103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB0998
 
Introduced , by Rep. La Shawn K. Ford
 
SYNOPSIS AS INTRODUCED:



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

 Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to any federal deduction disallowed pursuant to
Section 280E of the Internal Revenue Code related to the production and
distribution of adult-use cannabis products by an entity licensed under the Cannabis Regulation and Tax Act, if those amounts are not used as the basis for any other tax
deduction, exemption, or credit and not otherwise required to be added
back when computing the taxpayer's base income. Effective immediately.



LRB103 03557 HLH 48563 b


 
 
A BILL FOR
 


HB0998LRB103 03557 HLH 48563 b



1 AN ACT concerning revenue.


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

3represented in the General Assembly:



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

6 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
7 Sec. 203. Base income defined. 
8 (a) Individuals.
9  (1) In general. In the case of an individual, base 
10 income means an
amount equal to the taxpayer's adjusted 
11 gross income for the taxable
year as modified by paragraph 
12 (2).
13  (2) Modifications. The adjusted gross income referred 
14 to in
paragraph (1) shall be modified by adding thereto 
15 the sum of the
following amounts:
16   (A) An amount equal to all amounts paid or accrued 
17 to the taxpayer
as interest or dividends during the 
18 taxable year to the extent excluded
from gross income 
19 in the computation of adjusted gross income, except 
20 stock
dividends of qualified public utilities 
21 described in Section 305(e) of the
Internal Revenue 
22 Code;
23   (B) An amount equal to the amount of tax imposed by 
 
 
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1 this Act to the
extent deducted from gross income in 
2 the computation of adjusted gross
income for the 
3 taxable year;
4   (C) An amount equal to the amount received during 
5 the taxable year
as a recovery or refund of real 
6 property taxes paid with respect to the
taxpayer's 
7 principal residence under the Revenue Act of
1939 and 
8 for which a deduction was previously taken under 
9 subparagraph (L) of
this paragraph (2) prior to July 
10 1, 1991, the retrospective application date of
Article 
11 4 of Public Act 87-17. In the case of multi-unit or 
12 multi-use
structures and farm dwellings, the taxes on 
13 the taxpayer's principal residence
shall be that 
14 portion of the total taxes for the entire property 
15 which is
attributable to such principal residence;
16   (D) An amount equal to the amount of the capital 
17 gain deduction
allowable under the Internal Revenue 
18 Code, to the extent deducted from gross
income in the 
19 computation of adjusted gross income;
20   (D-5) An amount, to the extent not included in 
21 adjusted gross income,
equal to the amount of money 
22 withdrawn by the taxpayer in the taxable year from
a 
23 medical care savings account and the interest earned 
24 on the account in the
taxable year of a withdrawal 
25 pursuant to subsection (b) of Section 20 of the

26 Medical Care Savings Account Act or subsection (b) of 
 
 
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1 Section 20 of the
Medical Care Savings Account Act of 
2 2000;
3   (D-10) For taxable years ending after December 31, 
4 1997, an
amount equal to any eligible remediation 
5 costs that the individual
deducted in computing 
6 adjusted gross income and for which the
individual 
7 claims a credit under subsection (l) of Section 201;
8   (D-15) For taxable years 2001 and thereafter, an 
9 amount equal to the
bonus depreciation deduction taken 
10 on the taxpayer's federal income tax return for the 
11 taxable
year under subsection (k) of Section 168 of 
12 the Internal Revenue Code;
13   (D-16) If the taxpayer sells, transfers, abandons, 
14 or otherwise disposes of property for which the 
15 taxpayer was required in any taxable year to
make an 
16 addition modification under subparagraph (D-15), then 
17 an amount equal
to the aggregate amount of the 
18 deductions taken in all taxable
years under 
19 subparagraph (Z) with respect to that property.
20   If the taxpayer continues to own property through 
21 the last day of the last tax year for which a 
22 subtraction is allowed with respect to that property 
23 under subparagraph (Z) and for which the taxpayer was 
24 allowed in any taxable year to make a subtraction 
25 modification under subparagraph (Z), then an amount 
26 equal to that subtraction modification.

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

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

 
 
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1    (iii) the taxpayer can establish, based on 
2 clear and convincing evidence, that the interest 
3 paid, accrued, or incurred relates to a contract 
4 or agreement entered into at arm's-length rates 
5 and terms and the principal purpose for the 
6 payment is not federal or Illinois tax avoidance; 
7 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 
18 for any tax year beginning after the effective 
19 date of this amendment provided such adjustment is 
20 made pursuant to regulation adopted by the 
21 Department and such regulations provide methods 
22 and standards by which the Department will utilize 
23 its authority under Section 404 of this Act;

24   (D-18) 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 
 
 
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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 under Sections 951 through 964 of the Internal 
21 Revenue Code and amounts included in gross income 
22 under Section 78 of the Internal Revenue Code) with 
23 respect to the stock of the same person to whom the 
24 intangible expenses and costs were directly or 
25 indirectly paid, incurred, or accrued. The preceding 
26 sentence does not apply to the extent that the same 
 
 
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1 dividends caused a reduction to the addition 
2 modification required under Section 203(a)(2)(D-17) 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 
21 is subject in a foreign country or state, other 
22 than a state which requires mandatory unitary 
23 reporting, to a tax on or measured by net income 
24 with respect to such item; or
25    (ii) any item of intangible expense or cost 
26 paid, accrued, or incurred, directly or 
 
 
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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 
18 the 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 
22 alternative method of apportionment under Section 
23 304(f);

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

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

8   (D-20) For taxable years beginning on or after 
9 January 1,
2002 and ending on or before December 31, 
10 2006, in
the
case of a distribution from a qualified 
11 tuition program under Section 529 of
the Internal 
12 Revenue Code, other than (i) a distribution from a 
13 College Savings
Pool created under Section 16.5 of the 
14 State Treasurer Act or (ii) a
distribution from the 
15 Illinois Prepaid Tuition Trust Fund, an amount equal 
16 to
the amount excluded from gross income under Section 
17 529(c)(3)(B). For taxable years beginning on or after 
18 January 1, 2007, in the case of a distribution from a 
19 qualified tuition program under Section 529 of the 
20 Internal Revenue Code, other than (i) a distribution 
21 from a College Savings Pool created under Section 16.5 
22 of the State Treasurer Act, (ii) a distribution from 
23 the Illinois Prepaid Tuition Trust Fund, or (iii) a 
24 distribution from a qualified tuition program under 
25 Section 529 of the Internal Revenue Code that (I) 
26 adopts and determines that its offering materials 
 
 
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1 comply with the College Savings Plans Network's 
2 disclosure principles and (II) has made reasonable 
3 efforts to inform in-state residents of the existence 
4 of in-state qualified tuition programs by informing 
5 Illinois residents directly and, where applicable, to 
6 inform financial intermediaries distributing the 
7 program to inform in-state residents of the existence 
8 of in-state qualified tuition programs at least 
9 annually, an amount equal to the amount excluded from 
10 gross income under Section 529(c)(3)(B).
11   For the purposes of this subparagraph (D-20), a 
12 qualified tuition program has made reasonable efforts 
13 if it makes disclosures (which may use the term 
14 "in-state program" or "in-state plan" and need not 
15 specifically refer to Illinois or its qualified 
16 programs by name) (i) directly to prospective 
17 participants in its offering materials or makes a 
18 public disclosure, such as a website posting; and (ii) 
19 where applicable, to intermediaries selling the 
20 out-of-state program in the same manner that the 
21 out-of-state program distributes its offering 
22 materials;
23   (D-20.5) For taxable years beginning on or after 
24 January 1, 2018, in the case of a distribution from a 
25 qualified ABLE program under Section 529A of the 
26 Internal Revenue Code, other than a distribution from 
 
 
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1 a qualified ABLE program created under Section 16.6 of 
2 the State Treasurer Act, an amount equal to the amount 
3 excluded from gross income under Section 529A(c)(1)(B) 
4 of the Internal Revenue Code; 
5   (D-21) For taxable years beginning on or after 
6 January 1, 2007, in the case of transfer of moneys from 
7 a qualified tuition program under Section 529 of the 
8 Internal Revenue Code that is administered by the 
9 State to an out-of-state program, an amount equal to 
10 the amount of moneys previously deducted from base 
11 income under subsection (a)(2)(Y) of this Section;
12   (D-21.5) For taxable years beginning on or after 
13 January 1, 2018, in the case of the transfer of moneys 
14 from a qualified tuition program under Section 529 or 
15 a qualified ABLE program under Section 529A of the 
16 Internal Revenue Code that is administered by this 
17 State to an ABLE account established under an 
18 out-of-state ABLE account program, an amount equal to 
19 the contribution component of the transferred amount 
20 that was previously deducted from base income under 
21 subsection (a)(2)(Y) or subsection (a)(2)(HH) of this 
22 Section; 
23   (D-22) For taxable years beginning on or after 
24 January 1, 2009, and prior to January 1, 2018, in the 
25 case of a nonqualified withdrawal or refund of moneys 
26 from a qualified tuition program under Section 529 of 
 
 
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1 the Internal Revenue Code administered by the State 
2 that is not used for qualified expenses at an eligible 
3 education institution, an amount equal to the 
4 contribution component of the nonqualified withdrawal 
5 or refund that was previously deducted from base 
6 income under subsection (a)(2)(y) of this Section, 
7 provided that the withdrawal or refund did not result 
8 from the beneficiary's death or disability. For 
9 taxable years beginning on or after January 1, 2018: 
10 (1) in the case of a nonqualified withdrawal or 
11 refund, as defined under Section
16.5 of the State 
12 Treasurer Act, of moneys from a qualified tuition 
13 program under Section 529 of the Internal Revenue Code 
14 administered by the State, an amount equal to the 
15 contribution component of the nonqualified withdrawal 
16 or refund that was previously deducted from base

17 income under subsection (a)(2)(Y) of this Section, and 
18 (2) in the case of a nonqualified withdrawal or refund 
19 from a qualified ABLE program under Section 529A of 
20 the Internal Revenue Code administered by the State 
21 that is not used for qualified disability expenses, an 
22 amount equal to the contribution component of the 
23 nonqualified withdrawal or refund that was previously 
24 deducted from base income under subsection (a)(2)(HH) 
25 of this Section;
26   (D-23) An amount equal to the credit allowable to 
 
 
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1 the taxpayer under Section 218(a) of this Act, 
2 determined without regard to Section 218(c) of this 
3 Act;
4   (D-24) For taxable years ending on or after 
5 December 31, 2017, an amount equal to the deduction 
6 allowed under Section 199 of the Internal Revenue Code 
7 for the taxable year; 
8   (D-25) In the case of a resident, an amount equal 
9 to the amount of tax for which a credit is allowed 
10 pursuant to Section 201(p)(7) of this Act; 
11 and by deducting from the total so obtained the
sum of the 
12 following amounts:
13   (E) For taxable years ending before December 31, 
14 2001,
any amount included in such total in respect of 
15 any compensation
(including but not limited to any 
16 compensation paid or accrued to a
serviceman while a 
17 prisoner of war or missing in action) paid to a 
18 resident
by reason of being on active duty in the Armed 
19 Forces of the United States
and in respect of any 
20 compensation paid or accrued to a resident who as a

21 governmental employee was a prisoner of war or missing 
22 in action, and in
respect of any compensation paid to a 
23 resident in 1971 or thereafter for
annual training 
24 performed pursuant to Sections 502 and 503, Title 32,

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

26 retired partners, which payments are excluded in 
 
 
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1 computing net earnings
from self employment by Section 
2 1402 of the Internal Revenue Code and
regulations 
3 adopted pursuant thereto;
4   (G) The valuation limitation amount;
5   (H) An amount equal to the amount of any tax 
6 imposed by this Act
which was refunded to the taxpayer 
7 and included in such total for the
taxable year;
8   (I) An amount equal to all amounts included in 
9 such total pursuant
to the provisions of Section 111 
10 of the Internal Revenue Code as a
recovery of items 
11 previously deducted from adjusted gross income in the

