Rep. Kevin John Olickal

Filed: 3/17/2025

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1 AMENDMENT TO HOUSE BILL 3320

2 AMENDMENT NO. ______. Amend House Bill 3320 by replacing

3 everything after the enacting clause with the following:

4 "Section 1. Short title. This Act may be cited as the

5 Responsibility in Firearm Legislation Act.

6 Section 5. Findings and purpose. The General Assembly

7 finds that the people of the State of Illinois have incurred

8 undue direct costs and financial burdens from injuries and

9 deaths as a result of the use of firearms in this State.

10 Therefore, to protect the health, safety, and welfare of the

11 people of the State of Illinois, it is necessary to require the

12 licensing of manufacturers of firearms in this State and to

13 distribute the proceeds of license fees to victims of firearms

14 in this State.

15 Section 10. Definitions. In this Act:

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1 "Applicant" means a victim or secondary victim applying

2 for reimbursement for a firearm injury or firearm death.

3 "Direct costs" means costs incurred for any one or more of

4 the following: medical treatment and care; medical devices and

5 prescriptions drugs; mental health treatment provided by a

6 psychiatrist, psychologist, social worker, or behavioral

7 therapist; physical therapy, occupational therapy, and

8 rehabilitation services; funeral, burial, and cremation

9 services; emergency transportation; lost wages; emergency

10 relocation; property damage; legal services; or emergency

11 child or dependent care.

12 "Distributor of firearms" or "distributor" means a person

13 who supplies firearms to retailers or other business that sell

14 firearms to consumers in this State.

15 "Experience rating" means the number of firearms recovered

16 in a given year in connection with incidents involving firearm

17 injuries that are linked to a specific manufacturer in the

18 State, regardless of modifications or accessories added to the

19 firearm after manufacturing, divided by the total number of

20 firearms recovered in connection with those incidents in that

21 same year.

22 "Firearm" has the same meaning given to that term in the

23 Firearm Owners Identification Card Act.

24 "Finished firearm" means a firearm other than a firearm

25 muffler or firearm silencer that contains all component parts

26 necessary to function, whether or not assembled or operable.

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1 "Firearm death" means the death of a person that is the

2 direct or proximate result of a high-velocity projectile fired

3 from a firearm. "Firearm death" includes suicides and

4 homicides.

5 "Firearm injury" means a physical, mental, or emotional

6 injury to a person that is the direct or proximate result of a

7 high-velocity projectile fired from a firearm, whether

8 self-inflicted, accidental, or intentional.

9 "Importer" means any person that brings one or more

10 manufactured firearms into the State of Illinois.

11 "Manufacturer" means a person with a Federal Firearms

12 License who manufactures and sells finished firearms to

13 consumers, distributors, or retailers in this State.

14 "Manufacturer" does not include a person or entity that

15 manufactured or sold less than 1,000 firearms in the last 3

16 years.

17 "Permanent disability" means a permanent physical or

18 mental impairment to a person that prevents the person from

19 working or performing normal activities that person performed

20 before the incident or injury as evidenced by appropriate

21 medical documentation from a physician licensed to practice

22 medicine in all its branches.

23 "Retailer of firearms" or retailer" means a person that

24 sells firearms directly to consumers in this State.

25 "RIFL Agency" or "Agency" means the Responsibility in

26 Firearm Legislation Agency created under Section 15 of this

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1 Act.

2 "RIFL Board" or "Board" means the Board of Directors

3 supervising and directing the RIFL Agency, as appointed under

4 Section 20 of this Act.

5 "RIFL License" or "License" means a Responsibility in

6 Firearm Legislation License granted by the RIFL Agency under

7 Section 30 of this Act.

8 "RIFL Fund" or "Fund" means the Responsibility in Firearm

9 Legislation Fund created under this Act.

10 "Secondary victim" means one or more persons who are

11 related to a victim of firearms. A person is related to a

12 victim of firearms if that person is a legal guardian, parent,

13 sibling, spouse, living dependent, grandparent, grandchild, or

14 next of kin.

15 "Total annual aggregate fee" means the sum of all license

16 fees imposed over one year on manufacturers under this Act.

17 "Victim" means an individual who has been injured in a

18 firearm injury, who has succumbed to a firearm death, or who

19 has died from complications arising from a firearm injury.

20 Section 15. Responsibility in Firearm Legislation Agency.

21 (a) For the purpose of effectuating the policy declared in

22 Section 5 of this Act, there is established in the Executive

23 Branch of the State Government an independent agency to be

24 known as the Responsibility in Firearm Legislation Agency.

25 This RIFL Agency shall be under the supervision and direction

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1 of a Board of Directors as described under Section 20 of this

2 Act. The RIFL Agency shall have the powers and duties

3 enumerated in this Act, with such other powers and duties

4 conferred upon it by law.

5 Section 20. Responsibility in Firearm Legislation Board of

6 Directors.

7 (a) The Board of Directors of the RIFL Agency shall be

8 appointed as follows:

9 (1) The Governor shall appoint the Board of Directors

10 with the advice and consent of the Senate. The Board of

11 Directors shall supervise and direct the RIFL Agency

12 established under Section 15 of this Act.

13 (2) The Board of Directors shall have 9 members as

14 follows:

15 (A) Three representatives from private industry.

16 Each representative must be an owner or an executive

17 officer, with no more than one representative from

18 each sector of private industry. One of the 3 members

19 shall be licensed to practice law in the State of

20 Illinois, and one member shall be a representative of

21 the firearm industry.

22 (B) Three representatives from health professions,

23 licensed in the State of Illinois and with experience

24 in the treatment of patients who have suffered firearm

25 injuries. At least one member must hold a Medical

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1 Doctorate or Doctor of Osteopathic Medicine and one

2 member must be a licensed psychiatrist, psychologist,

3 psychotherapist, or behavioral therapist.

4 (C) One representative who is a highly respected

5 legal scholar nominated by the Chief Justice of the

6 Illinois Supreme Court and appointed under paragraph

7 (1) of this subsection (a).

8 (D) One representative who is an economist who

9 provides analysis in commercial litigation or a

10 Certified Public Accountant and who does not work in a

11 similar industry or field as any other representative.

12 (E) One representative from the general public.

13 (3) In addition to the requirements of paragraph (2)

14 of this subsection (a), no more than 5 members shall be

15 from the same political party.

16 (4) Members of the Board shall serve for a term of 4

17 years. No member may serve for more than 2 consecutive

18 terms.

19 (5) Vacancies shall be filled by the Board as

20 described under this subsection (a). An interim member

21 appointed by the Board by majority vote shall serve for

22 the remainder of the term or until a replacement can be

23 appointed by the Governor, as follows:

24 (A) Vacancies under subparagraphs (C), (D), and

25 (E) of paragraph (2) of this subsection (a) shall be

26 filled by majority vote of any remaining members under

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1 subparagraphs (C), (D), and (E) of paragraph (2) of

2 this subsection (a).

3 (B) Vacancies under subparagraphs (A) and (B) of

4 paragraph (2) of this subsection (a) shall be filled

5 by majority vote of any remaining members under

6 subparagraphs (A) and (B) of paragraph (2) of this

7 subsection (a).

8 If no candidate receives a majority of votes under

9 this paragraph (5), then the candidate with the least

10 number of votes is disqualified and a new vote will be made

11 for the remaining candidates. This shall continue until

12 one candidate is chosen.

13 In the event of a tie under this paragraph (5), the

14 President of the Board shall cast a tie-breaking vote.

15 (b) The requirements for the President of the Board shall

16 be as follows:

17 (1) The President of the Board shall be chosen from

18 among the members described under subparagraphs (C), (D),

19 and (E) of paragraph (2) of subsection (a). The President

20 of the Board shall be appointed by the Governor with the

21 advice and consent of the Senate. A person may be

22 appointed concurrently President of the Board and member

23 under subparagraph (C), (D), or (E) of paragraph (2) of

24 subsection (a) as provided under paragraph (1) of

25 subsection (a).

26 (2) If, for any reason there is a vacancy for the

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1 President of the Board, then the Board, by a majority of

2 members, shall choose an interim President of the Board

3 from among the remaining representatives as described

4 under subparagraphs (C), (D), and (E) of paragraph (2) of

5 subsection (a) who shall serve until such time a President

6 of the Board is appointed according to paragraph (1).

7 (c) No business may be conducted at a meeting of the Board

8 unless a majority of members are present. No business of the

9 Board can be considered binding unless a vote of a majority of

10 members have voted in favor unless a higher vote is otherwise

11 required.

12 (d) The Board of Directors shall:

13 (1) supervise and direct the Agency;

14 (2) adopt rules as authorized by law;

15 (3) hire executive staff including an Executive

16 Director of the RIFL Agency and Associate Director of the

17 RIFL Agency; and

18 (4) review disputed claims made by applicants under

19 the RIFL Financial Restitution Program.

20 (e) The Board of Directors shall adopt rules providing for

21 salaries for an Executive Director and Associate Director, and

22 any other executive staff, as well as compensation for members

23 of the Board.

24 Section 25. General powers and duties of the Agency.

25 (a) The Agency shall:

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1 (1) Develop and administer the RIFL Licensing Program.

2 (2) Develop and administer the RIFL Financial

3 Restitution Program.

4 (3) Assist in the management of the RIFL Fund.

5 (b) Except as otherwise limited by this Act, the Agency

6 has all of the powers to carry out the purposes and provisions

7 of this Act, including, but not limited to:

8 (1) obtaining and employing personnel and hiring

9 consultants that are necessary to fulfill the Agency's

10 purposed, and making expenditures for that purpose within

11 the appropriations for that purpose;

12 (2) purchasing, receiving, taking by grant, gift,

13 devise, bequest, or otherwise, lease, or otherwise

14 acquiring, owning, holding, improving, employing, using,

15 and otherwise dealing in and with, real or personal

16 property, whether tangible or intangible, or any interest

17 therein, within the State;

18 (3) acquiring real or personal property, whether

19 tangible or intangible, including without limitation

20 property rights, interests in property, franchises,

21 obligations, contracts, and debt and equity securities;

22 (4) selling, conveying, leasing, exchanging,

23 transferring, abandoning, or otherwise disposing of, or

24 mortgaging, pledging, or creating a security interest in,

25 any of its assets, properties, or any interest therein,

26 wherever situated;

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1 (5) purchasing, taking, receiving, subscribing for, or

2 otherwise acquiring, holding, making a tender offer for,

3 voting, disposing of, mortgaging, pledging or granting a

4 security interest in, using, and otherwise dealing in and

5 with, bonds and other obligations, shares or other

6 securities (or interests therein) issued by others,

7 whether engaged in a similar or different business or

8 activity;

9 (6) making and executing agreements, contracts, and

10 other instruments necessary or convenient in the exercise

11 of the powers and functions of the Agency under this Act,

12 including contracts with any person or other entity;

13 (7) lending money, investing and reinvesting its funds

14 in accordance with the Public Funds Investment Act, and

15 taking and holding real and personal property as security

16 for the payment of funds loaned or invested;

17 (8) borrowing money at such rate or rates of interest

18 as the Agency may determine, issuing its notes, bonds, or

19 other obligations to evidence that indebtedness, and

20 securing any of its obligations by mortgage or pledge of

21 its real or personal property, revenues, grants, and other

22 funds as provided or any interest therein, wherever

23 situated;

24 (9) procuring insurance against any loss in connection

25 with its properties or operations in such amount or

26 amounts and from such insurers, as it may deem necessary

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1 or desirable, and to pay any premiums therefore;

2 (10) negotiating and entering into agreements with

3 trustees or receivers appointed by United States

4 bankruptcy courts or federal district courts or in other

5 proceedings involving adjustment of debts and authorizing

6 proceedings involving adjustments of debts and authorizing

7 legal counsel for the Agency to appear in any such

8 proceedings;

9 (11) filing a petition under Chapter 9 of Title 11 of

10 the United States Bankruptcy Code or taking other similar

11 action for the adjustment of its debts;

12 (12) entering into management agreements for the

13 operation of any of the property or facilities owned by

14 the Agency;

15 (13) maintaining an office or offices at such place or

16 places in the State as it may determine;

17 (14) requesting information, and making any inquiry,

18 investigation, or study that the Agency may deem necessary

19 to enable it effectively to carry out the provisions of

20 this Act;

21 (15) accepting and expending appropriations;

22 (16) engaging in any activity or operation that is

23 incidental to and in furtherance of efficient operation to

24 accomplish the Agency's purposes, including hiring

25 employees that the Board deems essential for the

26 operations of the Agency;

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1 (17) adopting, revising, amending, and repealing rules

2 with respect to its operations and properties as may be

3 necessary or convenient to carry out the purposes of this

4 Act, subject to the provisions of the Illinois

5 Administrative Procedure Act; and

6 (18) establishing and collecting charges and fees as

7 described in this Act.

8 Section 30. Responsibility in Firearm Legislation

9 Licensing Program.

10 (a) The Responsibility in Firearm Legislation Licensing

11 Program is established and shall be administered by the RIFL

12 Agency.

13 (b) A manufacturer in this State shall be issued a RIFL

14 License by the Agency upon payment of the fee set by the

15 Agency.

16 (c) The Agency shall maintain a list of all licensed

17 manufacturers under this Section to be published on the

18 Agency's website.

19 (d) Retailers, distributors, and importers shall annually

20 report to the Agency the name of the manufacturer or

21 manufacturers with whom the retailer, distributor, and

22 importer contracts.

23 (e) Before commencing the Responsibility in Firearm

24 Legislation Licensing Program under this Section, the Board

25 shall issue a request for proposals from an actuarial or

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1 economics consulting firm to determine as outlined by this Act

2 each eligible manufacturer's responsibility to the portion of

3 the initial $821,000,000 for the RIFL Fund utilizing

4 experience rating as defined in the Act. The Agency shall set

5 fees for a RIFL License annually based on the following:

6 (1) The total annual aggregate fee for all

7 manufacturers of firearms in this State shall be set by

8 the Agency at an amount that the Agency estimates is equal

9 to the direct costs and financial burdens borne by the

10 State and its residents as a result of firearm injuries

11 occurring in this State, as determined by the Agency based

12 on the incidence of firearm injuries in this State in the

13 previous year, except that in the first program year the

14 total annual aggregate fee shall be equal to $821,000,000,

15 the calculated direct expenses of firearm injury in the

16 State of Illinois.

17 (2) The total annual aggregate fee for all

18 manufacturers in this State shall annually thereafter be

19 adjusted based on the incidence of injury and death and

20 correlated expenses.

21 (3) No less than 4% but no more than 6% of the annual

22 aggregate fee shall be appropriated for personnel and

23 administration costs of the Agency and Board of Directors.

24 (f) The RIFL Agency shall inform each manufacturer of the

25 amount of the fee and the description of how the fee was

26 calculated at least 90 days before the license renewal date.

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1 (g) The RIFL Agency shall provide manufacturers with an

2 opportunity to dispute any fees levied for a license under

3 procedures established by rules adopted by the Agency under

4 this Act.

5 (h) The proceeds from all fees under the Responsibility in

6 Firearm Legislation Licensing Program shall be deposited into

7 the RIFL Fund established under Section 35 of this Act.

8 (i) Beginning January 1, 2028, a manufacturer may not

9 operate in this State without a license issued by the Agency

10 under this Act.

11 (j) Beginning January 1, 2028, a retailer may not sell a

12 firearm to a consumer in this State from a manufacturer who

13 does not have a license issued by the Agency under this Act.

14 (k) Beginning January 1, 2028, an importer may not import

15 firearms into this State from a manufacturer who does not have

16 a license issued by the Agency under this Act.

17 (l) Beginning January 1, 2028, a distributor may not

18 distribute a firearm into this State from a manufacturer who

19 does not have a license issued by the Agency under this Act.

20 (m) Beginning January 1, 2028, a licensed dealer, private

21 seller, sponsor of a firearm trade show, or organizer of a

22 firearm trade show may not sell, distribute, sponsor, or

23 organize to effectuate the selling of firearms in this State

24 from a manufacturer who does not have a license issued by the

25 Agency under this Act.

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1 Section 35. RIFL Fund. The Responsibility in Firearm

2 Legislation Fund is created as a special fund in the State

3 treasury. Proceeds from fees imposed for RIFL Licenses under

4 Section 30 of this Act or rules adopted under this Act shall be

5 collected by the RIFL Agency and deposited into the Fund.

6 Civil penalties collected under Section 50 shall be deposited

7 into the Fund. Interest and dividends shall be reinvested into

8 the Fund. Moneys in the RIFL Fund, as directed by the RIFL

9 Agency, shall be expended for financial restitution to victims

10 of firearms in this State under Section 40 of this Act and for

11 other purposes authorized under this Act. Subsections (b) and

12 (c) of Section 5 of the State Finance Act do not apply to the

13 RIFL Fund.

14 In the event the Fund becomes insolvent, responsibility

15 for medical costs, mental health care costs, pharmaceutical

16 services costs, and rehabilitation services costs under

17 Section 40 shall default to the claimant's health insurer.

18 Section 40. RIFL Financial Restitution Program.

19 (a) The Responsibility in Firearm Legislation Financial

20 Restitution Program is established in the Agency for the

21 purpose of providing relief to victims and secondary victims.

