99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3745
 
Introduced , by Rep. William Davis
 
SYNOPSIS AS INTRODUCED:



30 ILCS 787/15
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/901 from Ch. 120, par. 9-901

 Amends the Illinois Income Tax Act. Creates an addition modification for any deduction allowed to the
taxpayer under Sections 243 through 246A of the
Internal Revenue Code (for certain qualifying dividends paid to corporations). Provides that the additional revenue attributable to that change shall be deposited into the 21st Century Workforce Development Fund. Amends the 21st Century Workforce Development Fund Act. Provides that the 21st Century Workforce Development Fund is not subject to sweeps, administrative charges or chargebacks, or other fiscal or budgetary maneuvers. Effective immediately.



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FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


HB3745LRB099 09333 HLH 29538 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 21st Century Workforce Development Fund Act 
5is amended by changing Section 15 as follows:

6 (30 ILCS 787/15)

7 Sec. 15. Use of Fund. 
8 (a) Role of Fund. Subject to appropriation, resources from 
9the Fund are intended to be used flexibly to support innovative 
10and locally-driven strategies, to leverage other funding 
11sources, and to fill gaps in existing workforce development 
12resources in Illinois. They are not intended to supplant 
13existing workforce development resources.
14 (b) Distribution of funds. Funds shall be distributed 
15through competitive grantmaking processes administered by the 
16Department and overseen by the Advisory Committee. No more than 
176% of funds used for grants may be retained by the Department 
18for administrative costs or for program evaluation or technical 
19assistance activities.
20 (c) Grantmaking. The Department must administer funds 
21through competitive grantmaking in accordance with the 
22priorities described in this Act. Grantmaking must be used to 
23support workforce development strategies consistent with the 
 
 
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1priorities outlined in this Act. Strategies may include, but 
2are not limited to the following: 
3  (i) Expanded grantmaking for existing State workforce 
4 development strategies, including the Job Training and 
5 Economic Development Program and programs designed to 
6 increase the number of persons traditionally 
7 underrepresented in the building trades, specifically 
8 minorities and women.
9  (ii) Workforce development initiatives that help the 
10 least skilled adults access employment and education 
11 opportunities, including transitional jobs programs and 
12 educational bridge programming that integrate basic 
13 education and occupational skills training.
14  (iii) Sectoral strategies that develop 
15 industry-specific workforce education and training 
16 services that lead to existing or expected jobs with 
17 identified employers and that include services to ensure 
18 that low-income, low-skilled adults can be served.
19  (iv) Support for the development and implementation of 
20 workforce education and training programs in the energy 
21 efficiency, renewable energy, and pollution control 
22 cleanup and prevention industries.
23  (v) Support for planning activities that: ensure that 
24 workforce development and education needs of low-skilled 
25 adults are integrated into industry-specific career 
26 pathways; analyze labor market data to track workforce 
 
 
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1 trends in the State's energy-related initiatives; or 
2 increase the capacity of communities to provide workforce 
3 services to low-income, low-skilled adults.

4 (d) Allowable expenditures. Grant funds are limited to 
5expenditures for the following:
6  (i) Basic skills training, adult education, 
7 occupational training, job readiness training, and 
8 soft-skills training for which financial aid is otherwise 
9 not available.

10  (ii) Workforce development-related services including 
11 mentoring, job development, support services, 
12 transportation assistance, and wage subsidies, that are 
13 tied to participation in training and employment.

14  (iii) Capacity building, program development, and 
15 technical assistance activities necessary for the 
16 development and implementation of new workforce education 
17 and training strategies.

18 No more than 5% of any grant may be used for administrative 
19costs.

20 (e) Eligible applicants. For grants under this Section, 
21eligible applicants include the following:

22  (i) Any private, public, and non-profit entities that 
23 provide education, training, and workforce development 
24 services to low-income individuals.
25  (ii) Educational institutions.
26  (iii) Labor and business associations.

 
 
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1 (f) The 21st Century Workforce Development Fund is not 
2subject to sweeps, administrative charges or chargebacks, 
3including, but not limited to, those authorized under Section 
48h of the State Finance Act, nor any other fiscal or budgetary 
5maneuver that would in any way transfer any funds from the 21st 
6Century Workforce Development Fund into any other fund of the 
7State. 
8(Source: P.A. 96-771, eff. 8-28-09; 97-581, eff. 8-26-11.)

9 Section 10. The Illinois Income Tax Act is amended by 
10changing Sections 203 and 901 as follows:

11 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
12 Sec. 203. Base income defined. 
13 (a) Individuals.
14  (1) In general. In the case of an individual, base 
15 income means an
amount equal to the taxpayer's adjusted 
16 gross income for the taxable
year as modified by paragraph 
17 (2).
18  (2) Modifications. The adjusted gross income referred 
19 to in
paragraph (1) shall be modified by adding thereto the 
20 sum of the
following amounts:
21   (A) An amount equal to all amounts paid or accrued 
22 to the taxpayer
as interest or dividends during the 
23 taxable year to the extent excluded
from gross income 
24 in the computation of adjusted gross income, except 
 
 
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1 stock
dividends of qualified public utilities 
2 described in Section 305(e) of the
Internal Revenue 
3 Code;
4   (B) An amount equal to the amount of tax imposed by 
5 this Act to the
extent deducted from gross income in 
6 the computation of adjusted gross
income for the 
7 taxable year;
8   (C) An amount equal to the amount received during 
9 the taxable year
as a recovery or refund of real 
10 property taxes paid with respect to the
taxpayer's 
11 principal residence under the Revenue Act of
1939 and 
12 for which a deduction was previously taken under 
13 subparagraph (L) of
this paragraph (2) prior to July 1, 
14 1991, the retrospective application date of
Article 4 
15 of Public Act 87-17. In the case of multi-unit or 
16 multi-use
structures and farm dwellings, the taxes on 
17 the taxpayer's principal residence
shall be that 
18 portion of the total taxes for the entire property 
19 which is
attributable to such principal residence;
20   (D) An amount equal to the amount of the capital 
21 gain deduction
allowable under the Internal Revenue 
22 Code, to the extent deducted from gross
income in the 
23 computation of adjusted gross income;
24   (D-5) An amount, to the extent not included in 
25 adjusted gross income,
equal to the amount of money 
26 withdrawn by the taxpayer in the taxable year from
a 
 
 
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1 medical care savings account and the interest earned on 
2 the account in the
taxable year of a withdrawal 
3 pursuant to subsection (b) of Section 20 of the
Medical 
4 Care Savings Account Act or subsection (b) of Section 
5 20 of the
Medical Care Savings Account Act of 2000;
6   (D-10) For taxable years ending after December 31, 
7 1997, an
amount equal to any eligible remediation costs 
8 that the individual
deducted in computing adjusted 
9 gross income and for which the
individual claims a 
10 credit under subsection (l) of Section 201;
11   (D-15) For taxable years 2001 and thereafter, an 
12 amount equal to the
bonus depreciation deduction taken 
13 on the taxpayer's federal income tax return for the 
14 taxable
year under subsection (k) of Section 168 of the 
15 Internal Revenue Code;
16   (D-16) If the taxpayer sells, transfers, abandons, 
17 or otherwise disposes of property for which the 
18 taxpayer was required in any taxable year to
make an 
19 addition modification under subparagraph (D-15), then 
20 an amount equal
to the aggregate amount of the 
21 deductions taken in all taxable
years under 
22 subparagraph (Z) with respect to that property.
23   If the taxpayer continues to own property through 
24 the last day of the last tax year for which the 
25 taxpayer may claim a depreciation deduction for 
26 federal income tax purposes and for which the taxpayer 
 
 
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1 was allowed in any taxable year to make a subtraction 
2 modification under subparagraph (Z), then an amount 
3 equal to that subtraction modification.

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

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

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

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

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

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

7   (D-20) For taxable years beginning on or after 
8 January 1,
2002 and ending on or before December 31, 
9 2006, in
the
case of a distribution from a qualified 
10 tuition program under Section 529 of
the Internal 
11 Revenue Code, other than (i) a distribution from a 
12 College Savings
Pool created under Section 16.5 of the 
13 State Treasurer Act or (ii) a
distribution from the 
14 Illinois Prepaid Tuition Trust Fund, an amount equal to

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

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

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

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

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

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

23 ending on or after August 13, 1999, Sections 171(a)(2), 
24 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
25 Code, plus, for taxable years ending on or after 
26 December 31, 2011, Section 45G(e)(3) of the Internal 
 
 
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1 Revenue Code and, for taxable years ending on or after 
2 December 31, 2008, any amount included in gross income 
3 under Section 87 of the Internal Revenue Code; the 
4 provisions of this
subparagraph are exempt from the 
5 provisions of Section 250;
6   (N) An amount equal to all amounts included in such 
7 total which are
exempt from taxation by this State 
8 either by reason of its statutes or
Constitution
or by 
9 reason of the Constitution, treaties or statutes of the 
10 United States;
provided that, in the case of any 
11 statute of this State that exempts income
derived from 
12 bonds or other obligations from the tax imposed under 
13 this Act,
the amount exempted shall be the interest net 
14 of bond premium amortization;
15   (O) An amount equal to any contribution made to a 
16 job training
project established pursuant to the Tax 
17 Increment Allocation Redevelopment Act;
18   (P) An amount equal to the amount of the deduction 
19 used to compute the
federal income tax credit for 
20 restoration of substantial amounts held under
claim of 
21 right for the taxable year pursuant to Section 1341 of 
22 the
Internal Revenue Code or of any itemized deduction 
23 taken from adjusted gross income in the computation of 
24 taxable income for restoration of substantial amounts 
25 held under claim of right for the taxable year;
26   (Q) An amount equal to any amounts included in such 
 
