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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB0219

Introduced 1/22/2025, by Sen. Mike Porfirio

SYNOPSIS AS INTRODUCED:

35 ILCS 5/203

Amends the Illinois Income Tax Act. Creates an income tax deduction
for taxpayers who are law enforcement officers in an amount equal to the
amount of overtime compensation that is paid to the taxpayer during the
taxable year for the taxpayer's service as a law enforcement officer and
that is included in the taxpayer's federal adjusted gross income.
Effective immediately.
LRB104 07439 HLH 17480 b

A BILL FOR

SB0219
LRB104 07439 HLH 17480 b
1

AN ACT concerning revenue.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Illinois Income Tax Act is amended by
5
changing Section 203 as follows:

6

(35 ILCS 5/203)
7

Sec. 203.
Base income defined.
8

(a) Individuals.
9

(1) In general. In the case of an individual, base
10

income means an amount equal to the taxpayer's adjusted
11

gross income for the taxable year as modified by paragraph
12

(2).
13

(2) Modifications. The adjusted gross income referred
14

to in paragraph (1) shall be modified by adding thereto
15

the sum of the following amounts:
16

(A) An amount equal to all amounts paid or accrued
17

to the taxpayer as interest or dividends during the
18

taxable year to the extent excluded from gross income
19

in the computation of adjusted gross income, except
20

stock dividends of qualified public utilities
21

described in Section 305(e) of the Internal Revenue
22

Code;
23

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

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1

this Act to the extent deducted from gross income in
2

the computation of adjusted gross income for the
3

taxable year;
4

(C) An amount equal to the amount received during
5

the taxable year as a recovery or refund of real
6

property taxes paid with respect to the taxpayer's
7

principal residence under the Revenue Act of 1939 and
8

for which a deduction was previously taken under
9

subparagraph (L) of this paragraph (2) prior to July
10

1, 1991, the retrospective application date of Article
11

4 of Public Act 87-17. In the case of multi-unit or
12

multi-use structures and farm dwellings, the taxes on
13

the taxpayer's principal residence shall be that
14

portion of the total taxes for the entire property
15

which is attributable to such principal residence;
16

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

gain deduction allowable under the Internal Revenue
18

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

computation of adjusted gross income;
20

(D-5) An amount, to the extent not included in
21

adjusted gross income, equal to the amount of money
22

withdrawn by the taxpayer in the taxable year from a
23

medical care savings account and the interest earned
24

on the account in the taxable year of a withdrawal
25

pursuant to subsection (b) of Section 20 of the
26

Medical Care Savings Account Act or subsection (b) of

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1

Section 20 of the Medical Care Savings Account Act of
2

2000;
3

(D-10) For taxable years ending after December 31,
4

1997, an amount equal to any eligible remediation
5

costs that the individual deducted in computing
6

adjusted gross income and for which the individual
7

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

(D-15) For taxable years 2001 and thereafter, an
9

amount equal to the bonus depreciation deduction taken
10

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

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

the Internal Revenue Code;
13

(D-16) If the taxpayer sells, transfers, abandons,
14

or otherwise disposes of property for which the
15

taxpayer was required in any taxable year to make an
16

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

an amount equal to the aggregate amount of the
18

deductions taken in all taxable years under
19

subparagraph (Z) with respect to that property.
20

If the taxpayer continues to own property through
21

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

subtraction is allowed with respect to that property
23

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

allowed in any taxable year to make a subtraction
25

modification under subparagraph (Z), then an amount
26

equal to that subtraction modification.

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The taxpayer is required to make the addition
2

