102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB0490
 
Introduced 2/23/2021, by Sen. Win Stoller
 
SYNOPSIS AS INTRODUCED:



35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 735/3-3.5 new

 Amends the Illinois Income Tax Act. Creates an income tax deduction for an amount of up to $50,000 per tax year contributed to a small business asset purchase account and all interest earned on such accounts during the tax year. Provides that a "small business asset purchase account" means an account established by a taxpayer, the proceeds of which are used to purchase property used primarily in Illinois for which a federal income tax deduction is claimed under Section 179 of the Internal Revenue Code. Provides an addition modification for amounts withdrawn from a small business asset purchase account that are not used for qualified purchases. Amends the Uniform Penalty and Interest Act to establish a penalty for improper use of moneys in a small business asset purchase account. Effective immediately.



LRB102 04170 HLH 14187 b


FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


SB0490LRB102 04170 HLH 14187 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 the 
22 taxpayer may claim a depreciation deduction for 
23 federal income tax purposes and for which the taxpayer 
24 was 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) An amount withdrawn from a small business 
9 asset purchase account that is not used for purchases 
10 of property for which a deduction under Section 179 of 
11 the Internal Revenue Code is claimed for the tax year 
12 in which the amount is withdrawn and which property is 
13 used predominantly in Illinois; such amounts are 
14 subject to the 10% penalty for ineligible use under 
15 Section 3-3.5 of the Uniform Penalty and Interest Act; 
16 and by deducting from the total so obtained the
sum of the 
17 following amounts:
18   (E) For taxable years ending before December 31, 
19 2001,
any amount included in such total in respect of 
20 any compensation
(including but not limited to any 
21 compensation paid or accrued to a
serviceman while a 
22 prisoner of war or missing in action) paid to a 
23 resident
by reason of being on active duty in the Armed 
24 Forces of the United States
and in respect of any 
25 compensation paid or accrued to a resident who as a

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

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

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

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

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

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

21 ending on or after August 13, 1999, Sections 
22 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
23 Internal Revenue Code, plus, for taxable years ending 
24 on or after December 31, 2011, Section 45G(e)(3) of 
25 the Internal Revenue Code and, for taxable years 
26 ending on or after December 31, 2008, any amount 
 
 
SB0490- 19 -LRB102 04170 HLH 14187 b


1 included in gross income under Section 87 of the 
2 Internal Revenue Code; the provisions of this

3 subparagraph are exempt from the provisions of Section 
4 250;
5   (N) An amount equal to all amounts included in 
6 such total which are
exempt from taxation by this 
7 State either by reason of its statutes or
Constitution

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

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

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

25 times a number that represents the fractional 
26 percentage of eligible medical
expenses under Section 
 
 
SB0490- 22 -LRB102 04170 HLH 14187 b


1 213 of the Internal Revenue Code of 1986 not actually

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

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

26 by Nazi Germany or any other Axis regime by European 
 
 
SB0490- 23 -LRB102 04170 HLH 14187 b


1 insurance companies
immediately prior to and during 
2 World War II;
provided, however, this subtraction from 
3 federal adjusted gross income does not
apply to assets 
4 acquired with such assets or with the proceeds from 
5 the sale of
such assets; provided, further, this 
6 paragraph shall only apply to a taxpayer
who was the 
7 first recipient of such assets after their recovery 
8 and who is a
victim of persecution for racial or 
9 religious reasons
by Nazi Germany or any other Axis 
10 regime or as an heir of the victim. The
amount of and 
11 the eligibility for any public assistance, benefit, or

12 similar entitlement is not affected by the inclusion 
13 of items (i) and (ii) of
this paragraph in gross income 
14 for federal income tax purposes.
This paragraph is 
15 exempt from the provisions of Section 250;
16   (Y) For taxable years beginning on or after 
17 January 1, 2002
and ending
on or before December 31, 
18 2004, moneys contributed in the taxable year to a 
19 College Savings Pool account under
Section 16.5 of the 
20 State Treasurer Act, except that amounts excluded from

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

 
 
SB0490- 24 -LRB102 04170 HLH 14187 b


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

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

13 is taken on the taxpayer's federal income tax return 
14 under
subsection (k) of Section 168 of the Internal 
15 Revenue Code and for each
applicable taxable year 
16 thereafter, an amount equal to "x", where:
17    (1) "y" equals the amount of the depreciation 
18 deduction taken for the
taxable year
on the 
19 taxpayer's federal income tax return on property 
20 for which the bonus
depreciation deduction
was 
21 taken in any year under subsection (k) of Section 
22 168 of the Internal
Revenue Code, but not 
23 including the bonus depreciation deduction;
24    (2) for taxable years ending on or before 
25 December 31, 2005, "x" equals "y" multiplied by 30 
26 and then divided by 70 (or "y"
multiplied by 
 
 
SB0490- 25 -LRB102 04170 HLH 14187 b


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

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

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

26   If the taxpayer continues to own property through 
 
 
SB0490- 26 -LRB102 04170 HLH 14187 b


1 the last day of the last tax year for which the 
2 taxpayer may claim a depreciation deduction for 
3 federal income tax purposes and for which the taxpayer 
4 was required in any taxable year to make an addition 
5 modification under subparagraph (D-15), then an amount 
6 equal to that addition modification.

7   The taxpayer is allowed to take the deduction 
8 under this subparagraph
only once with respect to any 
9 one piece of property.
10   This subparagraph (AA) is exempt from the 
11 provisions of Section 250;
12   (BB) Any amount included in adjusted gross income, 
13 other
than
salary,
received by a driver in a 
14 ridesharing arrangement using a motor vehicle;
15   (CC) 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 that addition modification, and
(ii) any 
23 income from intangible property (net of the deductions 
24 allocable thereto) taken into account for the taxable 
25 year with respect to a transaction with a taxpayer 
26 that is required to make an addition modification with 
 
 
SB0490- 27 -LRB102 04170 HLH 14187 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 that 
4 addition modification. This subparagraph (CC) is 
5 exempt from the provisions of Section 250;
6   (DD) An amount equal to the interest income taken 
7 into account for the taxable year (net of the 
8 deductions allocable thereto) with respect to 
9 transactions with (i) a foreign person who would be a 
10 member of the taxpayer's unitary business group but 
11 for the fact that the foreign person's business 
12 activity outside the United States is 80% or more of 
13 that person's total business activity and (ii) for 
14 taxable years ending on or after December 31, 2008, to 
15 a person who would be a member of the same unitary 
16 business group but for the fact that the person is 
17 prohibited under Section 1501(a)(27) from being 
18 included in the unitary business group because he or 
19 she is ordinarily required to apportion business 
20 income under different subsections of Section 304, but 
21 not to exceed the addition modification required to be 
22 made for the same taxable year under Section 
23 203(a)(2)(D-17) for interest paid, accrued, or 
24 incurred, directly or indirectly, to the same person. 
25 This subparagraph (DD) is exempt from the provisions 
26 of Section 250; 
 
 
SB0490- 28 -LRB102 04170 HLH 14187 b


1   (EE) An amount equal to the income from intangible 
2 property taken into account for the taxable year (net 
3 of the deductions allocable thereto) with respect to 
4 transactions with (i) a foreign person who would be a 
5 member of the taxpayer's unitary business group but 
6 for the fact that the foreign person's business 
7 activity outside the United States is 80% or more of 
8 that person's total business activity and (ii) for 
9 taxable years ending on or after December 31, 2008, to 
10 a person who would be a member of the same unitary 
11 business group but for the fact that the person is 
12 prohibited under Section 1501(a)(27) from being 
13 included in the unitary business group because he or 
14 she is ordinarily required to apportion business 
15 income under different subsections of Section 304, but 
16 not to exceed the addition modification required to be 
17 made for the same taxable year under Section 
18 203(a)(2)(D-18) for intangible expenses and costs 
19 paid, accrued, or incurred, directly or indirectly, to 
20 the same foreign person. This subparagraph (EE) is 
21 exempt from the provisions of Section 250;
22   (FF) An amount equal to any amount awarded to the 
23 taxpayer during the taxable year by the Court of 
24 Claims under subsection (c) of Section 8 of the Court 
25 of Claims Act for time unjustly served in a State 
26 prison. This subparagraph (FF) is exempt from the 
 
 
SB0490- 29 -LRB102 04170 HLH 14187 b


1 provisions of Section 250; 
2   (GG) For taxable years ending on or after December 
3 31, 2011, in the case of a taxpayer who was required to 
4 add back any insurance premiums under Section 
5 203(a)(2)(D-19), such taxpayer may elect to subtract 
6 that part of a reimbursement received from the 
7 insurance company equal to the amount of the expense 
8 or loss (including expenses incurred by the insurance 
9 company) that would have been taken into account as a 
10 deduction for federal income tax purposes if the 
11 expense or loss had been uninsured. If a taxpayer 
12 makes the election provided for by this subparagraph 
13 (GG), the insurer to which the premiums were paid must 
14 add back to income the amount subtracted by the 
15 taxpayer pursuant to this subparagraph (GG). This 
16 subparagraph (GG) is exempt from the provisions of 
17 Section 250; and 
18   (HH) For taxable years beginning on or after 
19 January 1, 2018 and prior to January 1, 2023, a maximum 
20 of $10,000 contributed in the taxable year to a 
21 qualified ABLE account under Section 16.6 of the State 
22 Treasurer Act, except that amounts excluded from gross 
23 income under Section 529(c)(3)(C)(i) or Section 
24 529A(c)(1)(C) of the Internal Revenue Code shall not 
25 be considered moneys contributed under this 
26 subparagraph (HH). For purposes of this subparagraph 
 
 
SB0490- 30 -LRB102 04170 HLH 14187 b


1 (HH), contributions made by an employer on behalf of 
2 an employee, or matching contributions made by an 
3 employee, shall be treated as made by the employee; 
4 and . 
5   (II) For taxable years beginning on or after 
6 January 1, 2022, an amount of up to $50,000 per tax 
7 year contributed to a small business asset purchase 
8 account during the tax year, plus all interest earned 
9 on such accounts during the tax year; a "small 
10 business asset purchase account" means an account 
11 established by a taxpayer, the proceeds of which are 
12 used to purchase property used primarily in Illinois 
13 for which a federal income tax deduction is claimed 
14 under Section 179 of the Internal Revenue Code. 