 
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1 total, received by
the taxpayer as an acceleration in 
2 the payment of life, endowment or annuity
benefits in 
3 advance of the time they would otherwise be payable as 
4 an indemnity
for a terminal 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 in 
17 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 the 
10 amount paid for that health insurance or long-term care

11 insurance may be deducted under Section 213 of the 
12 Internal Revenue Code, has not been deducted on the 
13 federal income tax return of the taxpayer,
and does not 
14 exceed the taxable income attributable to that 
15 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 
 
 
HB3745- 23 -LRB099 09333 HLH 29538 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 January 
4 1, 1998,
all amounts included in the taxpayer's federal 
5 gross income
in the taxable year from amounts converted 
6 from a regular IRA to a Roth IRA.
This paragraph is 
7 exempt from the provisions of Section
250;
8   (X) For taxable year 1999 and thereafter, an amount 
9 equal to the
amount of any (i) distributions, to the 
10 extent includible in gross income for
federal income 
11 tax purposes, made to the taxpayer because of his or 
12 her status
as a victim of persecution for racial or 
13 religious reasons by Nazi Germany or
any other Axis 
14 regime or as an heir of the victim and (ii) items
of 
15 income, to the extent
includible in gross income for 
16 federal income tax purposes, attributable to,
derived 
17 from or in any way related to assets stolen from, 
18 hidden from, or
otherwise lost to a victim of

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

 
 
HB3745- 24 -LRB099 09333 HLH 29538 b


1 provided, however, this subtraction from federal 
2 adjusted gross income does not
apply to assets acquired 
3 with such assets or with the proceeds from the sale of

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

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

26 State
Treasurer Act or (ii) the Illinois Prepaid 
 
 
HB3745- 25 -LRB099 09333 HLH 29538 b


1 Tuition Trust Fund,
except that
amounts excluded from 
2 gross income under Section 529(c)(3)(C)(i) of the

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

12 is taken on the taxpayer's federal income tax return 
13 under
subsection (k) of Section 168 of the Internal 
14 Revenue Code and for each
applicable taxable year 
15 thereafter, an amount equal to "x", where:
16    (1) "y" equals the amount of the depreciation 
17 deduction taken for the
taxable year
on the 
18 taxpayer's federal income tax return on property 
19 for which the bonus
depreciation deduction
was 
20 taken in any year under subsection (k) of Section 
21 168 of the Internal
Revenue Code, but not including 
22 the bonus depreciation deduction;
23    (2) for taxable years ending on or before 
24 December 31, 2005, "x" equals "y" multiplied by 30 
25 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
HB3745- 26 -LRB099 09333 HLH 29538 b


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

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

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

25   If the taxpayer continues to own property through 
26 the last day of the last tax year for which the 
 
 
HB3745- 27 -LRB099 09333 HLH 29538 b


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

6   The taxpayer is allowed to take the deduction under 
7 this subparagraph
only once with respect to any one 
8 piece of property.
9   This subparagraph (AA) is exempt from the 
10 provisions of Section 250;
11   (BB) Any amount included in adjusted gross income, 
12 other
than
salary,
received by a driver in a 
13 ridesharing arrangement using a motor vehicle;
14   (CC) The amount of (i) any interest income (net of 
15 the deductions allocable thereto) taken into account 
16 for the taxable year with respect to a transaction with 
17 a taxpayer that is required to make an addition 
18 modification with respect to such transaction under 
19 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
20 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
21 the amount of that addition modification, and
(ii) any 
22 income from intangible property (net of the deductions 
23 allocable thereto) taken into account for the taxable 
24 year with respect to a transaction with a taxpayer that 
25 is required to make an addition modification with 
26 respect to such transaction under Section 
 
 
HB3745- 28 -LRB099 09333 HLH 29538 b


1 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
2 203(d)(2)(D-8), but not to exceed the amount of that 
3 addition modification. This subparagraph (CC) is 
4 exempt from the provisions of Section 250;
5   (DD) An amount equal to the interest income taken 
6 into account for the taxable year (net of the 
7 deductions allocable thereto) with respect to 
8 transactions with (i) a foreign person who would be a 
9 member of the taxpayer's unitary business group but for 
10 the fact that the foreign person's business activity 
11 outside the United States is 80% or more of that 
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, but not to exceed the 
20 addition modification required to be made for the same 
21 taxable year under Section 203(a)(2)(D-17) for 
22 interest paid, accrued, or incurred, directly or 
23 indirectly, to the same person. This subparagraph (DD) 
24 is exempt from the provisions of Section 250; 
25   (EE) An amount equal to the income from intangible 
26 property taken into account for the taxable year (net 
 
 
HB3745- 29 -LRB099 09333 HLH 29538 b


1 of the deductions allocable thereto) with respect to 
2 transactions with (i) a foreign person who would be a 
3 member of the taxpayer's unitary business group but for 
4 the fact that the foreign person's business activity 
5 outside the United States is 80% or more of that 
6 person's total business activity and (ii) for taxable 
7 years ending on or after December 31, 2008, to a person 
8 who would be a member of the same unitary business 
9 group but for the fact that the person is prohibited 
10 under Section 1501(a)(27) from being included in the 
11 unitary business group because he or she is ordinarily 
12 required to apportion business income under different 
13 subsections of Section 304, but not to exceed the 
14 addition modification required to be made for the same 
15 taxable year under Section 203(a)(2)(D-18) for 
16 intangible expenses and costs paid, accrued, or 
17 incurred, directly or indirectly, to the same foreign 
18 person. This subparagraph (EE) is exempt from the 
19 provisions of Section 250;
20   (FF) An amount equal to any amount awarded to the 
21 taxpayer during the taxable year by the Court of Claims 
22 under subsection (c) of Section 8 of the Court of 
23 Claims Act for time unjustly served in a State prison. 
24 This subparagraph (FF) is exempt from the provisions of 
25 Section 250; and 
26   (GG) For taxable years ending on or after December 
 
 
HB3745- 30 -LRB099 09333 HLH 29538 b


1 31, 2011, in the case of a taxpayer who was required to 
2 add back any insurance premiums under Section 
3 203(a)(2)(D-19), such taxpayer may elect to subtract 
4 that part of a reimbursement received from the 
5 insurance company equal to the amount of the expense or 
6 loss (including expenses incurred by the insurance 
7 company) that would have been taken into account as a 
8 deduction for federal income tax purposes if the 
9 expense or loss had been uninsured. If a taxpayer makes 
10 the election provided for by this subparagraph (GG), 
11 the insurer to which the premiums were paid must add 
12 back to income the amount subtracted by the taxpayer 
13 pursuant to this subparagraph (GG). This subparagraph 
14 (GG) is exempt from the provisions of Section 250. 

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

 
 
HB3745- 31 -LRB099 09333 HLH 29538 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 year;
5   (C) In the case of a regulated investment company, 
6 an amount equal to
the excess of (i) the net long-term 
7 capital gain for the taxable year, over
(ii) the amount 
8 of the capital gain dividends designated as such in 
9 accordance
with Section 852(b)(3)(C) of the Internal 
10 Revenue Code and any amount
designated under Section 
11 852(b)(3)(D) of the Internal Revenue Code,

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

23 subparagraph (E) of paragraph (2) of subsection (e), 
24 the amount by which
addition modifications other than 
25 those provided by this subparagraph (E)
exceeded 
26 subtraction modifications in such earlier taxable 
 
 
HB3745- 32 -LRB099 09333 HLH 29538 b


1 year, with the
following limitations applied in the 
2 order that they are listed:
3    (i) the addition modification relating to the 
4 net operating loss
carried back or forward to the 
5 taxable year from any taxable year ending
prior to 
6 December 31, 1986 shall be reduced by the amount of 
7 addition
modification under this subparagraph (E) 
8 which related to that net operating
loss and which 
9 was taken into account in calculating the base 
10 income of an
earlier taxable year, and
11    (ii) the addition modification relating to the 
12 net operating loss
carried back or forward to the 
13 taxable year from any taxable year ending
prior to 
14 December 31, 1986 shall not exceed the amount of 
15 such carryback or
carryforward;
16   For taxable years in which there is a net operating 
17 loss carryback or
carryforward from more than one other 
18 taxable year ending prior to December
31, 1986, the 
19 addition modification provided in this subparagraph 
20 (E) shall
be the sum of the amounts computed 
21 independently under the preceding
provisions of this 
22 subparagraph (E) for each such taxable year;
23   (E-5) For taxable years ending after December 31, 
24 1997, an
amount equal to any eligible remediation costs 
25 that the corporation
deducted in computing adjusted 
26 gross income and for which the
corporation claims a 
 
