104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2279

Introduced 2/7/2025, by Sen. Robert Peters

SYNOPSIS AS INTRODUCED:

See Index

Creates the Responsibility in Firearm Legislation (RIFL) Act. Establishes a firearms manufacturer licensing program in the Department of Financial and Professional Regulation, with certain requirements, including that the sum of all fees for firearms manufacturer licenses shall be equal to the public health costs and financial burdens from firearm injuries and deaths. Provides that, beginning January 1, 2028, a manufacturer of firearms may not operate in this State without a license from the Department and that a manufacturer who violates this provision is subject to a civil penalty of up to $1,000,000 per month. Provides that, beginning January 1, 2028, a retailer may not sell a firearm to a consumer in this State from a manufacturer who does not have a license from the Department and that a retailer who violates this provision is subject to a civil penalty of up to $10,000 per violation, with certain requirements. Establishes the RIFL Fund as a special fund in the State treasury, with certain limitations. Provides that the proceeds from fees under the licensing program shall be deposited into the RIFL Fund. Establishes a financial assistance program in the Department with moneys from the RIFL Fund for financial assistance to victims of firearms and for other purposes. Provides that the Department shall contract with a program administrator to administer the financial assistance program, with certain requirements. Provides that the Department shall adopt rules for financial assistance to victims of firearms, with certain requirements, including regarding exemption from certain State taxes. Provides that the Department may contract with a program administrator to implement or administer any part of the Act, with certain requirements. Provides that the Illinois State Police shall report certain information to the Department. Provides that the Department may provide for other civil penalties of no more than $1,000 per violation. Provides that the Attorney General may enforce the Act. Makes other provisions. Amends the State Finance Act to make conforming changes. Amends the Illinois Income Tax Act to make conforming changes.

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A BILL FOR

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1 AN ACT concerning regulation.

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

3 represented in the General Assembly:

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

5 Responsibility in Firearm Legislation (RIFL) Act.

6 Section 5. Findings and purpose. The General Assembly

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

8 undue public health costs and financial burdens from injuries

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

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

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

12 licensing of manufacturers of firearms in this State and to

13 distribute the proceeds of license fees to victims of firearms

14 in this State.

15 Section 10. Definitions. In this Act:

16 "Consumer price index-u" means the index published by the

17 Bureau of Labor Statistics of the United States Department of

18 Labor that measures the average change in prices of goods and

19 services purchased by all urban consumers, United States city

20 average, all items, 1982-84 = 100.

21 "Department" means the Department of Financial and

22 Professional Regulation.

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

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

3 prescriptions drugs; mental health treatment provided by a

4 psychiatrist, psychologist, social worker, or behavioral

5 therapist; physical therapy, occupational therapy, and

6 rehabilitation services; funeral and burial; emergency

7 transportation; lost wages; emergency relocation; property

8 damage; legal services; or emergency child or dependent care.

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

10 who supplies firearms to retailers or other businesses that

11 sell firearms to consumers in this State.

12 "Firearm" has the meaning given in Section 1.1 of the

13 Firearm Owners Identification Card Act.

14 "Firearm injury or death" or "firearm injury" means an

15 injury to or the death of an individual that is caused by a

16 high-velocity projectile fired from a firearm. "Firearm

17 injury" includes firearm-related suicides and firearm-related

18 homicides.

19 "First-degree relative" means an individual's parent,

20 sibling, or child.

21 "Manufacturer of firearms" or "manufacturer" means a

22 person that manufactures and sells firearms to consumers,

23 distributors, or retailers in this State.

24 "Permanent disability" means a permanent physical

25 impairment to a person that is caused by a firearm injury and

26 either prevents the person from working or performing normal

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1 activities or results in paralysis or extended treatment in a

2 long-term acute care facility.

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

4 sells firearms directly to consumers in this State.

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

6 Firearm Legislation (RIFL) License granted by the Department

7 under Section 15 of this Act or the rules adopted under this

8 Act.

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

10 Legislation (RIFL) Fund created under this Act.

11 "Second-degree relative" means an individual's aunt,

12 uncle, grandparent, grandchild, niece, half-sibling, or other

13 blood relative who is one generation removed.

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

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

16 "Victim of firearms" or "Victim" means (i) an individual

17 who is killed by a firearm injury or suffers a firearm injury

18 or (ii) the next of kin, legal guardian, dependent,

19 first-degree relative, second-degree relative, or employer of

20 an individual described in item (i).

21 Section 15. RIFL Licensing Program.

22 (a) The Responsibility in Firearm Legislation (RIFL)

23 Licensing Program is established in the Department for the

24 licensing of manufacturers of firearms.

25 (b) The Department shall notify all manufacturers that are

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1 subject to licensing under this Act.

2 (c) A manufacturer in this State shall be awarded a RIFL

3 License by the Department upon payment of the fee set by the

4 Department for the License.

5 (d) Manufacturers who have a license from the Department

6 shall be listed on an Internet website maintained by the

7 Department in order to ensure that manufacturers,

8 distributors, and retailers comply with the requirements of

9 this Act.

10 (e) The fees for a RIFL License shall be determined by the

11 Department annually based on the findings and purpose of this

12 Act and on the following:

13 (1) The total annual aggregate fee for all

14 manufacturers of firearms in this State shall be set by

15 the Department at an amount that the Department estimates

16 is equal to the public health costs and financial burdens

17 borne by the State and its residents as a result of firearm

18 injuries occurring in this State, as determined by the

19 Department based on the incidence of firearm injuries in

20 this State in the previous year, except that in the first

21 program year the total annual aggregate fee shall not

22 exceed $866,000,000.

23 (2) The total annual aggregate fee for all

24 manufacturers of firearms in this State shall annually

25 thereafter be increased by the annual unadjusted

26 percentage increase in the consumer price index-u for the

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1 12 months ending with the September preceding each

2 November 1, including all previous adjustments.

3 (3) The fee paid by a firearm manufacturer shall be

4 the portion of the total annual aggregate fee equal to the

5 market share of the firearm manufacturer, as determined by

6 rule of the Department.

7 (4) The fee paid by a firearm manufacturer under

8 paragraph (3) may be adjusted by the Department based on

9 the number of firearms recovered in a given year in

10 connection with incidents involving firearm injuries that

11 are linked to a specific manufacturer in the State,

12 regardless of modifications or accessories added to the

13 firearm after manufacturing, divided by the total number

14 of firearms recovered in connection with those incidents

15 in that same year.

16 (f) The Department shall provide information regarding the

17 specific amount for the fee for the license to each

18 manufacturer at least 90 days before the fee for the license is

19 due.

20 (g) The Department shall provide manufacturers with an

21 opportunity to dispute any fees levied for a license under

22 procedures established by rules adopted by the Department

23 under this Act.

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

25 Firearm Legislation (RIFL) Licensing Program shall be

26 deposited into the RIFL Fund established in Section 20 of this

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1 Act.

2 (i) Beginning January 1, 2028, a manufacturer of firearms

3 may not operate in this State without a license issued by the

4 Department under this Act.

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

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

7 does not have a license issued by the Department under this

8 Act.

9 Section 20. RIFL Fund. The Responsibility in Firearm

10 Legislation (RIFL) Fund is created as a special fund in the

11 State treasury. Proceeds from fees imposed for RIFL Licenses

12 under Section 15 of this Act or rules adopted under Section 15

13 of this Act shall be collected by the Department and deposited

14 into the Fund. Civil penalties collected under Section 40

15 shall be deposited into the Fund. Proceeds from interest or

16 dividends shall be reinvested into the Fund. Moneys in the

17 RIFL Fund, as directed by the Secretary of Financial and

18 Professional Regulation or the Secretary's designee, shall be

19 expended for financial assistance to victims of firearms in

20 this State under Section 25 of this Act or rules adopted under

21 Section 25 of this Act and for other purposes authorized under

22 this Act or rules adopted under this Act. Subsections (b) and

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

24 RIFL Fund.

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1 Section 25. RIFL Financial Assistance Program.

2 (a) The Responsibility in Firearm Legislation (RIFL)

3 Financial Assistance Program is established in the Department

4 for the purpose of providing financial assistance to victims

5 of firearms in this State.

6 (b) The Department shall, in consultation with the

7 Department of Insurance, contract with a program administrator

8 under Section 30 to administer the RIFL Financial Assistance

9 Program. The contract with the program administrator selected

10 by the Department shall include all requirements under this

11 Act and rules adopted by the Department under this Act

12 applicable to the duties of the program administrator.

13 (c) Moneys in the RIFL Fund shall be used for the financial

14 assistance under the Responsibility in Firearm Legislation

15 (RIFL) Financial Assistance Program established under this

16 Section.

17 (d) On or before July 1, 2027, the Department, in

18 consultation with the Department of Insurance, shall adopt

19 rules for the provision of financial assistance to victims of

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

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

22 and as much as practicable, for the following:

23 (1) Eligible claimants for financial assistance shall

24 include all victims as defined in this Act.

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

26 eligible for compensation through financial assistance

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

2 limited to, costs related to medical and mental health

3 care, rehabilitation, prescriptions, medical devices,

4 funeral, emergency transportation, lost wages, loss of

5 tuition, property damage, temporary relocation, property

6 disability accommodations, probate costs, replacement

7 services loss, loss of support, dependent replacement

8 service, short-term childcare, pain and suffering, hiring,

9 recruiting, paid time-off, training, and work

10 accommodation costs.

11 (3) The financial assistance from the RIFL Fund under

12 this Act shall compensate victims of firearms for all

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

14 to 3 years post-event, except in the event of permanent

15 disability. Individuals who sustain permanent disability

16 from firearm injury are eligible for compensation for the

17 duration of the claimant's life. The Department shall

18 directly pay providers of medical care, mental health

19 care, pharmaceutical services, and rehabilitative services

20 who have provided medical care, mental health care,

21 pharmaceutical services, or rehabilitative services that

22 are connected to a firearm injury to a victim of firearms

23 as part of this compensation.

24 (4) Out-of-State residents who have suffered firearm

25 injury or death in this State are eligible for in-State

26 medical and mental health care costs, and rehabilitation

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1 only, through this RIFL Financial Assistance Program.

2 (5) The compensation received through the RIFL

3 Financial Assistance Program is exempt from State taxes

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

5 of Section 203 of the Illinois Income Tax Act.

6 (6) If any other sources of reimbursement are

7 available to a victim, the fund must be reimbursed by

8 those sources for the costs it incurs paying claims.

9 (7) Claimants are responsible to provide medical

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

11 (8) Claim disputes shall be resolved by a claim

12 dispute review board established in the Department.

13 Claimants whose applications are denied may request review

14 within 30 days of denial by the claims dispute review

15 board. The dedicated review board shall issue a decision

16 within 60 days. Claimants may appeal decisions by the

17 claims dispute review board to the Court of Claims.

18 Section 30. Contracting.

19 (a) The Department may, in consultation with the

20 Department of Insurance, contract with a program administrator

21 to implement or administer any part of this Act, subject to the

22 Illinois Procurement Code.

23 (b) The program administrator must demonstrate:

24 (1) expertise in actuarial science, compensation or

25 mass tort programs, and public health policy;

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1 (2) independence from financial or operational ties to

2 the firearm industry or firearm advocacy organizations;

3 and

4 (3) transparency in operations with a publicly

5 accessible annual report detailing administrative costs,

6 personnel costs, claims distributed, and any other

7 information required by the Department.

8 (c) The program administrator shall submit quarterly and

9 annual reports to the Department detailing administrative

10 costs, personnel costs, claims distributed under Section 25,

11 and any other information required by the Department. The

12 annual reports under this Section shall be made publicly

13 available on a public website.

14 Section 35. RIFL firearm recovery reporting.

15 (a) The Illinois State Police shall report to the

16 Department the manufacturer, make, and model of all firearms

17 recovered in any incidents to which they respond that result

18 in a firearm injury.

19 (b) The Department shall make available on the

20 Department's public website the substance of the reports

21 received under subsection (a).

22 (c) The Department, in consultation with the Illinois

23 State Police, shall, by rule, establish procedures

24 implementing this Section.

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1 Section 40. Enforcement and penalties.

2 (a) The Attorney General shall have the authority to

3 investigate violations of this Act and bring civil actions to

4 enforce this Act. Any civil penalty collected under this Act

5 shall be deposited into the RIFL Fund.

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

7 15 is subject to a civil penalty of up to $1,000,000 per month,

8 for every month a continuing violation of that subsection

9 continues.

10 (c) A retailer who violates subsection (j) of Section 15

11 is subject to a civil penalty of up to $10,000 per violation.

12 It is an affirmative defense that a retailer reasonably relied

13 upon the list of manufacturers under Section 15 of this Act.

14 (d) The Department may adopt rules that provide for other

15 civil penalties for violations of this Act or rules adopted

16 under this Act of no more than $1,000 per violation.