modification under this subparagraph only once with
3

respect to any one piece of property;
4

(D-17) An amount equal to the amount otherwise
5

allowed as a deduction in computing base income for
6

interest paid, accrued, or incurred, directly or
7

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

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

member of the same unitary business group but for the
10

fact that foreign person's business activity outside
11

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

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

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

who would be a member of the same unitary business
15

group but for the fact that the person is prohibited
16

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

unitary business group because he or she is ordinarily
18

required to apportion business income under different
19

subsections of Section 304. The addition modification
20

required by this subparagraph shall be reduced to the
21

extent that dividends were included in base income of
22

the unitary group for the same taxable year and
23

received by the taxpayer or by a member of the
24

taxpayer's unitary business group (including amounts
25

included in gross income under Sections 951 through
26

964 of the Internal Revenue Code and amounts included

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LRB104 07439 HLH 17480 b
1

in gross income under Section 78 of the Internal
2

Revenue Code) with respect to the stock of the same
3

person to whom the interest was paid, accrued, or
4

incurred.
5

This paragraph shall not apply to the following:
6

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

incurred, directly or indirectly, to a person who
8

is subject in a foreign country or state, other
9

than a state which requires mandatory unitary
10

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

with respect to such interest; or
12

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

incurred, directly or indirectly, to a person if
14

the taxpayer can establish, based on a
15

preponderance of the evidence, both of the
16

following:
17

(a) the person, during the same taxable
18

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

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

(b) the transaction giving rise to the
21

interest expense between the taxpayer and the
22

person did not have as a principal purpose the
23

avoidance of Illinois income tax, and is paid
24

pursuant to a contract or agreement that
25

reflects an arm's-length interest rate and
26

terms; or

SB0219
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LRB104 07439 HLH 17480 b
1

(iii) the taxpayer can establish, based on
2

clear and convincing evidence, that the interest
3

paid, accrued, or incurred relates to a contract
4

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

and terms and the principal purpose for the
6

payment is not federal or Illinois tax avoidance;
7

or
8

(iv) an item of interest paid, accrued, or
9

incurred, directly or indirectly, to a person if
10

the taxpayer establishes by clear and convincing
11

evidence that the adjustments are unreasonable; or
12

if the taxpayer and the Director agree in writing
13

to the application or use of an alternative method
14

of apportionment under Section 304(f).
15

Nothing in this subsection shall preclude the
16

Director from making any other adjustment
17

otherwise allowed under Section 404 of this Act
18

for any tax year beginning after the effective
19

date of this amendment provided such adjustment is
20

made pursuant to regulation adopted by the
21

Department and such regulations provide methods
22

and standards by which the Department will utilize
23

its authority under Section 404 of this Act;
24

(D-18) An amount equal to the amount of intangible
25

expenses and costs otherwise allowed as a deduction in
26

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

SB0219
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LRB104 07439 HLH 17480 b
1

incurred, directly or indirectly, (i) for taxable
2

years ending on or after December 31, 2004, to a
3

foreign person who would be a member of the same
4

unitary business group but for the fact that the
5

foreign person's business activity outside the United
6

States is 80% or more of that person's total business
7

activity and (ii) for taxable years ending on or after
8

December 31, 2008, to a person who would be a member of
9

the same unitary business group but for the fact that
10

the person is prohibited under Section 1501(a)(27)
11

from being included in the unitary business group
12

because he or she is ordinarily required to apportion
13

business income under different subsections of Section
14

304. The addition modification required by this
15

subparagraph shall be reduced to the extent that
16

dividends were included in base income of the unitary
17

group for the same taxable year and received by the
18

taxpayer or by a member of the taxpayer's unitary
19

business group (including amounts included in gross
20

income under Sections 951 through 964 of the Internal
21

Revenue Code and amounts included in gross income
22

under Section 78 of the Internal Revenue Code) with
23

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

intangible expenses and costs were directly or
25

indirectly paid, incurred, or accrued. The preceding
26

sentence does not apply to the extent that the same

SB0219
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LRB104 07439 HLH 17480 b
1

dividends caused a reduction to the addition
2

modification required under Section 203(a)(2)(D-17) of
3

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

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

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

indirect acquisition, use, maintenance or management,
7

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

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

indirectly, from factoring transactions or discounting
10

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

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

similar expenses and costs. For purposes of this
13

subparagraph, "intangible property" includes patents,
14

patent applications, trade names, trademarks, service
15

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

similar types of intangible assets.
17

This paragraph shall not apply to the following:
18

(i) any item of intangible expenses or costs
19

paid, accrued, or incurred, directly or
20

indirectly, from a transaction with a person who
21

is subject in a foreign country or state, other
22

than a state which requires mandatory unitary
23

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

with respect to such item; or
25

(ii) any item of intangible expense or cost
26

paid, accrued, or incurred, directly or

SB0219
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LRB104 07439 HLH 17480 b
1

indirectly, if the taxpayer can establish, based
2

on a preponderance of the evidence, both of the
3

following:
4

(a) the person during the same taxable
5

year paid, accrued, or incurred, the
6

intangible expense or cost to a person that is
7

not a related member, and
8

(b) the transaction giving rise to the
9

intangible expense or cost between the
10

taxpayer and the person did not have as a
11

principal purpose the avoidance of Illinois
12

income tax, and is paid pursuant to a contract
13

or agreement that reflects arm's-length terms;
14

or
15

(iii) any item of intangible expense or cost
16

paid, accrued, or incurred, directly or
17

indirectly, from a transaction with a person if
18

the taxpayer establishes by clear and convincing
19

evidence, that the adjustments are unreasonable;
20

or if the taxpayer and the Director agree in
21

writing to the application or use of an
22

alternative method of apportionment under Section
23

304(f);
24

Nothing in this subsection shall preclude the
25

Director from making any other adjustment
26

otherwise allowed under Section 404 of this Act

SB0219
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LRB104 07439 HLH 17480 b
1

