
5 basis was taken, "x" equals "y" multiplied by 
6 1.0.
7   The aggregate amount deducted under this 
8 subparagraph in all taxable
years for any one piece of 
9 property may not exceed the amount of the bonus

10 depreciation deduction
taken on that property on the 
11 taxpayer's federal income tax return under
subsection 
12 (k) of Section 168 of the Internal Revenue Code. This 
13 subparagraph (O) is exempt from the provisions of 
14 Section 250;
15   (P) If the taxpayer sells, transfers, abandons, or 
16 otherwise disposes of
property for which the taxpayer 
17 was required in any taxable year to make an
addition 
18 modification under subparagraph (D-5), then an amount 
19 equal to that
addition modification.
20   If the taxpayer continues to own property through 
21 the last day of the last tax year for which the 
22 taxpayer may claim a depreciation deduction for 
23 federal income tax purposes and for which the taxpayer 
24 was required in any taxable year to make an addition 
25 modification under subparagraph (D-5), then an amount 
26 equal to that addition modification.

 
 
09800HB0390ham001- 86 -LRB098 03196 HLH 46276 a


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

23   (R) An amount equal to the interest income taken 
24 into account for the taxable year (net of the 
25 deductions allocable thereto) with respect to 
26 transactions with (i) a foreign person who would be a 
 
 
09800HB0390ham001- 87 -LRB098 03196 HLH 46276 a


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

11   (T) For taxable years ending on or after December 
12 31, 2011, in the case of a taxpayer who was required to 
13 add back any insurance premiums under Section 
14 203(d)(2)(D-9), such taxpayer may elect to subtract 
15 that part of a reimbursement received from the 
16 insurance company equal to the amount of the expense or 
17 loss (including expenses incurred by the insurance 
18 company) that would have been taken into account as a 
19 deduction for federal income tax purposes if the 
20 expense or loss had been uninsured. If a taxpayer makes 
21 the election provided for by this subparagraph (T), the 
22 insurer to which the premiums were paid must add back 
23 to income the amount subtracted by the taxpayer 
24 pursuant to this subparagraph (T). This subparagraph 
25 (T) is exempt from the provisions of Section 250. 

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

8 purposes for the taxable year under the provisions of the 
9 Internal
Revenue Code. Taxable income may be less than 
10 zero. However, for taxable
years ending on or after 
11 December 31, 1986, net operating loss
carryforwards from 
12 taxable years ending prior to December 31, 1986, may not

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

22 trust, or estate is less than zero and addition 
23 modifications, other than
those provided by subparagraph 
24 (E) of paragraph (2) of subsection (b) for
corporations or 
25 subparagraph (E) of paragraph (2) of subsection (c) for

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

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

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

24 corporation determined in accordance with Section 
25 1363(b) of the Internal
Revenue Code, except that 
26 taxable income shall take into
account those items 
 
 
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1 which are required by Section 1363(b)(1) of the

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

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

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


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

20 property ending July 31, 1969 bears to the number of 
21 full calendar
months in the taxpayer's entire holding 
22 period for the
property.
23   (C) The Department shall prescribe such 
24 regulations as may be
necessary to carry out the 
25 purposes of this paragraph.

 
 
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1 (g) Double deductions. Unless specifically provided 
2otherwise, nothing
in this Section shall permit the same item 
3to be deducted more than once.

4 (h) Legislative intention. Except as expressly provided by 
5this
Section there shall be no modifications or limitations on 
6the amounts
of income, gain, loss or deduction taken into 
7account in determining
gross income, adjusted gross income or 
8taxable income for federal income
tax purposes for the taxable 
9year, or in the amount of such items
entering into the 
10computation of base income and net income under this
Act for 
11such taxable year, whether in respect of property values as of

12August 1, 1969 or otherwise.
13(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198, 
14eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09; 
1596-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff. 
166-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507, 
17eff. 8-23-11; 97-905, eff. 8-7-12.)

18 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
19 Sec. 901. Collection Authority. 
20 (a) In general.
21 The Department shall collect the taxes imposed by this Act. 
22The Department
shall collect certified past due child support 
23amounts under Section 2505-650
of the Department of Revenue Law 
24(20 ILCS 2505/2505-650). Except as
provided in subsections (c), 
 
 
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1(e), (f), and (g), and (h) of this Section, money collected

2pursuant to subsections (a) and (b) of Section 201 of this Act 
3shall be
paid into the General Revenue Fund in the State 
4treasury; money
collected pursuant to subsections (c) and (d) 
5of Section 201 of this Act
shall be paid into the Personal 
6Property Tax Replacement Fund, a special
fund in the State 
7Treasury; and money collected under Section 2505-650 of the

8Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid

9into the
Child Support Enforcement Trust Fund, a special fund 
10outside the State
Treasury, or
to the State
Disbursement Unit 
11established under Section 10-26 of the Illinois Public Aid

12Code, as directed by the Department of Healthcare and Family 
13Services.
14 (b) Local Government Distributive Fund.
15 Beginning August 1, 1969, and continuing through June 30, 
161994, the Treasurer
shall transfer each month from the General 
17Revenue Fund to a special fund in
the State treasury, to be 
18known as the "Local Government Distributive Fund", an
amount 
19equal to 1/12 of the net revenue realized from the tax imposed 
20by
subsections (a) and (b) of Section 201 of this Act during 
21the preceding month.
Beginning July 1, 1994, and continuing 
22through June 30, 1995, the Treasurer
shall transfer each month 
23from the General Revenue Fund to the Local Government

24Distributive Fund an amount equal to 1/11 of the net revenue 
25realized from the
tax imposed by subsections (a) and (b) of 
26Section 201 of this Act during the
preceding month. Beginning 
 
 
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1July 1, 1995 and continuing through January 31, 2011, the 
2Treasurer shall transfer each
month from the General Revenue 
3Fund to the Local Government Distributive Fund
an amount equal 
4to the net of (i) 1/10 of the net revenue realized from the
tax 
5imposed by
subsections (a) and (b) of Section 201 of the 
6Illinois Income Tax Act during
the preceding month
(ii) minus, 
7beginning July 1, 2003 and ending June 30, 2004, $6,666,666, 
8and
beginning July 1,
2004,
zero. Beginning February 1, 2011, 
9and continuing through January 31, 2015, the Treasurer shall 
10transfer each month from the General Revenue Fund to the Local 
11Government Distributive Fund an amount equal to the sum of (i) 
126% (10% of the ratio of the 3% individual income tax rate prior 
13to 2011 to the 5% individual income tax rate after 2010) of the 
14net revenue realized from the tax imposed by subsections (a) 
15and (b) of Section 201 of this Act upon individuals, trusts, 
16and estates during the preceding month and (ii) 6.86% (10% of 
17the ratio of the 4.8% corporate income tax rate prior to 2011 
18to the 7% corporate income tax rate after 2010) of the net 
19revenue realized from the tax imposed by subsections (a) and 
20(b) of Section 201 of this Act upon corporations during the 
21preceding month. Beginning February 1, 2015 and continuing 
22through January 31, 2025, the Treasurer shall transfer each 
23month from the General Revenue Fund to the Local Government 
24Distributive Fund an amount equal to the sum of (i) 8% (10% of 
25the ratio of the 3% individual income tax rate prior to 2011 to 
26the 3.75% individual income tax rate after 2014) of the net 
 