22 (b) Moneys in the RIFL Fund shall be used for the financial

23 restitution under the RIFL Financial Restitution Program

24 established under this Section after application by a person

25 who has suffered a firearm injury or the next of kin of someone

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1 who has suffered a firearm death.

2 (c) Initial determinations for eligibility shall be

3 determined by the Agency. Claimants may appeal a rejection of

4 the initial claim through the administrative process,

5 established by rule of the Agency.

6 (d) On or before July 1, 2027, the Agency shall adopt rules

7 for the provision of financial restitution to victims of

8 firearms in this State. These rules shall be based on the

9 findings and purpose of this Act and shall provide, at least

10 and as much as practicable, for the following:

11 (1) Eligible claimants for financial restitution shall

12 include all victims as defined in this Act and shall not

13 exclude any person based on citizenship or legal status.

14 No claim may be denied even if the claimant is at fault for

15 the firearm injury.

16 (2) Except as limited by paragraph (4), expenses

17 eligible for compensation through financial restitution

18 from the RIFL Fund under this Act include, but are not

19 limited to, costs related to medical and mental health

20 care, rehabilitation, prescriptions, medical devices,

21 funeral, emergency transportation, lost wages, loss of

22 tuition, property damage, temporary relocation, property

23 disability accommodations, probate costs, replacement

24 service, short-term childcare, pain and suffering,

25 time-off, and lost wage benefits for qualifying survivors

26 of deceased household income earners.

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1 (3) The financial restitution from the RIFL Fund under

2 this Act shall compensate victims of firearms for all

3 direct costs incurred as a result of firearm injury for up

4 to 3 years post-event, except:

5 (A) in the event of a permanent physical or mental

6 disability, the claimant is eligible for compensation

7 for the duration of the claimant's life including, but

8 not limited to, medical care, mental health care,

9 pharmaceutical services, and rehabilitative services;

10 and

11 (B) if a complication from a firearm injury causes

12 the death of the claimant, the claimant is eligible

13 for compensation for funeral, cremation, and burial

14 services.

15 (4) No award shall be reduced based on any applicable

16 private insurance claim.

17 (5) The Agency shall directly pay providers of medical

18 care, mental health care, pharmaceutical services, and

19 rehabilitative services that are connected to a firearm

20 injury to a victim of firearms as part of this

21 compensation.

22 (6) Notwithstanding any other provision of this

23 Section, out-of-state residents who have suffered firearm

24 injury or death in this State are eligible for in-state

25 medical and mental health care costs, and rehabilitation

26 only, except if the State in which the resident resides

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1 has a RIFL Agency or a similar compensation program funded

2 with reciprocity and funded by contributions from the

3 firearm industry, as determined by the Agency.

4 (7) The compensation received through the RIFL

5 Financial Restitution Program is exempt from State taxes

6 under subparagraph (NN) of paragraph (2) of subsection (a)

7 of Section 203 of the Illinois Income Tax Act.

8 (8) Claimants are responsible to provide medical

9 records, proof of employment, and proof of expenses.

10 (9) Claim disputes shall be resolved by the RIFL

11 Board.

12 Section 45. RIFL firearm recovery reporting.

13 (a) All law enforcement agencies shall report to the

14 Illinois State Police the manufacturer, make, and model of all

15 firearms recovered in any incidents to which they respond that

16 result in a firearm injury.

17 (b) The Illinois State Police shall compile all reports

18 and provide a report at least once a year to the Agency.

19 (c) The Agency shall make available on the Agency's public

20 website the substance of the reports received under this

21 Section.

22 (d) The Agency, in consultation with the Illinois State

23 Police, shall, by rule, establish procedures implementing this

24 Section.

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1 Section 50. Enforcement and penalties.

2 (a) The Attorney General may investigate violations of

3 this Act and bring civil actions to enforce this Act. Any civil

4 penalty collected under this Act shall be deposited into the

5 RIFL Fund.

6 (b) A manufacturer who violates subsection (i) of Section

7 30 is subject to a civil penalty of up to $10,000,000 per

8 month, for every month a continuing violation of that

9 subsection continues. After 60 days of failure to meet

10 requirements of licensing, the manufacturer shall be

11 prohibited from operating in the State. A manufacturer is

12 liable for all fees and fines levied while the license was

13 valid, including any fees for late payment. A license shall

14 not be reinstated until all outstanding fines and the

15 manufacturer's assessed contribution to the fund are paid in

16 full. All fines and penalties shall be paid into the RIFL Fund.

17 (c) A retailer, distributor, importer, licensed dealer,

18 private seller, sponsor of a firearm trade show, or organizer

19 of a firearm trade show who violates subsection (j), (k), (l),

20 or (m) of Section 30 is subject to a civil penalty of up to

21 $10,000 per violation. It is an affirmative defense that a

22 retailer, distributor, importer, licensed dealer, private

23 seller, sponsor of a firearm trade show, or organizer of a

24 firearm trade show reasonably relied upon the list of

25 manufacturers under Section 30 of this Act.

26 (d) The Agency may adopt rules that provide for other

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1 civil penalties for violations of this Act or rules adopted

2 under this Act of no more than $10,000 per violation for

3 retailers, distributors, importers, licensed dealers, private

4 sellers, sponsors of a firearm trade show, or organizers of a

5 firearm trade show.

6 (e) The Attorney General may bring an action for an

7 equitable or other remedy in a court of competent jurisdiction

8 to enforce this Act or to prevent a violation of this Act.

9 Section 55. Rulemaking. The Agency has rulemaking

10 authority and shall adopt rules implementing this Act.

11 Section 60. The State Finance Act is amended by changing

12 Section 5 and by adding Section 5.1030 as follows:

13 (30 ILCS 105/5) (from Ch. 127, par. 141)

14 Sec. 5. Special funds.

15 (a) There are special funds in the State Treasury

16 designated as specified in the Sections which succeed this

17 Section 5 and precede Section 5d.

18 (b) Except as provided in the Illinois Vehicle Hijacking

19 and Motor Vehicle Theft Prevention and Insurance Verification

20 Act and the Responsibility in Firearm Legislation Act, when

21 any special fund in the State Treasury is discontinued by an

22 Act of the General Assembly, any balance remaining therein on

23 the effective date of such Act shall be transferred to the

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1 General Revenue Fund, or to such other fund as such Act shall

2 provide. Warrants outstanding against such discontinued fund

3 at the time of the transfer of any such balance therein shall

4 be paid out of the fund to which the transfer was made.

5 (c) Except as provided in the Responsibility in Firearm

6 Legislation Act, when ~~When~~ any special fund in the State

7 Treasury has been inactive for 18 months or longer, the

8 Comptroller may terminate the fund, and the balance remaining

9 in such fund shall be transferred by the Comptroller to the

10 General Revenue Fund. When a special fund has been terminated

11 by the Comptroller as provided in this Section, the General

12 Assembly shall repeal or amend all Sections of the statutes

13 creating or otherwise referring to that fund.

14 The Comptroller shall be allowed the discretion to

15 maintain or dissolve any federal trust fund which has been

16 inactive for 18 months or longer.

17 (d) (Blank).

18 (e) (Blank).

19 (Source: P.A. 102-904, eff. 1-1-23; 103-266, eff. 1-1-24;

20 103-616, eff. 7-1-24.)

21 (30 ILCS 105/5.1030 new)

22 Sec. 5.1030. The Responsibility in Firearm Legislation

23 Fund.

24 Section 65. The Illinois Income Tax Act is amended by

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1 changing Section 203 as follows:

2 (35 ILCS 5/203)

3 Sec. 203. Base income defined.

4 (a) Individuals.

5 (1) In general. In the case of an individual, base

6 income means an amount equal to the taxpayer's adjusted

7 gross income for the taxable year as modified by paragraph

8 (2).

9 (2) Modifications. The adjusted gross income referred

10 to in paragraph (1) shall be modified by adding thereto

11 the sum of the following amounts:

12 (A) An amount equal to all amounts paid or accrued

13 to the taxpayer as interest or dividends during the

14 taxable year to the extent excluded from gross income

15 in the computation of adjusted gross income, except

16 stock dividends of qualified public utilities

17 described in Section 305(e) of the Internal Revenue

18 Code;

19 (B) An amount equal to the amount of tax imposed by

20 this Act to the extent deducted from gross income in

21 the computation of adjusted gross income for the

22 taxable year;

23 (C) An amount equal to the amount received during

24 the taxable year as a recovery or refund of real

25 property taxes paid with respect to the taxpayer's

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1 principal residence under the Revenue Act of 1939 and

2 for which a deduction was previously taken under

3 subparagraph (L) of this paragraph (2) prior to July

4 1, 1991, the retrospective application date of Article

5 4 of Public Act 87-17. In the case of multi-unit or

6 multi-use structures and farm dwellings, the taxes on

7 the taxpayer's principal residence shall be that

8 portion of the total taxes for the entire property

9 which is attributable to such principal residence;

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 adjusted gross income;

14 (D-5) An amount, to the extent not included in

15 adjusted gross income, equal to the amount of money

16 withdrawn by the taxpayer in the taxable year from a

17 medical care savings account and the interest earned

18 on the account in the taxable year of a withdrawal

19 pursuant to subsection (b) of Section 20 of the

20 Medical Care Savings Account Act or subsection (b) of

21 Section 20 of the Medical Care Savings Account Act of

22 2000;

23 (D-10) For taxable years ending after December 31,

24 1997, an amount equal to any eligible remediation

25 costs that the individual deducted in computing

26 adjusted gross income and for which the individual

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LRB104 12166 BDA 23623 a

1 claims a credit under subsection (l) of Section 201;

2 (D-15) 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

6 the Internal Revenue Code;

7 (D-16) 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 (D-15), then

11 an amount equal to the aggregate amount of the

12 deductions taken in all taxable years under

13 subparagraph (Z) 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 a

16 subtraction is allowed with respect to that property

17 under subparagraph (Z) and for which the taxpayer was

18 allowed in any taxable year to make a subtraction

19 modification under subparagraph (Z), 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 (D-17) 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

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LRB104 12166 BDA 23623 a

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 that 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 under Sections 951 through

20 964 of the Internal Revenue Code and amounts included

21 in gross income under Section 78 of the Internal

22 Revenue Code) with respect to the stock of the same

23 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

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LRB104 12166 BDA 23623 a

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

24 or agreement entered into at arm's-length rates

25 and terms and the principal purpose for the

26 payment is not federal or Illinois tax avoidance;

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LRB104 12166 BDA 23623 a

1 or

2 (iv) an item of interest paid, accrued, or

3 incurred, directly or indirectly, to a person if

4 the taxpayer establishes by clear and convincing

5 evidence that the adjustments are unreasonable; or

6 if the taxpayer and the Director agree in writing

7 to the application or use of an alternative method

8 of apportionment under Section 304(f).

9 Nothing in this subsection shall preclude the

10 Director from making any other adjustment

11 otherwise allowed under Section 404 of this Act

12 for any tax year beginning after the effective

13 date of this amendment provided such adjustment is

14 made pursuant to regulation adopted by the

15 Department and such regulations provide methods

16 and standards by which the Department will utilize

17 its authority under Section 404 of this Act;

18 (D-18) An amount equal to the amount of intangible

19 expenses and costs otherwise allowed as a deduction in

20 computing base income, and that were paid, accrued, or

21 incurred, directly or indirectly, (i) for taxable

22 years ending on or after December 31, 2004, to a

23 foreign person who would be a member of the same

24 unitary business group but for the fact that the

25 foreign person's business activity outside the United

26 States is 80% or more of that person's total business

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LRB104 12166 BDA 23623 a

1 activity and (ii) for taxable years ending on or after

2 December 31, 2008, to a person who would be a member of

3 the same unitary business group but for the fact that

4 the person is prohibited under Section 1501(a)(27)

5 from being included in the unitary business group

6 because he or she is ordinarily required to apportion

7 business income under different subsections of Section

8 304. The addition modification required by this

9 subparagraph shall be reduced to the extent that

10 dividends were included in base income of the unitary

11 group for the same taxable year and received by the

12 taxpayer or by a member of the taxpayer's unitary

13 business group (including amounts included in gross

14 income under Sections 951 through 964 of the Internal

15 Revenue Code and amounts included in gross income

16 under Section 78 of the Internal Revenue Code) with

17 respect to the stock of the same person to whom the

18 intangible expenses and costs were directly or

19 indirectly paid, incurred, or accrued. The preceding

20 sentence does not apply to the extent that the same

21 dividends caused a reduction to the addition

22 modification required under Section 203(a)(2)(D-17) of

23 this Act. As used in this subparagraph, the term

24 "intangible expenses and costs" includes (1) expenses,

25 losses, and costs for, or related to, the direct or

26 indirect acquisition, use, maintenance or management,

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LRB104 12166 BDA 23623 a

1 ownership, sale, exchange, or any other disposition of

2 intangible property; (2) losses incurred, directly or

3 indirectly, from factoring transactions or discounting

4 transactions; (3) royalty, patent, technical, and

5 copyright fees; (4) licensing fees; and (5) other

6 similar expenses and costs. For purposes of this

7 subparagraph, "intangible property" includes patents,

8 patent applications, trade names, trademarks, service

9 marks, copyrights, mask works, trade secrets, and

10 similar types of intangible assets.

11 This paragraph shall not apply to the following:

12 (i) any item of intangible expenses or costs

13 paid, accrued, or incurred, directly or

14 indirectly, from a transaction with a person who

15 is subject in a foreign country or state, other

16 than a state which requires mandatory unitary

17 reporting, to a tax on or measured by net income

18 with respect to such item; or

19 (ii) any item of intangible expense or cost

20 paid, accrued, or incurred, directly or

21 indirectly, if the taxpayer can establish, based

22 on a preponderance of the evidence, both of the

23 following:

24 (a) the person during the same taxable

25 year paid, accrued, or incurred, the

26 intangible expense or cost to a person that is

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LRB104 12166 BDA 23623 a

1 not a related member, and

2 (b) the transaction giving rise to the

3 intangible expense or cost between the

4 taxpayer and the person did not have as a

5 principal purpose the avoidance of Illinois

6 income tax, and is paid pursuant to a contract

7 or agreement that reflects arm's-length terms;

8 or

9 (iii) any item of intangible expense or cost

10 paid, accrued, or incurred, directly or

11 indirectly, from a transaction with a person if

12 the taxpayer establishes by clear and convincing

13 evidence, that the adjustments are unreasonable;

14 or if the taxpayer and the Director agree in

15 writing to the application or use of an

16 alternative method of apportionment under Section

17 304(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

21 for any tax year beginning after the effective

22 date of this amendment provided such adjustment is

23 made pursuant to regulation adopted by the

24 Department and such regulations provide methods

25 and standards by which the Department will utilize

26 its authority under Section 404 of this Act;

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LRB104 12166 BDA 23623 a

1 (D-19) 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

21 stock of the same person to whom the premiums and costs

22 were directly or indirectly paid, incurred, or

23 accrued. The preceding sentence does not apply to the

24 extent that the same dividends caused a reduction to

25 the addition modification required under Section

26 203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this

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LRB104 12166 BDA 23623 a

1 Act;

2 (D-20) For taxable years beginning on or after

3 January 1, 2002 and ending on or before December 31,

4 2006, in the case of a distribution from a qualified

5 tuition program under Section 529 of the Internal

6 Revenue Code, other than (i) a distribution from a

7 College Savings Pool created under Section 16.5 of the

8 State Treasurer Act or (ii) a distribution from the

9 Illinois Prepaid Tuition Trust Fund, an amount equal

10 to the amount excluded from gross income under Section

11 529(c)(3)(B). For taxable years beginning on or after

12 January 1, 2007, in the case of a distribution from a

13 qualified tuition program under Section 529 of the

14 Internal Revenue Code, other than (i) a distribution

15 from a College Savings Pool created under Section 16.5

16 of the State Treasurer Act, (ii) a distribution from

17 the Illinois Prepaid Tuition Trust Fund, or (iii) a

18 distribution from a qualified tuition program under

19 Section 529 of the Internal Revenue Code that (I)

20 adopts and determines that its offering materials

21 comply with the College Savings Plans Network's

22 disclosure principles and (II) has made reasonable

23 efforts to inform in-state residents of the existence

24 of in-state qualified tuition programs by informing

25 Illinois residents directly and, where applicable, to

26 inform financial intermediaries distributing the

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LRB104 12166 BDA 23623 a

1 program to inform in-state residents of the existence

2 of in-state qualified tuition programs at least

3 annually, an amount equal to the amount excluded from

4 gross income under Section 529(c)(3)(B).