for any tax year beginning after the effective
2

date of this amendment provided such adjustment is
3

made pursuant to regulation adopted by the
4

Department and such regulations provide methods
5

and standards by which the Department will utilize
6

its authority under Section 404 of this Act;
7

(D-19) For taxable years ending on or after
8

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

insurance premium expenses and costs otherwise allowed
10

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

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

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

business group but for the fact that the person is
14

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

included in the unitary business group because he or
16

she is ordinarily required to apportion business
17

income under different subsections of Section 304. The
18

addition modification required by this subparagraph
19

shall be reduced to the extent that dividends were
20

included in base income of the unitary group for the
21

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

member of the taxpayer's unitary business group
23

(including amounts included in gross income under
24

Sections 951 through 964 of the Internal Revenue Code
25

and amounts included in gross income under Section 78
26

of the Internal Revenue Code) with respect to the

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LRB104 07439 HLH 17480 b
1

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

were directly or indirectly paid, incurred, or
3

accrued. The preceding sentence does not apply to the
4

extent that the same dividends caused a reduction to
5

the addition modification required under Section
6

203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
7

Act;
8

(D-20) For taxable years beginning on or after
9

January 1, 2002 and ending on or before December 31,
10

2006, in the case of a distribution from a qualified
11

tuition program under Section 529 of the Internal
12

Revenue Code, other than (i) a distribution from a
13

College Savings Pool created under Section 16.5 of the
14

State Treasurer Act or (ii) a distribution from the
15

Illinois Prepaid Tuition Trust Fund, an amount equal
16

to the amount excluded from gross income under Section
17

529(c)(3)(B). For taxable years beginning on or after
18

January 1, 2007, in the case of a distribution from a
19

qualified tuition program under Section 529 of the
20

Internal Revenue Code, other than (i) a distribution
21

from a College Savings Pool created under Section 16.5
22

of the State Treasurer Act, (ii) a distribution from
23

the Illinois Prepaid Tuition Trust Fund, or (iii) a
24

distribution from a qualified tuition program under
25

Section 529 of the Internal Revenue Code that (I)
26

adopts and determines that its offering materials

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1

comply with the College Savings Plans Network's
2

disclosure principles and (II) has made reasonable
3

efforts to inform in-state residents of the existence
4

of in-state qualified tuition programs by informing
5

Illinois residents directly and, where applicable, to
6

inform financial intermediaries distributing the
7

program to inform in-state residents of the existence
8

of in-state qualified tuition programs at least
9

annually, an amount equal to the amount excluded from
10

gross income under Section 529(c)(3)(B).
11

For the purposes of this subparagraph (D-20), a
12

qualified tuition program has made reasonable efforts
13

if it makes disclosures (which may use the term
14

"in-state program" or "in-state plan" and need not
15

specifically refer to Illinois or its qualified
16

programs by name) (i) directly to prospective
17

participants in its offering materials or makes a
18

public disclosure, such as a website posting; and (ii)
19

where applicable, to intermediaries selling the
20

out-of-state program in the same manner that the
21

out-of-state program distributes its offering
22

materials;
23

(D-20.5) For taxable years beginning on or after
24

January 1, 2018, in the case of a distribution from a
25

qualified ABLE program under Section 529A of the
26

Internal Revenue Code, other than a distribution from

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1

a qualified ABLE program created under Section 16.6 of
2

the State Treasurer Act, an amount equal to the amount
3

excluded from gross income under Section 529A(c)(1)(B)
4

of the Internal Revenue Code;
5

(D-21) For taxable years beginning on or after
6

January 1, 2007, in the case of transfer of moneys from
7

a qualified tuition program under Section 529 of the
8

Internal Revenue Code that is administered by the
9

State to an out-of-state program, an amount equal to
10

the amount of moneys previously deducted from base
11

income under subsection (a)(2)(Y) of this Section;
12

(D-21.5) For taxable years beginning on or after
13

January 1, 2018, in the case of the transfer of moneys
14

from a qualified tuition program under Section 529 or
15

a qualified ABLE program under Section 529A of the
16

Internal Revenue Code that is administered by this
17

State to an ABLE account established under an
18

out-of-state ABLE account program, an amount equal to
19

the contribution component of the transferred amount
20

that was previously deducted from base income under
21

subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
22

Section;
23

(D-22) For taxable years beginning on or after
24

January 1, 2009, and prior to January 1, 2018, in the
25

case of a nonqualified withdrawal or refund of moneys
26

from a qualified tuition program under Section 529 of

SB0219
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LRB104 07439 HLH 17480 b
1