 
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1revenue realized from the tax imposed by subsections (a) and 
2(b) of Section 201 of this Act upon individuals, trusts, and 
3estates during the preceding month and (ii) 9.14% (10% of the 
4ratio of the 4.8% corporate income tax rate prior to 2011 to 
5the 5.25% corporate income tax rate after 2014) of the net 
6revenue realized from the tax imposed by subsections (a) and 
7(b) of Section 201 of this Act upon corporations during the 
8preceding month. Beginning February 1, 2025, the Treasurer 
9shall transfer each month from the General Revenue Fund to the 
10Local Government Distributive Fund an amount equal to the sum 
11of (i) 9.23% (10% of the ratio of the 3% individual income tax 
12rate prior to 2011 to the 3.25% individual income tax rate 
13after 2024) of the net revenue realized from the tax imposed by 
14subsections (a) and (b) of Section 201 of this Act upon 
15individuals, trusts, and estates during the preceding month and 
16(ii) 10% of the net revenue realized from the tax imposed by 
17subsections (a) and (b) of Section 201 of this Act upon 
18corporations during the preceding month. Net revenue realized 
19for a month shall be defined as the
revenue from the tax 
20imposed by subsections (a) and (b) of Section 201 of this
Act 
21which is deposited in the General Revenue Fund, the Education 
22Assistance
Fund, the Income Tax Surcharge Local Government 
23Distributive Fund, the Fund for the Advancement of Education, 
24and the Commitment to Human Services Fund during the
month 
25minus the amount paid out of the General Revenue Fund in State 
26warrants
during that same month as refunds to taxpayers for 
 
 
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1overpayment of liability
under the tax imposed by subsections 
2(a) and (b) of Section 201 of this Act.
3 (c) Deposits Into Income Tax Refund Fund.
4  (1) Beginning on January 1, 1989 and thereafter, the 
5 Department shall
deposit a percentage of the amounts 
6 collected pursuant to subsections (a)
and (b)(1), (2), and 
7 (3), of Section 201 of this Act into a fund in the State

8 treasury known as the Income Tax Refund Fund. The 
9 Department shall deposit 6%
of such amounts during the 
10 period beginning January 1, 1989 and ending on June
30, 
11 1989. Beginning with State fiscal year 1990 and for each 
12 fiscal year
thereafter, the percentage deposited into the 
13 Income Tax Refund Fund during a
fiscal year shall be the 
14 Annual Percentage. For fiscal years 1999 through
2001, the 
15 Annual Percentage shall be 7.1%.
For fiscal year 2003, the 
16 Annual Percentage shall be 8%.
For fiscal year 2004, the 
17 Annual Percentage shall be 11.7%. Upon the effective date 
18 of this amendatory Act of the 93rd General Assembly, the 
19 Annual Percentage shall be 10% for fiscal year 2005. For 
20 fiscal year 2006, the Annual Percentage shall be 9.75%. For 
21 fiscal
year 2007, the Annual Percentage shall be 9.75%. For 
22 fiscal year 2008, the Annual Percentage shall be 7.75%. For 
23 fiscal year 2009, the Annual Percentage shall be 9.75%. For 
24 fiscal year 2010, the Annual Percentage shall be 9.75%. For 
25 fiscal year 2011, the Annual Percentage shall be 8.75%. For 
26 fiscal year 2012, the Annual Percentage shall be 8.75%. For 
 
 
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1 fiscal year 2013, the Annual Percentage shall be 9.75%. For 
2 all other
fiscal years, the
Annual Percentage shall be 
3 calculated as a fraction, the numerator of which
shall be 
4 the amount of refunds approved for payment by the 
5 Department during
the preceding fiscal year as a result of 
6 overpayment of tax liability under
subsections (a) and 
7 (b)(1), (2), and (3) of Section 201 of this Act plus the

8 amount of such refunds remaining approved but unpaid at the 
9 end of the
preceding fiscal year, minus the amounts 
10 transferred into the Income Tax
Refund Fund from the 
11 Tobacco Settlement Recovery Fund, and
the denominator of 
12 which shall be the amounts which will be collected pursuant

13 to subsections (a) and (b)(1), (2), and (3) of Section 201 
14 of this Act during
the preceding fiscal year; except that 
15 in State fiscal year 2002, the Annual
Percentage shall in 
16 no event exceed 7.6%. The Director of Revenue shall
certify 
17 the Annual Percentage to the Comptroller on the last 
18 business day of
the fiscal year immediately preceding the 
19 fiscal year for which it is to be
effective.
20  (2) Beginning on January 1, 1989 and thereafter, the 
21 Department shall
deposit a percentage of the amounts 
22 collected pursuant to subsections (a)
and (b)(6), (7), and 
23 (8), (c) and (d) of Section 201
of this Act into a fund in 
24 the State treasury known as the Income Tax
Refund Fund. The 
25 Department shall deposit 18% of such amounts during the

26 period beginning January 1, 1989 and ending on June 30, 
 
 
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1 1989. Beginning
with State fiscal year 1990 and for each 
2 fiscal year thereafter, the
percentage deposited into the 
3 Income Tax Refund Fund during a fiscal year
shall be the 
4 Annual Percentage. For fiscal years 1999, 2000, and 2001, 
5 the
Annual Percentage shall be 19%.
For fiscal year 2003, 
6 the Annual Percentage shall be 27%. For fiscal year
2004, 
7 the Annual Percentage shall be 32%.
Upon the effective date 
8 of this amendatory Act of the 93rd General Assembly, the 
9 Annual Percentage shall be 24% for fiscal year 2005.
For 
10 fiscal year 2006, the Annual Percentage shall be 20%. For 
11 fiscal
year 2007, the Annual Percentage shall be 17.5%. For 
12 fiscal year 2008, the Annual Percentage shall be 15.5%. For 
13 fiscal year 2009, the Annual Percentage shall be 17.5%. For 
14 fiscal year 2010, the Annual Percentage shall be 17.5%. For 
15 fiscal year 2011, the Annual Percentage shall be 17.5%. For 
16 fiscal year 2012, the Annual Percentage shall be 17.5%. For 
17 fiscal year 2013, the Annual Percentage shall be 14%. For 
18 all other fiscal years, the Annual
Percentage shall be 
19 calculated
as a fraction, the numerator of which shall be 
20 the amount of refunds
approved for payment by the 
21 Department during the preceding fiscal year as
a result of 
22 overpayment of tax liability under subsections (a) and 
23 (b)(6),
(7), and (8), (c) and (d) of Section 201 of this 
24 Act plus the
amount of such refunds remaining approved but 
25 unpaid at the end of the
preceding fiscal year, and the 
26 denominator of
which shall be the amounts which will be 
 