5 For the purposes of this subparagraph (D-20), a

6 qualified tuition program has made reasonable efforts

7 if it makes disclosures (which may use the term

8 "in-state program" or "in-state plan" and need not

9 specifically refer to Illinois or its qualified

10 programs by name) (i) directly to prospective

11 participants in its offering materials or makes a

12 public disclosure, such as a website posting; and (ii)

13 where applicable, to intermediaries selling the

14 out-of-state program in the same manner that the

15 out-of-state program distributes its offering

16 materials;

17 (D-20.5) For taxable years beginning on or after

18 January 1, 2018, in the case of a distribution from a

19 qualified ABLE program under Section 529A of the

20 Internal Revenue Code, other than a distribution from

21 a qualified ABLE program created under Section 16.6 of

22 the State Treasurer Act, an amount equal to the amount

23 excluded from gross income under Section 529A(c)(1)(B)

24 of the Internal Revenue Code;

25 (D-21) For taxable years beginning on or after

26 January 1, 2007, in the case of transfer of moneys from

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LRB104 12166 BDA 23623 a

1 a qualified tuition program under Section 529 of the

2 Internal Revenue Code that is administered by the

3 State to an out-of-state program, an amount equal to

4 the amount of moneys previously deducted from base

5 income under subsection (a)(2)(Y) of this Section;

6 (D-21.5) For taxable years beginning on or after

7 January 1, 2018, in the case of the transfer of moneys

8 from a qualified tuition program under Section 529 or

9 a qualified ABLE program under Section 529A of the

10 Internal Revenue Code that is administered by this

11 State to an ABLE account established under an

12 out-of-state ABLE account program, an amount equal to

13 the contribution component of the transferred amount

14 that was previously deducted from base income under

15 subsection (a)(2)(Y) or subsection (a)(2)(HH) of this

16 Section;

17 (D-22) For taxable years beginning on or after

18 January 1, 2009, and prior to January 1, 2018, in the

19 case of a nonqualified withdrawal or refund of moneys

20 from a qualified tuition program under Section 529 of

21 the Internal Revenue Code administered by the State

22 that is not used for qualified expenses at an eligible

23 education institution, an amount equal to the

24 contribution component of the nonqualified withdrawal

25 or refund that was previously deducted from base

26 income under subsection (a)(2)(y) of this Section,

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LRB104 12166 BDA 23623 a

1 provided that the withdrawal or refund did not result

2 from the beneficiary's death or disability. For

3 taxable years beginning on or after January 1, 2018:

4 (1) in the case of a nonqualified withdrawal or

5 refund, as defined under Section 16.5 of the State

6 Treasurer Act, of moneys from a qualified tuition

7 program under Section 529 of the Internal Revenue Code

8 administered by the State, an amount equal to the

9 contribution component of the nonqualified withdrawal

10 or refund that was previously deducted from base

11 income under subsection (a)(2)(Y) of this Section, and

12 (2) in the case of a nonqualified withdrawal or refund

13 from a qualified ABLE program under Section 529A of

14 the Internal Revenue Code administered by the State

15 that is not used for qualified disability expenses, an

16 amount equal to the contribution component of the

17 nonqualified withdrawal or refund that was previously

18 deducted from base income under subsection (a)(2)(HH)

19 of this Section;

20 (D-23) An amount equal to the credit allowable to

21 the taxpayer under Section 218(a) of this Act,

22 determined without regard to Section 218(c) of this

23 Act;

24 (D-24) For taxable years ending on or after

25 December 31, 2017, an amount equal to the deduction

26 allowed under Section 199 of the Internal Revenue Code

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LRB104 12166 BDA 23623 a

1 for the taxable year;

2 (D-25) In the case of a resident, an amount equal

3 to the amount of tax for which a credit is allowed

4 pursuant to Section 201(p)(7) of this Act;

5 and by deducting from the total so obtained the sum of the

6 following amounts:

7 (E) For taxable years ending before December 31,

8 2001, any amount included in such total in respect of

9 any compensation (including but not limited to any

10 compensation paid or accrued to a serviceman while a

11 prisoner of war or missing in action) paid to a

12 resident by reason of being on active duty in the Armed

13 Forces of the United States and in respect of any

14 compensation paid or accrued to a resident who as a

15 governmental employee was a prisoner of war or missing

16 in action, and in respect of any compensation paid to a

17 resident in 1971 or thereafter for annual training

18 performed pursuant to Sections 502 and 503, Title 32,

19 United States Code as a member of the Illinois

20 National Guard or, beginning with taxable years ending

21 on or after December 31, 2007, the National Guard of

22 any other state. For taxable years ending on or after

23 December 31, 2001, any amount included in such total

24 in respect of any compensation (including but not

25 limited to any compensation paid or accrued to a

26 serviceman while a prisoner of war or missing in

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LRB104 12166 BDA 23623 a

1 action) paid to a resident by reason of being a member

2 of any component of the Armed Forces of the United

3 States and in respect of any compensation paid or

4 accrued to a resident who as a governmental employee

5 was a prisoner of war or missing in action, and in

6 respect of any compensation paid to a resident in 2001

7 or thereafter by reason of being a member of the

8 Illinois National Guard or, beginning with taxable

9 years ending on or after December 31, 2007, the

10 National Guard of any other state. The provisions of

11 this subparagraph (E) are exempt from the provisions

12 of Section 250;

13 (F) An amount equal to all amounts included in

14 such total pursuant to the provisions of Sections

15 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and

16 408 of the Internal Revenue Code, or included in such

17 total as distributions under the provisions of any

18 retirement or disability plan for employees of any

19 governmental agency or unit, or retirement payments to

20 retired partners, which payments are excluded in

21 computing net earnings from self employment by Section

22 1402 of the Internal Revenue Code and regulations

23 adopted pursuant thereto;

24 (G) The valuation limitation amount;

25 (H) An amount equal to the amount of any tax

26 imposed by this Act which was refunded to the taxpayer

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LRB104 12166 BDA 23623 a

1 and included in such total for the taxable year;

2 (I) An amount equal to all amounts included in

3 such total pursuant to the provisions of Section 111

4 of the Internal Revenue Code as a recovery of items

5 previously deducted from adjusted gross income in the

6 computation of taxable income;

7 (J) 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

12 substantially all of its operations in a River Edge

13 Redevelopment Zone or zones. This subparagraph (J) is

14 exempt from the provisions of Section 250;

15 (K) 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

19 a High Impact Business located in Illinois; provided

20 that dividends eligible for the deduction provided in

21 subparagraph (J) of paragraph (2) of this subsection

22 shall not be eligible for the deduction provided under

23 this subparagraph (K);

24 (L) For taxable years ending after December 31,

25 1983, an amount equal to all social security benefits

26 and railroad retirement benefits included in such

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LRB104 12166 BDA 23623 a

1 total pursuant to Sections 72(r) and 86 of the

2 Internal Revenue Code;

3 (M) With the exception of any amounts subtracted

4 under subparagraph (N), an amount equal to the sum of

5 all amounts disallowed as deductions by (i) Sections

6 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

7 and all amounts of expenses allocable to interest and

8 disallowed as deductions by Section 265(a)(1) of the

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

10 ending on or after August 13, 1999, Sections

11 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

12 Internal Revenue Code, plus, for taxable years ending

13 on or after December 31, 2011, Section 45G(e)(3) of

14 the Internal Revenue Code and, for taxable years

15 ending on or after December 31, 2008, any amount

16 included in gross income under Section 87 of the

17 Internal Revenue Code; the provisions of this

18 subparagraph are exempt from the provisions of Section

19 250;

20 (N) An amount equal to all amounts included in

21 such total which are exempt from taxation by this

22 State either by reason of its statutes or Constitution

23 or by reason of the Constitution, treaties or statutes

24 of the United States; provided that, in the case of any

25 statute of this State that exempts income derived from

26 bonds or other obligations from the tax imposed under

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LRB104 12166 BDA 23623 a

1 this Act, the amount exempted shall be the interest

2 net of bond premium amortization;

3 (O) An amount equal to any contribution made to a

4 job training project established pursuant to the Tax

5 Increment Allocation Redevelopment Act;

6 (P) An amount equal to the amount of the deduction

7 used to compute the federal income tax credit for

8 restoration of substantial amounts held under claim of

9 right for the taxable year pursuant to Section 1341 of

10 the Internal Revenue Code or of any itemized deduction

11 taken from adjusted gross income in the computation of

12 taxable income for restoration of substantial amounts

13 held under claim of right for the taxable year;

14 (Q) An amount equal to any amounts included in

15 such total, received by the taxpayer as an

16 acceleration in the payment of life, endowment or

17 annuity benefits in advance of the time they would

18 otherwise be payable as an indemnity for a terminal

19 illness;

20 (R) An amount equal to the amount of any federal or

21 State bonus paid to veterans of the Persian Gulf War;

22 (S) An amount, to the extent included in adjusted

23 gross income, equal to the amount of a contribution

24 made in the taxable year on behalf of the taxpayer to a

25 medical care savings account established under the

26 Medical Care Savings Account Act or the Medical Care

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LRB104 12166 BDA 23623 a

1 Savings Account Act of 2000 to the extent the

2 contribution is accepted by the account administrator

3 as provided in that Act;

4 (T) An amount, to the extent included in adjusted

5 gross income, equal to the amount of interest earned

6 in the taxable year on a medical care savings account

7 established under the Medical Care Savings Account Act

8 or the Medical Care Savings Account Act of 2000 on

9 behalf of the taxpayer, other than interest added

10 pursuant to item (D-5) of this paragraph (2);

11 (U) For one taxable year beginning on or after

12 January 1, 1994, an amount equal to the total amount of

13 tax imposed and paid under subsections (a) and (b) of

14 Section 201 of this Act on grant amounts received by

15 the taxpayer under the Nursing Home Grant Assistance

16 Act during the taxpayer's taxable years 1992 and 1993;

17 (V) Beginning with tax years ending on or after

18 December 31, 1995 and ending with tax years ending on

19 or before December 31, 2004, an amount equal to the

20 amount paid by a taxpayer who is a self-employed

21 taxpayer, a partner of a partnership, or a shareholder

22 in a Subchapter S corporation for health insurance or

23 long-term care insurance for that taxpayer or that

24 taxpayer's spouse or dependents, to the extent that

25 the amount paid for that health insurance or long-term

26 care insurance may be deducted under Section 213 of

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LRB104 12166 BDA 23623 a

1 the Internal Revenue Code, has not been deducted on

2 the federal income tax return of the taxpayer, and

3 does not exceed the taxable income attributable to

4 that taxpayer's income, self-employment income, or

5 Subchapter S corporation income; except that no

6 deduction shall be allowed under this item (V) if the

7 taxpayer is eligible to participate in any health

8 insurance or long-term care insurance plan of an

9 employer of the taxpayer or the taxpayer's spouse. The

10 amount of the health insurance and long-term care

11 insurance subtracted under this item (V) shall be

12 determined by multiplying total health insurance and

13 long-term care insurance premiums paid by the taxpayer

14 times a number that represents the fractional

15 percentage of eligible medical expenses under Section

16 213 of the Internal Revenue Code of 1986 not actually

17 deducted on the taxpayer's federal income tax return;

18 (W) For taxable years beginning on or after

19 January 1, 1998, all amounts included in the

20 taxpayer's federal gross income in the taxable year

21 from amounts converted from a regular IRA to a Roth

22 IRA. This paragraph is exempt from the provisions of

23 Section 250;

24 (X) For taxable year 1999 and thereafter, an

25 amount equal to the amount of any (i) distributions,

26 to the extent includible in gross income for federal

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LRB104 12166 BDA 23623 a

1 income tax purposes, made to the taxpayer because of

2 his or her status as a victim of persecution for racial

3 or religious reasons by Nazi Germany or any other Axis

4 regime or as an heir of the victim and (ii) items of

5 income, to the extent includible in gross income for

6 federal income tax purposes, attributable to, derived

7 from or in any way related to assets stolen from,

8 hidden from, or otherwise lost to a victim of

9 persecution for racial or religious reasons by Nazi

10 Germany or any other Axis regime immediately prior to,

11 during, and immediately after World War II, including,

12 but not limited to, interest on the proceeds

13 receivable as insurance under policies issued to a

14 victim of persecution for racial or religious reasons

15 by Nazi Germany or any other Axis regime by European

16 insurance companies immediately prior to and during

17 World War II; provided, however, this subtraction from

18 federal adjusted gross income does not apply to assets

19 acquired with such assets or with the proceeds from

20 the sale of such assets; provided, further, this

21 paragraph shall only apply to a taxpayer who was the

22 first recipient of such assets after their recovery

23 and who is a victim of persecution for racial or

24 religious reasons by Nazi Germany or any other Axis

25 regime or as an heir of the victim. The amount of and

26 the eligibility for any public assistance, benefit, or

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LRB104 12166 BDA 23623 a

1 similar entitlement is not affected by the inclusion

2 of items (i) and (ii) of this paragraph in gross income

3 for federal income tax purposes. This paragraph is

4 exempt from the provisions of Section 250;

5 (Y) For taxable years beginning on or after

6 January 1, 2002 and ending on or before December 31,

7 2004, moneys contributed in the taxable year to a

8 College Savings Pool account under Section 16.5 of the

9 State Treasurer Act, except that amounts excluded from

10 gross income under Section 529(c)(3)(C)(i) of the

11 Internal Revenue Code shall not be considered moneys

12 contributed under this subparagraph (Y). For taxable

13 years beginning on or after January 1, 2005, a maximum

14 of $10,000 contributed in the taxable year to (i) a

15 College Savings Pool account under Section 16.5 of the

16 State Treasurer Act or (ii) the Illinois Prepaid

17 Tuition Trust Fund, except that amounts excluded from

18 gross income under Section 529(c)(3)(C)(i) of the

19 Internal Revenue Code shall not be considered moneys

20 contributed under this subparagraph (Y). For purposes

21 of this subparagraph, contributions made by an

22 employer on behalf of an employee, or matching

23 contributions made by an employee, shall be treated as

24 made by the employee. This subparagraph (Y) is exempt

25 from the provisions of Section 250;

26 (Z) For taxable years 2001 and thereafter, for the

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LRB104 12166 BDA 23623 a

1 taxable year in which the bonus depreciation deduction

2 is taken on the taxpayer's federal income tax return

3 under subsection (k) of Section 168 of the Internal

4 Revenue Code and for each applicable taxable year

5 thereafter, an amount equal to "x", where:

6 (1) "y" equals the amount of the depreciation

7 deduction taken for the taxable year on the

8 taxpayer's federal income tax return on property

9 for which the bonus depreciation deduction was

10 taken in any year under subsection (k) of Section

11 168 of the Internal Revenue Code, but not

12 including the bonus depreciation deduction;

13 (2) for taxable years ending on or before

14 December 31, 2005, "x" equals "y" multiplied by 30

15 and then divided by 70 (or "y" multiplied by

16 0.429); and

17 (3) for taxable years ending after December

18 31, 2005:

19 (i) for property on which a bonus

20 depreciation deduction of 30% of the adjusted

21 basis was taken, "x" equals "y" multiplied by

22 30 and then divided by 70 (or "y" multiplied

23 by 0.429);

24 (ii) for property on which a bonus

25 depreciation deduction of 50% of the adjusted

26 basis was taken, "x" equals "y" multiplied by

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LRB104 12166 BDA 23623 a

1 1.0;

2 (iii) for property on which a bonus

3 depreciation deduction of 100% of the adjusted

4 basis was taken in a taxable year ending on or

5 after December 31, 2021, "x" equals the

6 depreciation deduction that would be allowed

7 on that property if the taxpayer had made the

8 election under Section 168(k)(7) of the

9 Internal Revenue Code to not claim bonus

10 depreciation on that property; and

11 (iv) for property on which a bonus

12 depreciation deduction of a percentage other

13 than 30%, 50% or 100% of the adjusted basis

14 was taken in a taxable year ending on or after

15 December 31, 2021, "x" equals "y" multiplied

16 by 100 times the percentage bonus depreciation

17 on the property (that is, 100(bonus%)) and

18 then divided by 100 times 1 minus the

19 percentage bonus depreciation on the property

20 (that is, 100(1-bonus%)).

21 The aggregate amount deducted under this

22 subparagraph in all taxable years for any one piece of

23 property may not exceed the amount of the bonus

24 depreciation deduction taken on that property on the

25 taxpayer's federal income tax return under subsection

26 (k) of Section 168 of the Internal Revenue Code. This

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LRB104 12166 BDA 23623 a

1 subparagraph (Z) is exempt from the provisions of

2 Section 250;

3 (AA) If the taxpayer sells, transfers, abandons,

4 or otherwise disposes of property for which the

5 taxpayer was required in any taxable year to make an

6 addition modification under subparagraph (D-15), then

7 an amount equal to that addition modification.

8 If the taxpayer continues to own property through

9 the last day of the last tax year for which a

10 subtraction is allowed with respect to that property

11 under subparagraph (Z) and for which the taxpayer was

12 required in any taxable year to make an addition

13 modification under subparagraph (D-15), then an amount

14 equal to that addition modification.

15 The taxpayer is allowed to take the deduction

16 under this subparagraph only once with respect to any

17 one piece of property.