the Internal Revenue Code administered by the State
2

that is not used for qualified expenses at an eligible
3

education institution, an amount equal to the
4

contribution component of the nonqualified withdrawal
5

or refund that was previously deducted from base
6

income under subsection (a)(2)(y) of this Section,
7

provided that the withdrawal or refund did not result
8

from the beneficiary's death or disability. For
9

taxable years beginning on or after January 1, 2018:
10

(1) in the case of a nonqualified withdrawal or
11

refund, as defined under Section 16.5 of the State
12

Treasurer Act, of moneys from a qualified tuition
13

program under Section 529 of the Internal Revenue Code
14

administered by the State, an amount equal to the
15

contribution component of the nonqualified withdrawal
16

or refund that was previously deducted from base
17

income under subsection (a)(2)(Y) of this Section, and
18

(2) in the case of a nonqualified withdrawal or refund
19

from a qualified ABLE program under Section 529A of
20

the Internal Revenue Code administered by the State
21

that is not used for qualified disability expenses, an
22

amount equal to the contribution component of the
23

nonqualified withdrawal or refund that was previously
24

deducted from base income under subsection (a)(2)(HH)
25

of this Section;
26

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

SB0219
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LRB104 07439 HLH 17480 b
1

the taxpayer under Section 218(a) of this Act,
2

determined without regard to Section 218(c) of this
3

Act;
4

(D-24) For taxable years ending on or after
5

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

allowed under Section 199 of the Internal Revenue Code
7

for the taxable year;
8

(D-25) In the case of a resident, an amount equal
9

to the amount of tax for which a credit is allowed
10

pursuant to Section 201(p)(7) of this Act;
11

and by deducting from the total so obtained the sum of the
12

following amounts:
13

(E) For taxable years ending before December 31,
14

2001, any amount included in such total in respect of
15

any compensation (including but not limited to any
16

compensation paid or accrued to a serviceman while a
17

prisoner of war or missing in action) paid to a
18

resident by reason of being on active duty in the Armed
19

Forces of the United States and in respect of any
20

compensation paid or accrued to a resident who as a
21

governmental employee was a prisoner of war or missing
22

in action, and in respect of any compensation paid to a
23

resident in 1971 or thereafter for annual training
24

performed pursuant to Sections 502 and 503, Title 32,
25

United States Code as a member of the Illinois
26

National Guard or, beginning with taxable years ending

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1

on or after December 31, 2007, the National Guard of
2

any other state. For taxable years ending on or after
3

December 31, 2001, any amount included in such total
4

in respect of any compensation (including but not
5

limited to any compensation paid or accrued to a
6

serviceman while a prisoner of war or missing in
7

action) paid to a resident by reason of being a member
8

of any component of the Armed Forces of the United
9

States and in respect of any compensation paid or
10

accrued to a resident who as a governmental employee
11

was a prisoner of war or missing in action, and in
12

respect of any compensation paid to a resident in 2001
13

or thereafter by reason of being a member of the
14

Illinois National Guard or, beginning with taxable
15

years ending on or after December 31, 2007, the
16

National Guard of any other state. The provisions of
17

this subparagraph (E) are exempt from the provisions
18

of Section 250;
19

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

such total pursuant to the provisions of Sections
21

402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
22

408 of the Internal Revenue Code, or included in such
23

total as distributions under the provisions of any
24

retirement or disability plan for employees of any
25

governmental agency or unit, or retirement payments to
26

retired partners, which payments are excluded in

SB0219
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1

computing net earnings from self employment by Section
2

1402 of the Internal Revenue Code and regulations
3

adopted pursuant thereto;
4

(G) The valuation limitation amount;
5

(H) An amount equal to the amount of any tax
6

imposed by this Act which was refunded to the taxpayer
7

and included in such total for the taxable year;
8

(I) An amount equal to all amounts included in
9

such total pursuant to the provisions of Section 111
10

of the Internal Revenue Code as a recovery of items
11

previously deducted from adjusted gross income in the
12

computation of taxable income;
13

(J) An amount equal to those dividends included in
14

such total which were paid by a corporation which
15

conducts business operations in a River Edge
16

Redevelopment Zone or zones created under the River
17

Edge Redevelopment Zone Act, and conducts
18

substantially all of its operations in a River Edge
19

Redevelopment Zone or zones. This subparagraph (J) is
20

exempt from the provisions of Section 250;
21

(K) An amount equal to those dividends included in
22

such total that were paid by a corporation that
23

conducts business operations in a federally designated
24

Foreign Trade Zone or Sub-Zone and that is designated
25

a High Impact Business located in Illinois; provided
26

that dividends eligible for the deduction provided in

SB0219
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LRB104 07439 HLH 17480 b
1