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

18 equitable or other remedy in a court of competent jurisdiction

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

20 Section 45. Rulemaking. The Department shall adopt rules

21 implementing this Act.

22 Section 50. The State Finance Act is amended by changing

23 Section 5 and by adding Section 5.1030 as follows:

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1 (30 ILCS 105/5) (from Ch. 127, par. 141)

2 Sec. 5. Special funds.

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

4 designated as specified in the Sections which succeed this

5 Section 5 and precede Section 5d.

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

7 and Motor Vehicle Theft Prevention and Insurance Verification

8 Act and the Responsibility in Firearm Legislation (RIFL) Act,

9 when any special fund in the State Treasury is discontinued by

10 an Act of the General Assembly, any balance remaining therein

11 on the effective date of such Act shall be transferred to the

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

13 provide. Warrants outstanding against such discontinued fund

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

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

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

17 Legislation (RIFL) Act, when ~~When~~ any special fund in the

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

19 Comptroller may terminate the fund, and the balance remaining

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

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

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

23 Assembly shall repeal or amend all Sections of the statutes

24 creating or otherwise referring to that fund.

25 The Comptroller shall be allowed the discretion to

26 maintain or dissolve any federal trust fund which has been

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1 inactive for 18 months or longer.

2 (d) (Blank).

3 (e) (Blank).

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

5 103-616, eff. 7-1-24.)

6 (30 ILCS 105/5.1030 new)

7 Sec. 5.1030. The Responsibility in Firearm Legislation

8 (RIFL) Fund.

9 Section 55. The Illinois Income Tax Act is amended by

10 changing Section 203 as follows:

11 (35 ILCS 5/203)

12 Sec. 203. Base income defined.

13 (a) Individuals.

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

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

16 gross income for the taxable year as modified by paragraph

17 (2).

18 (2) Modifications. The adjusted gross income referred

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

20 the sum of the following amounts:

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

22 to the taxpayer as interest or dividends during the

23 taxable year to the extent excluded from gross income

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1 in the computation of adjusted gross income, except

2 stock dividends of qualified public utilities

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

4 Code;

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

6 this Act to the extent deducted from gross income in

7 the computation of adjusted gross income for the

8 taxable year;

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

10 the taxable year as a recovery or refund of real

11 property taxes paid with respect to the taxpayer's

12 principal residence under the Revenue Act of 1939 and

13 for which a deduction was previously taken under

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

15 1, 1991, the retrospective application date of Article

16 4 of Public Act 87-17. In the case of multi-unit or

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

18 the taxpayer's principal residence shall be that

19 portion of the total taxes for the entire property

20 which is attributable to such principal residence;

21 (D) An amount equal to the amount of the capital

22 gain deduction allowable under the Internal Revenue

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

24 computation of adjusted gross income;

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

26 adjusted gross income, equal to the amount of money

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1 withdrawn by the taxpayer in the taxable year from a

2 medical care savings account and the interest earned

3 on the account in the taxable year of a withdrawal

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

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

6 Section 20 of the Medical Care Savings Account Act of

7 2000;

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

9 1997, an amount equal to any eligible remediation

10 costs that the individual deducted in computing

11 adjusted gross income and for which the individual

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

13 (D-15) For taxable years 2001 and thereafter, an

14 amount equal to the bonus depreciation deduction taken

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

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

17 the Internal Revenue Code;

18 (D-16) If the taxpayer sells, transfers, abandons,

19 or otherwise disposes of property for which the

20 taxpayer was required in any taxable year to make an

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

22 an amount equal to the aggregate amount of the

23 deductions taken in all taxable years under

24 subparagraph (Z) with respect to that property.

25 If the taxpayer continues to own property through

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

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1 subtraction is allowed with respect to that property

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

3 allowed in any taxable year to make a subtraction

4 modification under subparagraph (Z), then an amount

5 equal to that subtraction modification.

6 The taxpayer is required to make the addition

7 modification under this subparagraph only once with

8 respect to any one piece of property;

9 (D-17) An amount equal to the amount otherwise

10 allowed as a deduction in computing base income for

11 interest paid, accrued, or incurred, directly or

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

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

14 member of the same unitary business group but for the

15 fact that foreign person's business activity outside

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

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. The addition modification

25 required by this subparagraph shall be reduced to the

26 extent that dividends were included in base income of

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1 the unitary group for the same taxable year and

2 received by the taxpayer or by a member of the

3 taxpayer's unitary business group (including amounts

4 included in gross income under Sections 951 through

5 964 of the Internal Revenue Code and amounts included

6 in gross income under Section 78 of the Internal

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

8 person to whom the interest was paid, accrued, or

9 incurred.

10 This paragraph shall not apply to the following:

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

12 incurred, directly or indirectly, to a person who

13 is subject in a foreign country or state, other

14 than a state which requires mandatory unitary

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

16 with respect to such interest; or

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

18 incurred, directly or indirectly, to a person if

19 the taxpayer can establish, based on a

20 preponderance of the evidence, both of the

21 following:

22 (a) the person, during the same taxable

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

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

25 (b) the transaction giving rise to the

26 interest expense between the taxpayer and the

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1 person did not have as a principal purpose the

2 avoidance of Illinois income tax, and is paid

3 pursuant to a contract or agreement that

4 reflects an arm's-length interest rate and

5 terms; or

6 (iii) the taxpayer can establish, based on

7 clear and convincing evidence, that the interest

8 paid, accrued, or incurred relates to a contract

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

10 and terms and the principal purpose for the

11 payment is not federal or Illinois tax avoidance;

12 or

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

14 incurred, directly or indirectly, to a person if

15 the taxpayer establishes by clear and convincing

16 evidence that the adjustments are unreasonable; or

17 if the taxpayer and the Director agree in writing

18 to the application or use of an alternative method

19 of apportionment under Section 304(f).

20 Nothing in this subsection shall preclude the

21 Director from making any other adjustment

22 otherwise allowed under Section 404 of this Act

23 for any tax year beginning after the effective

24 date of this amendment provided such adjustment is

25 made pursuant to regulation adopted by the

26 Department and such regulations provide methods

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1 and standards by which the Department will utilize

2 its authority under Section 404 of this Act;

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

4 expenses and costs otherwise allowed as a deduction in

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

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

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

8 foreign person who would be a member of the same

9 unitary business group but for the fact that the

10 foreign person's business activity outside the United

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

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

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

14 the same unitary business group but for the fact that

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

16 from being included in the unitary business group

17 because he or she is ordinarily required to apportion

18 business income under different subsections of Section

19 304. The addition modification required by this

20 subparagraph shall be reduced to the extent that

21 dividends were included in base income of the unitary

22 group for the same taxable year and received by the

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

24 business group (including amounts included in gross

25 income under Sections 951 through 964 of the Internal

26 Revenue Code and amounts included in gross income

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1 under Section 78 of the Internal Revenue Code) with

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

3 intangible expenses and costs were directly or

4 indirectly paid, incurred, or accrued. The preceding

5 sentence does not apply to the extent that the same

6 dividends caused a reduction to the addition

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

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

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

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

11 indirect acquisition, use, maintenance or management,

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

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

14 indirectly, from factoring transactions or discounting

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

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

17 similar expenses and costs. For purposes of this

18 subparagraph, "intangible property" includes patents,

19 patent applications, trade names, trademarks, service

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

21 similar types of intangible assets.

22 This paragraph shall not apply to the following:

23 (i) any item of intangible expenses or costs

24 paid, accrued, or incurred, directly or

25 indirectly, from a transaction with a person who

26 is subject in a foreign country or state, other

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1 than a state which requires mandatory unitary

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

3 with respect to such item; or

4 (ii) any item of intangible expense or cost

5 paid, accrued, or incurred, directly or

6 indirectly, if the taxpayer can establish, based

7 on a preponderance of the evidence, both of the

8 following:

9 (a) the person during the same taxable

10 year paid, accrued, or incurred, the

11 intangible expense or cost to a person that is

12 not a related member, and

13 (b) the transaction giving rise to the

14 intangible expense or cost between the

15 taxpayer and the person did not have as a

16 principal purpose the avoidance of Illinois

17 income tax, and is paid pursuant to a contract

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

19 or

20 (iii) any item of intangible expense or cost

21 paid, accrued, or incurred, directly or

22 indirectly, from a transaction with a person if

23 the taxpayer establishes by clear and convincing

24 evidence, that the adjustments are unreasonable;

25 or if the taxpayer and the Director agree in

26 writing to the application or use of an

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1 alternative method of apportionment under Section

2 304(f);

3 Nothing in this subsection shall preclude the

4 Director from making any other adjustment

5 otherwise allowed under Section 404 of this Act

6 for any tax year beginning after the effective

7 date of this amendment provided such adjustment is

8 made pursuant to regulation adopted by the

9 Department and such regulations provide methods

10 and standards by which the Department will utilize

11 its authority under Section 404 of this Act;

12 (D-19) For taxable years ending on or after

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

14 insurance premium expenses and costs otherwise allowed

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

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

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

18 business group but for the fact that the person is

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

20 included in the unitary business group because he or

21 she is ordinarily required to apportion business

22 income under different subsections of Section 304. The

23 addition modification required by this subparagraph

24 shall be reduced to the extent that dividends were

25 included in base income of the unitary group for the

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

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1 member of the taxpayer's unitary business group

2 (including amounts included in gross income under

3 Sections 951 through 964 of the Internal Revenue Code

4 and amounts included in gross income under Section 78

5 of the Internal Revenue Code) with respect to the

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

7 were directly or indirectly paid, incurred, or

8 accrued. The preceding sentence does not apply to the

9 extent that the same dividends caused a reduction to

10 the addition modification required under Section

11 203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this

12 Act;

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

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

15 2006, in the case of a distribution from a qualified

16 tuition program under Section 529 of the Internal

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

18 College Savings Pool created under Section 16.5 of the

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

20 Illinois Prepaid Tuition Trust Fund, an amount equal

21 to the amount excluded from gross income under Section

22 529(c)(3)(B). For taxable years beginning on or after

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

24 qualified tuition program under Section 529 of the

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

26 from a College Savings Pool created under Section 16.5

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

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

3 distribution from a qualified tuition program under

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

5 adopts and determines that its offering materials

6 comply with the College Savings Plans Network's

7 disclosure principles and (II) has made reasonable

8 efforts to inform in-state residents of the existence

9 of in-state qualified tuition programs by informing

10 Illinois residents directly and, where applicable, to

11 inform financial intermediaries distributing the

12 program to inform in-state residents of the existence

13 of in-state qualified tuition programs at least

14 annually, an amount equal to the amount excluded from

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

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

17 qualified tuition program has made reasonable efforts

18 if it makes disclosures (which may use the term

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

20 specifically refer to Illinois or its qualified

21 programs by name) (i) directly to prospective

22 participants in its offering materials or makes a

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

24 where applicable, to intermediaries selling the

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

26 out-of-state program distributes its offering

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1 materials;

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

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

4 qualified ABLE program under Section 529A of the

5 Internal Revenue Code, other than a distribution from

6 a qualified ABLE program created under Section 16.6 of

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

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

9 of the Internal Revenue Code;

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

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

12 a qualified tuition program under Section 529 of the

13 Internal Revenue Code that is administered by the

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

15 the amount of moneys previously deducted from base

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

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

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

19 from a qualified tuition program under Section 529 or

20 a qualified ABLE program under Section 529A of the

21 Internal Revenue Code that is administered by this

22 State to an ABLE account established under an

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

24 the contribution component of the transferred amount

25 that was previously deducted from base income under

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

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1 Section;

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

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

4 case of a nonqualified withdrawal or refund of moneys

5 from a qualified tuition program under Section 529 of

6 the Internal Revenue Code administered by the State

7 that is not used for qualified expenses at an eligible

8 education institution, an amount equal to the

9 contribution component of the nonqualified withdrawal

10 or refund that was previously deducted from base

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

12 provided that the withdrawal or refund did not result

13 from the beneficiary's death or disability. For

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

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

16 refund, as defined under Section 16.5 of the State

17 Treasurer Act, of moneys from a qualified tuition

18 program under Section 529 of the Internal Revenue Code

19 administered by the State, an amount equal to the

20 contribution component of the nonqualified withdrawal

21 or refund that was previously deducted from base

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

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

24 from a qualified ABLE program under Section 529A of

25 the Internal Revenue Code administered by the State

26 that is not used for qualified disability expenses, an

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1 amount equal to the contribution component of the

2 nonqualified withdrawal or refund that was previously

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

4 of this Section;

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

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

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

8 Act;

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

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

11 allowed under Section 199 of the Internal Revenue Code

12 for the taxable year;

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

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

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

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

17 following amounts:

