99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB2148
 
Introduced 5/31/2015, by Sen. Toi W. Hutchinson
 
SYNOPSIS AS INTRODUCED:



    
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/804 from Ch. 120, par. 8-804
35 ILCS 5/1501 from Ch. 120, par. 15-1501

 Amends the Illinois Income Tax Act. Creates an addition modification in an amount equal to the deduction for qualified domestic production activities allowed under Section 199 of the Internal Revenue Code for the taxable year. Makes changes concerning the definition of "unitary business group". Provides that no penalty shall apply with respect to an underpayment of estimated tax for the first, second, or third quarter of any taxable year ending on or after December 31, 2015 and ending prior to December 31, 2016 if (i) the underpayment was due to the changes made by the amendatory Act, (ii) the payment was otherwise timely made, and (iii) the balance due is included with the taxpayer's estimated tax payment for the fourth quarter. Effective immediately.



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FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


SB2148LRB099 12695 HLH 36454 b



1 AN ACT concerning revenue.


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

3represented in the General Assembly:



4 Section 5. The Illinois Income Tax Act is amended by 
5changing Sections 203, 804, and 1501 as follows:

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

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

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

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

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

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

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

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

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

3   (D-20) For taxable years beginning on or after 
4 January 1,
2002 and ending on or before December 31, 
5 2006, in
the
case of a distribution from a qualified 
6 tuition program under Section 529 of
the Internal 
7 Revenue Code, other than (i) a distribution from a 
8 College Savings
Pool created under Section 16.5 of the 
9 State Treasurer Act or (ii) a
distribution from the 
10 Illinois Prepaid Tuition Trust Fund, an amount equal to

11 the amount excluded from gross income under Section 
12 529(c)(3)(B). For taxable years beginning on or after 
13 January 1, 2007, in the case of a distribution from a 
14 qualified tuition program under Section 529 of the 
15 Internal Revenue Code, other than (i) a distribution 
16 from a College Savings Pool created under Section 16.5 
17 of the State Treasurer Act, (ii) a distribution from 
18 the Illinois Prepaid Tuition Trust Fund, or (iii) a 
19 distribution from a qualified tuition program under 
20 Section 529 of the Internal Revenue Code that (I) 
21 adopts and determines that its offering materials 
22 comply with the College Savings Plans Network's 
23 disclosure principles and (II) has made reasonable 
24 efforts to inform in-state residents of the existence 
25 of in-state qualified tuition programs by informing 
26 Illinois residents directly and, where applicable, to 
 
 
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1 inform financial intermediaries distributing the 
2 program to inform in-state residents of the existence 
3 of in-state qualified tuition programs at least 
4 annually, an amount equal to the amount excluded from 
5 gross income under Section 529(c)(3)(B).
6   For the purposes of this subparagraph (D-20), a 
7 qualified tuition program has made reasonable efforts 
8 if it makes disclosures (which may use the term 
9 "in-state program" or "in-state plan" and need not 
10 specifically refer to Illinois or its qualified 
11 programs by name) (i) directly to prospective 
12 participants in its offering materials or makes a 
13 public disclosure, such as a website posting; and (ii) 
14 where applicable, to intermediaries selling the 
15 out-of-state program in the same manner that the 
16 out-of-state program distributes its offering 
17 materials;
18   (D-21) For taxable years beginning on or after 
19 January 1, 2007, in the case of transfer of moneys from 
20 a qualified tuition program under Section 529 of the 
21 Internal Revenue Code that is administered by the State 
22 to an out-of-state program, an amount equal to the 
23 amount of moneys previously deducted from base income 
24 under subsection (a)(2)(Y) of this Section;
25   (D-22) For taxable years beginning on or after 
26 January 1, 2009, in the case of a nonqualified 
 
 
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1 withdrawal or refund of moneys from a qualified tuition 
2 program under Section 529 of the Internal Revenue Code 
3 administered by the State that is not used for 
4 qualified expenses at an eligible education 
5 institution, an amount equal to the contribution 
6 component of the nonqualified withdrawal or refund 
7 that was previously deducted from base income under 
8 subsection (a)(2)(y) of this Section, provided that 
9 the withdrawal or refund did not result from the 
10 beneficiary's death or disability;
11   (D-23) 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-24) For taxable years ending on or after 
16 December 31, 2015, an amount equal to the deduction 
17 allowed under Section 199 of the Internal Revenue Code 
18 for the taxable year; 
19 and by deducting from the total so obtained the
sum of the 
20 following amounts:
21   (E) For taxable years ending before December 31, 
22 2001,
any amount included in such total in respect of 
23 any compensation
(including but not limited to any 
24 compensation paid or accrued to a
serviceman while a 
25 prisoner of war or missing in action) paid to a 
26 resident
by reason of being on active duty in the Armed 
 
 
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1 Forces of the United States
and in respect of any 
2 compensation paid or accrued to a resident who as a

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

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

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

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

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

23 ending on or after August 13, 1999, Sections 171(a)(2), 
24 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
25 Code, plus, for taxable years ending on or after 
26 December 31, 2011, Section 45G(e)(3) of the Internal 
 
 
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1 Revenue Code and, for taxable years ending on or after 
2 December 31, 2008, any amount included in gross income 
3 under Section 87 of the Internal Revenue Code; the 
4 provisions of this
subparagraph are exempt from the 
5 provisions of Section 250;
6   (N) An amount equal to all amounts included in such 
7 total which are
exempt from taxation by this State 
8 either by reason of its statutes or
Constitution
or by 
9 reason of the Constitution, treaties or statutes of the 
10 United States;
provided that, in the case of any 
11 statute of this State that exempts income
derived from 
12 bonds or other obligations from the tax imposed under 
13 this Act,
the amount exempted shall be the interest net 
14 of bond premium amortization;
15   (O) An amount equal to any contribution made to a 
16 job training
project established pursuant to the Tax 
17 Increment Allocation Redevelopment Act;
18   (P) An amount equal to the amount of the deduction 
19 used to compute the
federal income tax credit for 
20 restoration of substantial amounts held under
claim of 
21 right for the taxable year pursuant to Section 1341 of 
22 the
Internal Revenue Code or of any itemized deduction 
23 taken from adjusted gross income in the computation of 
24 taxable income for restoration of substantial amounts 
25 held under claim of right for the taxable year;
26   (Q) An amount equal to any amounts included in such 
 
 
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1 total, received by
the taxpayer as an acceleration in 
2 the payment of life, endowment or annuity
benefits in 
3 advance of the time they would otherwise be payable as 
4 an indemnity
for a terminal illness;
5   (R) An amount equal to the amount of any federal or 
6 State bonus paid
to veterans of the Persian Gulf War;
7   (S) An amount, to the extent included in adjusted 
8 gross income, equal
to the amount of a contribution 
9 made in the taxable year on behalf of the
taxpayer to a 
10 medical care savings account established under the 
11 Medical Care
Savings Account Act or the Medical Care 
12 Savings Account Act of 2000 to the
extent the 
13 contribution is accepted by the account
administrator 
14 as provided in that Act;
15   (T) An amount, to the extent included in adjusted 
16 gross income, equal to
the amount of interest earned in 
17 the taxable year on a medical care savings
account 
18 established under the Medical Care Savings Account Act 
19 or the Medical
Care Savings Account Act of 2000 on 
20 behalf of the
taxpayer, other than interest added 
21 pursuant to item (D-5) of this paragraph
(2);
22   (U) For one taxable year beginning on or after 
23 January 1,
1994, an
amount equal to the total amount of 
24 tax imposed and paid under subsections (a)
and (b) of 
25 Section 201 of this Act on grant amounts received by 
26 the taxpayer
under the Nursing Home Grant Assistance 
 
 
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1 Act during the taxpayer's taxable years
1992 and 1993;
2   (V) Beginning with tax years ending on or after 
3 December 31, 1995 and
ending with tax years ending on 
4 or before December 31, 2004, an amount equal to
the 
5 amount paid by a taxpayer who is a
self-employed 
6 taxpayer, a partner of a partnership, or a
shareholder 
7 in a Subchapter S corporation for health insurance or 
8 long-term
care insurance for that taxpayer or that 
9 taxpayer's spouse or dependents, to
the extent that the 
10 amount paid for that health insurance or long-term care

11 insurance may be deducted under Section 213 of the 
12 Internal Revenue Code, has not been deducted on the 
13 federal income tax return of the taxpayer,
and does not 
14 exceed the taxable income attributable to that 
15 taxpayer's income,
self-employment income, or 
16 Subchapter S corporation income; except that no

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

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

25 times a number that represents the fractional 
26 percentage of eligible medical
expenses under Section 
 
 
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1 213 of the Internal Revenue Code of 1986 not actually

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

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

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

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

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

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

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

12 is taken on the taxpayer's federal income tax return 
13 under
subsection (k) of Section 168 of the Internal 
14 Revenue Code and for each
applicable taxable year 
15 thereafter, an amount equal to "x", where:
16    (1) "y" equals the amount of the depreciation 
17 deduction taken for the
taxable year
on the 
18 taxpayer's federal income tax return on property 
19 for which the bonus
depreciation deduction
was 
20 taken in any year under subsection (k) of Section 
21 168 of the Internal
Revenue Code, but not including 
22 the bonus depreciation deduction;
23    (2) for taxable years ending on or before 
24 December 31, 2005, "x" equals "y" multiplied by 30 
25 and then divided by 70 (or "y"
multiplied by 
26 0.429); and
 
 
SB2148- 23 -LRB099 12695 HLH 36454 b


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

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

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

25   If the taxpayer continues to own property through 
26 the last day of the last tax year for which the 
 
 
SB2148- 24 -LRB099 12695 HLH 36454 b


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

6   The taxpayer is allowed to take the deduction under 
7 this subparagraph
only once with respect to any one 
8 piece of property.
9   This subparagraph (AA) is exempt from the 
10 provisions of Section 250;
11   (BB) Any amount included in adjusted gross income, 
12 other
than
salary,
received by a driver in a 
13 ridesharing arrangement using a motor vehicle;
14   (CC) The amount of (i) any interest income (net of 
15 the deductions allocable thereto) taken into account 
16 for the taxable year with respect to a transaction with 
17 a taxpayer that is required to make an addition 
18 modification with respect to such transaction under 
19 Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
20 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
21 the amount of that addition modification, and
(ii) any 
22 income from intangible property (net of the deductions 
23 allocable thereto) taken into account for the taxable 
24 year with respect to a transaction with a taxpayer that 
25 is required to make an addition modification with 
26 respect to such transaction under Section 
 
 
SB2148- 25 -LRB099 12695 HLH 36454 b


1 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
2 203(d)(2)(D-8), but not to exceed the amount of that 
3 addition modification. This subparagraph (CC) is 
4 exempt from the provisions of Section 250;
5   (DD) An amount equal to the interest income taken 
6 into account for the taxable year (net of the 
7 deductions allocable thereto) with respect to 
8 transactions with (i) a foreign person who would be a 
9 member of the taxpayer's unitary business group but for 
10 the fact that the foreign person's business activity 
11 outside the United States is 80% or more of that 
12 person's total business activity and (ii) for taxable 
13 years ending on or after December 31, 2008, to a person 
14 who would be a member of the same unitary business 
15 group but for the fact that the person is prohibited 
16 under Section 1501(a)(27) from being included in the 
17 unitary business group because he or she is ordinarily 
18 required to apportion business income under different 
19 subsections of Section 304, but not to exceed the 
20 addition modification required to be made for the same 
21 taxable year under Section 203(a)(2)(D-17) for 
22 interest paid, accrued, or incurred, directly or 
23 indirectly, to the same person. This subparagraph (DD) 
24 is exempt from the provisions of Section 250; 
25   (EE) An amount equal to the income from intangible 
26 property taken into account for the taxable year (net 
 
 
SB2148- 26 -LRB099 12695 HLH 36454 b


1 of the deductions allocable thereto) with respect to 
2 transactions with (i) a foreign person who would be a 
3 member of the taxpayer's unitary business group but for 
4 the fact that the foreign person's business activity 
5 outside the United States is 80% or more of that 
6 person's total business activity and (ii) for taxable 
7 years ending on or after December 31, 2008, to a person 
8 who would be a member of the same unitary business 
9 group but for the fact that the person is prohibited 
10 under Section 1501(a)(27) from being included in the 
11 unitary business group because he or she is ordinarily 
12 required to apportion business income under different 
13 subsections of Section 304, but not to exceed the 
14 addition modification required to be made for the same 
15 taxable year under Section 203(a)(2)(D-18) for 
16 intangible expenses and costs paid, accrued, or 
17 incurred, directly or indirectly, to the same foreign 
18 person. This subparagraph (EE) is exempt from the 
19 provisions of Section 250;
20   (FF) An amount equal to any amount awarded to the 
21 taxpayer during the taxable year by the Court of Claims 
22 under subsection (c) of Section 8 of the Court of 
23 Claims Act for time unjustly served in a State prison. 
24 This subparagraph (FF) is exempt from the provisions of 
25 Section 250; and 
26   (GG) For taxable years ending on or after December 
 