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

shall not be eligible for the deduction provided under
3

this subparagraph (K);
4

(L) For taxable years ending after December 31,
5

1983, an amount equal to all social security benefits
6

and railroad retirement benefits included in such
7

total pursuant to Sections 72(r) and 86 of the
8

Internal Revenue Code;
9

(M) With the exception of any amounts subtracted
10

under subparagraph (N), an amount equal to the sum of
11

all amounts disallowed as deductions by (i) Sections
12

171(a)(2) and 265(a)(2) of the Internal Revenue Code,
13

and all amounts of expenses allocable to interest and
14

disallowed as deductions by Section 265(a)(1) of the
15

Internal Revenue Code; and (ii) for taxable years
16

ending on or after August 13, 1999, Sections
17

171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
18

Internal Revenue Code, plus, for taxable years ending
19

on or after December 31, 2011, Section 45G(e)(3) of
20

the Internal Revenue Code and, for taxable years
21

ending on or after December 31, 2008, any amount
22

included in gross income under Section 87 of the
23

Internal Revenue Code; the provisions of this
24

subparagraph are exempt from the provisions of Section
25

250;
26

(N) An amount equal to all amounts included in

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1

such total which are exempt from taxation by this
2

State either by reason of its statutes or Constitution
3

or by reason of the Constitution, treaties or statutes
4

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

statute of this State that exempts income derived from
6

bonds or other obligations from the tax imposed under
7

this Act, the amount exempted shall be the interest
8

net of bond premium amortization;
9

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

job training project established pursuant to the Tax
11

Increment Allocation Redevelopment Act;
12

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

used to compute the federal income tax credit for
14

restoration of substantial amounts held under claim of
15

right for the taxable year pursuant to Section 1341 of
16

the Internal Revenue Code or of any itemized deduction
17

taken from adjusted gross income in the computation of
18

taxable income for restoration of substantial amounts
19

held under claim of right for the taxable year;
20

(Q) An amount equal to any amounts included in
21

such total, received by the taxpayer as an
22

acceleration in the payment of life, endowment or
23

annuity benefits in advance of the time they would
24

otherwise be payable as an indemnity for a terminal
25

illness;
26

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

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1

State bonus paid to veterans of the Persian Gulf War;
2

(S) An amount, to the extent included in adjusted
3

gross income, equal to the amount of a contribution
4

made in the taxable year on behalf of the taxpayer to a
5

medical care savings account established under the
6

Medical Care Savings Account Act or the Medical Care
7

Savings Account Act of 2000 to the extent the
8

contribution is accepted by the account administrator
9

as provided in that Act;
10

(T) An amount, to the extent included in adjusted
11

gross income, equal to the amount of interest earned
12

in the taxable year on a medical care savings account
13

established under the Medical Care Savings Account Act
14

or the Medical Care Savings Account Act of 2000 on
15

behalf of the taxpayer, other than interest added
16

pursuant to item (D-5) of this paragraph (2);
17

(U) For one taxable year beginning on or after
18

January 1, 1994, an amount equal to the total amount of
19

tax imposed and paid under subsections (a) and (b) of
20

Section 201 of this Act on grant amounts received by
21

the taxpayer under the Nursing Home Grant Assistance
22

Act during the taxpayer's taxable years 1992 and 1993;
23

(V) Beginning with tax years ending on or after
24

December 31, 1995 and ending with tax years ending on
25

or before December 31, 2004, an amount equal to the
26

amount paid by a taxpayer who is a self-employed

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taxpayer, a partner of a partnership, or a shareholder
2