 
HB3745- 33 -LRB099 09333 HLH 29538 b


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

21   The taxpayer is required to make the addition 
22 modification under this
subparagraph
only once with 
23 respect to any one piece of property;
24   (E-12) An amount equal to the amount otherwise 
25 allowed as a deduction in computing base income for 
26 interest paid, accrued, or incurred, directly or 
 
 
HB3745- 34 -LRB099 09333 HLH 29538 b


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

25   This paragraph shall not apply to the following:

26    (i) an item of interest paid, accrued, or 
 
 
HB3745- 35 -LRB099 09333 HLH 29538 b


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

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

 
 
HB3745- 36 -LRB099 09333 HLH 29538 b


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

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

17   (E-13) An amount equal to the amount of intangible 
18 expenses and costs otherwise allowed as a deduction in 
19 computing base income, and that were paid, accrued, or 
20 incurred, directly or indirectly, (i) for taxable 
21 years ending on or after December 31, 2004, to a 
22 foreign person who would be a member of the same 
23 unitary business group but for the fact that the 
24 foreign person's business activity outside the United 
25 States is 80% or more of that person's total business 
26 activity and (ii) for taxable years ending on or after 
 
 
HB3745- 37 -LRB099 09333 HLH 29538 b


1 December 31, 2008, to a person who would be a member of 
2 the same unitary business group but for the fact that 
3 the person is prohibited under Section 1501(a)(27) 
4 from being included in the unitary business group 
5 because he or she is ordinarily required to apportion 
6 business income under different subsections of Section 
7 304. The addition modification required by this 
8 subparagraph shall be reduced to the extent that 
9 dividends were included in base income of the unitary 
10 group for the same taxable year and received by the 
11 taxpayer or by a member of the taxpayer's unitary 
12 business group (including amounts included in gross 
13 income pursuant to Sections 951 through 964 of the 
14 Internal Revenue Code and amounts included in gross 
15 income under Section 78 of the Internal Revenue Code) 
16 with respect to the stock of the same person to whom 
17 the intangible expenses and costs were directly or 
18 indirectly paid, incurred, or accrued. The preceding 
19 sentence shall not apply to the extent that the same 
20 dividends caused a reduction to the addition 
21 modification required under Section 203(b)(2)(E-12) of 
22 this Act.
As used in this subparagraph, the term 
23 "intangible expenses and costs" includes (1) expenses, 
24 losses, and costs for, or related to, the direct or 
25 indirect acquisition, use, maintenance or management, 
26 ownership, sale, exchange, or any other disposition of 
 
 
HB3745- 38 -LRB099 09333 HLH 29538 b


1 intangible property; (2) losses incurred, directly or 
2 indirectly, from factoring transactions or discounting 
3 transactions; (3) royalty, patent, technical, and 
4 copyright fees; (4) licensing fees; and (5) other 
5 similar expenses and costs.
For purposes of this 
6 subparagraph, "intangible property" includes patents, 
7 patent applications, trade names, trademarks, service 
8 marks, copyrights, mask works, trade secrets, and 
9 similar types of intangible assets.
10   This paragraph shall not apply to the following:
11    (i) any item of intangible expenses or costs 
12 paid, accrued, or incurred, directly or 
13 indirectly, from a transaction with a person who is 
14 subject in a foreign country or state, other than a 
15 state which requires mandatory unitary reporting, 
16 to a tax on or measured by net income with respect 
17 to such item; or
18    (ii) any item of intangible expense or cost 
19 paid, accrued, or incurred, directly or 
20 indirectly, if the taxpayer can establish, based 
21 on a preponderance of the evidence, both of the 
22 following:
23     (a) the person during the same taxable 
24 year paid, accrued, or incurred, the 
25 intangible expense or cost to a person that is 
26 not a related member, and
 
 
HB3745- 39 -LRB099 09333 HLH 29538 b


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

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

25   (E-14) For taxable years ending on or after 
26 December 31, 2008, an amount equal to the amount of 
 
 
HB3745- 40 -LRB099 09333 HLH 29538 b


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

25   (E-15) For taxable years beginning after December 
26 31, 2008, any deduction for dividends paid by a captive 
 
 
HB3745- 41 -LRB099 09333 HLH 29538 b


1 real estate investment trust that is allowed to a real 
2 estate investment trust under Section 857(b)(2)(B) of 
3 the Internal Revenue Code for dividends paid;
4   (E-16) An amount equal to the credit allowable to 
5 the taxpayer under Section 218(a) of this Act, 
6 determined without regard to Section 218(c) of this 
7 Act;
8   (E-17) For taxable years ending on or after

9 December 31, 2015, any deduction allowed to the

10 taxpayer under Sections 243 through 246A of the

11 Internal Revenue Code; 
12 and by deducting from the total so obtained the sum of the 
13 following
amounts:
14   (F) An amount equal to the amount of any tax 
15 imposed by this Act
which was refunded to the taxpayer 
16 and included in such total for the
taxable year;
17   (G) An amount equal to any amount included in such 
18 total under
Section 78 of the Internal Revenue Code;
19   (H) In the case of a regulated investment company, 
20 an amount equal
to the amount of exempt interest 
21 dividends as defined in subsection (b)
(5) of Section 
22 852 of the Internal Revenue Code, paid to shareholders

23 for the taxable year;
24   (I) With the exception of any amounts subtracted 
25 under subparagraph
(J),
an amount equal to the sum of 
26 all amounts disallowed as
deductions by (i) Sections 
 
 
HB3745- 42 -LRB099 09333 HLH 29538 b


1 171(a) (2), and 265(a)(2) and amounts disallowed as

2 interest expense by Section 291(a)(3) of the Internal 
3 Revenue Code, and all amounts of expenses allocable to 
4 interest and
disallowed as deductions by Section 
5 265(a)(1) of the Internal Revenue Code;
and (ii) for 
6 taxable years
ending on or after August 13, 1999, 
7 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
8 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
9 for tax years ending on or after December 31, 2011, 
10 amounts disallowed as deductions by Section 45G(e)(3) 
11 of the Internal Revenue Code and, for taxable years 
12 ending on or after December 31, 2008, any amount 
13 included in gross income under Section 87 of the 
14 Internal Revenue Code and the policyholders' share of 
15 tax-exempt interest of a life insurance company under 
16 Section 807(a)(2)(B) of the Internal Revenue Code (in 
17 the case of a life insurance company with gross income 
18 from a decrease in reserves for the tax year) or 
19 Section 807(b)(1)(B) of the Internal Revenue Code (in 
20 the case of a life insurance company allowed a 
21 deduction for an increase in reserves for the tax 
22 year); the
provisions of this
subparagraph are exempt 
23 from the provisions of Section 250;
24   (J) An amount equal to all amounts included in such 
25 total which are
exempt from taxation by this State 
26 either by reason of its statutes or
Constitution
or by 
 
 
HB3745- 43 -LRB099 09333 HLH 29538 b


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

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

 
 
HB3745- 44 -LRB099 09333 HLH 29538 b


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

12 the date that it was placed in service in the River 
13 Edge Redevelopment Zone. The subtraction modification 
14 available to taxpayer in any
year under this subsection 
15 shall be that portion of the total interest paid
by the 
16 borrower with respect to such loan attributable to the 
17 eligible
property as calculated under the previous 
18 sentence. This subparagraph (M) is exempt from the 
19 provisions of Section 250;
20   (M-1) For any taxpayer that is a financial 
21 organization within the
meaning of Section 304(c) of 
22 this Act, an amount included in such total as
interest 
23 income from a loan or loans made by such taxpayer to a 
24 borrower,
to the extent that such a loan is secured by 
25 property which is eligible for
the High Impact Business 
26 Investment Credit. To determine the portion of a
loan 
 
 
HB3745- 45 -LRB099 09333 HLH 29538 b


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

5 the basis of the Section 201(h) investment credit 
6 property which
secures the loan or loans, using for 
7 this purpose the original basis of such
property on the 
8 date that it was placed in service in a federally 
9 designated
Foreign Trade Zone or Sub-Zone located in 
10 Illinois. No taxpayer that is
eligible for the 
11 deduction provided in subparagraph (M) of paragraph 
12 (2) of
this subsection shall be eligible for the 
13 deduction provided under this
subparagraph (M-1). The 
14 subtraction modification available to taxpayers in
any 
15 year under this subsection shall be that portion of the 
16 total interest
paid by the borrower with respect to 
17 such loan attributable to the eligible
property as 
18 calculated under the previous sentence;
19   (N) Two times any contribution made during the 
20 taxable year to a
designated zone organization to the 
21 extent that the contribution (i)
qualifies as a 
22 charitable contribution under subsection (c) of 
23 Section 170
of the Internal Revenue Code and (ii) must, 
24 by its terms, be used for a
project approved by the 
25 Department of Commerce and Economic Opportunity under 
26 Section 11 of the Illinois Enterprise Zone Act or under 
 
 
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1 Section 10-10 of the River Edge Redevelopment Zone Act. 
2 This subparagraph (N) is exempt from the provisions of 
3 Section 250;
4   (O) An amount equal to: (i) 85% for taxable years 
5 ending on or before
December 31, 1992, or, a percentage 
6 equal to the percentage allowable under
Section 
7 243(a)(1) of the Internal Revenue Code of 1986 for 
8 taxable years ending
after December 31, 1992, of the 
9 amount by which dividends included in taxable
income 
10 and received from a corporation that is not created or 
11 organized under
the laws of the United States or any 
12 state or political subdivision thereof,
including, for 
13 taxable years ending on or after December 31, 1988, 
14 dividends
received or deemed received or paid or deemed 
15 paid under Sections 951 through
965 of the Internal 
16 Revenue Code, exceed the amount of the modification