 
SB2148- 27 -LRB099 12695 HLH 36454 b


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

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

 
 
SB2148- 28 -LRB099 12695 HLH 36454 b


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

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

23 subparagraph (E) of paragraph (2) of subsection (e), 
24 the amount by which
addition modifications other than 
25 those provided by this subparagraph (E)
exceeded 
26 subtraction modifications in such earlier taxable 
 
 
SB2148- 29 -LRB099 12695 HLH 36454 b


1 year, with the
following limitations applied in the 
2 order that they are listed:
3    (i) the addition modification relating to the 
4 net operating loss
carried back or forward to the 
5 taxable year from any taxable year ending
prior to 
6 December 31, 1986 shall be reduced by the amount of 
7 addition
modification under this subparagraph (E) 
8 which related to that net operating
loss and which 
9 was taken into account in calculating the base 
10 income of an
earlier taxable year, and
11    (ii) the addition modification relating to the 
12 net operating loss
carried back or forward to the 
13 taxable year from any taxable year ending
prior to 
14 December 31, 1986 shall not exceed the amount of 
15 such carryback or
carryforward;
16   For taxable years in which there is a net operating 
17 loss carryback or
carryforward from more than one other 
18 taxable year ending prior to December
31, 1986, the 
19 addition modification provided in this subparagraph 
20 (E) shall
be the sum of the amounts computed 
21 independently under the preceding
provisions of this 
22 subparagraph (E) for each such taxable year;
23   (E-5) For taxable years ending after December 31, 
24 1997, an
amount equal to any eligible remediation costs 
25 that the corporation
deducted in computing adjusted 
26 gross income and for which the
corporation claims a 
 
 
SB2148- 30 -LRB099 12695 HLH 36454 b


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

21   The taxpayer is required to make the addition 
22 modification under this
subparagraph
only once with 
23 respect to any one piece of property;
24   (E-12) An amount equal to the amount otherwise 
25 allowed as a deduction in computing base income for 
26 interest paid, accrued, or incurred, directly or 
 
 
SB2148- 31 -LRB099 12695 HLH 36454 b


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

25   This paragraph shall not apply to the following:

26    (i) an item of interest paid, accrued, or 
 
 
SB2148- 32 -LRB099 12695 HLH 36454 b


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

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

 
 
SB2148- 33 -LRB099 12695 HLH 36454 b


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

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

17   (E-13) An amount equal to the amount of intangible 
18 expenses and costs otherwise allowed as a deduction in 
19 computing base income, and that were paid, accrued, or 
20 incurred, directly or indirectly, (i) for taxable 
21 years ending on or after December 31, 2004, to a 
22 foreign person who would be a member of the same 
23 unitary business group but for the fact that the 
24 foreign person's business activity outside the United 
25 States is 80% or more of that person's total business 
26 activity and (ii) for taxable years ending on or after 
 
 
SB2148- 34 -LRB099 12695 HLH 36454 b


1 December 31, 2008, to a person who would be a member of 
2 the same unitary business group but for the fact that 
3 the person is prohibited under Section 1501(a)(27) 
4 from being included in the unitary business group 
5 because he or she is ordinarily required to apportion 
6 business income under different subsections of Section 
7 304. The addition modification required by this 
8 subparagraph shall be reduced to the extent that 
9 dividends were included in base income of the unitary 
10 group for the same taxable year and received by the 
11 taxpayer or by a member of the taxpayer's unitary 
12 business group (including amounts included in gross 
13 income pursuant to Sections 951 through 964 of the 
14 Internal Revenue Code and amounts included in gross 
15 income under Section 78 of the Internal Revenue Code) 
16 with respect to the stock of the same person to whom 
17 the intangible expenses and costs were directly or 
18 indirectly paid, incurred, or accrued. The preceding 
19 sentence shall not apply to the extent that the same 
20 dividends caused a reduction to the addition 
21 modification required under Section 203(b)(2)(E-12) of 
22 this Act.
As used in this subparagraph, the term 
23 "intangible expenses and costs" includes (1) expenses, 
24 losses, and costs for, or related to, the direct or 
25 indirect acquisition, use, maintenance or management, 
26 ownership, sale, exchange, or any other disposition of 
 
 
SB2148- 35 -LRB099 12695 HLH 36454 b


1 intangible property; (2) losses incurred, directly or 
2 indirectly, from factoring transactions or discounting 
3 transactions; (3) royalty, patent, technical, and 
4 copyright fees; (4) licensing fees; and (5) other 
5 similar expenses and costs.
For purposes of this 
6 subparagraph, "intangible property" includes patents, 
7 patent applications, trade names, trademarks, service 
8 marks, copyrights, mask works, trade secrets, and 
9 similar types of intangible assets.
10   This paragraph shall not apply to the following:
11    (i) any item of intangible expenses or costs 
12 paid, accrued, or incurred, directly or 
13 indirectly, from a transaction with a person who is 
14 subject in a foreign country or state, other than a 
15 state which requires mandatory unitary reporting, 
16 to a tax on or measured by net income with respect 
17 to such item; or
18    (ii) any item of intangible expense or cost 
19 paid, accrued, or incurred, directly or 
20 indirectly, if the taxpayer can establish, based 
21 on a preponderance of the evidence, both of the 
22 following:
23     (a) the person during the same taxable 
24 year paid, accrued, or incurred, the 
25 intangible expense or cost to a person that is 
26 not a related member, and
 
 
SB2148- 36 -LRB099 12695 HLH 36454 b


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

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

25   (E-14) For taxable years ending on or after 
26 December 31, 2008, an amount equal to the amount of 
 
 
SB2148- 37 -LRB099 12695 HLH 36454 b


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

25   (E-15) For taxable years beginning after December 
26 31, 2008, any deduction for dividends paid by a captive 
 
 
SB2148- 38 -LRB099 12695 HLH 36454 b


1 real estate investment trust that is allowed to a real 
2 estate investment trust under Section 857(b)(2)(B) of 
3 the Internal Revenue Code for dividends paid;
4   (E-16) An amount equal to the credit allowable to 
5 the taxpayer under Section 218(a) of this Act, 
6 determined without regard to Section 218(c) of this 
7 Act;
8   (E-17) For taxable years ending on or after 
9 December 31, 2015, an amount equal to the deduction 
10 allowed under Section 199 of the Internal Revenue Code 
11 for the taxable year; 
12   (E-18) For taxable years ending on or after 
13 December 31, 2015, any deduction allowed to the 
14 taxpayer under Sections 243 through 246A of the 
15 Internal Revenue Code; 
16 and by deducting from the total so obtained the sum of the 
17 following
amounts:
18   (F) An amount equal to the amount of any tax 
19 imposed by this Act
which was refunded to the taxpayer 
20 and included in such total for the
taxable year;
21   (G) An amount equal to any amount included in such 
22 total under
Section 78 of the Internal Revenue Code;
23   (H) In the case of a regulated investment company, 
24 an amount equal
to the amount of exempt interest 
25 dividends as defined in subsection (b)
(5) of Section 
26 852 of the Internal Revenue Code, paid to shareholders

 
 
SB2148- 39 -LRB099 12695 HLH 36454 b


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

6 interest expense by Section 291(a)(3) of the Internal 
7 Revenue Code, and all amounts of expenses allocable to 
8 interest and
disallowed as deductions by Section 
9 265(a)(1) of the Internal Revenue Code;
and (ii) for 
10 taxable years
ending on or after August 13, 1999, 
11 Sections
171(a)(2), 265,
280C, 291(a)(3), and 
12 832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
13 for tax years ending on or after December 31, 2011, 
14 amounts disallowed as deductions by Section 45G(e)(3) 
15 of the Internal Revenue Code and, for taxable years 
16 ending on or after December 31, 2008, any amount 
17 included in gross income under Section 87 of the 
18 Internal Revenue Code and the policyholders' share of 
19 tax-exempt interest of a life insurance company under 
20 Section 807(a)(2)(B) of the Internal Revenue Code (in 
21 the case of a life insurance company with gross income 
22 from a decrease in reserves for the tax year) or 
23 Section 807(b)(1)(B) of the Internal Revenue Code (in 
24 the case of a life insurance company allowed a 
25 deduction for an increase in reserves for the tax 
26 year); the
provisions of this
subparagraph are exempt 
 
 
SB2148- 40 -LRB099 12695 HLH 36454 b


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

26 shall not be eligible for the deduction provided under 
 
 
SB2148- 41 -LRB099 12695 HLH 36454 b


1 this subparagraph
(L);
2   (M) For any taxpayer that is a financial 
3 organization within the meaning
of Section 304(c) of 
4 this Act, an amount included in such total as interest

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

16 the date that it was placed in service in the River 
17 Edge Redevelopment Zone. The subtraction modification 
18 available to taxpayer in any
year under this subsection 
19 shall be that portion of the total interest paid
by the 
20 borrower with respect to such loan attributable to the 
21 eligible
property as calculated under the previous 
22 sentence. This subparagraph (M) is exempt from the 
23 provisions of 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 
 
 
SB2148- 42 -LRB099 12695 HLH 36454 b


1 income from a loan or loans made by such taxpayer to a 
2 borrower,
to the extent that such a loan is secured by 
3 property which is eligible for
the High Impact Business 
4 Investment Credit. To determine the portion of a
loan 
5 or loans that is secured by property eligible for a 
6 Section 201(h) investment credit to the borrower, the 
7 entire principal amount of
the loan or loans between 
8 the taxpayer and the borrower should be divided into

9 the basis of the Section 201(h) investment credit 
10 property which
secures the loan or loans, using for 
11 this purpose the original basis of such
property on the 
12 date that it was placed in service in a federally 
13 designated
Foreign Trade Zone or Sub-Zone located in 
14 Illinois. No taxpayer that is
eligible for the 
15 deduction provided in subparagraph (M) of paragraph 
16 (2) of
this subsection shall be eligible for the 
17 deduction provided under this
subparagraph (M-1). The 
18 subtraction modification available to taxpayers in
any 
19 year under this subsection shall be that portion of the 
20 total interest
paid by the borrower with respect to 
21 such loan attributable to the eligible
property as 
22 calculated under the previous sentence;
23   (N) Two times any contribution made during the 
24 taxable year to a
designated zone organization to the 
25 extent that the contribution (i)
qualifies as a 
26 charitable contribution under subsection (c) of 
 
 
SB2148- 43 -LRB099 12695 HLH 36454 b


1 Section 170
of the Internal Revenue Code and (ii) must, 
2 by its terms, be used for a
project approved by the 
3 Department of Commerce and Economic Opportunity under 
4 Section 11 of the Illinois Enterprise Zone Act or under 
5 Section 10-10 of the River Edge Redevelopment Zone Act. 
6 This subparagraph (N) is exempt from the provisions of 
7 Section 250;
8   (O) An amount equal to: (i) 85% for taxable years 
9 ending on or before
December 31, 1992, or, a percentage 
10 equal to the percentage allowable under
Section 
11 243(a)(1) of the Internal Revenue Code of 1986 for 
12 taxable years ending
after December 31, 1992, of the 
13 amount by which dividends included in taxable
income 
14 and received from a corporation that is not created or 
15 organized under
the laws of the United States or any 
16 state or political subdivision thereof,
including, for 
17 taxable years ending on or after December 31, 1988, 
18 dividends
received or deemed received or paid or deemed 
19 paid under Sections 951 through
965 of the Internal 
20 Revenue Code, exceed the amount of the modification

21 provided under subparagraph (G) of paragraph (2) of 
22 this subsection (b) which
is related to such dividends, 
23 and including, for taxable years ending on or after 
24 December 31, 2008, dividends received from a captive 
25 real estate investment trust; plus (ii) 100% of the 
26 amount by which dividends,
included in taxable income 
 