18 This subparagraph (AA) is exempt from the

19 provisions of Section 250;

20 (BB) Any amount included in adjusted gross income,

21 other than salary, received by a driver in a

22 ridesharing arrangement using a motor vehicle;

23 (CC) The amount of (i) any interest income (net of

24 the deductions allocable thereto) taken into account

25 for the taxable year with respect to a transaction

26 with a taxpayer that is required to make an addition

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LRB104 12166 BDA 23623 a

1 modification with respect to such transaction under

2 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

3 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

4 the amount of that addition modification, and (ii) any

5 income from intangible property (net of the deductions

6 allocable thereto) taken into account for the taxable

7 year with respect to a transaction with a taxpayer

8 that is required to make an addition modification with

9 respect to such transaction under Section

10 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

11 203(d)(2)(D-8), but not to exceed the amount of that

12 addition modification. This subparagraph (CC) is

13 exempt from the provisions of Section 250;

14 (DD) An amount equal to the interest income taken

15 into account for the taxable year (net of the

16 deductions allocable thereto) with respect to

17 transactions with (i) a foreign person who would be a

18 member of the taxpayer's unitary business group but

19 for the fact that the foreign person's business

20 activity outside the United States is 80% or more of

21 that person's total business activity and (ii) for

22 taxable years ending on or after December 31, 2008, to

23 a person who would be a member of the same unitary

24 business group but for the fact that the person is

25 prohibited under Section 1501(a)(27) from being

26 included in the unitary business group because he or

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LRB104 12166 BDA 23623 a

1 she is ordinarily required to apportion business

2 income under different subsections of Section 304, but

3 not to exceed the addition modification required to be

4 made for the same taxable year under Section

5 203(a)(2)(D-17) for interest paid, accrued, or

6 incurred, directly or indirectly, to the same person.

7 This subparagraph (DD) is exempt from the provisions

8 of Section 250;

9 (EE) An amount equal to the income from intangible

10 property taken into account for the taxable year (net

11 of the deductions allocable thereto) with respect to

12 transactions with (i) a foreign person who would be a

13 member of the taxpayer's unitary business group but

14 for the fact that the foreign person's business

15 activity outside the United States is 80% or more of

16 that person's total business activity and (ii) for

17 taxable years ending on or after December 31, 2008, to

18 a person who would be a member of the same unitary

19 business group but for the fact that the person is

20 prohibited under Section 1501(a)(27) from being

21 included in the unitary business group because he or

22 she is ordinarily required to apportion business

23 income under different subsections of Section 304, but

24 not to exceed the addition modification required to be

25 made for the same taxable year under Section

26 203(a)(2)(D-18) for intangible expenses and costs

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LRB104 12166 BDA 23623 a

1 paid, accrued, or incurred, directly or indirectly, to

2 the same foreign person. This subparagraph (EE) is

3 exempt from the provisions of Section 250;

4 (FF) An amount equal to any amount awarded to the

5 taxpayer during the taxable year by the Court of

6 Claims under subsection (c) of Section 8 of the Court

7 of Claims Act for time unjustly served in a State

8 prison. This subparagraph (FF) is exempt from the

9 provisions of Section 250;

10 (GG) For taxable years ending on or after December

11 31, 2011, in the case of a taxpayer who was required to

12 add back any insurance premiums under Section

13 203(a)(2)(D-19), such taxpayer may elect to subtract

14 that part of a reimbursement received from the

15 insurance company equal to the amount of the expense

16 or loss (including expenses incurred by the insurance

17 company) that would have been taken into account as a

18 deduction for federal income tax purposes if the

19 expense or loss had been uninsured. If a taxpayer

20 makes the election provided for by this subparagraph

21 (GG), the insurer to which the premiums were paid must

22 add back to income the amount subtracted by the

23 taxpayer pursuant to this subparagraph (GG). This

24 subparagraph (GG) is exempt from the provisions of

25 Section 250;

26 (HH) For taxable years beginning on or after

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1 January 1, 2018 and prior to January 1, 2028, a maximum

2 of $10,000 contributed in the taxable year to a

3 qualified ABLE account under Section 16.6 of the State

4 Treasurer Act, except that amounts excluded from gross

5 income under Section 529(c)(3)(C)(i) or Section

6 529A(c)(1)(C) of the Internal Revenue Code shall not

7 be considered moneys contributed under this

8 subparagraph (HH). For purposes of this subparagraph

9 (HH), contributions made by an employer on behalf of

10 an employee, or matching contributions made by an

11 employee, shall be treated as made by the employee;

12 (II) For taxable years that begin on or after

13 January 1, 2021 and begin before January 1, 2026, the

14 amount that is included in the taxpayer's federal

15 adjusted gross income pursuant to Section 61 of the

16 Internal Revenue Code as discharge of indebtedness

17 attributable to student loan forgiveness and that is

18 not excluded from the taxpayer's federal adjusted

19 gross income pursuant to paragraph (5) of subsection

20 (f) of Section 108 of the Internal Revenue Code;

21 (JJ) For taxable years beginning on or after

22 January 1, 2023, for any cannabis establishment

23 operating in this State and licensed under the

24 Cannabis Regulation and Tax Act or any cannabis

25 cultivation center or medical cannabis dispensing

26 organization operating in this State and licensed

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LRB104 12166 BDA 23623 a

1 under the Compassionate Use of Medical Cannabis

2 Program Act, an amount equal to the deductions that

3 were disallowed under Section 280E of the Internal

4 Revenue Code for the taxable year and that would not be

5 added back under this subsection. The provisions of

6 this subparagraph (JJ) are exempt from the provisions

7 of Section 250; ~~and~~

8 (KK) To the extent includible in gross income for

9 federal income tax purposes, any amount awarded or

10 paid to the taxpayer as a result of a judgment or

11 settlement for fertility fraud as provided in Section

12 15 of the Illinois Fertility Fraud Act, donor

13 fertility fraud as provided in Section 20 of the

14 Illinois Fertility Fraud Act, or similar action in

15 another state; ~~and~~

16 (LL) For taxable years beginning on or after

17 January 1, 2026, if the taxpayer is a qualified

18 worker, as defined in the Workforce Development

19 through Charitable Loan Repayment Act, an amount equal

20 to the amount included in the taxpayer's federal

21 adjusted gross income that is attributable to student

22 loan repayment assistance received by the taxpayer

23 during the taxable year from a qualified community

24 foundation under the provisions of the Workforce

25 Development through ~~Through~~ Charitable Loan Repayment

26 Act.

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LRB104 12166 BDA 23623 a

1 This subparagraph (LL) is exempt from the

2 provisions of Section 250; ~~.~~

3 (MM) ~~(LL)~~ For taxable years beginning on or after

4 January 1, 2025, if the taxpayer is an eligible

5 resident as defined in the Medical Debt Relief Act, an

6 amount equal to the amount included in the taxpayer's

7 federal adjusted gross income that is attributable to

8 medical debt relief received by the taxpayer during

9 the taxable year from a nonprofit medical debt relief

10 coordinator under the provisions of the Medical Debt

11 Relief Act. This subparagraph (MM) ~~(LL)~~ is exempt from

12 the provisions of Section 250; and

13 (NN) For taxable years that begin on or after

14 January 1, 2028, any amount received from the

15 Responsibility in Firearm Legislation Fund or the

16 Responsibility in Firearm Legislation Financial

17 Restitution Program to the extent included in the

18 taxpayer's federal adjusted gross income and that is

19 not excluded from the taxpayer's federal adjusted

20 gross income.

21 (b) Corporations.

22 (1) In general. In the case of a corporation, base

23 income means an amount equal to the taxpayer's taxable

24 income for the taxable year as modified by paragraph (2).

25 (2) Modifications. The taxable income referred to in

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LRB104 12166 BDA 23623 a

1 paragraph (1) shall be modified by adding thereto the sum

2 of the following amounts:

3 (A) An amount equal to all amounts paid or accrued

4 to the taxpayer as interest and all distributions

5 received from regulated investment companies during

6 the taxable year to the extent excluded from gross

7 income in the computation of taxable income;

8 (B) An amount equal to the amount of tax imposed by

9 this Act to the extent deducted from gross income in

10 the computation of taxable income for the taxable

11 year;

12 (C) In the case of a regulated investment company,

13 an amount equal to the excess of (i) the net long-term

14 capital gain for the taxable year, over (ii) the

15 amount of the capital gain dividends designated as

16 such in accordance with Section 852(b)(3)(C) of the

17 Internal Revenue Code and any amount designated under

18 Section 852(b)(3)(D) of the Internal Revenue Code,

19 attributable to the taxable year (this amendatory Act

20 of 1995 (Public Act 89-89) is declarative of existing

21 law and is not a new enactment);

22 (D) The amount of any net operating loss deduction

23 taken in arriving at taxable income, other than a net

24 operating loss carried forward from a taxable year

25 ending prior to December 31, 1986;

26 (E) For taxable years in which a net operating

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LRB104 12166 BDA 23623 a

1 loss carryback or carryforward from a taxable year

2 ending prior to December 31, 1986 is an element of

3 taxable income under paragraph (1) of subsection (e)

4 or subparagraph (E) of paragraph (2) of subsection

5 (e), the amount by which addition modifications other

6 than those provided by this subparagraph (E) exceeded

7 subtraction modifications in such earlier taxable

8 year, with the following limitations applied in the

9 order that they are listed:

10 (i) the addition modification relating to the

11 net operating loss carried back or forward to the

12 taxable year from any taxable year ending prior to

13 December 31, 1986 shall be reduced by the amount

14 of addition modification under this subparagraph

15 (E) which related to that net operating loss and

16 which was taken into account in calculating the

17 base income of an earlier taxable year, and

18 (ii) the addition modification relating to the

19 net operating loss carried back or forward to the

20 taxable year from any taxable year ending prior to

21 December 31, 1986 shall not exceed the amount of

22 such carryback or carryforward;

23 For taxable years in which there is a net

24 operating loss carryback or carryforward from more

25 than one other taxable year ending prior to December

26 31, 1986, the addition modification provided in this

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LRB104 12166 BDA 23623 a

1 subparagraph (E) shall be the sum of the amounts

2 computed independently under the preceding provisions

3 of this subparagraph (E) for each such taxable year;

4 (E-5) For taxable years ending after December 31,

5 1997, an amount equal to any eligible remediation

6 costs that the corporation deducted in computing

7 adjusted gross income and for which the corporation

8 claims a credit under subsection (l) of Section 201;

9 (E-10) For taxable years 2001 and thereafter, an

10 amount equal to the bonus depreciation deduction taken

11 on the taxpayer's federal income tax return for the

12 taxable year under subsection (k) of Section 168 of

13 the Internal Revenue Code;

14 (E-11) If the taxpayer sells, transfers, abandons,

15 or otherwise disposes of property for which the

16 taxpayer was required in any taxable year to make an

17 addition modification under subparagraph (E-10), then

18 an amount equal to the aggregate amount of the

19 deductions taken in all taxable years under

20 subparagraph (T) with respect to that property.

21 If the taxpayer continues to own property through

22 the last day of the last tax year for which a

23 subtraction is allowed with respect to that property

24 under subparagraph (T) and for which the taxpayer was

25 allowed in any taxable year to make a subtraction

26 modification under subparagraph (T), then an amount

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LRB104 12166 BDA 23623 a

1 equal to that subtraction modification.

2 The taxpayer is required to make the addition

3 modification under this subparagraph only once with

4 respect to any one piece of property;

5 (E-12) An amount equal to the amount otherwise

6 allowed as a deduction in computing base income for

7 interest paid, accrued, or incurred, directly or

8 indirectly, (i) for taxable years ending on or after

9 December 31, 2004, to a foreign person who would be a

10 member of the same unitary business group but for the

11 fact the foreign person's business activity outside

12 the United States is 80% or more of the foreign

13 person's total business activity and (ii) for taxable

14 years ending on or after December 31, 2008, to a person

15 who would be a member of the same unitary business

16 group but for the fact that the person is prohibited

17 under Section 1501(a)(27) from being included in the

18 unitary business group because he or she is ordinarily

19 required to apportion business income under different

20 subsections of Section 304. The addition modification

21 required by this subparagraph shall be reduced to the

22 extent that dividends were included in base income of

23 the unitary group for the same taxable year and

24 received by the taxpayer or by a member of the

25 taxpayer's unitary business group (including amounts

26 included in gross income pursuant to Sections 951

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LRB104 12166 BDA 23623 a

1 through 964 of the Internal Revenue Code and amounts

2 included in gross income under Section 78 of the

3 Internal Revenue Code) with respect to the stock of

4 the same person to whom the interest was paid,

5 accrued, or incurred.

6 This paragraph shall not apply to the following:

7 (i) an item of interest paid, accrued, or

8 incurred, directly or indirectly, to a person who

9 is subject in a foreign country or state, other

10 than a state which requires mandatory unitary

11 reporting, to a tax on or measured by net income

12 with respect to such interest; or

13 (ii) an item of interest paid, accrued, or

14 incurred, directly or indirectly, to a person if

15 the taxpayer can establish, based on a

16 preponderance of the evidence, both of the

17 following:

18 (a) the person, during the same taxable

19 year, paid, accrued, or incurred, the interest

20 to a person that is not a related member, and

21 (b) the transaction giving rise to the

22 interest expense between the taxpayer and the

23 person did not have as a principal purpose the

24 avoidance of Illinois income tax, and is paid

25 pursuant to a contract or agreement that

26 reflects an arm's-length interest rate and

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LRB104 12166 BDA 23623 a

1 terms; or

2 (iii) the taxpayer can establish, based on

3 clear and convincing evidence, that the interest

4 paid, accrued, or incurred relates to a contract

5 or agreement entered into at arm's-length rates

6 and terms and the principal purpose for the

7 payment is not federal or Illinois tax avoidance;

8 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

19 for any tax year beginning after the effective

20 date of this amendment provided such adjustment is

21 made pursuant to regulation adopted by the

22 Department and such regulations provide methods

23 and standards by which the Department will utilize

24 its authority under Section 404 of this Act;

25 (E-13) An amount equal to the amount of intangible

26 expenses and costs otherwise allowed as a deduction in

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LRB104 12166 BDA 23623 a

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 pursuant to Sections 951 through 964 of the

22 Internal Revenue Code and amounts included in gross

23 income under Section 78 of the Internal Revenue Code)

24 with respect to the stock of the same person to whom

25 the intangible expenses and costs were directly or

26 indirectly paid, incurred, or accrued. The preceding

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LRB104 12166 BDA 23623 a

1 sentence shall not apply to the extent that the same

2 dividends caused a reduction to the addition

3 modification required under Section 203(b)(2)(E-12) of

4 this Act. As used in this subparagraph, the term

5 "intangible expenses and costs" includes (1) expenses,

6 losses, and costs for, or related to, the direct or

7 indirect acquisition, use, maintenance or management,

8 ownership, sale, exchange, or any other disposition of

9 intangible property; (2) losses incurred, directly or

10 indirectly, from factoring transactions or discounting

11 transactions; (3) royalty, patent, technical, and

12 copyright fees; (4) licensing fees; and (5) other

13 similar expenses and costs. For purposes of this

14 subparagraph, "intangible property" includes patents,

15 patent applications, trade names, trademarks, service

16 marks, copyrights, mask works, trade secrets, and

17 similar types of intangible 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

22 is subject in a foreign country or state, other

23 than a state which requires mandatory unitary

24 reporting, to a tax on or measured by net income

25 with respect to such item; or

26 (ii) any item of intangible expense or cost

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LRB104 12166 BDA 23623 a

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

19 the 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

23 alternative method of apportionment under Section

24 304(f);

25 Nothing in this subsection shall preclude the

26 Director from making any other adjustment

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LRB104 12166 BDA 23623 a

1 otherwise allowed under Section 404 of this Act

2 for any tax year beginning after the effective

3 date of this amendment provided such adjustment is

4 made pursuant to regulation adopted by the

5 Department and such regulations provide methods

6 and standards by which the Department will utilize

7 its authority under Section 404 of this Act;

8 (E-14) For taxable years ending on or after

9 December 31, 2008, an amount equal to the amount of

10 insurance premium expenses and costs otherwise allowed

11 as a deduction in computing base income, and that were

12 paid, accrued, or incurred, directly or indirectly, to

13 a person who would be a member of the same unitary

14 business group but for the fact that the person is

15 prohibited under Section 1501(a)(27) from being

16 included in the unitary business group because he or

17 she is ordinarily required to apportion business

18 income under different subsections of Section 304. The

19 addition modification required by this subparagraph

20 shall be reduced to the extent that dividends were

21 included in base income of the unitary group for the

22 same taxable year and received by the taxpayer or by a

23 member of the taxpayer's unitary business group

24 (including amounts included in gross income under

25 Sections 951 through 964 of the Internal Revenue Code

26 and amounts included in gross income under Section 78

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LRB104 12166 BDA 23623 a

1 of the Internal Revenue Code) with respect to the

2 stock of the same person to whom the premiums and costs

3 were directly or indirectly paid, incurred, or

4 accrued. The preceding sentence does not apply to the

5 extent that the same dividends caused a reduction to

6 the addition modification required under Section

7 203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this

8 Act;

9 (E-15) For taxable years beginning after December

10 31, 2008, any deduction for dividends paid by a

11 captive real estate investment trust that is allowed

12 to a real estate investment trust under Section

13 857(b)(2)(B) of the Internal Revenue Code for

14 dividends paid;

