103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3124
 
Introduced , by Rep. Anthony DeLuca
 
SYNOPSIS AS INTRODUCED:



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

 Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude (i) the portion of the income or loss received from a trade or business conducted within and without Illinois and that is not derived from or connected with Illinois sources and (ii) the portion of the income or loss received from a pass-through entity conducting business within and without Illinois that is not derived from or connected with Illinois sources. Effective immediately.



LRB103 05196 HLH 50212 b


 
 
A BILL FOR
 


HB3124LRB103 05196 HLH 50212 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 
 
 
HB3124- 23 -LRB103 05196 HLH 50212 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 
 
 
HB3124- 24 -LRB103 05196 HLH 50212 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 
 
 
HB3124- 25 -LRB103 05196 HLH 50212 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%)). 
 
 
HB3124- 26 -LRB103 05196 HLH 50212 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, 
 
 
HB3124- 27 -LRB103 05196 HLH 50212 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 
 
 
HB3124- 28 -LRB103 05196 HLH 50212 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 
 
 
HB3124- 29 -LRB103 05196 HLH 50212 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 
 
 
HB3124- 30 -LRB103 05196 HLH 50212 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 (b) Corporations.
19  (1) In general. In the case of a corporation, base 
20 income means an
amount equal to the taxpayer's taxable 
21 income for the taxable year as
modified by paragraph (2).
22  (2) Modifications. The taxable income referred to in 
23 paragraph (1)
shall be modified by adding thereto the sum 
24 of the following amounts:
25   (A) An amount equal to all amounts paid or accrued 
 
 
HB3124- 31 -LRB103 05196 HLH 50212 b


1 to the taxpayer
as interest and all distributions 
2 received from regulated investment
companies during 
3 the taxable year to the extent excluded from gross

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

16 attributable to the taxable year (this amendatory Act 
17 of 1995
(Public Act 89-89) is declarative of existing 
18 law and is not a new
enactment);
19   (D) The amount of any net operating loss deduction 
20 taken in arriving
at taxable income, other than a net 
21 operating loss carried forward from a
taxable year 
22 ending prior to December 31, 1986;
23   (E) For taxable years in which a net operating 
24 loss carryback or
carryforward from a taxable year 
25 ending prior to December 31, 1986 is an
element of 
26 taxable income under paragraph (1) of subsection (e) 
 
 
HB3124- 32 -LRB103 05196 HLH 50212 b


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

23 31, 1986, the addition modification provided in this 
24 subparagraph (E) shall
be the sum of the amounts 
25 computed independently under the preceding
provisions 
26 of this subparagraph (E) for each such taxable year;
 
 
HB3124- 33 -LRB103 05196 HLH 50212 b


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

25   The taxpayer is required to make the addition 
26 modification under this
subparagraph
only once with 
 
 
HB3124- 34 -LRB103 05196 HLH 50212 b


1 respect to any one piece of property;
2   (E-12) An amount equal to the amount otherwise 
3 allowed as a deduction in computing base income for 
4 interest paid, accrued, or incurred, directly or 
5 indirectly, (i) for taxable years ending on or after 
6 December 31, 2004, to a foreign person who would be a 
7 member of the same unitary business group but for the 
8 fact the foreign person's business activity outside 
9 the United States is 80% or more of the foreign 
10 person's total business activity and (ii) for taxable 
11 years ending on or after December 31, 2008, to a person 
12 who would be a member of the same unitary business 
13 group but for the fact that the person is prohibited 
14 under Section 1501(a)(27) from being included in the 
15 unitary business group because he or she is ordinarily 
16 required to apportion business income under different 
17 subsections of Section 304. The addition modification 
18 required by this subparagraph shall be reduced to the 
19 extent that dividends were included in base income of 
20 the unitary group for the same taxable year and 
21 received by the taxpayer or by a member of the 
22 taxpayer's unitary business group (including amounts 
23 included in gross income pursuant to Sections 951 
24 through 964 of the Internal Revenue Code and amounts 
25 included in gross income under Section 78 of the 
26 Internal Revenue Code) with respect to the stock of 
 
 
HB3124- 35 -LRB103 05196 HLH 50212 b


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

3   This paragraph shall not apply to the following:

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

25    (iii) the taxpayer can establish, based on 
26 clear and convincing evidence, that the interest 
 
 
HB3124- 36 -LRB103 05196 HLH 50212 b


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

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

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

22   (E-13) An amount equal to the amount of intangible 
23 expenses and costs otherwise allowed as a deduction in 
24 computing base income, and that were paid, accrued, or 
25 incurred, directly or indirectly, (i) for taxable 
26 years ending on or after December 31, 2004, to a 
 
 
HB3124- 37 -LRB103 05196 HLH 50212 b


1 foreign person who would be a member of the same 
2 unitary business group but for the fact that the 
3 foreign person's business activity outside the United 
4 States is 80% or more of that person's total business 
5 activity and (ii) for taxable years ending on or after 
6 December 31, 2008, to a person who would be a member of 
7 the same unitary business group but for the fact that 
8 the person is prohibited under Section 1501(a)(27) 
9 from being included in the unitary business group 
10 because he or she is ordinarily required to apportion 
11 business income under different subsections of Section 
12 304. The addition modification required by this 
13 subparagraph shall be reduced to the extent that 
14 dividends were included in base income of the unitary 
15 group for the same taxable year and received by the 
16 taxpayer or by a member of the taxpayer's unitary 
17 business group (including amounts included in gross 
18 income pursuant to Sections 951 through 964 of the 
19 Internal Revenue Code and amounts included in gross 
20 income under Section 78 of the Internal Revenue Code) 
21 with respect to the stock of the same person to whom 
22 the intangible expenses and costs were directly or 
23 indirectly paid, incurred, or accrued. The preceding 
24 sentence shall not apply to the extent that the same 
25 dividends caused a reduction to the addition 
26 modification required under Section 203(b)(2)(E-12) of 
 
 
HB3124- 38 -LRB103 05196 HLH 50212 b


1 this Act.
As used in this subparagraph, the term 
2 "intangible expenses and costs" includes (1) expenses, 
3 losses, and costs for, or related to, the direct or 
4 indirect acquisition, use, maintenance or management, 
5 ownership, sale, exchange, or any other disposition of 
6 intangible property; (2) losses incurred, directly or 
7 indirectly, from factoring transactions or discounting 
8 transactions; (3) royalty, patent, technical, and 
9 copyright fees; (4) licensing fees; and (5) other 
10 similar expenses and costs.
For purposes of this 
11 subparagraph, "intangible property" includes patents, 
12 patent applications, trade names, trademarks, service 
13 marks, copyrights, mask works, trade secrets, and 
14 similar types of intangible assets.
15   This paragraph shall not apply to the following:
16    (i) any item of intangible expenses or costs 
17 paid, accrued, or incurred, directly or 
18 indirectly, from a transaction with a person who 
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 item; or
23    (ii) any item of intangible expense or cost 
24 paid, accrued, or incurred, directly or 
25 indirectly, if the taxpayer can establish, based 
26 on a preponderance of the evidence, both of the 
 