15 (b) Corporations.
16  (1) In general. In the case of a corporation, base 
17 income means an
amount equal to the taxpayer's taxable 
18 income for the taxable year as
modified by paragraph (2).
19  (2) Modifications. The taxable income referred to in 
20 paragraph (1)
shall be modified by adding thereto the sum 
21 of the following amounts:
22   (A) An amount equal to all amounts paid or accrued 
23 to the taxpayer
as interest and all distributions 
24 received from regulated investment
companies during 
25 the taxable year to the extent excluded from gross

 
 
SB0490- 31 -LRB102 04170 HLH 14187 b


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

13 attributable to the taxable year (this amendatory Act 
14 of 1995
(Public Act 89-89) is declarative of existing 
15 law and is not a new
enactment);
16   (D) The amount of any net operating loss deduction 
17 taken in arriving
at taxable income, other than a net 
18 operating loss carried forward from a
taxable year 
19 ending prior to December 31, 1986;
20   (E) For taxable years in which a net operating 
21 loss carryback or
carryforward from a taxable year 
22 ending prior to December 31, 1986 is an
element of 
23 taxable income under paragraph (1) of subsection (e) 
24 or
subparagraph (E) of paragraph (2) of subsection 
25 (e), the amount by which
addition modifications other 
26 than those provided by this subparagraph (E)
exceeded 
 
 
SB0490- 32 -LRB102 04170 HLH 14187 b


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

20 31, 1986, the addition modification provided in this 
21 subparagraph (E) shall
be the sum of the amounts 
22 computed independently under the preceding
provisions 
23 of this subparagraph (E) for each such taxable year;
24   (E-5) For taxable years ending after December 31, 
25 1997, an
amount equal to any eligible remediation 
26 costs that the corporation
deducted in computing 
 
 
SB0490- 33 -LRB102 04170 HLH 14187 b


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

22   The taxpayer is required to make the addition 
23 modification under this
subparagraph
only once with 
24 respect to any one piece of property;
25   (E-12) An amount equal to the amount otherwise 
26 allowed as a deduction in computing base income for 
 
 
SB0490- 34 -LRB102 04170 HLH 14187 b


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

26   This paragraph shall not apply to the following:

 
 
SB0490- 35 -LRB102 04170 HLH 14187 b


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

22    (iii) the taxpayer can establish, based on 
23 clear and convincing evidence, that the interest 
24 paid, accrued, or incurred relates to a contract 
25 or agreement entered into at arm's-length rates 
26 and terms and the principal purpose for the 
 
 
SB0490- 36 -LRB102 04170 HLH 14187 b


1 payment is not federal or Illinois tax avoidance; 
2 or

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

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

19   (E-13) An amount equal to the amount of intangible 
20 expenses and costs otherwise allowed as a deduction in 
21 computing base income, and that were paid, accrued, or 
22 incurred, directly or indirectly, (i) for taxable 
23 years ending on or after December 31, 2004, to a 
24 foreign person who would be a member of the same 
25 unitary business group but for the fact that the 
26 foreign person's business activity outside the United 
 
 
SB0490- 37 -LRB102 04170 HLH 14187 b


1 States is 80% or more of that person's total business 
2 activity and (ii) for taxable years ending on or after 
3 December 31, 2008, to a person who would be a member of 
4 the same unitary business group but for the fact that 
5 the person is prohibited under Section 1501(a)(27) 
6 from being included in the unitary business group 
7 because he or she is ordinarily required to apportion 
8 business income under different subsections of Section 
9 304. The addition modification required by this 
10 subparagraph shall be reduced to the extent that 
11 dividends were included in base income of the unitary 
12 group for the same taxable year and received by the 
13 taxpayer or by a member of the taxpayer's unitary 
14 business group (including amounts included in gross 
15 income pursuant to Sections 951 through 964 of the 
16 Internal Revenue Code and amounts included in gross 
17 income under Section 78 of the Internal Revenue Code) 
18 with respect to the stock of the same person to whom 
19 the intangible expenses and costs were directly or 
20 indirectly paid, incurred, or accrued. The preceding 
21 sentence shall not apply to the extent that the same 
22 dividends caused a reduction to the addition 
23 modification required under Section 203(b)(2)(E-12) of 
24 this Act.
As used in this subparagraph, the term 
25 "intangible expenses and costs" includes (1) expenses, 
26 losses, and costs for, or related to, the direct or 
 
 
SB0490- 38 -LRB102 04170 HLH 14187 b


1 indirect acquisition, use, maintenance or management, 
2 ownership, sale, exchange, or any other disposition of 
3 intangible property; (2) losses incurred, directly or 
4 indirectly, from factoring transactions or discounting 
5 transactions; (3) royalty, patent, technical, and 
6 copyright fees; (4) licensing fees; and (5) other 
7 similar expenses and costs.
For purposes of this 
8 subparagraph, "intangible property" includes patents, 
9 patent applications, trade names, trademarks, service 
10 marks, copyrights, mask works, trade secrets, and 
11 similar types of intangible assets.
12   This paragraph shall not apply to the following:
13    (i) any item of intangible expenses or costs 
14 paid, accrued, or incurred, directly or 
15 indirectly, from a transaction with a person who 
16 is subject in a foreign country or state, other 
17 than a state which requires mandatory unitary 
18 reporting, to a tax on or measured by net income 
19 with respect to such item; or
20    (ii) any item of intangible expense or cost 
21 paid, accrued, or incurred, directly or 
22 indirectly, if the taxpayer can establish, based 
23 on a preponderance of the evidence, both of the 
24 following:
25     (a) the person during the same taxable 
26 year paid, accrued, or incurred, the 
 
 
SB0490- 39 -LRB102 04170 HLH 14187 b


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

19    Nothing in this subsection shall preclude the 
20 Director from making any other adjustment 
21 otherwise allowed under Section 404 of this Act 
22 for any tax year beginning after the effective 
23 date of this amendment provided such adjustment is 
24 made pursuant to regulation adopted by the 
25 Department and such regulations provide methods 
26 and standards by which the Department will utilize 
 
 
SB0490- 40 -LRB102 04170 HLH 14187 b


1 its authority under Section 404 of this Act;

2   (E-14) For taxable years ending on or after 
3 December 31, 2008, an amount equal to the amount of 
4 insurance premium expenses and costs otherwise allowed 
5 as a deduction in computing base income, and that were 
6 paid, accrued, or incurred, directly or indirectly, to 
7 a person who would be a member of the same unitary 
8 business group but for the fact that the person is 
9 prohibited under Section 1501(a)(27) from being 
10 included in the unitary business group because he or 
11 she is ordinarily required to apportion business 
12 income under different subsections of Section 304. The 
13 addition modification required by this subparagraph 
14 shall be reduced to the extent that dividends were 
15 included in base income of the unitary group for the 
16 same taxable year and received by the taxpayer or by a 
17 member of the taxpayer's unitary business group 
18 (including amounts included in gross income under 
19 Sections 951 through 964 of the Internal Revenue Code 
20 and amounts included in gross income under Section 78 
21 of the Internal Revenue Code) with respect to the 
22 stock of the same person to whom the premiums and costs 
23 were directly or indirectly paid, incurred, or 
24 accrued. The preceding sentence does not apply to the 
25 extent that the same dividends caused a reduction to 
26 the addition modification required under Section 
 
 
SB0490- 41 -LRB102 04170 HLH 14187 b


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

3   (E-15) For taxable years beginning after December 
4 31, 2008, any deduction for dividends paid by a 
5 captive real estate investment trust that is allowed 
6 to a real estate investment trust under Section 
7 857(b)(2)(B) of the Internal Revenue Code for 
8 dividends paid;
9   (E-16) An amount equal to the credit allowable to 
10 the taxpayer under Section 218(a) of this Act, 
11 determined without regard to Section 218(c) of this 
12 Act;
13   (E-17) For taxable years ending on or after 
14 December 31, 2017, an amount equal to the deduction 
15 allowed under Section 199 of the Internal Revenue Code 
16 for the taxable year; 
17   (E-18) for taxable years beginning after December 
18 31, 2018, an amount equal to the deduction allowed 
19 under Section 250(a)(1)(A) of the Internal Revenue 
20 Code for the taxable year; . 
21   (E-19) An amount withdrawn from a small business 
22 asset purchase account that is not used for purchases 
23 of property for which a deduction under Section 179 of 
24 the Internal Revenue Code is claimed for the tax year 
25 in which the amount is withdrawn and which property is 
26 used predominantly in Illinois; such amounts are 
 