in a Subchapter S corporation for health insurance or
3

long-term care insurance for that taxpayer or that
4

taxpayer's spouse or dependents, to the extent that
5

the amount paid for that health insurance or long-term
6

care insurance may be deducted under Section 213 of
7

the Internal Revenue Code, has not been deducted on
8

the federal income tax return of the taxpayer, and
9

does not exceed the taxable income attributable to
10

that taxpayer's income, self-employment income, or
11

Subchapter S corporation income; except that no
12

deduction shall be allowed under this item (V) if the
13

taxpayer is eligible to participate in any health
14

insurance or long-term care insurance plan of an
15

employer of the taxpayer or the taxpayer's spouse. The
16

amount of the health insurance and long-term care
17

insurance subtracted under this item (V) shall be
18

determined by multiplying total health insurance and
19

long-term care insurance premiums paid by the taxpayer
20

times a number that represents the fractional
21

percentage of eligible medical expenses under Section
22

213 of the Internal Revenue Code of 1986 not actually
23

deducted on the taxpayer's federal income tax return;
24

(W) For taxable years beginning on or after
25

January 1, 1998, all amounts included in the
26

taxpayer's federal gross income in the taxable year

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1

from amounts converted from a regular IRA to a Roth
2

IRA. This paragraph is exempt from the provisions of
3

Section 250;
4

(X) For taxable year 1999 and thereafter, an
5

amount equal to the amount of any (i) distributions,
6

to the extent includible in gross income for federal
7

income tax purposes, made to the taxpayer because of
8

his or her status as a victim of persecution for racial
9

or religious reasons by Nazi Germany or any other Axis
10

regime or as an heir of the victim and (ii) items of
11

income, to the extent includible in gross income for
12

federal income tax purposes, attributable to, derived
13

from or in any way related to assets stolen from,
14

hidden from, or otherwise lost to a victim of
15

persecution for racial or religious reasons by Nazi
16

Germany or any other Axis regime immediately prior to,
17

during, and immediately after World War II, including,
18

but not limited to, interest on the proceeds
19

receivable as insurance under policies issued to a
20

victim of persecution for racial or religious reasons
21

by Nazi Germany or any other Axis regime by European
22

insurance companies immediately prior to and during
23

World War II; provided, however, this subtraction from
24

federal adjusted gross income does not apply to assets
25

acquired with such assets or with the proceeds from
26

the sale of such assets; provided, further, this

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1

paragraph shall only apply to a taxpayer who was the
2

first recipient of such assets after their recovery
3

and who is a victim of persecution for racial or
4

religious reasons by Nazi Germany or any other Axis
5

regime or as an heir of the victim. The amount of and
6

the eligibility for any public assistance, benefit, or
7

similar entitlement is not affected by the inclusion
8

of items (i) and (ii) of this paragraph in gross income
9

for federal income tax purposes. This paragraph is
10

exempt from the provisions of Section 250;
11

(Y) For taxable years beginning on or after
12

January 1, 2002 and ending on or before December 31,
13

2004, moneys contributed in the taxable year to a
14

College Savings Pool account under Section 16.5 of the
15

State Treasurer Act, except that amounts excluded from
16

gross income under Section 529(c)(3)(C)(i) of the
17

Internal Revenue Code shall not be considered moneys
18

contributed under this subparagraph (Y). For taxable
19

years beginning on or after January 1, 2005, a maximum
20

of $10,000 contributed in the taxable year to (i) a
21

College Savings Pool account under Section 16.5 of the
22

State Treasurer Act or (ii) the Illinois Prepaid
23

Tuition Trust Fund, except that amounts excluded from
24

gross income under Section 529(c)(3)(C)(i) of the
25

Internal Revenue Code shall not be considered moneys
26

contributed under this subparagraph (Y). For purposes

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of this subparagraph, contributions made by an
2

employer on behalf of an employee, or matching
3

contributions made by an employee, shall be treated as
4

made by the employee. This subparagraph (Y) is exempt
5

from the provisions of Section 250;
6

(Z) 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

SB0219
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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 (Z) is exempt from the provisions of
8

Section 250;
9

(AA) If the taxpayer sells, transfers, abandons,
10

or otherwise disposes of property for which the
11

taxpayer was required in any taxable year to make an
12

addition modification under subparagraph (D-15), then
13

an amount 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 (Z) and for which the taxpayer was
18

required in any taxable year to make an addition
19

modification under subparagraph (D-15), 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 (AA) is exempt from the
25

provisions of Section 250;
26

(BB) Any amount included in adjusted gross income,

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1

other than salary, received by a driver in a
2

ridesharing arrangement using a motor vehicle;
3

(CC) The amount of (i) any interest income (net of
4

the deductions allocable thereto) taken into account
5

for the taxable year with respect to a transaction
6

with a taxpayer that is required to make an addition
7

modification with respect to such transaction under
8

Section 203(a)(2)(D-17), 203(b)(2)(E-12),
9

203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
10

the amount of that addition modification, and (ii) any
11

income from intangible property (net of the deductions
12

allocable thereto) taken into account for the taxable
13

year with respect to a transaction with a taxpayer
14

that is required to make an addition modification with
15

respect to such transaction under Section
16

203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
17

203(d)(2)(D-8), but not to exceed the amount of that
18

addition modification. This subparagraph (CC) is
19

exempt from the provisions of Section 250;
20

(DD) An amount equal to the interest income taken
21

into account for the taxable year (net of the
22

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-17) for interest paid, accrued, or
12