 
SB2148- 44 -LRB099 12695 HLH 36454 b


1 and received, including, for taxable years ending on
or 
2 after December 31, 1988, dividends received or deemed 
3 received or paid or
deemed paid under Sections 951 
4 through 964 of the Internal Revenue Code and including, 
5 for taxable years ending on or after December 31, 2008, 
6 dividends received from a captive real estate 
7 investment trust, from
any such corporation specified 
8 in clause (i) that would but for the provisions
of 
9 Section 1504 (b) (3) of the Internal Revenue Code be 
10 treated as a member of
the affiliated group which 
11 includes the dividend recipient, exceed the amount
of 
12 the modification provided under subparagraph (G) of 
13 paragraph (2) of this
subsection (b) which is related 
14 to such dividends. This subparagraph (O) shall not 
15 apply to taxable years ending on or after December 31, 
16 2015 is exempt from the provisions of Section 250 of 
17 this Act;
18   (P) An amount equal to any contribution made to a 
19 job training project
established pursuant to the Tax 
20 Increment Allocation Redevelopment Act;
21   (Q) An amount equal to the amount of the deduction 
22 used to compute the
federal income tax credit for 
23 restoration of substantial amounts held under
claim of 
24 right for the taxable year pursuant to Section 1341 of 
25 the
Internal Revenue Code;
26   (R) On and after July 20, 1999, in the case of an 
 
 
SB2148- 45 -LRB099 12695 HLH 36454 b


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

8 interinsurer or reciprocal insurer with respect to the 
9 attorney-in-fact under
Section 835(b) of the Internal 
10 Revenue Code for the taxable year; the provisions of 
11 this subparagraph are exempt from the provisions of 
12 Section 250;
13   (S) For taxable years ending on or after December 
14 31, 1997, in the
case of a Subchapter
S corporation, an 
15 amount equal to all amounts of income allocable to a

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

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

25 is taken on the taxpayer's federal income tax return 
26 under
subsection (k) of Section 168 of the Internal 
 
 
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1 Revenue Code and for each
applicable taxable year 
2 thereafter, an amount equal to "x", where:
3    (1) "y" equals the amount of the depreciation 
4 deduction taken for the
taxable year
on the 
5 taxpayer's federal income tax return on property 
6 for which the bonus
depreciation deduction
was 
7 taken in any year under subsection (k) of Section 
8 168 of the Internal
Revenue Code, but not including 
9 the bonus depreciation deduction;
10    (2) for taxable years ending on or before 
11 December 31, 2005, "x" equals "y" multiplied by 30 
12 and then divided by 70 (or "y"
multiplied by 
13 0.429); and
14    (3) for taxable years ending after December 
15 31, 2005:
16     (i) for property on which a bonus 
17 depreciation deduction of 30% of the adjusted 
18 basis was taken, "x" equals "y" multiplied by 
19 30 and then divided by 70 (or "y"
multiplied by 
20 0.429); and
21     (ii) for property on which a bonus 
22 depreciation deduction of 50% of the adjusted 
23 basis was taken, "x" equals "y" multiplied by 
24 1.0.
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 the 
14 taxpayer may claim a depreciation deduction for 
15 federal income tax purposes and for which the taxpayer 
16 was 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 under 
20 this subparagraph
only once with respect to any one 
21 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 with 
 
 
SB2148- 48 -LRB099 12695 HLH 36454 b


1 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 that 
9 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 an 
17 addition modification with respect to such transaction 
18 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 
 
 
SB2148- 49 -LRB099 12695 HLH 36454 b


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

17   (X) An amount equal to the income from intangible 
18 property taken into account for the taxable year (net 
19 of the deductions allocable thereto) with respect to 
20 transactions with (i) a foreign person who would be a 
21 member of the taxpayer's unitary business group but for 
22 the fact that the foreign person's business activity 
23 outside the United States is 80% or more of that 
24 person's total business activity and (ii) for taxable 
25 years ending on or after December 31, 2008, to a person 
26 who would be a member of the same unitary business 
 
 
SB2148- 50 -LRB099 12695 HLH 36454 b


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

12   (Y) For taxable years ending on or after December 
13 31, 2011, in the case of a taxpayer who was required to 
14 add back any insurance premiums under Section 
15 203(b)(2)(E-14), such taxpayer may elect to subtract 
16 that part of a reimbursement received from the 
17 insurance company equal to the amount of the expense or 
18 loss (including expenses incurred by the insurance 
19 company) that would have been taken into account as a 
20 deduction for federal income tax purposes if the 
21 expense or loss had been uninsured. If a taxpayer makes 
22 the election provided for by this subparagraph (Y), the 
23 insurer to which the premiums were paid must add back 
24 to income the amount subtracted by the taxpayer 
25 pursuant to this subparagraph (Y). This subparagraph 
26 (Y) is exempt from the provisions of Section 250; and 
 
 
SB2148- 51 -LRB099 12695 HLH 36454 b


1   (Z) The difference between the nondeductible 
2 controlled foreign corporation dividends under Section 
3 965(e)(3) of the Internal Revenue Code over the taxable 
4 income of the taxpayer, computed without regard to 
5 Section 965(e)(2)(A) of the Internal Revenue Code, and 
6 without regard to any net operating loss deduction. 
7 This subparagraph (Z) is exempt from the provisions of 
8 Section 250. 
9  (3) Special rule. For purposes of paragraph (2) (A), 
10 "gross income"
in the case of a life insurance company, for 
11 tax years ending on and after
December 31, 1994,
and prior 
12 to December 31, 2011, shall mean the gross investment 
13 income for the taxable year and, for tax years ending on or 
14 after December 31, 2011, shall mean all amounts included in 
15 life insurance gross income under Section 803(a)(3) of the 
16 Internal Revenue Code.

17 (c) Trusts and estates.
18  (1) In general. In the case of a trust or estate, base 
19 income means
an amount equal to the taxpayer's taxable 
20 income for the taxable year as
modified by paragraph (2).
21  (2) Modifications. Subject to the provisions of 
22 paragraph (3), the
taxable income referred to in paragraph 
23 (1) shall be modified by adding
thereto the sum of the 
24 following amounts:
25   (A) An amount equal to all amounts paid or accrued 
 
 
SB2148- 52 -LRB099 12695 HLH 36454 b


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

24 subtraction modifications in such taxable year, with 
25 the following limitations
applied in the order that 
26 they are listed:
 
 
SB2148- 53 -LRB099 12695 HLH 36454 b


1    (i) the addition modification relating to the 
2 net operating loss
carried back or forward to the 
3 taxable year from any taxable year ending
prior to 
4 December 31, 1986 shall be reduced by the amount of 
5 addition
modification under this subparagraph (E) 
6 which related to that net
operating loss and which 
7 was taken into account in calculating the base

8 income of an earlier taxable year, and
9    (ii) the addition modification relating to the 
10 net operating loss
carried back or forward to the 
11 taxable year from any taxable year ending
prior to 
12 December 31, 1986 shall not exceed the amount of 
13 such carryback or
carryforward;
14   For taxable years in which there is a net operating 
15 loss carryback or
carryforward from more than one other 
16 taxable year ending prior to December
31, 1986, the 
17 addition modification provided in this subparagraph 
18 (E) shall
be the sum of the amounts computed 
19 independently under the preceding
provisions of this 
20 subparagraph (E) for each such taxable year;
21   (F) For taxable years ending on or after January 1, 
22 1989, an amount
equal to the tax deducted pursuant to 
23 Section 164 of the Internal Revenue
Code if the trust 
24 or estate is claiming the same tax for purposes of the

25 Illinois foreign tax credit under Section 601 of this 
26 Act;
 
 
SB2148- 54 -LRB099 12695 HLH 36454 b


1   (G) An amount equal to the amount of the capital 
2 gain deduction
allowable under the Internal Revenue 
3 Code, to the extent deducted from
gross income in the 
4 computation of taxable income;
5   (G-5) For taxable years ending after December 31, 
6 1997, an
amount equal to any eligible remediation costs 
7 that the trust or estate
deducted in computing adjusted 
8 gross income and for which the trust
or estate claims a 
9 credit under subsection (l) of Section 201;
10   (G-10) For taxable years 2001 and thereafter, an 
11 amount equal to the
bonus depreciation deduction taken 
12 on the taxpayer's federal income tax return for the 
13 taxable
year under subsection (k) of Section 168 of the 
14 Internal Revenue Code; and
15   (G-11) If the taxpayer sells, transfers, abandons, 
16 or otherwise disposes of property for which the 
17 taxpayer was required in any taxable year to
make an 
18 addition modification under subparagraph (G-10), then 
19 an amount equal
to the aggregate amount of the 
20 deductions taken in all taxable
years under 
21 subparagraph (R) with respect to that property.
22   If the taxpayer continues to own property through 
23 the last day of the last tax year for which the 
24 taxpayer may claim a depreciation deduction for 
25 federal income tax purposes and for which the taxpayer 
26 was allowed in any taxable year to make a subtraction 
 
 
SB2148- 55 -LRB099 12695 HLH 36454 b


1 modification under subparagraph (R), then an amount 
2 equal to that subtraction modification.

3   The taxpayer is required to make the addition 
4 modification under this
subparagraph
only once with 
5 respect to any one piece of property;
6   (G-12) An amount equal to the amount otherwise 
7 allowed as a deduction in computing base income for 
8 interest paid, accrued, or incurred, directly or 
9 indirectly, (i) for taxable years ending on or after 
10 December 31, 2004, to a foreign person who would be a 
11 member of the same unitary business group but for the 
12 fact that the foreign person's business activity 
13 outside the United States is 80% or more of the foreign 
14 person's total business activity and (ii) for taxable 
15 years ending on or after December 31, 2008, to a person 
16 who would be a member of the same unitary business 
17 group but for the fact that the person is prohibited 
18 under Section 1501(a)(27) from being included in the 
19 unitary business group because he or she is ordinarily 
20 required to apportion business income under different 
21 subsections of Section 304. The addition modification 
22 required by this subparagraph shall be reduced to the 
23 extent that dividends were included in base income of 
24 the unitary group for the same taxable year and 
25 received by the taxpayer or by a member of the 
26 taxpayer's unitary business group (including amounts 
 
 
SB2148- 56 -LRB099 12695 HLH 36454 b


1 included in gross income pursuant to Sections 951 
2 through 964 of the Internal Revenue Code and amounts 
3 included in gross income under Section 78 of the 
4 Internal Revenue Code) with respect to the stock of the 
5 same person to whom the interest was paid, accrued, or 
6 incurred.

7   This paragraph shall not apply to the following:

8    (i) an item of interest paid, accrued, or 
9 incurred, directly or indirectly, to a person who 
10 is subject in a foreign country or state, other 
11 than a state which requires mandatory unitary 
12 reporting, to a tax on or measured by net income 
13 with respect to such interest; or
14    (ii) an item of interest paid, accrued, or 
15 incurred, directly or indirectly, to a person if 
16 the taxpayer can establish, based on a 
17 preponderance of the evidence, both of the 
18 following:
19     (a) the person, during the same taxable 
20 year, paid, accrued, or incurred, the interest 
21 to a person that is not a related member, and
22     (b) the transaction giving rise to the 
23 interest expense between the taxpayer and the 
24 person did not have as a principal purpose the 
25 avoidance of Illinois income tax, and is paid 
26 pursuant to a contract or agreement that 
 
 
SB2148- 57 -LRB099 12695 HLH 36454 b


1 reflects an arm's-length interest rate and 
2 terms; or

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

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

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

25   (G-13) An amount equal to the amount of intangible 
26 expenses and costs otherwise allowed as a deduction in 
 
 
SB2148- 58 -LRB099 12695 HLH 36454 b


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 
 
 
SB2148- 59 -LRB099 12695 HLH 36454 b


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(c)(2)(G-12) of 
4 this Act. As used in this subparagraph, the term 
5 "intangible expenses and costs" includes: (1) 
6 expenses, losses, and costs for or related to the 
7 direct or indirect acquisition, use, maintenance or 
8 management, ownership, sale, exchange, or any other 
9 disposition of intangible property; (2) losses 
10 incurred, directly or indirectly, from factoring 
11 transactions or discounting transactions; (3) royalty, 
12 patent, technical, and copyright fees; (4) licensing 
13 fees; and (5) other similar expenses and costs. For 
14 purposes of this subparagraph, "intangible property" 
15 includes patents, patent applications, trade names, 
16 trademarks, service marks, copyrights, mask works, 
17 trade secrets, and 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 is 
22 subject in a foreign country or state, other than a 
23 state which requires mandatory unitary reporting, 
24 to a tax on or measured by net income with respect 
25 to such item; or
26    (ii) any item of intangible expense or cost 
 