15 (E-16) 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 (E-17) For taxable years ending on or after

20 December 31, 2017, an amount equal to the deduction

21 allowed under Section 199 of the Internal Revenue Code

22 for the taxable year;

23 (E-18) for taxable years beginning after December

24 31, 2018, an amount equal to the deduction allowed

25 under Section 250(a)(1)(A) of the Internal Revenue

26 Code for the taxable year;

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LRB104 12166 BDA 23623 a

1 (E-19) for taxable years ending on or after June

2 30, 2021, an amount equal to the deduction allowed

3 under Section 250(a)(1)(B)(i) of the Internal Revenue

4 Code for the taxable year;

5 (E-20) for taxable years ending on or after June

6 30, 2021, an amount equal to the deduction allowed

7 under Sections 243(e) and 245A(a) of the Internal

8 Revenue Code for the taxable year;

9 (E-21) the amount that is claimed as a federal

10 deduction when computing the taxpayer's federal

11 taxable income for the taxable year and that is

12 attributable to an endowment gift for which the

13 taxpayer receives a credit under the Illinois Gives

14 Tax Credit Act;

15 and by deducting from the total so obtained the sum of the

16 following amounts:

17 (F) An amount equal to the amount of any tax

18 imposed by this Act which was refunded to the taxpayer

19 and included in such total for the taxable year;

20 (G) An amount equal to any amount included in such

21 total under Section 78 of the Internal Revenue Code;

22 (H) In the case of a regulated investment company,

23 an amount equal to the amount of exempt interest

24 dividends as defined in subsection (b)(5) of Section

25 852 of the Internal Revenue Code, paid to shareholders

26 for the taxable year;

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LRB104 12166 BDA 23623 a

1 (I) With the exception of any amounts subtracted

2 under subparagraph (J), an amount equal to the sum of

3 all amounts disallowed as deductions by (i) Sections

4 171(a)(2) and 265(a)(2) and amounts disallowed as

5 interest expense by Section 291(a)(3) of the Internal

6 Revenue Code, and all amounts of expenses allocable to

7 interest and disallowed as deductions by Section

8 265(a)(1) of the Internal Revenue Code; and (ii) for

9 taxable years ending on or after August 13, 1999,

10 Sections 171(a)(2), 265, 280C, 291(a)(3), and

11 832(b)(5)(B)(i) of the Internal Revenue Code, plus,

12 for tax years ending on or after December 31, 2011,

13 amounts disallowed as deductions by Section 45G(e)(3)

14 of the Internal Revenue Code and, for taxable years

15 ending on or after December 31, 2008, any amount

16 included in gross income under Section 87 of the

17 Internal Revenue Code and the policyholders' share of

18 tax-exempt interest of a life insurance company under

19 Section 807(a)(2)(B) of the Internal Revenue Code (in

20 the case of a life insurance company with gross income

21 from a decrease in reserves for the tax year) or

22 Section 807(b)(1)(B) of the Internal Revenue Code (in

23 the case of a life insurance company allowed a

24 deduction for an increase in reserves for the tax

25 year); the provisions of this subparagraph are exempt

26 from the provisions of Section 250;

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LRB104 12166 BDA 23623 a

1 (J) An amount equal to all amounts included in

2 such total which are exempt from taxation by this

3 State either by reason of its statutes or Constitution

4 or by reason of the Constitution, treaties or statutes

5 of the United States; provided that, in the case of any

6 statute of this State that exempts income derived from

7 bonds or other obligations from the tax imposed under

8 this Act, the amount exempted shall be the interest

9 net of bond premium amortization;

10 (K) An amount equal to those dividends included in

11 such total which were paid by a corporation which

12 conducts business operations in a River Edge

13 Redevelopment Zone or zones created under the River

14 Edge Redevelopment Zone Act and conducts substantially

15 all of its operations in a River Edge Redevelopment

16 Zone or zones. This subparagraph (K) is exempt from

17 the provisions of Section 250;

18 (L) An amount equal to those dividends included in

19 such total that were paid by a corporation that

20 conducts business operations in a federally designated

21 Foreign Trade Zone or Sub-Zone and that is designated

22 a High Impact Business located in Illinois; provided

23 that dividends eligible for the deduction provided in

24 subparagraph (K) of paragraph 2 of this subsection

25 shall not be eligible for the deduction provided under

26 this subparagraph (L);

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LRB104 12166 BDA 23623 a

1 (M) For any taxpayer that is a financial

2 organization within the meaning of Section 304(c) of

3 this Act, an amount included in such total as interest

4 income from a loan or loans made by such taxpayer to a

5 borrower, to the extent that such a loan is secured by

6 property which is eligible for the River Edge

7 Redevelopment Zone Investment Credit. To determine the

8 portion of a loan or loans that is secured by property

9 eligible for a Section 201(f) investment credit to the

10 borrower, the entire principal amount of the loan or

11 loans between the taxpayer and the borrower should be

12 divided into the basis of the Section 201(f)

13 investment credit property which secures the loan or

14 loans, using for this purpose the original basis of

15 such property on the date that it was placed in service

16 in the River Edge Redevelopment Zone. The subtraction

17 modification available to the taxpayer in any year

18 under this subsection shall be that portion of the

19 total interest paid by the borrower with respect to

20 such loan attributable to the eligible property as

21 calculated under the previous sentence. This

22 subparagraph (M) is exempt from the provisions of

23 Section 250;

24 (M-1) 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

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LRB104 12166 BDA 23623 a

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 High Impact

4 Business Investment Credit. To determine the portion

5 of a loan or loans that is secured by property eligible

6 for a Section 201(h) 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(h)

10 investment credit property which secures the loan or

11 loans, using for this purpose the original basis of

12 such property on the date that it was placed in service

13 in a federally designated Foreign Trade Zone or

14 Sub-Zone located in Illinois. No taxpayer that is

15 eligible for the deduction provided in subparagraph

16 (M) of paragraph (2) of this subsection shall be

17 eligible for the deduction provided under this

18 subparagraph (M-1). The subtraction modification

19 available to taxpayers in any year under this

20 subsection shall be that portion of the total interest

21 paid by the borrower with respect to such loan

22 attributable to the eligible property as calculated

23 under the previous sentence;

24 (N) Two times any contribution made during the

25 taxable year to a designated zone organization to the

26 extent that the contribution (i) qualifies as a

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1 charitable contribution under subsection (c) of

2 Section 170 of the Internal Revenue Code and (ii)

3 must, by its terms, be used for a project approved by

4 the Department of Commerce and Economic Opportunity

5 under Section 11 of the Illinois Enterprise Zone Act

6 or under Section 10-10 of the River Edge Redevelopment

7 Zone Act. This subparagraph (N) is exempt from the

8 provisions of Section 250;

9 (O) An amount equal to: (i) 85% for taxable years

10 ending on or before December 31, 1992, or, a

11 percentage equal to the percentage allowable under

12 Section 243(a)(1) of the Internal Revenue Code of 1986

13 for taxable years ending after December 31, 1992, of

14 the amount by which dividends included in taxable

15 income and received from a corporation that is not

16 created or organized under the laws of the United

17 States or any state or political subdivision thereof,

18 including, for taxable years ending on or after

19 December 31, 1988, dividends received or deemed

20 received or paid or deemed paid under Sections 951

21 through 965 of the Internal Revenue Code, exceed the

22 amount of the modification provided under subparagraph

23 (G) of paragraph (2) of this subsection (b) which is

24 related to such dividends, and including, for taxable

25 years ending on or after December 31, 2008, dividends

26 received from a captive real estate investment trust;

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1 plus (ii) 100% of the amount by which dividends,

2 included in taxable income and received, including,

3 for taxable years ending on or after December 31,

4 1988, dividends received or deemed received or paid or

5 deemed paid under Sections 951 through 964 of the

6 Internal Revenue Code and including, for taxable years

7 ending on or after December 31, 2008, dividends

8 received from a captive real estate investment trust,

9 from any such corporation specified in clause (i) that

10 would but for the provisions of Section 1504(b)(3) of

11 the Internal Revenue Code be treated as a member of the

12 affiliated group which includes the dividend

13 recipient, exceed the amount of the modification

14 provided under subparagraph (G) of paragraph (2) of

15 this subsection (b) which is related to such

16 dividends. For taxable years ending on or after June

17 30, 2021, (i) for purposes of this subparagraph, the

18 term "dividend" does not include any amount treated as

19 a dividend under Section 1248 of the Internal Revenue

20 Code, and (ii) this subparagraph shall not apply to

21 dividends for which a deduction is allowed under

22 Section 245(a) of the Internal Revenue Code. This

23 subparagraph (O) is exempt from the provisions of

24 Section 250 of this Act;

25 (P) An amount equal to any contribution made to a

26 job training project established pursuant to the Tax

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1 Increment Allocation Redevelopment Act;

2 (Q) An amount equal to the amount of the deduction

3 used to compute the federal income tax credit for

4 restoration of substantial amounts held under claim of

5 right for the taxable year pursuant to Section 1341 of

6 the Internal Revenue Code;

7 (R) On and after July 20, 1999, in the case of an

8 attorney-in-fact with respect to whom an interinsurer

9 or a reciprocal insurer has made the election under

10 Section 835 of the Internal Revenue Code, 26 U.S.C.

11 835, an amount equal to the excess, if any, of the

12 amounts paid or incurred by that interinsurer or

13 reciprocal insurer in the taxable year to the

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

15 interinsurer or reciprocal insurer with respect to the

16 attorney-in-fact under Section 835(b) of the Internal

17 Revenue Code for the taxable year; the provisions of

18 this subparagraph are exempt from the provisions of

19 Section 250;

20 (S) For taxable years ending on or after December

21 31, 1997, in the case of a Subchapter S corporation, an

22 amount equal to all amounts of income allocable to a

23 shareholder subject to the Personal Property Tax

24 Replacement Income Tax imposed by subsections (c) and

25 (d) of Section 201 of this Act, including amounts

26 allocable to organizations exempt from federal income

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1 tax by reason of Section 501(a) of the Internal

2 Revenue Code. This subparagraph (S) is exempt from the

3 provisions of Section 250;

4 (T) For taxable years 2001 and thereafter, for the

5 taxable year in which the bonus depreciation deduction

6 is taken on the taxpayer's federal income tax return

7 under subsection (k) of Section 168 of the Internal

8 Revenue Code and for each applicable taxable year

9 thereafter, an amount equal to "x", where:

10 (1) "y" equals the amount of the depreciation

11 deduction taken for the taxable year on the

12 taxpayer's federal income tax return on property

13 for which the bonus depreciation deduction was

14 taken in any year under subsection (k) of Section

15 168 of the Internal Revenue Code, but not

16 including the bonus depreciation deduction;

17 (2) for taxable years ending on or before

18 December 31, 2005, "x" equals "y" multiplied by 30

19 and then divided by 70 (or "y" multiplied by

20 0.429); and

21 (3) for taxable years ending after December

22 31, 2005:

23 (i) for property on which a bonus

24 depreciation deduction of 30% of the adjusted

25 basis was taken, "x" equals "y" multiplied by

26 30 and then divided by 70 (or "y" multiplied

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1 by 0.429);

2 (ii) for property on which a bonus

3 depreciation deduction of 50% of the adjusted

4 basis was taken, "x" equals "y" multiplied by

5 1.0;

6 (iii) for property on which a bonus

7 depreciation deduction of 100% of the adjusted

8 basis was taken in a taxable year ending on or

9 after December 31, 2021, "x" equals the

10 depreciation deduction that would be allowed

11 on that property if the taxpayer had made the

12 election under Section 168(k)(7) of the

13 Internal Revenue Code to not claim bonus

14 depreciation on that property; and

15 (iv) for property on which a bonus

16 depreciation deduction of a percentage other

17 than 30%, 50% or 100% of the adjusted basis

18 was taken in a taxable year ending on or after

19 December 31, 2021, "x" equals "y" multiplied

20 by 100 times the percentage bonus depreciation

21 on the property (that is, 100(bonus%)) and

22 then divided by 100 times 1 minus the

23 percentage bonus depreciation on the property

24 (that is, 100(1-bonus%)).

25 The aggregate amount deducted under this

26 subparagraph in all taxable years for any one piece of

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1 property may not exceed the amount of the bonus

2 depreciation deduction taken on that property on the

3 taxpayer's federal income tax return under subsection

4 (k) of Section 168 of the Internal Revenue Code. This

5 subparagraph (T) is exempt from the provisions of

6 Section 250;

7 (U) If the taxpayer sells, transfers, abandons, or

8 otherwise disposes of property for which the taxpayer

9 was required in any taxable year to make an addition

10 modification under subparagraph (E-10), then an amount

11 equal to that addition modification.

12 If the taxpayer continues to own property through

13 the last day of the last tax year for which a

14 subtraction is allowed with respect to that property

15 under subparagraph (T) and for which the taxpayer was

16 required in any taxable year to make an addition

17 modification under subparagraph (E-10), then an amount

18 equal to that addition modification.

19 The taxpayer is allowed to take the deduction

20 under this subparagraph only once with respect to any

21 one piece of property.

22 This subparagraph (U) is exempt from the

23 provisions of Section 250;

24 (V) The amount of: (i) any interest income (net of

25 the deductions allocable thereto) taken into account

26 for the taxable year with respect to a transaction

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1 with a taxpayer that is required to make an addition

2 modification with respect to such transaction under

3 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

4 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

5 the amount of such addition modification, (ii) any

6 income from intangible property (net of the deductions

7 allocable thereto) taken into account for the taxable

8 year with respect to a transaction with a taxpayer

9 that is required to make an addition modification with

10 respect to such transaction under Section

11 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

12 203(d)(2)(D-8), but not to exceed the amount of such

13 addition modification, and (iii) any insurance premium

14 income (net of deductions allocable thereto) taken

15 into account for the taxable year with respect to a

16 transaction with a taxpayer that is required to make

17 an addition modification with respect to such

18 transaction under Section 203(a)(2)(D-19), Section

19 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section

20 203(d)(2)(D-9), but not to exceed the amount of that

21 addition modification. This subparagraph (V) is exempt

22 from the provisions of Section 250;

23 (W) An amount equal to the interest income taken

24 into account for the taxable year (net of the

25 deductions allocable thereto) with respect to

26 transactions with (i) a foreign person who would be a

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1 member of the taxpayer's unitary business group but

2 for the fact that the foreign person's business

3 activity outside the United States is 80% or more of

4 that person's total business activity and (ii) for

5 taxable years ending on or after December 31, 2008, 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, but

12 not to exceed the addition modification required to be

13 made for the same taxable year under Section

14 203(b)(2)(E-12) for interest paid, accrued, or

15 incurred, directly or indirectly, to the same person.

16 This subparagraph (W) is exempt from the provisions of

17 Section 250;

18 (X) An amount equal to the income from intangible

19 property taken into account for the taxable year (net

20 of the deductions allocable thereto) with respect to

21 transactions with (i) a foreign person who would be a

22 member of the taxpayer's unitary business group but

23 for the fact that the foreign person's business

24 activity outside the United States is 80% or more of

25 that person's total business activity and (ii) for

26 taxable years ending on or after December 31, 2008, to

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1 a person who would be a member of the same unitary

2 business group but for the fact that the person is

3 prohibited under Section 1501(a)(27) from being

4 included in the unitary business group because he or

5 she is ordinarily required to apportion business

6 income under different subsections of Section 304, but

7 not to exceed the addition modification required to be

8 made for the same taxable year under Section

9 203(b)(2)(E-13) for intangible expenses and costs

10 paid, accrued, or incurred, directly or indirectly, to

11 the same foreign person. This subparagraph (X) is

12 exempt from the provisions of Section 250;

13 (Y) For taxable years ending on or after December

14 31, 2011, in the case of a taxpayer who was required to

15 add back any insurance premiums under Section

16 203(b)(2)(E-14), such taxpayer may elect to subtract

17 that part of a reimbursement received from the

18 insurance company equal to the amount of the expense

19 or loss (including expenses incurred by the insurance

20 company) that would have been taken into account as a

21 deduction for federal income tax purposes if the

22 expense or loss had been uninsured. If a taxpayer

23 makes the election provided for by this subparagraph

24 (Y), the insurer to which the premiums were paid must

25 add back to income the amount subtracted by the

26 taxpayer pursuant to this subparagraph (Y). This

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1 subparagraph (Y) is exempt from the provisions of

2 Section 250;

3 (Z) The difference between the nondeductible

4 controlled foreign corporation dividends under Section

5 965(e)(3) of the Internal Revenue Code over the

6 taxable income of the taxpayer, computed without

7 regard to Section 965(e)(2)(A) of the Internal Revenue

8 Code, and without regard to any net operating loss

9 deduction. This subparagraph (Z) is exempt from the

10 provisions of Section 250; and

11 (AA) For taxable years beginning on or after

12 January 1, 2023, for any cannabis establishment

13 operating in this State and licensed under the

14 Cannabis Regulation and Tax Act or any cannabis

15 cultivation center or medical cannabis dispensing

16 organization operating in this State and licensed

17 under the Compassionate Use of Medical Cannabis

18 Program Act, an amount equal to the deductions that

19 were disallowed under Section 280E of the Internal

20 Revenue Code for the taxable year and that would not be

21 added back under this subsection. The provisions of

22 this subparagraph (AA) are exempt from the provisions

23 of Section 250.