 
09800HB0390ham001- 103 -LRB098 03196 HLH 46276 a


1 collected pursuant to subsections (a)
and (b)(6), (7), and 
2 (8), (c) and (d) of Section 201 of this Act during the

3 preceding fiscal year; except that in State fiscal year 
4 2002, the Annual
Percentage shall in no event exceed 23%. 
5 The Director of Revenue shall
certify the Annual Percentage 
6 to the Comptroller on the last business day of
the fiscal 
7 year immediately preceding the fiscal year for which it is 
8 to be
effective.
9  (3) The Comptroller shall order transferred and the 
10 Treasurer shall
transfer from the Tobacco Settlement 
11 Recovery Fund to the Income Tax Refund
Fund (i) $35,000,000 
12 in January, 2001, (ii) $35,000,000 in January, 2002, and

13 (iii) $35,000,000 in January, 2003.
14 (d) Expenditures from Income Tax Refund Fund.
15  (1) Beginning January 1, 1989, money in the Income Tax 
16 Refund Fund
shall be expended exclusively for the purpose 
17 of paying refunds resulting
from overpayment of tax 
18 liability under Section 201 of this Act, for paying
rebates 
19 under Section 208.1 in the event that the amounts in the 
20 Homeowners'
Tax Relief Fund are insufficient for that 
21 purpose,
and for
making transfers pursuant to this 
22 subsection (d).
23  (2) The Director shall order payment of refunds 
24 resulting from
overpayment of tax liability under Section 
25 201 of this Act from the
Income Tax Refund Fund only to the 
26 extent that amounts collected pursuant
to Section 201 of 
 
 
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1 this Act and transfers pursuant to this subsection (d)
and 
2 item (3) of subsection (c) have been deposited and retained 
3 in the
Fund.
4  (3) As soon as possible after the end of each fiscal 
5 year, the Director
shall
order transferred and the State 
6 Treasurer and State Comptroller shall
transfer from the 
7 Income Tax Refund Fund to the Personal Property Tax

8 Replacement Fund an amount, certified by the Director to 
9 the Comptroller,
equal to the excess of the amount 
10 collected pursuant to subsections (c) and
(d) of Section 
11 201 of this Act deposited into the Income Tax Refund Fund

12 during the fiscal year over the amount of refunds resulting 
13 from
overpayment of tax liability under subsections (c) and 
14 (d) of Section 201
of this Act paid from the Income Tax 
15 Refund Fund during the fiscal year.
16  (4) As soon as possible after the end of each fiscal 
17 year, the Director shall
order transferred and the State 
18 Treasurer and State Comptroller shall
transfer from the 
19 Personal Property Tax Replacement Fund to the Income Tax

20 Refund Fund an amount, certified by the Director to the 
21 Comptroller, equal
to the excess of the amount of refunds 
22 resulting from overpayment of tax
liability under 
23 subsections (c) and (d) of Section 201 of this Act paid

24 from the Income Tax Refund Fund during the fiscal year over 
25 the amount
collected pursuant to subsections (c) and (d) of 
26 Section 201 of this Act
deposited into the Income Tax 
 
 
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1 Refund Fund during the fiscal year.
2  (4.5) As soon as possible after the end of fiscal year 
3 1999 and of each
fiscal year
thereafter, the Director shall 
4 order transferred and the State Treasurer and
State 
5 Comptroller shall transfer from the Income Tax Refund Fund 
6 to the General
Revenue Fund any surplus remaining in the 
7 Income Tax Refund Fund as of the end
of such fiscal year; 
8 excluding for fiscal years 2000, 2001, and 2002
amounts 
9 attributable to transfers under item (3) of subsection (c) 
10 less refunds
resulting from the earned income tax credit.
11  (5) This Act shall constitute an irrevocable and 
12 continuing
appropriation from the Income Tax Refund Fund 
13 for the purpose of paying
refunds upon the order of the 
14 Director in accordance with the provisions of
this Section.
15 (e) Deposits into the Education Assistance Fund and the 
16Income Tax
Surcharge Local Government Distributive Fund.
17 On July 1, 1991, and thereafter, of the amounts collected 
18pursuant to
subsections (a) and (b) of Section 201 of this Act, 
19minus deposits into the
Income Tax Refund Fund, the Department 
20shall deposit 7.3% into the
Education Assistance Fund in the 
21State Treasury. Beginning July 1, 1991,
and continuing through 
22January 31, 1993, of the amounts collected pursuant to

23subsections (a) and (b) of Section 201 of the Illinois Income 
24Tax Act, minus
deposits into the Income Tax Refund Fund, the 
25Department shall deposit 3.0%
into the Income Tax Surcharge 
26Local Government Distributive Fund in the State
Treasury. 
 
 
09800HB0390ham001- 106 -LRB098 03196 HLH 46276 a


1Beginning February 1, 1993 and continuing through June 30, 
21993, of
the amounts collected pursuant to subsections (a) and 
3(b) of Section 201 of the
Illinois Income Tax Act, minus 
4deposits into the Income Tax Refund Fund, the
Department shall 
5deposit 4.4% into the Income Tax Surcharge Local Government

6Distributive Fund in the State Treasury. Beginning July 1, 
71993, and
continuing through June 30, 1994, of the amounts 
8collected under subsections
(a) and (b) of Section 201 of this 
9Act, minus deposits into the Income Tax
Refund Fund, the 
10Department shall deposit 1.475% into the Income Tax Surcharge

11Local Government Distributive Fund in the State Treasury.
12 (f) Deposits into the Fund for the Advancement of 
13Education. Beginning February 1, 2015, the Department shall 
14deposit the following portions of the revenue realized from the 
15tax imposed upon individuals, trusts, and estates by 
16subsections (a) and (b) of Section 201 of this Act during the 
17preceding month, minus deposits into the Income Tax Refund 
18Fund, into the Fund for the Advancement of Education: 
19  (1) beginning February 1, 2015, and prior to February 
20 1, 2025, 1/30; and 
21  (2) beginning February 1, 2025, 1/26. 
22 If the rate of tax imposed by subsection (a) and (b) of 
23Section 201 is reduced pursuant to Section 201.5 of this Act, 
24the Department shall not make the deposits required by this 
25subsection (f) on or after the effective date of the reduction. 
26 (g) Deposits into the Commitment to Human Services Fund. 
 
 
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1Beginning February 1, 2015, the Department shall deposit the 
2following portions of the revenue realized from the tax imposed 
3upon individuals, trusts, and estates by subsections (a) and 
4(b) of Section 201 of this Act during the preceding month, 
5minus deposits into the Income Tax Refund Fund, into the 
6Commitment to Human Services Fund: 
7  (1) beginning February 1, 2015, and prior to February 
8 1, 2025, 1/30; and 
9  (2) beginning February 1, 2025, 1/26. 
10 If the rate of tax imposed by subsection (a) and (b) of 
11Section 201 is reduced pursuant to Section 201.5 of this Act, 
12the Department shall not make the deposits required by this 
13subsection (g) on or after the effective date of the reduction. 
14 (h) Deposits into the Bill Payment Trust Fund. On and after 
15the effective date of this amendatory Act of the 98th General 
16Assembly, the Department shall deposit into the Bill Payment 
17Trust Fund each month an amount equal the revenue realized from 
18the tax imposed by subsections (a) and (b) of Section 201 of 
19this Act during the preceding month that is attributable to the 
20changes made to Section 203 and Section 1501 of this Act by 
21this amendatory Act of the 98th General Assembly, net of 
22deposits into the Income Tax Refund Fund. 
23(Source: P.A. 96-45, eff. 7-15-09; 96-328, eff. 8-11-09; 
2496-959, eff. 7-1-10; 96-1496, eff. 1-13-11; 97-72, eff. 7-1-11; 
2597-732, eff. 6-30-12.)