 
SB0490- 42 -LRB102 04170 HLH 14187 b


1 subject to the 10% penalty for ineligible use under 
2 Section 3-3.5 of the Uniform Penalty and Interest Act; 
3 and by deducting from the total so obtained the sum of the 
4 following
amounts:
5   (F) 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   (G) An amount equal to any amount included in such 
9 total under
Section 78 of the Internal Revenue Code;
10   (H) In the case of a regulated investment company, 
11 an amount equal
to the amount of exempt interest 
12 dividends as defined in subsection (b)(5) of Section 
13 852 of the Internal Revenue Code, paid to shareholders

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

19 interest expense by Section 291(a)(3) of the Internal 
20 Revenue Code, and all amounts of expenses allocable to 
21 interest and
disallowed as deductions by Section 
22 265(a)(1) of the Internal Revenue Code;
and (ii) for 
23 taxable years
ending on or after August 13, 1999, 
24 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
25 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
26 for tax years ending on or after December 31, 2011, 
 
 
SB0490- 43 -LRB102 04170 HLH 14187 b


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

18 or by reason of the Constitution, treaties or statutes 
19 of the United States;
provided that, in the case of any 
20 statute of this State that exempts income
derived from 
21 bonds or other obligations from the tax imposed under 
22 this Act,
the amount exempted shall be the interest 
23 net of bond premium amortization;
24   (K) An amount equal to those dividends included in 
25 such total
which were paid by a corporation which 
26 conducts
business operations in a River Edge 
 
 
SB0490- 44 -LRB102 04170 HLH 14187 b


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

13 shall not be eligible for the deduction provided under 
14 this subparagraph
(L);
15   (M) 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 River Edge 
21 Redevelopment Zone Investment Credit. To determine the 
22 portion of a loan or loans that is
secured by property 
23 eligible for a Section 201(f) 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(f) 
 
 
SB0490- 45 -LRB102 04170 HLH 14187 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 the River Edge Redevelopment Zone. The subtraction 
5 modification available to the taxpayer in any
year 
6 under this subsection shall be that portion of the 
7 total interest paid
by the borrower with respect to 
8 such loan attributable to the eligible
property as 
9 calculated under the previous sentence. This 
10 subparagraph (M) is exempt from the provisions of 
11 Section 250;
12   (M-1) For any taxpayer that is a financial 
13 organization within the
meaning of Section 304(c) of 
14 this Act, an amount included in such total as
interest 
15 income from a loan or loans made by such taxpayer to a 
16 borrower,
to the extent that such a loan is secured by 
17 property which is eligible for
the High Impact 
18 Business Investment Credit. To determine the portion 
19 of a
loan or loans that is secured by property eligible 
20 for a Section 201(h) investment credit to the 
21 borrower, the entire principal amount of
the loan or 
22 loans between the taxpayer and the borrower should be 
23 divided into
the basis of the Section 201(h) 
24 investment credit property which
secures the loan or 
25 loans, using for this purpose the original basis of 
26 such
property on the date that it was placed in service 
 
 
SB0490- 46 -LRB102 04170 HLH 14187 b


1 in a federally designated
Foreign Trade Zone or 
2 Sub-Zone located in Illinois. No taxpayer that is

3 eligible for the deduction provided in subparagraph 
4 (M) of paragraph (2) of
this subsection shall be 
5 eligible for the deduction provided under this

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

9 paid by the borrower with respect to such loan 
10 attributable to the eligible
property as calculated 
11 under the previous sentence;
12   (N) Two times any contribution made during the 
13 taxable year to a
designated zone organization to the 
14 extent that the contribution (i)
qualifies as a 
15 charitable contribution under subsection (c) of 
16 Section 170
of the Internal Revenue Code and (ii) 
17 must, by its terms, be used for a
project approved by 
18 the Department of Commerce and Economic Opportunity 
19 under Section 11 of the Illinois Enterprise Zone Act 
20 or under Section 10-10 of the River Edge Redevelopment 
21 Zone Act. This subparagraph (N) is exempt from the 
22 provisions of Section 250;
23   (O) An amount equal to: (i) 85% for taxable years 
24 ending on or before
December 31, 1992, or, a 
25 percentage equal to the percentage allowable under

26 Section 243(a)(1) of the Internal Revenue Code of 1986 
 
 
SB0490- 47 -LRB102 04170 HLH 14187 b


1 for taxable years ending
after December 31, 1992, of 
2 the amount by which dividends included in taxable

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

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

16 included in taxable income and received, including, 
17 for taxable years ending on
or after December 31, 
18 1988, dividends received or deemed received or paid or

19 deemed paid under Sections 951 through 964 of the 
20 Internal Revenue Code and including, for taxable years 
21 ending on or after December 31, 2008, dividends 
22 received from a captive real estate investment trust, 
23 from
any such corporation specified in clause (i) that 
24 would but for the provisions
of Section 1504(b)(3) of 
25 the Internal Revenue Code be treated as a member of
the 
26 affiliated group which includes the dividend 
 
 
SB0490- 48 -LRB102 04170 HLH 14187 b


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

22 interinsurer or reciprocal insurer with respect to the 
23 attorney-in-fact under
Section 835(b) of the Internal 
24 Revenue Code for the taxable year; the provisions of 
25 this subparagraph are exempt from the provisions of 
26 Section 250;
 
 
SB0490- 49 -LRB102 04170 HLH 14187 b


1   (S) For taxable years ending on or after December 
2 31, 1997, in the
case of a Subchapter
S corporation, an 
3 amount equal to all amounts of income allocable to a

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

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

13 is taken on the taxpayer's federal income tax return 
14 under
subsection (k) of Section 168 of the Internal 
15 Revenue Code and for each
applicable taxable year 
16 thereafter, an amount equal to "x", where:
17    (1) "y" equals the amount of the depreciation 
18 deduction taken for the
taxable year
on the 
19 taxpayer's federal income tax return on property 
20 for which the bonus
depreciation deduction
was 
21 taken in any year under subsection (k) of Section 
22 168 of the Internal
Revenue Code, but not 
23 including the bonus depreciation deduction;
24    (2) for taxable years ending on or before 
25 December 31, 2005, "x" equals "y" multiplied by 30 
26 and then divided by 70 (or "y"
multiplied by 
 
 
SB0490- 50 -LRB102 04170 HLH 14187 b


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

16 depreciation deduction
taken on that property on the 
17 taxpayer's federal income tax return under
subsection 
18 (k) of Section 168 of the Internal Revenue Code. This 
19 subparagraph (T) is exempt from the provisions of 
20 Section 250;
21   (U) If the taxpayer sells, transfers, abandons, or 
22 otherwise disposes of
property for which the taxpayer 
23 was required in any taxable year to make an
addition 
24 modification under subparagraph (E-10), then an amount 
25 equal to that
addition modification.
26   If the taxpayer continues to own property through 
 
 
SB0490- 51 -LRB102 04170 HLH 14187 b


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

7   The taxpayer is allowed to take the deduction 
8 under this subparagraph
only once with respect to any 
9 one piece of property.
10   This subparagraph (U) is exempt from the 
11 provisions of Section 250;
12   (V) The amount of: (i) any interest income (net of 
13 the deductions allocable thereto) taken into account 
14 for the taxable year with respect to a transaction 
15 with a taxpayer that is required to make an addition 
16 modification with respect to such transaction under 
17 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
18 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
19 the amount of such addition modification,
(ii) any 
20 income from intangible property (net of the deductions 
21 allocable thereto) taken into account for the taxable 
22 year with respect to a transaction with a taxpayer 
23 that is required to make an addition modification with 
24 respect to such transaction under Section 
25 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
26 203(d)(2)(D-8), but not to exceed the amount of such 
 
 
SB0490- 52 -LRB102 04170 HLH 14187 b


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

11   (W) 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 
 
 
SB0490- 53 -LRB102 04170 HLH 14187 b


1 made for the same taxable year under Section 
2 203(b)(2)(E-12) for interest paid, accrued, or 
3 incurred, directly or indirectly, to the same person. 
4 This subparagraph (W) is exempt from the provisions of 
5 Section 250;

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

 
 