 
HB3124- 39 -LRB103 05196 HLH 50212 b


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

22    Nothing in this subsection shall preclude the 
23 Director from making any other adjustment 
24 otherwise allowed under Section 404 of this Act 
25 for any tax year beginning after the effective 
26 date of this amendment provided such adjustment is 
 
 
HB3124- 40 -LRB103 05196 HLH 50212 b


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

5   (E-14) For taxable years ending on or after 
6 December 31, 2008, an amount equal to the amount of 
7 insurance premium expenses and costs otherwise allowed 
8 as a deduction in computing base income, and that were 
9 paid, accrued, or incurred, directly or indirectly, 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. The 
16 addition modification required by this subparagraph 
17 shall be reduced to the extent that dividends were 
18 included in base income of the unitary group for the 
19 same taxable year and received by the taxpayer or by a 
20 member of the taxpayer's unitary business group 
21 (including amounts included in gross income under 
22 Sections 951 through 964 of the Internal Revenue Code 
23 and amounts included in gross income under Section 78 
24 of the Internal Revenue Code) with respect to the 
25 stock of the same person to whom the premiums and costs 
26 were directly or indirectly paid, incurred, or 
 
 
HB3124- 41 -LRB103 05196 HLH 50212 b


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

6   (E-15) For taxable years beginning after December 
7 31, 2008, any deduction for dividends paid by a 
8 captive real estate investment trust that is allowed 
9 to a real estate investment trust under Section 
10 857(b)(2)(B) of the Internal Revenue Code for 
11 dividends paid;
12   (E-16) An amount equal to the credit allowable to 
13 the taxpayer under Section 218(a) of this Act, 
14 determined without regard to Section 218(c) of this 
15 Act;
16   (E-17) For taxable years ending on or after 
17 December 31, 2017, an amount equal to the deduction 
18 allowed under Section 199 of the Internal Revenue Code 
19 for the taxable year; 
20   (E-18) for taxable years beginning after December 
21 31, 2018, an amount equal to the deduction allowed 
22 under Section 250(a)(1)(A) of the Internal Revenue 
23 Code for the taxable year; 
24   (E-19) for taxable years ending on or after June 
25 30, 2021, an amount equal to the deduction allowed 
26 under Section 250(a)(1)(B)(i) of the Internal Revenue 
 
 
HB3124- 42 -LRB103 05196 HLH 50212 b


1 Code for the taxable year; 
2   (E-20) for taxable years ending on or after June 
3 30, 2021, an amount equal to the deduction allowed 
4 under Sections 243(e) and 245A(a) of the Internal 
5 Revenue Code for the taxable year. 
6 and by deducting from the total so obtained the sum of the 
7 following
amounts:
8   (F) An amount equal to the amount of any tax 
9 imposed by this Act
which was refunded to the taxpayer 
10 and included in such total for the
taxable year;
11   (G) An amount equal to any amount included in such 
12 total under
Section 78 of the Internal Revenue Code;
13   (H) In the case of a regulated investment company, 
14 an amount equal
to the amount of exempt interest 
15 dividends as defined in subsection (b)(5) of Section 
16 852 of the Internal Revenue Code, paid to shareholders

17 for the taxable year;
18   (I) With the exception of any amounts subtracted 
19 under subparagraph
(J),
an amount equal to the sum of 
20 all amounts disallowed as
deductions by (i) Sections 
21 171(a)(2) and 265(a)(2) and amounts disallowed as

22 interest expense by Section 291(a)(3) of the Internal 
23 Revenue Code, and all amounts of expenses allocable to 
24 interest and
disallowed as deductions by Section 
25 265(a)(1) of the Internal Revenue Code;
and (ii) for 
26 taxable years
ending on or after August 13, 1999, 
 
 
HB3124- 43 -LRB103 05196 HLH 50212 b


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

21 or by reason of the Constitution, treaties or statutes 
22 of the United States;
provided that, in the case of any 
23 statute of this State that exempts income
derived from 
24 bonds or other obligations from the tax imposed under 
25 this Act,
the amount exempted shall be the interest 
26 net of bond premium amortization;
 
 
HB3124- 44 -LRB103 05196 HLH 50212 b


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

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

21 income from a loan or loans made by such taxpayer to a 
22 borrower, to the extent
that such a loan is secured by 
23 property which is eligible for the River Edge 
24 Redevelopment Zone Investment Credit. To determine the 
25 portion of a loan or loans that is
secured by property 
26 eligible for a Section 201(f) investment
credit to the 
 
 
HB3124- 45 -LRB103 05196 HLH 50212 b


1 borrower, the entire principal amount of the loan or 
2 loans
between the taxpayer and the borrower should be 
3 divided into the basis of the
Section 201(f) 
4 investment credit property which secures the
loan or 
5 loans, using for this purpose the original basis of 
6 such property on
the date that it was placed in service 
7 in the River Edge Redevelopment Zone. The subtraction 
8 modification available to the taxpayer in any
year 
9 under this subsection shall be that portion of the 
10 total interest paid
by the borrower with respect to 
11 such loan attributable to the eligible
property as 
12 calculated under the previous sentence. This 
13 subparagraph (M) is exempt from the provisions of 
14 Section 250;
15   (M-1) For any taxpayer that is a financial 
16 organization within the
meaning of Section 304(c) of 
17 this Act, an amount included in such total as
interest 
18 income from a loan or loans made by such taxpayer to a 
19 borrower,
to the extent that such a loan is secured by 
20 property which is eligible for
the High Impact 
21 Business Investment Credit. To determine the portion 
22 of a
loan or loans that is secured by property eligible 
23 for a Section 201(h) investment credit to the 
24 borrower, the entire principal amount of
the loan or 
25 loans between the taxpayer and the borrower should be 
26 divided into
the basis of the Section 201(h) 
 