 
 
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1 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)


2 Sec. 1501. Definitions. 

3 (a) In general. When used in this Act, where not
otherwise 
4distinctly expressed or manifestly incompatible with the 
5intent
thereof:


6  (1) Business income. The term "business income" means 
7 all income that may be treated as apportionable business 
8 income under the Constitution of the United States. 
9 Business income is net of the deductions allocable thereto. 
10 Such term does not include compensation
or the deductions 
11 allocable thereto.
For each taxable year beginning on or 
12 after January 1, 2003, a taxpayer may
elect to treat all 
13 income other than compensation as business income. This

14 election shall be made in accordance with rules adopted by 
15 the Department and,
once made, shall be irrevocable.

16  (1.5) Captive real estate investment trust:

17   (A) The term "captive real estate investment 
18 trust" means a corporation, trust, or association:

19    (i) that is considered a real estate 
20 investment trust for the taxable year under 
21 Section 856 of the Internal Revenue Code;

22    (ii) the certificates of beneficial interest 
23 or shares of which are not regularly traded on an 
24 established securities market; and
25    (iii) of which more than 50% of the voting 
26 power or value of the beneficial interest or 
 
 
09800HB0390ham001- 109 -LRB098 03196 HLH 46276 a


1 shares, at any time during the last half of the 
2 taxable year, is owned or controlled, directly, 
3 indirectly, or constructively, by a single 
4 corporation.
5   (B) The term "captive real estate investment 
6 trust" does not include:
7    (i) a real estate investment trust of which 
8 more than 50% of the voting power or value of the 
9 beneficial interest or shares is owned or 
10 controlled, directly, indirectly, or 
11 constructively, by:
12     (a) a real estate investment trust, other 
13 than a captive real estate investment trust;
14     (b) a person who is exempt from taxation 
15 under Section 501 of the Internal Revenue Code, 
16 and who is not required to treat income 
17 received from the real estate investment trust 
18 as unrelated business taxable income under 
19 Section 512 of the Internal Revenue Code;
20     (c) a listed Australian property trust, if 
21 no more than 50% of the voting power or value 
22 of the beneficial interest or shares of that 
23 trust, at any time during the last half of the 
24 taxable year, is owned or controlled, directly 
25 or indirectly, by a single person;
26     (d) an entity organized as a trust, 
 
 
09800HB0390ham001- 110 -LRB098 03196 HLH 46276 a


1 provided a listed Australian property trust 
2 described in subparagraph (c) owns or 
3 controls, directly or indirectly, or 
4 constructively, 75% or more of the voting power 
5 or value of the beneficial interests or shares 
6 of such entity; or
7     (e) an entity that is organized outside of 
8 the laws of the United States and that 
9 satisfies all of the following criteria:
10      (1) at least 75% of the entity's total 
11 asset value at the close of its taxable 
12 year is represented by real estate assets 
13 (as defined in Section 856(c)(5)(B) of the 
14 Internal Revenue Code, thereby including 
15 shares or certificates of beneficial 
16 interest in any real estate investment 
17 trust), cash and cash equivalents, and 
18 U.S. Government securities;
19      (2) the entity is not subject to tax on 
20 amounts that are distributed to its 
21 beneficial owners or is exempt from 
22 entity-level taxation;
23      (3) the entity distributes at least 
24 85% of its taxable income (as computed in 
25 the jurisdiction in which it is organized) 
26 to the holders of its shares or 
 
 
09800HB0390ham001- 111 -LRB098 03196 HLH 46276 a


1 certificates of beneficial interest on an 
2 annual basis;
3      (4) either (i) the shares or 
4 beneficial interests of the entity are 
5 regularly traded on an established 
6 securities market or (ii) not more than 10% 
7 of the voting power or value in the entity 
8 is held, directly, indirectly, or 
9 constructively, by a single entity or 
10 individual; and
11      (5) the entity is organized in a 
12 country that has entered into a tax treaty 
13 with the United States; or 
14    (ii) during its first taxable year for which it 
15 elects to be treated as a real estate investment 
16 trust under Section 856(c)(1) of the Internal 
17 Revenue Code, a real estate investment trust the 
18 certificates of beneficial interest or shares of 
19 which are not regularly traded on an established 
20 securities market, but only if the certificates of 
21 beneficial interest or shares of the real estate 
22 investment trust are regularly traded on an 
23 established securities market prior to the earlier 
24 of the due date (including extensions) for filing 
25 its return under this Act for that first taxable 
26 year or the date it actually files that return.
 
 
09800HB0390ham001- 112 -LRB098 03196 HLH 46276 a


1   (C) For the purposes of this subsection (1.5), the 
2 constructive ownership rules prescribed under Section 
3 318(a) of the Internal Revenue Code, as modified by 
4 Section 856(d)(5) of the Internal Revenue Code, apply 
5 in determining the ownership of stock, assets, or net 
6 profits of any person.


7  (2) Commercial domicile. The term "commercial 
8 domicile" means the
principal
place from which the trade or 
9 business of the taxpayer is directed or managed.


10  (3) Compensation. The term "compensation" means wages, 
11 salaries,
commissions
and any other form of remuneration 
12 paid to employees for personal services.


13  (4) Corporation. The term "corporation" includes 
14 associations, joint-stock
companies, insurance companies 
15 and cooperatives. Any entity, including a
limited 
16 liability company formed under the Illinois Limited 
17 Liability Company
Act, shall be treated as a corporation if 
18 it is so classified for federal
income tax purposes.



19  (5) Department. The term "Department" means the 
20 Department of Revenue of
this State.


21  (6) Director. The term "Director" means the Director of 
22 Revenue of this
State.


23  (7) Fiduciary. The term "fiduciary" means a guardian, 
24 trustee, executor,
administrator, receiver, or any person 
25 acting in any fiduciary capacity for any
person.


26  (8) Financial organization.


 
 
09800HB0390ham001- 113 -LRB098 03196 HLH 46276 a


1   (A) The term "financial organization" means
any

2 bank, bank holding company, trust company, savings 
3 bank, industrial bank,
land bank, safe deposit 
4 company, private banker, savings and loan association,

5 building and loan association, credit union, currency 
6 exchange, cooperative
bank, small loan company, sales 
7 finance company, investment company, or any
person 
8 which is owned by a bank or bank holding company. For 
9 the purpose of
this Section a "person" will include 
10 only those persons which a bank holding
company may 
11 acquire and hold an interest in, directly or 
12 indirectly, under the
provisions of the Bank Holding 
13 Company Act of 1956 (12 U.S.C. 1841, et seq.),
except 
14 where interests in any person must be disposed of 
15 within certain
required time limits under the Bank 
16 Holding Company Act of 1956.