17 provided under subparagraph (G) of paragraph (2) of 
18 this subsection (b) which
is related to such dividends, 
19 and including, for taxable years ending on or after 
20 December 31, 2008, dividends received from a captive 
21 real estate investment trust; plus (ii) 100% of the 
22 amount by which dividends,
included in taxable income 
23 and received, including, for taxable years ending on
or 
24 after December 31, 1988, dividends received or deemed 
25 received or paid or
deemed paid under Sections 951 
26 through 964 of the Internal Revenue Code and including, 
 
 
HB3745- 47 -LRB099 09333 HLH 29538 b


1 for taxable years ending on or after December 31, 2008, 
2 dividends received from a captive real estate 
3 investment trust, from
any such corporation specified 
4 in clause (i) that would but for the provisions
of 
5 Section 1504 (b) (3) of the Internal Revenue Code be 
6 treated as a member of
the affiliated group which 
7 includes the dividend recipient, exceed the amount
of 
8 the modification provided under subparagraph (G) of 
9 paragraph (2) of this
subsection (b) which is related 
10 to such dividends. This subparagraph (O) is exempt from 
11 the provisions of Section 250 of this Act;
12   (P) An amount equal to any contribution made to a 
13 job training project
established pursuant to the Tax 
14 Increment Allocation Redevelopment Act;
15   (Q) 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   (R) On and after July 20, 1999, in the case of an 
21 attorney-in-fact with respect to whom an
interinsurer 
22 or a reciprocal insurer has made the election under 
23 Section 835 of
the Internal Revenue Code, 26 U.S.C. 
24 835, an amount equal to the excess, if
any, of the 
25 amounts paid or incurred by that interinsurer or 
26 reciprocal insurer
in the taxable year to the 
 
 
HB3745- 48 -LRB099 09333 HLH 29538 b


1 attorney-in-fact over the deduction allowed to that

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

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

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

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

22 depreciation deduction
taken on that property on the 
23 taxpayer's federal income tax return under
subsection 
24 (k) of Section 168 of the Internal Revenue Code. This 
25 subparagraph (T) is exempt from the provisions of 
26 Section 250;
 
 
HB3745- 50 -LRB099 09333 HLH 29538 b


1   (U) If the taxpayer sells, transfers, abandons, or 
2 otherwise disposes of
property for which the taxpayer 
3 was required in any taxable year to make an
addition 
4 modification under subparagraph (E-10), then an amount 
5 equal to that
addition modification.
6   If the taxpayer continues to own property through 
7 the last day of the last tax year for which the 
8 taxpayer may claim a depreciation deduction for 
9 federal income tax purposes and for which the taxpayer 
10 was required in any taxable year to make an addition 
11 modification under subparagraph (E-10), then an amount 
12 equal to that addition modification.

13   The taxpayer is allowed to take the deduction under 
14 this subparagraph
only once with respect to any one 
15 piece of property.
16   This subparagraph (U) is exempt from the 
17 provisions of Section 250;
18   (V) The amount of: (i) any interest income (net of 
19 the deductions allocable thereto) taken into account 
20 for the taxable year with respect to a transaction with 
21 a taxpayer that is required to make an addition 
22 modification with respect to such transaction under 
23 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
24 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
25 the amount of such addition modification,
(ii) any 
26 income from intangible property (net of the deductions 
 
 
HB3745- 51 -LRB099 09333 HLH 29538 b


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

17   (W) An amount equal to the interest income taken 
18 into account for the taxable year (net of the 
19 deductions allocable thereto) with respect to 
20 transactions with (i) a foreign person who would be a 
21 member of the taxpayer's unitary business group but for 
22 the fact that the foreign person's business activity 
23 outside the United States is 80% or more of that 
24 person's total business activity and (ii) for taxable 
25 years ending on or after December 31, 2008, to a person 
26 who would be a member of the same unitary business 
 
 
HB3745- 52 -LRB099 09333 HLH 29538 b


1 group but for the fact that the person is prohibited 
2 under Section 1501(a)(27) from being included in the 
3 unitary business group because he or she is ordinarily 
4 required to apportion business income under different 
5 subsections of Section 304, but not to exceed the 
6 addition modification required to be made for the same 
7 taxable year under Section 203(b)(2)(E-12) for 
8 interest paid, accrued, or incurred, directly or 
9 indirectly, to the same person. This subparagraph (W) 
10 is exempt from the provisions of Section 250;

11   (X) An amount equal to the income from intangible 
12 property taken into account for the taxable year (net 
13 of the 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 for 
16 the fact that the foreign person's business activity 
17 outside the United States is 80% or more of that 
18 person's total business activity and (ii) for taxable 
19 years ending on or after December 31, 2008, to a person 
20 who would be a member of the same unitary business 
21 group but for the fact that the person is prohibited 
22 under Section 1501(a)(27) from being included in the 
23 unitary business group because he or she is ordinarily 
24 required to apportion business income under different 
25 subsections of Section 304, but not to exceed the 
26 addition modification required to be made for the same 
 
 
HB3745- 53 -LRB099 09333 HLH 29538 b


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

6   (Y) For taxable years ending on or after December 
7 31, 2011, in the case of a taxpayer who was required to 
8 add back any insurance premiums under Section 
9 203(b)(2)(E-14), such taxpayer may elect to subtract 
10 that part of a reimbursement received from the 
11 insurance company equal to the amount of the expense or 
12 loss (including expenses incurred by the insurance 
13 company) that would have been taken into account as a 
14 deduction for federal income tax purposes if the 
15 expense or loss had been uninsured. If a taxpayer makes 
16 the election provided for by this subparagraph (Y), the 
17 insurer to which the premiums were paid must add back 
18 to income the amount subtracted by the taxpayer 
19 pursuant to this subparagraph (Y). This subparagraph 
20 (Y) is exempt from the provisions of Section 250; and 
21   (Z) The difference between the nondeductible 
22 controlled foreign corporation dividends under Section 
23 965(e)(3) of the Internal Revenue Code over the taxable 
24 income of the taxpayer, computed without regard to 
25 Section 965(e)(2)(A) of the Internal Revenue Code, and 
26 without regard to any net operating loss deduction. 
 
 
HB3745- 54 -LRB099 09333 HLH 29538 b


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

11 (c) Trusts and estates.
12  (1) In general. In the case of a trust or estate, base 
13 income means
an amount equal to the taxpayer's taxable 
14 income for the taxable year as
modified by paragraph (2).
15  (2) Modifications. Subject to the provisions of 
16 paragraph (3), the
taxable income referred to in paragraph 
17 (1) shall be modified by adding
thereto the sum of the 
18 following amounts:
19   (A) An amount equal to all amounts paid or accrued 
20 to the taxpayer
as interest or dividends during the 
21 taxable year to the extent excluded
from gross income 
22 in the computation of taxable income;
23   (B) In the case of (i) an estate, $600; (ii) a 
24 trust which, under
its governing instrument, is 
25 required to distribute all of its income
currently, 
 
 
HB3745- 55 -LRB099 09333 HLH 29538 b


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

18 subtraction modifications in such taxable year, with 
19 the following limitations
applied in the order that 
20 they are listed:
21    (i) the addition modification relating to the 
22 net operating loss
carried back or forward to the 
23 taxable year from any taxable year ending
prior to 
24 December 31, 1986 shall be reduced by the amount of 
25 addition
modification under this subparagraph (E) 
26 which related to that net
operating loss and which 
 
 
HB3745- 56 -LRB099 09333 HLH 29538 b


1 was taken into account in calculating the base

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

19 Illinois foreign tax credit under Section 601 of this 
20 Act;
21   (G) An amount equal to the amount of the capital 
22 gain deduction
allowable under the Internal Revenue 
23 Code, to the extent deducted from
gross income in the 
24 computation of taxable income;
25   (G-5) For taxable years ending after December 31, 
26 1997, an
amount equal to any eligible remediation costs 
 
 
HB3745- 57 -LRB099 09333 HLH 29538 b


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

23   The taxpayer is required to make the addition 
24 modification under this
subparagraph
only once with 
25 respect to any one piece of property;
26   (G-12) An amount equal to the amount otherwise 
 
 
HB3745- 58 -LRB099 09333 HLH 29538 b


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

 
 
HB3745- 59 -LRB099 09333 HLH 29538 b


1   This paragraph shall not apply to the following:

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

23    (iii) the taxpayer can establish, based on 
24 clear and convincing evidence, that the interest 
25 paid, accrued, or incurred relates to a contract or 
26 agreement entered into at arm's-length rates and 
 
 
HB3745- 60 -LRB099 09333 HLH 29538 b


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

19   (G-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 
 
 
HB3745- 61 -LRB099 09333 HLH 29538 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(c)(2)(G-12) of 
24 this Act. As used in this subparagraph, the term 
25 "intangible expenses and costs" includes: (1) 
26 expenses, losses, and costs for or related to the 
 