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

19 2001, any amount included in such total in respect of

20 any compensation (including but not limited to any

21 compensation paid or accrued to a serviceman while a

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

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

24 Forces of the United States and in respect of any

25 compensation paid or accrued to a resident who as a

26 governmental employee was a prisoner of war or missing

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

2 resident in 1971 or thereafter for annual training

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

4 United States Code as a member of the Illinois

5 National Guard or, beginning with taxable years ending

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

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

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

9 in respect of any compensation (including but not

10 limited to any compensation paid or accrued to a

11 serviceman while a prisoner of war or missing in

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

13 of any component of the Armed Forces of the United

14 States and in respect of any compensation paid or

15 accrued to a resident who as a governmental employee

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

17 respect of any compensation paid to a resident in 2001

18 or thereafter by reason of being a member of the

19 Illinois National Guard or, beginning with taxable

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

21 National Guard of any other state. The provisions of

22 this subparagraph (E) are exempt from the provisions

23 of Section 250;

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

25 such total pursuant to the provisions of Sections

26 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and

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1 408 of the Internal Revenue Code, or included in such

2 total as distributions under the provisions of any

3 retirement or disability plan for employees of any

4 governmental agency or unit, or retirement payments to

5 retired partners, which payments are excluded in

6 computing net earnings from self employment by Section

7 1402 of the Internal Revenue Code and regulations

8 adopted pursuant thereto;

9 (G) The valuation limitation amount;

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

11 imposed by this Act which was refunded to the taxpayer

12 and included in such total for the taxable year;

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

14 such total pursuant to the provisions of Section 111

15 of the Internal Revenue Code as a recovery of items

16 previously deducted from adjusted gross income in the

17 computation of taxable income;

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

19 such total which were paid by a corporation which

20 conducts business operations in a River Edge

21 Redevelopment Zone or zones created under the River

22 Edge Redevelopment Zone Act, and conducts

23 substantially all of its operations in a River Edge

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

25 exempt from the provisions of Section 250;

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

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1 such total that were paid by a corporation that

2 conducts business operations in a federally designated

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

4 a High Impact Business located in Illinois; provided

5 that dividends eligible for the deduction provided in

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

7 shall not be eligible for the deduction provided under

8 this subparagraph (K);

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

10 1983, an amount equal to all social security benefits

11 and railroad retirement benefits included in such

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

13 Internal Revenue Code;

14 (M) With the exception of any amounts subtracted

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

16 all amounts disallowed as deductions by (i) Sections

17 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

18 and all amounts of expenses allocable to interest and

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

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

21 ending on or after August 13, 1999, Sections

22 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

23 Internal Revenue Code, plus, for taxable years ending

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

25 the Internal Revenue Code and, for taxable years

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

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1 included in gross income under Section 87 of the

2 Internal Revenue Code; the provisions of this

3 subparagraph are exempt from the provisions of Section

4 250;

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

6 such total which are exempt from taxation by this

7 State either by reason of its statutes or Constitution

8 or by reason of the Constitution, treaties or statutes

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

10 statute of this State that exempts income derived from

11 bonds or other obligations from the tax imposed under

12 this Act, the amount exempted shall be the interest

13 net of bond premium amortization;

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

15 job training project established pursuant to the Tax

16 Increment Allocation Redevelopment Act;

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

18 used to compute the federal income tax credit for

19 restoration of substantial amounts held under claim of

20 right for the taxable year pursuant to Section 1341 of

21 the Internal Revenue Code or of any itemized deduction

22 taken from adjusted gross income in the computation of

23 taxable income for restoration of substantial amounts

24 held under claim of right for the taxable year;

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

26 such total, received by the taxpayer as an

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1 acceleration in the payment of life, endowment or

2 annuity benefits in advance of the time they would

3 otherwise be payable as an indemnity for a terminal

4 illness;

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

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

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

8 gross income, equal to the amount of a contribution

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

10 medical care savings account established under the

11 Medical Care Savings Account Act or the Medical Care

12 Savings Account Act of 2000 to the extent the

13 contribution is accepted by the account administrator

14 as provided in that Act;

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

16 gross income, equal to the amount of interest earned

17 in the taxable year on a medical care savings account

18 established under the Medical Care Savings Account Act

19 or the Medical Care Savings Account Act of 2000 on

20 behalf of the taxpayer, other than interest added

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

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

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

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

25 Section 201 of this Act on grant amounts received by

26 the taxpayer under the Nursing Home Grant Assistance

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

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

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

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

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

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

7 in a Subchapter S corporation for health insurance or

8 long-term care insurance for that taxpayer or that

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

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

11 care insurance may be deducted under Section 213 of

12 the Internal Revenue Code, has not been deducted on

13 the federal income tax return of the taxpayer, and

14 does not exceed the taxable income attributable to

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

16 Subchapter S corporation income; except that no

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

18 taxpayer is eligible to participate in any health

19 insurance or long-term care insurance plan of an

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

21 amount of the health insurance and long-term care

22 insurance subtracted under this item (V) shall be

23 determined by multiplying total health insurance and

24 long-term care insurance premiums paid by the taxpayer

25 times a number that represents the fractional

26 percentage of eligible medical expenses under Section

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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

4 January 1, 1998, all amounts included in the

5 taxpayer's federal gross income in the taxable year

6 from amounts converted from a regular IRA to a Roth

7 IRA. This paragraph is exempt from the provisions of

8 Section 250;

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

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

11 to the extent includible in gross income for federal

12 income tax purposes, made to the taxpayer because of

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

14 or religious reasons by Nazi Germany or any other Axis

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

16 income, to the extent includible in gross income for

17 federal income tax purposes, attributable to, derived

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

19 hidden from, or otherwise lost to a victim of

20 persecution for racial or religious reasons by Nazi

21 Germany or any other Axis regime immediately prior to,

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

23 but not limited to, interest on the proceeds

24 receivable as insurance under policies issued to a

25 victim of persecution for racial or religious reasons

26 by Nazi Germany or any other Axis regime by European

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1 insurance companies immediately prior to and during

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

3 federal adjusted gross income does not apply to assets

4 acquired with such assets or with the proceeds from

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

6 paragraph shall only apply to a taxpayer who was the

7 first recipient of such assets after their recovery

8 and who is a victim of persecution for racial or

9 religious reasons by Nazi Germany or any other Axis

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

11 the eligibility for any public assistance, benefit, or

12 similar entitlement is not affected by the inclusion

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

14 for federal income tax purposes. This paragraph is

15 exempt from the provisions of Section 250;

16 (Y) For taxable years beginning on or after

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

18 2004, moneys contributed in the taxable year to a

19 College Savings Pool account under Section 16.5 of the

20 State Treasurer Act, except that amounts excluded from

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

22 Internal Revenue Code shall not be considered moneys

23 contributed under this subparagraph (Y). For taxable

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

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

26 College Savings Pool account under Section 16.5 of the

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1 State Treasurer Act or (ii) the Illinois Prepaid

2 Tuition Trust Fund, except that amounts excluded from

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

4 Internal Revenue Code shall not be considered moneys

5 contributed under this subparagraph (Y). For purposes

6 of this subparagraph, contributions made by an

7 employer on behalf of an employee, or matching

8 contributions made by an employee, shall be treated as

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

10 from the provisions of Section 250;

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

12 taxable year in which the bonus depreciation deduction

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

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

15 Revenue Code and for each applicable taxable year

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

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

18 deduction taken for the taxable year on the

19 taxpayer's federal income tax return on property

20 for which the bonus depreciation deduction was

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

22 168 of the Internal Revenue Code, but not

23 including the bonus depreciation deduction;

24 (2) for taxable years ending on or before

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

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

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LRB104 12211 BDA 22316 b

1 0.429); and

2 (3) for taxable years ending after December

3 31, 2005:

4 (i) for property on which a bonus

5 depreciation deduction of 30% of the adjusted

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

7 30 and then divided by 70 (or "y" multiplied

8 by 0.429);

9 (ii) for property on which a bonus

10 depreciation deduction of 50% of the adjusted

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

12 1.0;

13 (iii) for property on which a bonus

14 depreciation deduction of 100% of the adjusted

15 basis was taken in a taxable year ending on or

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

17 depreciation deduction that would be allowed

18 on that property if the taxpayer had made the

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

20 Internal Revenue Code to not claim bonus

21 depreciation on that property; and

22 (iv) for property on which a bonus

23 depreciation deduction of a percentage other

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

25 was taken in a taxable year ending on or after

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

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1 by 100 times the percentage bonus depreciation

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

3 then divided by 100 times 1 minus the

4 percentage bonus depreciation on the property

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

6 The aggregate amount deducted under this

7 subparagraph in all taxable years for any one piece of

8 property may not exceed the amount of the bonus

9 depreciation deduction taken on that property on the

10 taxpayer's federal income tax return under subsection

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

12 subparagraph (Z) is exempt from the provisions of

13 Section 250;

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

15 or otherwise disposes of property for which the

16 taxpayer was required in any taxable year to make an

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

18 an amount equal to that addition modification.

19 If the taxpayer continues to own property through

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

21 subtraction is allowed with respect to that property

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

23 required in any taxable year to make an addition

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

25 equal to that addition modification.

26 The taxpayer is allowed to take the deduction

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LRB104 12211 BDA 22316 b

1 under this subparagraph only once with respect to any

2 one piece of property.

3 This subparagraph (AA) is exempt from the

4 provisions of Section 250;

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

6 other than salary, received by a driver in a

7 ridesharing arrangement using a motor vehicle;

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

9 the deductions allocable thereto) taken into account

10 for the taxable year with respect to a transaction

11 with a taxpayer that is required to make an addition

12 modification with respect to such transaction under

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

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

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

16 income from intangible property (net of the deductions

17 allocable thereto) taken into account for the taxable

18 year with respect to a transaction with a taxpayer

19 that is required to make an addition modification with

20 respect to such transaction under Section

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

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

23 addition modification. This subparagraph (CC) is

24 exempt from the provisions of Section 250;

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

26 into account for the taxable year (net of the

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1 deductions allocable thereto) with respect to

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

3 member of the taxpayer's unitary business group but

4 for the fact that the foreign person's business

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

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

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

14 not to exceed the addition modification required to be

15 made for the same taxable year under Section

16 203(a)(2)(D-17) for interest paid, accrued, or

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

18 This subparagraph (DD) is exempt from the provisions

19 of Section 250;

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

21 property taken into account for the taxable year (net

22 of the deductions allocable thereto) with respect to

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

24 member of the taxpayer's unitary business group but

25 for the fact that the foreign person's business

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

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

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

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

4 business group but for the fact that the person is

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

6 included in the unitary business group because he or

7 she is ordinarily required to apportion business

8 income under different subsections of Section 304, but

9 not to exceed the addition modification required to be

10 made for the same taxable year under Section

11 203(a)(2)(D-18) for intangible expenses and costs

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

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

14 exempt from the provisions of Section 250;

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

16 taxpayer during the taxable year by the Court of

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

18 of Claims Act for time unjustly served in a State

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

20 provisions of Section 250;

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

22 31, 2011, in the case of a taxpayer who was required to

23 add back any insurance premiums under Section

24 203(a)(2)(D-19), such taxpayer may elect to subtract

25 that part of a reimbursement received from the

26 insurance company equal to the amount of the expense

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LRB104 12211 BDA 22316 b

1 or loss (including expenses incurred by the insurance

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

3 deduction for federal income tax purposes if the

4 expense or loss had been uninsured. If a taxpayer

5 makes the election provided for by this subparagraph

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

7 add back to income the amount subtracted by the

8 taxpayer pursuant to this subparagraph (GG). This

9 subparagraph (GG) is exempt from the provisions of

10 Section 250;

11 (HH) For taxable years beginning on or after

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

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

14 qualified ABLE account under Section 16.6 of the State

15 Treasurer Act, except that amounts excluded from gross

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

17 529A(c)(1)(C) of the Internal Revenue Code shall not

18 be considered moneys contributed under this

19 subparagraph (HH). For purposes of this subparagraph

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

21 an employee, or matching contributions made by an

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

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

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

25 amount that is included in the taxpayer's federal

26 adjusted gross income pursuant to Section 61 of the

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LRB104 12211 BDA 22316 b

1 Internal Revenue Code as discharge of indebtedness

2 attributable to student loan forgiveness and that is

3 not excluded from the taxpayer's federal adjusted

4 gross income pursuant to paragraph (5) of subsection

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

6 (JJ) For taxable years beginning on or after

7 January 1, 2023, for any cannabis establishment

8 operating in this State and licensed under the

9 Cannabis Regulation and Tax Act or any cannabis

10 cultivation center or medical cannabis dispensing

11 organization operating in this State and licensed

12 under the Compassionate Use of Medical Cannabis

13 Program Act, an amount equal to the deductions that

14 were disallowed under Section 280E of the Internal

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

16 added back under this subsection. The provisions of

17 this subparagraph (JJ) are exempt from the provisions

18 of Section 250; ~~and~~

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

20 federal income tax purposes, any amount awarded or

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

22 settlement for fertility fraud as provided in Section

23 15 of the Illinois Fertility Fraud Act, donor

24 fertility fraud as provided in Section 20 of the

25 Illinois Fertility Fraud Act, or similar action in

26 another state; ~~and~~

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LRB104 12211 BDA 22316 b

1 (LL) For taxable years beginning on or after

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

3 worker, as defined in the Workforce Development

4 through Charitable Loan Repayment Act, an amount equal

5 to the amount included in the taxpayer's federal

6 adjusted gross income that is attributable to student

7 loan repayment assistance received by the taxpayer

8 during the taxable year from a qualified community

9 foundation under the provisions of the Workforce

10 Development through ~~Through~~ Charitable Loan Repayment

11 Act.

12 This subparagraph (LL) is exempt from the

13 provisions of Section 250; ~~.~~

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

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

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

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

18 federal adjusted gross income that is attributable to

19 medical debt relief received by the taxpayer during

20 the taxable year from a nonprofit medical debt relief

21 coordinator under the provisions of the Medical Debt

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

23 the provisions of Section 250; and

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

25 January 1, 2028, any amount received from the

26 Responsibility in Firearm Legislation (RIFL) Fund or

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LRB104 12211 BDA 22316 b

1 the Responsibility in Firearm Legislation (RIFL)

2 Financial Assistance Program to the extent included in

3 the taxpayer's federal adjusted gross income and that

4 is not excluded from the taxpayer's federal adjusted

5 gross income.