 
HB3124- 46 -LRB103 05196 HLH 50212 b


1 investment credit property which
secures the loan or 
2 loans, using for this purpose the original basis of 
3 such
property on the date that it was placed in service 
4 in a federally designated
Foreign Trade Zone or 
5 Sub-Zone located in Illinois. No taxpayer that is

6 eligible for the deduction provided in subparagraph 
7 (M) of paragraph (2) of
this subsection shall be 
8 eligible for the deduction provided under this

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

12 paid by the borrower with respect to such loan 
13 attributable to the eligible
property as calculated 
14 under the previous sentence;
15   (N) Two times any contribution made during the 
16 taxable year to a
designated zone organization to the 
17 extent that the contribution (i)
qualifies as a 
18 charitable contribution under subsection (c) of 
19 Section 170
of the Internal Revenue Code and (ii) 
20 must, by its terms, be used for a
project approved by 
21 the Department of Commerce and Economic Opportunity 
22 under Section 11 of the Illinois Enterprise Zone Act 
23 or under Section 10-10 of the River Edge Redevelopment 
24 Zone Act. This subparagraph (N) is exempt from the 
25 provisions of Section 250;
26   (O) An amount equal to: (i) 85% for taxable years 
 
 
HB3124- 47 -LRB103 05196 HLH 50212 b


1 ending on or before
December 31, 1992, or, a 
2 percentage equal to the percentage allowable under

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

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

9 including, for taxable years ending on or after 
10 December 31, 1988, dividends
received or deemed 
11 received or paid or deemed paid under Sections 951 
12 through
965 of the Internal Revenue Code, exceed the 
13 amount of the modification
provided under subparagraph 
14 (G) of paragraph (2) of this subsection (b) which
is 
15 related to such dividends, and including, for taxable 
16 years ending on or after December 31, 2008, dividends 
17 received from a captive real estate investment trust; 
18 plus (ii) 100% of the amount by which dividends,

19 included in taxable income and received, including, 
20 for taxable years ending on
or after December 31, 
21 1988, dividends received or deemed received or paid or

22 deemed paid under Sections 951 through 964 of the 
23 Internal Revenue Code and including, for taxable years 
24 ending on or after December 31, 2008, dividends 
25 received from a captive real estate investment trust, 
26 from
any such corporation specified in clause (i) that 
 
 
HB3124- 48 -LRB103 05196 HLH 50212 b


1 would but for the provisions
of Section 1504(b)(3) of 
2 the Internal Revenue Code be treated as a member of
the 
3 affiliated group which includes the dividend 
4 recipient, exceed the amount
of the modification 
5 provided under subparagraph (G) of paragraph (2) of 
6 this
subsection (b) which is related to such 
7 dividends. For taxable years ending on or after June 
8 30, 2021, (i) for purposes of this subparagraph, the 
9 term "dividend" does not include any amount treated as 
10 a dividend under Section 1248 of the Internal Revenue 
11 Code, and (ii) this subparagraph shall not apply to 
12 dividends for which a deduction is allowed under 
13 Section 245(a) of the Internal Revenue Code. This 
14 subparagraph (O) is exempt from the provisions of 
15 Section 250 of this Act;
16   (P) An amount equal to any contribution made to a 
17 job training project
established pursuant to the Tax 
18 Increment Allocation Redevelopment Act;
19   (Q) An amount equal to the amount of the deduction 
20 used to compute the
federal income tax credit for 
21 restoration of substantial amounts held under
claim of 
22 right for the taxable year pursuant to Section 1341 of 
23 the
Internal Revenue Code;
24   (R) On and after July 20, 1999, in the case of an 
25 attorney-in-fact with respect to whom an
interinsurer 
26 or a reciprocal insurer has made the election under 
 
 
HB3124- 49 -LRB103 05196 HLH 50212 b


1 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
2 835, an amount equal to the excess, if
any, of the 
3 amounts paid or incurred by that interinsurer or 
4 reciprocal insurer
in the taxable year to the 
5 attorney-in-fact over the deduction allowed to that

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

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

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

23 is taken on the taxpayer's federal income tax return 
24 under
subsection (k) of Section 168 of the Internal 
25 Revenue Code and for each
applicable taxable year 
26 thereafter, an amount equal to "x", where:
 
 
HB3124- 50 -LRB103 05196 HLH 50212 b


1    (1) "y" equals the amount of the depreciation 
2 deduction taken for the
taxable year
on the 
3 taxpayer's federal income tax return on property 
4 for which the bonus
depreciation deduction
was 
5 taken in any year under subsection (k) of Section 
6 168 of the Internal
Revenue Code, but not 
7 including the bonus depreciation deduction;
8    (2) for taxable years ending on or before 
9 December 31, 2005, "x" equals "y" multiplied by 30 
10 and then divided by 70 (or "y"
multiplied by 
11 0.429); and
12    (3) for taxable years ending after December 
13 31, 2005:
14     (i) for property on which a bonus 
15 depreciation deduction of 30% of the adjusted 
16 basis was taken, "x" equals "y" multiplied by 
17 30 and then divided by 70 (or "y"
multiplied 
18 by 0.429);
19     (ii) for property on which a bonus 
20 depreciation deduction of 50% of the adjusted 
21 basis was taken, "x" equals "y" multiplied by 
22 1.0;
23     (iii) for property on which a bonus 
24 depreciation deduction of 100% of the adjusted 
25 basis was taken in a taxable year ending on or 
26 after December 31, 2021, "x" equals the 
 
 
HB3124- 51 -LRB103 05196 HLH 50212 b


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

19 depreciation deduction
taken on that property on the 
20 taxpayer's federal income tax return under
subsection 
21 (k) of Section 168 of the Internal Revenue Code. This 
22 subparagraph (T) is exempt from the provisions of 
23 Section 250;
24   (U) If the taxpayer sells, transfers, abandons, or 
25 otherwise disposes of
property for which the taxpayer 
26 was required in any taxable year to make an
addition 
 
 
HB3124- 52 -LRB103 05196 HLH 50212 b


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

10   The taxpayer is allowed to take the deduction 
11 under this subparagraph
only once with respect to any 
12 one piece of property.
13   This subparagraph (U) is exempt from the 
14 provisions of Section 250;
15   (V) The amount of: (i) any interest income (net of 
16 the deductions allocable thereto) taken into account 
17 for the taxable year with respect to a transaction 
18 with a taxpayer that is required to make an addition 
19 modification with respect to such transaction under 
20 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
21 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
22 the amount of such addition modification,
(ii) any 
23 income from intangible property (net of the deductions 
24 allocable thereto) taken into account for the taxable 
25 year with respect to a transaction with a taxpayer 
26 that is required to make an addition modification with 
 