12 computation of taxable income;
13   (J) An amount equal to those dividends included in 
14 such total which were
paid by a corporation which 
15 conducts business operations in a River Edge 
16 Redevelopment Zone or zones created under the River 
17 Edge Redevelopment Zone Act, and conducts

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

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

16 ending on or after August 13, 1999, Sections 
17 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
18 Internal Revenue Code, plus, for taxable years ending 
19 on or after December 31, 2011, Section 45G(e)(3) of 
20 the Internal Revenue Code and, for taxable years 
21 ending on or after December 31, 2008, any amount 
22 included in gross income under Section 87 of the 
23 Internal Revenue Code; the provisions of this

24 subparagraph are exempt from the provisions of Section 
25 250;
26   (N) An amount equal to all amounts included in 
 
 
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1 such total which are
exempt from taxation by this 
2 State either by reason of its statutes or
Constitution

3 or by reason of the Constitution, treaties or statutes 
4 of the United States;
provided that, in the case of any 
5 statute of this State that exempts income
derived from 
6 bonds or other obligations from the tax imposed under 
7 this Act,
the amount exempted shall be the interest 
8 net of bond premium amortization;
9   (O) An amount equal to any contribution made to a 
10 job training
project established pursuant to the Tax 
11 Increment Allocation Redevelopment Act;
12   (P) An amount equal to the amount of the deduction 
13 used to compute the
federal income tax credit for 
14 restoration of substantial amounts held under
claim of 
15 right for the taxable year pursuant to Section 1341 of 
16 the
Internal Revenue Code or of any itemized deduction 
17 taken from adjusted gross income in the computation of 
18 taxable income for restoration of substantial amounts 
19 held under claim of right for the taxable year;
20   (Q) An amount equal to any amounts included in 
21 such total, received by
the taxpayer as an 
22 acceleration in the payment of life, endowment or 
23 annuity
benefits in advance of the time they would 
24 otherwise be payable as an indemnity
for a terminal 
25 illness;
26   (R) An amount equal to the amount of any federal or 
 
 
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1 State bonus paid
to veterans of the Persian Gulf War;
2   (S) An amount, to the extent included in adjusted 
3 gross income, equal
to the amount of a contribution 
4 made in the taxable year on behalf of the
taxpayer to a 
5 medical care savings account established under the 
6 Medical Care
Savings Account Act or the Medical Care 
7 Savings Account Act of 2000 to the
extent the 
8 contribution is accepted by the account
administrator 
9 as provided in that Act;
10   (T) An amount, to the extent included in adjusted 
11 gross income, equal to
the amount of interest earned 
12 in the taxable year on a medical care savings
account 
13 established under the Medical Care Savings Account Act 
14 or the Medical
Care Savings Account Act of 2000 on 
15 behalf of the
taxpayer, other than interest added 
16 pursuant to item (D-5) of this paragraph
(2);
17   (U) For one taxable year beginning on or after 
18 January 1,
1994, an
amount equal to the total amount of 
19 tax imposed and paid under subsections (a)
and (b) of 
20 Section 201 of this Act on grant amounts received by 
21 the taxpayer
under the Nursing Home Grant Assistance 
22 Act during the taxpayer's taxable years
1992 and 1993;
23   (V) Beginning with tax years ending on or after 
24 December 31, 1995 and
ending with tax years ending on 
25 or before December 31, 2004, an amount equal to
the 
26 amount paid by a taxpayer who is a
self-employed 
 
 
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1 taxpayer, a partner of a partnership, or a
shareholder 
2 in a Subchapter S corporation for health insurance or 
3 long-term
care insurance for that taxpayer or that 
4 taxpayer's spouse or dependents, to
the extent that 
5 the amount paid for that health insurance or long-term 
6 care
insurance may be deducted under Section 213 of 
7 the Internal Revenue Code, has not been deducted on 
8 the federal income tax return of the taxpayer,
and 
9 does not exceed the taxable income attributable to 
10 that taxpayer's income,
self-employment income, or 
11 Subchapter S corporation income; except that no

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

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

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

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

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

21 by Nazi Germany or any other Axis regime by European 
22 insurance companies
immediately prior to and during 
23 World War II;
provided, however, this subtraction from 
24 federal adjusted gross income does not
apply to assets 
25 acquired with such assets or with the proceeds from 
26 the sale of
such assets; provided, further, this 
 
 
HB0998- 23 -LRB103 03557 HLH 48563 b


1 paragraph shall only apply to a taxpayer
who was the 
2 first recipient of such assets after their recovery 
3 and who is a
victim of persecution for racial or 
4 religious reasons
by Nazi Germany or any other Axis 
5 regime or as an heir of the victim. The
amount of and 
6 the eligibility for any public assistance, benefit, or

7 similar entitlement is not affected by the inclusion 
8 of items (i) and (ii) of
this paragraph in gross income 
9 for federal income tax purposes.
This paragraph is 
10 exempt from the provisions of Section 250;
11   (Y) For taxable years beginning on or after 
12 January 1, 2002
and ending
on or before December 31, 
13 2004, moneys contributed in the taxable year to a 
14 College Savings Pool account under
Section 16.5 of the 
15 State Treasurer Act, except that amounts excluded from

16 gross income under Section 529(c)(3)(C)(i) of the 
17 Internal Revenue Code
shall not be considered moneys 
18 contributed under this subparagraph (Y). For taxable 
19 years beginning on or after January 1, 2005, a maximum 
20 of $10,000
contributed
in the
taxable year to (i) a 
21 College Savings Pool account under Section 16.5 of the

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

25 Internal
Revenue Code shall not be considered moneys 
26 contributed under this subparagraph
(Y). For purposes 
 
 
HB0998- 24 -LRB103 03557 HLH 48563 b


1 of this subparagraph, contributions made by an 
2 employer on behalf of an employee, or matching 
3 contributions made by an employee, shall be treated as 
4 made by the employee. This
subparagraph (Y) is exempt 
5 from the provisions of Section 250;
6   (Z) For taxable years 2001 and thereafter, for the 
7 taxable year in
which the bonus depreciation deduction

8 is taken on the taxpayer's federal income tax return 
9 under
subsection (k) of Section 168 of the Internal 
10 Revenue Code and for each
applicable taxable year 
11 thereafter, an amount equal to "x", where:
12    (1) "y" equals the amount of the depreciation 
13 deduction taken for the
taxable year
on the 
14 taxpayer's federal income tax return on property 
15 for which the bonus
depreciation deduction
was 
16 taken in any year under subsection (k) of Section 
17 168 of the Internal
Revenue Code, but not 
18 including the bonus depreciation deduction;
19    (2) for taxable years ending on or before 
20 December 31, 2005, "x" equals "y" multiplied by 30 
21 and then divided by 70 (or "y"
multiplied by 
22 0.429); and
23    (3) for taxable years ending after December 
24 31, 2005:
25     (i) for property on which a bonus 
26 depreciation deduction of 30% of the adjusted 
 
 
HB0998- 25 -LRB103 03557 HLH 48563 b


1 basis was taken, "x" equals "y" multiplied by 
2 30 and then divided by 70 (or "y"
multiplied 
3 by 0.429);
4     (ii) for property on which a bonus 
5 depreciation deduction of 50% of the adjusted 
6 basis was taken, "x" equals "y" multiplied by 
7 1.0;
8     (iii) for property on which a bonus 
9 depreciation deduction of 100% of the adjusted 
10 basis was taken in a taxable year ending on or 
11 after December 31, 2021, "x" equals the 
12 depreciation deduction that would be allowed 
13 on that property if the taxpayer had made the 
14 election under Section 168(k)(7) of the 
15 Internal Revenue Code to not claim bonus 
16 depreciation on that property; and
17     (iv) for property on which a bonus 
18 depreciation deduction of a percentage other 
19 than 30%, 50% or 100% of the adjusted basis 
20 was taken in a taxable year ending on or after 
21 December 31, 2021, "x" equals "y" multiplied 
22 by 100 times the percentage bonus depreciation 
23 on the property (that is, 100(bonus%)) and 
24 then divided by 100 times 1 minus the 
25 percentage bonus depreciation on the property 
26 (that is, 100(1–bonus%)). 
 
 
HB0998- 26 -LRB103 03557 HLH 48563 b


1   The aggregate amount deducted under this 
2 subparagraph in all taxable
years for any one piece of 
3 property may not exceed the amount of the bonus

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

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

14   If the taxpayer continues to own property through 
15 the last day of the last tax year for which a 
16 subtraction is allowed with respect to that property 
17 under subparagraph (Z) and for which the taxpayer was 
18 required in any taxable year to make an addition 
19 modification under subparagraph (D-15), then an amount 
20 equal to that addition modification.

21   The taxpayer is allowed to take the deduction 
22 under this subparagraph
only once with respect to any 
23 one piece of property.
24   This subparagraph (AA) is exempt from the 
25 provisions of Section 250;
26   (BB) Any amount included in adjusted gross income, 
 
 
HB0998- 27 -LRB103 03557 HLH 48563 b


1 other
than
salary,
received by a driver in a 
2 ridesharing arrangement using a motor vehicle;
3   (CC) The amount of (i) any interest income (net of 
4 the deductions allocable thereto) taken into account 
5 for the taxable year with respect to a transaction 
6 with a taxpayer that is required to make an addition 
7 modification with respect to such transaction under 
8 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
9 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
10 the amount of that addition modification, and
(ii) any 
11 income from intangible property (net of the deductions 
12 allocable thereto) taken into account for the taxable 
13 year with respect to a transaction with a taxpayer 
14 that is required to make an addition modification with 
15 respect to such transaction under Section 
16 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
17 203(d)(2)(D-8), but not to exceed the amount of that 
18 addition modification. This subparagraph (CC) is 
19 exempt from the provisions of Section 250;
20   (DD) An amount equal to the interest income taken 
21 into account for the taxable year (net of the 
22 deductions allocable thereto) with respect to 
23 transactions with (i) a foreign person who would be a 
24 member of the taxpayer's unitary business group but 
25 for the fact that the foreign person's business 
26 activity outside the United States is 80% or more of 
 
 
HB0998- 28 -LRB103 03557 HLH 48563 b


1 that person's total business activity and (ii) for 
2 taxable years ending on or after December 31, 2008, to 
3 a person who would be a member of the same unitary 
4 business group but for the fact that the person is 
5 prohibited under Section 1501(a)(27) from being 
6 included in the unitary business group because he or 
7 she is ordinarily required to apportion business 
8 income under different subsections of Section 304, but 
9 not to exceed the addition modification required to be 
10 made for the same taxable year under Section 
11 203(a)(2)(D-17) for interest paid, accrued, or 
12 incurred, directly or indirectly, to the same person. 
13 This subparagraph (DD) is exempt from the provisions 
14 of Section 250; 
15   (EE) An amount equal to the income from intangible 
16 property taken into account for the taxable year (net 
17 of the deductions allocable thereto) with respect to 
18 transactions with (i) a foreign person who would be a 
19 member of the taxpayer's unitary business group but 
20 for the fact that the foreign person's business 
21 activity outside the United States is 80% or more of 
22 that person's total business activity and (ii) for 
23 taxable years ending on or after December 31, 2008, to 
24 a person who would be a member of the same unitary 
25 business group but for the fact that the person is 
26 prohibited under Section 1501(a)(27) from being 
 