6 (b) Corporations.

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

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

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

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

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

12 of the following amounts:

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

14 to the taxpayer as interest and all distributions

15 received from regulated investment companies during

16 the taxable year to the extent excluded from gross

17 income in the computation of taxable income;

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

19 this Act to the extent deducted from gross income in

20 the computation of taxable income for the taxable

21 year;

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

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

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

25 amount of the capital gain dividends designated as

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

2 Internal Revenue Code and any amount designated under

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

4 attributable to the taxable year (this amendatory Act

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

6 law and is not a new enactment);

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

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

9 operating loss carried forward from a taxable year

10 ending prior to December 31, 1986;

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

12 loss carryback or carryforward from a taxable year

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

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

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

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

17 than those provided by this subparagraph (E) exceeded

18 subtraction modifications in such earlier taxable

19 year, with the following limitations applied in the

20 order that they are listed:

21 (i) the addition modification relating to the

22 net operating loss carried back or forward to the

23 taxable year from any taxable year ending prior to

24 December 31, 1986 shall be reduced by the amount

25 of addition modification under this subparagraph

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

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1 which was taken into account in calculating the

2 base income of an earlier taxable year, and

3 (ii) the addition modification relating to the

4 net operating loss carried back or forward to the

5 taxable year from any taxable year ending prior to

6 December 31, 1986 shall not exceed the amount of

7 such carryback or carryforward;

8 For taxable years in which there is a net

9 operating loss carryback or carryforward from more

10 than one other taxable year ending prior to December

11 31, 1986, the addition modification provided in this

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

13 computed independently under the preceding provisions

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

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

16 1997, an amount equal to any eligible remediation

17 costs that the corporation deducted in computing

18 adjusted gross income and for which the corporation

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

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

21 amount equal to the bonus depreciation deduction taken

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

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

24 the Internal Revenue Code;

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

26 or otherwise disposes of property for which the

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1 taxpayer was required in any taxable year to make an

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

3 an amount equal to the aggregate amount of the

4 deductions taken in all taxable years under

5 subparagraph (T) with respect to that property.

6 If the taxpayer continues to own property through

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

8 subtraction is allowed with respect to that property

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

10 allowed in any taxable year to make a subtraction

11 modification under subparagraph (T), then an amount

12 equal to that subtraction modification.

13 The taxpayer is required to make the addition

14 modification under this subparagraph only once with

15 respect to any one piece of property;

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

17 allowed as a deduction in computing base income for

18 interest paid, accrued, or incurred, directly or

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

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

21 member of the same unitary business group but for the

22 fact the foreign person's business activity outside

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

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

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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. The addition modification

6 required by this subparagraph shall be reduced to the

7 extent that dividends were included in base income of

8 the unitary group for the same taxable year and

9 received by the taxpayer or by a member of the

10 taxpayer's unitary business group (including amounts

11 included in gross income pursuant to Sections 951

12 through 964 of the Internal Revenue Code and amounts

13 included in gross income under Section 78 of the

14 Internal Revenue Code) with respect to the stock of

15 the same person to whom the interest was paid,

16 accrued, or incurred.

17 This paragraph shall not apply to the following:

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

19 incurred, directly or indirectly, to a person who

20 is subject in a foreign country or state, other

21 than a state which requires mandatory unitary

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

23 with respect to such interest; or

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

25 incurred, directly or indirectly, to a person if

26 the taxpayer can establish, based on a

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1 preponderance of the evidence, both of the

2 following:

3 (a) the person, during the same taxable

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

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

6 (b) the transaction giving rise to the

7 interest expense between the taxpayer and the

8 person did not have as a principal purpose the

9 avoidance of Illinois income tax, and is paid

10 pursuant to a contract or agreement that

11 reflects an arm's-length interest rate and

12 terms; or

13 (iii) the taxpayer can establish, based on

14 clear and convincing evidence, that the interest

15 paid, accrued, or incurred relates to a contract

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

17 and terms and the principal purpose for the

18 payment is not federal or Illinois tax avoidance;

19 or

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

21 incurred, directly or indirectly, to a person if

22 the taxpayer establishes by clear and convincing

23 evidence that the adjustments are unreasonable; or

24 if the taxpayer and the Director agree in writing

25 to the application or use of an alternative method

26 of apportionment under Section 304(f).

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1 Nothing in this subsection shall preclude the

2 Director from making any other adjustment

3 otherwise allowed under Section 404 of this Act

4 for any tax year beginning after the effective

5 date of this amendment provided such adjustment is

6 made pursuant to regulation adopted by the

7 Department and such regulations provide methods

8 and standards by which the Department will utilize

9 its authority under Section 404 of this Act;

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

11 expenses and costs otherwise allowed as a deduction in

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

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

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

15 foreign person who would be a member of the same

16 unitary business group but for the fact that the

17 foreign person's business activity outside the United

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

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

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

21 the same unitary business group but for the fact that

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

23 from being included in the unitary business group

24 because he or she is ordinarily required to apportion

25 business income under different subsections of Section

26 304. The addition modification required by this

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1 subparagraph shall be reduced to the extent that

2 dividends were included in base income of the unitary

3 group for the same taxable year and received by the

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

5 business group (including amounts included in gross

6 income pursuant to Sections 951 through 964 of the

7 Internal Revenue Code and amounts included in gross

8 income under Section 78 of the Internal Revenue Code)

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

10 the intangible expenses and costs were directly or

11 indirectly paid, incurred, or accrued. The preceding

12 sentence shall not apply to the extent that the same

13 dividends caused a reduction to the addition

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

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

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

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

18 indirect acquisition, use, maintenance or management,

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

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

21 indirectly, from factoring transactions or discounting

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

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

24 similar expenses and costs. For purposes of this

25 subparagraph, "intangible property" includes patents,

26 patent applications, trade names, trademarks, service

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

2 similar types of intangible assets.

3 This paragraph shall not apply to the following:

4 (i) any item of intangible expenses or costs

5 paid, accrued, or incurred, directly or

6 indirectly, from a transaction with a person who

7 is subject in a foreign country or state, other

8 than a state which requires mandatory unitary

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

10 with respect to such item; or

11 (ii) any item of intangible expense or cost

12 paid, accrued, or incurred, directly or

13 indirectly, if the taxpayer can establish, based

14 on a preponderance of the evidence, both of the

15 following:

16 (a) the person during the same taxable

17 year paid, accrued, or incurred, the

18 intangible expense or cost to a person that is

19 not a related member, and

20 (b) the transaction giving rise to the

21 intangible expense or cost between the

22 taxpayer and the person did not have as a

23 principal purpose the avoidance of Illinois

24 income tax, and is paid pursuant to a contract

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

26 or

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1 (iii) any item of intangible expense or cost

2 paid, accrued, or incurred, directly or

3 indirectly, from a transaction with a person if

4 the taxpayer establishes by clear and convincing

5 evidence, that the adjustments are unreasonable;

6 or if the taxpayer and the Director agree in

7 writing to the application or use of an

8 alternative method of apportionment under Section

9 304(f);

10 Nothing in this subsection shall preclude the

11 Director from making any other adjustment

12 otherwise allowed under Section 404 of this Act

13 for any tax year beginning after the effective

14 date of this amendment provided such adjustment is

15 made pursuant to regulation adopted by the

16 Department and such regulations provide methods

17 and standards by which the Department will utilize

18 its authority under Section 404 of this Act;

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

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

21 insurance premium expenses and costs otherwise allowed

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

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

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

25 business group but for the fact that the person is

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

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1 included in the unitary business group because he or

2 she is ordinarily required to apportion business

3 income under different subsections of Section 304. The

4 addition modification required by this subparagraph

5 shall be reduced to the extent that dividends were

6 included in base income of the unitary group for the

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

8 member of the taxpayer's unitary business group

9 (including amounts included in gross income under

10 Sections 951 through 964 of the Internal Revenue Code

11 and amounts included in gross income under Section 78

12 of the Internal Revenue Code) with respect to the

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

14 were directly or indirectly paid, incurred, or

15 accrued. The preceding sentence does not apply to the

16 extent that the same dividends caused a reduction to

17 the addition modification required under Section

18 203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this

19 Act;

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

21 31, 2008, any deduction for dividends paid by a

22 captive real estate investment trust that is allowed

23 to a real estate investment trust under Section

24 857(b)(2)(B) of the Internal Revenue Code for

25 dividends paid;

26 (E-16) An amount equal to the credit allowable to

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

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

3 Act;

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

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

6 allowed under Section 199 of the Internal Revenue Code

7 for the taxable year;

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

9 31, 2018, an amount equal to the deduction allowed

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

11 Code for the taxable year;

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

13 30, 2021, an amount equal to the deduction allowed

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

15 Code for the taxable year;

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

17 30, 2021, an amount equal to the deduction allowed

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

19 Revenue Code for the taxable year;

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

21 deduction when computing the taxpayer's federal

22 taxable income for the taxable year and that is

23 attributable to an endowment gift for which the

24 taxpayer receives a credit under the Illinois Gives

25 Tax Credit Act;

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

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1 following amounts:

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

3 imposed by this Act which was refunded to the taxpayer

4 and included in such total for the taxable year;

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

6 total under Section 78 of the Internal Revenue Code;

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

8 an amount equal to the amount of exempt interest

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

10 852 of the Internal Revenue Code, paid to shareholders

11 for the taxable year;

12 (I) With the exception of any amounts subtracted

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

14 all amounts disallowed as deductions by (i) Sections

15 171(a)(2) and 265(a)(2) and amounts disallowed as

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

17 Revenue Code, and all amounts of expenses allocable to

18 interest and disallowed as deductions by Section

19 265(a)(1) of the Internal Revenue Code; and (ii) for

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

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

22 832(b)(5)(B)(i) of the Internal Revenue Code, plus,

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

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

25 of the Internal Revenue Code and, for taxable years

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

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1 included in gross income under Section 87 of the

2 Internal Revenue Code and the policyholders' share of

3 tax-exempt interest of a life insurance company under

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

5 the case of a life insurance company with gross income

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

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

8 the case of a life insurance company allowed a

9 deduction for an increase in reserves for the tax

10 year); the provisions of this subparagraph are exempt

11 from the provisions of Section 250;

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

13 such total which are exempt from taxation by this

14 State either by reason of its statutes or Constitution

15 or by reason of the Constitution, treaties or statutes

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

17 statute of this State that exempts income derived from

18 bonds or other obligations from the tax imposed under

19 this Act, the amount exempted shall be the interest

20 net of bond premium amortization;

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

22 such total which were paid by a corporation which

23 conducts business operations in a River Edge

24 Redevelopment Zone or zones created under the River

25 Edge Redevelopment Zone Act and conducts substantially

26 all of its operations in a River Edge Redevelopment

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

2 the provisions of Section 250;

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

4 such total that were paid by a corporation that

5 conducts business operations in a federally designated

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

7 a High Impact Business located in Illinois; provided

8 that dividends eligible for the deduction provided in

9 subparagraph (K) of paragraph 2 of this subsection

10 shall not be eligible for the deduction provided under

11 this subparagraph (L);

12 (M) For any taxpayer that is a financial

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

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

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

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

17 property which is eligible for the River Edge

18 Redevelopment Zone Investment Credit. To determine the

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

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

21 borrower, the entire principal amount of the loan or

22 loans between the taxpayer and the borrower should be

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

24 investment credit property which secures the loan or

25 loans, using for this purpose the original basis of

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

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1 in the River Edge Redevelopment Zone. The subtraction