 
HB3124- 53 -LRB103 05196 HLH 50212 b


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

14   (W) An amount equal to the interest income taken 
15 into account for the taxable year (net of the 
16 deductions allocable thereto) with respect to 
17 transactions with (i) a foreign person who would be a 
18 member of the taxpayer's unitary business group but 
19 for the fact that the foreign person's business 
20 activity outside the United States is 80% or more of 
21 that person's total business activity and (ii) for 
22 taxable years ending on or after December 31, 2008, 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 
 
 
HB3124- 54 -LRB103 05196 HLH 50212 b


1 she is ordinarily required to apportion business 
2 income under different subsections of Section 304, but 
3 not to exceed the addition modification required to be 
4 made for the same taxable year under Section 
5 203(b)(2)(E-12) for interest paid, accrued, or 
6 incurred, directly or indirectly, to the same person. 
7 This subparagraph (W) is exempt from the provisions of 
8 Section 250;

9   (X) An amount equal to the income from intangible 
10 property taken into account for the taxable year (net 
11 of the deductions allocable thereto) with respect to 
12 transactions with (i) a foreign person who would be a 
13 member of the taxpayer's unitary business group but 
14 for the fact that the foreign person's business 
15 activity outside the United States is 80% or more of 
16 that person's total business activity and (ii) for 
17 taxable years ending on or after December 31, 2008, to 
18 a person who would be a member of the same unitary 
19 business group but for the fact that the person is 
20 prohibited under Section 1501(a)(27) from being 
21 included in the unitary business group because he or 
22 she is ordinarily required to apportion business 
23 income under different subsections of Section 304, but 
24 not to exceed the addition modification required to be 
25 made for the same taxable year under Section 
26 203(b)(2)(E-13) for intangible expenses and costs 
 
 
HB3124- 55 -LRB103 05196 HLH 50212 b


1 paid, accrued, or incurred, directly or indirectly, to 
2 the same foreign person. This subparagraph (X) is 
3 exempt from the provisions of Section 250;

4   (Y) For taxable years ending on or after December 
5 31, 2011, in the case of a taxpayer who was required to 
6 add back any insurance premiums under Section 
7 203(b)(2)(E-14), such taxpayer may elect to subtract 
8 that part of a reimbursement received from the 
9 insurance company equal to the amount of the expense 
10 or loss (including expenses incurred by the insurance 
11 company) that would have been taken into account as a 
12 deduction for federal income tax purposes if the 
13 expense or loss had been uninsured. If a taxpayer 
14 makes the election provided for by this subparagraph 
15 (Y), the insurer to which the premiums were paid must 
16 add back to income the amount subtracted by the 
17 taxpayer pursuant to this subparagraph (Y). This 
18 subparagraph (Y) is exempt from the provisions of 
19 Section 250; and 
20   (Z) The difference between the nondeductible 
21 controlled foreign corporation dividends under Section 
22 965(e)(3) of the Internal Revenue Code over the 
23 taxable income of the taxpayer, computed without 
24 regard to Section 965(e)(2)(A) of the Internal Revenue 
25 Code, and without regard to any net operating loss 
26 deduction. This subparagraph (Z) is exempt from the 
 
 
HB3124- 56 -LRB103 05196 HLH 50212 b


1 provisions of Section 250. 
2  (3) Special rule. For purposes of paragraph (2)(A), 
3 "gross income"
in the case of a life insurance company, 
4 for tax years ending on and after
December 31, 1994,
and 
5 prior to December 31, 2011, shall mean the gross 
6 investment income for the taxable year and, for tax years 
7 ending on or after December 31, 2011, shall mean all 
8 amounts included in life insurance gross income under 
9 Section 803(a)(3) of the Internal Revenue Code.

10 (c) Trusts and estates.
11  (1) In general. In the case of a trust or estate, 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. Subject to the provisions of 
15 paragraph (3), the
taxable income referred to in paragraph 
16 (1) shall be modified by adding
thereto the sum of the 
17 following amounts:
18   (A) An amount equal to all amounts paid or accrued 
19 to the taxpayer
as interest or dividends during the 
20 taxable year to the extent excluded
from gross income 
21 in the computation of taxable income;
22   (B) In the case of (i) an estate, $600; (ii) a 
23 trust which, under
its governing instrument, is 
24 required to distribute all of its income
currently, 
25 $300; and (iii) any other trust, $100, but in each such 
 
 
HB3124- 57 -LRB103 05196 HLH 50212 b


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

18 subtraction modifications in such taxable year, with 
19 the following limitations
applied in the order that 
20 they are listed:
21    (i) the addition modification relating to the 
22 net operating loss
carried back or forward to the 
23 taxable year from any taxable year ending
prior to 
24 December 31, 1986 shall be reduced by the amount 
25 of addition
modification under this subparagraph 
26 (E) which related to that net
operating loss and 
 
 
HB3124- 58 -LRB103 05196 HLH 50212 b


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

11 31, 1986, the addition modification provided in this 
12 subparagraph (E) shall
be the sum of the amounts 
13 computed independently under the preceding
provisions 
14 of this subparagraph (E) for each such taxable year;
15   (F) For taxable years ending on or after January 
16 1, 1989, an amount
equal to the tax deducted pursuant 
17 to Section 164 of the Internal Revenue
Code if the 
18 trust or estate is claiming the same tax for purposes 
19 of the
Illinois foreign tax credit under Section 601 
20 of this Act;
21   (G) An amount equal to the amount of the capital 
22 gain deduction
allowable under the Internal Revenue 
23 Code, to the extent deducted from
gross income in the 
24 computation of taxable income;
25   (G-5) For taxable years ending after December 31, 
26 1997, an
amount equal to any eligible remediation 
 
 
HB3124- 59 -LRB103 05196 HLH 50212 b


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

24   The taxpayer is required to make the addition 
25 modification under this
subparagraph
only once with 
26 respect to any one piece of property;
 
 
HB3124- 60 -LRB103 05196 HLH 50212 b


1   (G-12) An amount equal to the amount otherwise 
2 allowed as a deduction in computing base income for 
3 interest paid, accrued, or incurred, directly or 
4 indirectly, (i) for taxable years ending on or after 
5 December 31, 2004, to a foreign person who would be a 
6 member of the same unitary business group but for the 
7 fact that the foreign person's business activity 
8 outside the United States is 80% or more of the foreign 
9 person's total business activity and (ii) for taxable 
10 years ending on or after December 31, 2008, to a person 
11 who would be a member of the same unitary business 
12 group but for the fact that the person is prohibited 
13 under Section 1501(a)(27) from being included in the 
14 unitary business group because he or she is ordinarily 
15 required to apportion business income under different 
16 subsections of Section 304. The addition modification 
17 required by this subparagraph shall be reduced to the 
18 extent that dividends were included in base income of 
19 the unitary group for the same taxable year and 
20 received by the taxpayer or by a member of the 
21 taxpayer's unitary business group (including amounts 
22 included in gross income pursuant to Sections 951 
23 through 964 of the Internal Revenue Code and amounts 
24 included in gross income under Section 78 of the 
25 Internal Revenue Code) with respect to the stock of 
26 the same person to whom the interest was paid, 
 
 
HB3124- 61 -LRB103 05196 HLH 50212 b


1 accrued, or incurred.