 
HB3745- 62 -LRB099 09333 HLH 29538 b


1 direct or indirect acquisition, use, maintenance or 
2 management, ownership, sale, exchange, or any other 
3 disposition of intangible property; (2) losses 
4 incurred, directly or indirectly, from factoring 
5 transactions or discounting transactions; (3) royalty, 
6 patent, technical, and copyright fees; (4) licensing 
7 fees; and (5) other similar expenses and costs. For 
8 purposes of this subparagraph, "intangible property" 
9 includes patents, patent applications, trade names, 
10 trademarks, service marks, copyrights, mask works, 
11 trade secrets, and 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 is 
16 subject in a foreign country or state, other than a 
17 state which requires mandatory unitary reporting, 
18 to a tax on or measured by net income with respect 
19 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 
 
 
HB3745- 63 -LRB099 09333 HLH 29538 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 the 
13 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 alternative 
17 method of apportionment under Section 304(f);

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

 
 
HB3745- 64 -LRB099 09333 HLH 29538 b


1   (G-14) For taxable years ending on or after 
2 December 31, 2008, an amount equal to the amount of 
3 insurance premium expenses and costs otherwise allowed 
4 as a deduction in computing base income, and that were 
5 paid, accrued, or incurred, directly or indirectly, to 
6 a person who would be a member of the same unitary 
7 business group but for the fact that the person is 
8 prohibited under Section 1501(a)(27) from being 
9 included in the unitary business group because he or 
10 she is ordinarily required to apportion business 
11 income under different subsections of Section 304. The 
12 addition modification required by this subparagraph 
13 shall be reduced to the extent that dividends were 
14 included in base income of the unitary group for the 
15 same taxable year and received by the taxpayer or by a 
16 member of the taxpayer's unitary business group 
17 (including amounts included in gross income under 
18 Sections 951 through 964 of the Internal Revenue Code 
19 and amounts included in gross income under Section 78 
20 of the Internal Revenue Code) with respect to the stock 
21 of the same person to whom the premiums and costs were 
22 directly or indirectly paid, incurred, or accrued. The 
23 preceding sentence does not apply to the extent that 
24 the same dividends caused a reduction to the addition 
25 modification required under Section 203(c)(2)(G-12) or 
26 Section 203(c)(2)(G-13) of this Act;
 
 
HB3745- 65 -LRB099 09333 HLH 29538 b


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

11 distributions under the provisions of any retirement 
12 or disability plan for
employees of any governmental 
13 agency or unit, or retirement payments to
retired 
14 partners, which payments are excluded in computing net 
15 earnings
from self employment by Section 1402 of the 
16 Internal Revenue Code and
regulations adopted pursuant 
17 thereto;
18   (I) The valuation limitation amount;
19   (J) An amount equal to the amount of any tax 
20 imposed by this Act
which was refunded to the taxpayer 
21 and included in such total for the
taxable year;
22   (K) An amount equal to all amounts included in 
23 taxable income as
modified by subparagraphs (A), (B), 
24 (C), (D), (E), (F) and (G) which
are exempt from 
25 taxation by this State either by reason of its statutes 
26 or
Constitution
or by reason of the Constitution, 
 
 
HB3745- 66 -LRB099 09333 HLH 29538 b


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

14 ending on or after August 13, 1999, Sections
171(a)(2), 
15 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
16 Code, plus, (iii) for taxable years ending on or after 
17 December 31, 2011, Section 45G(e)(3) of the Internal 
18 Revenue Code and, for taxable years ending on or after 
19 December 31, 2008, any amount included in gross income 
20 under Section 87 of the Internal Revenue Code; the 
21 provisions of this
subparagraph are exempt from the 
22 provisions of Section 250;
23   (M) An amount equal to those dividends included in 
24 such total
which were paid by a corporation which 
25 conducts business operations in a River Edge 
26 Redevelopment Zone or zones created under the River 
 
 
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1 Edge Redevelopment Zone Act and
conducts substantially 
2 all of its operations in a River Edge Redevelopment 
3 Zone or zones. This subparagraph (M) is exempt from the 
4 provisions of Section 250;
5   (N) An amount equal to any contribution made to a 
6 job training
project established pursuant to the Tax 
7 Increment Allocation
Redevelopment Act;
8   (O) An amount equal to those dividends included in 
9 such total
that were paid by a corporation that 
10 conducts business operations in a
federally designated 
11 Foreign Trade Zone or Sub-Zone and that is designated
a 
12 High Impact Business located in Illinois; provided 
13 that dividends eligible
for the deduction provided in 
14 subparagraph (M) of paragraph (2) of this
subsection 
15 shall not be eligible for the deduction provided under 
16 this
subparagraph (O);
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;
22   (Q) For taxable year 1999 and thereafter, an amount 
23 equal to the
amount of any
(i) distributions, to the 
24 extent includible in gross income for
federal income 
25 tax purposes, made to the taxpayer because of
his or 
26 her status as a victim of
persecution for racial or 
 
 
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1 religious reasons by Nazi Germany or any other Axis

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

7 persecution for racial or religious reasons by Nazi

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

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

14 companies
immediately prior to and during World War II;

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

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

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

26 this paragraph in gross income for federal income tax 
 
 
HB3745- 69 -LRB099 09333 HLH 29538 b


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

5 is taken on the taxpayer's federal income tax return 
6 under
subsection (k) of Section 168 of the Internal 
7 Revenue Code and for each
applicable taxable year 
8 thereafter, an amount equal to "x", where:
9    (1) "y" equals the amount of the depreciation 
10 deduction taken for the
taxable year
on the 
11 taxpayer's federal income tax return on property 
12 for which the bonus
depreciation deduction
was 
13 taken in any year under subsection (k) of Section 
14 168 of the Internal
Revenue Code, but not including 
15 the bonus depreciation deduction;
16    (2) for taxable years ending on or before 
17 December 31, 2005, "x" equals "y" multiplied by 30 
18 and then divided by 70 (or "y"
multiplied by 
19 0.429); and
20    (3) for taxable years ending after December 
21 31, 2005:
22     (i) for property on which a bonus 
23 depreciation deduction of 30% of the adjusted 
24 basis was taken, "x" equals "y" multiplied by 
25 30 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
HB3745- 70 -LRB099 09333 HLH 29538 b


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

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

25   The taxpayer is allowed to take the deduction under 
26 this subparagraph
only once with respect to any one 
 
 
HB3745- 71 -LRB099 09333 HLH 29538 b


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

21   (U) An amount equal to the interest income taken 
22 into account for the taxable year (net of the 
23 deductions allocable thereto) with respect to 
24 transactions with (i) a foreign person who would be a 
25 member of the taxpayer's unitary business group but for 
26 the fact the foreign person's business activity 
 
 
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1 outside the United States is 80% or more of that 
2 person's total business activity and (ii) for taxable 
3 years ending on or after December 31, 2008, to a person 
4 who would be a member of the same unitary business 
5 group but for the fact that the person is prohibited 
6 under Section 1501(a)(27) from being included in the 
7 unitary business group because he or she is ordinarily 
8 required to apportion business income under different 
9 subsections of Section 304, but not to exceed the 
10 addition modification required to be made for the same 
11 taxable year under Section 203(c)(2)(G-12) for 
12 interest paid, accrued, or incurred, directly or 
13 indirectly, to the same person. This subparagraph (U) 
14 is exempt from the provisions of Section 250; 
15   (V) An amount equal to the income from intangible 
16 property taken into account for the taxable year (net 
17 of the deductions allocable thereto) with respect to 
18 transactions with (i) a foreign person who would be a 
19 member of the taxpayer's unitary business group but for 
20 the fact that the foreign person's business activity 
21 outside the United States is 80% or more of that 
22 person's total business activity and (ii) for taxable 
23 years ending on or after December 31, 2008, to a person 
24 who would be a member of the same unitary business 
25 group but for the fact that the person is prohibited 
26 under Section 1501(a)(27) from being included in the 
 
 
HB3745- 73 -LRB099 09333 HLH 29538 b


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

10   (W) in the case of an estate, an amount equal to 
11 all amounts included in such total pursuant to the 
12 provisions of Section 111 of the Internal Revenue Code 
13 as a recovery of items previously deducted by the 
14 decedent from adjusted gross income in the computation 
15 of taxable income. This subparagraph (W) is exempt from 
16 Section 250; 
17   (X) an amount equal to the refund included in such 
18 total of any tax deducted for federal income tax 
19 purposes, to the extent that deduction was added back 
20 under subparagraph (F). This subparagraph (X) is 
21 exempt from the provisions of Section 250; and
22   (Y) For taxable years ending on or after December 
23 31, 2011, in the case of a taxpayer who was required to 
24 add back any insurance premiums under Section 
25 203(c)(2)(G-14), such taxpayer may elect to subtract 
26 that part of a reimbursement received from the 
 
 
HB3745- 74 -LRB099 09333 HLH 29538 b


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

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

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

22 addition modification under subparagraph (D-5), then 
23 an amount equal to the
aggregate amount of the 
24 deductions taken in all taxable years
under 
25 subparagraph (O) with respect to that property.
26   If the taxpayer continues to own property through 
 
 
HB3745- 76 -LRB099 09333 HLH 29538 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 allowed in any taxable year to make a subtraction 
5 modification under subparagraph (O), then an amount 
6 equal to that subtraction modification.