SB0490- 54 -LRB102 04170 HLH 14187 b


1   (Y) For taxable years ending on or after December 
2 31, 2011, in the case of a taxpayer who was required to 
3 add back any insurance premiums under Section 
4 203(b)(2)(E-14), such taxpayer may elect to subtract 
5 that part of a reimbursement received from the 
6 insurance company equal to the amount of the expense 
7 or loss (including expenses incurred by the insurance 
8 company) that would have been taken into account as a 
9 deduction for federal income tax purposes if the 
10 expense or loss had been uninsured. If a taxpayer 
11 makes the election provided for by this subparagraph 
12 (Y), the insurer to which the premiums were paid must 
13 add back to income the amount subtracted by the 
14 taxpayer pursuant to this subparagraph (Y). This 
15 subparagraph (Y) is exempt from the provisions of 
16 Section 250; and 
17   (Z) The difference between the nondeductible 
18 controlled foreign corporation dividends under Section 
19 965(e)(3) of the Internal Revenue Code over the 
20 taxable income of the taxpayer, computed without 
21 regard to Section 965(e)(2)(A) of the Internal Revenue 
22 Code, and without regard to any net operating loss 
23 deduction. This subparagraph (Z) is exempt from the 
24 provisions of Section 250; and . 
25   (AA) For taxable years beginning on or after 
26 January 1, 2022, an amount of up to $50,000 per tax 
 
 
SB0490- 55 -LRB102 04170 HLH 14187 b


1 year contributed to a small business asset purchase 
2 account during the tax year, plus all interest earned 
3 on such accounts during the tax year; a "small 
4 business asset purchase account" means an account 
5 established by a taxpayer, the proceeds of which are 
6 used to purchase property used primarily in Illinois 
7 for which a federal income tax deduction is claimed 
8 under Section 179 of the Internal Revenue Code. 
9  (3) Special rule. For purposes of paragraph (2)(A), 
10 "gross income"
in the case of a life insurance company, 
11 for tax years ending on and after
December 31, 1994,
and 
12 prior to December 31, 2011, shall mean the gross 
13 investment income for the taxable year and, for tax years 
14 ending on or after December 31, 2011, shall mean all 
15 amounts included in life insurance gross income under 
16 Section 803(a)(3) of the Internal Revenue Code.

17 (c) Trusts and estates.
18  (1) In general. In the case of a trust or estate, base 
19 income means
an amount equal to the taxpayer's taxable 
20 income for the taxable year as
modified by paragraph (2).
21  (2) Modifications. Subject to the provisions of 
22 paragraph (3), the
taxable income referred to in paragraph 
23 (1) shall be modified by adding
thereto the sum of the 
24 following amounts:
25   (A) An amount equal to all amounts paid or accrued 
 
 
SB0490- 56 -LRB102 04170 HLH 14187 b


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

25 subtraction modifications in such taxable year, with 
26 the following limitations
applied in the order that 
 
 
SB0490- 57 -LRB102 04170 HLH 14187 b


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

18 31, 1986, the addition modification provided in this 
19 subparagraph (E) shall
be the sum of the amounts 
20 computed independently under the preceding
provisions 
21 of this subparagraph (E) for each such taxable year;
22   (F) For taxable years ending on or after January 
23 1, 1989, an amount
equal to the tax deducted pursuant 
24 to Section 164 of the Internal Revenue
Code if the 
25 trust or estate is claiming the same tax for purposes 
26 of the
Illinois foreign tax credit under Section 601 
 
 
SB0490- 58 -LRB102 04170 HLH 14187 b


1 of this Act;
2   (G) An amount equal to the amount of the capital 
3 gain deduction
allowable under the Internal Revenue 
4 Code, to the extent deducted from
gross income in the 
5 computation of taxable income;
6   (G-5) For taxable years ending after December 31, 
7 1997, an
amount equal to any eligible remediation 
8 costs that the trust or estate
deducted in computing 
9 adjusted gross income and for which the trust
or 
10 estate claims a credit under subsection (l) of Section 
11 201;
12   (G-10) For taxable years 2001 and thereafter, an 
13 amount equal to the
bonus depreciation deduction taken 
14 on the taxpayer's federal income tax return for the 
15 taxable
year under subsection (k) of Section 168 of 
16 the Internal Revenue Code; and
17   (G-11) If the taxpayer sells, transfers, abandons, 
18 or otherwise disposes of property for which the 
19 taxpayer was required in any taxable year to
make an 
20 addition modification under subparagraph (G-10), then 
21 an amount equal
to the aggregate amount of the 
22 deductions taken in all taxable
years under 
23 subparagraph (R) with respect to that property.
24   If the taxpayer continues to own property through 
25 the last day of the last tax year for which the 
26 taxpayer may claim a depreciation deduction for 
 
 
SB0490- 59 -LRB102 04170 HLH 14187 b


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

5   The taxpayer is required to make the addition 
6 modification under this
subparagraph
only once with 
7 respect to any one piece of property;
8   (G-12) An amount equal to the amount otherwise 
9 allowed as a deduction in computing base income for 
10 interest paid, accrued, or incurred, directly or 
11 indirectly, (i) for taxable years ending on or after 
12 December 31, 2004, to a foreign person who would be a 
13 member of the same unitary business group but for the 
14 fact that the foreign person's business activity 
15 outside the United States is 80% or more of the foreign 
16 person's total business activity and (ii) for taxable 
17 years ending on or after December 31, 2008, to a person 
18 who would be a member of the same unitary business 
19 group but for the fact that the person is prohibited 
20 under Section 1501(a)(27) from being included in the 
21 unitary business group because he or she is ordinarily 
22 required to apportion business income under different 
23 subsections of Section 304. The addition modification 
24 required by this subparagraph shall be reduced to the 
25 extent that dividends were included in base income of 
26 the unitary group for the same taxable year and 
 
 
SB0490- 60 -LRB102 04170 HLH 14187 b


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

9   This paragraph shall not apply to the following:

10    (i) an item of interest paid, accrued, or 
11 incurred, directly or indirectly, to a person who 
12 is subject in a foreign country or state, other 
13 than a state which requires mandatory unitary 
14 reporting, to a tax on or measured by net income 
15 with respect to such interest; or
16    (ii) an item of interest paid, accrued, or 
17 incurred, directly or indirectly, to a person if 
18 the taxpayer can establish, based on a 
19 preponderance of the evidence, both of the 
20 following:
21     (a) the person, during the same taxable 
22 year, paid, accrued, or incurred, the interest 
23 to a person that is not a related member, and
24     (b) the transaction giving rise to the 
25 interest expense between the taxpayer and the 
26 person did not have as a principal purpose the 
 
 
SB0490- 61 -LRB102 04170 HLH 14187 b


1 avoidance of Illinois income tax, and is paid 
2 pursuant to a contract or agreement that 
3 reflects an arm's-length interest rate and 
4 terms; or

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

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

19    Nothing in this subsection shall preclude the 
20 Director from making any other adjustment 
21 otherwise allowed under Section 404 of this Act 
22 for any tax year beginning after the effective 
23 date of this amendment provided such adjustment is 
24 made pursuant to regulation adopted by the 
25 Department and such regulations provide methods 
26 and standards by which the Department will utilize 
 
 
SB0490- 62 -LRB102 04170 HLH 14187 b


1 its authority under Section 404 of this Act;

2   (G-13) An amount equal to the amount of intangible 
3 expenses and costs otherwise allowed as a deduction in 
4 computing base income, and that were paid, accrued, or 
5 incurred, directly or indirectly, (i) for taxable 
6 years ending on or after December 31, 2004, to a 
7 foreign person who would be a member of the same 
8 unitary business group but for the fact that the 
9 foreign person's business activity outside the United 
10 States is 80% or more of that person's total business 
11 activity and (ii) for taxable years ending on or after 
12 December 31, 2008, to a person who would be a member of 
13 the same unitary business group but for the fact that 
14 the person is prohibited under Section 1501(a)(27) 
15 from being included in the unitary business group 
16 because he or she is ordinarily required to apportion 
17 business income under different subsections of Section 
18 304. The addition modification required by this 
19 subparagraph shall be reduced to the extent that 
20 dividends were included in base income of the unitary 
21 group for the same taxable year and received by the 
22 taxpayer or by a member of the taxpayer's unitary 
23 business group (including amounts included in gross 
24 income pursuant to Sections 951 through 964 of the 
25 Internal Revenue Code and amounts included in gross 
26 income under Section 78 of the Internal Revenue Code) 
 
 
SB0490- 63 -LRB102 04170 HLH 14187 b


1 with respect to the stock of the same person to whom 
2 the intangible expenses and costs were directly or 
3 indirectly paid, incurred, or accrued. The preceding 
4 sentence shall not apply to the extent that the same 
5 dividends caused a reduction to the addition 
6 modification required under Section 203(c)(2)(G-12) of 
7 this Act. As used in this subparagraph, the term 
8 "intangible expenses and costs" includes: (1) 
9 expenses, losses, and costs for or related to the 
10 direct or indirect acquisition, use, maintenance or 
11 management, ownership, sale, exchange, or any other 
12 disposition of intangible property; (2) losses 
13 incurred, directly or indirectly, from factoring 
14 transactions or discounting transactions; (3) royalty, 
15 patent, technical, and copyright fees; (4) licensing 
16 fees; and (5) other similar expenses and costs. For 
17 purposes of this subparagraph, "intangible property" 
18 includes patents, patent applications, trade names, 
19 trademarks, service marks, copyrights, mask works, 
20 trade secrets, and similar types of intangible assets.
21   This paragraph shall not apply to the following:
22    (i) any item of intangible expenses or costs 
23 paid, accrued, or incurred, directly or 
24 indirectly, from a transaction with a person who 
25 is subject in a foreign country or state, other 
26 than a state which requires mandatory unitary 
 