2   This paragraph shall not apply to the following:

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

24    (iii) the taxpayer can establish, based on 
25 clear and convincing evidence, that the interest 
26 paid, accrued, or incurred relates to a contract 
 
 
HB3124- 62 -LRB103 05196 HLH 50212 b


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

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

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

21   (G-13) An amount equal to the amount of intangible 
22 expenses and costs otherwise allowed as a deduction in 
23 computing base income, and that were paid, accrued, or 
24 incurred, directly or indirectly, (i) for taxable 
25 years ending on or after December 31, 2004, to a 
26 foreign person who would be a member of the same 
 
 
HB3124- 63 -LRB103 05196 HLH 50212 b


1 unitary business group but for the fact that the 
2 foreign person's business activity outside the United 
3 States is 80% or more of that person's total business 
4 activity and (ii) for taxable years ending on or after 
5 December 31, 2008, to a person who would be a member of 
6 the same unitary business group but for the fact that 
7 the person is prohibited under Section 1501(a)(27) 
8 from being included in the unitary business group 
9 because he or she is ordinarily required to apportion 
10 business income under different subsections of Section 
11 304. The addition modification required by this 
12 subparagraph shall be reduced to the extent that 
13 dividends were included in base income of the unitary 
14 group for the same taxable year and received by the 
15 taxpayer or by a member of the taxpayer's unitary 
16 business group (including amounts included in gross 
17 income pursuant to Sections 951 through 964 of the 
18 Internal Revenue Code and amounts included in gross 
19 income under Section 78 of the Internal Revenue Code) 
20 with respect to the stock of the same person to whom 
21 the intangible expenses and costs were directly or 
22 indirectly paid, incurred, or accrued. The preceding 
23 sentence shall not apply to the extent that the same 
24 dividends caused a reduction to the addition 
25 modification required under Section 203(c)(2)(G-12) of 
26 this Act. As used in this subparagraph, the term 
 
 
HB3124- 64 -LRB103 05196 HLH 50212 b


1 "intangible expenses and costs" includes: (1) 
2 expenses, losses, and costs for or related to the 
3 direct or indirect acquisition, use, maintenance or 
4 management, ownership, sale, exchange, or any other 
5 disposition of intangible property; (2) losses 
6 incurred, directly or indirectly, from factoring 
7 transactions or discounting transactions; (3) royalty, 
8 patent, technical, and copyright fees; (4) licensing 
9 fees; and (5) other similar expenses and costs. For 
10 purposes of this subparagraph, "intangible property" 
11 includes patents, patent applications, trade names, 
12 trademarks, service marks, copyrights, mask works, 
13 trade secrets, and similar types of intangible assets.
14   This paragraph shall not apply to the following:
15    (i) any item of intangible expenses or costs 
16 paid, accrued, or incurred, directly or 
17 indirectly, from a transaction with a person who 
18 is subject in a foreign country or state, other 
19 than a state which requires mandatory unitary 
20 reporting, to a tax on or measured by net income 
21 with respect to such item; or
22    (ii) any item of intangible expense or cost 
23 paid, accrued, or incurred, directly or 
24 indirectly, if the taxpayer can establish, based 
25 on a preponderance of the evidence, both of the 
26 following:
 
 
HB3124- 65 -LRB103 05196 HLH 50212 b


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

21    Nothing in this subsection shall preclude the 
22 Director from making any other adjustment 
23 otherwise allowed under Section 404 of this Act 
24 for any tax year beginning after the effective 
25 date of this amendment provided such adjustment is 
26 made pursuant to regulation adopted by the 
 
 
HB3124- 66 -LRB103 05196 HLH 50212 b


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

4   (G-14) For taxable years ending on or after 
5 December 31, 2008, an amount equal to the amount of 
6 insurance premium expenses and costs otherwise allowed 
7 as a deduction in computing base income, and that were 
8 paid, accrued, or incurred, directly or indirectly, to 
9 a person who would be a member of the same unitary 
10 business group but for the fact that the person is 
11 prohibited under Section 1501(a)(27) from being 
12 included in the unitary business group because he or 
13 she is ordinarily required to apportion business 
14 income under different subsections of Section 304. The 
15 addition modification required by this subparagraph 
16 shall be reduced to the extent that dividends were 
17 included in base income of the unitary group for the 
18 same taxable year and received by the taxpayer or by a 
19 member of the taxpayer's unitary business group 
20 (including amounts included in gross income under 
21 Sections 951 through 964 of the Internal Revenue Code 
22 and amounts included in gross income under Section 78 
23 of the Internal Revenue Code) with respect to the 
24 stock of the same person to whom the premiums and costs 
25 were directly or indirectly paid, incurred, or 
26 accrued. The preceding sentence does not apply to the 
 
 
HB3124- 67 -LRB103 05196 HLH 50212 b


1 extent that the same dividends caused a reduction to 
2 the addition modification required under Section 
3 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this 
4 Act;
5   (G-15) An amount equal to the credit allowable to 
6 the taxpayer under Section 218(a) of this Act, 
7 determined without regard to Section 218(c) of this 
8 Act;
9   (G-16) For taxable years ending on or after 
10 December 31, 2017, an amount equal to the deduction 
11 allowed under Section 199 of the Internal Revenue Code 
12 for the taxable year; 
13 and by deducting from the total so obtained the sum of the 
14 following
amounts:
15   (H) An amount equal to all amounts included in 
16 such total pursuant
to the provisions of Sections 
17 402(a), 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 
18 of the Internal Revenue Code or included in such total 
19 as
distributions under the provisions of any 
20 retirement or disability plan for
employees of any 
21 governmental agency or unit, or retirement payments to