 
SB2148- 60 -LRB099 12695 HLH 36454 b


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

24    Nothing in this subsection shall preclude the 
25 Director from making any other adjustment 
26 otherwise allowed under Section 404 of this Act for 
 
 
SB2148- 61 -LRB099 12695 HLH 36454 b


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

7   (G-14) For taxable years ending on or after 
8 December 31, 2008, an amount equal to the amount of 
9 insurance premium expenses and costs otherwise allowed 
10 as a deduction in computing base income, and that were 
11 paid, accrued, or incurred, directly or indirectly, to 
12 a person who would be a member of the same unitary 
13 business group but for the fact that the person is 
14 prohibited under Section 1501(a)(27) from being 
15 included in the unitary business group because he or 
16 she is ordinarily required to apportion business 
17 income under different subsections of Section 304. The 
18 addition modification required by this subparagraph 
19 shall be reduced to the extent that dividends were 
20 included in base income of the unitary group for the 
21 same taxable year and received by the taxpayer or by a 
22 member of the taxpayer's unitary business group 
23 (including amounts included in gross income under 
24 Sections 951 through 964 of the Internal Revenue Code 
25 and amounts included in gross income under Section 78 
26 of the Internal Revenue Code) with respect to the stock 
 
 
SB2148- 62 -LRB099 12695 HLH 36454 b


1 of the same person to whom the premiums and costs were 
2 directly or indirectly paid, incurred, or accrued. The 
3 preceding sentence does not apply to the extent that 
4 the same dividends caused a reduction to the addition 
5 modification required under Section 203(c)(2)(G-12) or 
6 Section 203(c)(2)(G-13) of this Act;
7   (G-15) An amount equal to the credit allowable to 
8 the taxpayer under Section 218(a) of this Act, 
9 determined without regard to Section 218(c) of this 
10 Act;
11   (G-16) For taxable years ending on or after 
12 December 31, 2015, an amount equal to the deduction 
13 allowed under Section 199 of the Internal Revenue Code 
14 for the taxable year; 
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 such 
18 total pursuant
to the provisions of Sections 402(a), 
19 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the 
20 Internal Revenue Code or included in such total as

21 distributions under the provisions of any retirement 
22 or disability plan for
employees of any governmental 
23 agency or unit, or retirement payments to
retired 
24 partners, which payments are excluded in computing net 
25 earnings
from self employment by Section 1402 of the 
26 Internal Revenue Code and
regulations adopted pursuant 
 
 
SB2148- 63 -LRB099 12695 HLH 36454 b


1 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 statutes 
10 or
Constitution
or by reason of the Constitution, 
11 treaties or statutes of the United States;
provided 
12 that, in the case of any statute of this State that 
13 exempts income
derived from bonds or other obligations 
14 from the tax imposed under this Act,
the amount 
15 exempted shall be the interest net of bond premium 
16 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(1) of the 
23 Internal
Revenue Code;
and (ii) for taxable years

24 ending on or after August 13, 1999, Sections
171(a)(2), 
25 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
26 Code, plus, (iii) for taxable years ending on or after 
 
 
SB2148- 64 -LRB099 12695 HLH 36454 b


1 December 31, 2011, Section 45G(e)(3) of the Internal 
2 Revenue Code and, for taxable years ending on or after 
3 December 31, 2008, any amount included in gross income 
4 under Section 87 of the Internal Revenue Code; the 
5 provisions of this
subparagraph are exempt from the 
6 provisions of Section 250;
7   (M) An amount equal to those dividends included in 
8 such total
which were paid by a corporation which 
9 conducts business operations in a River Edge 
10 Redevelopment Zone or zones created under the River 
11 Edge Redevelopment Zone Act and
conducts substantially 
12 all of its operations in a River Edge Redevelopment 
13 Zone or zones. This subparagraph (M) is exempt from the 
14 provisions of Section 250;
15   (N) An amount equal to any contribution made to a 
16 job training
project established pursuant to the Tax 
17 Increment Allocation
Redevelopment Act;
18   (O) 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
a 
22 High Impact Business located in Illinois; provided 
23 that dividends eligible
for the deduction provided in 
24 subparagraph (M) of paragraph (2) of this
subsection 
25 shall not be eligible for the deduction provided under 
26 this
subparagraph (O);
 
 
SB2148- 65 -LRB099 12695 HLH 36454 b


1   (P) An amount equal to the amount of the deduction 
2 used to compute the
federal income tax credit for 
3 restoration of substantial amounts held under
claim of 
4 right for the taxable year pursuant to Section 1341 of 
5 the
Internal Revenue Code;
6   (Q) For taxable year 1999 and thereafter, an amount 
7 equal to the
amount of any
(i) distributions, to the 
8 extent includible in gross income for
federal income 
9 tax purposes, made to the taxpayer because of
his or 
10 her status as a victim of
persecution for racial or 
11 religious reasons by Nazi Germany or any other Axis

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

17 persecution for racial or religious reasons by Nazi

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

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

24 companies
immediately prior to and during World War II;

25 provided, however, this subtraction from federal 
26 adjusted gross income does not
apply to assets acquired 
 
 
SB2148- 66 -LRB099 12695 HLH 36454 b


1 with such assets or with the proceeds from the sale of

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

5 persecution for racial or religious reasons
by Nazi 
6 Germany or any other Axis regime or as an heir of the 
7 victim. The
amount of and the eligibility for any 
8 public assistance, benefit, or
similar entitlement is 
9 not affected by the inclusion of items (i) and (ii) of

10 this paragraph in gross income for federal income tax 
11 purposes.
This paragraph is exempt from the provisions 
12 of Section 250;
13   (R) For taxable years 2001 and thereafter, for the 
14 taxable year in
which the bonus depreciation deduction

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

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

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

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

20   (W) in the case of an estate, an amount equal to 
21 all amounts included in such total pursuant to the 
22 provisions of Section 111 of the Internal Revenue Code 
23 as a recovery of items previously deducted by the 
24 decedent from adjusted gross income in the computation 
25 of taxable income. This subparagraph (W) is exempt from 
26 Section 250; 
 
 
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1   (X) an amount equal to the refund included in such 
2 total of any tax deducted for federal income tax 
3 purposes, to the extent that deduction was added back 
4 under subparagraph (F). This subparagraph (X) is 
5 exempt from the provisions of Section 250; and
6   (Y) For taxable years ending on or after December 
7 31, 2011, in the case of a taxpayer who was required to 
8 add back any insurance premiums under Section 
9 203(c)(2)(G-14), such taxpayer may elect to subtract 
10 that part of a reimbursement received from the 
11 insurance company equal to the amount of the expense or 
12 loss (including expenses incurred by the insurance 
13 company) that would have been taken into account as a 
14 deduction for federal income tax purposes if the 
15 expense or loss had been uninsured. If a taxpayer makes 
16 the election provided for by this subparagraph (Y), the 
17 insurer to which the premiums were paid must add back 
18 to income the amount subtracted by the taxpayer 
19 pursuant to this subparagraph (Y). This subparagraph 
20 (Y) is exempt from the provisions of Section 250.
21  (3) Limitation. The amount of any modification 
22 otherwise required
under this subsection shall, under 
23 regulations prescribed by the
Department, be adjusted by 
24 any amounts included therein which were
properly paid, 
25 credited, or required to be distributed, or permanently set

26 aside for charitable purposes pursuant to Internal Revenue 
 
 
SB2148- 72 -LRB099 12695 HLH 36454 b


1 Code Section
642(c) during the taxable year.

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

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

21   This paragraph shall not apply to the following:

22    (i) an item of interest paid, accrued, or 
23 incurred, directly or indirectly, to a person who 
24 is subject in a foreign country or state, other 
25 than a state which requires mandatory unitary 
26 reporting, to a tax on or measured by net income 
 
 
SB2148- 75 -LRB099 12695 HLH 36454 b


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

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

23    (iv) an item of interest paid, accrued, or 
24 incurred, directly or indirectly, to a person if 
25 the taxpayer establishes by clear and convincing 
26 evidence that the adjustments are unreasonable; or 
 
 
SB2148- 76 -LRB099 12695 HLH 36454 b


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

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

13   (D-8) An amount equal to the amount of intangible 
14 expenses and costs otherwise allowed as a deduction in 
15 computing base income, and that were paid, accrued, or 
16 incurred, directly or indirectly, (i) for taxable 
17 years ending on or after December 31, 2004, to a 
18 foreign person who would be a member of the same 
19 unitary business group but for the fact that the 
20 foreign person's business activity outside the United 
21 States is 80% or more of that person's total business 
22 activity and (ii) for taxable years ending on or after 
23 December 31, 2008, to a person who would be a member of 
24 the same unitary business group but for the fact that 
25 the person is prohibited under Section 1501(a)(27) 
26 from being included in the unitary business group 
 
 
SB2148- 77 -LRB099 12695 HLH 36454 b


1 because he or she is ordinarily required to apportion 
2 business income under different subsections of Section 
3 304. The addition modification required by this 
4 subparagraph shall be reduced to the extent that 
5 dividends were included in base income of the unitary 
6 group for the same taxable year and received by the 
7 taxpayer or by a member of the taxpayer's unitary 
8 business group (including amounts included in gross 
9 income pursuant to Sections 951 through 964 of the 
10 Internal Revenue Code and amounts included in gross 
11 income under Section 78 of the Internal Revenue Code) 
12 with respect to the stock of the same person to whom 
13 the intangible expenses and costs were directly or 
14 indirectly paid, incurred or accrued. The preceding 
15 sentence shall not apply to the extent that the same 
16 dividends caused a reduction to the addition 
17 modification required under Section 203(d)(2)(D-7) of 
18 this Act. As used in this subparagraph, the term 
19 "intangible expenses and costs" includes (1) expenses, 
20 losses, and costs for, or related to, the direct or 
21 indirect acquisition, use, maintenance or management, 
22 ownership, sale, exchange, or any other disposition of 
23 intangible property; (2) losses incurred, directly or 
24 indirectly, from factoring transactions or discounting 
25 transactions; (3) royalty, patent, technical, and 
26 copyright fees; (4) licensing fees; and (5) other 
 
 
SB2148- 78 -LRB099 12695 HLH 36454 b


1 similar expenses and costs. For purposes of this 
2 subparagraph, "intangible property" includes patents, 
3 patent applications, trade names, trademarks, service 
4 marks, copyrights, mask works, trade secrets, and 
5 similar types of intangible assets;
6   This paragraph shall not apply to the following:
7    (i) any item of intangible expenses or costs 
8 paid, accrued, or incurred, directly or 
9 indirectly, from a transaction with a person who is 
10 subject in a foreign country or state, other than a 
11 state which requires mandatory unitary reporting, 
12 to a tax on or measured by net income with respect 
13 to such item; or
14    (ii) any item of intangible expense or cost 
15 paid, accrued, or incurred, directly or 
16 indirectly, if the taxpayer can establish, based 
17 on a preponderance of the evidence, both of the 
18 following:
19     (a) the person during the same taxable 
20 year paid, accrued, or incurred, the 
21 intangible expense or cost to a person that is 
22 not a related member, and
23     (b) the transaction giving rise to the 
24 intangible expense or cost between the 
25 taxpayer and the person did not have as a 
26 principal purpose the avoidance of Illinois 
 
 
SB2148- 79 -LRB099 12695 HLH 36454 b


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

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

21   (D-9) For taxable years ending on or after December 
22 31, 2008, an amount equal to the amount of insurance 
23 premium expenses and costs otherwise allowed as a 
24 deduction in computing base income, and that were paid, 
25 accrued, or incurred, directly or indirectly, to a 
26 person who would be a member of the same unitary 
 
 
SB2148- 80 -LRB099 12695 HLH 36454 b


1 business group but for the fact that the person is 
2 prohibited under Section 1501(a)(27) from being 
3 included in the unitary business group because he or 
4 she is ordinarily required to apportion business 
5 income under different subsections of Section 304. The 
6 addition modification required by this subparagraph 
7 shall be reduced to the extent that dividends were 
8 included in base income of the unitary group for the 
9 same taxable year and received by the taxpayer or by a 
10 member of the taxpayer's unitary business group 
11 (including amounts included in gross income under 
12 Sections 951 through 964 of the Internal Revenue Code 
13 and amounts included in gross income under Section 78 
14 of the Internal Revenue Code) with respect to the stock 
15 of the same person to whom the premiums and costs were 
16 directly or indirectly paid, incurred, or accrued. The 
17 preceding sentence does not apply to the extent that 
18 the same dividends caused a reduction to the addition 
19 modification required under Section 203(d)(2)(D-7) or 
20 Section 203(d)(2)(D-8) of this Act;
21   (D-10) An amount equal to the credit allowable to 
22 the taxpayer under Section 218(a) of this Act, 
23 determined without regard to Section 218(c) of this 
24 Act;
25   (D-11) For taxable years ending on or after 
26 December 31, 2015, an amount equal to the deduction 
 