24 (3) Special rule. For purposes of paragraph (2)(A),

25 "gross income" in the case of a life insurance company,

26 for tax years ending on and after December 31, 1994, and

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1 prior to December 31, 2011, shall mean the gross

2 investment income for the taxable year and, for tax years

3 ending on or after December 31, 2011, shall mean all

4 amounts included in life insurance gross income under

5 Section 803(a)(3) of the Internal Revenue Code.

6 (c) Trusts and estates.

7 (1) In general. In the case of a trust or estate, base

8 income means an amount equal to the taxpayer's taxable

9 income for the taxable year as modified by paragraph (2).

10 (2) Modifications. Subject to the provisions of

11 paragraph (3), the taxable income referred to in paragraph

12 (1) shall be modified by adding thereto the sum of the

13 following amounts:

14 (A) An amount equal to all amounts paid or accrued

15 to the taxpayer as interest or dividends during the

16 taxable year to the extent excluded from gross income

17 in the computation of taxable income;

18 (B) In the case of (i) an estate, $600; (ii) a

19 trust which, under its governing instrument, is

20 required to distribute all of its income currently,

21 $300; and (iii) any other trust, $100, but in each such

22 case, only to the extent such amount was deducted in

23 the computation of taxable income;

24 (C) An amount equal to the amount of tax imposed by

25 this Act to the extent deducted from gross income in

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1 the computation of taxable income for the taxable

2 year;

3 (D) The amount of any net operating loss deduction

4 taken in arriving at taxable income, other than a net

5 operating loss carried forward from a taxable year

6 ending prior to December 31, 1986;

7 (E) For taxable years in which a net operating

8 loss carryback or carryforward from a taxable year

9 ending prior to December 31, 1986 is an element of

10 taxable income under paragraph (1) of subsection (e)

11 or subparagraph (E) of paragraph (2) of subsection

12 (e), the amount by which addition modifications other

13 than those provided by this subparagraph (E) exceeded

14 subtraction modifications in such taxable year, with

15 the following limitations applied in the order that

16 they are listed:

17 (i) the addition modification relating to the

18 net operating loss carried back or forward to the

19 taxable year from any taxable year ending prior to

20 December 31, 1986 shall be reduced by the amount

21 of addition modification under this subparagraph

22 (E) which related to that net operating loss and

23 which was taken into account in calculating the

24 base income of an earlier taxable year, and

25 (ii) the addition modification relating to the

26 net operating loss carried back or forward to the

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1 taxable year from any taxable year ending prior to

2 December 31, 1986 shall not exceed the amount of

3 such carryback or carryforward;

4 For taxable years in which there is a net

5 operating loss carryback or carryforward from more

6 than one other taxable year ending prior to December

7 31, 1986, the addition modification provided in this

8 subparagraph (E) shall be the sum of the amounts

9 computed independently under the preceding provisions

10 of this subparagraph (E) for each such taxable year;

11 (F) For taxable years ending on or after January

12 1, 1989, an amount equal to the tax deducted pursuant

13 to Section 164 of the Internal Revenue Code if the

14 trust or estate is claiming the same tax for purposes

15 of the Illinois foreign tax credit under Section 601

16 of this Act;

17 (G) An amount equal to the amount of the capital

18 gain deduction allowable under the Internal Revenue

19 Code, to the extent deducted from gross income in the

20 computation of taxable income;

21 (G-5) For taxable years ending after December 31,

22 1997, an amount equal to any eligible remediation

23 costs that the trust or estate deducted in computing

24 adjusted gross income and for which the trust or

25 estate claims a credit under subsection (l) of Section

26 201;

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LRB104 12166 BDA 23623 a

1 (G-10) For taxable years 2001 and thereafter, an

2 amount equal to the bonus depreciation deduction taken

3 on the taxpayer's federal income tax return for the

4 taxable year under subsection (k) of Section 168 of

5 the Internal Revenue Code; and

6 (G-11) If the taxpayer sells, transfers, abandons,

7 or otherwise disposes of property for which the

8 taxpayer was required in any taxable year to make an

9 addition modification under subparagraph (G-10), then

10 an amount equal to the aggregate amount of the

11 deductions taken in all taxable years under

12 subparagraph (R) with respect to that property.

13 If the taxpayer continues to own property through

14 the last day of the last tax year for which a

15 subtraction is allowed with respect to that property

16 under subparagraph (R) and for which the taxpayer was

17 allowed in any taxable year to make a subtraction

18 modification under subparagraph (R), then an amount

19 equal to that subtraction modification.

20 The taxpayer is required to make the addition

21 modification under this subparagraph only once with

22 respect to any one piece of property;

23 (G-12) An amount equal to the amount otherwise

24 allowed as a deduction in computing base income for

25 interest paid, accrued, or incurred, directly or

26 indirectly, (i) for taxable years ending on or after

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1 December 31, 2004, to a foreign person who would be a

2 member of the same unitary business group but for the

3 fact that the foreign person's business activity

4 outside the United States is 80% or more of the foreign

5 person's total business activity and (ii) for taxable

6 years ending on or after December 31, 2008, to a person

7 who would be a member of the same unitary business

8 group but for the fact that the person is prohibited

9 under Section 1501(a)(27) from being included in the

10 unitary business group because he or she is ordinarily

11 required to apportion business income under different

12 subsections of Section 304. The addition modification

13 required by this subparagraph shall be reduced to the

14 extent that dividends were included in base income of

15 the unitary group for the same taxable year and

16 received by the taxpayer or by a member of the

17 taxpayer's unitary business group (including amounts

18 included in gross income pursuant to Sections 951

19 through 964 of the Internal Revenue Code and amounts

20 included in gross income under Section 78 of the

21 Internal Revenue Code) with respect to the stock of

22 the same person to whom the interest was paid,

23 accrued, or incurred.

24 This paragraph shall not apply to the following:

25 (i) an item of interest paid, accrued, or

26 incurred, directly or indirectly, to a person who

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1 is subject in a foreign country or state, other

2 than a state which requires mandatory unitary

3 reporting, to a tax on or measured by net income

4 with respect to such interest; or

5 (ii) an item of interest paid, accrued, or

6 incurred, directly or indirectly, to a person if

7 the taxpayer can establish, based on a

8 preponderance of the evidence, both of the

9 following:

10 (a) the person, during the same taxable

11 year, paid, accrued, or incurred, the interest

12 to a person that is not a related member, and

13 (b) the transaction giving rise to the

14 interest expense between the taxpayer and the

15 person did not have as a principal purpose the

16 avoidance of Illinois income tax, and is paid

17 pursuant to a contract or agreement that

18 reflects an arm's-length interest rate and

19 terms; or

20 (iii) the taxpayer can establish, based on

21 clear and convincing evidence, that the interest

22 paid, accrued, or incurred relates to a contract

23 or agreement entered into at arm's-length rates

24 and terms and the principal purpose for the

25 payment is not federal or Illinois tax avoidance;

26 or

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LRB104 12166 BDA 23623 a

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

11 for any tax year beginning after the effective

12 date of this amendment provided such adjustment is

13 made pursuant to regulation adopted by the

14 Department and such regulations provide methods

15 and standards by which the Department will utilize

16 its authority under Section 404 of this Act;

17 (G-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

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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(c)(2)(G-12) of

22 this Act. As used in this subparagraph, the term

23 "intangible expenses and costs" includes: (1)

24 expenses, losses, and costs for or related to the

25 direct or indirect acquisition, use, maintenance or

26 management, ownership, sale, exchange, or any other

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LRB104 12166 BDA 23623 a

1 disposition of intangible property; (2) losses

2 incurred, directly or indirectly, from factoring

3 transactions or discounting transactions; (3) royalty,

4 patent, technical, and copyright fees; (4) licensing

5 fees; and (5) other similar expenses and costs. For

6 purposes of this subparagraph, "intangible property"

7 includes patents, patent applications, trade names,

8 trademarks, service marks, copyrights, mask works,

9 trade secrets, and 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

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 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

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LRB104 12166 BDA 23623 a

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

11 the 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

15 alternative method of apportionment under Section

16 304(f);

17 Nothing in this subsection shall preclude the

18 Director from making any other adjustment

19 otherwise allowed under Section 404 of this Act

20 for any tax year beginning after the effective

21 date of this amendment provided such adjustment is

22 made pursuant to regulation adopted by the

23 Department and such regulations provide methods

24 and standards by which the Department will utilize

25 its authority under Section 404 of this Act;

26 (G-14) For taxable years ending on or after

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1 December 31, 2008, an amount equal to the amount of

2 insurance premium expenses and costs otherwise allowed

3 as a deduction in computing base income, and that were

4 paid, accrued, or incurred, directly or indirectly, to

5 a person who would be a member of the same unitary

6 business group but for the fact that the person is

7 prohibited under Section 1501(a)(27) from being

8 included in the unitary business group because he or

9 she is ordinarily required to apportion business

10 income under different subsections of Section 304. The

11 addition modification required by this subparagraph

12 shall be reduced to the extent that dividends were

13 included in base income of the unitary group for the

14 same taxable year and received by the taxpayer or by a

15 member of the taxpayer's unitary business group

16 (including amounts included in gross income under

17 Sections 951 through 964 of the Internal Revenue Code

18 and amounts included in gross income under Section 78

19 of the Internal Revenue Code) with respect to the

20 stock of the same person to whom the premiums and costs

21 were directly or indirectly paid, incurred, or

22 accrued. The preceding sentence does not apply to the

23 extent that the same dividends caused a reduction to

24 the addition modification required under Section

25 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this

26 Act;

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LRB104 12166 BDA 23623 a

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 (G-16) For taxable years ending on or after

6 December 31, 2017, an amount equal to the deduction

7 allowed under Section 199 of the Internal Revenue Code

8 for the taxable year;

9 (G-17) the amount that is claimed as a federal

10 deduction when computing the taxpayer's federal

11 taxable income for the taxable year and that is

12 attributable to an endowment gift for which the

13 taxpayer receives a credit under the Illinois Gives

14 Tax Credit Act;

15 and by deducting from the total so obtained the sum of the

16 following amounts:

17 (H) An amount equal to all amounts included in

18 such total pursuant to the provisions of Sections

19 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408

20 of the Internal Revenue Code or included in such total

21 as distributions under the provisions of any

22 retirement or disability plan for employees of any

23 governmental agency or unit, or retirement payments to

24 retired partners, which payments are excluded in

25 computing net earnings from self employment by Section

26 1402 of the Internal Revenue Code and regulations

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1 adopted pursuant thereto;

2 (I) The valuation limitation amount;

3 (J) An amount equal to the amount of any tax

4 imposed by this Act which was refunded to the taxpayer

5 and included in such total for the taxable year;

6 (K) An amount equal to all amounts included in

7 taxable income as modified by subparagraphs (A), (B),

8 (C), (D), (E), (F) and (G) which are exempt from

9 taxation by this State either by reason of its

10 statutes or Constitution or by reason of the

11 Constitution, treaties or statutes of the United

12 States; provided that, in the case of any statute of

13 this State that exempts income derived from bonds or

14 other obligations from the tax imposed under this Act,

15 the amount exempted shall be the interest net of bond

16 premium amortization;

17 (L) With the exception of any amounts subtracted

18 under subparagraph (K), an amount equal to the sum of

19 all amounts disallowed as deductions by (i) Sections

20 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

21 and all amounts of expenses allocable to interest and

22 disallowed as deductions by Section 265(a)(1) of the

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

24 ending on or after August 13, 1999, Sections

25 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

26 Internal Revenue Code, plus, (iii) for taxable years

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1 ending on or after December 31, 2011, Section

2 45G(e)(3) of the Internal Revenue Code and, for

3 taxable years ending on or after December 31, 2008,

4 any amount included in gross income under Section 87

5 of the Internal Revenue Code; the provisions of this

6 subparagraph are exempt from the provisions of Section

7 250;

8 (M) An amount equal to those dividends included in

9 such total which were paid by a corporation which

10 conducts business operations in a River Edge

11 Redevelopment Zone or zones created under the River

12 Edge Redevelopment Zone Act and conducts substantially

13 all of its operations in a River Edge Redevelopment

14 Zone or zones. This subparagraph (M) is exempt from

15 the provisions of Section 250;

16 (N) An amount equal to any contribution made to a

17 job training project established pursuant to the Tax

18 Increment Allocation Redevelopment Act;

19 (O) An amount equal to those dividends included in

20 such total that were paid by a corporation that

21 conducts business operations in a federally designated

22 Foreign Trade Zone or Sub-Zone and that is designated

23 a High Impact Business located in Illinois; provided

24 that dividends eligible for the deduction provided in

25 subparagraph (M) of paragraph (2) of this subsection

26 shall not be eligible for the deduction provided under

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1 this subparagraph (O);

2 (P) An amount equal to the amount of the deduction

3 used to compute the federal income tax credit for

4 restoration of substantial amounts held under claim of

5 right for the taxable year pursuant to Section 1341 of

6 the Internal Revenue Code;

7 (Q) For taxable year 1999 and thereafter, an

8 amount equal to the amount of any (i) distributions,

9 to the extent includible in gross income for federal

10 income tax purposes, made to the taxpayer because of

11 his or her status as a victim of persecution for racial

12 or religious reasons by Nazi Germany or any other Axis

13 regime or as an heir of the victim and (ii) items of

14 income, to the extent includible in gross income for

15 federal income tax purposes, attributable to, derived

16 from or in any way related to assets stolen from,

17 hidden from, or otherwise lost to a victim of

18 persecution for racial or religious reasons by Nazi

19 Germany or any other Axis regime immediately prior to,

20 during, and immediately after World War II, including,

21 but not limited to, interest on the proceeds

22 receivable as insurance under policies issued to a

23 victim of persecution for racial or religious reasons

24 by Nazi Germany or any other Axis regime by European

25 insurance companies immediately prior to and during

26 World War II; provided, however, this subtraction from

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1 federal adjusted gross income does not apply to assets

2 acquired with such assets or with the proceeds from

3 the sale of such assets; provided, further, this

4 paragraph shall only apply to a taxpayer who was the

5 first recipient of such assets after their recovery

6 and who is a victim of persecution for racial or

7 religious reasons by Nazi Germany or any other Axis

8 regime or as an heir of the victim. The amount of and

9 the eligibility for any public assistance, benefit, or

10 similar entitlement is not affected by the inclusion

11 of items (i) and (ii) of this paragraph in gross income

12 for federal income tax purposes. This paragraph is

13 exempt from the provisions of Section 250;

14 (R) For taxable years 2001 and thereafter, for the

15 taxable year in which the bonus depreciation deduction

16 is taken on the taxpayer's federal income tax return

17 under subsection (k) of Section 168 of the Internal

18 Revenue Code and for each applicable taxable year

19 thereafter, an amount equal to "x", where:

20 (1) "y" equals the amount of the depreciation

21 deduction taken for the taxable year on the

22 taxpayer's federal income tax return on property

23 for which the bonus depreciation deduction was

24 taken in any year under subsection (k) of Section

25 168 of the Internal Revenue Code, but not

26 including the bonus depreciation deduction;

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1 (2) for taxable years ending on or before

2 December 31, 2005, "x" equals "y" multiplied by 30

3 and then divided by 70 (or "y" multiplied by

4 0.429); and

5 (3) for taxable years ending after December

6 31, 2005:

7 (i) for property on which a bonus

8 depreciation deduction of 30% of the adjusted

9 basis was taken, "x" equals "y" multiplied by

10 30 and then divided by 70 (or "y" multiplied

11 by 0.429);

12 (ii) for property on which a bonus

13 depreciation deduction of 50% of the adjusted

14 basis was taken, "x" equals "y" multiplied by

15 1.0;

16 (iii) for property on which a bonus

17 depreciation deduction of 100% of the adjusted

18 basis was taken in a taxable year ending on or

19 after December 31, 2021, "x" equals the

20 depreciation deduction that would be allowed

21 on that property if the taxpayer had made the

22 election under Section 168(k)(7) of the

23 Internal Revenue Code to not claim bonus

24 depreciation on that property; and

25 (iv) for property on which a bonus

26 depreciation deduction of a percentage other

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1 than 30%, 50% or 100% of the adjusted basis

2 was taken in a taxable year ending on or after

3 December 31, 2021, "x" equals "y" multiplied

4 by 100 times the percentage bonus depreciation

5 on the property (that is, 100(bonus%)) and

6 then divided by 100 times 1 minus the

7 percentage bonus depreciation on the property

8 (that is, 100(1-bonus%)).