17   (B) For purposes of subparagraph (A) of this 
18 paragraph, the term
"bank" includes (i) any entity that 
19 is regulated by the Comptroller of the
Currency under 
20 the National Bank Act, or by the Federal Reserve Board, 
21 or by
the
Federal Deposit Insurance Corporation and 
22 (ii) any federally or State chartered
bank
operating as 
23 a credit card bank.


24   (C) For purposes of subparagraph (A) of this 
25 paragraph, the term
"sales finance company" has the 
26 meaning provided in the following item (i) or
(ii):


 
 
09800HB0390ham001- 114 -LRB098 03196 HLH 46276 a


1    (i) A person primarily engaged in one or more 
2 of the following
businesses: the business of 
3 purchasing customer receivables, the business
of 
4 making loans upon the security of customer 
5 receivables, the
business of making loans for the 
6 express purpose of funding purchases of
tangible 
7 personal property or services by the borrower, or 
8 the business of
finance leasing. For purposes of 
9 this item (i), "customer receivable"
means:


10     (a) a retail installment contract or 
11 retail charge agreement within
the
meaning
of 
12 the Sales Finance Agency Act, the Retail 
13 Installment Sales Act, or the
Motor Vehicle 
14 Retail Installment Sales Act;


15     (b) an installment, charge, credit, or 
16 similar contract or agreement
arising from
the 
17 sale of tangible personal property or services 
18 in a transaction involving
a deferred payment 
19 price payable in one or more installments 
20 subsequent
to the sale; or


21     (c) the outstanding balance of a contract 
22 or agreement described in
provisions
(a) or (b) 
23 of this item (i).


24    A customer receivable need not provide for 
25 payment of interest on
deferred
payments. A sales 
26 finance company may purchase a customer receivable 
 
 
09800HB0390ham001- 115 -LRB098 03196 HLH 46276 a


1 from, or
make a loan secured by a customer 
2 receivable to, the seller in the original

3 transaction or to a person who purchased the 
4 customer receivable directly or
indirectly from 
5 that seller.


6    (ii) A corporation meeting each of the 
7 following criteria:


8     (a) the corporation must be a member of an 
9 "affiliated group" within
the
meaning of 
10 Section 1504(a) of the Internal Revenue Code, 
11 determined
without regard to Section 1504(b) 
12 of the Internal Revenue Code;


13     (b) more than 50% of the gross income of 
14 the corporation for the
taxable
year
must be 
15 interest income derived from qualifying loans. 
16 A "qualifying
loan" is a loan made to a member 
17 of the corporation's affiliated group that

18 originates customer receivables (within the 
19 meaning of item (i)) or to whom
customer 
20 receivables originated by a member of the 
21 affiliated group have been
transferred, to
the 
22 extent the average outstanding balance of 
23 loans from that corporation
to members of its 
24 affiliated group during the taxable year do not 
25 exceed
the limitation amount for that 
26 corporation. The "limitation amount" for a

 
 
09800HB0390ham001- 116 -LRB098 03196 HLH 46276 a


1 corporation is the average outstanding 
2 balances during the taxable year of
customer 
3 receivables (within the meaning of item (i)) 
4 originated by
all members of the affiliated 
5 group.
If the average outstanding balances of 
6 the
loans made by a corporation to members of 
7 its affiliated group exceed the
limitation 
8 amount, the interest income of that 
9 corporation from qualifying
loans shall be 
10 equal to its interest income from loans to 
11 members of its
affiliated groups times a 
12 fraction equal to the limitation amount 
13 divided by
the average outstanding balances of 
14 the loans made by that corporation to
members 
15 of its affiliated group;


16     (c) the total of all shareholder's equity 
17 (including, without
limitation,
paid-in

18 capital on common and preferred stock and 
19 retained earnings) of the
corporation plus the 
20 total of all of its loans, advances, and other

21 obligations payable or owed to members of its 
22 affiliated group may not
exceed 20% of the 
23 total assets of the corporation at any time 
24 during the tax
year; and


25     (d) more than 50% of all interest-bearing 
26 obligations of the
affiliated group payable to 
 
 
09800HB0390ham001- 117 -LRB098 03196 HLH 46276 a


1 persons outside the group determined in 
2 accordance
with generally accepted accounting 
3 principles must be obligations of the

4 corporation.


5   This amendatory Act of the 91st General Assembly is 
6 declaratory of
existing
law.


7   (D) Subparagraphs
(B) and (C) of this paragraph are 
8 declaratory of
existing law and apply retroactively, 
9 for all tax years beginning on or before
December 31, 
10 1996,
to all original returns, to all amended returns 
11 filed no later than 30
days after the effective date of 
12 this amendatory Act of 1996, and to all
notices issued 
13 on or before the effective date of this amendatory Act 
14 of 1996
under subsection (a) of Section 903, subsection 
15 (a) of Section 904,
subsection (e) of Section 909, or 
16 Section 912.
A taxpayer that is a "financial 
17 organization" that engages in any transaction
with an 
18 affiliate shall be a "financial organization" for all 
19 purposes of this
Act.


20   (E) For all tax years beginning on or
before 
21 December 31, 1996, a taxpayer that falls within the 
22 definition
of a
"financial organization" under 
23 subparagraphs (B) or (C) of this paragraph, but
who 
24 does
not fall within the definition of a "financial 
25 organization" under the Proposed
Regulations issued by 
26 the Department of Revenue on July 19, 1996, may

 
 
09800HB0390ham001- 118 -LRB098 03196 HLH 46276 a


1 irrevocably elect to apply the Proposed Regulations 
2 for all of those years as
though the Proposed 
3 Regulations had been lawfully promulgated, adopted, 
4 and in
effect for all of those years. For purposes of 
5 applying subparagraphs (B) or
(C) of
this
paragraph to 
6 all of those years, the election allowed by this 
7 subparagraph
applies only to the taxpayer making the 
8 election and to those members of the
taxpayer's unitary 
9 business group who are ordinarily required to 
10 apportion
business income under the same subsection of 
11 Section 304 of this Act as the
taxpayer making the 
12 election. No election allowed by this subparagraph 
13 shall
be made under a claim
filed under subsection (d) 
14 of Section 909 more than 30 days after the
effective 
15 date of this amendatory Act of 1996.


16   (F) Finance Leases. For purposes of this 
17 subsection, a finance lease
shall be treated as a loan 
18 or other extension of credit, rather than as a
lease,

19 regardless of how the transaction is characterized for 
20 any other purpose,
including the purposes of any 
21 regulatory agency to which the lessor is subject.
A 
22 finance lease is any transaction in the form of a lease 
23 in which the lessee
is treated as the owner of the 
24 leased asset entitled to any deduction for

25 depreciation allowed under Section 167 of the Internal 
26 Revenue Code.