 
SB2148- 81 -LRB099 12695 HLH 36454 b


1 allowed under Section 199 of the Internal Revenue Code 
2 for the taxable year; 
3 and by deducting from the total so obtained the following 
4 amounts:
5   (E) The valuation limitation amount;
6   (F) An amount equal to the amount of any tax 
7 imposed by this Act which
was refunded to the taxpayer 
8 and included in such total for the taxable year;
9   (G) An amount equal to all amounts included in 
10 taxable income as
modified by subparagraphs (A), (B), 
11 (C) and (D) which are exempt from
taxation by this 
12 State either by reason of its statutes or Constitution 
13 or
by reason of
the Constitution, treaties or statutes 
14 of the United States;
provided that, in the case of any 
15 statute of this State that exempts income
derived from 
16 bonds or other obligations from the tax imposed under 
17 this Act,
the amount exempted shall be the interest net 
18 of bond premium amortization;
19   (H) Any income of the partnership which 
20 constitutes personal service
income as defined in 
21 Section 1348 (b) (1) of the Internal Revenue Code (as

22 in effect December 31, 1981) or a reasonable allowance 
23 for compensation
paid or accrued for services rendered 
24 by partners to the partnership,
whichever is greater; 
25 this subparagraph (H) is exempt from the provisions of 
26 Section 250;
 
 
SB2148- 82 -LRB099 12695 HLH 36454 b


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

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

16 ending on or after August 13, 1999, Sections
171(a)(2), 
17 265,
280C, and 832(b)(5)(B)(i) of the Internal Revenue 
18 Code, plus, (iii) for taxable years ending on or after 
19 December 31, 2011, Section 45G(e)(3) of the Internal 
20 Revenue Code and, for taxable years ending on or after 
21 December 31, 2008, any amount included in gross income 
22 under Section 87 of the Internal Revenue Code; the 
23 provisions of this
subparagraph are exempt from the 
24 provisions of Section 250;
25   (K) An amount equal to those dividends included in 
26 such total which were
paid by a corporation which 
 
 
SB2148- 83 -LRB099 12695 HLH 36454 b


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

14 High Impact Business located in Illinois; provided 
15 that dividends eligible
for the deduction provided in 
16 subparagraph (K) of paragraph (2) of this
subsection 
17 shall not be eligible for the deduction provided under 
18 this
subparagraph (M);
19   (N) An amount equal to the amount of the deduction 
20 used to compute the
federal income tax credit for 
21 restoration of substantial amounts held under
claim of 
22 right for the taxable year pursuant to Section 1341 of 
23 the
Internal Revenue Code;
24   (O) For taxable years 2001 and thereafter, for the 
25 taxable year in
which the bonus depreciation deduction

26 is taken on the taxpayer's federal income tax return 
 
 
SB2148- 84 -LRB099 12695 HLH 36454 b


1 under
subsection (k) of Section 168 of the Internal 
2 Revenue Code and for each
applicable taxable year 
3 thereafter, an amount equal to "x", where:
4    (1) "y" equals the amount of the depreciation 
5 deduction taken for the
taxable year
on the 
6 taxpayer's federal income tax return on property 
7 for which the bonus
depreciation deduction
was 
8 taken in any year under subsection (k) of Section 
9 168 of the Internal
Revenue Code, but not including 
10 the bonus depreciation deduction;
11    (2) for taxable years ending on or before 
12 December 31, 2005, "x" equals "y" multiplied by 30 
13 and then divided by 70 (or "y"
multiplied by 
14 0.429); and
15    (3) for taxable years ending after December 
16 31, 2005:
17     (i) for property on which a bonus 
18 depreciation deduction of 30% of the adjusted 
19 basis was taken, "x" equals "y" multiplied by 
20 30 and then divided by 70 (or "y"
multiplied by 
21 0.429); and
22     (ii) for property on which a bonus 
23 depreciation deduction of 50% of the adjusted 
24 basis was taken, "x" equals "y" multiplied by 
25 1.0.
26   The aggregate amount deducted under this 
 
 
SB2148- 85 -LRB099 12695 HLH 36454 b


1 subparagraph in all taxable
years for any one piece of 
2 property may not exceed the amount of the bonus

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

20   The taxpayer is allowed to take the deduction under 
21 this subparagraph
only once with respect to any one 
22 piece of property.
23   This subparagraph (P) is exempt from the 
24 provisions of Section 250;
25   (Q) The amount of (i) any interest income (net of 
26 the deductions allocable thereto) taken into account 
 
 
SB2148- 86 -LRB099 12695 HLH 36454 b


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

16   (R) An amount equal to the interest income taken 
17 into account for the taxable year (net of the 
18 deductions allocable thereto) with respect to 
19 transactions with (i) a foreign person who would be a 
20 member of the taxpayer's unitary business group but for 
21 the fact that the foreign person's business activity 
22 outside the United States is 80% or more of that 
23 person's total business activity and (ii) for taxable 
24 years ending on or after December 31, 2008, to a person 
25 who would be a member of the same unitary business 
26 group but for the fact that the person is prohibited 
 
 
SB2148- 87 -LRB099 12695 HLH 36454 b


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

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

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

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

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

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

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

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

 
 
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1 taxable income determined as if such corporation had 
2 filed a separate
return for federal income tax purposes 
3 for the taxable year and each
preceding taxable year 
4 for which it was a member of an affiliated group.
For 
5 purposes of this subparagraph, the taxpayer's separate 
6 taxable
income shall be determined as if the election 
7 provided by Section
243(b) (2) of the Internal Revenue 
8 Code had been in effect for all such years;
9   (F) Cooperatives. In the case of a cooperative 
10 corporation or
association, the taxable income of such 
11 organization determined in
accordance with the 
12 provisions of Section 1381 through 1388 of the
Internal 
13 Revenue Code, but without regard to the prohibition 
14 against offsetting losses from patronage activities 
15 against income from nonpatronage activities; except 
16 that a cooperative corporation or association may make 
17 an election to follow its federal income tax treatment 
18 of patronage losses and nonpatronage losses. In the 
19 event such election is made, such losses shall be 
20 computed and carried over in a manner consistent with 
21 subsection (a) of Section 207 of this Act and 
22 apportioned by the apportionment factor reported by 
23 the cooperative on its Illinois income tax return filed 
24 for the taxable year in which the losses are incurred. 
25 The election shall be effective for all taxable years 
26 with original returns due on or after the date of the 
 
 
SB2148- 92 -LRB099 12695 HLH 36454 b


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

17 corporation determined in accordance with Section 
18 1363(b) of the Internal
Revenue Code, except that 
19 taxable income shall take into
account those items 
20 which are required by Section 1363(b)(1) of the

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

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

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


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

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

19 (g) Double deductions. Unless specifically provided 
20otherwise, nothing
in this Section shall permit the same item 
21to be deducted more than once.

22 (h) Legislative intention. Except as expressly provided by 
23this
Section there shall be no modifications or limitations on 
24the amounts
of income, gain, loss or deduction taken into 
 
 
SB2148- 96 -LRB099 12695 HLH 36454 b


1account in determining
gross income, adjusted gross income or 
2taxable income for federal income
tax purposes for the taxable 
3year, or in the amount of such items
entering into the 
4computation of base income and net income under this
Act for 
5such taxable year, whether in respect of property values as of

6August 1, 1969 or otherwise.
7(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198, 
8eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09; 
996-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff. 
106-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507, 
11eff. 8-23-11; 97-905, eff. 8-7-12.)




12 (35 ILCS 5/804) (from Ch. 120, par. 8-804)


13 Sec. 804. Failure to Pay Estimated Tax. 

14 (a) In general. In case of any underpayment of estimated 
15tax by a
taxpayer, except as provided in subsection (d) or (e), 
16the taxpayer shall
be liable to a penalty in an amount 
17determined at the rate prescribed by
Section 3-3 of the Uniform 
18Penalty and Interest Act upon the amount of the
underpayment 
19(determined under subsection (b)) for each required 
20installment.

21 (b) Amount of underpayment. For purposes of subsection (a), 
22the
amount of the underpayment shall be the excess of:


23  (1) the amount of the installment which would be 
24 required to be paid
under subsection (c), over


25  (2) the amount, if any, of the installment paid on or 
 
 
SB2148- 97 -LRB099 12695 HLH 36454 b


1 before the
last date prescribed for payment.

2 (c) Amount of Required Installments.


3  (1) Amount.


4   (A) In General. Except as provided in paragraphs 
5 (2) and (3), the amount of any
required installment 
6 shall be 25% of the required annual payment.


7   (B) Required Annual Payment. For purposes of 
8 subparagraph (A),
the term "required annual payment" 
9 means the lesser of: 


10    (i) 90% of the tax shown on the return for the 
11 taxable year, or
if no return is filed, 90% of the 
12 tax for such year;


13    (ii) for installments due prior to February 1, 
14 2011, and after January 31, 2012, 100% of the tax 
15 shown on the return of the taxpayer for the

16 preceding taxable year if a return showing a 
17 liability for tax was filed by
the taxpayer for the 
18 preceding taxable year and such preceding year was 
19 a
taxable year of 12 months; or

20    (iii) for installments due after January 31, 
21 2011, and prior to February 1, 2012, 150% of the 
22 tax shown on the return of the taxpayer for the 
23 preceding taxable year if a return showing a 
24 liability for tax was filed by the taxpayer for the 
25 preceding taxable year and such preceding year was 
26 a taxable year of 12 months. 

 
 
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1  (2) Lower Required Installment where Annualized Income 
2 Installment is Less
Than Amount Determined Under Paragraph 
3 (1).


4   (A) In General. In the case of any required 
5 installment if a taxpayer
establishes that the 
6 annualized income installment is less than the amount

7 determined under paragraph (1),


8    (i) the amount of such required installment 
9 shall be the annualized
income installment, and


10    (ii) any reduction in a required installment 
11 resulting from the
application of this 
12 subparagraph shall be recaptured by increasing the

13 amount of the next required installment determined 
14 under paragraph (1) by
the amount of such 
15 reduction, and by increasing subsequent required

16 installments to the extent that the reduction has 
17 not previously been
recaptured under this clause.


18   (B) Determination of Annualized Income 
19 Installment. In the case of
any required installment, 
20 the annualized income installment is the
excess, if 
21 any, of: 


22    (i) an amount equal to the applicable 
23 percentage of the tax for the
taxable year computed 
24 by placing on an annualized basis the net income 
25 for
months in the taxable year ending before the 
26 due date for the installment, over





 
 
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1    (ii) the aggregate amount of any prior 
2 required installments for
the taxable year.


3   (C) Applicable Percentage.


































4  In the case of the followingThe applicable
5  required installments:percentage is:
6  1st ...............................22.5%
7  2nd ...............................45%
8  3rd ...............................67.5%
9  4th ...............................90%
10   (D) Annualized Net Income; Individuals. For 
11 individuals, net
income shall be placed on an 
12 annualized basis by:


13    (i) multiplying by 12, or in the case of a 
14 taxable year of
less than 12 months, by the number 
15 of months in the taxable year, the
net income 
16 computed without regard to the standard exemption 
17 for the months
in the taxable
year ending before 
18 the month in which the installment is required to 
19 be paid;


20    (ii) dividing the resulting amount by the 
21 number of months in the
taxable year ending before 
22 the month in which such installment date falls; and


23    (iii) deducting from such amount the standard 
24 exemption allowable for
the taxable year, such 
25 standard exemption being determined as of the last

26 date prescribed for payment of the installment.