 
SB0490- 64 -LRB102 04170 HLH 14187 b


1 reporting, to a tax on or measured by net income 
2 with respect to such item; or
3    (ii) any item of intangible expense or cost 
4 paid, accrued, or incurred, directly or 
5 indirectly, if the taxpayer can establish, based 
6 on a preponderance of the evidence, both of the 
7 following:
8     (a) the person during the same taxable 
9 year paid, accrued, or incurred, the 
10 intangible expense or cost to a person that is 
11 not a related member, and
12     (b) the transaction giving rise to the 
13 intangible expense or cost between the 
14 taxpayer and the person did not have as a 
15 principal purpose the avoidance of Illinois 
16 income tax, and is paid pursuant to a contract 
17 or agreement that reflects arm's-length terms; 
18 or
19    (iii) any item of intangible expense or cost 
20 paid, accrued, or incurred, directly or 
21 indirectly, from a transaction with a person if 
22 the taxpayer establishes by clear and convincing 
23 evidence, that the adjustments are unreasonable; 
24 or if the taxpayer and the Director agree in 
25 writing to the application or use of an 
26 alternative method of apportionment under Section 
 
 
SB0490- 65 -LRB102 04170 HLH 14187 b


1 304(f);

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

11   (G-14) For taxable years ending on or after 
12 December 31, 2008, an amount equal to the amount of 
13 insurance premium expenses and costs otherwise allowed 
14 as a deduction in computing base income, and that were 
15 paid, accrued, or incurred, directly or indirectly, to 
16 a person who would be a member of the same unitary 
17 business group but for the fact that the person is 
18 prohibited under Section 1501(a)(27) from being 
19 included in the unitary business group because he or 
20 she is ordinarily required to apportion business 
21 income under different subsections of Section 304. The 
22 addition modification required by this subparagraph 
23 shall be reduced to the extent that dividends were 
24 included in base income of the unitary group for the 
25 same taxable year and received by the taxpayer or by a 
26 member of the taxpayer's unitary business group 
 
 
SB0490- 66 -LRB102 04170 HLH 14187 b


1 (including amounts included in gross income under 
2 Sections 951 through 964 of the Internal Revenue Code 
3 and amounts included in gross income under Section 78 
4 of the Internal Revenue Code) with respect to the 
5 stock of the same person to whom the premiums and costs 
6 were directly or indirectly paid, incurred, or 
7 accrued. The preceding sentence does not apply to the 
8 extent that the same dividends caused a reduction to 
9 the addition modification required under Section 
10 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this 
11 Act;
12   (G-15) 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   (G-16) 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   (G-17) An amount withdrawn from a small business 
21 asset purchase account that is not used for purchases 
22 of property for which a deduction under Section 179 of 
23 the Internal Revenue Code is claimed for the tax year 
24 in which the amount is withdrawn and which property is 
25 used predominantly in Illinois; such amounts are 
26 subject to the 10% penalty for ineligible use under 
 
 
SB0490- 67 -LRB102 04170 HLH 14187 b


1 Section 3-3.5 of the Uniform Penalty and Interest Act; 
2 and by deducting from the total so obtained the sum of the 
3 following
amounts:
4   (H) An amount equal to all amounts included in 
5 such total pursuant
to the provisions of Sections 
6 402(a), 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 
7 of the Internal Revenue Code or included in such total 
8 as
distributions under the provisions of any 
9 retirement or disability plan for
employees of any 
10 governmental agency or unit, or retirement payments to

11 retired partners, which payments are excluded in 
12 computing net earnings
from self employment by Section 
13 1402 of the Internal Revenue Code and
regulations 
14 adopted pursuant thereto;
15   (I) The valuation limitation amount;
16   (J) An amount equal to the amount of any tax 
17 imposed by this Act
which was refunded to the taxpayer 
18 and included in such total for the
taxable year;
19   (K) An amount equal to all amounts included in 
20 taxable income as
modified by subparagraphs (A), (B), 
21 (C), (D), (E), (F) and (G) which
are exempt from 
22 taxation by this State either by reason of its 
23 statutes or
Constitution
or by reason of the 
24 Constitution, treaties or statutes of the United 
25 States;
provided that, in the case of any statute of 
26 this State that exempts income
derived from bonds or 
 
 
SB0490- 68 -LRB102 04170 HLH 14187 b


1 other obligations from the tax imposed under this Act,

2 the amount exempted shall be the interest net of bond 
3 premium amortization;
4   (L) With the exception of any amounts subtracted 
5 under subparagraph
(K),
an amount equal to the sum of 
6 all amounts disallowed as
deductions by (i) Sections 
7 171(a)(2) and 265(a)(2) of the Internal Revenue
Code, 
8 and all amounts of expenses allocable
to interest and 
9 disallowed as deductions by Section 265(a)(1) of the 
10 Internal
Revenue Code;
and (ii) for taxable years

11 ending on or after August 13, 1999, Sections

12 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
13 Internal Revenue Code, plus, (iii) for taxable years 
14 ending on or after December 31, 2011, Section 
15 45G(e)(3) of the Internal Revenue Code and, for 
16 taxable years ending on or after December 31, 2008, 
17 any amount included in gross income under Section 87 
18 of the Internal Revenue Code; the provisions of this

19 subparagraph are exempt from the provisions of Section 
20 250;
21   (M) An amount equal to those dividends included in 
22 such total
which were paid by a corporation which 
23 conducts business operations in a River Edge 
24 Redevelopment Zone or zones created under the River 
25 Edge Redevelopment Zone Act and
conducts substantially 
26 all of its operations in a River Edge Redevelopment 
 
 
SB0490- 69 -LRB102 04170 HLH 14187 b


1 Zone or zones. This subparagraph (M) is exempt from 
2 the provisions of Section 250;
3   (N) An amount equal to any contribution made to a 
4 job training
project established pursuant to the Tax 
5 Increment Allocation
Redevelopment Act;
6   (O) An amount equal to those dividends included in 
7 such total
that were paid by a corporation that 
8 conducts business operations in a
federally designated 
9 Foreign Trade Zone or Sub-Zone and that is designated

10 a High Impact Business located in Illinois; provided 
11 that dividends eligible
for the deduction provided in 
12 subparagraph (M) of paragraph (2) of this
subsection 
13 shall not be eligible for the deduction provided under 
14 this
subparagraph (O);
15   (P) An amount equal to the amount of the deduction 
16 used to compute the
federal income tax credit for 
17 restoration of substantial amounts held under
claim of 
18 right for the taxable year pursuant to Section 1341 of 
19 the
Internal Revenue Code;
20   (Q) For taxable year 1999 and thereafter, an 
21 amount equal to the
amount of any
(i) distributions, 
22 to the extent includible in gross income for
federal 
23 income tax purposes, made to the taxpayer because of

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

26 regime or as an heir of the victim and (ii) items
of 
 
 
SB0490- 70 -LRB102 04170 HLH 14187 b


1 income, to the extent
includible in gross income for 
2 federal income tax purposes, attributable to,
derived 
3 from or in any way related to assets stolen from, 
4 hidden from, or
otherwise lost to a victim of

5 persecution for racial or religious reasons by Nazi

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

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

23 similar entitlement is not affected by the inclusion 
24 of items (i) and (ii) of
this paragraph in gross income 
25 for federal income tax purposes.
This paragraph is 
26 exempt from the provisions of Section 250;
 
 
SB0490- 71 -LRB102 04170 HLH 14187 b


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

3 is taken on the taxpayer's federal income tax return 
4 under
subsection (k) of Section 168 of the Internal 
5 Revenue Code and for each
applicable taxable year 
6 thereafter, an amount equal to "x", where:
7    (1) "y" equals the amount of the depreciation 
8 deduction taken for the
taxable year
on the 
9 taxpayer's federal income tax return on property 
10 for which the bonus
depreciation deduction
was 
11 taken in any year under subsection (k) of Section 
12 168 of the Internal
Revenue Code, but not 
13 including the bonus depreciation deduction;
14    (2) for taxable years ending on or before 
15 December 31, 2005, "x" equals "y" multiplied by 30 
16 and then divided by 70 (or "y"
multiplied by 
17 0.429); and
18    (3) for taxable years ending after December 
19 31, 2005:
20     (i) for property on which a bonus 
21 depreciation deduction of 30% of the adjusted 
22 basis was taken, "x" equals "y" multiplied by 
23 30 and then divided by 70 (or "y"
multiplied 
24 by 0.429); and
25     (ii) for property on which a bonus 
26 depreciation deduction of 50% of the adjusted 
 
 
SB0490- 72 -LRB102 04170 HLH 14187 b


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

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

23   The taxpayer is allowed to take the deduction 
24 under this subparagraph
only once with respect to any 
25 one piece of property.
26   This subparagraph (S) is exempt from the 
 