 
HB0998- 29 -LRB103 03557 HLH 48563 b


1 included in the unitary business group because he or 
2 she is ordinarily required to apportion business 
3 income under different subsections of Section 304, but 
4 not to exceed the addition modification required to be 
5 made for the same taxable year under Section 
6 203(a)(2)(D-18) for intangible expenses and costs 
7 paid, accrued, or incurred, directly or indirectly, to 
8 the same foreign person. This subparagraph (EE) is 
9 exempt from the provisions of Section 250;
10   (FF) An amount equal to any amount awarded to the 
11 taxpayer during the taxable year by the Court of 
12 Claims under subsection (c) of Section 8 of the Court 
13 of Claims Act for time unjustly served in a State 
14 prison. This subparagraph (FF) is exempt from the 
15 provisions of Section 250; 
16   (GG) For taxable years ending on or after December 
17 31, 2011, in the case of a taxpayer who was required to 
18 add back any insurance premiums under Section 
19 203(a)(2)(D-19), such taxpayer may elect to subtract 
20 that part of a reimbursement received from the 
21 insurance company equal to the amount of the expense 
22 or loss (including expenses incurred by the insurance 
23 company) that would have been taken into account as a 
24 deduction for federal income tax purposes if the 
25 expense or loss had been uninsured. If a taxpayer 
26 makes the election provided for by this subparagraph 
 
 
HB0998- 30 -LRB103 03557 HLH 48563 b


1 (GG), the insurer to which the premiums were paid must 
2 add back to income the amount subtracted by the 
3 taxpayer pursuant to this subparagraph (GG). This 
4 subparagraph (GG) is exempt from the provisions of 
5 Section 250; and 
6   (HH) For taxable years beginning on or after 
7 January 1, 2018 and prior to January 1, 2023, a maximum 
8 of $10,000 contributed in the taxable year to a 
9 qualified ABLE account under Section 16.6 of the State 
10 Treasurer Act, except that amounts excluded from gross 
11 income under Section 529(c)(3)(C)(i) or Section 
12 529A(c)(1)(C) of the Internal Revenue Code shall not 
13 be considered moneys contributed under this 
14 subparagraph (HH). For purposes of this subparagraph 
15 (HH), contributions made by an employer on behalf of 
16 an employee, or matching contributions made by an 
17 employee, shall be treated as made by the employee; 
18 and . 
19   (II) For taxable years beginning on or after 
20 January 1, 2024, the amount of any federal deduction 
21 disallowed pursuant to
Section 280E of the Internal 
22 Revenue Code related to the production and

23 distribution of adult-use cannabis products by an 
24 entity licensed under the Cannabis Regulation and Tax 
25 Act, if those amounts are not used as the basis for any 
26 other tax
deduction, exemption, or credit and not 
 
 
HB0998- 31 -LRB103 03557 HLH 48563 b


1 otherwise required to be added
back when computing the 
2 taxpayer's base income under this Section. This 
3 subparagraph (II) is exempt from the provisions of 
4 Section 250. 

5 (b) Corporations.
6  (1) In general. In the case of a corporation, base 
7 income means an
amount equal to the taxpayer's taxable 
8 income for the taxable year as
modified by paragraph (2).
9  (2) Modifications. The taxable income referred to in 
10 paragraph (1)
shall be modified by adding thereto the sum 
11 of the following amounts:
12   (A) An amount equal to all amounts paid or accrued 
13 to the taxpayer
as interest and all distributions 
14 received from regulated investment
companies during 
15 the taxable year to the extent excluded from gross

16 income in the computation of taxable income;
17   (B) 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 
20 year;
21   (C) In the case of a regulated investment company, 
22 an amount equal to
the excess of (i) the net long-term 
23 capital gain for the taxable year, over
(ii) the 
24 amount of the capital gain dividends designated as 
25 such in accordance
with Section 852(b)(3)(C) of the 
 
 
HB0998- 32 -LRB103 03557 HLH 48563 b


1 Internal Revenue Code and any amount
designated under 
2 Section 852(b)(3)(D) of the Internal Revenue Code,

3 attributable to the taxable year (this amendatory Act 
4 of 1995
(Public Act 89-89) is declarative of existing 
5 law and is not a new
enactment);
6   (D) The amount of any net operating loss deduction 
7 taken in arriving
at taxable income, other than a net 
8 operating loss carried forward from a
taxable year 
9 ending prior to December 31, 1986;
10   (E) For taxable years in which a net operating 
11 loss carryback or
carryforward from a taxable year 
12 ending prior to December 31, 1986 is an
element of 
13 taxable income under paragraph (1) of subsection (e) 
14 or
subparagraph (E) of paragraph (2) of subsection 
15 (e), the amount by which
addition modifications other 
16 than those provided by this subparagraph (E)
exceeded 
17 subtraction modifications in such earlier taxable 
18 year, with the
following limitations applied in the 
19 order that they are listed:
20    (i) the addition modification relating to the 
21 net operating loss
carried back or forward to the 
22 taxable year from any taxable year ending
prior to 
23 December 31, 1986 shall be reduced by the amount 
24 of addition
modification under this subparagraph 
25 (E) which related to that net operating
loss and 
26 which was taken into account in calculating the 
 
 
HB0998- 33 -LRB103 03557 HLH 48563 b


1 base income of an
earlier taxable year, and
2    (ii) the addition modification relating to the 
3 net operating loss
carried back or forward to the 
4 taxable year from any taxable year ending
prior to 
5 December 31, 1986 shall not exceed the amount of 
6 such carryback or
carryforward;
7   For taxable years in which there is a net 
8 operating loss carryback or
carryforward from more 
9 than one other taxable year ending prior to December

10 31, 1986, the addition modification provided in this 
11 subparagraph (E) shall
be the sum of the amounts 
12 computed independently under the preceding
provisions 
13 of this subparagraph (E) for each such taxable year;
14   (E-5) For taxable years ending after December 31, 
15 1997, an
amount equal to any eligible remediation 
16 costs that the corporation
deducted in computing 
17 adjusted gross income and for which the
corporation 
18 claims a credit under subsection (l) of Section 201;
19   (E-10) For taxable years 2001 and thereafter, an 
20 amount equal to the
bonus depreciation deduction taken 
21 on the taxpayer's federal income tax return for the 
22 taxable
year under subsection (k) of Section 168 of 
23 the Internal Revenue Code;
24   (E-11) If the taxpayer sells, transfers, abandons, 
25 or otherwise disposes of property for which the 
26 taxpayer was required in any taxable year to
make an 
 
 
HB0998- 34 -LRB103 03557 HLH 48563 b


1 addition modification under subparagraph (E-10), then 
2 an amount equal
to the aggregate amount of the 
3 deductions taken in all taxable
years under 
4 subparagraph (T) with respect to that property.
5   If the taxpayer continues to own property through 
6 the last day of the last tax year for which a 
7 subtraction is allowed with respect to that property 
8 under subparagraph (T) and for which the taxpayer was 
9 allowed in any taxable year to make a subtraction 
10 modification under subparagraph (T), then an amount 
11 equal to that subtraction modification.

12   The taxpayer is required to make the addition 
13 modification under this
subparagraph
only once with 
14 respect to any one piece of property;
15   (E-12) An amount equal to the amount otherwise 
16 allowed as a deduction in computing base income for 
17 interest paid, accrued, or incurred, directly or 
18 indirectly, (i) for taxable years ending on or after 
19 December 31, 2004, to a foreign person who would be a 
20 member of the same unitary business group but for the 
21 fact the foreign person's business activity outside 
22 the United States is 80% or more of the foreign 
23 person's total business activity and (ii) for taxable 
24 years ending on or after December 31, 2008, to a person 
25 who would be a member of the same unitary business 
26 group but for the fact that the person is prohibited 
 
 
HB0998- 35 -LRB103 03557 HLH 48563 b


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

16   This paragraph shall not apply to the following:

17    (i) an item of interest paid, accrued, or 
18 incurred, directly or indirectly, to a person who 
19 is subject in a foreign country or state, other 
20 than a state which requires mandatory unitary 
21 reporting, to a tax on or measured by net income 
22 with respect to such interest; or
23    (ii) an item of interest paid, accrued, or 
24 incurred, directly or indirectly, to a person if 
25 the taxpayer can establish, based on a 
26 preponderance of the evidence, both of the 
 
 
HB0998- 36 -LRB103 03557 HLH 48563 b


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

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

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

26    Nothing in this subsection shall preclude the 
 
 
HB0998- 37 -LRB103 03557 HLH 48563 b


1 Director from making any other adjustment 
2 otherwise allowed under Section 404 of this Act 
3 for any tax year beginning after the effective 
4 date of this amendment provided such adjustment is 
5 made pursuant to regulation adopted by the 
6 Department and such regulations provide methods 
7 and standards by which the Department will utilize 
8 its authority under Section 404 of this Act;

9   (E-13) An amount equal to the amount of intangible 
10 expenses and costs otherwise allowed as a deduction in 
11 computing base income, and that were paid, accrued, or 
12 incurred, directly or indirectly, (i) for taxable 
13 years ending on or after December 31, 2004, to a 
14 foreign person who would be a member of the same 
15 unitary business group but for the fact that the 
16 foreign person's business activity outside the United 
17 States is 80% or more of that person's total business 
18 activity and (ii) for taxable years ending on or after 
19 December 31, 2008, to a person who would be a member of 
20 the same unitary business group but for the fact that 
21 the person is prohibited under Section 1501(a)(27) 
22 from being included in the unitary business group 
23 because he or she is ordinarily required to apportion 
24 business income under different subsections of Section 
25 304. The addition modification required by this 
26 subparagraph shall be reduced to the extent that 
 
 
HB0998- 38 -LRB103 03557 HLH 48563 b


1 dividends were included in base income of the unitary 
2 group for the same taxable year and received by the 
3 taxpayer or by a member of the taxpayer's unitary 
4 business group (including amounts included in gross 
5 income pursuant to Sections 951 through 964 of the 
6 Internal Revenue Code and amounts included in gross 
7 income under Section 78 of the Internal Revenue Code) 
8 with respect to the stock of the same person to whom 
9 the intangible expenses and costs were directly or 
10 indirectly paid, incurred, or accrued. The preceding 
11 sentence shall not apply to the extent that the same 
12 dividends caused a reduction to the addition 
13 modification required under Section 203(b)(2)(E-12) of 
14 this Act.
As used in this subparagraph, the term 
15 "intangible expenses and costs" includes (1) expenses, 
16 losses, and costs for, or related to, the direct or 
17 indirect acquisition, use, maintenance or management, 
18 ownership, sale, exchange, or any other disposition of 
19 intangible property; (2) losses incurred, directly or 
20 indirectly, from factoring transactions or discounting 
21 transactions; (3) royalty, patent, technical, and 
22 copyright fees; (4) licensing fees; and (5) other 
23 similar expenses and costs.
For purposes of this 
24 subparagraph, "intangible property" includes patents, 
25 patent applications, trade names, trademarks, service 
26 marks, copyrights, mask works, trade secrets, and 
 
 
HB0998- 39 -LRB103 03557 HLH 48563 b


1 similar types of intangible assets.
2   This paragraph shall not apply to the following:
3    (i) any item of intangible expenses or costs 
4 paid, accrued, or incurred, directly or 
5 indirectly, from a transaction with a person who 
6 is subject in a foreign country or state, other 
7 than a state which requires mandatory unitary 
8 reporting, to a tax on or measured by net income 
9 with respect to such item; or
10    (ii) any item of intangible expense or cost 
11 paid, accrued, or incurred, directly or 
12 indirectly, if the taxpayer can establish, based 
13 on a preponderance of the evidence, both of the 
14 following:
15     (a) the person during the same taxable 
16 year paid, accrued, or incurred, the 
17 intangible expense or cost to a person that is 
18 not a related member, and
19     (b) the transaction giving rise to the 
20 intangible expense or cost between the 
21 taxpayer and the person did not have as a 
22 principal purpose the avoidance of Illinois 
23 income tax, and is paid pursuant to a contract 
24 or agreement that reflects arm's-length terms; 
25 or
26    (iii) any item of intangible expense or cost 
 