 
 
SB2148- 100 -LRB099 12695 HLH 36454 b


1   (E) Annualized Net Income; Corporations. For 
2 corporations,
net income shall be placed on an 
3 annualized basis by multiplying
by 12 the taxable 
4 income 


5    (i) for the first 3 months of the taxable year, 
6 in the case of the
installment required to be paid 
7 in the 4th month,


8    (ii) for the first 3 months or for the first 5 
9 months of the taxable
year, in the case of the 
10 installment required to be paid in the 6th month,


11    (iii) for the first 6 months or for the first 8 
12 months of the taxable
year, in the case of the 
13 installment required to be paid in the 9th month, 
14 and


15    (iv) for the first 9 months or for the first 11 
16 months of the taxable
year, in the case of the 
17 installment required to be paid in the 12th month

18 of the taxable year,


19  then dividing the resulting amount by the number of 
20 months in the taxable
year (3, 5, 6, 8, 9, or 11 as the 
21 case may be).

22  (3) Notwithstanding any other provision of this 
23 subsection (c), in the case of a federally regulated 
24 exchange that elects to apportion its income under Section 
25 304(c-1) of this Act, the amount of each required 
26 installment due prior to June 30 of the first taxable year 
 
 
SB2148- 101 -LRB099 12695 HLH 36454 b


1 to which the election applies shall be 25% of the tax that 
2 would have been shown on the return for that taxable year 
3 if the taxpayer had not made such election. 
4 (d) Exceptions. Notwithstanding the provisions of the 
5preceding
subsections, the penalty imposed by subsection (a) 
6shall not
be imposed if the taxpayer was not required to file 
7an Illinois income
tax return for the preceding taxable year, 
8or, for individuals, if the
taxpayer had no tax liability for 
9the preceding taxable year and such year
was a taxable year of 
1012 months.
The penalty imposed by subsection (a) shall
also not 
11be imposed on any underpayments of estimated tax due before the

12effective date of this amendatory Act of 1998 which 
13underpayments are solely
attributable to the change in 
14apportionment from subsection (a) to subsection
(h) of Section 
15304. The provisions of this amendatory Act of 1998 apply to tax

16years ending on or after December 31, 1998.

17 (e) The penalty imposed for underpayment of estimated tax 
18by subsection
(a) of this Section shall not be imposed to the 
19extent that the Director
or his or her designate determines, 
20pursuant to Section 3-8 of the Uniform Penalty
and Interest Act 
21that the penalty should not be imposed.

22 (f) Definition of tax. For purposes of subsections (b) and 
23(c),
the term "tax" means the excess of the tax imposed under 
24Article 2 of
this Act, over the amounts credited against such 
25tax under Sections
601(b) (3) and (4).

26 (g) Application of Section in case of tax withheld under 
 
 
SB2148- 102 -LRB099 12695 HLH 36454 b


1Article 7.
For purposes of applying this Section:

2  (1) tax
withheld from compensation for the taxable year 
3 shall be deemed a payment
of estimated tax, and an equal 
4 part of such amount shall be deemed paid
on each 
5 installment date for such taxable year, unless the taxpayer

6 establishes the dates on which all amounts were actually 
7 withheld, in
which case the amounts so withheld shall be 
8 deemed payments of estimated
tax on the dates on which such 
9 amounts were actually withheld;

10  (2) amounts timely paid by a partnership, Subchapter S 
11 corporation, or trust on behalf of a partner, shareholder, 
12 or beneficiary pursuant to subsection (f) of Section 502 or 
13 Section 709.5 and claimed as a payment of estimated tax 
14 shall be deemed a payment of estimated tax made on the last 
15 day of the taxable year of the partnership, Subchapter S 
16 corporation, or trust for which the income from the 
17 withholding is made was computed; and
18  (3) all other amounts pursuant to Article 7 shall be 
19 deemed a payment of estimated tax on the date the payment 
20 is made to the taxpayer of the amount from which the tax is 
21 withheld.

22 (g-5) Amounts withheld under the State Salary and Annuity 
23Withholding
Act. An individual who has amounts withheld under 
24paragraph (10) of Section 4
of the State Salary and Annuity 
25Withholding Act may elect to have those amounts
treated as 
26payments of estimated tax made on the dates on which those 
 
 
SB2148- 103 -LRB099 12695 HLH 36454 b


1amounts
are actually withheld.

2 (g-10) Notwithstanding any other provision of law, no 
3penalty shall apply with respect to an underpayment of 
4estimated tax for the first, second, or third quarter of any 
5taxable year ending on or after December 31, 2015 and ending 
6prior to December 31, 2016 if (i) the underpayment was due to 
7the changes made by this amendatory Act of the 99th General 
8Assembly, (ii) the payment was otherwise timely made, and (iii) 
9the balance due is included with the taxpayer's estimated tax 
10payment for the fourth quarter. 
11 (i) Short taxable year. The application of this Section to

12taxable years of less than 12 months shall be in accordance 
13with
regulations prescribed by the Department.

14 The changes in this Section made by Public Act 84-127 shall 
15apply to
taxable years ending on or after January 1, 1986.

16(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11; 
1797-636, eff. 6-1-12.)





18 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)


19 Sec. 1501. Definitions. 

20 (a) In general. When used in this Act, where not
otherwise 
21distinctly expressed or manifestly incompatible with the 
22intent
thereof:


23  (1) Business income. The term "business income" means 
24 all income that may be treated as apportionable business 
25 income under the Constitution of the United States. 
 
 
SB2148- 104 -LRB099 12695 HLH 36454 b


1 Business income is net of the deductions allocable thereto. 
2 Such term does not include compensation
or the deductions 
3 allocable thereto.
For each taxable year beginning on or 
4 after January 1, 2003, a taxpayer may
elect to treat all 
5 income other than compensation as business income. This

6 election shall be made in accordance with rules adopted by 
7 the Department and,
once made, shall be irrevocable.

8  (1.5) Captive real estate investment trust:

9   (A) The term "captive real estate investment 
10 trust" means a corporation, trust, or association:

11    (i) that is considered a real estate 
12 investment trust for the taxable year under 
13 Section 856 of the Internal Revenue Code;

14    (ii) the certificates of beneficial interest 
15 or shares of which are not regularly traded on an 
16 established securities market; and
17    (iii) of which more than 50% of the voting 
18 power or value of the beneficial interest or 
19 shares, at any time during the last half of the 
20 taxable year, is owned or controlled, directly, 
21 indirectly, or constructively, by a single 
22 corporation.
23   (B) The term "captive real estate investment 
24 trust" does not include:
25    (i) a real estate investment trust of which 
26 more than 50% of the voting power or value of the 
 
 
SB2148- 105 -LRB099 12695 HLH 36454 b


1 beneficial interest or shares is owned or 
2 controlled, directly, indirectly, or 
3 constructively, by:
4     (a) a real estate investment trust, other 
5 than a captive real estate investment trust;
6     (b) a person who is exempt from taxation 
7 under Section 501 of the Internal Revenue Code, 
8 and who is not required to treat income 
9 received from the real estate investment trust 
10 as unrelated business taxable income under 
11 Section 512 of the Internal Revenue Code;
12     (c) a listed Australian property trust, if 
13 no more than 50% of the voting power or value 
14 of the beneficial interest or shares of that 
15 trust, at any time during the last half of the 
16 taxable year, is owned or controlled, directly 
17 or indirectly, by a single person;
18     (d) an entity organized as a trust, 
19 provided a listed Australian property trust 
20 described in subparagraph (c) owns or 
21 controls, directly or indirectly, or 
22 constructively, 75% or more of the voting power 
23 or value of the beneficial interests or shares 
24 of such entity; or
25     (e) an entity that is organized outside of 
26 the laws of the United States and that 
 
 
SB2148- 106 -LRB099 12695 HLH 36454 b


1 satisfies all of the following criteria:
2      (1) at least 75% of the entity's total 
3 asset value at the close of its taxable 
4 year is represented by real estate assets 
5 (as defined in Section 856(c)(5)(B) of the 
6 Internal Revenue Code, thereby including 
7 shares or certificates of beneficial 
8 interest in any real estate investment 
9 trust), cash and cash equivalents, and 
10 U.S. Government securities;
11      (2) the entity is not subject to tax on 
12 amounts that are distributed to its 
13 beneficial owners or is exempt from 
14 entity-level taxation;
15      (3) the entity distributes at least 
16 85% of its taxable income (as computed in 
17 the jurisdiction in which it is organized) 
18 to the holders of its shares or 
19 certificates of beneficial interest on an 
20 annual basis;
21      (4) either (i) the shares or 
22 beneficial interests of the entity are 
23 regularly traded on an established 
24 securities market or (ii) not more than 10% 
25 of the voting power or value in the entity 
26 is held, directly, indirectly, or 
 
 
SB2148- 107 -LRB099 12695 HLH 36454 b


1 constructively, by a single entity or 
2 individual; and
3      (5) the entity is organized in a 
4 country that has entered into a tax treaty 
5 with the United States; or 
6    (ii) during its first taxable year for which it 
7 elects to be treated as a real estate investment 
8 trust under Section 856(c)(1) of the Internal 
9 Revenue Code, a real estate investment trust the 
10 certificates of beneficial interest or shares of 
11 which are not regularly traded on an established 
12 securities market, but only if the certificates of 
13 beneficial interest or shares of the real estate 
14 investment trust are regularly traded on an 
15 established securities market prior to the earlier 
16 of the due date (including extensions) for filing 
17 its return under this Act for that first taxable 
18 year or the date it actually files that return.
19   (C) For the purposes of this subsection (1.5), the 
20 constructive ownership rules prescribed under Section 
21 318(a) of the Internal Revenue Code, as modified by 
22 Section 856(d)(5) of the Internal Revenue Code, apply 
23 in determining the ownership of stock, assets, or net 
24 profits of any person.


25  (2) Commercial domicile. The term "commercial 
26 domicile" means the
principal
place from which the trade or 
 
 
SB2148- 108 -LRB099 12695 HLH 36454 b


1 business of the taxpayer is directed or managed.


2  (3) Compensation. The term "compensation" means wages, 
3 salaries,
commissions
and any other form of remuneration 
4 paid to employees for personal services.


5  (4) Corporation. The term "corporation" includes 
6 associations, joint-stock
companies, insurance companies 
7 and cooperatives. Any entity, including a
limited 
8 liability company formed under the Illinois Limited 
9 Liability Company
Act, shall be treated as a corporation if 
10 it is so classified for federal
income tax purposes.



11  (5) Department. The term "Department" means the 
12 Department of Revenue of
this State.


13  (6) Director. The term "Director" means the Director of 
14 Revenue of this
State.


15  (7) Fiduciary. The term "fiduciary" means a guardian, 
16 trustee, executor,
administrator, receiver, or any person 
17 acting in any fiduciary capacity for any
person.


18  (8) Financial organization.


19   (A) The term "financial organization" means
any

20 bank, bank holding company, trust company, savings 
21 bank, industrial bank,
land bank, safe deposit 
22 company, private banker, savings and loan association,

23 building and loan association, credit union, currency 
24 exchange, cooperative
bank, small loan company, sales 
25 finance company, investment company, or any
person 
26 which is owned by a bank or bank holding company. For 
 
 
SB2148- 109 -LRB099 12695 HLH 36454 b


1 the purpose of
this Section a "person" will include 
2 only those persons which a bank holding
company may 
3 acquire and hold an interest in, directly or 
4 indirectly, under the
provisions of the Bank Holding 
5 Company Act of 1956 (12 U.S.C. 1841, et seq.),
except 
6 where interests in any person must be disposed of 
7 within certain
required time limits under the Bank 
8 Holding Company Act of 1956.


9   (B) For purposes of subparagraph (A) of this 
10 paragraph, the term
"bank" includes (i) any entity that 
11 is regulated by the Comptroller of the
Currency under 
12 the National Bank Act, or by the Federal Reserve Board, 
13 or by
the
Federal Deposit Insurance Corporation and 
14 (ii) any federally or State chartered
bank
operating as 
15 a credit card bank.


16   (C) For purposes of subparagraph (A) of this 
17 paragraph, the term
"sales finance company" has the 
18 meaning provided in the following item (i) or
(ii):


19    (i) A person primarily engaged in one or more 
20 of the following
businesses: the business of 
21 purchasing customer receivables, the business
of 
22 making loans upon the security of customer 
23 receivables, the
business of making loans for the 
24 express purpose of funding purchases of
tangible 
25 personal property or services by the borrower, or 
26 the business of
finance leasing. For purposes of 
 
 
SB2148- 110 -LRB099 12695 HLH 36454 b


1 this item (i), "customer receivable"
means:


2     (a) a retail installment contract or 
3 retail charge agreement within
the
meaning
of 
4 the Sales Finance Agency Act, the Retail 
5 Installment Sales Act, or the
Motor Vehicle 
6 Retail Installment Sales Act;


7     (b) an installment, charge, credit, or 
8 similar contract or agreement
arising from
the 
9 sale of tangible personal property or services 
10 in a transaction involving
a deferred payment 
11 price payable in one or more installments 
12 subsequent
to the sale; or


13     (c) the outstanding balance of a contract 
14 or agreement described in
provisions
(a) or (b) 
15 of this item (i).