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

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

22 ending on or after August 13, 1999, Sections

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

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

21 a High Impact Business located in Illinois; provided 
22 that dividends eligible
for the deduction provided in 
23 subparagraph (M) of paragraph (2) of this
subsection 
24 shall not be eligible for the deduction provided under 
25 this
subparagraph (O);
26   (P) An amount equal to the amount of the deduction 
 
 
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1 used to compute the
federal income tax credit for 
2 restoration of substantial amounts held under
claim of 
3 right for the taxable year pursuant to Section 1341 of 
4 the
Internal Revenue Code;
5   (Q) For taxable year 1999 and thereafter, an 
6 amount equal to the
amount of any
(i) distributions, 
7 to the extent includible in gross income for
federal 
8 income tax purposes, made to the taxpayer because of

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

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

16 persecution for racial or religious reasons by Nazi

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

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

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

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

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

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

23   (U) An amount equal to the interest income taken 
24 into account for the taxable year (net of the 
25 deductions allocable thereto) with respect to 
26 transactions with (i) a foreign person who would be a 
 
 
HB3124- 75 -LRB103 05196 HLH 50212 b


1 member of the taxpayer's unitary business group but 
2 for the fact the foreign person's business activity 
3 outside the United States is 80% or more of that 
4 person's total business activity and (ii) for taxable 
5 years ending on or after December 31, 2008, to a person 
6 who would be a member of the same unitary business 
7 group but for the fact that the person is prohibited 
8 under Section 1501(a)(27) from being included in the 
9 unitary business group because he or she is ordinarily 
10 required to apportion business income under different 
11 subsections of Section 304, but not to exceed the 
12 addition modification required to be made for the same 
13 taxable year under Section 203(c)(2)(G-12) for 
14 interest paid, accrued, or incurred, directly or 
15 indirectly, to the same person. This subparagraph (U) 
16 is exempt from the provisions of Section 250; 
17   (V) An amount equal to the income from intangible 
18 property taken into account for the taxable year (net 
19 of the deductions allocable thereto) with respect to 
20 transactions with (i) a foreign person who would be a 
21 member of the taxpayer's unitary business group but 
22 for the fact that the foreign person's business 
23 activity outside the United States is 80% or more of 
24 that person's total business activity and (ii) for 
25 taxable years ending on or after December 31, 2008, to 
26 a person who would be a member of the same unitary 
 
 
HB3124- 76 -LRB103 05196 HLH 50212 b


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

12   (W) in the case of an estate, an amount equal to 
13 all amounts included in such total pursuant to the 
14 provisions of Section 111 of the Internal Revenue Code 
15 as a recovery of items previously deducted by the 
16 decedent from adjusted gross income in the computation 
17 of taxable income. This subparagraph (W) is exempt 
18 from Section 250; 
19   (X) an amount equal to the refund included in such 
20 total of any tax deducted for federal income tax 
21 purposes, to the extent that deduction was added back 
22 under subparagraph (F). This subparagraph (X) is 
23 exempt from the provisions of Section 250;
24   (Y) For taxable years ending on or after December 
25 31, 2011, in the case of a taxpayer who was required to 
26 add back any insurance premiums under Section 
 
 
HB3124- 77 -LRB103 05196 HLH 50212 b


1 203(c)(2)(G-14), such taxpayer may elect to subtract 
2 that part of a reimbursement received from the 
3 insurance company equal to the amount of the expense 
4 or loss (including expenses incurred by the insurance 
5 company) that would have been taken into account as a 
6 deduction for federal income tax purposes if the 
7 expense or loss had been uninsured. If a taxpayer 
8 makes the election provided for by this subparagraph 
9 (Y), the insurer to which the premiums were paid must 
10 add back to income the amount subtracted by the 
11 taxpayer pursuant to this subparagraph (Y). This 
12 subparagraph (Y) is exempt from the provisions of 
13 Section 250; and
14   (Z) For taxable years beginning after December 31, 
15 2018 and before January 1, 2026, the amount of excess 
16 business loss of the taxpayer disallowed as a 
17 deduction by Section 461(l)(1)(B) of the Internal 
18 Revenue Code. 
19  (3) Limitation. The amount of any modification 
20 otherwise required
under this subsection shall, under 
21 regulations prescribed by the
Department, be adjusted by 
22 any amounts included therein which were
properly paid, 
23 credited, or required to be distributed, or permanently 
24 set
aside for charitable purposes pursuant to Internal 
25 Revenue Code Section
642(c) during the taxable year.

 
 
HB3124- 78 -LRB103 05196 HLH 50212 b


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

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

16   The taxpayer is required to make the addition 
17 modification under this
subparagraph
only once with 
18 respect to any one piece of property;
19   (D-7) An amount equal to the amount otherwise 
20 allowed as a deduction in computing base income for 
21 interest paid, accrued, or incurred, directly or 
22 indirectly, (i) for taxable years ending on or after 
23 December 31, 2004, to a foreign person who would be a 
24 member of the same unitary business group but for the 
25 fact the foreign person's business activity outside 
26 the United States is 80% or more of the foreign 
 
 
HB3124- 80 -LRB103 05196 HLH 50212 b


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

20   This paragraph shall not apply to the following:

21    (i) an item of interest paid, accrued, or 
22 incurred, directly or indirectly, to a person who 
23 is subject in a foreign country or state, other 
24 than a state which requires mandatory unitary 
25 reporting, to a tax on or measured by net income 
26 with respect to such interest; or
 
 
HB3124- 81 -LRB103 05196 HLH 50212 b


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

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

23    (iv) an item of interest paid, accrued, or 
24 incurred, directly or indirectly, to a person if 
25 the taxpayer establishes by clear and convincing 
26 evidence that the adjustments are unreasonable; or 
 
 
HB3124- 82 -LRB103 05196 HLH 50212 b


1 if the taxpayer and the Director agree in writing 
2 to the application or use of an alternative method 
3 of apportionment under Section 304(f).