 
HB0998- 40 -LRB103 03557 HLH 48563 b


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

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

18   (E-14) For taxable years ending on or after 
19 December 31, 2008, an amount equal to the amount of 
20 insurance premium expenses and costs otherwise allowed 
21 as a deduction in computing base income, and that were 
22 paid, accrued, or incurred, directly or indirectly, to 
23 a person who would be a member of the same unitary 
24 business group but for the fact that the person is 
25 prohibited under Section 1501(a)(27) from being 
26 included in the unitary business group because he or 
 
 
HB0998- 41 -LRB103 03557 HLH 48563 b


1 she is ordinarily required to apportion business 
2 income under different subsections of Section 304. The 
3 addition modification required by this subparagraph 
4 shall be reduced to the extent that dividends were 
5 included in base income of the unitary group for the 
6 same taxable year and received by the taxpayer or by a 
7 member of the taxpayer's unitary business group 
8 (including amounts included in gross income under 
9 Sections 951 through 964 of the Internal Revenue Code 
10 and amounts included in gross income under Section 78 
11 of the Internal Revenue Code) with respect to the 
12 stock of the same person to whom the premiums and costs 
13 were directly or indirectly paid, incurred, or 
14 accrued. The preceding sentence does not apply to the 
15 extent that the same dividends caused a reduction to 
16 the addition modification required under Section 
17 203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this 
18 Act;

19   (E-15) For taxable years beginning after December 
20 31, 2008, any deduction for dividends paid by a 
21 captive real estate investment trust that is allowed 
22 to a real estate investment trust under Section 
23 857(b)(2)(B) of the Internal Revenue Code for 
24 dividends paid;
25   (E-16) An amount equal to the credit allowable to 
26 the taxpayer under Section 218(a) of this Act, 
 
 
HB0998- 42 -LRB103 03557 HLH 48563 b


1 determined without regard to Section 218(c) of this 
2 Act;
3   (E-17) For taxable years ending on or after 
4 December 31, 2017, an amount equal to the deduction 
5 allowed under Section 199 of the Internal Revenue Code 
6 for the taxable year; 
7   (E-18) for taxable years beginning after December 
8 31, 2018, an amount equal to the deduction allowed 
9 under Section 250(a)(1)(A) of the Internal Revenue 
10 Code for the taxable year; 
11   (E-19) for taxable years ending on or after June 
12 30, 2021, an amount equal to the deduction allowed 
13 under Section 250(a)(1)(B)(i) of the Internal Revenue 
14 Code for the taxable year; 
15   (E-20) for taxable years ending on or after June 
16 30, 2021, an amount equal to the deduction allowed 
17 under Sections 243(e) and 245A(a) of the Internal 
18 Revenue Code for the taxable year. 
19 and by deducting from the total so obtained the sum of the 
20 following
amounts:
21   (F) An amount equal to the amount of any tax 
22 imposed by this Act
which was refunded to the taxpayer 
23 and included in such total for the
taxable year;
24   (G) An amount equal to any amount included in such 
25 total under
Section 78 of the Internal Revenue Code;
26   (H) In the case of a regulated investment company, 
 
 
HB0998- 43 -LRB103 03557 HLH 48563 b


1 an amount equal
to the amount of exempt interest 
2 dividends as defined in subsection (b)(5) of Section 
3 852 of the Internal Revenue Code, paid to shareholders

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

9 interest expense by Section 291(a)(3) of the Internal 
10 Revenue Code, and all amounts of expenses allocable to 
11 interest and
disallowed as deductions by Section 
12 265(a)(1) of the Internal Revenue Code;
and (ii) for 
13 taxable years
ending on or after August 13, 1999, 
14 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
15 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
16 for tax years ending on or after December 31, 2011, 
17 amounts disallowed as deductions by Section 45G(e)(3) 
18 of the Internal Revenue Code and, for taxable years 
19 ending on or after December 31, 2008, any amount 
20 included in gross income under Section 87 of the 
21 Internal Revenue Code and the policyholders' share of 
22 tax-exempt interest of a life insurance company under 
23 Section 807(a)(2)(B) of the Internal Revenue Code (in 
24 the case of a life insurance company with gross income 
25 from a decrease in reserves for the tax year) or 
26 Section 807(b)(1)(B) of the Internal Revenue Code (in 
 
 
HB0998- 44 -LRB103 03557 HLH 48563 b


1 the case of a life insurance company allowed a 
2 deduction for an increase in reserves for the tax 
3 year); the
provisions of this
subparagraph are exempt 
4 from the provisions of Section 250;
5   (J) An amount equal to all amounts included in 
6 such total which are
exempt from taxation by this 
7 State either by reason of its statutes or
Constitution

8 or by reason of the Constitution, treaties or statutes 
9 of the United States;
provided that, in the case of any 
10 statute of this State that exempts income
derived from 
11 bonds or other obligations from the tax imposed under 
12 this Act,
the amount exempted shall be the interest 
13 net of bond premium amortization;
14   (K) 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 (K) is exempt from 
21 the provisions of Section 250;
22   (L) An amount equal to those dividends included in 
23 such total that
were paid by a corporation that 
24 conducts business operations in a federally
designated 
25 Foreign Trade Zone or Sub-Zone and that is designated 
26 a High Impact
Business located in Illinois; provided 
 
 
HB0998- 45 -LRB103 03557 HLH 48563 b


1 that dividends eligible for the
deduction provided in 
2 subparagraph (K) of paragraph 2 of this subsection

3 shall not be eligible for the deduction provided under 
4 this subparagraph
(L);
5   (M) 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 River Edge 
11 Redevelopment Zone Investment Credit. To determine the 
12 portion of a loan or loans that is
secured by property 
13 eligible for a Section 201(f) investment
credit to the 
14 borrower, the entire principal amount of the loan or 
15 loans
between the taxpayer and the borrower should be 
16 divided into the basis of the
Section 201(f) 
17 investment credit property which secures the
loan or 
18 loans, using for this purpose the original basis of 
19 such property on
the date that it was placed in service 
20 in the River Edge Redevelopment Zone. The subtraction 
21 modification available to the taxpayer in any
year 
22 under this subsection shall be that portion of the 
23 total interest paid
by the borrower with respect to 
24 such loan attributable to the eligible
property as 
25 calculated under the previous sentence. This 
26 subparagraph (M) is exempt from the provisions of 
 
 
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1 Section 250;
2   (M-1) For any taxpayer that is a financial 
3 organization within the
meaning of Section 304(c) of 
4 this Act, an amount included in such total as
interest 
5 income from a loan or loans made by such taxpayer to a 
6 borrower,
to the extent that such a loan is secured by 
7 property which is eligible for
the High Impact 
8 Business Investment Credit. To determine the portion 
9 of a
loan or loans that is secured by property eligible 
10 for a Section 201(h) investment credit to the 
11 borrower, the entire principal amount of
the loan or 
12 loans between the taxpayer and the borrower should be 
13 divided into
the basis of the Section 201(h) 
14 investment credit property which
secures the loan or 
15 loans, using for this purpose the original basis of 
16 such
property on the date that it was placed in service 
17 in a federally designated
Foreign Trade Zone or 
18 Sub-Zone located in Illinois. No taxpayer that is

19 eligible for the deduction provided in subparagraph 
20 (M) of paragraph (2) of
this subsection shall be 
21 eligible for the deduction provided under this

22 subparagraph (M-1). The subtraction modification 
23 available to taxpayers in
any year under this 
24 subsection shall be that portion of the total interest

25 paid by the borrower with respect to such loan 
26 attributable to the eligible
property as calculated 
 
 
HB0998- 47 -LRB103 03557 HLH 48563 b


1 under the previous sentence;
2   (N) Two times any contribution made during the 
3 taxable year to a
designated zone organization to the 
4 extent that the contribution (i)
qualifies as a 
5 charitable contribution under subsection (c) of 
6 Section 170
of the Internal Revenue Code and (ii) 
7 must, by its terms, be used for a
project approved by 
8 the Department of Commerce and Economic Opportunity 
9 under Section 11 of the Illinois Enterprise Zone Act 
10 or under Section 10-10 of the River Edge Redevelopment 
11 Zone Act. This subparagraph (N) is exempt from the 
12 provisions of Section 250;
13   (O) An amount equal to: (i) 85% for taxable years 
14 ending on or before
December 31, 1992, or, a 
15 percentage equal to the percentage allowable under

16 Section 243(a)(1) of the Internal Revenue Code of 1986 
17 for taxable years ending
after December 31, 1992, of 
18 the amount by which dividends included in taxable

19 income and received from a corporation that is not 
20 created or organized under
the laws of the United 
21 States or any state or political subdivision thereof,

22 including, for taxable years ending on or after 
23 December 31, 1988, dividends
received or deemed 
24 received or paid or deemed paid under Sections 951 
25 through
965 of the Internal Revenue Code, exceed the 
26 amount of the modification
provided under subparagraph 
 
 
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1 (G) of paragraph (2) of this subsection (b) which
is 
2 related to such dividends, and including, for taxable 
3 years ending on or after December 31, 2008, dividends 
4 received from a captive real estate investment trust; 
5 plus (ii) 100% of the amount by which dividends,

6 included in taxable income and received, including, 
7 for taxable years ending on
or after December 31, 
8 1988, dividends received or deemed received or paid or

9 deemed paid under Sections 951 through 964 of the 
10 Internal Revenue Code and including, for taxable years 
11 ending on or after December 31, 2008, dividends 
12 received from a captive real estate investment trust, 
13 from
any such corporation specified in clause (i) that 
14 would but for the provisions
of Section 1504(b)(3) of 
15 the Internal Revenue Code be treated as a member of
the 
16 affiliated group which includes the dividend 
17 recipient, exceed the amount
of the modification 
18 provided under subparagraph (G) of paragraph (2) of 
19 this
subsection (b) which is related to such 
20 dividends. For taxable years ending on or after June 
21 30, 2021, (i) for purposes of this subparagraph, the 
22 term "dividend" does not include any amount treated as 
23 a dividend under Section 1248 of the Internal Revenue 
24 Code, and (ii) this subparagraph shall not apply to 
25 dividends for which a deduction is allowed under 
26 Section 245(a) of the Internal Revenue Code. This 
 
 
HB0998- 49 -LRB103 03557 HLH 48563 b


1 subparagraph (O) is exempt from the provisions of 
2 Section 250 of this Act;
3   (P) An amount equal to any contribution made to a 
4 job training project
established pursuant to the Tax 
5 Increment Allocation Redevelopment Act;
6   (Q) An amount equal to the amount of the deduction 
7 used to compute the
federal income tax credit for 
8 restoration of substantial amounts held under
claim of 
9 right for the taxable year pursuant to Section 1341 of 
10 the
Internal Revenue Code;
11   (R) On and after July 20, 1999, in the case of an 
12 attorney-in-fact with respect to whom an
interinsurer 
13 or a reciprocal insurer has made the election under 
14 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
15 835, an amount equal to the excess, if
any, of the 
16 amounts paid or incurred by that interinsurer or 
17 reciprocal insurer
in the taxable year to the 
18 attorney-in-fact over the deduction allowed to that

19 interinsurer or reciprocal insurer with respect to the 
20 attorney-in-fact under
Section 835(b) of the Internal 
21 Revenue Code for the taxable year; the provisions of 
22 this subparagraph are exempt from the provisions of 
23 Section 250;
24   (S) For taxable years ending on or after December 
25 31, 1997, in the
case of a Subchapter
S corporation, an 
26 amount equal to all amounts of income allocable to a

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

4 allocable to organizations exempt from federal income 
5 tax by reason of Section
501(a) of the Internal 
6 Revenue Code. This subparagraph (S) is exempt from
the 
7 provisions of Section 250;
8   (T) For taxable years 2001 and thereafter, for the 
9 taxable year in
which the bonus depreciation deduction