16    A customer receivable need not provide for 
17 payment of interest on
deferred
payments. A sales 
18 finance company may purchase a customer receivable 
19 from, or
make a loan secured by a customer 
20 receivable to, the seller in the original

21 transaction or to a person who purchased the 
22 customer receivable directly or
indirectly from 
23 that seller.


24    (ii) A corporation meeting each of the 
25 following criteria:


26     (a) the corporation must be a member of an 
 
 
SB2148- 111 -LRB099 12695 HLH 36454 b


1 "affiliated group" within
the
meaning of 
2 Section 1504(a) of the Internal Revenue Code, 
3 determined
without regard to Section 1504(b) 
4 of the Internal Revenue Code;


5     (b) more than 50% of the gross income of 
6 the corporation for the
taxable
year
must be 
7 interest income derived from qualifying loans. 
8 A "qualifying
loan" is a loan made to a member 
9 of the corporation's affiliated group that

10 originates customer receivables (within the 
11 meaning of item (i)) or to whom
customer 
12 receivables originated by a member of the 
13 affiliated group have been
transferred, to
the 
14 extent the average outstanding balance of 
15 loans from that corporation
to members of its 
16 affiliated group during the taxable year do not 
17 exceed
the limitation amount for that 
18 corporation. The "limitation amount" for a

19 corporation is the average outstanding 
20 balances during the taxable year of
customer 
21 receivables (within the meaning of item (i)) 
22 originated by
all members of the affiliated 
23 group.
If the average outstanding balances of 
24 the
loans made by a corporation to members of 
25 its affiliated group exceed the
limitation 
26 amount, the interest income of that 
 
 
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1 corporation from qualifying
loans shall be 
2 equal to its interest income from loans to 
3 members of its
affiliated groups times a 
4 fraction equal to the limitation amount 
5 divided by
the average outstanding balances of 
6 the loans made by that corporation to
members 
7 of its affiliated group;


8     (c) the total of all shareholder's equity 
9 (including, without
limitation,
paid-in

10 capital on common and preferred stock and 
11 retained earnings) of the
corporation plus the 
12 total of all of its loans, advances, and other

13 obligations payable or owed to members of its 
14 affiliated group may not
exceed 20% of the 
15 total assets of the corporation at any time 
16 during the tax
year; and


17     (d) more than 50% of all interest-bearing 
18 obligations of the
affiliated group payable to 
19 persons outside the group determined in 
20 accordance
with generally accepted accounting 
21 principles must be obligations of the

22 corporation.


23   This amendatory Act of the 91st General Assembly is 
24 declaratory of
existing
law.


25   (D) Subparagraphs
(B) and (C) of this paragraph are 
26 declaratory of
existing law and apply retroactively, 
 
 
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1 for all tax years beginning on or before
December 31, 
2 1996,
to all original returns, to all amended returns 
3 filed no later than 30
days after the effective date of 
4 this amendatory Act of 1996, and to all
notices issued 
5 on or before the effective date of this amendatory Act 
6 of 1996
under subsection (a) of Section 903, subsection 
7 (a) of Section 904,
subsection (e) of Section 909, or 
8 Section 912.
A taxpayer that is a "financial 
9 organization" that engages in any transaction
with an 
10 affiliate shall be a "financial organization" for all 
11 purposes of this
Act.


12   (E) For all tax years beginning on or
before 
13 December 31, 1996, a taxpayer that falls within the 
14 definition
of a
"financial organization" under 
15 subparagraphs (B) or (C) of this paragraph, but
who 
16 does
not fall within the definition of a "financial 
17 organization" under the Proposed
Regulations issued by 
18 the Department of Revenue on July 19, 1996, may

19 irrevocably elect to apply the Proposed Regulations 
20 for all of those years as
though the Proposed 
21 Regulations had been lawfully promulgated, adopted, 
22 and in
effect for all of those years. For purposes of 
23 applying subparagraphs (B) or
(C) of
this
paragraph to 
24 all of those years, the election allowed by this 
25 subparagraph
applies only to the taxpayer making the 
26 election and to those members of the
taxpayer's unitary 
 
 
SB2148- 114 -LRB099 12695 HLH 36454 b


1 business group who are ordinarily required to 
2 apportion
business income under the same subsection of 
3 Section 304 of this Act as the
taxpayer making the 
4 election. No election allowed by this subparagraph 
5 shall
be made under a claim
filed under subsection (d) 
6 of Section 909 more than 30 days after the
effective 
7 date of this amendatory Act of 1996.


8   (F) Finance Leases. For purposes of this 
9 subsection, a finance lease
shall be treated as a loan 
10 or other extension of credit, rather than as a
lease,

11 regardless of how the transaction is characterized for 
12 any other purpose,
including the purposes of any 
13 regulatory agency to which the lessor is subject.
A 
14 finance lease is any transaction in the form of a lease 
15 in which the lessee
is treated as the owner of the 
16 leased asset entitled to any deduction for

17 depreciation allowed under Section 167 of the Internal 
18 Revenue Code.


19  (9) Fiscal year. The term "fiscal year" means an 
20 accounting period of
12 months ending on the last day of 
21 any month other than December.

22  (9.5) Fixed place of business. The term "fixed place of 
23 business" has the same meaning as that term is given in 
24 Section 864 of the Internal Revenue Code and the related 
25 Treasury regulations. 

26  (10) Includes and including. The terms "includes" and 
 
 
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1 "including" when
used in a definition contained in this Act 
2 shall not be deemed to exclude
other things otherwise 
3 within the meaning of the term defined.


4  (11) Internal Revenue Code. The term "Internal Revenue 
5 Code" means the
United States Internal Revenue Code of 1954 
6 or any successor law or laws
relating to federal income 
7 taxes in effect for the taxable year.

8  (11.5) Investment partnership.
9   (A) The term "investment partnership" means any 
10 entity that is treated as a partnership for federal 
11 income tax purposes that meets the following 
12 requirements:
13    (i) no less than 90% of the partnership's cost 
14 of its total assets consists of qualifying 
15 investment securities, deposits at banks or other 
16 financial institutions, and office space and 
17 equipment reasonably necessary to carry on its 
18 activities as an investment partnership;
19    (ii) no less than 90% of its gross income 
20 consists of interest, dividends, and gains from 
21 the sale or exchange of qualifying investment 
22 securities; and

23    (iii) the partnership is not a dealer in 
24 qualifying investment securities.
25   (B) For purposes of this paragraph (11.5), the term 
26 "qualifying investment securities" includes all of the 
 
 
SB2148- 116 -LRB099 12695 HLH 36454 b


1 following:

2    (i) common stock, including preferred or debt 
3 securities convertible into common stock, and 
4 preferred stock;
5    (ii) bonds, debentures, and other debt 
6 securities;
7    (iii) foreign and domestic currency deposits 
8 secured by federal, state, or local governmental 
9 agencies;
10    (iv) mortgage or asset-backed securities 
11 secured by federal, state, or local governmental 
12 agencies;
13    (v) repurchase agreements and loan 
14 participations;
15    (vi) foreign currency exchange contracts and 
16 forward and futures contracts on foreign 
17 currencies;
18    (vii) stock and bond index securities and 
19 futures contracts and other similar financial 
20 securities and futures contracts on those 
21 securities;

22    (viii) options for the purchase or sale of any 
23 of the securities, currencies, contracts, or 
24 financial instruments described in items (i) to 
25 (vii), inclusive;

26    (ix) regulated futures contracts;

 
 
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1    (x) commodities (not described in Section 
2 1221(a)(1) of the Internal Revenue Code) or 
3 futures, forwards, and options with respect to 
4 such commodities, provided, however, that any item 
5 of a physical commodity to which title is actually 
6 acquired in the partnership's capacity as a dealer 
7 in such commodity shall not be a qualifying 
8 investment security;


9    (xi) derivatives; and

10    (xii) a partnership interest in another 
11 partnership that is an investment partnership.


12  (12) Mathematical error. The term "mathematical error" 
13 includes the
following types of errors, omissions, or 
14 defects in a return filed by a
taxpayer which prevents 
15 acceptance of the return as filed for processing:


16   (A) arithmetic errors or incorrect computations on 
17 the return or
supporting schedules;


18   (B) entries on the wrong lines;


19   (C) omission of required supporting forms or 
20 schedules or the omission
of the information in whole 
21 or in part called for thereon; and


22   (D) an attempt to claim, exclude, deduct, or 
23 improperly report, in a
manner
directly contrary to the 
24 provisions of the Act and regulations thereunder
any 
25 item of income, exemption, deduction, or credit.


26  (13) Nonbusiness income. The term "nonbusiness income" 
 
 
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1 means all income
other than business income or 
2 compensation.


3  (14) Nonresident. The term "nonresident" means a 
4 person who is not a
resident.


5  (15) Paid, incurred and accrued. The terms "paid", 
6 "incurred" and
"accrued"
shall be construed according to 
7 the method of accounting upon the basis
of which the 
8 person's base income is computed under this Act.


9  (16) Partnership and partner. The term "partnership" 
10 includes a syndicate,
group, pool, joint venture or other 
11 unincorporated organization, through
or by means of which 
12 any business, financial operation, or venture is carried

13 on, and which is not, within the meaning of this Act, a 
14 trust or estate
or a corporation; and the term "partner" 
15 includes a member in such syndicate,
group, pool, joint 
16 venture or organization.


17  The term "partnership" includes any entity, including 
18 a limited
liability company formed under the Illinois

19 Limited Liability Company Act, classified as a partnership 
20 for federal income tax purposes.


21  The term "partnership" does not include a syndicate, 
22 group, pool,
joint venture, or other unincorporated 
23 organization established for the
sole purpose of playing 
24 the Illinois State Lottery.


25  (17) Part-year resident. The term "part-year resident" 
26 means an individual
who became a resident during the 
 
 
SB2148- 119 -LRB099 12695 HLH 36454 b


1 taxable year or ceased to be a resident
during the taxable 
2 year. Under Section 1501(a)(20)(A)(i) residence
commences 
3 with presence in this State for other than a temporary or 
4 transitory
purpose and ceases with absence from this State 
5 for other than a temporary or
transitory purpose. Under 
6 Section 1501(a)(20)(A)(ii) residence commences
with the 
7 establishment of domicile in this State and ceases with the

8 establishment of domicile in another State.


9  (18) Person. The term "person" shall be construed to 
10 mean and include
an individual, a trust, estate, 
11 partnership, association, firm, company,
corporation, 
12 limited liability company, or fiduciary. For purposes of 
13 Section
1301 and 1302 of this Act, a "person" means (i) an 
14 individual, (ii) a
corporation, (iii) an officer, agent, or 
15 employee of a
corporation, (iv) a member, agent or employee 
16 of a partnership, or (v)
a member,
manager, employee, 
17 officer, director, or agent of a limited liability company

18 who in such capacity commits an offense specified in 
19 Section 1301 and 1302.


20  (18A) Records. The term "records" includes all data 
21 maintained by the
taxpayer, whether on paper, microfilm, 
22 microfiche, or any type of
machine-sensible data 
23 compilation.


24  (19) Regulations. The term "regulations" includes 
25 rules promulgated and
forms prescribed by the Department.


26  (20) Resident. The term "resident" means:


 
 
SB2148- 120 -LRB099 12695 HLH 36454 b


1   (A) an individual (i) who is
in this State for 
2 other than a temporary or transitory purpose during the

3 taxable year; or (ii) who is domiciled in this State 
4 but is absent from
the State for a temporary or 
5 transitory purpose during the taxable year;


6   (B) The estate of a decedent who at his or her 
7 death was domiciled in
this
State;


8   (C) A trust created by a will of a decedent who at 
9 his death was
domiciled
in this State; and


10   (D) An irrevocable trust, the grantor of which was 
11 domiciled in this
State
at the time such trust became 
12 irrevocable. For purpose of this subparagraph,
a trust 
13 shall be considered irrevocable to the extent that the 
14 grantor is
not treated as the owner thereof under 
15 Sections 671 through 678 of the Internal
Revenue Code.


16  (21) Sales. The term "sales" means all gross receipts 
17 of the taxpayer
not allocated under Sections 301, 302 and 
18 303.