2 modification available to the taxpayer in any year

3 under this subsection shall be that portion of the

4 total interest paid by the borrower with respect to

5 such loan attributable to the eligible property as

6 calculated under the previous sentence. This

7 subparagraph (M) is exempt from the provisions of

8 Section 250;

9 (M-1) For any taxpayer that is a financial

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

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

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

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

14 property which is eligible for the High Impact

15 Business Investment Credit. To determine the portion

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

17 for a Section 201(h) investment credit to the

18 borrower, the entire principal amount of the loan or

19 loans between the taxpayer and the borrower should be

20 divided into the basis of the Section 201(h)

21 investment credit property which secures the loan or

22 loans, using for this purpose the original basis of

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

24 in a federally designated Foreign Trade Zone or

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

26 eligible for the deduction provided in subparagraph

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

2 eligible for the deduction provided under this

3 subparagraph (M-1). The subtraction modification

4 available to taxpayers in any year under this

5 subsection shall be that portion of the total interest

6 paid by the borrower with respect to such loan

7 attributable to the eligible property as calculated

8 under the previous sentence;

9 (N) Two times any contribution made during the

10 taxable year to a designated zone organization to the

11 extent that the contribution (i) qualifies as a

12 charitable contribution under subsection (c) of

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

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

15 the Department of Commerce and Economic Opportunity

16 under Section 11 of the Illinois Enterprise Zone Act

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

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

19 provisions of Section 250;

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

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

22 percentage equal to the percentage allowable under

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

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

25 the amount by which dividends included in taxable

26 income and received from a corporation that is not

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1 created or organized under the laws of the United

2 States or any state or political subdivision thereof,

3 including, for taxable years ending on or after

4 December 31, 1988, dividends received or deemed

5 received or paid or deemed paid under Sections 951

6 through 965 of the Internal Revenue Code, exceed the

7 amount of the modification provided under subparagraph

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

9 related to such dividends, and including, for taxable

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

11 received from a captive real estate investment trust;

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

13 included in taxable income and received, including,

14 for taxable years ending on or after December 31,

15 1988, dividends received or deemed received or paid or

16 deemed paid under Sections 951 through 964 of the

17 Internal Revenue Code and including, for taxable years

18 ending on or after December 31, 2008, dividends

19 received from a captive real estate investment trust,

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

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

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

23 affiliated group which includes the dividend

24 recipient, exceed the amount of the modification

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

26 this subsection (b) which is related to such

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1 dividends. For taxable years ending on or after June

2 30, 2021, (i) for purposes of this subparagraph, the

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

4 a dividend under Section 1248 of the Internal Revenue

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

6 dividends for which a deduction is allowed under

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

8 subparagraph (O) is exempt from the provisions of

9 Section 250 of this Act;

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

11 job training project established pursuant to the Tax

12 Increment Allocation Redevelopment Act;

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

14 used to compute the federal income tax credit for

15 restoration of substantial amounts held under claim of

16 right for the taxable year pursuant to Section 1341 of

17 the Internal Revenue Code;

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

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

20 or a reciprocal insurer has made the election under

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

22 835, an amount equal to the excess, if any, of the

23 amounts paid or incurred by that interinsurer or

24 reciprocal insurer in the taxable year to the

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

26 interinsurer or reciprocal insurer with respect to the

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

2 Revenue Code for the taxable year; the provisions of

3 this subparagraph are exempt from the provisions of

4 Section 250;

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

6 31, 1997, in the case of a Subchapter S corporation, an

7 amount equal to all amounts of income allocable to a

8 shareholder subject to the Personal Property Tax

9 Replacement Income Tax imposed by subsections (c) and

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

11 allocable to organizations exempt from federal income

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

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

14 provisions of Section 250;

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

16 taxable year in which the bonus depreciation deduction

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

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

19 Revenue Code and for each applicable taxable year

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

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

22 deduction taken for the taxable year on the

23 taxpayer's federal income tax return on property

24 for which the bonus depreciation deduction was

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

26 168 of the Internal Revenue Code, but not

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1 including the bonus depreciation deduction;

2 (2) for taxable years ending on or before

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

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

5 0.429); and

6 (3) for taxable years ending after December

7 31, 2005:

8 (i) for property on which a bonus

9 depreciation deduction of 30% of the adjusted

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

11 30 and then divided by 70 (or "y" multiplied

12 by 0.429);

13 (ii) for property on which a bonus

14 depreciation deduction of 50% of the adjusted

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

16 1.0;

17 (iii) for property on which a bonus

18 depreciation deduction of 100% of the adjusted

19 basis was taken in a taxable year ending on or

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

21 depreciation deduction that would be allowed

22 on that property if the taxpayer had made the

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

24 Internal Revenue Code to not claim bonus

25 depreciation on that property; and

26 (iv) for property on which a bonus

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1 depreciation deduction of a percentage other

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

3 was taken in a taxable year ending on or after

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

5 by 100 times the percentage bonus depreciation

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

7 then divided by 100 times 1 minus the

8 percentage bonus depreciation on the property

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

10 The aggregate amount deducted under this

11 subparagraph in all taxable years for any one piece of

12 property may not exceed the amount of the bonus

13 depreciation deduction taken on that property on the

14 taxpayer's federal income tax return under subsection

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

16 subparagraph (T) is exempt from the provisions of

17 Section 250;

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

19 otherwise disposes of property for which the taxpayer

20 was required in any taxable year to make an addition

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

22 equal to that addition modification.

23 If the taxpayer continues to own property through

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

25 subtraction is allowed with respect to that property

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

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1 required in any taxable year to make an addition

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

3 equal to that addition modification.

4 The taxpayer is allowed to take the deduction

5 under this subparagraph only once with respect to any

6 one piece of property.

7 This subparagraph (U) is exempt from the

8 provisions of Section 250;

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

10 the deductions allocable thereto) taken into account

11 for the taxable year with respect to a transaction

12 with a taxpayer that is required to make an addition

13 modification with respect to such transaction under

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

15 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

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

17 income from intangible property (net of the deductions

18 allocable thereto) taken into account for the taxable

19 year with respect to a transaction with a taxpayer

20 that is required to make an addition modification with

21 respect to such transaction under Section

22 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

23 203(d)(2)(D-8), but not to exceed the amount of such

24 addition modification, and (iii) any insurance premium

25 income (net of deductions allocable thereto) taken

26 into account for the taxable year with respect to a

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1 transaction with a taxpayer that is required to make

2 an addition modification with respect to such

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

4 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section

5 203(d)(2)(D-9), but not to exceed the amount of that

6 addition modification. This subparagraph (V) is exempt

7 from the provisions of Section 250;

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

9 into account for the taxable year (net of the

10 deductions allocable thereto) with respect to

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

12 member of the taxpayer's unitary business group but

13 for the fact that the foreign person's business

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

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

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

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

18 business group but for the fact that the person is

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

20 included in the unitary business group because he or

21 she is ordinarily required to apportion business

22 income under different subsections of Section 304, but

23 not to exceed the addition modification required to be

24 made for the same taxable year under Section

25 203(b)(2)(E-12) for interest paid, accrued, or

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

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

2 Section 250;

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

4 property taken into account for the taxable year (net

5 of the deductions allocable thereto) with respect to

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

7 member of the taxpayer's unitary business group but

8 for the fact that the foreign person's business

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

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

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

18 not to exceed the addition modification required to be

19 made for the same taxable year under Section

20 203(b)(2)(E-13) for intangible expenses and costs

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

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

23 exempt from the provisions of Section 250;

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

25 31, 2011, in the case of a taxpayer who was required to

26 add back any insurance premiums under Section

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1 203(b)(2)(E-14), such taxpayer may elect to subtract

2 that part of a reimbursement received from the

3 insurance company equal to the amount of the expense

4 or loss (including expenses incurred by the insurance

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

6 deduction for federal income tax purposes if the

7 expense or loss had been uninsured. If a taxpayer

8 makes the election provided for by this subparagraph

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

10 add back to income the amount subtracted by the

11 taxpayer pursuant to this subparagraph (Y). This

12 subparagraph (Y) is exempt from the provisions of

13 Section 250;

14 (Z) The difference between the nondeductible

15 controlled foreign corporation dividends under Section

16 965(e)(3) of the Internal Revenue Code over the

17 taxable income of the taxpayer, computed without

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

19 Code, and without regard to any net operating loss

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

21 provisions of Section 250; and

22 (AA) For taxable years beginning on or after

23 January 1, 2023, for any cannabis establishment

24 operating in this State and licensed under the

25 Cannabis Regulation and Tax Act or any cannabis

26 cultivation center or medical cannabis dispensing

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1 organization operating in this State and licensed

2 under the Compassionate Use of Medical Cannabis

3 Program Act, an amount equal to the deductions that

4 were disallowed under Section 280E of the Internal

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

6 added back under this subsection. The provisions of

7 this subparagraph (AA) are exempt from the provisions

8 of Section 250.

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

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

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

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

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

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

15 amounts included in life insurance gross income under

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

17 (c) Trusts and estates.

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

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

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

21 (2) Modifications. Subject to the provisions of

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

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

24 following amounts:

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

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1 to the taxpayer as interest or dividends during the

2 taxable year to the extent excluded from gross income

3 in the computation of taxable income;

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

5 trust which, under its governing instrument, is

6 required to distribute all of its income currently,

7 $300; and (iii) any other trust, $100, but in each such

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

9 the computation of taxable income;

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

11 this Act to the extent deducted from gross income in

12 the computation of taxable income for the taxable

13 year;

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

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

16 operating loss carried forward from a taxable year

17 ending prior to December 31, 1986;

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

19 loss carryback or carryforward from a taxable year

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

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

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

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

24 than those provided by this subparagraph (E) exceeded

25 subtraction modifications in such taxable year, with

26 the following limitations applied in the order that

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1 they are listed:

2 (i) the addition modification relating to the

3 net operating loss carried back or forward to the

4 taxable year from any taxable year ending prior to

5 December 31, 1986 shall be reduced by the amount

6 of addition modification under this subparagraph

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

8 which was taken into account in calculating the

9 base income of an earlier taxable year, and

10 (ii) the addition modification relating to the

11 net operating loss carried back or forward to the

12 taxable year from any taxable year ending prior to

13 December 31, 1986 shall not exceed the amount of

14 such carryback or carryforward;

15 For taxable years in which there is a net

16 operating loss carryback or carryforward from more

17 than one other taxable year ending prior to December

18 31, 1986, the addition modification provided in this

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

20 computed independently under the preceding provisions

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

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

23 1, 1989, an amount equal to the tax deducted pursuant

24 to Section 164 of the Internal Revenue Code if the

25 trust or estate is claiming the same tax for purposes

26 of the Illinois foreign tax credit under Section 601

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1 of this Act;

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

3 gain deduction allowable under the Internal Revenue

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

5 computation of taxable income;

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

7 1997, an amount equal to any eligible remediation

8 costs that the trust or estate deducted in computing

9 adjusted gross income and for which the trust or

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

11 201;

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

13 amount equal to the bonus depreciation deduction taken

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

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

16 the Internal Revenue Code; and

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

18 or otherwise disposes of property for which the

19 taxpayer was required in any taxable year to make an

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

21 an amount equal to the aggregate amount of the

22 deductions taken in all taxable years under

23 subparagraph (R) with respect to that property.

24 If the taxpayer continues to own property through

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

26 subtraction is allowed with respect to that property

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

2 allowed in any taxable year to make a subtraction

3 modification under subparagraph (R), then an amount

4 equal to that subtraction modification.

5 The taxpayer is required to make the addition

6 modification under this subparagraph only once with

7 respect to any one piece of property;

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

9 allowed as a deduction in computing base income for

10 interest paid, accrued, or incurred, directly or

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

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

13 member of the same unitary business group but for the

14 fact that the foreign person's business activity

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

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

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

18 who would be a member of the same unitary business

19 group but for the fact that the person is prohibited

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

21 unitary business group because he or she is ordinarily

22 required to apportion business income under different

23 subsections of Section 304. The addition modification

24 required by this subparagraph shall be reduced to the

25 extent that dividends were included in base income of

26 the unitary group for the same taxable year and

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1 received by the taxpayer or by a member of the

2 taxpayer's unitary business group (including amounts

3 included in gross income pursuant to Sections 951

4 through 964 of the Internal Revenue Code and amounts

5 included in gross income under Section 78 of the

6 Internal Revenue Code) with respect to the stock of

7 the same person to whom the interest was paid,

8 accrued, or incurred.