10 is taken on the taxpayer's federal income tax return 
11 under
subsection (k) of Section 168 of the Internal 
12 Revenue Code and for each
applicable taxable year 
13 thereafter, an amount equal to "x", where:
14    (1) "y" equals the amount of the depreciation 
15 deduction taken for the
taxable year
on the 
16 taxpayer's federal income tax return on property 
17 for which the bonus
depreciation deduction
was 
18 taken in any year under subsection (k) of Section 
19 168 of the Internal
Revenue Code, but not 
20 including the bonus depreciation deduction;
21    (2) for taxable years ending on or before 
22 December 31, 2005, "x" equals "y" multiplied by 30 
23 and then divided by 70 (or "y"
multiplied by 
24 0.429); and
25    (3) for taxable years ending after December 
26 31, 2005:
 
 
HB0998- 51 -LRB103 03557 HLH 48563 b


1     (i) for property on which a bonus 
2 depreciation deduction of 30% of the adjusted 
3 basis was taken, "x" equals "y" multiplied by 
4 30 and then divided by 70 (or "y"
multiplied 
5 by 0.429);
6     (ii) for property on which a bonus 
7 depreciation deduction of 50% of the adjusted 
8 basis was taken, "x" equals "y" multiplied by 
9 1.0;
10     (iii) for property on which a bonus 
11 depreciation deduction of 100% of the adjusted 
12 basis was taken in a taxable year ending on or 
13 after December 31, 2021, "x" equals the 
14 depreciation deduction that would be allowed 
15 on that property if the taxpayer had made the 
16 election under Section 168(k)(7) of the 
17 Internal Revenue Code to not claim bonus 
18 depreciation on that property; and
19     (iv) for property on which a bonus 
20 depreciation deduction of a percentage other 
21 than 30%, 50% or 100% of the adjusted basis 
22 was taken in a taxable year ending on or after 
23 December 31, 2021, "x" equals "y" multiplied 
24 by 100 times the percentage bonus depreciation 
25 on the property (that is, 100(bonus%)) and 
26 then divided by 100 times 1 minus the 
 
 
HB0998- 52 -LRB103 03557 HLH 48563 b


1 percentage bonus depreciation on the property 
2 (that is, 100(1–bonus%)). 
3   The aggregate amount deducted under this 
4 subparagraph in all taxable
years for any one piece of 
5 property may not exceed the amount of the bonus

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

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

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

22   (X) An amount equal to the income from intangible 
23 property taken into account for the taxable year (net 
24 of the deductions allocable thereto) with respect to 
25 transactions with (i) a foreign person who would be a 
26 member of the taxpayer's unitary business group but 
 
 
HB0998- 55 -LRB103 03557 HLH 48563 b


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

17   (Y) For taxable years ending on or after December 
18 31, 2011, in the case of a taxpayer who was required to 
19 add back any insurance premiums under Section 
20 203(b)(2)(E-14), such taxpayer may elect to subtract 
21 that part of a reimbursement received from the 
22 insurance company equal to the amount of the expense 
23 or loss (including expenses incurred by the insurance 
24 company) that would have been taken into account as a 
25 deduction for federal income tax purposes if the 
26 expense or loss had been uninsured. If a taxpayer 
 
 
HB0998- 56 -LRB103 03557 HLH 48563 b


1 makes the election provided for by this subparagraph 
2 (Y), the insurer to which the premiums were paid must 
3 add back to income the amount subtracted by the 
4 taxpayer pursuant to this subparagraph (Y). This 
5 subparagraph (Y) is exempt from the provisions of 
6 Section 250; and 
7   (Z) The difference between the nondeductible 
8 controlled foreign corporation dividends under Section 
9 965(e)(3) of the Internal Revenue Code over the 
10 taxable income of the taxpayer, computed without 
11 regard to Section 965(e)(2)(A) of the Internal Revenue 
12 Code, and without regard to any net operating loss 
13 deduction. This subparagraph (Z) is exempt from the 
14 provisions of Section 250; and . 
15   (AA) For taxable years beginning on or after 
16 January 1, 2024, the amount of any federal deduction 
17 disallowed pursuant to
Section 280E of the Internal 
18 Revenue Code related to the production and

19 distribution of adult-use cannabis products by an 
20 entity licensed under the Cannabis Regulation and Tax 
21 Act, if those amounts are not used as the basis for any 
22 other tax
deduction, exemption, or credit and not 
23 otherwise required to be added
back when computing the 
24 taxpayer's base income under this Section. This 
25 subparagraph (AA) is exempt from the provisions of 
26 Section 250. 
 
 
HB0998- 57 -LRB103 03557 HLH 48563 b


1  (3) Special rule. For purposes of paragraph (2)(A), 
2 "gross income"
in the case of a life insurance company, 
3 for tax years ending on and after
December 31, 1994,
and 
4 prior to December 31, 2011, shall mean the gross 
5 investment income for the taxable year and, for tax years 
6 ending on or after December 31, 2011, shall mean all 
7 amounts included in life insurance gross income under 
8 Section 803(a)(3) of the Internal Revenue Code.

9 (c) Trusts and estates.
10  (1) In general. In the case of a trust or estate, 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. Subject to the provisions of 
14 paragraph (3), the
taxable income referred to in paragraph 
15 (1) shall be modified by adding
thereto the sum of the 
16 following amounts:
17   (A) An amount equal to all amounts paid or accrued 
18 to the taxpayer
as interest or dividends during the 
19 taxable year to the extent excluded
from gross income 
20 in the computation of taxable income;
21   (B) In the case of (i) an estate, $600; (ii) a 
22 trust which, under
its governing instrument, is 
23 required to distribute all of its income
currently, 
24 $300; and (iii) any other trust, $100, but in each such 
25 case,
only to the extent such amount was deducted in 
 
 
HB0998- 58 -LRB103 03557 HLH 48563 b


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

17 subtraction modifications in such taxable year, with 
18 the following limitations
applied in the order that 
19 they are listed:
20    (i) the addition modification relating to the 
21 net operating loss
carried back or forward to the 
22 taxable year from any taxable year ending
prior to 
23 December 31, 1986 shall be reduced by the amount 
24 of addition
modification under this subparagraph 
25 (E) which related to that net
operating loss and 
26 which was taken into account in calculating the 
 
 
HB0998- 59 -LRB103 03557 HLH 48563 b


1 base
income of an earlier taxable year, and
2    (ii) the addition modification relating to the 
3 net operating loss
carried back or forward to the 
4 taxable year from any taxable year ending
prior to 
5 December 31, 1986 shall not exceed the amount of 
6 such carryback or
carryforward;
7   For taxable years in which there is a net 
8 operating loss carryback or
carryforward from more 
9 than one other taxable year ending prior to December

10 31, 1986, the addition modification provided in this 
11 subparagraph (E) shall
be the sum of the amounts 
12 computed independently under the preceding
provisions 
13 of this subparagraph (E) for each such taxable year;
14   (F) For taxable years ending on or after January 
15 1, 1989, an amount
equal to the tax deducted pursuant 
16 to Section 164 of the Internal Revenue
Code if the 
17 trust or estate is claiming the same tax for purposes 
18 of the
Illinois foreign tax credit under Section 601 
19 of this Act;
20   (G) An amount equal to the amount of the capital 
21 gain deduction
allowable under the Internal Revenue 
22 Code, to the extent deducted from
gross income in the 
23 computation of taxable income;
24   (G-5) For taxable years ending after December 31, 
25 1997, an
amount equal to any eligible remediation 
26 costs that the trust or estate
deducted in computing 
 
 
HB0998- 60 -LRB103 03557 HLH 48563 b


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

23   The taxpayer is required to make the addition 
24 modification under this
subparagraph
only once with 
25 respect to any one piece of property;
26   (G-12) An amount equal to the amount otherwise 
 
 
HB0998- 61 -LRB103 03557 HLH 48563 b


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

 
 
HB0998- 62 -LRB103 03557 HLH 48563 b


1   This paragraph shall not apply to the following:

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

23    (iii) the taxpayer can establish, based on 
24 clear and convincing evidence, that the interest 
25 paid, accrued, or incurred relates to a contract 
26 or agreement entered into at arm's-length rates 
 
 
HB0998- 63 -LRB103 03557 HLH 48563 b


1 and terms and the principal purpose for the 
2 payment is not federal or Illinois tax avoidance; 
3 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 
14 for any tax year beginning after the effective 
15 date of this amendment provided such adjustment is 
16 made pursuant to regulation adopted by the 
17 Department and such regulations provide methods 
18 and standards by which the Department will utilize 
19 its authority under Section 404 of this Act;

20   (G-13) An amount equal to the amount of intangible 
21 expenses and costs otherwise allowed as a deduction in 
22 computing base income, and that were paid, accrued, or 
23 incurred, directly or indirectly, (i) for taxable 
24 years ending on or after December 31, 2004, to a 
25 foreign person who would be a member of the same 
26 unitary business group but for the fact that the 
 
 
HB0998- 64 -LRB103 03557 HLH 48563 b


1 foreign person's business activity outside the United 
2 States is 80% or more of that person's total business 
3 activity and (ii) for taxable years ending on or after 
4 December 31, 2008, to a person who would be a member of 
5 the same unitary business group but for the fact that 
6 the person is prohibited under Section 1501(a)(27) 
7 from being included in the unitary business group 
8 because he or she is ordinarily required to apportion 
9 business income under different subsections of Section 
10 304. The addition modification required by this 
11 subparagraph shall be reduced to the extent that 
12 dividends were included in base income of the unitary 
13 group for the same taxable year and received by the 
14 taxpayer or by a member of the taxpayer's unitary 
15 business group (including amounts included in gross 
16 income pursuant to Sections 951 through 964 of the 
17 Internal Revenue Code and amounts included in gross 
18 income under Section 78 of the Internal Revenue Code) 
19 with respect to the stock of the same person to whom 
20 the intangible expenses and costs were directly or 
21 indirectly paid, incurred, or accrued. The preceding 
22 sentence shall not apply to the extent that the same 
23 dividends caused a reduction to the addition 
24 modification required under Section 203(c)(2)(G-12) of 
25 this Act. As used in this subparagraph, the term 
26 "intangible expenses and costs" includes: (1) 
 
 
HB0998- 65 -LRB103 03557 HLH 48563 b


1 expenses, losses, and costs for or related to the 
2 direct or indirect acquisition, use, maintenance or 
3 management, ownership, sale, exchange, or any other 
4 disposition of intangible property; (2) losses 
5 incurred, directly or indirectly, from factoring 
6 transactions or discounting transactions; (3) royalty, 
7 patent, technical, and copyright fees; (4) licensing 
8 fees; and (5) other similar expenses and costs. For 
9 purposes of this subparagraph, "intangible property" 
10 includes patents, patent applications, trade names, 
11 trademarks, service marks, copyrights, mask works, 
12 trade secrets, and similar types of intangible assets.
13   This paragraph shall not apply to the following:
14    (i) any item of intangible expenses or costs 
15 paid, accrued, or incurred, directly or 
16 indirectly, from a transaction with a person who 
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 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 
 
 
HB0998- 66 -LRB103 03557 HLH 48563 b


1 year paid, accrued, or incurred, the 
2 intangible expense or cost to a person that is 
3 not a related member, and
4     (b) the transaction giving rise to the 
5 intangible expense or cost between the 
6 taxpayer and the person did not have as a 
7 principal purpose the avoidance of Illinois 
8 income tax, and is paid pursuant to a contract 
9 or agreement that reflects arm's-length terms; 
10 or
11    (iii) any item of intangible expense or cost 
12 paid, accrued, or incurred, directly or 
13 indirectly, from a transaction with a person if 
14 the 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 
18 alternative method of apportionment under Section 
19 304(f);