7   The taxpayer is required to make the addition 
8 modification under this
subparagraph
only once with 
9 respect to any one piece of property;
10   (D-7) An amount equal to the amount otherwise 
11 allowed as a deduction in computing base income for 
12 interest paid, accrued, or incurred, directly or 
13 indirectly, (i) for taxable years ending on or after 
14 December 31, 2004, to a foreign person who would be a 
15 member of the same unitary business group but for the 
16 fact the foreign person's business activity outside 
17 the United States is 80% or more of the foreign 
18 person's total business activity and (ii) for taxable 
19 years ending on or after December 31, 2008, to a person 
20 who would be a member of the same unitary business 
21 group but for the fact that the person is prohibited 
22 under Section 1501(a)(27) from being included in the 
23 unitary business group because he or she is ordinarily 
24 required to apportion business income under different 
25 subsections of Section 304. The addition modification 
26 required by this subparagraph shall be reduced to the 
 
 
HB3745- 77 -LRB099 09333 HLH 29538 b


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

11   This paragraph shall not apply to the following:

12    (i) an item of interest paid, accrued, or 
13 incurred, directly or indirectly, to a person who 
14 is subject in a foreign country or state, other 
15 than a state which requires mandatory unitary 
16 reporting, to a tax on or measured by net income 
17 with respect to such interest; or
18    (ii) an item of interest paid, accrued, or 
19 incurred, directly or indirectly, to a person if 
20 the taxpayer can establish, based on a 
21 preponderance of the evidence, both of the 
22 following:
23     (a) the person, during the same taxable 
24 year, paid, accrued, or incurred, the interest 
25 to a person that is not a related member, and
26     (b) the transaction giving rise to the 
 
 
HB3745- 78 -LRB099 09333 HLH 29538 b


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

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

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

20    Nothing in this subsection shall preclude the 
21 Director from making any other adjustment 
22 otherwise allowed under Section 404 of this Act for 
23 any tax year beginning after the effective date of 
24 this amendment provided such adjustment is made 
25 pursuant to regulation adopted by the Department 
26 and such regulations provide methods and standards 
 
 
HB3745- 79 -LRB099 09333 HLH 29538 b


1 by which the Department will utilize its authority 
2 under Section 404 of this Act; and

3   (D-8) An amount equal to the amount of intangible 
4 expenses and costs otherwise allowed as a deduction in 
5 computing base income, and that were paid, accrued, or 
6 incurred, directly or indirectly, (i) for taxable 
7 years ending on or after December 31, 2004, to a 
8 foreign person who would be a member of the same 
9 unitary business group but for the fact that the 
10 foreign person's business activity outside the United 
11 States is 80% or more of that person's total business 
12 activity and (ii) for taxable years ending on or after 
13 December 31, 2008, to a person who would be a member of 
14 the same unitary business group but for the fact that 
15 the person is prohibited under Section 1501(a)(27) 
16 from being included in the unitary business group 
17 because he or she is ordinarily required to apportion 
18 business income under different subsections of Section 
19 304. The addition modification required by this 
20 subparagraph shall be reduced to the extent that 
21 dividends were included in base income of the unitary 
22 group for the same taxable year and received by the 
23 taxpayer or by a member of the taxpayer's unitary 
24 business group (including amounts included in gross 
25 income pursuant to Sections 951 through 964 of the 
26 Internal Revenue Code and amounts included in gross 
 
 
HB3745- 80 -LRB099 09333 HLH 29538 b


1 income under Section 78 of the Internal Revenue Code) 
2 with respect to the stock of the same person to whom 
3 the intangible expenses and costs were directly or 
4 indirectly paid, incurred or accrued. The preceding 
5 sentence shall not apply to the extent that the same 
6 dividends caused a reduction to the addition 
7 modification required under Section 203(d)(2)(D-7) of 
8 this Act. As used in this subparagraph, the term 
9 "intangible expenses and costs" includes (1) expenses, 
10 losses, and costs for, or related to, the direct or 
11 indirect acquisition, use, maintenance or management, 
12 ownership, sale, exchange, or any other disposition of 
13 intangible property; (2) losses incurred, directly or 
14 indirectly, from factoring transactions or discounting 
15 transactions; (3) royalty, patent, technical, and 
16 copyright fees; (4) licensing fees; and (5) other 
17 similar expenses and costs. For purposes of this 
18 subparagraph, "intangible property" includes patents, 
19 patent applications, trade names, trademarks, service 
20 marks, copyrights, mask works, trade secrets, and 
21 similar types of intangible assets;
22   This paragraph shall not apply to the following:
23    (i) any item of intangible expenses or costs 
24 paid, accrued, or incurred, directly or 
25 indirectly, from a transaction with a person who is 
26 subject in a foreign country or state, other than a 
 
 
HB3745- 81 -LRB099 09333 HLH 29538 b


1 state which requires mandatory unitary reporting, 
2 to a tax on or measured by net income with respect 
3 to such item; or
4    (ii) any item of intangible expense or cost 
5 paid, accrued, or incurred, directly or 
6 indirectly, if the taxpayer can establish, based 
7 on a preponderance of the evidence, both of the 
8 following:
9     (a) the person during the same taxable 
10 year paid, accrued, or incurred, the 
11 intangible expense or cost to a person that is 
12 not a related member, and
13     (b) the transaction giving rise to the 
14 intangible expense or cost between the 
15 taxpayer and the person did not have as a 
16 principal purpose the avoidance of Illinois 
17 income tax, and is paid pursuant to a contract 
18 or agreement that reflects arm's-length terms; 
19 or
20    (iii) any item of intangible expense or cost 
21 paid, accrued, or incurred, directly or 
22 indirectly, from a transaction with a person if the 
23 taxpayer establishes by clear and convincing 
24 evidence, that the adjustments are unreasonable; 
25 or if the taxpayer and the Director agree in 
26 writing to the application or use of an alternative 
 
 
HB3745- 82 -LRB099 09333 HLH 29538 b


1 method of apportionment under Section 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 for 
5 any tax year beginning after the effective date of 
6 this amendment provided such adjustment is made 
7 pursuant to regulation adopted by the Department 
8 and such regulations provide methods and standards 
9 by which the Department will utilize its authority 
10 under Section 404 of this Act;

11   (D-9) For taxable years ending on or after December 
12 31, 2008, an amount equal to the amount of insurance 
13 premium expenses and costs otherwise allowed as a 
14 deduction in computing base income, and that were paid, 
15 accrued, or incurred, directly or indirectly, to a 
16 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 
 
 
HB3745- 83 -LRB099 09333 HLH 29538 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 stock 
5 of the same person to whom the premiums and costs were 
6 directly or indirectly paid, incurred, or accrued. The 
7 preceding sentence does not apply to the extent that 
8 the same dividends caused a reduction to the addition 
9 modification required under Section 203(d)(2)(D-7) or 
10 Section 203(d)(2)(D-8) of this Act;
11   (D-10) An amount equal to the credit allowable to 
12 the taxpayer under Section 218(a) of this Act, 
13 determined without regard to Section 218(c) of this 
14 Act;
15 and by deducting from the total so obtained the following 
16 amounts:
17   (E) The valuation limitation amount;
18   (F) An amount equal to the amount of any tax 
19 imposed by this Act which
was refunded to the taxpayer 
20 and included in such total for the taxable year;
21   (G) An amount equal to all amounts included in 
22 taxable income as
modified by subparagraphs (A), (B), 
23 (C) and (D) which are exempt from
taxation by this 
24 State either by reason of its statutes or Constitution 
25 or
by reason of
the Constitution, treaties or statutes 
26 of the United States;
provided that, in the case of any 
 
 
HB3745- 84 -LRB099 09333 HLH 29538 b


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

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

16 subsections (c) and (d) of Section 201 of this Act 
17 including amounts
distributable to organizations 
18 exempt from federal income tax by reason of
Section 
19 501(a) of the Internal Revenue Code; this subparagraph 
20 (I) is exempt from the provisions of Section 250;
21   (J) With the exception of any amounts subtracted 
22 under subparagraph
(G),
an amount equal to the sum of 
23 all amounts disallowed as deductions
by (i) Sections 
24 171(a) (2), and 265(2) of the Internal Revenue Code, 
25 and all amounts of expenses allocable to
interest and 
26 disallowed as deductions by Section 265(1) of the 
 
 
HB3745- 85 -LRB099 09333 HLH 29538 b


1 Internal
Revenue Code;
and (ii) for taxable years

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

26 High Impact Business located in Illinois; provided 
 
 
HB3745- 86 -LRB099 09333 HLH 29538 b


1 that dividends eligible
for the deduction provided in 
2 subparagraph (K) of paragraph (2) of this
subsection 
3 shall not be eligible for the deduction provided under 
4 this
subparagraph (M);
5   (N) An amount equal to the amount of the deduction 
6 used to compute the
federal income tax credit for 
7 restoration of substantial amounts held under
claim of 
8 right for the taxable year pursuant to Section 1341 of 
9 the
Internal Revenue Code;
10   (O) For taxable years 2001 and thereafter, for the 
11 taxable year in
which the bonus depreciation deduction