9 The aggregate amount deducted under this

10 subparagraph in all taxable years for any one piece of

11 property may not exceed the amount of the bonus

12 depreciation deduction taken on that property on the

13 taxpayer's federal income tax return under subsection

14 (k) of Section 168 of the Internal Revenue Code. This

15 subparagraph (R) is exempt from the provisions of

16 Section 250;

17 (S) If the taxpayer sells, transfers, abandons, or

18 otherwise disposes of property for which the taxpayer

19 was required in any taxable year to make an addition

20 modification under subparagraph (G-10), then an amount

21 equal to that addition modification.

22 If the taxpayer continues to own property through

23 the last day of the last tax year for which a

24 subtraction is allowed with respect to that property

25 under subparagraph (R) and for which the taxpayer was

26 required in any taxable year to make an addition

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1 modification under subparagraph (G-10), then an amount

2 equal to that addition modification.

3 The taxpayer is allowed to take the deduction

4 under this subparagraph only once with respect to any

5 one piece of property.

6 This subparagraph (S) is exempt from the

7 provisions of Section 250;

8 (T) The amount of (i) any interest income (net of

9 the deductions allocable thereto) taken into account

10 for the taxable year with respect to a transaction

11 with a taxpayer that is required to make an addition

12 modification with respect to such transaction under

13 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

14 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

15 the amount of such addition modification and (ii) any

16 income from intangible property (net of the deductions

17 allocable thereto) taken into account for the taxable

18 year with respect to a transaction with a taxpayer

19 that is required to make an addition modification with

20 respect to such transaction under Section

21 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

22 203(d)(2)(D-8), but not to exceed the amount of such

23 addition modification. This subparagraph (T) is exempt

24 from the provisions of Section 250;

25 (U) An amount equal to the interest income taken

26 into account for the taxable year (net of the

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1 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

4 for the fact 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(c)(2)(G-12) for

16 interest paid, accrued, or incurred, directly or

17 indirectly, to the same person. This subparagraph (U)

18 is exempt from the provisions of Section 250;

19 (V) An amount equal to the income from intangible

20 property taken into account for the taxable year (net

21 of the deductions allocable thereto) with respect to

22 transactions with (i) a foreign person who would be a

23 member of the taxpayer's unitary business group but

24 for the fact that the foreign person's business

25 activity outside the United States is 80% or more of

26 that person's total business activity and (ii) for

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1 taxable years ending on or after December 31, 2008, to

2 a person who would be a member of the same unitary

3 business group but for the fact that the person is

4 prohibited under Section 1501(a)(27) from being

5 included in the unitary business group because he or

6 she is ordinarily required to apportion business

7 income under different subsections of Section 304, but

8 not to exceed the addition modification required to be

9 made for the same taxable year under Section

10 203(c)(2)(G-13) for intangible expenses and costs

11 paid, accrued, or incurred, directly or indirectly, to

12 the same foreign person. This subparagraph (V) is

13 exempt from the provisions of Section 250;

14 (W) in the case of an estate, an amount equal to

15 all amounts included in such total pursuant to the

16 provisions of Section 111 of the Internal Revenue Code

17 as a recovery of items previously deducted by the

18 decedent from adjusted gross income in the computation

19 of taxable income. This subparagraph (W) is exempt

20 from Section 250;

21 (X) an amount equal to the refund included in such

22 total of any tax deducted for federal income tax

23 purposes, to the extent that deduction was added back

24 under subparagraph (F). This subparagraph (X) is

25 exempt from the provisions of Section 250;

26 (Y) For taxable years ending on or after December

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1 31, 2011, in the case of a taxpayer who was required to

2 add back any insurance premiums under Section

3 203(c)(2)(G-14), such taxpayer may elect to subtract

4 that part of a reimbursement received from the

5 insurance company equal to the amount of the expense

6 or loss (including expenses incurred by the insurance

7 company) that would have been taken into account as a

8 deduction for federal income tax purposes if the

9 expense or loss had been uninsured. If a taxpayer

10 makes the election provided for by this subparagraph

11 (Y), the insurer to which the premiums were paid must

12 add back to income the amount subtracted by the

13 taxpayer pursuant to this subparagraph (Y). This

14 subparagraph (Y) is exempt from the provisions of

15 Section 250;

16 (Z) For taxable years beginning after December 31,

17 2018 and before January 1, 2026, the amount of excess

18 business loss of the taxpayer disallowed as a

19 deduction by Section 461(l)(1)(B) of the Internal

20 Revenue Code; and

21 (AA) For taxable years beginning on or after

22 January 1, 2023, for any cannabis establishment

23 operating in this State and licensed under the

24 Cannabis Regulation and Tax Act or any cannabis

25 cultivation center or medical cannabis dispensing

26 organization operating in this State and licensed

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1 under the Compassionate Use of Medical Cannabis

2 Program Act, an amount equal to the deductions that

3 were disallowed under Section 280E of the Internal

4 Revenue Code for the taxable year and that would not be

5 added back under this subsection. The provisions of

6 this subparagraph (AA) are exempt from the provisions

7 of Section 250.

8 (3) Limitation. The amount of any modification

9 otherwise required under this subsection shall, under

10 regulations prescribed by the Department, be adjusted by

11 any amounts included therein which were properly paid,

12 credited, or required to be distributed, or permanently

13 set aside for charitable purposes pursuant to Internal

14 Revenue Code Section 642(c) during the taxable year.

15 (d) Partnerships.

16 (1) In general. In the case of a partnership, 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 or dividends during the

24 taxable year to the extent excluded from gross income

25 in the computation of taxable income;

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1 (B) An amount equal to the amount of tax imposed by

2 this Act to the extent deducted from gross income for

3 the taxable year;

4 (C) The amount of deductions allowed to the

5 partnership pursuant to Section 707 (c) of the

6 Internal Revenue Code in calculating its taxable

7 income;

8 (D) An amount equal to the amount of the capital

9 gain deduction allowable under the Internal Revenue

10 Code, to the extent deducted from gross income in the

11 computation of taxable income;

12 (D-5) For taxable years 2001 and thereafter, an

13 amount equal to the bonus depreciation deduction taken

14 on the taxpayer's federal income tax return for the

15 taxable year under subsection (k) of Section 168 of

16 the Internal Revenue Code;

17 (D-6) If the taxpayer sells, transfers, abandons,

18 or otherwise disposes of property for which the

19 taxpayer was required in any taxable year to make an

20 addition modification under subparagraph (D-5), then

21 an amount equal to the aggregate amount of the

22 deductions taken in all taxable years under

23 subparagraph (O) with respect to that property.

24 If the taxpayer continues to own property through

25 the last day of the last tax year for which a

26 subtraction is allowed with respect to that property

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1 under subparagraph (O) and for which the taxpayer was

2 allowed in any taxable year to make a subtraction

3 modification under subparagraph (O), then an amount

4 equal to that subtraction modification.

5 The taxpayer is required to make the addition

6 modification under this subparagraph only once with

7 respect to any one piece of property;

8 (D-7) An amount equal to the amount otherwise

9 allowed as a deduction in computing base income for

10 interest paid, accrued, or incurred, directly or

11 indirectly, (i) for taxable years ending on or after

12 December 31, 2004, to a foreign person who would be a

13 member of the same unitary business group but for the

14 fact the foreign person's business activity outside

15 the United States is 80% or more of the foreign

16 person's total business activity and (ii) for taxable

17 years ending on or after December 31, 2008, to a person

18 who would be a member of the same unitary business

19 group but for the fact that the person is prohibited

20 under Section 1501(a)(27) from being included in the

21 unitary business group because he or she is ordinarily

22 required to apportion business income under different

23 subsections of Section 304. The addition modification

24 required by this subparagraph shall be reduced to the

25 extent that dividends were included in base income of

26 the unitary group for the same taxable year and

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LRB104 12166 BDA 23623 a

1 received by the taxpayer or by a member of the

2 taxpayer's unitary business group (including amounts

3 included in gross income pursuant to Sections 951

4 through 964 of the Internal Revenue Code and amounts

5 included in gross income under Section 78 of the

6 Internal Revenue Code) with respect to the stock of

7 the same person to whom the interest was paid,

8 accrued, or incurred.

9 This paragraph shall not apply to the following:

10 (i) an item of interest paid, accrued, or

11 incurred, directly or indirectly, to a person who

12 is subject in a foreign country or state, other

13 than a state which requires mandatory unitary

14 reporting, to a tax on or measured by net income

15 with respect to such interest; or

16 (ii) an item of interest paid, accrued, or

17 incurred, directly or indirectly, to a person if

18 the taxpayer can establish, based on a

19 preponderance of the evidence, both of the

20 following:

21 (a) the person, during the same taxable

22 year, paid, accrued, or incurred, the interest

23 to a person that is not a related member, and

24 (b) the transaction giving rise to the

25 interest expense between the taxpayer and the

26 person did not have as a principal purpose the

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1 avoidance of Illinois income tax, and is paid

2 pursuant to a contract or agreement that

3 reflects an arm's-length interest rate and

4 terms; or

5 (iii) the taxpayer can establish, based on

6 clear and convincing evidence, that the interest

7 paid, accrued, or incurred relates to a contract

8 or agreement entered into at arm's-length rates

9 and terms and the principal purpose for the

10 payment is not federal or Illinois tax avoidance;

11 or

12 (iv) an item of interest paid, accrued, or

13 incurred, directly or indirectly, to a person if

14 the taxpayer establishes by clear and convincing

15 evidence that the adjustments are unreasonable; or

16 if the taxpayer and the Director agree in writing

17 to the application or use of an alternative method

18 of apportionment under Section 304(f).

19 Nothing in this subsection shall preclude the

20 Director from making any other adjustment

21 otherwise allowed under Section 404 of this Act

22 for any tax year beginning after the effective

23 date of this amendment provided such adjustment is

24 made pursuant to regulation adopted by the

25 Department and such regulations provide methods

26 and standards by which the Department will utilize

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1 its authority under Section 404 of this Act; and

2 (D-8) An amount equal to the amount of intangible

3 expenses and costs otherwise allowed as a deduction in

4 computing base income, and that were paid, accrued, or

5 incurred, directly or indirectly, (i) for taxable

6 years ending on or after December 31, 2004, to a

7 foreign person who would be a member of the same

8 unitary business group but for the fact that the

9 foreign person's business activity outside the United

10 States is 80% or more of that person's total business

11 activity and (ii) for taxable years ending on or after

12 December 31, 2008, to a person who would be a member of

13 the same unitary business group but for the fact that

14 the person is prohibited under Section 1501(a)(27)

15 from being included in the unitary business group

16 because he or she is ordinarily required to apportion

17 business income under different subsections of Section

18 304. The addition modification required by this

19 subparagraph shall be reduced to the extent that

20 dividends were included in base income of the unitary

21 group for the same taxable year and received by the

22 taxpayer or by a member of the taxpayer's unitary

23 business group (including amounts included in gross

24 income pursuant to Sections 951 through 964 of the

25 Internal Revenue Code and amounts included in gross

26 income under Section 78 of the Internal Revenue Code)

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1 with respect to the stock of the same person to whom

2 the intangible expenses and costs were directly or

3 indirectly paid, incurred or accrued. The preceding

4 sentence shall not apply to the extent that the same

5 dividends caused a reduction to the addition

6 modification required under Section 203(d)(2)(D-7) of

7 this Act. As used in this subparagraph, the term

8 "intangible expenses and costs" includes (1) expenses,

9 losses, and costs for, or related to, the direct or

10 indirect acquisition, use, maintenance or management,

11 ownership, sale, exchange, or any other disposition of

12 intangible property; (2) losses incurred, directly or

13 indirectly, from factoring transactions or discounting

14 transactions; (3) royalty, patent, technical, and

15 copyright fees; (4) licensing fees; and (5) other

16 similar expenses and costs. For purposes of this

17 subparagraph, "intangible property" includes patents,

18 patent applications, trade names, trademarks, service

19 marks, copyrights, mask works, trade secrets, and

20 similar types of intangible assets;

21 This paragraph shall not apply to the following:

22 (i) any item of intangible expenses or costs

23 paid, accrued, or incurred, directly or

24 indirectly, from a transaction with a person who

25 is subject in a foreign country or state, other

26 than a state which requires mandatory unitary

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LRB104 12166 BDA 23623 a

1 reporting, to a tax on or measured by net income

2 with respect to such item; or

3 (ii) any item of intangible expense or cost

4 paid, accrued, or incurred, directly or

5 indirectly, if the taxpayer can establish, based

6 on a preponderance of the evidence, both of the

7 following:

8 (a) the person during the same taxable

9 year paid, accrued, or incurred, the

10 intangible expense or cost to a person that is

11 not a related member, and

12 (b) the transaction giving rise to the

13 intangible expense or cost between the

14 taxpayer and the person did not have as a

15 principal purpose the avoidance of Illinois

16 income tax, and is paid pursuant to a contract

17 or agreement that reflects arm's-length terms;

18 or

19 (iii) any item of intangible expense or cost

20 paid, accrued, or incurred, directly or

21 indirectly, from a transaction with a person if

22 the taxpayer establishes by clear and convincing

23 evidence, that the adjustments are unreasonable;

24 or if the taxpayer and the Director agree in

25 writing to the application or use of an

26 alternative method of apportionment under Section

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1 304(f);

2 Nothing in this subsection shall preclude the

3 Director from making any other adjustment

4 otherwise allowed under Section 404 of this Act

5 for any tax year beginning after the effective

6 date of this amendment provided such adjustment is

7 made pursuant to regulation adopted by the

8 Department and such regulations provide methods

9 and standards by which the Department will utilize

10 its authority under Section 404 of this Act;

11 (D-9) For taxable years ending on or after

12 December 31, 2008, an amount equal to the amount of

13 insurance premium expenses and costs otherwise allowed

14 as a deduction in computing base income, and that were

15 paid, accrued, or incurred, directly or indirectly, to

16 a person who would be a member of the same unitary

17 business group but for the fact that the person is

18 prohibited under Section 1501(a)(27) from being

19 included in the unitary business group because he or

20 she is ordinarily required to apportion business

21 income under different subsections of Section 304. The

22 addition modification required by this subparagraph

23 shall be reduced to the extent that dividends were

24 included in base income of the unitary group for the

25 same taxable year and received by the taxpayer or by a

26 member of the taxpayer's unitary business group

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1 (including amounts included in gross income under

2 Sections 951 through 964 of the Internal Revenue Code

3 and amounts included in gross income under Section 78

4 of the Internal Revenue Code) with respect to the

5 stock of the same person to whom the premiums and costs

6 were directly or indirectly paid, incurred, or

7 accrued. The preceding sentence does not apply to the

8 extent that the same dividends caused a reduction to

9 the addition modification required under Section

10 203(d)(2)(D-7) or 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 (D-11) For taxable years ending on or after

16 December 31, 2017, an amount equal to the deduction

17 allowed under Section 199 of the Internal Revenue Code

18 for the taxable year;

19 (D-12) the amount that is claimed as a federal

20 deduction when computing the taxpayer's federal

21 taxable income for the taxable year and that is

22 attributable to an endowment gift for which the

23 taxpayer receives a credit under the Illinois Gives

24 Tax Credit Act;

25 and by deducting from the total so obtained the following

26 amounts:

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LRB104 12166 BDA 23623 a

1 (E) The valuation limitation amount;

2 (F) An amount equal to the amount of any tax

3 imposed by this Act which was refunded to the taxpayer

4 and included in such total for the taxable year;

5 (G) An amount equal to all amounts included in

6 taxable income as modified by subparagraphs (A), (B),

7 (C) and (D) which are exempt from taxation by this

8 State either by reason of its statutes or Constitution

9 or by reason of the Constitution, treaties or statutes

10 of the 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

14 net of bond premium amortization;

15 (H) Any income of the partnership which

16 constitutes personal service income as defined in

17 Section 1348(b)(1) of the Internal Revenue Code (as in

18 effect December 31, 1981) or a reasonable allowance

19 for compensation paid or accrued for services rendered

20 by partners to the partnership, whichever is greater;

21 this subparagraph (H) is exempt from the provisions of

22 Section 250;

23 (I) An amount equal to all amounts of income

24 distributable to an entity subject to the Personal

25 Property Tax Replacement Income Tax imposed by

26 subsections (c) and (d) of Section 201 of this Act

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1 including amounts distributable to organizations

2 exempt from federal income tax by reason of Section

3 501(a) of the Internal Revenue Code; this subparagraph

4 (I) is exempt from the provisions of Section 250;

5 (J) With the exception of any amounts subtracted

6 under subparagraph (G), an amount equal to the sum of

7 all amounts disallowed as deductions by (i) Sections

8 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

9 and all amounts of expenses allocable to interest and

10 disallowed as deductions by Section 265(a)(1) of the

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

12 ending on or after August 13, 1999, Sections

13 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

14 Internal Revenue Code, plus, (iii) for taxable years

15 ending on or after December 31, 2011, Section

16 45G(e)(3) of the Internal Revenue Code and, for

17 taxable years ending on or after December 31, 2008,

18 any amount included in gross income under Section 87

19 of the Internal Revenue Code; the provisions of this

20 subparagraph are exempt from the provisions of Section

21 250;