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

3   (G-14) For taxable years ending on or after 
4 December 31, 2008, an amount equal to the amount of 
5 insurance premium expenses and costs otherwise allowed 
6 as a deduction in computing base income, and that were 
7 paid, accrued, or incurred, directly or indirectly, to 
8 a person who would be a member of the same unitary 
9 business group but for the fact that the person is 
10 prohibited under Section 1501(a)(27) from being 
11 included in the unitary business group because he or 
12 she is ordinarily required to apportion business 
13 income under different subsections of Section 304. The 
14 addition modification required by this subparagraph 
15 shall be reduced to the extent that dividends were 
16 included in base income of the unitary group for the 
17 same taxable year and received by the taxpayer or by a 
18 member of the taxpayer's unitary business group 
19 (including amounts included in gross income under 
20 Sections 951 through 964 of the Internal Revenue Code 
21 and amounts included in gross income under Section 78 
22 of the Internal Revenue Code) with respect to the 
23 stock of the same person to whom the premiums and costs 
24 were directly or indirectly paid, incurred, or 
25 accrued. The preceding sentence does not apply to the 
26 extent that the same dividends caused a reduction to 
 
 
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1 the addition modification required under Section 
2 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this 
3 Act;
4   (G-15) An amount equal to the credit allowable to 
5 the taxpayer under Section 218(a) of this Act, 
6 determined without regard to Section 218(c) of this 
7 Act;
8   (G-16) For taxable years ending on or after 
9 December 31, 2017, an amount equal to the deduction 
10 allowed under Section 199 of the Internal Revenue Code 
11 for the taxable year; 
12 and by deducting from the total so obtained the sum of the 
13 following
amounts:
14   (H) An amount equal to all amounts included in 
15 such total pursuant
to the provisions of Sections 
16 402(a), 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 
17 of the Internal Revenue Code or included in such total 
18 as
distributions under the provisions of any 
19 retirement or disability plan for
employees of any 
20 governmental agency or unit, or retirement payments to

21 retired partners, which payments are excluded in 
22 computing net earnings
from self employment by Section 
23 1402 of the Internal Revenue Code and
regulations 
24 adopted pursuant thereto;
25   (I) The valuation limitation amount;
26   (J) An amount equal to the amount of any tax 
 
 
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1 imposed by this Act
which was refunded to the taxpayer 
2 and included in such total for the
taxable year;
3   (K) An amount equal to all amounts included in 
4 taxable income as
modified by subparagraphs (A), (B), 
5 (C), (D), (E), (F) and (G) which
are exempt from 
6 taxation by this State either by reason of its 
7 statutes or
Constitution
or by reason of the 
8 Constitution, treaties or statutes of the United 
9 States;
provided that, in the case of any statute of 
10 this State that exempts income
derived from bonds or 
11 other obligations from the tax imposed under this Act,

12 the amount exempted shall be the interest net of bond 
13 premium amortization;
14   (L) With the exception of any amounts subtracted 
15 under subparagraph
(K),
an amount equal to the sum of 
16 all amounts disallowed as
deductions by (i) Sections 
17 171(a)(2) and 265(a)(2) of the Internal Revenue
Code, 
18 and all amounts of expenses allocable
to interest and 
19 disallowed as deductions by Section 265(a)(1) of the 
20 Internal
Revenue Code;
and (ii) for taxable years

21 ending on or after August 13, 1999, Sections

22 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
23 Internal Revenue Code, plus, (iii) for taxable years 
24 ending on or after December 31, 2011, Section 
25 45G(e)(3) of the Internal Revenue Code and, for 
26 taxable years ending on or after December 31, 2008, 
 
 
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1 any amount included in gross income under Section 87 
2 of the Internal Revenue Code; the provisions of this

3 subparagraph are exempt from the provisions of Section 
4 250;
5   (M) An amount equal to those dividends included in 
6 such total
which were paid by a corporation which 
7 conducts business operations in a River Edge 
8 Redevelopment Zone or zones created under the River 
9 Edge Redevelopment Zone Act and
conducts substantially 
10 all of its operations in a River Edge Redevelopment 
11 Zone or zones. This subparagraph (M) is exempt from 
12 the provisions of Section 250;
13   (N) An amount equal to any contribution made to a 
14 job training
project established pursuant to the Tax 
15 Increment Allocation
Redevelopment Act;
16   (O) An amount equal to those dividends included in 
17 such total
that were paid by a corporation that 
18 conducts business operations in a
federally designated 
19 Foreign Trade Zone or Sub-Zone and that is designated

20 a High Impact Business located in Illinois; provided 
21 that dividends eligible
for the deduction provided in 
22 subparagraph (M) of paragraph (2) of this
subsection 
23 shall not be eligible for the deduction provided under 
24 this
subparagraph (O);
25   (P) An amount equal to the amount of the deduction 
26 used to compute the
federal income tax credit for 
 
 
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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;
4   (Q) For taxable year 1999 and thereafter, an 
5 amount equal to the
amount of any
(i) distributions, 
6 to the extent includible in gross income for
federal 
7 income tax purposes, made to the taxpayer because of

8 his or her status as a victim of
persecution for racial 
9 or religious reasons by Nazi Germany or any other Axis

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

15 persecution for racial or religious reasons by Nazi

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

18 but
not limited to, interest on the proceeds 
19 receivable as insurance
under policies issued to a 
20 victim of persecution for racial or religious
reasons 
21 by Nazi Germany or any other Axis regime by European 
22 insurance
companies
immediately prior to and during 
23 World War II;
provided, however, this subtraction from 
24 federal adjusted gross income does not
apply to assets 
25 acquired with such assets or with the proceeds from 
26 the sale of
such assets; provided, further, this 
 
 
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1 paragraph shall only apply to a taxpayer
who was the 
2 first recipient of such assets after their recovery 
3 and who is a
victim of
persecution for racial or 
4 religious reasons
by Nazi Germany or any other Axis 
5 regime or as an heir of the victim. The
amount of and 
6 the eligibility for any public assistance, benefit, or

7 similar entitlement is not affected by the inclusion 
8 of items (i) and (ii) of
this paragraph in gross income 
9 for federal income tax purposes.
This paragraph is 
10 exempt from the provisions of Section 250;
11   (R) For taxable years 2001 and thereafter, for the 
12 taxable year in
which the bonus depreciation deduction

13 is taken on the taxpayer's federal income tax return 
14 under
subsection (k) of Section 168 of the Internal 
15 Revenue Code and for each
applicable taxable year 
16 thereafter, an amount equal to "x", where:
17    (1) "y" equals the amount of the depreciation 
18 deduction taken for the
taxable year
on the 
19 taxpayer's federal income tax return on property 
20 for which the bonus
depreciation deduction
was 
21 taken in any year under subsection (k) of Section 
22 168 of the Internal
Revenue Code, but not 
23 including the bonus depreciation deduction;
24    (2) for taxable years ending on or before 
25 December 31, 2005, "x" equals "y" multiplied by 30 
26 and then divided by 70 (or "y"
multiplied by 
 
 
HB0998- 73 -LRB103 03557 HLH 48563 b


1 0.429); and
2    (3) for taxable years ending after December 
3 31, 2005:
4     (i) for property on which a bonus 
5 depreciation deduction of 30% of the adjusted 
6 basis was taken, "x" equals "y" multiplied by 
7 30 and then divided by 70 (or "y"
multiplied 
8 by 0.429);
9     (ii) for property on which a bonus 
10 depreciation deduction of 50% of the adjusted 
11 basis was taken, "x" equals "y" multiplied by 
12 1.0;
13     (iii) for property on which a bonus 
14 depreciation deduction of 100% of the adjusted 
15 basis was taken in a taxable year ending on or 
16 after December 31, 2021, "x" equals the 
17 depreciation deduction that would be allowed 
18 on that property if the taxpayer had made the 
19 election under Section 168(k)(7) of the 
20 Internal Revenue Code to not claim bonus 
21 depreciation on that property; and
22     (iv) for property on which a bonus 
23 depreciation deduction of a percentage other 
24 than 30%, 50% or 100% of the adjusted basis 
25 was taken in a taxable year ending on or after 
26 December 31, 2021, "x" equals "y" multiplied 
 
 
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1 by 100 times the percentage bonus depreciation 
2 on the property (that is, 100(bonus%)) and 
3 then divided by 100 times 1 minus the 
4 percentage bonus depreciation on the property 
5 (that is, 100(1–bonus%)). 
6   The aggregate amount deducted under this 
7 subparagraph in all taxable
years for any one piece of 
8 property may not exceed the amount of the bonus

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

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

22   (U) An amount equal to the interest income taken 
23 into account for the taxable year (net of the 
24 deductions allocable thereto) with respect to 
25 transactions with (i) a foreign person who would be a 
26 member of the taxpayer's unitary business group but 
 
 
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1 for the fact the foreign person's business activity 
2 outside the United States is 80% or more of that 
3 person's total business activity and (ii) for taxable 
4 years ending on or after December 31, 2008, to a person 
5 who would be a member of the same unitary business 
6 group but for the fact that the person is prohibited 
7 under Section 1501(a)(27) from being included in the 
8 unitary business group because he or she is ordinarily 
9 required to apportion business income under different 
10 subsections of Section 304, but not to exceed the 
11 addition modification required to be made for the same 
12 taxable year under Section 203(c)(2)(G-12) for 
13 interest paid, accrued, or incurred, directly or 
14 indirectly, to the same person. This subparagraph (U) 
15 is exempt from the provisions of Section 250; 
16   (V) An amount equal to the income from intangible 
17 property taken into account for the taxable year (net 
18 of the deductions allocable thereto) with respect to 
19 transactions with (i) a foreign person who would be a 
20 member of the taxpayer's unitary business group but 
21 for the fact that the foreign person's business 
22 activity outside the United States is 80% or more of 
23 that person's total business activity and (ii) for 
24 taxable years ending on or after December 31, 2008, to 
25 a person who would be a member of the same unitary 
26 business group but for the fact that the person is 
 
 
HB0998- 77 -LRB103 03557 HLH 48563 b


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

11   (W) in the case of an estate, an amount equal to 
12 all amounts included in such total pursuant to the 
13 provisions of Section 111 of the Internal Revenue Code 
14 as a recovery of items previously deducted by the 
15 decedent from adjusted gross income in the computation 
16 of taxable income. This subparagraph (W) is exempt 
17 from Section 250; 
18   (X) an amount equal to the refund included in such 
19 total of any tax deducted for federal income tax 
20 purposes, to the extent that deduction was added back 
21 under subparagraph (F). This subparagraph (X) is 
22 exempt from the provisions of Section 250;
23   (Y) For taxable years ending on or after December 
24 31, 2011, in the case of a taxpayer who was required to 
25 add back any insurance premiums under Section 
26 203(c)(2)(G-14), such taxpayer may elect to subtract 
 
 
HB0998- 78 -LRB103 03557 HLH 48563 b


1 that part of a reimbursement received from the 
2 insurance company equal to the amount of the expense 
3 or loss (including expenses incurred by the insurance 
4 company) that would have been taken into account as a 
5 deduction for federal income tax purposes if the 
6 expense or loss had been uninsured. If a taxpayer 
7 makes the election provided for by this subparagraph 
8 (Y), the insurer to which the premiums were paid must 
9 add back to income the amount subtracted by the 
10 taxpayer pursuant to this subparagraph (Y). This 
11 subparagraph (Y) is exempt from the provisions of 
12 Section 250; and
13   (Z) For taxable years beginning after December 31, 
14 2018 and before January 1, 2026, the amount of excess 
15 business loss of the taxpayer disallowed as a 
16 deduction by Section 461(l)(1)(B) of the Internal 
17 Revenue Code; and . 
18  (AA) For taxable years beginning on or after January 
19 1, 2024, the amount of any federal deduction disallowed 
20 pursuant to
Section 280E of the Internal Revenue Code 
21 related to the production and
distribution of adult-use 
22 cannabis products by an entity licensed under the Cannabis 
23 Regulation and Tax Act, if those amounts are not used as 
24 the basis for any other tax
deduction, exemption, or 
25 credit and not otherwise required to be added
back when 
26 computing the taxpayer's base income under this Section. 
 