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

13   (D-8) An amount equal to the amount of intangible 
14 expenses and costs otherwise allowed as a deduction in 
15 computing base income, and that were paid, accrued, or 
16 incurred, directly or indirectly, (i) for taxable 
17 years ending on or after December 31, 2004, to a 
18 foreign person who would be a member of the same 
19 unitary business group but for the fact that the 
20 foreign person's business activity outside the United 
21 States is 80% or more of that person's total business 
22 activity and (ii) for taxable years ending on or after 
23 December 31, 2008, to a person who would be a member of 
24 the same unitary business group but for the fact that 
25 the person is prohibited under Section 1501(a)(27) 
26 from being included in the unitary business group 
 
 
HB3124- 83 -LRB103 05196 HLH 50212 b


1 because he or she is ordinarily required to apportion 
2 business income under different subsections of Section 
3 304. The addition modification required by this 
4 subparagraph shall be reduced to the extent that 
5 dividends were included in base income of the unitary 
6 group for the same taxable year and received by the 
7 taxpayer or by a member of the taxpayer's unitary 
8 business group (including amounts included in gross 
9 income pursuant to Sections 951 through 964 of the 
10 Internal Revenue Code and amounts included in gross 
11 income under Section 78 of the Internal Revenue Code) 
12 with respect to the stock of the same person to whom 
13 the intangible expenses and costs were directly or 
14 indirectly paid, incurred or accrued. The preceding 
15 sentence shall not apply to the extent that the same 
16 dividends caused a reduction to the addition 
17 modification required under Section 203(d)(2)(D-7) of 
18 this Act. As used in this subparagraph, the term 
19 "intangible expenses and costs" includes (1) expenses, 
20 losses, and costs for, or related to, the direct or 
21 indirect acquisition, use, maintenance or management, 
22 ownership, sale, exchange, or any other disposition of 
23 intangible property; (2) losses incurred, directly or 
24 indirectly, from factoring transactions or discounting 
25 transactions; (3) royalty, patent, technical, and 
26 copyright fees; (4) licensing fees; and (5) other 
 
 
HB3124- 84 -LRB103 05196 HLH 50212 b


1 similar expenses and costs. For purposes of this 
2 subparagraph, "intangible property" includes patents, 
3 patent applications, trade names, trademarks, service 
4 marks, copyrights, mask works, trade secrets, and 
5 similar types of intangible assets;
6   This paragraph shall not apply to the following:
7    (i) any item of intangible expenses or costs 
8 paid, accrued, or incurred, directly or 
9 indirectly, from a transaction with a person who 
10 is subject in a foreign country or state, other 
11 than a state which requires mandatory unitary 
12 reporting, to a tax on or measured by net income 
13 with respect to such item; or
14    (ii) any item of intangible expense or cost 
15 paid, accrued, or incurred, directly or 
16 indirectly, if the taxpayer can establish, based 
17 on a preponderance of the evidence, both of the 
18 following:
19     (a) the person during the same taxable 
20 year paid, accrued, or incurred, the 
21 intangible expense or cost to a person that is 
22 not a related member, and
23     (b) the transaction giving rise to the 
24 intangible expense or cost between the 
25 taxpayer and the person did not have as a 
26 principal purpose the avoidance of Illinois 
 
 
HB3124- 85 -LRB103 05196 HLH 50212 b


1 income tax, and is paid pursuant to a contract 
2 or agreement that reflects arm's-length terms; 
3 or
4    (iii) any item of intangible expense or cost 
5 paid, accrued, or incurred, directly or 
6 indirectly, from a transaction with a person if 
7 the taxpayer establishes by clear and convincing 
8 evidence, that the adjustments are unreasonable; 
9 or if the taxpayer and the Director agree in 
10 writing to the application or use of an 
11 alternative method of apportionment under Section 
12 304(f);

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

22   (D-9) For taxable years ending on or after 
23 December 31, 2008, an amount equal to the amount of 
24 insurance premium expenses and costs otherwise allowed 
25 as a deduction in computing base income, and that were 
26 paid, accrued, or incurred, directly or indirectly, to 
 
 
HB3124- 86 -LRB103 05196 HLH 50212 b


1 a person who would be a member of the same unitary 
2 business group but for the fact that the person is 
3 prohibited under Section 1501(a)(27) from being 
4 included in the unitary business group because he or 
5 she is ordinarily required to apportion business 
6 income under different subsections of Section 304. The 
7 addition modification required by this subparagraph 
8 shall be reduced to the extent that dividends were 
9 included in base income of the unitary group for the 
10 same taxable year and received by the taxpayer or by a 
11 member of the taxpayer's unitary business group 
12 (including amounts included in gross income under 
13 Sections 951 through 964 of the Internal Revenue Code 
14 and amounts included in gross income under Section 78 
15 of the Internal Revenue Code) with respect to the 
16 stock of the same person to whom the premiums and costs 
17 were directly or indirectly paid, incurred, or 
18 accrued. The preceding sentence does not apply to the 
19 extent that the same dividends caused a reduction to 
20 the addition modification required under Section 
21 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
22   (D-10) An amount equal to the credit allowable to 
23 the taxpayer under Section 218(a) of this Act, 
24 determined without regard to Section 218(c) of this 
25 Act;
26   (D-11) For taxable years ending on or after 
 
 
HB3124- 87 -LRB103 05196 HLH 50212 b


1 December 31, 2017, an amount equal to the deduction 
2 allowed under Section 199 of the Internal Revenue Code 
3 for the taxable year; 
4 and by deducting from the total so obtained the following 
5 amounts:
6   (E) The valuation limitation amount;
7   (F) An amount equal to the amount of any tax 
8 imposed by this Act which
was refunded to the taxpayer 
9 and included in such total for the taxable year;
10   (G) An amount equal to all amounts included in 
11 taxable income as
modified by subparagraphs (A), (B), 
12 (C) and (D) which are exempt from
taxation by this 
13 State either by reason of its statutes or Constitution 
14 or
by reason of
the Constitution, treaties or statutes 
15 of the United States;
provided that, in the case of any 
16 statute of this State that exempts income
derived from 
17 bonds or other obligations from the tax imposed under 
18 this Act,
the amount exempted shall be the interest 
19 net of bond premium amortization;
20   (H) Any income of the partnership which 
21 constitutes personal service
income as defined in 
22 Section 1348(b)(1) of the Internal Revenue Code (as
in 
23 effect December 31, 1981) or a reasonable allowance 
24 for compensation
paid or accrued for services rendered 
25 by partners to the partnership,
whichever is greater; 
26 this subparagraph (H) is exempt from the provisions of 
 
 
HB3124- 88 -LRB103 05196 HLH 50212 b


1 Section 250;
2   (I) An amount equal to all amounts of income 
3 distributable to an entity
subject to the Personal 
4 Property Tax Replacement Income Tax imposed by