19  (22) State. The term "state" when applied to a 
20 jurisdiction other than
this State means any state of the 
21 United States, the District of Columbia,
the Commonwealth 
22 of Puerto Rico, any Territory or Possession of the United

23 States, and any foreign country, or any political 
24 subdivision of any of the
foregoing. For purposes of the 
25 foreign tax credit under Section 601, the
term "state" 
26 means any state of the United States, the District of 
 
 
SB2148- 121 -LRB099 12695 HLH 36454 b


1 Columbia,
the Commonwealth of Puerto Rico, and any 
2 territory or possession of the
United States, or any 
3 political subdivision of any of the foregoing,
effective 
4 for tax years ending on or after December 31, 1989.


5  (23) Taxable year. The term "taxable year" means the 
6 calendar year, or
the fiscal year ending during such 
7 calendar year, upon the basis of which
the base income is 
8 computed under this Act. "Taxable year" means, in the
case 
9 of a return made for a fractional part of a year under the 
10 provisions
of this Act, the period for which such return is 
11 made.


12  (24) Taxpayer. The term "taxpayer" means any person 
13 subject to the tax
imposed by this Act.


14  (25) International banking facility. The term 
15 international banking
facility shall have the same meaning 
16 as is set forth in the Illinois Banking
Act or as is set 
17 forth in the laws of the United States or regulations of

18 the Board of Governors of the Federal Reserve System.


19  (26) Income Tax Return Preparer.


20   (A) The term "income tax return preparer"
means any 
21 person who prepares for compensation, or who employs 
22 one or more
persons to prepare for compensation, any 
23 return of tax imposed by this Act
or any claim for 
24 refund of tax imposed by this Act. The preparation of a

25 substantial portion of a return or claim for refund 
26 shall be treated as
the preparation of that return or 
 
 
SB2148- 122 -LRB099 12695 HLH 36454 b


1 claim for refund.


2   (B) A person is not an income tax return preparer 
3 if all he or she does
is


4    (i) furnish typing, reproducing, or other 
5 mechanical assistance;


6    (ii) prepare returns or claims for refunds for 
7 the employer by whom he
or she is regularly and 
8 continuously employed;


9    (iii) prepare as a fiduciary returns or claims 
10 for refunds for any
person; or


11    (iv) prepare claims for refunds for a taxpayer 
12 in response to any
notice
of deficiency issued to 
13 that taxpayer or in response to any waiver of

14 restriction after the commencement of an audit of 
15 that taxpayer or of another
taxpayer if a 
16 determination in the audit of the other taxpayer 
17 directly or
indirectly affects the tax liability 
18 of the taxpayer whose claims he or she is

19 preparing.


20  (27) Unitary business group. 
21   (A) The term "unitary business group" means
a group 
22 of persons related through common ownership whose 
23 business activities
are integrated with, dependent 
24 upon and contribute to each other. The group
will not 
25 include those members whose business activity outside 
26 the United
States is 80% or more of any such member's 
 
 
SB2148- 123 -LRB099 12695 HLH 36454 b


1 total business activity; for
purposes of this 
2 paragraph and clause (a)(3)(B)(ii) of Section 304,

3 business
activity within the United States shall be 
4 measured by means of the factors
ordinarily applicable 
5 under subsections (a), (b), (c), (d), or (h)
of Section

6 304 except that, in the case of members ordinarily 
7 required to apportion
business income by means of the 3 
8 factor formula of property, payroll and sales

9 specified in subsection (a) of Section 304, including 
10 the
formula as weighted in subsection (h) of Section 
11 304, such members shall
not use the sales factor in the 
12 computation and the results of the property
and payroll 
13 factor computations of subsection (a) of Section 304 
14 shall be
divided by 2 (by one if either
the property or 
15 payroll factor has a denominator of zero). The 
16 computation
required by the preceding sentence shall, 
17 in each case, involve the division of
the member's 
18 property, payroll, or revenue miles in the United 
19 States,
insurance premiums on property or risk in the 
20 United States, or financial
organization business 
21 income from sources within the United States, as the

22 case may be, by the respective worldwide figures for 
23 such items. Common
ownership in the case of 
24 corporations is the direct or indirect control or

25 ownership of more than 50% of the outstanding voting 
26 stock of the persons
carrying on unitary business 
 
 
SB2148- 124 -LRB099 12695 HLH 36454 b


1 activity. Unitary business activity can
ordinarily be 
2 illustrated where the activities of the members are: 
3 (1) in the
same general line (such as manufacturing, 
4 wholesaling, retailing of tangible
personal property, 
5 insurance, transportation or finance); or (2) are 
6 steps in a
vertically structured enterprise or process 
7 (such as the steps involved in the
production of 
8 natural resources, which might include exploration, 
9 mining,
refining, and marketing); and, in either 
10 instance, the members are functionally
integrated 
11 through the exercise of strong centralized management 
12 (where, for
example, authority over such matters as 
13 purchasing, financing, tax compliance,
product line, 
14 personnel, marketing and capital investment is not 
15 left to each
member).

16   (B) In no event, for taxable years ending prior to 
17 December 31, 2015, shall any
unitary business group 
18 include members
which are ordinarily required to 
19 apportion business income under different
subsections 
20 of Section 304 except that for tax years ending on or 
21 after
December 31, 1987 this prohibition shall not 
22 apply to a holding company that would otherwise be a 
23 member of a unitary business group with taxpayers that 
24 apportion business income under any of subsections 
25 (b), (c), (c-1), or (d) of Section 304. If a unitary 
26 business
group would, but for the preceding sentence, 
 
 
SB2148- 125 -LRB099 12695 HLH 36454 b


1 include members that are
ordinarily required to 
2 apportion business income under different subsections 
3 of
Section 304, then for each subsection of Section 304 
4 for which there are two or
more members, there shall be 
5 a separate unitary business group composed of such

6 members. For purposes of the preceding two sentences, a 
7 member is "ordinarily
required to apportion business 
8 income" under a particular subsection of Section
304 if 
9 it would be required to use the apportionment method 
10 prescribed by such
subsection except for the fact that 
11 it derives business income solely from
Illinois. As 
12 used in this paragraph, the phrase "United States" 
13 means only the 50 states and the District of Columbia, 
14 but does not include any territory or possession of the 
15 United States or any area over which the United States 
16 has asserted jurisdiction or claimed exclusive rights 
17 with respect to the exploration for or exploitation of 
18 natural resources.

19   (C) Holding companies.
20    (i) For purposes of this subparagraph, a 
21 "holding company" is a corporation (other than a 
22 corporation that is a financial organization under 
23 paragraph (8) of this subsection (a) of Section 
24 1501 because it is a bank holding company under the 
25 provisions of the Bank Holding Company Act of 1956 
26 (12 U.S.C. 1841, et seq.) or because it is owned by 
 
 
SB2148- 126 -LRB099 12695 HLH 36454 b


1 a bank or a bank holding company) that owns a 
2 controlling interest in one or more other 
3 taxpayers ("controlled taxpayers"); that, during 
4 the period that includes the taxable year and the 2 
5 immediately preceding taxable years or, if the 
6 corporation was formed during the current or 
7 immediately preceding taxable year, the taxable 
8 years in which the corporation has been in 
9 existence, derived substantially all its gross 
10 income from dividends, interest, rents, royalties, 
11 fees or other charges received from controlled 
12 taxpayers for the provision of services, and gains 
13 on the sale or other disposition of interests in 
14 controlled taxpayers or in property leased or 
15 licensed to controlled taxpayers or used by the 
16 taxpayer in providing services to controlled 
17 taxpayers; and that incurs no substantial expenses 
18 other than expenses (including interest and other 
19 costs of borrowing) incurred in connection with 
20 the acquisition and holding of interests in 
21 controlled taxpayers and in the provision of 
22 services to controlled taxpayers or in the leasing 
23 or licensing of property to controlled taxpayers.
24    (ii) The income of a holding company which is a 
25 member of more than one unitary business group 
26 shall be included in each unitary business group of 
 
 
SB2148- 127 -LRB099 12695 HLH 36454 b


1 which it is a member on a pro rata basis, by 
2 including in each unitary business group that 
3 portion of the base income of the holding company 
4 that bears the same proportion to the total base 
5 income of the holding company as the gross receipts 
6 of the unitary business group bears to the combined 
7 gross receipts of all unitary business groups (in 
8 both cases without regard to the holding company) 
9 or on any other reasonable basis, consistently 
10 applied.
11    (iii) A holding company shall apportion its 
12 business income under the subsection of Section 
13 304 used by the other members of its unitary 
14 business group. The apportionment factors of a 
15 holding company which would be a member of more 
16 than one unitary business group shall be included 
17 with the apportionment factors of each unitary 
18 business group of which it is a member on a pro 
19 rata basis using the same method used in clause 
20 (ii).
21    (iv) The provisions of this subparagraph (C) 
22 are intended to clarify existing law.
23   (D) If including the base income and factors of a 
24 holding company in more than one unitary business group 
25 under subparagraph (C) does not fairly reflect the 
26 degree of integration between the holding company and 
 
 
SB2148- 128 -LRB099 12695 HLH 36454 b


1 one or more of the unitary business groups, the 
2 dependence of the holding company and one or more of 
3 the unitary business groups upon each other, or the 
4 contributions between the holding company and one or 
5 more of the unitary business groups, the holding 
6 company may petition the Director, under the 
7 procedures provided under Section 304(f), for 
8 permission to include all base income and factors of 
9 the holding company only with members of a unitary 
10 business group apportioning their business income 
11 under one subsection of subsections (a), (b), (c), or 
12 (d) of Section 304. If the petition is granted, the 
13 holding company shall be included in a unitary business 
14 group only with persons apportioning their business 
15 income under the selected subsection of Section 304 
16 until the Director grants a petition of the holding 
17 company either to be included in more than one unitary 
18 business group under subparagraph (C) or to include its 
19 base income and factors only with members of a unitary 
20 business group apportioning their business income 
21 under a different subsection of Section 304. 
22   (E) If the unitary business group members' 
23 accounting periods differ,
the common parent's 
24 accounting period or, if there is no common parent, the

25 accounting period of the member that is expected to 
26 have, on a recurring basis,
the greatest Illinois 
 
 
SB2148- 129 -LRB099 12695 HLH 36454 b


1 income tax liability must be used to determine whether 
2 to
use the apportionment method provided in subsection 
3 (a) or subsection (h) of
Section 304. The
prohibition 
4 against membership in a unitary business group for 
5 taxpayers
ordinarily required to apportion income 
6 under different subsections of Section
304 does not 
7 apply to taxpayers required to apportion income under 
8 subsection
(a) and subsection (h) of Section
304. The 
9 provisions of this amendatory Act of 1998 apply to tax

10 years ending on or after December 31, 1998.


11  (28) Subchapter S corporation. The term "Subchapter S 
12 corporation"
means a corporation for which there is in 
13 effect an election under Section
1362 of the Internal 
14 Revenue Code, or for which there is a federal election
to 
15 opt out of the provisions of the Subchapter S Revision Act 
16 of 1982 and
have applied instead the prior federal 
17 Subchapter S rules as in effect on July
1, 1982.

18  (30) Foreign person. The term "foreign person" means 
19 any person who is a nonresident alien individual and any 
20 nonindividual entity, regardless of where created or 
21 organized, whose business activity outside the United 
22 States is 80% or more of the entity's total business 
23 activity.



24 (b) Other definitions.


25  (1) Words denoting number, gender, and so forth,
when 
 
 
SB2148- 130 -LRB099 12695 HLH 36454 b


1 used in this Act, where not otherwise distinctly expressed 
2 or manifestly
incompatible with the intent thereof:


3   (A) Words importing the singular include and apply 
4 to several persons,
parties or things;


5   (B) Words importing the plural include the 
6 singular; and


7   (C) Words importing the masculine gender include 
8 the feminine as well.


9  (2) "Company" or "association" as including successors 
10 and assigns. The
word "company" or "association", when used 
11 in reference to a corporation,
shall be deemed to embrace 
12 the words "successors and assigns of such company
or 
13 association", and in like manner as if these last-named 
14 words, or words
of similar import, were expressed.


15  (3) Other terms. Any term used in any Section of this 
16 Act with respect
to the application of, or in connection 
17 with, the provisions of any other
Section of this Act shall 
18 have the same meaning as in such other Section.

19(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11; 
2097-636, eff. 6-1-12.)



21 Section 99. Effective date. This Act takes effect upon 
22becoming law.