9 This paragraph shall not apply to the following:

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

11 incurred, directly or indirectly, to a person who

12 is subject in a foreign country or state, other

13 than a state which requires mandatory unitary

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

15 with respect to such interest; or

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

17 incurred, directly or indirectly, to a person if

18 the taxpayer can establish, based on a

19 preponderance of the evidence, both of the

20 following:

21 (a) the person, during the same taxable

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

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

24 (b) the transaction giving rise to the

25 interest expense between the taxpayer and the

26 person did not have as a principal purpose the

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1 avoidance of Illinois income tax, and is paid

2 pursuant to a contract or agreement that

3 reflects an arm's-length interest rate and

4 terms; or

5 (iii) the taxpayer can establish, based on

6 clear and convincing evidence, that the interest

7 paid, accrued, or incurred relates to a contract

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

9 and terms and the principal purpose for the

10 payment is not federal or Illinois tax avoidance;

11 or

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

13 incurred, directly or indirectly, to a person if

14 the taxpayer establishes by clear and convincing

15 evidence that the adjustments are unreasonable; or

16 if the taxpayer and the Director agree in writing

17 to the application or use of an alternative method

18 of apportionment under Section 304(f).

19 Nothing in this subsection shall preclude the

20 Director from making any other adjustment

21 otherwise allowed under Section 404 of this Act

22 for any tax year beginning after the effective

23 date of this amendment provided such adjustment is

24 made pursuant to regulation adopted by the

25 Department and such regulations provide methods

26 and standards by which the Department will utilize

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1 its authority under Section 404 of this Act;

2 (G-13) An amount equal to the amount of intangible

3 expenses and costs otherwise allowed as a deduction in

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

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

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

7 foreign person who would be a member of the same

8 unitary business group but for the fact that the

9 foreign person's business activity outside the United

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

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

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

13 the same unitary business group but for the fact that

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

15 from being included in the unitary business group

16 because he or she is ordinarily required to apportion

17 business income under different subsections of Section

18 304. The addition modification required by this

19 subparagraph shall be reduced to the extent that

20 dividends were included in base income of the unitary

21 group for the same taxable year and received by the

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

23 business group (including amounts included in gross

24 income pursuant to Sections 951 through 964 of the

25 Internal Revenue Code and amounts included in gross

26 income under Section 78 of the Internal Revenue Code)

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

2 the intangible expenses and costs were directly or

3 indirectly paid, incurred, or accrued. The preceding

4 sentence shall not apply to the extent that the same

5 dividends caused a reduction to the addition

6 modification required under Section 203(c)(2)(G-12) of

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

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

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

10 direct or indirect acquisition, use, maintenance or

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

12 disposition of intangible property; (2) losses

13 incurred, directly or indirectly, from factoring

14 transactions or discounting transactions; (3) royalty,

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

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

17 purposes of this subparagraph, "intangible property"

18 includes patents, patent applications, trade names,

19 trademarks, service marks, copyrights, mask works,

20 trade secrets, and similar types of intangible assets.

21 This paragraph shall not apply to the following:

22 (i) any item of intangible expenses or costs

23 paid, accrued, or incurred, directly or

24 indirectly, from a transaction with a person who

25 is subject in a foreign country or state, other

26 than a state which requires mandatory unitary

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

2 with respect to such item; or

3 (ii) any item of intangible expense or cost

4 paid, accrued, or incurred, directly or

5 indirectly, if the taxpayer can establish, based

6 on a preponderance of the evidence, both of the

7 following:

8 (a) the person during the same taxable

9 year paid, accrued, or incurred, the

10 intangible expense or cost to a person that is

11 not a related member, and

12 (b) the transaction giving rise to the

13 intangible expense or cost between the

14 taxpayer and the person did not have as a

15 principal purpose the avoidance of Illinois

16 income tax, and is paid pursuant to a contract

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

18 or

19 (iii) any item of intangible expense or cost

20 paid, accrued, or incurred, directly or

21 indirectly, from a transaction with a person if

22 the taxpayer establishes by clear and convincing

23 evidence, that the adjustments are unreasonable;

24 or if the taxpayer and the Director agree in

25 writing to the application or use of an

26 alternative method of apportionment under Section

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1 304(f);

2 Nothing in this subsection shall preclude the

3 Director from making any other adjustment

4 otherwise allowed under Section 404 of this Act

5 for any tax year beginning after the effective

6 date of this amendment provided such adjustment is

7 made pursuant to regulation adopted by the

8 Department and such regulations provide methods

9 and standards by which the Department will utilize

10 its authority under Section 404 of this Act;

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

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

13 insurance premium expenses and costs otherwise allowed

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

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

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

17 business group but for the fact that the person is

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

19 included in the unitary business group because he or

20 she is ordinarily required to apportion business

21 income under different subsections of Section 304. The

22 addition modification required by this subparagraph

23 shall be reduced to the extent that dividends were

24 included in base income of the unitary group for the

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

26 member of the taxpayer's unitary business group

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1 (including amounts included in gross income under

2 Sections 951 through 964 of the Internal Revenue Code

3 and amounts included in gross income under Section 78

4 of the Internal Revenue Code) with respect to the

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

6 were directly or indirectly paid, incurred, or

7 accrued. The preceding sentence does not apply to the

8 extent that the same dividends caused a reduction to

9 the addition modification required under Section

10 203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this

11 Act;

12 (G-15) An amount equal to the credit allowable to

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

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

15 Act;

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

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

18 allowed under Section 199 of the Internal Revenue Code

19 for the taxable year;

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

21 deduction when computing the taxpayer's federal

22 taxable income for the taxable year and that is

23 attributable to an endowment gift for which the

24 taxpayer receives a credit under the Illinois Gives

25 Tax Credit Act;

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

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1 following amounts:

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

3 such total pursuant to the provisions of Sections

4 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408

5 of the Internal Revenue Code or included in such total

6 as distributions under the provisions of any

7 retirement or disability plan for employees of any

8 governmental agency or unit, or retirement payments to

9 retired partners, which payments are excluded in

10 computing net earnings from self employment by Section

11 1402 of the Internal Revenue Code and regulations

12 adopted pursuant thereto;

13 (I) The valuation limitation amount;

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

15 imposed by this Act which was refunded to the taxpayer

16 and included in such total for the taxable year;

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

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

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

20 taxation by this State either by reason of its

21 statutes or Constitution or by reason of the

22 Constitution, treaties or statutes of the United

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

24 this State that exempts income derived from bonds or

25 other obligations from the tax imposed under this Act,

26 the amount exempted shall be the interest net of bond

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1 premium amortization;

2 (L) With the exception of any amounts subtracted

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

4 all amounts disallowed as deductions by (i) Sections

5 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

6 and all amounts of expenses allocable to interest and

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

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

9 ending on or after August 13, 1999, Sections

10 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

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

12 ending on or after December 31, 2011, Section

13 45G(e)(3) of the Internal Revenue Code and, for

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

15 any amount included in gross income under Section 87

16 of the Internal Revenue Code; the provisions of this

17 subparagraph are exempt from the provisions of Section

18 250;

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

20 such total which were paid by a corporation which

21 conducts business operations in a River Edge

22 Redevelopment Zone or zones created under the River

23 Edge Redevelopment Zone Act and conducts substantially

24 all of its operations in a River Edge Redevelopment

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

26 the provisions of Section 250;

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

2 job training project established pursuant to the Tax

3 Increment Allocation Redevelopment Act;

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

5 such total that were paid by a corporation that

6 conducts business operations in a federally designated

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

8 a High Impact Business located in Illinois; provided

9 that dividends eligible for the deduction provided in

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

11 shall not be eligible for the deduction provided under

12 this subparagraph (O);

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

14 used to compute the federal income tax credit for

15 restoration of substantial amounts held under claim of

16 right for the taxable year pursuant to Section 1341 of

17 the Internal Revenue Code;

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

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

20 to the extent includible in gross income for federal

21 income tax purposes, made to the taxpayer because of

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

23 or religious reasons by Nazi Germany or any other Axis

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

25 income, to the extent includible in gross income for

26 federal income tax purposes, attributable to, derived

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

2 hidden from, or otherwise lost to a victim of

3 persecution for racial or religious reasons by Nazi

4 Germany or any other Axis regime immediately prior to,

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

6 but not limited to, interest on the proceeds

7 receivable as insurance under policies issued to a

8 victim of persecution for racial or religious reasons

9 by Nazi Germany or any other Axis regime by European

10 insurance companies immediately prior to and during

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

12 federal adjusted gross income does not apply to assets

13 acquired with such assets or with the proceeds from

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

15 paragraph shall only apply to a taxpayer who was the

16 first recipient of such assets after their recovery

17 and who is a victim of persecution for racial or

18 religious reasons by Nazi Germany or any other Axis

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

20 the eligibility for any public assistance, benefit, or

21 similar entitlement is not affected by the inclusion

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

23 for federal income tax purposes. This paragraph is

24 exempt from the provisions of Section 250;

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

26 taxable year in which the bonus depreciation deduction

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

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

3 Revenue Code and for each applicable taxable year

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

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

6 deduction taken for the taxable year on the

7 taxpayer's federal income tax return on property

8 for which the bonus depreciation deduction was

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

10 168 of the Internal Revenue Code, but not

11 including the bonus depreciation deduction;

12 (2) for taxable years ending on or before

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

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

15 0.429); and

16 (3) for taxable years ending after December

17 31, 2005:

18 (i) for property on which a bonus

19 depreciation deduction of 30% of the adjusted

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

21 30 and then divided by 70 (or "y" multiplied

22 by 0.429);

23 (ii) for property on which a bonus

24 depreciation deduction of 50% of the adjusted

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

26 1.0;

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1 (iii) for property on which a bonus

2 depreciation deduction of 100% of the adjusted

3 basis was taken in a taxable year ending on or

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

5 depreciation deduction that would be allowed

6 on that property if the taxpayer had made the

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

8 Internal Revenue Code to not claim bonus

9 depreciation on that property; and

10 (iv) for property on which a bonus

11 depreciation deduction of a percentage other

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

13 was taken in a taxable year ending on or after

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

15 by 100 times the percentage bonus depreciation

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

17 then divided by 100 times 1 minus the

18 percentage bonus depreciation on the property

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

20 The aggregate amount deducted under this

21 subparagraph in all taxable years for any one piece of

22 property may not exceed the amount of the bonus

23 depreciation deduction taken on that property on the

24 taxpayer's federal income tax return under subsection

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

26 subparagraph (R) is exempt from the provisions of

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1 Section 250;

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

3 otherwise disposes of property for which the taxpayer

4 was required in any taxable year to make an addition

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

6 equal to that addition modification.

7 If the taxpayer continues to own property through

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

9 subtraction is allowed with respect to that property

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

11 required in any taxable year to make an addition

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

13 equal to that addition modification.

14 The taxpayer is allowed to take the deduction

15 under this subparagraph only once with respect to any

16 one piece of property.

17 This subparagraph (S) is exempt from the

18 provisions of Section 250;

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

20 the deductions allocable thereto) taken into account

21 for the taxable year with respect to a transaction

22 with a taxpayer that is required to make an addition

23 modification with respect to such transaction under

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

25 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

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

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1 income from intangible property (net of the deductions

2 allocable thereto) taken into account for the taxable

3 year with respect to a transaction with a taxpayer

4 that is required to make an addition modification with

5 respect to such transaction under Section

6 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

7 203(d)(2)(D-8), but not to exceed the amount of such

8 addition modification. This subparagraph (T) is exempt

9 from the provisions of Section 250;

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

11 into account for the taxable year (net of the

12 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

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

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1 interest paid, accrued, or incurred, directly or

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

3 is exempt from the provisions of Section 250;

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

5 property taken into account for the taxable year (net

6 of the deductions allocable thereto) with respect to

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

8 member of the taxpayer's unitary business group but

9 for the fact that the foreign person's business

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

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

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

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

14 business group but for the fact that the person is

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

16 included in the unitary business group because he or

17 she is ordinarily required to apportion business

18 income under different subsections of Section 304, but

19 not to exceed the addition modification required to be

20 made for the same taxable year under Section

21 203(c)(2)(G-13) for intangible expenses and costs

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

23 the same foreign person. This subparagraph (V) is

24 exempt from the provisions of Section 250;

25 (W) in the case of an estate, an amount equal to

26 all amounts included in such total pursuant to the

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1 provisions of Section 111 of the Internal Revenue Code

2 as a recovery of items previously deducted by the

3 decedent from adjusted gross income in the computation

4 of taxable income. This subparagraph (W) is exempt

5 from Section 250;

6 (X) an amount equal to the refund included in such

7 total of any tax deducted for federal income tax

8 purposes, to the extent that deduction was added back

9 under subparagraph (F). This subparagraph (X) is

10 exempt from the provisions of Section 250;

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

12 31, 2011, in the case of a taxpayer who was required to

13 add back any insurance premiums under Section

14 203(c)(2)(G-14), such taxpayer may elect to subtract

15 that part of a reimbursement received from the

16 insurance company equal to the amount of the expense

17 or loss (including expenses incurred by the insurance

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

19 deduction for federal income tax purposes if the

20 expense or loss had been uninsured. If a taxpayer

21 makes the election provided for by this subparagraph

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

23 add back to income the amount subtracted by the

24 taxpayer pursuant to this subparagraph (Y). This

25 subparagraph (Y) is exempt from the provisions of

26 Section 250;

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1 (Z) For taxable years beginning after December 31,

2 2018 and before January 1, 2026, the amount of excess

3 business loss of the taxpayer disallowed as a

4 deduction by Section 461(l)(1)(B) of the Internal

5 Revenue Code; and

6 (AA) For taxable years beginning on or after

7 January 1, 2023, for any cannabis establishment

8 operating in this State and licensed under the

9 Cannabis Regulation and Tax Act or any cannabis

10 cultivation center or medical cannabis dispensing

11 organization operating in this State and licensed

12 under the Compassionate Use of Medical Cannabis

13 Program Act, an amount equal to the deductions that

14 were disallowed under Section 280E of the Internal

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

16 added back under this subsection. The provisions of

17 this subparagraph (AA) are exempt from the provisions

18 of Section 250.