5 subsections (c) and (d) of Section 201 of this Act 
6 including amounts
distributable to organizations 
7 exempt from federal income tax by reason of
Section 
8 501(a) of the Internal Revenue Code; this subparagraph 
9 (I) is exempt from the provisions of Section 250;
10   (J) With the exception of any amounts subtracted 
11 under subparagraph
(G),
an amount equal to the sum of 
12 all amounts disallowed as deductions
by (i) Sections 
13 171(a)(2) and 265(a)(2) of the Internal Revenue Code, 
14 and all amounts of expenses allocable to
interest and 
15 disallowed as deductions by Section 265(a)(1) of the 
16 Internal
Revenue Code;
and (ii) for taxable years

17 ending on or after August 13, 1999, Sections

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

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

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

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

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

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

26   (T) For taxable years ending on or after December 
 
 
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1 31, 2011, in the case of a taxpayer who was required to 
2 add back any insurance premiums under Section 
3 203(d)(2)(D-9), such taxpayer may elect to subtract 
4 that part of a reimbursement received from the 
5 insurance company equal to the amount of the expense 
6 or loss (including expenses incurred by the insurance 
7 company) that would have been taken into account as a 
8 deduction for federal income tax purposes if the 
9 expense or loss had been uninsured. If a taxpayer 
10 makes the election provided for by this subparagraph 
11 (T), the insurer to which the premiums were paid must 
12 add back to income the amount subtracted by the 
13 taxpayer pursuant to this subparagraph (T). This 
14 subparagraph (T) is exempt from the provisions of 
15 Section 250. 

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

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

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

12 trust, or estate is less than zero and addition 
13 modifications, other than
those provided by subparagraph 
14 (E) of paragraph (2) of subsection (b) for
corporations or 
15 subparagraph (E) of paragraph (2) of subsection (c) for

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

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

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

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

11 Internal Revenue Code, but without regard to the 
12 prohibition against offsetting losses from patronage 
13 activities against income from nonpatronage 
14 activities; except that a cooperative corporation or 
15 association may make an election to follow its federal 
16 income tax treatment of patronage losses and 
17 nonpatronage losses. In the event such election is 
18 made, such losses shall be computed and carried over 
19 in a manner consistent with subsection (a) of Section 
20 207 of this Act and apportioned by the apportionment 
21 factor reported by the cooperative on its Illinois 
22 income tax return filed for the taxable year in which 
23 the losses are incurred. The election shall be 
24 effective for all taxable years with original returns 
25 due on or after the date of the election. In addition, 
26 the cooperative may file an amended return or returns, 
 
 
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1 as allowed under this Act, to provide that the 
2 election shall be effective for losses incurred or 
3 carried forward for taxable years occurring prior to 
4 the date of the election. Once made, the election may 
5 only be revoked upon approval of the Director. The 
6 Department shall adopt rules setting forth 
7 requirements for documenting the elections and any 
8 resulting Illinois net loss and the standards to be 
9 used by the Director in evaluating requests to revoke 
10 elections. Public Act 96-932 is declaratory of 
11 existing law; 
12   (G) Subchapter S corporations. In the case of: (i) 
13 a Subchapter S
corporation for which there is in 
14 effect an election for the taxable year
under Section 
15 1362 of the Internal Revenue Code, the taxable income 
16 of such
corporation determined in accordance with 
17 Section 1363(b) of the Internal
Revenue Code, except 
18 that taxable income shall take into
account those 
19 items which are required by Section 1363(b)(1) of the

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

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

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


 
 
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1 (f) Valuation limitation amount.
2  (1) In general. The valuation limitation amount 
3 referred to in
subsections (a)(2)(G), (c)(2)(I) and 
4 (d)(2)(E) is an amount equal to:
5   (A) The sum of the pre-August 1, 1969 appreciation 
6 amounts (to the
extent consisting of gain reportable 
7 under the provisions of Section
1245 or 1250 of the 
8 Internal Revenue Code) for all property in respect
of 
9 which such gain was reported for the taxable year; 
10 plus
11   (B) The lesser of (i) the sum of the pre-August 1, 
12 1969 appreciation
amounts (to the extent consisting of 
13 capital gain) for all property in
respect of which 
14 such gain was reported for federal income tax purposes

15 for the taxable year, or (ii) the net capital gain for 
16 the taxable year,
reduced in either case by any amount 
17 of such gain included in the amount
determined under 
18 subsection (a)(2)(F) or (c)(2)(H).
19  (2) Pre-August 1, 1969 appreciation amount.
20   (A) If the fair market value of property referred 
21 to in paragraph
(1) was readily ascertainable on 
22 August 1, 1969, the pre-August 1, 1969
appreciation 
23 amount for such property is the lesser of (i) the 
24 excess of
such fair market value over the taxpayer's 
25 basis (for determining gain)
for such property on that 
 
 
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1 date (determined under the Internal Revenue
Code as in 
2 effect on that date), or (ii) the total gain realized 
3 and
reportable for federal income tax purposes in 
4 respect of the sale,
exchange or other disposition of 
5 such property.
6   (B) If the fair market value of property referred 
7 to in paragraph
(1) was not readily ascertainable on 
8 August 1, 1969, the pre-August 1,
1969 appreciation 
9 amount for such property is that amount which bears

10 the same ratio to the total gain reported in respect of 
11 the property for
federal income tax purposes for the 
12 taxable year, as the number of full
calendar months in 
13 that part of the taxpayer's holding period for the

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

20 (g) Double deductions. Unless specifically provided 
21otherwise, nothing
in this Section shall permit the same item 
22to be deducted more than once.
23 (g-5) For taxable years beginning on or after January 1, 
242024, in calculating the taxpayer's base income, the 
25taxpayer's federal adjusted gross income shall also be 
 
 
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1modified to exclude (i) the portion of the income or loss that 
2is received from a trade or business conducted within and 
3without Illinois and that is not derived from or connected 
4with Illinois sources as determined in the provisions in 
5Article 3 of this Act and (ii) the portion of the income or 
6loss that is received from a pass-through entity conducting 
7business within and without Illinois and that is not derived 
8from or connected with Illinois sources as determined in the 
9provisions in Article 3 of this Act. This subsection (g-5) is 
10exempt from the provisions of Section 250.

11 (h) Legislative intention. Except as expressly provided by 
12this
Section there shall be no modifications or limitations on 
13the amounts
of income, gain, loss or deduction taken into 
14account in determining
gross income, adjusted gross income or 
15taxable income for federal income
tax purposes for the taxable 
16year, or in the amount of such items
entering into the 
17computation of base income and net income under this
Act for 
18such taxable year, whether in respect of property values as of

19August 1, 1969 or otherwise.
20(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19; 
21102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff. 
228-27-21; 102-813, eff. 5-13-22.)


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