incurred, directly or indirectly, to the same person.
13

This subparagraph (DD) is exempt from the provisions
14

of Section 250;
15

(EE) An amount equal to the income from intangible
16

property taken into account for the taxable year (net
17

of the deductions allocable thereto) with respect to
18

transactions with (i) a foreign person who would be a
19

member of the taxpayer's unitary business group but
20

for the fact that the foreign person's business
21

activity outside the United States is 80% or more of
22

that person's total business activity and (ii) for
23

taxable years ending on or after December 31, 2008, 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, but
4

not to exceed the addition modification required to be
5

made for the same taxable year under Section
6

203(a)(2)(D-18) for intangible expenses and costs
7

paid, accrued, or incurred, directly or indirectly, to
8

the same foreign person. This subparagraph (EE) is
9

exempt from the provisions of Section 250;
10

(FF) An amount equal to any amount awarded to the
11

taxpayer during the taxable year by the Court of
12

Claims under subsection (c) of Section 8 of the Court
13

of Claims Act for time unjustly served in a State
14

prison. This subparagraph (FF) is exempt from the
15

provisions of Section 250;
16

(GG) For taxable years ending on or after December
17

31, 2011, in the case of a taxpayer who was required to
18

add back any insurance premiums under Section
19

203(a)(2)(D-19), such taxpayer may elect to subtract
20

that part of a reimbursement received from the
21

insurance company equal to the amount of the expense
22

or loss (including expenses incurred by the insurance
23

company) that would have been taken into account as a
24

deduction for federal income tax purposes if the
25

expense or loss had been uninsured. If a taxpayer
26

makes the election provided for by this subparagraph

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1

(GG), the insurer to which the premiums were paid must
2

add back to income the amount subtracted by the
3

taxpayer pursuant to this subparagraph (GG). This
4

subparagraph (GG) is exempt from the provisions of
5

Section 250;
6

(HH) For taxable years beginning on or after
7

January 1, 2018 and prior to January 1, 2028, a maximum
8

of $10,000 contributed in the taxable year to a
9

qualified ABLE account under Section 16.6 of the State
10

Treasurer Act, except that amounts excluded from gross
11

income under Section 529(c)(3)(C)(i) or Section
12

529A(c)(1)(C) of the Internal Revenue Code shall not
13

be considered moneys contributed under this
14

subparagraph (HH). For purposes of this subparagraph
15

(HH), contributions made by an employer on behalf of
16

an employee, or matching contributions made by an
17

employee, shall be treated as made by the employee;
18

(II) For taxable years that begin on or after
19

January 1, 2021 and begin before January 1, 2026, the
20

amount that is included in the taxpayer's federal
21

adjusted gross income pursuant to Section 61 of the
22

Internal Revenue Code as discharge of indebtedness
23

attributable to student loan forgiveness and that is
24

not excluded from the taxpayer's federal adjusted
25

gross income pursuant to paragraph (5) of subsection
26

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

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1

(JJ) For taxable years beginning on or after
2

January 1, 2023, for any cannabis establishment
3

operating in this State and licensed under the
4

Cannabis Regulation and Tax Act or any cannabis
5

cultivation center or medical cannabis dispensing
6

organization operating in this State and licensed
7

under the Compassionate Use of Medical Cannabis
8

Program Act, an amount equal to the deductions that
9

were disallowed under Section 280E of the Internal
10

Revenue Code for the taxable year and that would not be
11

added back under this subsection. The provisions of
12

this subparagraph (JJ) are exempt from the provisions
13

of Section 250;
and

14

(KK) To the extent includible in gross income for
15

federal income tax purposes, any amount awarded or
16

paid to the taxpayer as a result of a judgment or
17

settlement for fertility fraud as provided in Section
18

15 of the Illinois Fertility Fraud Act, donor
19

fertility fraud as provided in Section 20 of the
20

Illinois Fertility Fraud Act, or similar action in
21

another state;
and

22

(LL) For taxable years beginning on or after
23

January 1, 2026, if the taxpayer is a qualified
24

worker, as defined in the Workforce Development
25

through Charitable Loan Repayment Act, an amount equal
26

to the amount included in the taxpayer's federal

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1

adjusted gross income that is attributable to student
2

loan repayment assistance received by the taxpayer
3

during the taxable year from a qualified community
4

foundation under the provisions of the Workforce
5

Development
through

Through
Charitable Loan Repayment
6

Act.
7

This subparagraph (LL) is exempt from the
8

provisions of Section 250
;

.