 
SB0490- 73 -LRB102 04170 HLH 14187 b


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

19   (U) An amount equal to the interest income taken 
20 into account for the taxable year (net of the 
21 deductions allocable thereto) with respect to 
22 transactions with (i) a foreign person who would be a 
23 member of the taxpayer's unitary business group but 
24 for the fact the foreign person's business activity 
25 outside the United States is 80% or more of that 
26 person's total business activity and (ii) for taxable 
 
 
SB0490- 74 -LRB102 04170 HLH 14187 b


1 years ending on or after December 31, 2008, to a person 
2 who would be a member of the same unitary business 
3 group but for the fact that the person is prohibited 
4 under Section 1501(a)(27) from being included in the 
5 unitary business group because he or she is ordinarily 
6 required to apportion business income under different 
7 subsections of Section 304, but not to exceed the 
8 addition modification required to be made for the same 
9 taxable year under Section 203(c)(2)(G-12) for 
10 interest paid, accrued, or incurred, directly or 
11 indirectly, to the same person. This subparagraph (U) 
12 is exempt from the provisions of Section 250; 
13   (V) An amount equal to the income from intangible 
14 property taken into account for the taxable year (net 
15 of the deductions allocable thereto) with respect to 
16 transactions with (i) a foreign person who would be a 
17 member of the taxpayer's unitary business group but 
18 for the fact that the foreign person's business 
19 activity outside the United States is 80% or more of 
20 that person's total business activity and (ii) for 
21 taxable years ending on or after December 31, 2008, to 
22 a person who would be a member of the same unitary 
23 business group but for the fact that the person is 
24 prohibited under Section 1501(a)(27) from being 
25 included in the unitary business group because he or 
26 she is ordinarily required to apportion business 
 
 
SB0490- 75 -LRB102 04170 HLH 14187 b


1 income under different subsections of Section 304, but 
2 not to exceed the addition modification required to be 
3 made for the same taxable year under Section 
4 203(c)(2)(G-13) for intangible expenses and costs 
5 paid, accrued, or incurred, directly or indirectly, to 
6 the same foreign person. This subparagraph (V) is 
7 exempt from the provisions of Section 250;

8   (W) in the case of an estate, an amount equal to 
9 all amounts included in such total pursuant to the 
10 provisions of Section 111 of the Internal Revenue Code 
11 as a recovery of items previously deducted by the 
12 decedent from adjusted gross income in the computation 
13 of taxable income. This subparagraph (W) is exempt 
14 from Section 250; 
15   (X) an amount equal to the refund included in such 
16 total of any tax deducted for federal income tax 
17 purposes, to the extent that deduction was added back 
18 under subparagraph (F). This subparagraph (X) is 
19 exempt from the provisions of Section 250;
20   (Y) For taxable years ending on or after December 
21 31, 2011, in the case of a taxpayer who was required to 
22 add back any insurance premiums under Section 
23 203(c)(2)(G-14), such taxpayer may elect to subtract 
24 that part of a reimbursement received from the 
25 insurance company equal to the amount of the expense 
26 or loss (including expenses incurred by the insurance 
 
 
SB0490- 76 -LRB102 04170 HLH 14187 b


1 company) that would have been taken into account as a 
2 deduction for federal income tax purposes if the 
3 expense or loss had been uninsured. If a taxpayer 
4 makes the election provided for by this subparagraph 
5 (Y), the insurer to which the premiums were paid must 
6 add back to income the amount subtracted by the 
7 taxpayer pursuant to this subparagraph (Y). This 
8 subparagraph (Y) is exempt from the provisions of 
9 Section 250; and
10   (Z) For taxable years beginning after December 31, 
11 2018 and before January 1, 2026, the amount of excess 
12 business loss of the taxpayer disallowed as a 
13 deduction by Section 461(l)(1)(B) of the Internal 
14 Revenue Code; and . 
15   (AA) For taxable years beginning on or after 
16 January 1, 2022, an amount of up to $50,000 per tax 
17 year contributed to a small business asset purchase 
18 account during the tax year, plus all interest earned 
19 on such accounts during the tax year; a "small 
20 business asset purchase account" means an account 
21 established by a taxpayer, the proceeds of which are 
22 used to purchase property used primarily in Illinois 
23 for which a federal income tax deduction is claimed 
24 under Section 179 of the Internal Revenue Code. 
25  (3) Limitation. The amount of any modification 
26 otherwise required
under this subsection shall, under 
 
 
SB0490- 77 -LRB102 04170 HLH 14187 b


1 regulations prescribed by the
Department, be adjusted by 
2 any amounts included therein which were
properly paid, 
3 credited, or required to be distributed, or permanently 
4 set
aside for charitable purposes pursuant to Internal 
5 Revenue Code Section
642(c) during the taxable year.

6 (d) Partnerships.
7  (1) In general. In the case of a partnership, base 
8 income means an
amount equal to the taxpayer's taxable 
9 income for the taxable year as
modified by paragraph (2).
10  (2) Modifications. The taxable income referred to in 
11 paragraph (1)
shall be modified by adding thereto the sum 
12 of the following amounts:
13   (A) An amount equal to all amounts paid or accrued 
14 to the taxpayer as
interest or dividends during the 
15 taxable year to the extent excluded from
gross income 
16 in the computation of taxable income;
17   (B) An amount equal to the amount of tax imposed by 
18 this Act to the
extent deducted from gross income for 
19 the taxable year;
20   (C) The amount of deductions allowed to the 
21 partnership pursuant to
Section 707 (c) of the 
22 Internal Revenue Code in calculating its taxable 
23 income;
24   (D) An amount equal to the amount of the capital 
25 gain deduction
allowable under the Internal Revenue 
 
 
SB0490- 78 -LRB102 04170 HLH 14187 b


1 Code, to the extent deducted from
gross income in the 
2 computation of taxable income;
3   (D-5) For taxable years 2001 and thereafter, an 
4 amount equal to the
bonus depreciation deduction taken 
5 on the taxpayer's federal income tax return for the 
6 taxable
year under subsection (k) of Section 168 of 
7 the Internal Revenue Code;
8   (D-6) If the taxpayer sells, transfers, abandons, 
9 or otherwise disposes of
property for which the 
10 taxpayer was required in any taxable year to make an

11 addition modification under subparagraph (D-5), then 
12 an amount equal to the
aggregate amount of the 
13 deductions taken in all taxable years
under 
14 subparagraph (O) with respect to that property.
15   If the taxpayer continues to own property through 
16 the last day of the last tax year for which the 
17 taxpayer may claim a depreciation deduction for 
18 federal income tax purposes and for which the taxpayer 
19 was allowed in any taxable year to make a subtraction 
20 modification under subparagraph (O), then an amount 
21 equal to that subtraction modification.

22   The taxpayer is required to make the addition 
23 modification under this
subparagraph
only once with 
24 respect to any one piece of property;
25   (D-7) An amount equal to the amount otherwise 
26 allowed as a deduction in computing base income for 
 
 
SB0490- 79 -LRB102 04170 HLH 14187 b


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

26   This paragraph shall not apply to the following:

 
 
SB0490- 80 -LRB102 04170 HLH 14187 b


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

22    (iii) the taxpayer can establish, based on 
23 clear and convincing evidence, that the interest 
24 paid, accrued, or incurred relates to a contract 
25 or agreement entered into at arm's-length rates 
26 and terms and the principal purpose for the 
 
 
SB0490- 81 -LRB102 04170 HLH 14187 b


1 payment is not federal or Illinois tax avoidance; 
2 or

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

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

19   (D-8) An amount equal to the amount of intangible 
20 expenses and costs otherwise allowed as a deduction in 
21 computing base income, and that were paid, accrued, or 
22 incurred, directly or indirectly, (i) for taxable 
23 years ending on or after December 31, 2004, to a 
24 foreign person who would be a member of the same 
25 unitary business group but for the fact that the 
26 foreign person's business activity outside the United 
 
 
SB0490- 82 -LRB102 04170 HLH 14187 b


1 States is 80% or more of that person's total business 
2 activity and (ii) for taxable years ending on or after 
3 December 31, 2008, to a person who would be a member of 
4 the same unitary business group but for the fact that 
5 the person is prohibited under Section 1501(a)(27) 
6 from being included in the unitary business group 
7 because he or she is ordinarily required to apportion 
8 business income under different subsections of Section 
9 304. The addition modification required by this 
10 subparagraph shall be reduced to the extent that 
11 dividends were included in base income of the unitary 
12 group for the same taxable year and received by the 
13 taxpayer or by a member of the taxpayer's unitary 
14 business group (including amounts included in gross 
15 income pursuant to Sections 951 through 964 of the 
16 Internal Revenue Code and amounts included in gross 
17 income under Section 78 of the Internal Revenue Code) 
18 with respect to the stock of the same person to whom 
19 the intangible expenses and costs were directly or 
20 indirectly paid, incurred or accrued. The preceding 
21 sentence shall not apply to the extent that the same 
22 dividends caused a reduction to the addition 
23 modification required under Section 203(d)(2)(D-7) of 
24 this Act. As used in this subparagraph, the term 
25 "intangible expenses and costs" includes (1) expenses, 
26 losses, and costs for, or related to, the direct or 
 