 
 
09800HB0390ham001- 119 -LRB098 03196 HLH 46276 a


1  (9) Fiscal year. The term "fiscal year" means an 
2 accounting period of
12 months ending on the last day of 
3 any month other than December.

4  (9.5) Fixed place of business. The term "fixed place of 
5 business" has the same meaning as that term is given in 
6 Section 864 of the Internal Revenue Code and the related 
7 Treasury regulations. 

8  (10) Includes and including. The terms "includes" and 
9 "including" when
used in a definition contained in this Act 
10 shall not be deemed to exclude
other things otherwise 
11 within the meaning of the term defined.


12  (11) Internal Revenue Code. The term "Internal Revenue 
13 Code" means the
United States Internal Revenue Code of 1954 
14 or any successor law or laws
relating to federal income 
15 taxes in effect for the taxable year.

16  (11.5) Investment partnership.
17   (A) The term "investment partnership" means any 
18 entity that is treated as a partnership for federal 
19 income tax purposes that meets the following 
20 requirements:
21    (i) no less than 90% of the partnership's cost 
22 of its total assets consists of qualifying 
23 investment securities, deposits at banks or other 
24 financial institutions, and office space and 
25 equipment reasonably necessary to carry on its 
26 activities as an investment partnership;
 
 
09800HB0390ham001- 120 -LRB098 03196 HLH 46276 a


1    (ii) no less than 90% of its gross income 
2 consists of interest, dividends, and gains from 
3 the sale or exchange of qualifying investment 
4 securities; and

5    (iii) the partnership is not a dealer in 
6 qualifying investment securities.
7   (B) For purposes of this paragraph (11.5), the term 
8 "qualifying investment securities" includes all of the 
9 following:

10    (i) common stock, including preferred or debt 
11 securities convertible into common stock, and 
12 preferred stock;
13    (ii) bonds, debentures, and other debt 
14 securities;
15    (iii) foreign and domestic currency deposits 
16 secured by federal, state, or local governmental 
17 agencies;
18    (iv) mortgage or asset-backed securities 
19 secured by federal, state, or local governmental 
20 agencies;
21    (v) repurchase agreements and loan 
22 participations;
23    (vi) foreign currency exchange contracts and 
24 forward and futures contracts on foreign 
25 currencies;
26    (vii) stock and bond index securities and 
 
 
09800HB0390ham001- 121 -LRB098 03196 HLH 46276 a


1 futures contracts and other similar financial 
2 securities and futures contracts on those 
3 securities;

4    (viii) options for the purchase or sale of any 
5 of the securities, currencies, contracts, or 
6 financial instruments described in items (i) to 
7 (vii), inclusive;

8    (ix) regulated futures contracts;

9    (x) commodities (not described in Section 
10 1221(a)(1) of the Internal Revenue Code) or 
11 futures, forwards, and options with respect to 
12 such commodities, provided, however, that any item 
13 of a physical commodity to which title is actually 
14 acquired in the partnership's capacity as a dealer 
15 in such commodity shall not be a qualifying 
16 investment security;


17    (xi) derivatives; and

18    (xii) a partnership interest in another 
19 partnership that is an investment partnership.


20  (12) Mathematical error. The term "mathematical error" 
21 includes the
following types of errors, omissions, or 
22 defects in a return filed by a
taxpayer which prevents 
23 acceptance of the return as filed for processing:


24   (A) arithmetic errors or incorrect computations on 
25 the return or
supporting schedules;


26   (B) entries on the wrong lines;


 
 
09800HB0390ham001- 122 -LRB098 03196 HLH 46276 a


1   (C) omission of required supporting forms or 
2 schedules or the omission
of the information in whole 
3 or in part called for thereon; and


4   (D) an attempt to claim, exclude, deduct, or 
5 improperly report, in a
manner
directly contrary to the 
6 provisions of the Act and regulations thereunder
any 
7 item of income, exemption, deduction, or credit.


8  (13) Nonbusiness income. The term "nonbusiness income" 
9 means all income
other than business income or 
10 compensation.


11  (14) Nonresident. The term "nonresident" means a 
12 person who is not a
resident.


13  (15) Paid, incurred and accrued. The terms "paid", 
14 "incurred" and
"accrued"
shall be construed according to 
15 the method of accounting upon the basis
of which the 
16 person's base income is computed under this Act.


17  (16) Partnership and partner. The term "partnership" 
18 includes a syndicate,
group, pool, joint venture or other 
19 unincorporated organization, through
or by means of which 
20 any business, financial operation, or venture is carried

21 on, and which is not, within the meaning of this Act, a 
22 trust or estate
or a corporation; and the term "partner" 
23 includes a member in such syndicate,
group, pool, joint 
24 venture or organization.


25  The term "partnership" includes any entity, including 
26 a limited
liability company formed under the Illinois

 
 
09800HB0390ham001- 123 -LRB098 03196 HLH 46276 a


1 Limited Liability Company Act, classified as a partnership 
2 for federal income tax purposes.


3  The term "partnership" does not include a syndicate, 
4 group, pool,
joint venture, or other unincorporated 
5 organization established for the
sole purpose of playing 
6 the Illinois State Lottery.


7  (17) Part-year resident. The term "part-year resident" 
8 means an individual
who became a resident during the 
9 taxable year or ceased to be a resident
during the taxable 
10 year. Under Section 1501(a)(20)(A)(i) residence
commences 
11 with presence in this State for other than a temporary or 
12 transitory
purpose and ceases with absence from this State 
13 for other than a temporary or
transitory purpose. Under 
14 Section 1501(a)(20)(A)(ii) residence commences
with the 
15 establishment of domicile in this State and ceases with the

16 establishment of domicile in another State.


17  (18) Person. The term "person" shall be construed to 
18 mean and include
an individual, a trust, estate, 
19 partnership, association, firm, company,
corporation, 
20 limited liability company, or fiduciary. For purposes of 
21 Section
1301 and 1302 of this Act, a "person" means (i) an 
22 individual, (ii) a
corporation, (iii) an officer, agent, or 
23 employee of a
corporation, (iv) a member, agent or employee 
24 of a partnership, or (v)
a member,
manager, employee, 
25 officer, director, or agent of a limited liability company

26 who in such capacity commits an offense specified in 
 
 
09800HB0390ham001- 124 -LRB098 03196 HLH 46276 a


1 Section 1301 and 1302.


2  (18A) Records. The term "records" includes all data 
3 maintained by the
taxpayer, whether on paper, microfilm, 
4 microfiche, or any type of
machine-sensible data 
5 compilation.


6  (19) Regulations. The term "regulations" includes 
7 rules promulgated and
forms prescribed by the Department.