19 (3) Limitation. The amount of any modification

20 otherwise required under this subsection shall, under

21 regulations prescribed by the Department, be adjusted by

22 any amounts included therein which were properly paid,

23 credited, or required to be distributed, or permanently

24 set aside for charitable purposes pursuant to Internal

25 Revenue Code Section 642(c) during the taxable year.

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1 (d) Partnerships.

2 (1) In general. In the case of a partnership, base

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

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

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

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

7 of the following amounts:

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

9 to the taxpayer as interest or dividends during the

10 taxable year to the extent excluded from gross income

11 in the computation of taxable income;

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

13 this Act to the extent deducted from gross income for

14 the taxable year;

15 (C) The amount of deductions allowed to the

16 partnership pursuant to Section 707 (c) of the

17 Internal Revenue Code in calculating its taxable

18 income;

19 (D) An amount equal to the amount of the capital

20 gain deduction allowable under the Internal Revenue

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

22 computation of taxable income;

23 (D-5) For taxable years 2001 and thereafter, an

24 amount equal to the bonus depreciation deduction taken

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

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

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1 the Internal Revenue Code;

2 (D-6) If the taxpayer sells, transfers, abandons,

3 or otherwise disposes of property for which the

4 taxpayer was required in any taxable year to make an

5 addition modification under subparagraph (D-5), then

6 an amount equal to the aggregate amount of the

7 deductions taken in all taxable years under

8 subparagraph (O) with respect to that property.

9 If the taxpayer continues to own property through

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

11 subtraction is allowed with respect to that property

12 under subparagraph (O) and for which the taxpayer was

13 allowed in any taxable year to make a subtraction

14 modification under subparagraph (O), then an amount

15 equal to that subtraction modification.

16 The taxpayer is required to make the addition

17 modification under this subparagraph only once with

18 respect to any one piece of property;

19 (D-7) An amount equal to the amount otherwise

20 allowed as a deduction in computing base income for

21 interest paid, accrued, or incurred, directly or

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

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

24 member of the same unitary business group but for the

25 fact the foreign person's business activity outside

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

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

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

3 who would be a member of the same unitary business

4 group but for the fact that the person is prohibited

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

6 unitary business group because he or she is ordinarily

7 required to apportion business income under different

8 subsections of Section 304. The addition modification

9 required by this subparagraph shall be reduced to the

10 extent that dividends were included in base income of

11 the unitary group for the same taxable year and

12 received by the taxpayer or by a member of the

13 taxpayer's unitary business group (including amounts

14 included in gross income pursuant to Sections 951

15 through 964 of the Internal Revenue Code and amounts

16 included in gross income under Section 78 of the

17 Internal Revenue Code) with respect to the stock of

18 the same person to whom the interest was paid,

19 accrued, or incurred.

20 This paragraph shall not apply to the following:

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

22 incurred, directly or indirectly, to a person who

23 is subject in a foreign country or state, other

24 than a state which requires mandatory unitary

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

26 with respect to such interest; or

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

2 incurred, directly or indirectly, to a person if

3 the taxpayer can establish, based on a

4 preponderance of the evidence, both of the

5 following:

6 (a) the person, during the same taxable

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

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

9 (b) the transaction giving rise to the

10 interest expense between the taxpayer and the

11 person did not have as a principal purpose the

12 avoidance of Illinois income tax, and is paid

13 pursuant to a contract or agreement that

14 reflects an arm's-length interest rate and

15 terms; or

16 (iii) the taxpayer can establish, based on

17 clear and convincing evidence, that the interest

18 paid, accrued, or incurred relates to a contract

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

20 and terms and the principal purpose for the

21 payment is not federal or Illinois tax avoidance;

22 or

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

24 incurred, directly or indirectly, to a person if

25 the taxpayer establishes by clear and convincing

26 evidence that the adjustments are unreasonable; or

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1 if the taxpayer and the Director agree in writing

2 to the application or use of an alternative method

3 of apportionment under Section 304(f).

4 Nothing in this subsection shall preclude the

5 Director from making any other adjustment

6 otherwise allowed under Section 404 of this Act

7 for any tax year beginning after the effective

8 date of this amendment provided such adjustment is

9 made pursuant to regulation adopted by the

10 Department and such regulations provide methods

11 and standards by which the Department will utilize

12 its authority under Section 404 of this Act; and

13 (D-8) An amount equal to the amount of intangible

14 expenses and costs otherwise allowed as a deduction in

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

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

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

18 foreign person who would be a member of the same

19 unitary business group but for the fact that the

20 foreign person's business activity outside the United

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

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

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

24 the same unitary business group but for the fact that

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

26 from being included in the unitary business group

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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

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1 similar expenses and costs. For purposes of this

2 subparagraph, "intangible property" includes patents,

3 patent applications, trade names, trademarks, service

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

5 similar types of intangible assets;

6 This paragraph shall not apply to the following:

7 (i) any item of intangible expenses or costs

8 paid, accrued, or incurred, directly or

9 indirectly, from a transaction with a person who

10 is subject in a foreign country or state, other

11 than a state which requires mandatory unitary

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

13 with respect to such item; or

14 (ii) any item of intangible expense or cost

15 paid, accrued, or incurred, directly or

16 indirectly, if the taxpayer can establish, based

17 on a preponderance of the evidence, both of the

18 following:

19 (a) the person during the same taxable

20 year paid, accrued, or incurred, the

21 intangible expense or cost to a person that is

22 not a related member, and

23 (b) the transaction giving rise to the

24 intangible expense or cost between the

25 taxpayer and the person did not have as a

26 principal purpose the avoidance of Illinois

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1 income tax, and is paid pursuant to a contract

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

3 or

4 (iii) any item of intangible expense or cost

5 paid, accrued, or incurred, directly or

6 indirectly, from a transaction with a person if

7 the taxpayer establishes by clear and convincing

8 evidence, that the adjustments are unreasonable;

9 or if the taxpayer and the Director agree in

10 writing to the application or use of an

11 alternative method of apportionment under Section

12 304(f);

13 Nothing in this subsection shall preclude the

14 Director from making any other adjustment

15 otherwise allowed under Section 404 of this Act

16 for any tax year beginning after the effective

17 date of this amendment provided such adjustment is

18 made pursuant to regulation adopted by the

19 Department and such regulations provide methods

20 and standards by which the Department will utilize

21 its authority under Section 404 of this Act;

22 (D-9) For taxable years ending on or after

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

24 insurance premium expenses and costs otherwise allowed

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

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

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

2 business group but for the fact that the person is

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

4 included in the unitary business group because he or

5 she is ordinarily required to apportion business

6 income under different subsections of Section 304. The

7 addition modification required by this subparagraph

8 shall be reduced to the extent that dividends were

9 included in base income of the unitary group for the

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

11 member of the taxpayer's unitary business group

12 (including amounts included in gross income under

13 Sections 951 through 964 of the Internal Revenue Code

14 and amounts included in gross income under Section 78

15 of the Internal Revenue Code) with respect to the

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

17 were directly or indirectly paid, incurred, or

18 accrued. The preceding sentence does not apply to the

19 extent that the same dividends caused a reduction to

20 the addition modification required under Section

21 203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;

22 (D-10) An amount equal to the credit allowable to

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

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

25 Act;

26 (D-11) For taxable years ending on or after

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

2 allowed under Section 199 of the Internal Revenue Code

3 for the taxable year;

4 (D-12) the amount that is claimed as a federal

5 deduction when computing the taxpayer's federal

6 taxable income for the taxable year and that is

7 attributable to an endowment gift for which the

8 taxpayer receives a credit under the Illinois Gives

9 Tax Credit Act;

10 and by deducting from the total so obtained the following

11 amounts:

12 (E) The valuation limitation amount;

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

14 imposed by this Act which was refunded to the taxpayer

15 and included in such total for the taxable year;

16 (G) An amount equal to all amounts included in

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

18 (C) and (D) which are exempt from taxation by this

19 State either by reason of its statutes or Constitution

20 or by reason of the Constitution, treaties or statutes

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

22 statute of this State that exempts income derived from

23 bonds or other obligations from the tax imposed under

24 this Act, the amount exempted shall be the interest

25 net of bond premium amortization;

26 (H) Any income of the partnership which

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1 constitutes personal service income as defined in

2 Section 1348(b)(1) of the Internal Revenue Code (as in

3 effect December 31, 1981) or a reasonable allowance

4 for compensation paid or accrued for services rendered

5 by partners to the partnership, whichever is greater;

6 this subparagraph (H) is exempt from the provisions of

7 Section 250;

8 (I) An amount equal to all amounts of income

9 distributable to an entity subject to the Personal

10 Property Tax Replacement Income Tax imposed by

11 subsections (c) and (d) of Section 201 of this Act

12 including amounts distributable to organizations

13 exempt from federal income tax by reason of Section

14 501(a) of the Internal Revenue Code; this subparagraph

15 (I) is exempt from the provisions of Section 250;

16 (J) With the exception of any amounts subtracted

17 under subparagraph (G), an amount equal to the sum of

18 all amounts disallowed as deductions by (i) Sections

19 171(a)(2) and 265(a)(2) of the Internal Revenue Code,

20 and all amounts of expenses allocable to interest and

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

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

23 ending on or after August 13, 1999, Sections

24 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

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

26 ending on or after December 31, 2011, Section

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1 45G(e)(3) of the Internal Revenue Code and, for

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

3 any amount included in gross income under Section 87

4 of the Internal Revenue Code; the provisions of this

5 subparagraph are exempt from the provisions of Section

6 250;

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

8 such total which were paid by a corporation which

9 conducts business operations in a River Edge

10 Redevelopment Zone or zones created under the River

11 Edge Redevelopment Zone Act and conducts substantially

12 all of its operations from a River Edge Redevelopment

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

14 the provisions of Section 250;

15 (L) An amount equal to any contribution made to a

16 job training project established pursuant to the Real

17 Property Tax Increment Allocation Redevelopment Act;

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

19 such total that were paid by a corporation that

20 conducts business operations in a federally designated

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

22 a High Impact Business located in Illinois; provided

23 that dividends eligible for the deduction provided in

24 subparagraph (K) of paragraph (2) of this subsection

25 shall not be eligible for the deduction provided under

26 this subparagraph (M);

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1 (N) 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 (O) For taxable years 2001 and thereafter, for the

7 taxable year in which the bonus depreciation deduction

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

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

10 Revenue Code and for each applicable taxable year

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

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

13 deduction taken for the taxable year on the

14 taxpayer's federal income tax return on property

15 for which the bonus depreciation deduction was

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

17 168 of the Internal Revenue Code, but not

18 including the bonus depreciation deduction;

19 (2) for taxable years ending on or before

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

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

22 0.429); and

23 (3) for taxable years ending after December

24 31, 2005:

25 (i) for property on which a bonus

26 depreciation deduction of 30% of the adjusted

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

2 30 and then divided by 70 (or "y" multiplied

3 by 0.429);

4 (ii) for property on which a bonus

5 depreciation deduction of 50% of the adjusted

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

7 1.0;

8 (iii) for property on which a bonus

9 depreciation deduction of 100% of the adjusted

10 basis was taken in a taxable year ending on or

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

12 depreciation deduction that would be allowed

13 on that property if the taxpayer had made the

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

15 Internal Revenue Code to not claim bonus

16 depreciation on that property; and

17 (iv) for property on which a bonus

18 depreciation deduction of a percentage other

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

20 was taken in a taxable year ending on or after

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

22 by 100 times the percentage bonus depreciation

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

24 then divided by 100 times 1 minus the

25 percentage bonus depreciation on the property

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

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1 The aggregate amount deducted under this

2 subparagraph in all taxable years for any one piece of

3 property may not exceed the amount of the bonus

4 depreciation deduction taken on that property on the

5 taxpayer's federal income tax return under subsection

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

7 subparagraph (O) is exempt from the provisions of

8 Section 250;

9 (P) If the taxpayer sells, transfers, abandons, or

10 otherwise disposes of property for which the taxpayer

11 was required in any taxable year to make an addition

12 modification under subparagraph (D-5), then an amount

13 equal to that addition modification.