12 is taken on the taxpayer's federal income tax return 
13 under
subsection (k) of Section 168 of the Internal 
14 Revenue Code and for each
applicable taxable year 
15 thereafter, an amount equal to "x", where:
16    (1) "y" equals the amount of the depreciation 
17 deduction taken for the
taxable year
on the 
18 taxpayer's federal income tax return on property 
19 for which the bonus
depreciation deduction
was 
20 taken in any year under subsection (k) of Section 
21 168 of the Internal
Revenue Code, but not including 
22 the bonus depreciation deduction;
23    (2) for taxable years ending on or before 
24 December 31, 2005, "x" equals "y" multiplied by 30 
25 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
HB3745- 87 -LRB099 09333 HLH 29538 b


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

15 depreciation deduction
taken on that property on the 
16 taxpayer's federal income tax return under
subsection 
17 (k) of Section 168 of the Internal Revenue Code. This 
18 subparagraph (O) is exempt from the provisions of 
19 Section 250;
20   (P) If the taxpayer sells, transfers, abandons, or 
21 otherwise disposes of
property for which the taxpayer 
22 was required in any taxable year to make an
addition 
23 modification under subparagraph (D-5), then an amount 
24 equal to that
addition modification.
25   If the taxpayer continues to own property through 
26 the last day of the last tax year for which the 
 
 
HB3745- 88 -LRB099 09333 HLH 29538 b


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

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

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

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

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

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

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

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

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

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

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

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

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

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

19 required by Section 703(a)(1) to be separately stated 
20 but which would be
taken into account by an individual 
21 in calculating his taxable income.
22  (3) Recapture of business expenses on disposition of 
23 asset or business. Notwithstanding any other law to the 
24 contrary, if in prior years income from an asset or 
25 business has been classified as business income and in a 
26 later year is demonstrated to be non-business income, then 
 
 
HB3745- 96 -LRB099 09333 HLH 29538 b


1 all expenses, without limitation, deducted in such later 
2 year and in the 2 immediately preceding taxable years 
3 related to that asset or business that generated the 
4 non-business income shall be added back and recaptured as 
5 business income in the year of the disposition of the asset 
6 or business. Such amount shall be apportioned to Illinois 
7 using the greater of the apportionment fraction computed 
8 for the business under Section 304 of this Act for the 
9 taxable year or the average of the apportionment fractions 
10 computed for the business under Section 304 of this Act for 
11 the taxable year and for the 2 immediately preceding 
12 taxable years.


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

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

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

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

16August 1, 1969 or otherwise.
17(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198, 
18eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09; 
1996-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff. 
206-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507, 
21eff. 8-23-11; 97-905, eff. 8-7-12.)

22 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
23 Sec. 901. Collection authority. 
 
 
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1 (a) In general.
2 The Department shall collect the taxes imposed by this Act. 
3The Department
shall collect certified past due child support 
4amounts under Section 2505-650
of the Department of Revenue Law 
5(20 ILCS 2505/2505-650). Except as
provided in subsections (c), 
6(e), (f), (g), and (h), and (i)  of this Section, money 
7collected
pursuant to subsections (a) and (b) of Section 201 of 
8this Act shall be
paid into the General Revenue Fund in the 
9State treasury; money
collected pursuant to subsections (c) and 
10(d) of Section 201 of this Act
shall be paid into the Personal 
11Property Tax Replacement Fund, a special
fund in the State 
12Treasury; and money collected under Section 2505-650 of the

13Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid

14into the
Child Support Enforcement Trust Fund, a special fund 
15outside the State
Treasury, or
to the State
Disbursement Unit 
16established under Section 10-26 of the Illinois Public Aid

17Code, as directed by the Department of Healthcare and Family 
18Services.
19 (b) Local Government Distributive Fund.
20 Beginning August 1, 1969, and continuing through June 30, 
211994, the Treasurer
shall transfer each month from the General 
22Revenue Fund to a special fund in
the State treasury, to be 
23known as the "Local Government Distributive Fund", an
amount 
24equal to 1/12 of the net revenue realized from the tax imposed 
25by
subsections (a) and (b) of Section 201 of this Act during 
26the preceding month.
Beginning July 1, 1994, and continuing 
 
 
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1through June 30, 1995, the Treasurer
shall transfer each month 
2from the General Revenue Fund to the Local Government

3Distributive Fund an amount equal to 1/11 of the net revenue 
4realized from the
tax imposed by subsections (a) and (b) of 
5Section 201 of this Act during the
preceding month. Beginning 
6July 1, 1995 and continuing through January 31, 2011, the 
7Treasurer shall transfer each
month from the General Revenue 
8Fund to the Local Government Distributive Fund
an amount equal 
9to the net of (i) 1/10 of the net revenue realized from the
tax 
10imposed by
subsections (a) and (b) of Section 201 of the 
11Illinois Income Tax Act during
the preceding month
(ii) minus, 
12beginning July 1, 2003 and ending June 30, 2004, $6,666,666, 
13and
beginning July 1,
2004,
zero. Beginning February 1, 2011, 
14and continuing through January 31, 2015, the Treasurer shall 
15transfer each month from the General Revenue Fund to the Local 
16Government Distributive Fund an amount equal to the sum of (i) 
176% (10% of the ratio of the 3% individual income tax rate prior 
18to 2011 to the 5% individual income tax rate after 2010) of the 
19net revenue realized from the tax imposed by subsections (a) 
20and (b) of Section 201 of this Act upon individuals, trusts, 
21and estates during the preceding month and (ii) 6.86% (10% of 
22the ratio of the 4.8% corporate income tax rate prior to 2011 
23to the 7% corporate income tax rate after 2010) of the net 
24revenue realized from the tax imposed by subsections (a) and 
25(b) of Section 201 of this Act upon corporations during the 
26preceding month. Beginning February 1, 2015 and continuing 
 
 
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1through January 31, 2025, the Treasurer shall transfer each 
2month from the General Revenue Fund to the Local Government 
3Distributive Fund an amount equal to the sum of (i) 8% (10% of 
4the ratio of the 3% individual income tax rate prior to 2011 to 
5the 3.75% individual income tax rate after 2014) of the net 
6revenue realized from the tax imposed by subsections (a) and 
7(b) of Section 201 of this Act upon individuals, trusts, and 
8estates during the preceding month and (ii) 9.14% (10% of the 
9ratio of the 4.8% corporate income tax rate prior to 2011 to 
10the 5.25% corporate income tax rate after 2014) of the net 
11revenue realized from the tax imposed by subsections (a) and 
12(b) of Section 201 of this Act upon corporations during the 
13preceding month. Beginning February 1, 2025, the Treasurer 
14shall transfer each month from the General Revenue Fund to the 
15Local Government Distributive Fund an amount equal to the sum 
16of (i) 9.23% (10% of the ratio of the 3% individual income tax 
17rate prior to 2011 to the 3.25% individual income tax rate 
18after 2024) of the net revenue realized from the tax imposed by 
19subsections (a) and (b) of Section 201 of this Act upon 
20individuals, trusts, and estates during the preceding month and 
21(ii) 10% of the net revenue realized from the tax imposed by 
22subsections (a) and (b) of Section 201 of this Act upon 
23corporations during the preceding month. Net revenue realized 
24for a month shall be defined as the
revenue from the tax 
25imposed by subsections (a) and (b) of Section 201 of this
Act 
26which is deposited in the General Revenue Fund, the Education 
 
 
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1Assistance
Fund, the Income Tax Surcharge Local Government 
2Distributive Fund, the Fund for the Advancement of Education, 
3and the Commitment to Human Services Fund during the
month 
4minus the amount paid out of the General Revenue Fund in State 
5warrants
during that same month as refunds to taxpayers for 
6overpayment of liability
under the tax imposed by subsections 
7(a) and (b) of Section 201 of this Act.
8 Beginning on August 26, 2014 (the effective date of Public 
9Act 98-1052) this amendatory Act of the 98th General Assembly, 
10the Comptroller shall perform the transfers required by this 
11subsection (b) no later than 60 days after he or she receives 
12the certification from the Treasurer as provided in Section 1 
13of the State Revenue Sharing Act. 
14 (c) Deposits Into Income Tax Refund Fund.
15  (1) Beginning on January 1, 1989 and thereafter, the 
16 Department shall
deposit a percentage of the amounts 
17 collected pursuant to subsections (a)
and (b)(1), (2), and 
18 (3), of Section 201 of this Act into a fund in the State

19 treasury known as the Income Tax Refund Fund. The 
20 Department shall deposit 6%
of such amounts during the 
21 period beginning January 1, 1989 and ending on June
30, 
22 1989. Beginning with State fiscal year 1990 and for each 
23 fiscal year
thereafter, the percentage deposited into the 
24 Income Tax Refund Fund during a
fiscal year shall be the 
25 Annual Percentage. For fiscal years 1999 through
2001, the 
26 Annual Percentage shall be 7.1%.
For fiscal year 2003, the 
 