8  (20) Resident. The term "resident" means:


9   (A) an individual (i) who is
in this State for 
10 other than a temporary or transitory purpose during the

11 taxable year; or (ii) who is domiciled in this State 
12 but is absent from
the State for a temporary or 
13 transitory purpose during the taxable year;


14   (B) The estate of a decedent who at his or her 
15 death was domiciled in
this
State;


16   (C) A trust created by a will of a decedent who at 
17 his death was
domiciled
in this State; and


18   (D) An irrevocable trust, the grantor of which was 
19 domiciled in this
State
at the time such trust became 
20 irrevocable. For purpose of this subparagraph,
a trust 
21 shall be considered irrevocable to the extent that the 
22 grantor is
not treated as the owner thereof under 
23 Sections 671 through 678 of the Internal
Revenue Code.


24  (21) Sales. The term "sales" means all gross receipts 
25 of the taxpayer
not allocated under Sections 301, 302 and 
26 303.


 
 
09800HB0390ham001- 125 -LRB098 03196 HLH 46276 a


1  (22) State. The term "state" when applied to a 
2 jurisdiction other than
this State means any state of the 
3 United States, the District of Columbia,
the Commonwealth 
4 of Puerto Rico, any Territory or Possession of the United

5 States, and any foreign country, or any political 
6 subdivision of any of the
foregoing. For purposes of the 
7 foreign tax credit under Section 601, the
term "state" 
8 means any state of the United States, the District of 
9 Columbia,
the Commonwealth of Puerto Rico, and any 
10 territory or possession of the
United States, or any 
11 political subdivision of any of the foregoing,
effective 
12 for tax years ending on or after December 31, 1989.


13  (23) Taxable year. The term "taxable year" means the 
14 calendar year, or
the fiscal year ending during such 
15 calendar year, upon the basis of which
the base income is 
16 computed under this Act. "Taxable year" means, in the
case 
17 of a return made for a fractional part of a year under the 
18 provisions
of this Act, the period for which such return is 
19 made.


20  (24) Taxpayer. The term "taxpayer" means any person 
21 subject to the tax
imposed by this Act.


22  (25) International banking facility. The term 
23 international banking
facility shall have the same meaning 
24 as is set forth in the Illinois Banking
Act or as is set 
25 forth in the laws of the United States or regulations of

26 the Board of Governors of the Federal Reserve System.


 
 
09800HB0390ham001- 126 -LRB098 03196 HLH 46276 a


1  (26) Income Tax Return Preparer.


2   (A) The term "income tax return preparer"
means any 
3 person who prepares for compensation, or who employs 
4 one or more
persons to prepare for compensation, any 
5 return of tax imposed by this Act
or any claim for 
6 refund of tax imposed by this Act. The preparation of a

7 substantial portion of a return or claim for refund 
8 shall be treated as
the preparation of that return or 
9 claim for refund.


10   (B) A person is not an income tax return preparer 
11 if all he or she does
is


12    (i) furnish typing, reproducing, or other 
13 mechanical assistance;


14    (ii) prepare returns or claims for refunds for 
15 the employer by whom he
or she is regularly and 
16 continuously employed;


17    (iii) prepare as a fiduciary returns or claims 
18 for refunds for any
person; or


19    (iv) prepare claims for refunds for a taxpayer 
20 in response to any
notice
of deficiency issued to 
21 that taxpayer or in response to any waiver of

22 restriction after the commencement of an audit of 
23 that taxpayer or of another
taxpayer if a 
24 determination in the audit of the other taxpayer 
25 directly or
indirectly affects the tax liability 
26 of the taxpayer whose claims he or she is

 
 
09800HB0390ham001- 127 -LRB098 03196 HLH 46276 a


1 preparing.


2  (27) Unitary business group. 
3   (A) The term "unitary business group" means
a group 
4 of persons related through common ownership whose 
5 business activities
are integrated with, dependent 
6 upon and contribute to each other. The group
will not 
7 include those members whose business activity outside 
8 the United
States is 80% or more of any such member's 
9 total business activity; for
purposes of this 
10 paragraph and clause (a)(3)(B)(ii) of Section 304,

11 business
activity within the United States shall be 
12 measured by means of the factors
ordinarily applicable 
13 under subsections (a), (b), (c), (d), or (h)
of Section

14 304 except that, in the case of members ordinarily 
15 required to apportion
business income by means of the 3 
16 factor formula of property, payroll and sales

17 specified in subsection (a) of Section 304, including 
18 the
formula as weighted in subsection (h) of Section 
19 304, such members shall
not use the sales factor in the 
20 computation and the results of the property
and payroll 
21 factor computations of subsection (a) of Section 304 
22 shall be
divided by 2 (by one if either
the property or 
23 payroll factor has a denominator of zero). The 
24 computation
required by the preceding sentence shall, 
25 in each case, involve the division of
the member's 
26 property, payroll, or revenue miles in the United 
 
 
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1 States,
insurance premiums on property or risk in the 
2 United States, or financial
organization business 
3 income from sources within the United States, as the

4 case may be, by the respective worldwide figures for 
5 such items. Common
ownership in the case of 
6 corporations is the direct or indirect control or

7 ownership of more than 50% of the outstanding voting 
8 stock of the persons
carrying on unitary business 
9 activity. Unitary business activity can
ordinarily be 
10 illustrated where the activities of the members are: 
11 (1) in the
same general line (such as manufacturing, 
12 wholesaling, retailing of tangible
personal property, 
13 insurance, transportation or finance); or (2) are 
14 steps in a
vertically structured enterprise or process 
15 (such as the steps involved in the
production of 
16 natural resources, which might include exploration, 
17 mining,
refining, and marketing); and, in either 
18 instance, the members are functionally
integrated 
19 through the exercise of strong centralized management 
20 (where, for
example, authority over such matters as 
21 purchasing, financing, tax compliance,
product line, 
22 personnel, marketing and capital investment is not 
23 left to each
member).

24   (B) In no event, for taxable years ending prior to 
25 December 31, 2013, shall any
unitary business group 
26 include members
which are ordinarily required to 
 
 
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1 apportion business income under different
subsections 
2 of Section 304 except that for tax years ending on or 
3 after
December 31, 1987 this prohibition shall not 
4 apply to a holding company that would otherwise be a 
5 member of a unitary business group with taxpayers that 
6 apportion business income under any of subsections 
7 (b), (c), (c-1), or (d) of Section 304. If a unitary 
8 business
group would, but for the preceding sentence, 
9 include members that are
ordinarily required to 
10 apportion business income under different subsections 
11 of
Section 304, then for each subsection of Section 304 
12 for which there are two or
more members, there shall be 
13 a separate unitary business group composed of such

14 members. For purposes of the preceding two sentences, a 
15 member is "ordinarily
required to apportion business 
16 income" under a particular subsection of Section
304 if 
17 it would be required to use the apportionment method 
18 prescribed by such
subsection except for the fact that 
19 it derives business income solely from
Illinois. As 
20 used in this paragraph, the phrase "United States" 
21 means only the 50 states and the District of Columbia, 
22 but does not include any territory or possession of the 
23 United States or any area over which the United States 
24 has asserted jurisdiction or claimed exclusive rights 
25 with respect to the exploration for or exploitation of 
26 natural resources.