14 If the taxpayer continues to own property through

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

16 subtraction is allowed with respect to that property

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

18 required in any taxable year to make an addition

19 modification under subparagraph (D-5), then an amount

20 equal to that addition modification.

21 The taxpayer is allowed to take the deduction

22 under this subparagraph only once with respect to any

23 one piece of property.

24 This subparagraph (P) is exempt from the

25 provisions of Section 250;

26 (Q) The amount of (i) any interest income (net of

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1 the deductions allocable thereto) taken into account

2 for the taxable year with respect to a transaction

3 with a taxpayer that is required to make an addition

4 modification with respect to such transaction under

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

6 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

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

8 income from intangible property (net of the deductions

9 allocable thereto) taken into account for the taxable

10 year with respect to a transaction with a taxpayer

11 that is required to make an addition modification with

12 respect to such transaction under Section

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

14 203(d)(2)(D-8), but not to exceed the amount of such

15 addition modification. This subparagraph (Q) is exempt

16 from Section 250;

17 (R) An amount equal to the interest income taken

18 into account for the taxable year (net of the

19 deductions allocable thereto) with respect to

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

21 member of the taxpayer's unitary business group but

22 for the fact that the foreign person's business

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

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

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

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

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1 business group but for the fact that the person is

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

3 included in the unitary business group because he or

4 she is ordinarily required to apportion business

5 income under different subsections of Section 304, but

6 not to exceed the addition modification required to be

7 made for the same taxable year under Section

8 203(d)(2)(D-7) for interest paid, accrued, or

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

10 This subparagraph (R) is exempt from Section 250;

11 (S) An amount equal to the income from intangible

12 property taken into account for the taxable year (net

13 of the deductions allocable thereto) with respect to

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

15 member of the taxpayer's unitary business group but

16 for the fact that the foreign person's business

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

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

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

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

21 business group but for the fact that the person is

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

23 included in the unitary business group because he or

24 she is ordinarily required to apportion business

25 income under different subsections of Section 304, but

26 not to exceed the addition modification required to be

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1 made for the same taxable year under Section

2 203(d)(2)(D-8) for intangible expenses and costs paid,

3 accrued, or incurred, directly or indirectly, to the

4 same person. This subparagraph (S) is exempt from

5 Section 250;

6 (T) 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(d)(2)(D-9), 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

12 or 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

16 makes the election provided for by this subparagraph

17 (T), the insurer to which the premiums were paid must

18 add back to income the amount subtracted by the

19 taxpayer pursuant to this subparagraph (T). This

20 subparagraph (T) is exempt from the provisions of

21 Section 250; and

22 (U) For taxable years beginning on or after

23 January 1, 2023, for any cannabis establishment

24 operating in this State and licensed under the

25 Cannabis Regulation and Tax Act or any cannabis

26 cultivation center or medical cannabis dispensing

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1 organization operating in this State and licensed

2 under the Compassionate Use of Medical Cannabis

3 Program Act, an amount equal to the deductions that

4 were disallowed under Section 280E of the Internal

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

6 added back under this subsection. The provisions of

7 this subparagraph (U) are exempt from the provisions

8 of Section 250.

9 (e) Gross income; adjusted gross income; taxable income.

10 (1) In general. Subject to the provisions of paragraph

11 (2) and subsection (b)(3), for purposes of this Section

12 and Section 803(e), a taxpayer's gross income, adjusted

13 gross income, or taxable income for the taxable year shall

14 mean the amount of gross income, adjusted gross income or

15 taxable income properly reportable for federal income tax

16 purposes for the taxable year under the provisions of the

17 Internal Revenue Code. Taxable income may be less than

18 zero. However, for taxable years ending on or after

19 December 31, 1986, net operating loss carryforwards from

20 taxable years ending prior to December 31, 1986, may not

21 exceed the sum of federal taxable income for the taxable

22 year before net operating loss deduction, plus the excess

23 of addition modifications over subtraction modifications

24 for the taxable year. For taxable years ending prior to

25 December 31, 1986, taxable income may never be an amount

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1 in excess of the net operating loss for the taxable year as

2 defined in subsections (c) and (d) of Section 172 of the

3 Internal Revenue Code, provided that when taxable income

4 of a corporation (other than a Subchapter S corporation),

5 trust, or estate is less than zero and addition

6 modifications, other than those provided by subparagraph

7 (E) of paragraph (2) of subsection (b) for corporations or

8 subparagraph (E) of paragraph (2) of subsection (c) for

9 trusts and estates, exceed subtraction modifications, an

10 addition modification must be made under those

11 subparagraphs for any other taxable year to which the

12 taxable income less than zero (net operating loss) is

13 applied under Section 172 of the Internal Revenue Code or

14 under subparagraph (E) of paragraph (2) of this subsection

15 (e) applied in conjunction with Section 172 of the

16 Internal Revenue Code.

17 (2) Special rule. For purposes of paragraph (1) of

18 this subsection, the taxable income properly reportable

19 for federal income tax purposes shall mean:

20 (A) Certain life insurance companies. In the case

21 of a life insurance company subject to the tax imposed

22 by Section 801 of the Internal Revenue Code, life

23 insurance company taxable income, plus the amount of

24 distribution from pre-1984 policyholder surplus

25 accounts as calculated under Section 815a of the

26 Internal Revenue Code;

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1 (B) Certain other insurance companies. In the case

2 of mutual insurance companies subject to the tax

3 imposed by Section 831 of the Internal Revenue Code,

4 insurance company taxable income;

5 (C) Regulated investment companies. In the case of

6 a regulated investment company subject to the tax

7 imposed by Section 852 of the Internal Revenue Code,

8 investment company taxable income;

9 (D) Real estate investment trusts. In the case of

10 a real estate investment trust subject to the tax

11 imposed by Section 857 of the Internal Revenue Code,

12 real estate investment trust taxable income;

13 (E) Consolidated corporations. In the case of a

14 corporation which is a member of an affiliated group

15 of corporations filing a consolidated income tax

16 return for the taxable year for federal income tax

17 purposes, taxable income determined as if such

18 corporation had filed a separate return for federal

19 income tax purposes for the taxable year and each

20 preceding taxable year for which it was a member of an

21 affiliated group. For purposes of this subparagraph,

22 the taxpayer's separate taxable income shall be

23 determined as if the election provided by Section

24 243(b)(2) of the Internal Revenue Code had been in

25 effect for all such years;

26 (F) Cooperatives. In the case of a cooperative

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1 corporation or association, the taxable income of such

2 organization determined in accordance with the

3 provisions of Section 1381 through 1388 of the

4 Internal Revenue Code, but without regard to the

5 prohibition against offsetting losses from patronage

6 activities against income from nonpatronage

7 activities; except that a cooperative corporation or

8 association may make an election to follow its federal

9 income tax treatment of patronage losses and

10 nonpatronage losses. In the event such election is

11 made, such losses shall be computed and carried over

12 in a manner consistent with subsection (a) of Section

13 207 of this Act and apportioned by the apportionment

14 factor reported by the cooperative on its Illinois

15 income tax return filed for the taxable year in which

16 the losses are incurred. The election shall be

17 effective for all taxable years with original returns

18 due on or after the date of the election. In addition,

19 the cooperative may file an amended return or returns,

20 as allowed under this Act, to provide that the

21 election shall be effective for losses incurred or

22 carried forward for taxable years occurring prior to

23 the date of the election. Once made, the election may

24 only be revoked upon approval of the Director. The

25 Department shall adopt rules setting forth

26 requirements for documenting the elections and any

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1 resulting Illinois net loss and the standards to be

2 used by the Director in evaluating requests to revoke

3 elections. Public Act 96-932 is declaratory of

4 existing law;

5 (G) Subchapter S corporations. In the case of: (i)

6 a Subchapter S corporation for which there is in

7 effect an election for the taxable year under Section

8 1362 of the Internal Revenue Code, the taxable income

9 of such corporation determined in accordance with

10 Section 1363(b) of the Internal Revenue Code, except

11 that taxable income shall take into account those

12 items which are required by Section 1363(b)(1) of the

13 Internal Revenue Code to be separately stated; and

14 (ii) a Subchapter S corporation for which there is in

15 effect a federal election to opt out of the provisions

16 of the Subchapter S Revision Act of 1982 and have

17 applied instead the prior federal Subchapter S rules

18 as in effect on July 1, 1982, the taxable income of

19 such corporation determined in accordance with the

20 federal Subchapter S rules as in effect on July 1,

21 1982; and

22 (H) Partnerships. In the case of a partnership,

23 taxable income determined in accordance with Section

24 703 of the Internal Revenue Code, except that taxable

25 income shall take into account those items which are

26 required by Section 703(a)(1) to be separately stated

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1 but which would be taken into account by an individual

2 in calculating his taxable income.

3 (3) Recapture of business expenses on disposition of

4 asset or business. Notwithstanding any other law to the

5 contrary, if in prior years income from an asset or

6 business has been classified as business income and in a

7 later year is demonstrated to be non-business income, then

8 all expenses, without limitation, deducted in such later

9 year and in the 2 immediately preceding taxable years

10 related to that asset or business that generated the

11 non-business income shall be added back and recaptured as

12 business income in the year of the disposition of the

13 asset or business. Such amount shall be apportioned to

14 Illinois using the greater of the apportionment fraction

15 computed for the business under Section 304 of this Act

16 for the taxable year or the average of the apportionment

17 fractions computed for the business under Section 304 of

18 this Act for the taxable year and for the 2 immediately

19 preceding taxable years.

20 (f) Valuation limitation amount.

21 (1) In general. The valuation limitation amount

22 referred to in subsections (a)(2)(G), (c)(2)(I) and

23 (d)(2)(E) is an amount equal to:

24 (A) The sum of the pre-August 1, 1969 appreciation

25 amounts (to the extent consisting of gain reportable

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1 under the provisions of Section 1245 or 1250 of the

2 Internal Revenue Code) for all property in respect of

3 which such gain was reported for the taxable year;

4 plus

5 (B) The lesser of (i) the sum of the pre-August 1,

6 1969 appreciation amounts (to the extent consisting of

7 capital gain) for all property in respect of which

8 such gain was reported for federal income tax purposes

9 for the taxable year, or (ii) the net capital gain for

10 the taxable year, reduced in either case by any amount

11 of such gain included in the amount determined under

12 subsection (a)(2)(F) or (c)(2)(H).

13 (2) Pre-August 1, 1969 appreciation amount.

14 (A) If the fair market value of property referred

15 to in paragraph (1) was readily ascertainable on

16 August 1, 1969, the pre-August 1, 1969 appreciation

17 amount for such property is the lesser of (i) the

18 excess of such fair market value over the taxpayer's

19 basis (for determining gain) for such property on that

20 date (determined under the Internal Revenue Code as in

21 effect on that date), or (ii) the total gain realized

22 and reportable for federal income tax purposes in

23 respect of the sale, exchange or other disposition of

24 such property.

25 (B) If the fair market value of property referred

26 to in paragraph (1) was not readily ascertainable on

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1 August 1, 1969, the pre-August 1, 1969 appreciation

2 amount for such property is that amount which bears

3 the same ratio to the total gain reported in respect of

4 the property for federal income tax purposes for the

5 taxable year, as the number of full calendar months in

6 that part of the taxpayer's holding period for the

7 property ending July 31, 1969 bears to the number of

8 full calendar months in the taxpayer's entire holding

9 period for the property.

10 (C) The Department shall prescribe such

11 regulations as may be necessary to carry out the

12 purposes of this paragraph.

13 (g) Double deductions. Unless specifically provided

14 otherwise, nothing in this Section shall permit the same item

15 to be deducted more than once.

16 (h) Legislative intention. Except as expressly provided by

17 this Section there shall be no modifications or limitations on

18 the amounts of income, gain, loss or deduction taken into

19 account in determining gross income, adjusted gross income or

20 taxable income for federal income tax purposes for the taxable

21 year, or in the amount of such items entering into the

22 computation of base income and net income under this Act for

23 such taxable year, whether in respect of property values as of

24 August 1, 1969 or otherwise.

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1 (Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;

2 102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.

3 12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; 103-592,

4 Article 10, Section 10-900, eff. 6-7-24; 103-592, Article 170,

5 Section 170-90, eff. 6-7-24; 103-605, eff. 7-1-24; 103-647,

6 eff. 7-1-24; revised 8-20-24.)

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INDEX

Statutes amended in order of appearance