 
HB3745- 103 -LRB099 09333 HLH 29538 b


1 Annual Percentage shall be 8%.
For fiscal year 2004, the 
2 Annual Percentage shall be 11.7%. Upon the effective date 
3 of this amendatory Act of the 93rd General Assembly, the 
4 Annual Percentage shall be 10% for fiscal year 2005. For 
5 fiscal year 2006, the Annual Percentage shall be 9.75%. For 
6 fiscal
year 2007, the Annual Percentage shall be 9.75%. For 
7 fiscal year 2008, the Annual Percentage shall be 7.75%. For 
8 fiscal year 2009, the Annual Percentage shall be 9.75%. For 
9 fiscal year 2010, the Annual Percentage shall be 9.75%. For 
10 fiscal year 2011, the Annual Percentage shall be 8.75%. For 
11 fiscal year 2012, the Annual Percentage shall be 8.75%. For 
12 fiscal year 2013, the Annual Percentage shall be 9.75%. For 
13 fiscal year 2014, the Annual Percentage shall be 9.5%. For 
14 fiscal year 2015, the Annual Percentage shall be 10%. For 
15 all other
fiscal years, the
Annual Percentage shall be 
16 calculated as a fraction, the numerator of which
shall be 
17 the amount of refunds approved for payment by the 
18 Department during
the preceding fiscal year as a result of 
19 overpayment of tax liability under
subsections (a) and 
20 (b)(1), (2), and (3) of Section 201 of this Act plus the

21 amount of such refunds remaining approved but unpaid at the 
22 end of the
preceding fiscal year, minus the amounts 
23 transferred into the Income Tax
Refund Fund from the 
24 Tobacco Settlement Recovery Fund, and
the denominator of 
25 which shall be the amounts which will be collected pursuant

26 to subsections (a) and (b)(1), (2), and (3) of Section 201 
 
 
HB3745- 104 -LRB099 09333 HLH 29538 b


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

13 period beginning January 1, 1989 and ending on June 30, 
14 1989. Beginning
with State fiscal year 1990 and for each 
15 fiscal year thereafter, the
percentage deposited into the 
16 Income Tax Refund Fund during a fiscal year
shall be the 
17 Annual Percentage. For fiscal years 1999, 2000, and 2001, 
18 the
Annual Percentage shall be 19%.
For fiscal year 2003, 
19 the Annual Percentage shall be 27%. For fiscal year
2004, 
20 the Annual Percentage shall be 32%.
Upon the effective date 
21 of this amendatory Act of the 93rd General Assembly, the 
22 Annual Percentage shall be 24% for fiscal year 2005.
For 
23 fiscal year 2006, the Annual Percentage shall be 20%. For 
24 fiscal
year 2007, the Annual Percentage shall be 17.5%. For 
25 fiscal year 2008, the Annual Percentage shall be 15.5%. For 
26 fiscal year 2009, the Annual Percentage shall be 17.5%. For 
 
 
HB3745- 105 -LRB099 09333 HLH 29538 b


1 fiscal year 2010, the Annual Percentage shall be 17.5%. For 
2 fiscal year 2011, the Annual Percentage shall be 17.5%. For 
3 fiscal year 2012, the Annual Percentage shall be 17.5%. For 
4 fiscal year 2013, the Annual Percentage shall be 14%. For 
5 fiscal year 2014, the Annual Percentage shall be 13.4%. For 
6 fiscal year 2015, the Annual Percentage shall be 14%. For 
7 all other fiscal years, the Annual
Percentage shall be 
8 calculated
as a fraction, the numerator of which shall be 
9 the amount of refunds
approved for payment by the 
10 Department during the preceding fiscal year as
a result of 
11 overpayment of tax liability under subsections (a) and 
12 (b)(6),
(7), and (8), (c) and (d) of Section 201 of this 
13 Act plus the
amount of such refunds remaining approved but 
14 unpaid at the end of the
preceding fiscal year, and the 
15 denominator of
which shall be the amounts which will be 
16 collected pursuant to subsections (a)
and (b)(6), (7), and 
17 (8), (c) and (d) of Section 201 of this Act during the

18 preceding fiscal year; except that in State fiscal year 
19 2002, the Annual
Percentage shall in no event exceed 23%. 
20 The Director of Revenue shall
certify the Annual Percentage 
21 to the Comptroller on the last business day of
the fiscal 
22 year immediately preceding the fiscal year for which it is 
23 to be
effective.
24  (3) The Comptroller shall order transferred and the 
25 Treasurer shall
transfer from the Tobacco Settlement 
26 Recovery Fund to the Income Tax Refund
Fund (i) $35,000,000 
 
 
HB3745- 106 -LRB099 09333 HLH 29538 b


1 in January, 2001, (ii) $35,000,000 in January, 2002, and

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

23 Replacement Fund an amount, certified by the Director to 
24 the Comptroller,
equal to the excess of the amount 
25 collected pursuant to subsections (c) and
(d) of Section 
26 201 of this Act deposited into the Income Tax Refund Fund

 
 
HB3745- 107 -LRB099 09333 HLH 29538 b


1 during the fiscal year over the amount of refunds resulting 
2 from
overpayment of tax liability under subsections (c) and 
3 (d) of Section 201
of this Act paid from the Income Tax 
4 Refund Fund during the fiscal year.
5  (4) As soon as possible after the end of each fiscal 
6 year, the Director shall
order transferred and the State 
7 Treasurer and State Comptroller shall
transfer from the 
8 Personal Property Tax Replacement Fund to the Income Tax

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

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

12subsections (a) and (b) of Section 201 of the Illinois Income 
13Tax Act, minus
deposits into the Income Tax Refund Fund, the 
14Department shall deposit 3.0%
into the Income Tax Surcharge 
15Local Government Distributive Fund in the State
Treasury. 
16Beginning February 1, 1993 and continuing through June 30, 
171993, of
the amounts collected pursuant to subsections (a) and 
18(b) of Section 201 of the
Illinois Income Tax Act, minus 
19deposits into the Income Tax Refund Fund, the
Department shall 
20deposit 4.4% into the Income Tax Surcharge Local Government

21Distributive Fund in the State Treasury. Beginning July 1, 
221993, and
continuing through June 30, 1994, of the amounts 
23collected under subsections
(a) and (b) of Section 201 of this 
24Act, minus deposits into the Income Tax
Refund Fund, the 
25Department shall deposit 1.475% into the Income Tax Surcharge

26Local Government Distributive Fund in the State Treasury.
 
 
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1 (f) Deposits into the Fund for the Advancement of 
2Education. Beginning February 1, 2015, the Department shall 
3deposit the following portions of the revenue realized from the 
4tax imposed upon individuals, trusts, and estates by 
5subsections (a) and (b) of Section 201 of this Act during the 
6preceding month, minus deposits into the Income Tax Refund 
7Fund, into the Fund for the Advancement of Education: 
8  (1) beginning February 1, 2015, and prior to February 
9 1, 2025, 1/30; and 
10  (2) beginning February 1, 2025, 1/26. 
11 If the rate of tax imposed by subsection (a) and (b) of 
12Section 201 is reduced pursuant to Section 201.5 of this Act, 
13the Department shall not make the deposits required by this 
14subsection (f) on or after the effective date of the reduction. 
15 (g) Deposits into the Commitment to Human Services Fund. 
16Beginning February 1, 2015, the Department shall deposit the 
17following portions of the revenue realized from the tax imposed 
18upon individuals, trusts, and estates by subsections (a) and 
19(b) of Section 201 of this Act during the preceding month, 
20minus deposits into the Income Tax Refund Fund, into the 
21Commitment to Human Services Fund: 
22  (1) beginning February 1, 2015, and prior to February 
23 1, 2025, 1/30; and 
24  (2) beginning February 1, 2025, 1/26. 
25 If the rate of tax imposed by subsection (a) and (b) of 
26Section 201 is reduced pursuant to Section 201.5 of this Act, 
 
 
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1the Department shall not make the deposits required by this 
2subsection (g) on or after the effective date of the reduction. 
3 (h) Deposits into the Tax Compliance and Administration 
4Fund. Beginning on the first day of the first calendar month to 
5occur on or after August 26, 2014 (the effective date of Public 
6Act 98-1098) this amendatory Act of the 98th General Assembly, 
7each month the Department shall pay into the Tax Compliance and 
8Administration Fund, to be used, subject to appropriation, to 
9fund additional auditors and compliance personnel at the 
10Department, an amount equal to 1/12 of 5% of the cash receipts 
11collected during the preceding fiscal year by the Audit Bureau 
12of the Department from the tax imposed by subsections (a), (b), 
13(c), and (d) of Section 201 of this Act, net of deposits into 
14the Income Tax Refund Fund made from those cash receipts. 
15 (i) Deposits into the 21st Century Workforce Development 
16Fund. On and after the effective date of this amendatory Act of 
17the 99th General Assembly, the Department shall deposit into 
18the 21st Century Workforce Development Fund each month an 
19amount equal to 1/10 of the revenue realized from the tax 
20imposed by subsections (a) and (b) of Section 201 of this Act 
21during the preceding month that is attributable to the changes 
22made to Section 203 of this Act by this amendatory Act of the 
2399th General Assembly, net of deposits into the Income Tax 
24Refund Fund. 
25(Source: P.A. 97-72, eff. 7-1-11; 97-732, eff. 6-30-12; 98-24, 
26eff. 6-19-13; 98-674, eff. 6-30-14; 98-1052, eff. 8-26-14; 
 
 
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198-1098, eff. 8-26-14; revised 9-26-14.)


2 Section 99. Effective date. This Act takes effect upon 
3becoming law.