22 (K) An amount equal to those dividends included in

23 such total which were paid by a corporation which

24 conducts business operations in a River Edge

25 Redevelopment Zone or zones created under the River

26 Edge Redevelopment Zone Act and conducts substantially

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1 all of its operations from a River Edge Redevelopment

2 Zone or zones. This subparagraph (K) is exempt from

3 the provisions of Section 250;

4 (L) An amount equal to any contribution made to a

5 job training project established pursuant to the Real

6 Property Tax Increment Allocation Redevelopment Act;

7 (M) An amount equal to those dividends included in

8 such total that were paid by a corporation that

9 conducts business operations in a federally designated

10 Foreign Trade Zone or Sub-Zone and that is designated

11 a High Impact Business located in Illinois; provided

12 that dividends eligible for the deduction provided in

13 subparagraph (K) of paragraph (2) of this subsection

14 shall not be eligible for the deduction provided under

15 this subparagraph (M);

16 (N) An amount equal to the amount of the deduction

17 used to compute the federal income tax credit for

18 restoration of substantial amounts held under claim of

19 right for the taxable year pursuant to Section 1341 of

20 the Internal Revenue Code;

21 (O) For taxable years 2001 and thereafter, for the

22 taxable year in which the bonus depreciation deduction

23 is taken on the taxpayer's federal income tax return

24 under subsection (k) of Section 168 of the Internal

25 Revenue Code and for each applicable taxable year

26 thereafter, an amount equal to "x", where:

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1 (1) "y" equals the amount of the depreciation

2 deduction taken for the taxable year on the

3 taxpayer's federal income tax return on property

4 for which the bonus depreciation deduction was

5 taken in any year under subsection (k) of Section

6 168 of the Internal Revenue Code, but not

7 including the bonus depreciation deduction;

8 (2) for taxable years ending on or before

9 December 31, 2005, "x" equals "y" multiplied by 30

10 and then divided by 70 (or "y" multiplied by

11 0.429); and

12 (3) for taxable years ending after December

13 31, 2005:

14 (i) for property on which a bonus

15 depreciation deduction of 30% of the adjusted

16 basis was taken, "x" equals "y" multiplied by

17 30 and then divided by 70 (or "y" multiplied

18 by 0.429);

19 (ii) for property on which a bonus

20 depreciation deduction of 50% of the adjusted

21 basis was taken, "x" equals "y" multiplied by

22 1.0;

23 (iii) for property on which a bonus

24 depreciation deduction of 100% of the adjusted

25 basis was taken in a taxable year ending on or

26 after December 31, 2021, "x" equals the

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1 depreciation deduction that would be allowed

2 on that property if the taxpayer had made the

3 election under Section 168(k)(7) of the

4 Internal Revenue Code to not claim bonus

5 depreciation on that property; and

6 (iv) for property on which a bonus

7 depreciation deduction of a percentage other

8 than 30%, 50% or 100% of the adjusted basis

9 was taken in a taxable year ending on or after

10 December 31, 2021, "x" equals "y" multiplied

11 by 100 times the percentage bonus depreciation

12 on the property (that is, 100(bonus%)) and

13 then divided by 100 times 1 minus the

14 percentage bonus depreciation on the property

15 (that is, 100(1-bonus%)).

16 The aggregate amount deducted under this

17 subparagraph in all taxable years for any one piece of

18 property may not exceed the amount of the bonus

19 depreciation deduction taken on that property on the

20 taxpayer's federal income tax return under subsection

21 (k) of Section 168 of the Internal Revenue Code. This

22 subparagraph (O) is exempt from the provisions of

23 Section 250;

24 (P) If the taxpayer sells, transfers, abandons, or

25 otherwise disposes of property for which the taxpayer

26 was required in any taxable year to make an addition

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1 modification under subparagraph (D-5), then an amount

2 equal to that addition modification.

3 If the taxpayer continues to own property through

4 the last day of the last tax year for which a

5 subtraction is allowed with respect to that property

6 under subparagraph (O) and for which the taxpayer was

7 required in any taxable year to make an addition

8 modification under subparagraph (D-5), then an amount

9 equal to that addition modification.

10 The taxpayer is allowed to take the deduction

11 under this subparagraph only once with respect to any

12 one piece of property.

13 This subparagraph (P) is exempt from the

14 provisions of Section 250;

15 (Q) The amount of (i) any interest income (net of

16 the deductions allocable thereto) taken into account

17 for the taxable year with respect to a transaction

18 with a taxpayer that is required to make an addition

19 modification with respect to such transaction under

20 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

21 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

22 the amount of such addition modification and (ii) any

23 income from intangible property (net of the deductions

24 allocable thereto) taken into account for the taxable

25 year with respect to a transaction with a taxpayer

26 that is required to make an addition modification with

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1 respect to such transaction under Section

2 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

3 203(d)(2)(D-8), but not to exceed the amount of such

4 addition modification. This subparagraph (Q) is exempt

5 from Section 250;

6 (R) An amount equal to the interest income taken

7 into account for the taxable year (net of the

8 deductions allocable thereto) with respect to

9 transactions with (i) a foreign person who would be a

10 member of the taxpayer's unitary business group but

11 for the fact that the foreign person's business

12 activity outside the United States is 80% or more of

13 that person's total business activity and (ii) for

14 taxable years ending on or after December 31, 2008, to

15 a person who would be a member of the same unitary

16 business group but for the fact that the person is

17 prohibited under Section 1501(a)(27) from being

18 included in the unitary business group because he or

19 she is ordinarily required to apportion business

20 income under different subsections of Section 304, but

21 not to exceed the addition modification required to be

22 made for the same taxable year under Section

23 203(d)(2)(D-7) for interest paid, accrued, or

24 incurred, directly or indirectly, to the same person.

25 This subparagraph (R) is exempt from Section 250;

26 (S) An amount equal to the income from intangible

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1 property taken into account for the taxable year (net

2 of the deductions allocable thereto) with respect to

3 transactions with (i) a foreign person who would be a

4 member of the taxpayer's unitary business group but

5 for the fact that the foreign person's business

6 activity outside the United States is 80% or more of

7 that person's total business activity and (ii) for

8 taxable years ending on or after December 31, 2008, to

9 a person who would be a member of the same unitary

10 business group but for the fact that the person is

11 prohibited under Section 1501(a)(27) from being

12 included in the unitary business group because he or

13 she is ordinarily required to apportion business

14 income under different subsections of Section 304, but

15 not to exceed the addition modification required to be

16 made for the same taxable year under Section

17 203(d)(2)(D-8) for intangible expenses and costs paid,

18 accrued, or incurred, directly or indirectly, to the

19 same person. This subparagraph (S) is exempt from

20 Section 250;

21 (T) For taxable years ending on or after December

22 31, 2011, in the case of a taxpayer who was required to

23 add back any insurance premiums under Section

24 203(d)(2)(D-9), such taxpayer may elect to subtract

25 that part of a reimbursement received from the

26 insurance company equal to the amount of the expense

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1 or loss (including expenses incurred by the insurance

2 company) that would have been taken into account as a

3 deduction for federal income tax purposes if the

4 expense or loss had been uninsured. If a taxpayer

5 makes the election provided for by this subparagraph

6 (T), the insurer to which the premiums were paid must

7 add back to income the amount subtracted by the

8 taxpayer pursuant to this subparagraph (T). This

9 subparagraph (T) is exempt from the provisions of

10 Section 250; and

11 (U) For taxable years beginning on or after

12 January 1, 2023, for any cannabis establishment

13 operating in this State and licensed under the

14 Cannabis Regulation and Tax Act or any cannabis

15 cultivation center or medical cannabis dispensing

16 organization operating in this State and licensed

17 under the Compassionate Use of Medical Cannabis

18 Program Act, an amount equal to the deductions that

19 were disallowed under Section 280E of the Internal

20 Revenue Code for the taxable year and that would not be

21 added back under this subsection. The provisions of

22 this subparagraph (U) are exempt from the provisions

23 of Section 250.

24 (e) Gross income; adjusted gross income; taxable income.

25 (1) In general. Subject to the provisions of paragraph

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1 (2) and subsection (b)(3), for purposes of this Section

2 and Section 803(e), a taxpayer's gross income, adjusted

3 gross income, or taxable income for the taxable year shall

4 mean the amount of gross income, adjusted gross income or

5 taxable income properly reportable for federal income tax

6 purposes for the taxable year under the provisions of the

7 Internal Revenue Code. Taxable income may be less than

8 zero. However, for taxable years ending on or after

9 December 31, 1986, net operating loss carryforwards from

10 taxable years ending prior to December 31, 1986, may not

11 exceed the sum of federal taxable income for the taxable

12 year before net operating loss deduction, plus the excess

13 of addition modifications over subtraction modifications

14 for the taxable year. For taxable years ending prior to

15 December 31, 1986, taxable income may never be an amount

16 in excess of the net operating loss for the taxable year as

17 defined in subsections (c) and (d) of Section 172 of the

18 Internal Revenue Code, provided that when taxable income

19 of a corporation (other than a Subchapter S corporation),

20 trust, or estate is less than zero and addition

21 modifications, other than those provided by subparagraph

22 (E) of paragraph (2) of subsection (b) for corporations or

23 subparagraph (E) of paragraph (2) of subsection (c) for

24 trusts and estates, exceed subtraction modifications, an

25 addition modification must be made under those

26 subparagraphs for any other taxable year to which the

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1 taxable income less than zero (net operating loss) is

2 applied under Section 172 of the Internal Revenue Code or

3 under subparagraph (E) of paragraph (2) of this subsection

4 (e) applied in conjunction with Section 172 of the

5 Internal Revenue Code.

6 (2) Special rule. For purposes of paragraph (1) of

7 this subsection, the taxable income properly reportable

8 for federal income tax purposes shall mean:

9 (A) Certain life insurance companies. In the case

10 of a life insurance company subject to the tax imposed

11 by Section 801 of the Internal Revenue Code, life

12 insurance company taxable income, plus the amount of

13 distribution from pre-1984 policyholder surplus

14 accounts as calculated under Section 815a of the

15 Internal Revenue Code;

16 (B) Certain other insurance companies. In the case

17 of mutual insurance companies subject to the tax

18 imposed by Section 831 of the Internal Revenue Code,

19 insurance company taxable income;

20 (C) Regulated investment companies. In the case of

21 a regulated investment company subject to the tax

22 imposed by Section 852 of the Internal Revenue Code,

23 investment company taxable income;

24 (D) Real estate investment trusts. In the case of

25 a real estate investment trust subject to the tax

26 imposed by Section 857 of the Internal Revenue Code,

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1 real estate investment trust taxable income;

2 (E) Consolidated corporations. In the case of a

3 corporation which is a member of an affiliated group

4 of corporations filing a consolidated income tax

5 return for the taxable year for federal income tax

6 purposes, taxable income determined as if such

7 corporation had filed a separate return for federal

8 income tax purposes for the taxable year and each

9 preceding taxable year for which it was a member of an

10 affiliated group. For purposes of this subparagraph,

11 the taxpayer's separate taxable income shall be

12 determined as if the election provided by Section

13 243(b)(2) of the Internal Revenue Code had been in

14 effect for all such years;

15 (F) Cooperatives. In the case of a cooperative

16 corporation or association, the taxable income of such

17 organization determined in accordance with the

18 provisions of Section 1381 through 1388 of the

19 Internal Revenue Code, but without regard to the

20 prohibition against offsetting losses from patronage

21 activities against income from nonpatronage

22 activities; except that a cooperative corporation or

23 association may make an election to follow its federal

24 income tax treatment of patronage losses and

25 nonpatronage losses. In the event such election is

26 made, such losses shall be computed and carried over

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1 in a manner consistent with subsection (a) of Section

2 207 of this Act and apportioned by the apportionment

3 factor reported by the cooperative on its Illinois

4 income tax return filed for the taxable year in which

5 the losses are incurred. The election shall be

6 effective for all taxable years with original returns

7 due on or after the date of the election. In addition,

8 the cooperative may file an amended return or returns,

9 as allowed under this Act, to provide that the

10 election shall be effective for losses incurred or

11 carried forward for taxable years occurring prior to

12 the date of the election. Once made, the election may

13 only be revoked upon approval of the Director. The

14 Department shall adopt rules setting forth

15 requirements for documenting the elections and any

16 resulting Illinois net loss and the standards to be

17 used by the Director in evaluating requests to revoke

18 elections. Public Act 96-932 is declaratory of

19 existing law;

20 (G) Subchapter S corporations. In the case of: (i)

21 a Subchapter S corporation for which there is in

22 effect an election for the taxable year under Section

23 1362 of the Internal Revenue Code, the taxable income

24 of such corporation determined in accordance with

25 Section 1363(b) of the Internal Revenue Code, except

26 that taxable income shall take into account those

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1 items which are required by Section 1363(b)(1) of the

2 Internal Revenue Code to be separately stated; and

3 (ii) a Subchapter S corporation for which there is in

4 effect a federal election to opt out of the provisions

5 of the Subchapter S Revision Act of 1982 and have

6 applied instead the prior federal Subchapter S rules

7 as in effect on July 1, 1982, the taxable income of

8 such corporation determined in accordance with the

9 federal Subchapter S rules as in effect on July 1,

10 1982; and

11 (H) Partnerships. In the case of a partnership,

12 taxable income determined in accordance with Section

13 703 of the Internal Revenue Code, except that taxable

14 income shall take into account those items which are

15 required by Section 703(a)(1) to be separately stated

16 but which would be taken into account by an individual

17 in calculating his taxable income.

18 (3) Recapture of business expenses on disposition of

19 asset or business. Notwithstanding any other law to the

20 contrary, if in prior years income from an asset or

21 business has been classified as business income and in a

22 later year is demonstrated to be non-business income, then

23 all expenses, without limitation, deducted in such later

24 year and in the 2 immediately preceding taxable years

25 related to that asset or business that generated the

26 non-business income shall be added back and recaptured as

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1 business income in the year of the disposition of the

2 asset or business. Such amount shall be apportioned to

3 Illinois using the greater of the apportionment fraction

4 computed for the business under Section 304 of this Act

5 for the taxable year or the average of the apportionment

6 fractions computed for the business under Section 304 of

7 this Act for the taxable year and for the 2 immediately

8 preceding taxable years.

9 (f) Valuation limitation amount.

10 (1) In general. The valuation limitation amount

11 referred to in subsections (a)(2)(G), (c)(2)(I) and

12 (d)(2)(E) is an amount equal to:

13 (A) The sum of the pre-August 1, 1969 appreciation

14 amounts (to the extent consisting of gain reportable

15 under the provisions of Section 1245 or 1250 of the

16 Internal Revenue Code) for all property in respect of

17 which such gain was reported for the taxable year;

18 plus

19 (B) The lesser of (i) the sum of the pre-August 1,

20 1969 appreciation amounts (to the extent consisting of

21 capital gain) for all property in respect of which

22 such gain was reported for federal income tax purposes

23 for the taxable year, or (ii) the net capital gain for

24 the taxable year, reduced in either case by any amount

25 of such gain included in the amount determined under

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1 subsection (a)(2)(F) or (c)(2)(H).

2 (2) Pre-August 1, 1969 appreciation amount.

3 (A) If the fair market value of property referred

4 to in paragraph (1) was readily ascertainable on

5 August 1, 1969, the pre-August 1, 1969 appreciation

6 amount for such property is the lesser of (i) the

7 excess of such fair market value over the taxpayer's

8 basis (for determining gain) for such property on that

9 date (determined under the Internal Revenue Code as in

10 effect on that date), or (ii) the total gain realized

11 and reportable for federal income tax purposes in

12 respect of the sale, exchange or other disposition of

13 such property.

14 (B) If the fair market value of property referred

15 to in paragraph (1) was not readily ascertainable on

16 August 1, 1969, the pre-August 1, 1969 appreciation

17 amount for such property is that amount which bears

18 the same ratio to the total gain reported in respect of

19 the property for federal income tax purposes for the

20 taxable year, as the number of full calendar months in

21 that part of the taxpayer's holding period for the

22 property ending July 31, 1969 bears to the number of

23 full calendar months in the taxpayer's entire holding

24 period for the property.

25 (C) The Department shall prescribe such

26 regulations as may be necessary to carry out the

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1 purposes of this paragraph.

2 (g) Double deductions. Unless specifically provided

3 otherwise, nothing in this Section shall permit the same item

4 to be deducted more than once.

5 (h) Legislative intention. Except as expressly provided by

6 this Section there shall be no modifications or limitations on

7 the amounts of income, gain, loss or deduction taken into

8 account in determining gross income, adjusted gross income or

9 taxable income for federal income tax purposes for the taxable

10 year, or in the amount of such items entering into the

11 computation of base income and net income under this Act for

12 such taxable year, whether in respect of property values as of

13 August 1, 1969 or otherwise.

14 (Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;

15 102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.

16 12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; 103-592,

17 Article 10, Section 10-900, eff. 6-7-24; 103-592, Article 170,

18 Section 170-90, eff. 6-7-24; 103-605, eff. 7-1-24; 103-647,

19 eff. 7-1-24; revised 8-20-24.)".