 
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1 This subparagraph (AA) is exempt from the provisions of 
2 Section 250. 
3  (3) Limitation. The amount of any modification 
4 otherwise required
under this subsection shall, under 
5 regulations prescribed by the
Department, be adjusted by 
6 any amounts included therein which were
properly paid, 
7 credited, or required to be distributed, or permanently 
8 set
aside for charitable purposes pursuant to Internal 
9 Revenue Code Section
642(c) during the taxable year.

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

15 addition modification under subparagraph (D-5), then 
16 an amount equal to the
aggregate amount of the 
17 deductions taken in all taxable years
under 
18 subparagraph (O) with respect to that property.
19   If the taxpayer continues to own property through 
20 the last day of the last tax year for which a 
21 subtraction is allowed with respect to that property 
22 under subparagraph (O) and for which the taxpayer was 
23 allowed in any taxable year to make a subtraction 
24 modification under subparagraph (O), then an amount 
25 equal to that subtraction modification.

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

4   This paragraph shall not apply to the following:

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

26    (iii) the taxpayer can establish, based on 
 
 
HB0998- 83 -LRB103 03557 HLH 48563 b


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

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

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

23   (D-8) An amount equal to the amount of intangible 
24 expenses and costs otherwise allowed as a deduction in 
25 computing base income, and that were paid, accrued, or 
26 incurred, directly or indirectly, (i) for taxable 
 
 
HB0998- 84 -LRB103 03557 HLH 48563 b


1 years ending on or after December 31, 2004, to a 
2 foreign person who would be a member of the same 
3 unitary business group but for the fact that the 
4 foreign person's business activity outside the United 
5 States is 80% or more of that person's total business 
6 activity and (ii) for taxable years ending on or after 
7 December 31, 2008, to a person who would be a member of 
8 the same unitary business group but for the fact that 
9 the person is prohibited under Section 1501(a)(27) 
10 from being included in the unitary business group 
11 because he or she is ordinarily required to apportion 
12 business income under different subsections of Section 
13 304. The addition modification required by this 
14 subparagraph shall be reduced to the extent that 
15 dividends were included in base income of the unitary 
16 group for the same taxable year and received by the 
17 taxpayer or by a member of the taxpayer's unitary 
18 business group (including amounts included in gross 
19 income pursuant to Sections 951 through 964 of the 
20 Internal Revenue Code and amounts included in gross 
21 income under Section 78 of the Internal Revenue Code) 
22 with respect to the stock of the same person to whom 
23 the intangible expenses and costs were directly or 
24 indirectly paid, incurred or accrued. The preceding 
25 sentence shall not apply to the extent that the same 
26 dividends caused a reduction to the addition 
 
 
HB0998- 85 -LRB103 03557 HLH 48563 b


1 modification required under Section 203(d)(2)(D-7) of 
2 this Act. As used in this subparagraph, the term 
3 "intangible expenses and costs" includes (1) expenses, 
4 losses, and costs for, or related to, the direct or 
5 indirect acquisition, use, maintenance or management, 
6 ownership, sale, exchange, or any other disposition of 
7 intangible property; (2) losses incurred, directly or 
8 indirectly, from factoring transactions or discounting 
9 transactions; (3) royalty, patent, technical, and 
10 copyright fees; (4) licensing fees; and (5) other 
11 similar expenses and costs. For purposes of this 
12 subparagraph, "intangible property" includes patents, 
13 patent applications, trade names, trademarks, service 
14 marks, copyrights, mask works, trade secrets, and 
15 similar types of intangible assets;
16   This paragraph shall not apply to the following:
17    (i) any item of intangible expenses or costs 
18 paid, accrued, or incurred, directly or 
19 indirectly, from a transaction with a person who 
20 is subject in a foreign country or state, other 
21 than a state which requires mandatory unitary 
22 reporting, to a tax on or measured by net income 
23 with respect to such item; or
24    (ii) any item of intangible expense or cost 
25 paid, accrued, or incurred, directly or 
26 indirectly, if the taxpayer can establish, based 
 
 
HB0998- 86 -LRB103 03557 HLH 48563 b


1 on a preponderance of the evidence, both of the 
2 following:
3     (a) the person during the same taxable 
4 year paid, accrued, or incurred, the 
5 intangible expense or cost to a person that is 
6 not a related member, and
7     (b) the transaction giving rise to the 
8 intangible expense or cost between the 
9 taxpayer and the person did not have as a 
10 principal purpose the avoidance of Illinois 
11 income tax, and is paid pursuant to a contract 
12 or agreement that reflects arm's-length terms; 
13 or
14    (iii) any item of intangible expense or cost 
15 paid, accrued, or incurred, directly or 
16 indirectly, from a transaction with a person if 
17 the taxpayer establishes by clear and convincing 
18 evidence, that the adjustments are unreasonable; 
19 or if the taxpayer and the Director agree in 
20 writing to the application or use of an 
21 alternative method of apportionment under Section 
22 304(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 
26 for any tax year beginning after the effective 
 
 
HB0998- 87 -LRB103 03557 HLH 48563 b


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

6   (D-9) 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 
26 stock of the same person to whom the premiums and costs 
 
 
HB0998- 88 -LRB103 03557 HLH 48563 b


1 were directly or indirectly paid, incurred, or 
2 accrued. The preceding sentence does not apply to the 
3 extent that the same dividends caused a reduction to 
4 the addition modification required under Section 
5 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
6   (D-10) An amount equal to the credit allowable to 
7 the taxpayer under Section 218(a) of this Act, 
8 determined without regard to Section 218(c) of this 
9 Act;
10   (D-11) For taxable years ending on or after 
11 December 31, 2017, an amount equal to the deduction 
12 allowed under Section 199 of the Internal Revenue Code 
13 for the taxable year; 
14 and by deducting from the total so obtained the following 
15 amounts:
16   (E) The valuation limitation amount;
17   (F) An amount equal to the amount of any tax 
18 imposed by this Act which
was refunded to the taxpayer 
19 and included in such total for the taxable year;
20   (G) An amount equal to all amounts included in 
21 taxable income as
modified by subparagraphs (A), (B), 
22 (C) and (D) which are exempt from
taxation by this 
23 State either by reason of its statutes or Constitution 
24 or
by reason of
the Constitution, treaties or statutes 
25 of the United States;
provided that, in the case of any 
26 statute of this State that exempts income
derived from 
 
 
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1 bonds or other obligations from the tax imposed under 
2 this Act,
the amount exempted shall be the interest 
3 net of bond premium amortization;
4   (H) Any income of the partnership which 
5 constitutes personal service
income as defined in 
6 Section 1348(b)(1) of the Internal Revenue Code (as
in 
7 effect December 31, 1981) or a reasonable allowance 
8 for compensation
paid or accrued for services rendered 
9 by partners to the partnership,
whichever is greater; 
10 this subparagraph (H) is exempt from the provisions of 
11 Section 250;
12   (I) An amount equal to all amounts of income 
13 distributable to an entity
subject to the Personal 
14 Property Tax Replacement Income Tax imposed by

15 subsections (c) and (d) of Section 201 of this Act 
16 including amounts
distributable to organizations 
17 exempt from federal income tax by reason of
Section 
18 501(a) of the Internal Revenue Code; this subparagraph 
19 (I) is exempt from the provisions of Section 250;
20   (J) With the exception of any amounts subtracted 
21 under subparagraph
(G),
an amount equal to the sum of 
22 all amounts disallowed as deductions
by (i) Sections 
23 171(a)(2) and 265(a)(2) of the Internal Revenue Code, 
24 and all amounts of expenses allocable to
interest and 
25 disallowed as deductions by Section 265(a)(1) of the 
26 Internal
Revenue Code;
and (ii) for taxable years

 
 
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1 ending on or after August 13, 1999, Sections

2 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
3 Internal Revenue Code, plus, (iii) for taxable years 
4 ending on or after December 31, 2011, Section 
5 45G(e)(3) of the Internal Revenue Code and, for 
6 taxable years ending on or after December 31, 2008, 
7 any amount included in gross income under Section 87 
8 of the Internal Revenue Code; the provisions of this

9 subparagraph are exempt from the provisions of Section 
10 250;
11   (K) An amount equal to those dividends included in 
12 such total which were
paid by a corporation which 
13 conducts business operations in a River Edge 
14 Redevelopment Zone or zones created under the River 
15 Edge Redevelopment Zone Act and
conducts substantially 
16 all of its operations
from a River Edge Redevelopment 
17 Zone or zones. This subparagraph (K) is exempt from 
18 the provisions of Section 250;
19   (L) An amount equal to any contribution made to a 
20 job training project
established pursuant to the Real 
21 Property Tax Increment Allocation
Redevelopment Act;
22   (M) An amount equal to those dividends included in 
23 such total
that were paid by a corporation that 
24 conducts business operations in a
federally designated 
25 Foreign Trade Zone or Sub-Zone and that is designated 
26 a
High Impact Business located in Illinois; provided 
 
 
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1 that dividends eligible
for the deduction provided in 
2 subparagraph (K) of paragraph (2) of this
subsection 
3 shall not be eligible for the deduction provided under 
4 this
subparagraph (M);
5   (N) An amount equal to the amount of the deduction 
6 used to compute the
federal income tax credit for 
7 restoration of substantial amounts held under
claim of 
8 right for the taxable year pursuant to Section 1341 of 
9 the
Internal Revenue Code;
10   (O) For taxable years 2001 and thereafter, for the 
11 taxable year in
which the bonus depreciation deduction

12 is taken on the taxpayer's federal income tax return 
13 under
subsection (k) of Section 168 of the Internal 
14 Revenue Code and for each
applicable taxable year 
15 thereafter, an amount equal to "x", where:
16    (1) "y" equals the amount of the depreciation 
17 deduction taken for the
taxable year
on the 
18 taxpayer's federal income tax return on property 
19 for which the bonus
depreciation deduction
was 
20 taken in any year under subsection (k) of Section 
21 168 of the Internal
Revenue Code, but not 
22 including the bonus depreciation deduction;
23    (2) for taxable years ending on or before 
24 December 31, 2005, "x" equals "y" multiplied by 30 
25 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
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1    (3) for taxable years ending after December 
2 31, 2005:
3     (i) for property on which a bonus 
4 depreciation deduction of 30% of the adjusted 
5 basis was taken, "x" equals "y" multiplied by 
6 30 and then divided by 70 (or "y"
multiplied 
7 by 0.429);
8     (ii) for property on which a bonus 
9 depreciation deduction of 50% of the adjusted 
10 basis was taken, "x" equals "y" multiplied by 
11 1.0;
12     (iii) for property on which a bonus 
13 depreciation deduction of 100% of the adjusted 
14 basis was taken in a taxable year ending on or 
15 after December 31, 2021, "x" equals the 
16 depreciation deduction that would be allowed 
17 on that property if the taxpayer had made the 
18 election under Section 168(k)(7) of the 
19 Internal Revenue Code to not claim bonus 
20 depreciation on that property; and
21     (iv) for property on which a bonus 
22 depreciation deduction of a percentage other 
23 than 30%, 50% or 100% of the adjusted basis 
24 was taken in a taxable year ending on or after 
25 December 31, 2021, "x" equals "y" multiplied 
26 by 100 times the percentage bonus depreciation 
 
 
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1 on the property (that is, 100(bonus%)) and 
2 then divided by 100 times 1 minus the 
3 percentage bonus depreciation on the property 
4 (that is, 100(1–bonus%)). 
5   The aggregate amount deducted under this 
6 subparagraph in all taxable
years for any one piece of 
7 property may not exceed the amount of the bonus