 
 
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1   (C) Holding companies.
2    (i) For purposes of this subparagraph, a 
3 "holding company" is a corporation (other than a 
4 corporation that is a financial organization under 
5 paragraph (8) of this subsection (a) of Section 
6 1501 because it is a bank holding company under the 
7 provisions of the Bank Holding Company Act of 1956 
8 (12 U.S.C. 1841, et seq.) or because it is owned by 
9 a bank or a bank holding company) that owns a 
10 controlling interest in one or more other 
11 taxpayers ("controlled taxpayers"); that, during 
12 the period that includes the taxable year and the 2 
13 immediately preceding taxable years or, if the 
14 corporation was formed during the current or 
15 immediately preceding taxable year, the taxable 
16 years in which the corporation has been in 
17 existence, derived substantially all its gross 
18 income from dividends, interest, rents, royalties, 
19 fees or other charges received from controlled 
20 taxpayers for the provision of services, and gains 
21 on the sale or other disposition of interests in 
22 controlled taxpayers or in property leased or 
23 licensed to controlled taxpayers or used by the 
24 taxpayer in providing services to controlled 
25 taxpayers; and that incurs no substantial expenses 
26 other than expenses (including interest and other 
 
 
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1 costs of borrowing) incurred in connection with 
2 the acquisition and holding of interests in 
3 controlled taxpayers and in the provision of 
4 services to controlled taxpayers or in the leasing 
5 or licensing of property to controlled taxpayers.
6    (ii) The income of a holding company which is a 
7 member of more than one unitary business group 
8 shall be included in each unitary business group of 
9 which it is a member on a pro rata basis, by 
10 including in each unitary business group that 
11 portion of the base income of the holding company 
12 that bears the same proportion to the total base 
13 income of the holding company as the gross receipts 
14 of the unitary business group bears to the combined 
15 gross receipts of all unitary business groups (in 
16 both cases without regard to the holding company) 
17 or on any other reasonable basis, consistently 
18 applied.
19    (iii) A holding company shall apportion its 
20 business income under the subsection of Section 
21 304 used by the other members of its unitary 
22 business group. The apportionment factors of a 
23 holding company which would be a member of more 
24 than one unitary business group shall be included 
25 with the apportionment factors of each unitary 
26 business group of which it is a member on a pro 
 
 
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1 rata basis using the same method used in clause 
2 (ii).
3    (iv) The provisions of this subparagraph (C) 
4 are intended to clarify existing law.
5   (D) If including the base income and factors of a 
6 holding company in more than one unitary business group 
7 under subparagraph (C) does not fairly reflect the 
8 degree of integration between the holding company and 
9 one or more of the unitary business groups, the 
10 dependence of the holding company and one or more of 
11 the unitary business groups upon each other, or the 
12 contributions between the holding company and one or 
13 more of the unitary business groups, the holding 
14 company may petition the Director, under the 
15 procedures provided under Section 304(f), for 
16 permission to include all base income and factors of 
17 the holding company only with members of a unitary 
18 business group apportioning their business income 
19 under one subsection of subsections (a), (b), (c), or 
20 (d) of Section 304. If the petition is granted, the 
21 holding company shall be included in a unitary business 
22 group only with persons apportioning their business 
23 income under the selected subsection of Section 304 
24 until the Director grants a petition of the holding 
25 company either to be included in more than one unitary 
26 business group under subparagraph (C) or to include its 
 
 
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1 base income and factors only with members of a unitary 
2 business group apportioning their business income 
3 under a different subsection of Section 304. 
4   (E) If the unitary business group members' 
5 accounting periods differ,
the common parent's 
6 accounting period or, if there is no common parent, the

7 accounting period of the member that is expected to 
8 have, on a recurring basis,
the greatest Illinois 
9 income tax liability must be used to determine whether 
10 to
use the apportionment method provided in subsection 
11 (a) or subsection (h) of
Section 304. The
prohibition 
12 against membership in a unitary business group for 
13 taxpayers
ordinarily required to apportion income 
14 under different subsections of Section
304 does not 
15 apply to taxpayers required to apportion income under 
16 subsection
(a) and subsection (h) of Section
304. The 
17 provisions of this amendatory Act of 1998 apply to tax

18 years ending on or after December 31, 1998.


19  (28) Subchapter S corporation. The term "Subchapter S 
20 corporation"
means a corporation for which there is in 
21 effect an election under Section
1362 of the Internal 
22 Revenue Code, or for which there is a federal election
to 
23 opt out of the provisions of the Subchapter S Revision Act 
24 of 1982 and
have applied instead the prior federal 
25 Subchapter S rules as in effect on July
1, 1982.

26  (30) Foreign person. The term "foreign person" means 
 
 
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1 any person who is a nonresident alien individual and any 
2 nonindividual entity, regardless of where created or 
3 organized, whose business activity outside the United 
4 States is 80% or more of the entity's total business 
5 activity.



6 (b) Other definitions.


7  (1) Words denoting number, gender, and so forth,
when 
8 used in this Act, where not otherwise distinctly expressed 
9 or manifestly
incompatible with the intent thereof:


10   (A) Words importing the singular include and apply 
11 to several persons,
parties or things;


12   (B) Words importing the plural include the 
13 singular; and


14   (C) Words importing the masculine gender include 
15 the feminine as well.


16  (2) "Company" or "association" as including successors 
17 and assigns. The
word "company" or "association", when used 
18 in reference to a corporation,
shall be deemed to embrace 
19 the words "successors and assigns of such company
or 
20 association", and in like manner as if these last-named 
21 words, or words
of similar import, were expressed.


22  (3) Other terms. Any term used in any Section of this 
23 Act with respect
to the application of, or in connection 
24 with, the provisions of any other
Section of this Act shall 
25 have the same meaning as in such other Section.

 
 
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1(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11; 
297-636, eff. 6-1-12.)


3 Section 10. The State Finance Act is amended by adding 
4Sections 5.826 and 6z-98 as follows:

5 (30 ILCS 105/5.826 new)
6 Sec. 5.826. The Bill Payment Trust Fund.

7 (30 ILCS 105/6z-98 new)
8 Sec. 6z-98. Bill Payment Trust Fund; creation. The Bill 
9Payment Trust Fund is created as a special fund in the State 
10Treasury. Moneys in the Fund shall be used to make payments to 
11bona fide creditors of the State who:
12  (1) have submitted a bill or invoice to the State that 
13 (A) was properly approved under rules adopted under Section 
14 3-3 of the State Prompt Payment Act, and (B) is more than 
15 90 days past due; or 
16  (2) are entitled to payment from State funds if the 
17 State is more than 90 days delinquent in the payment of 
18 those funds. For the purposes of this Section, the term 
19 "bona fide creditor" includes, but is not limited to, 
20 healthcare providers, public and private universities, 
21 school districts, units of local government, and State 
22 vendors. 
23 The Bill Payment Trust Fund is not subject to 
 
 
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1administrative charges or chargebacks, including, but not 
2limited to, those authorized under Section 8h of the State 
3Finance Act. 


4 Section 99. Effective date. This Act takes effect upon 
5becoming law.".