 
SB0490- 83 -LRB102 04170 HLH 14187 b


1 indirect acquisition, use, maintenance or management, 
2 ownership, sale, exchange, or any other disposition of 
3 intangible property; (2) losses incurred, directly or 
4 indirectly, from factoring transactions or discounting 
5 transactions; (3) royalty, patent, technical, and 
6 copyright fees; (4) licensing fees; and (5) other 
7 similar expenses and costs. For purposes of this 
8 subparagraph, "intangible property" includes patents, 
9 patent applications, trade names, trademarks, service 
10 marks, copyrights, mask works, trade secrets, and 
11 similar types of intangible assets;
12   This paragraph shall not apply to the following:
13    (i) any item of intangible expenses or costs 
14 paid, accrued, or incurred, directly or 
15 indirectly, from a transaction with a person who 
16 is subject in a foreign country or state, other 
17 than a state which requires mandatory unitary 
18 reporting, to a tax on or measured by net income 
19 with respect to such item; or
20    (ii) any item of intangible expense or cost 
21 paid, accrued, or incurred, directly or 
22 indirectly, if the taxpayer can establish, based 
23 on a preponderance of the evidence, both of the 
24 following:
25     (a) the person during the same taxable 
26 year paid, accrued, or incurred, the 
 
 
SB0490- 84 -LRB102 04170 HLH 14187 b


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

19    Nothing in this subsection shall preclude the 
20 Director from making any other adjustment 
21 otherwise allowed under Section 404 of this Act 
22 for any tax year beginning after the effective 
23 date of this amendment provided such adjustment is 
24 made pursuant to regulation adopted by the 
25 Department and such regulations provide methods 
26 and standards by which the Department will utilize 
 
 
SB0490- 85 -LRB102 04170 HLH 14187 b


1 its authority under Section 404 of this Act;

2   (D-9) For taxable years ending on or after 
3 December 31, 2008, an amount equal to the amount of 
4 insurance premium expenses and costs otherwise allowed 
5 as a deduction in computing base income, and that were 
6 paid, accrued, or incurred, directly or indirectly, to 
7 a person who would be a member of the same unitary 
8 business group but for the fact that the person is 
9 prohibited under Section 1501(a)(27) from being 
10 included in the unitary business group because he or 
11 she is ordinarily required to apportion business 
12 income under different subsections of Section 304. The 
13 addition modification required by this subparagraph 
14 shall be reduced to the extent that dividends were 
15 included in base income of the unitary group for the 
16 same taxable year and received by the taxpayer or by a 
17 member of the taxpayer's unitary business group 
18 (including amounts included in gross income under 
19 Sections 951 through 964 of the Internal Revenue Code 
20 and amounts included in gross income under Section 78 
21 of the Internal Revenue Code) with respect to the 
22 stock of the same person to whom the premiums and costs 
23 were directly or indirectly paid, incurred, or 
24 accrued. The preceding sentence does not apply to the 
25 extent that the same dividends caused a reduction to 
26 the addition modification required under Section 
 
 
SB0490- 86 -LRB102 04170 HLH 14187 b


1 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
2   (D-10) An amount equal to the credit allowable to 
3 the taxpayer under Section 218(a) of this Act, 
4 determined without regard to Section 218(c) of this 
5 Act;
6   (D-11) For taxable years ending on or after 
7 December 31, 2017, an amount equal to the deduction 
8 allowed under Section 199 of the Internal Revenue Code 
9 for the taxable year; 
10   (D-12) An amount withdrawn from a small business 
11 asset purchase account that is not used for purchases 
12 of property for which a deduction under Section 179 of 
13 the Internal Revenue Code is claimed for the tax year 
14 in which the amount is withdrawn and which property is 
15 used predominantly in Illinois; such amounts are 
16 subject to the 10% penalty for ineligible use under 
17 Section 3-3.5 of the Uniform Penalty and Interest Act; 
18 and by deducting from the total so obtained the following 
19 amounts:
20   (E) The valuation limitation amount;
21   (F) An amount equal to the amount of any tax 
22 imposed by this Act which
was refunded to the taxpayer 
23 and included in such total for the taxable year;
24   (G) An amount equal to all amounts included in 
25 taxable income as
modified by subparagraphs (A), (B), 
26 (C) and (D) which are exempt from
taxation by this 
 
 
SB0490- 87 -LRB102 04170 HLH 14187 b


1 State either by reason of its statutes or Constitution 
2 or
by reason of
the Constitution, treaties or statutes 
3 of the United States;
provided that, in the case of any 
4 statute of this State that exempts income
derived from 
5 bonds or other obligations from the tax imposed under 
6 this Act,
the amount exempted shall be the interest 
7 net of bond premium amortization;
8   (H) Any income of the partnership which 
9 constitutes personal service
income as defined in 
10 Section 1348(b)(1) of the Internal Revenue Code (as
in 
11 effect December 31, 1981) or a reasonable allowance 
12 for compensation
paid or accrued for services rendered 
13 by partners to the partnership,
whichever is greater; 
14 this subparagraph (H) is exempt from the provisions of 
15 Section 250;
16   (I) An amount equal to all amounts of income 
17 distributable to an entity
subject to the Personal 
18 Property Tax Replacement Income Tax imposed by

19 subsections (c) and (d) of Section 201 of this Act 
20 including amounts
distributable to organizations 
21 exempt from federal income tax by reason of
Section 
22 501(a) of the Internal Revenue Code; this subparagraph 
23 (I) is exempt from the provisions of Section 250;
24   (J) With the exception of any amounts subtracted 
25 under subparagraph
(G),
an amount equal to the sum of 
26 all amounts disallowed as deductions
by (i) Sections 
 
 
SB0490- 88 -LRB102 04170 HLH 14187 b


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

5 ending on or after August 13, 1999, Sections

6 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
7 Internal Revenue Code, plus, (iii) for taxable years 
8 ending on or after December 31, 2011, Section 
9 45G(e)(3) of the Internal Revenue Code and, for 
10 taxable years ending on or after December 31, 2008, 
11 any amount included in gross income under Section 87 
12 of the Internal Revenue Code; the provisions of this

13 subparagraph are exempt from the provisions of Section 
14 250;
15   (K) An amount equal to those dividends included in 
16 such total which were
paid by a corporation which 
17 conducts business operations in a River Edge 
18 Redevelopment Zone or zones created under the River 
19 Edge Redevelopment Zone Act and
conducts substantially 
20 all of its operations
from a River Edge Redevelopment 
21 Zone or zones. This subparagraph (K) is exempt from 
22 the provisions of Section 250;
23   (L) An amount equal to any contribution made to a 
24 job training project
established pursuant to the Real 
25 Property Tax Increment Allocation
Redevelopment Act;
26   (M) An amount equal to those dividends included in 
 
 
SB0490- 89 -LRB102 04170 HLH 14187 b


1 such total
that were paid by a corporation that 
2 conducts business operations in a
federally designated 
3 Foreign Trade Zone or Sub-Zone and that is designated 
4 a
High Impact Business located in Illinois; provided 
5 that dividends eligible
for the deduction provided in 
6 subparagraph (K) of paragraph (2) of this
subsection 
7 shall not be eligible for the deduction provided under 
8 this
subparagraph (M);
9   (N) An amount equal to the amount of the deduction 
10 used to compute the
federal income tax credit for 
11 restoration of substantial amounts held under
claim of 
12 right for the taxable year pursuant to Section 1341 of 
13 the
Internal Revenue Code;
14   (O) For taxable years 2001 and thereafter, for the 
15 taxable year in
which the bonus depreciation deduction

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

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

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

6   (R) An amount equal to the interest income taken 
7 into account for the taxable year (net of the 
8 deductions allocable thereto) with respect to 
9 transactions with (i) a foreign person who would be a 
10 member of the taxpayer's unitary business group but 
11 for the fact that the foreign person's business 
12 activity outside the United States is 80% or more of 
13 that person's total business activity and (ii) for 
14 taxable years ending on or after December 31, 2008, to 
15 a person who would be a member of the same unitary 
16 business group but for the fact that the person is 
17 prohibited under Section 1501(a)(27) from being 
18 included in the unitary business group because he or 
19 she is ordinarily required to apportion business 
20 income under different subsections of Section 304, but 
21 not to exceed the addition modification required to be 
22 made for the same taxable year under Section 
23 203(d)(2)(D-7) for interest paid, accrued, or 
24 incurred, directly or indirectly, to the same person. 
25 This subparagraph (R) is exempt from Section 250; 
26   (S) An amount equal to the income from intangible 
 
 
SB0490- 93 -LRB102 04170 HLH 14187 b


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

21   (T) For taxable years ending on or after December 
22 31, 2011, in the case of a taxpayer who was required to 
23 add back any insurance premiums under Section 
24 203(d)(2)(D-9), such taxpayer may elect to subtract 
25 that part of a reimbursement received from the 
26 insurance company equal to the amount of the expense 
 
 
SB0490- 94 -LRB102 04170 HLH 14187 b


1 or loss (including expenses incurred by the insurance 
2 company) that would have been taken into account as a 
3 deduction for federal income tax purposes if the 
4 expense or loss had been uninsured. If a taxpayer 
5 makes the election provided for by this subparagraph 
6 (T), the insurer to which the premiums were paid must 
7 add back to income the amount subtracted by the 
8 taxpayer pursuant to this subparagraph (T). This 
9 subparagraph (T) is exempt from the provisions of 
10 Section 250; and . 
11   (U) For taxable years beginning on or after 
12 January 1, 2022, an amount of up to $50,000 per tax 
13 year contributed to a small business asset purchase 
14 account during the tax year, plus all interest earned 
15 on such accounts during the tax year; a "small 
16 business asset purchase account" means an account 
17 established by a taxpayer, the proceeds of which are 
18 used to purchase property used primarily in Illinois 
19 for which a federal income tax deduction is claimed 
20 under Section 179 of the Internal Revenue Code. 