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

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

21   (R) An amount equal to the interest income taken 
22 into account for the taxable year (net of the 
23 deductions allocable thereto) with respect to 
24 transactions with (i) a foreign person who would be a 
25 member of the taxpayer's unitary business group but 
26 for the fact that the foreign person's business 
 
 
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1 activity outside the United States is 80% or more of 
2 that person's total business activity and (ii) for 
3 taxable years ending on or after December 31, 2008, to 
4 a person who would be a member of the same unitary 
5 business group but for the fact that the person is 
6 prohibited under Section 1501(a)(27) from being 
7 included in the unitary business group because he or 
8 she is ordinarily required to apportion business 
9 income under different subsections of Section 304, but 
10 not to exceed the addition modification required to be 
11 made for the same taxable year under Section 
12 203(d)(2)(D-7) for interest paid, accrued, or 
13 incurred, directly or indirectly, to the same person. 
14 This subparagraph (R) is exempt from Section 250; 
15   (S) An amount equal to the income from intangible 
16 property taken into account for the taxable year (net 
17 of the deductions allocable thereto) with respect to 
18 transactions with (i) a foreign person who would be a 
19 member of the taxpayer's unitary business group but 
20 for the fact that the foreign person's business 
21 activity outside the United States is 80% or more of 
22 that person's total business activity and (ii) for 
23 taxable years ending on or after December 31, 2008, to 
24 a person who would be a member of the same unitary 
25 business group but for the fact that the person is 
26 prohibited under Section 1501(a)(27) from being 
 
 
HB0998- 96 -LRB103 03557 HLH 48563 b


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

10   (T) For taxable years ending on or after December 
11 31, 2011, in the case of a taxpayer who was required to 
12 add back any insurance premiums under Section 
13 203(d)(2)(D-9), such taxpayer may elect to subtract 
14 that part of a reimbursement received from the 
15 insurance company equal to the amount of the expense 
16 or loss (including expenses incurred by the insurance 
17 company) that would have been taken into account as a 
18 deduction for federal income tax purposes if the 
19 expense or loss had been uninsured. If a taxpayer 
20 makes the election provided for by this subparagraph 
21 (T), the insurer to which the premiums were paid must 
22 add back to income the amount subtracted by the 
23 taxpayer pursuant to this subparagraph (T). This 
24 subparagraph (T) is exempt from the provisions of 
25 Section 250; and . 
26   (U) For taxable years beginning on or after 
 
 
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1 January 1, 2024, the amount of any federal deduction 
2 disallowed pursuant to
Section 280E of the Internal 
3 Revenue Code related to the production and

4 distribution of adult-use cannabis products by an 
5 entity licensed under the Cannabis Regulation and Tax 
6 Act, if those amounts are not used as the basis for any 
7 other tax
deduction, exemption, or credit and not 
8 otherwise required to be added
back when computing the 
9 taxpayer's base income under this Section. This 
10 subparagraph (U) is exempt from the provisions of 
11 Section 250. 

12 (e) Gross income; adjusted gross income; taxable income.
13  (1) In general. Subject to the provisions of paragraph 
14 (2) and
subsection (b)(3), for purposes of this Section 
15 and Section 803(e), a
taxpayer's gross income, adjusted 
16 gross income, or taxable income for
the taxable year shall 
17 mean the amount of gross income, adjusted gross
income or 
18 taxable income properly reportable for federal income tax

19 purposes for the taxable year under the provisions of the 
20 Internal
Revenue Code. Taxable income may be less than 
21 zero. However, for taxable
years ending on or after 
22 December 31, 1986, net operating loss
carryforwards from 
23 taxable years ending prior to December 31, 1986, may not

24 exceed the sum of federal taxable income for the taxable 
25 year before net
operating loss deduction, plus the excess 
 
 
HB0998- 98 -LRB103 03557 HLH 48563 b


1 of addition modifications over
subtraction modifications 
2 for the taxable year. For taxable years ending
prior to 
3 December 31, 1986, taxable income may never be an amount 
4 in excess
of the net operating loss for the taxable year as 
5 defined in subsections
(c) and (d) of Section 172 of the 
6 Internal Revenue Code, provided that when
taxable income 
7 of a corporation (other than a Subchapter S corporation),

8 trust, or estate is less than zero and addition 
9 modifications, other than
those provided by subparagraph 
10 (E) of paragraph (2) of subsection (b) for
corporations or 
11 subparagraph (E) of paragraph (2) of subsection (c) for

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

16 applied under Section 172 of the Internal Revenue Code or 
17 under
subparagraph (E) of paragraph (2) of this subsection 
18 (e) applied in
conjunction with Section 172 of the 
19 Internal Revenue Code.
20  (2) Special rule. For purposes of paragraph (1) of 
21 this subsection,
the taxable income properly reportable 
22 for federal income tax purposes
shall mean:
23   (A) Certain life insurance companies. In the case 
24 of a life
insurance company subject to the tax imposed 
25 by Section 801 of the
Internal Revenue Code, life 
26 insurance company taxable income, plus the
amount of 
 
 
HB0998- 99 -LRB103 03557 HLH 48563 b


1 distribution from pre-1984 policyholder surplus 
2 accounts as
calculated under Section 815a of the 
3 Internal Revenue Code;
4   (B) Certain other insurance companies. In the case 
5 of mutual
insurance companies subject to the tax 
6 imposed by Section 831 of the
Internal Revenue Code, 
7 insurance company taxable income;
8   (C) Regulated investment companies. In the case of 
9 a regulated
investment company subject to the tax 
10 imposed by Section 852 of the
Internal Revenue Code, 
11 investment company taxable income;
12   (D) Real estate investment trusts. In the case of 
13 a real estate
investment trust subject to the tax 
14 imposed by Section 857 of the
Internal Revenue Code, 
15 real estate investment trust taxable income;
16   (E) Consolidated corporations. In the case of a 
17 corporation which
is a member of an affiliated group 
18 of corporations filing a consolidated
income tax 
19 return for the taxable year for federal income tax 
20 purposes,
taxable income determined as if such 
21 corporation had filed a separate
return for federal 
22 income tax purposes for the taxable year and each

23 preceding taxable year for which it was a member of an 
24 affiliated group.
For purposes of this subparagraph, 
25 the taxpayer's separate taxable
income shall be 
26 determined as if the election provided by Section

 
 
HB0998- 100 -LRB103 03557 HLH 48563 b


1 243(b)(2) of the Internal Revenue Code had been in 
2 effect for all such years;
3   (F) Cooperatives. In the case of a cooperative 
4 corporation or
association, the taxable income of such 
5 organization determined in
accordance with the 
6 provisions of Section 1381 through 1388 of the

7 Internal Revenue Code, but without regard to the 
8 prohibition against offsetting losses from patronage 
9 activities against income from nonpatronage 
10 activities; except that a cooperative corporation or 
11 association may make an election to follow its federal 
12 income tax treatment of patronage losses and 
13 nonpatronage losses. In the event such election is 
14 made, such losses shall be computed and carried over 
15 in a manner consistent with subsection (a) of Section 
16 207 of this Act and apportioned by the apportionment 
17 factor reported by the cooperative on its Illinois 
18 income tax return filed for the taxable year in which 
19 the losses are incurred. The election shall be 
20 effective for all taxable years with original returns 
21 due on or after the date of the election. In addition, 
22 the cooperative may file an amended return or returns, 
23 as allowed under this Act, to provide that the 
24 election shall be effective for losses incurred or 
25 carried forward for taxable years occurring prior to 
26 the date of the election. Once made, the election may 
 
 
HB0998- 101 -LRB103 03557 HLH 48563 b


1 only be revoked upon approval of the Director. The 
2 Department shall adopt rules setting forth 
3 requirements for documenting the elections and any 
4 resulting Illinois net loss and the standards to be 
5 used by the Director in evaluating requests to revoke 
6 elections. Public Act 96-932 is declaratory of 
7 existing law; 
8   (G) Subchapter S corporations. In the case of: (i) 
9 a Subchapter S
corporation for which there is in 
10 effect an election for the taxable year
under Section 
11 1362 of the Internal Revenue Code, the taxable income 
12 of such
corporation determined in accordance with 
13 Section 1363(b) of the Internal
Revenue Code, except 
14 that taxable income shall take into
account those 
15 items which are required by Section 1363(b)(1) of the

16 Internal Revenue Code to be separately stated; and 
17 (ii) a Subchapter
S corporation for which there is in 
18 effect a federal election to opt out of
the provisions 
19 of the Subchapter S Revision Act of 1982 and have 
20 applied
instead the prior federal Subchapter S rules 
21 as in effect on July 1, 1982,
the taxable income of 
22 such corporation determined in accordance with the

23 federal Subchapter S rules as in effect on July 1, 
24 1982; and
25   (H) Partnerships. In the case of a partnership, 
26 taxable income
determined in accordance with Section 
 
 
HB0998- 102 -LRB103 03557 HLH 48563 b


1 703 of the Internal Revenue Code,
except that taxable 
2 income shall take into account those items which are

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


23 (f) Valuation limitation amount.
24  (1) In general. The valuation limitation amount 
25 referred to in
subsections (a)(2)(G), (c)(2)(I) and 
 
 
HB0998- 103 -LRB103 03557 HLH 48563 b


1 (d)(2)(E) is an amount equal to:
2   (A) The sum of the pre-August 1, 1969 appreciation 
3 amounts (to the
extent consisting of gain reportable 
4 under the provisions of Section
1245 or 1250 of the 
5 Internal Revenue Code) for all property in respect
of 
6 which such gain was reported for the taxable year; 
7 plus
8   (B) The lesser of (i) the sum of the pre-August 1, 
9 1969 appreciation
amounts (to the extent consisting of 
10 capital gain) for all property in
respect of which 
11 such gain was reported for federal income tax purposes

12 for the taxable year, or (ii) the net capital gain for 
13 the taxable year,
reduced in either case by any amount 
14 of such gain included in the amount
determined under 
15 subsection (a)(2)(F) or (c)(2)(H).
16  (2) Pre-August 1, 1969 appreciation amount.
17   (A) If the fair market value of property referred 
18 to in paragraph
(1) was readily ascertainable on 
19 August 1, 1969, the pre-August 1, 1969
appreciation 
20 amount for such property is the lesser of (i) the 
21 excess of
such fair market value over the taxpayer's 
22 basis (for determining gain)
for such property on that 
23 date (determined under the Internal Revenue
Code as in 
24 effect on that date), or (ii) the total gain realized 
25 and
reportable for federal income tax purposes in 
26 respect of the sale,
exchange or other disposition of 
 
 
HB0998- 104 -LRB103 03557 HLH 48563 b


1 such property.
2   (B) If the fair market value of property referred 
3 to in paragraph
(1) was not readily ascertainable on 
4 August 1, 1969, the pre-August 1,
1969 appreciation 
5 amount for such property is that amount which bears

6 the same ratio to the total gain reported in respect of 
7 the property for
federal income tax purposes for the 
8 taxable year, as the number of full
calendar months in 
9 that part of the taxpayer's holding period for the

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

16 (g) Double deductions. Unless specifically provided 
17otherwise, nothing
in this Section shall permit the same item 
18to be deducted more than once.

19 (h) Legislative intention. Except as expressly provided by 
20this
Section there shall be no modifications or limitations on 
21the amounts
of income, gain, loss or deduction taken into 
22account in determining
gross income, adjusted gross income or 
23taxable income for federal income
tax purposes for the taxable 
24year, or in the amount of such items
entering into the 
 
 
HB0998- 105 -LRB103 03557 HLH 48563 b


1computation of base income and net income under this
Act for 
2such taxable year, whether in respect of property values as of

3August 1, 1969 or otherwise.
4(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19; 
5102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff. 
68-27-21; 102-813, eff. 5-13-22.)


7 Section 99. Effective date. This Act takes effect upon 
8becoming law.