21 (e) Gross income; adjusted gross income; taxable income.
22  (1) In general. Subject to the provisions of paragraph 
23 (2) and
subsection (b)(3), for purposes of this Section 
24 and Section 803(e), a
taxpayer's gross income, adjusted 
25 gross income, or taxable income for
the taxable year shall 
 
 
SB0490- 95 -LRB102 04170 HLH 14187 b


1 mean the amount of gross income, adjusted gross
income or 
2 taxable income properly reportable for federal income tax

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

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

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

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

25 applied under Section 172 of the Internal Revenue Code or 
26 under
subparagraph (E) of paragraph (2) of this subsection 
 
 
SB0490- 96 -LRB102 04170 HLH 14187 b


1 (e) applied in
conjunction with Section 172 of the 
2 Internal Revenue Code.
3  (2) Special rule. For purposes of paragraph (1) of 
4 this subsection,
the taxable income properly reportable 
5 for federal income tax purposes
shall mean:
6   (A) Certain life insurance companies. In the case 
7 of a life
insurance company subject to the tax imposed 
8 by Section 801 of the
Internal Revenue Code, life 
9 insurance company taxable income, plus the
amount of 
10 distribution from pre-1984 policyholder surplus 
11 accounts as
calculated under Section 815a of the 
12 Internal Revenue Code;
13   (B) Certain other insurance companies. In the case 
14 of mutual
insurance companies subject to the tax 
15 imposed by Section 831 of the
Internal Revenue Code, 
16 insurance company taxable income;
17   (C) Regulated investment companies. In the case of 
18 a regulated
investment company subject to the tax 
19 imposed by Section 852 of the
Internal Revenue Code, 
20 investment company taxable income;
21   (D) Real estate investment trusts. In the case of 
22 a real estate
investment trust subject to the tax 
23 imposed by Section 857 of the
Internal Revenue Code, 
24 real estate investment trust taxable income;
25   (E) Consolidated corporations. In the case of a 
26 corporation which
is a member of an affiliated group 
 
 
SB0490- 97 -LRB102 04170 HLH 14187 b


1 of corporations filing a consolidated
income tax 
2 return for the taxable year for federal income tax 
3 purposes,
taxable income determined as if such 
4 corporation had filed a separate
return for federal 
5 income tax purposes for the taxable year and each

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

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

16 Internal Revenue Code, but without regard to the 
17 prohibition against offsetting losses from patronage 
18 activities against income from nonpatronage 
19 activities; except that a cooperative corporation or 
20 association may make an election to follow its federal 
21 income tax treatment of patronage losses and 
22 nonpatronage losses. In the event such election is 
23 made, such losses shall be computed and carried over 
24 in a manner consistent with subsection (a) of Section 
25 207 of this Act and apportioned by the apportionment 
26 factor reported by the cooperative on its Illinois 
 
 
SB0490- 98 -LRB102 04170 HLH 14187 b


1 income tax return filed for the taxable year in which 
2 the losses are incurred. The election shall be 
3 effective for all taxable years with original returns 
4 due on or after the date of the election. In addition, 
5 the cooperative may file an amended return or returns, 
6 as allowed under this Act, to provide that the 
7 election shall be effective for losses incurred or 
8 carried forward for taxable years occurring prior to 
9 the date of the election. Once made, the election may 
10 only be revoked upon approval of the Director. The 
11 Department shall adopt rules setting forth 
12 requirements for documenting the elections and any 
13 resulting Illinois net loss and the standards to be 
14 used by the Director in evaluating requests to revoke 
15 elections. Public Act 96-932 is declaratory of 
16 existing law; 
17   (G) Subchapter S corporations. In the case of: (i) 
18 a Subchapter S
corporation for which there is in 
19 effect an election for the taxable year
under Section 
20 1362 of the Internal Revenue Code, the taxable income 
21 of such
corporation determined in accordance with 
22 Section 1363(b) of the Internal
Revenue Code, except 
23 that taxable income shall take into
account those 
24 items which are required by Section 1363(b)(1) of the

25 Internal Revenue Code to be separately stated; and 
26 (ii) a Subchapter
S corporation for which there is in 
 
 
SB0490- 99 -LRB102 04170 HLH 14187 b


1 effect a federal election to opt out of
the provisions 
2 of the Subchapter S Revision Act of 1982 and have 
3 applied
instead the prior federal Subchapter S rules 
4 as in effect on July 1, 1982,
the taxable income of 
5 such corporation determined in accordance with the

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

12 required by Section 703(a)(1) to be separately stated 
13 but which would be
taken into account by an individual 
14 in calculating his taxable income.
15  (3) Recapture of business expenses on disposition of 
16 asset or business. Notwithstanding any other law to the 
17 contrary, if in prior years income from an asset or 
18 business has been classified as business income and in a 
19 later year is demonstrated to be non-business income, then 
20 all expenses, without limitation, deducted in such later 
21 year and in the 2 immediately preceding taxable years 
22 related to that asset or business that generated the 
23 non-business income shall be added back and recaptured as 
24 business income in the year of the disposition of the 
25 asset or business. Such amount shall be apportioned to 
26 Illinois using the greater of the apportionment fraction 
 
 
SB0490- 100 -LRB102 04170 HLH 14187 b


1 computed for the business under Section 304 of this Act 
2 for the taxable year or the average of the apportionment 
3 fractions computed for the business under Section 304 of 
4 this Act for the taxable year and for the 2 immediately 
5 preceding taxable years.


6 (f) Valuation limitation amount.
7  (1) In general. The valuation limitation amount 
8 referred to in
subsections (a)(2)(G), (c)(2)(I) and 
9 (d)(2)(E) is an amount equal to:
10   (A) The sum of the pre-August 1, 1969 appreciation 
11 amounts (to the
extent consisting of gain reportable 
12 under the provisions of Section
1245 or 1250 of the 
13 Internal Revenue Code) for all property in respect
of 
14 which such gain was reported for the taxable year; 
15 plus
16   (B) The lesser of (i) the sum of the pre-August 1, 
17 1969 appreciation
amounts (to the extent consisting of 
18 capital gain) for all property in
respect of which 
19 such gain was reported for federal income tax purposes

20 for the taxable year, or (ii) the net capital gain for 
21 the taxable year,
reduced in either case by any amount 
22 of such gain included in the amount
determined under 
23 subsection (a)(2)(F) or (c)(2)(H).
24  (2) Pre-August 1, 1969 appreciation amount.
25   (A) If the fair market value of property referred 
 
 
SB0490- 101 -LRB102 04170 HLH 14187 b


1 to in paragraph
(1) was readily ascertainable on 
2 August 1, 1969, the pre-August 1, 1969
appreciation 
3 amount for such property is the lesser of (i) the 
4 excess of
such fair market value over the taxpayer's 
5 basis (for determining gain)
for such property on that 
6 date (determined under the Internal Revenue
Code as in 
7 effect on that date), or (ii) the total gain realized 
8 and
reportable for federal income tax purposes in 
9 respect of the sale,
exchange or other disposition of 
10 such property.
11   (B) If the fair market value of property referred 
12 to in paragraph
(1) was not readily ascertainable on 
13 August 1, 1969, the pre-August 1,
1969 appreciation 
14 amount for such property is that amount which bears

15 the same ratio to the total gain reported in respect of 
16 the property for
federal income tax purposes for the 
17 taxable year, as the number of full
calendar months in 
18 that part of the taxpayer's holding period for the

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

25 (g) Double deductions. Unless specifically provided 
 
 
SB0490- 102 -LRB102 04170 HLH 14187 b


1otherwise, nothing
in this Section shall permit the same item 
2to be deducted more than once.

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

11August 1, 1969 or otherwise.
12(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18; 
13101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)

14 Section 10. The Uniform Penalty and Interest Act is 
15amended by adding Section 3-3.5 as follows:

16 (35 ILCS 735/3-3.5 new)
17 Sec. 3-3.5. Penalty for improper use of proceeds of Small 
18Business Asset Purchase Account. A penalty of 10% of the 
19amount withdrawn from a small business asset purchase account, 
20as defined in Section 203 of the Illinois Income Tax Act, 
21during a tax year that is used for purchases of property for 
22which a deduction under Section 179 of the Internal Revenue 
23Code is not claimed for the tax year in which the amount is 
 
 
SB0490- 103 -LRB102 04170 HLH 14187 b


1withdrawn, or purchases of property for which the deduction 
2under Section 179 of the Internal Revenue Code is claimed that 
3is not used predominantly in Illinois.


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