9

(MM)

(LL)
For taxable years beginning on or after
10

January 1, 2025, if the taxpayer is an eligible
11

resident as defined in the Medical Debt Relief Act, an
12

amount equal to the amount included in the taxpayer's
13

federal adjusted gross income that is attributable to
14

medical debt relief received by the taxpayer during
15

the taxable year from a nonprofit medical debt relief
16

coordinator under the provisions of the Medical Debt
17

Relief Act. This subparagraph
(MM)

(LL)
is exempt from
18

the provisions of Section 250
; and

.

19

(NN) For taxable years beginning on or after
20

January 1, 2026, if the taxpayer is a law enforcement
21

officer, an amount equal to the amount of overtime
22

compensation that is paid to the taxpayer during the
23

taxable year for the taxpayer's service as a law
24

enforcement officer and that is included in the
25

taxpayer's federal adjusted gross income; as used in
26

this subparagraph (NN), "law enforcement officer"

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1

means any person employed by a State, county, or
2

municipality as a policeman, as a peace officer, or in
3

a like position involving the enforcement of the law
4

and the protection of the public interest; as used in
5

this subparagraph (NN), "overtime compensation" has
6

the meaning given to that term in the federal Fair
7

Labor Standards Act; this subparagraph (NN) is exempt
8

from the provisions of Section 250.

9

(b) Corporations.
10

(1) In general. In the case of a corporation, base
11

income means an amount equal to the taxpayer's taxable
12

income for the taxable year as modified by paragraph (2).
13

(2) Modifications. The taxable income referred to in
14

paragraph (1) shall be modified by adding thereto the sum
15

of the following amounts:
16

(A) An amount equal to all amounts paid or accrued
17

to the taxpayer as interest and all distributions
18

received from regulated investment companies during
19

the taxable year to the extent excluded from gross
20

income in the computation of taxable income;
21

(B) An amount equal to the amount of tax imposed by
22

this Act to the extent deducted from gross income in
23

the computation of taxable income for the taxable
24

year;
25

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

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1

an amount equal to the excess of (i) the net long-term
2

capital gain for the taxable year, over (ii) the
3

amount of the capital gain dividends designated as
4

such in accordance with Section 852(b)(3)(C) of the
5

Internal Revenue Code and any amount designated under
6

Section 852(b)(3)(D) of the Internal Revenue Code,
7

attributable to the taxable year (this amendatory Act
8

of 1995 (Public Act 89-89) is declarative of existing
9

law and is not a new enactment);
10

(D) The amount of any net operating loss deduction
11

taken in arriving at taxable income, other than a net
12

operating loss carried forward from a taxable year
13

ending prior to December 31, 1986;
14

(E) For taxable years in which a net operating
15

loss carryback or carryforward from a taxable year
16

ending prior to December 31, 1986 is an element of
17

taxable income under paragraph (1) of subsection (e)
18

or subparagraph (E) of paragraph (2) of subsection
19

(e), the amount by which addition modifications other
20

than those provided by this subparagraph (E) exceeded
21

subtraction modifications in such earlier taxable
22

year, with the following limitations applied in the
23

order that they are listed:
24

(i) the addition modification relating to the
25

net operating loss carried back or forward to the
26

taxable year from any taxable year ending prior to

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1

December 31, 1986 shall be reduced by the amount
2

of addition modification under this subparagraph
3

(E) which related to that net operating loss and
4

which was taken into account in calculating the
5

base income of an earlier taxable year, and
6

(ii) the addition modification relating to the
7

net operating loss carried back or forward to the
8

taxable year from any taxable year ending prior to
9

December 31, 1986 shall not exceed the amount of
10

such carryback or carryforward;
11

For taxable years in which there is a net
12

operating loss carryback or carryforward from more
13

than one other taxable year ending prior to December
14

31, 1986, the addition modification provided in this
15

subparagraph (E) shall be the sum of the amounts
16

computed independently under the preceding provisions
17

of this subparagraph (E) for each such taxable year;
18

(E-5) For taxable years ending after December 31,
19

1997, an amount equal to any eligible remediation
20

costs that the corporation deducted in computing
21

adjusted gross income and for which the corporation
22

claims a credit under subsection (l) of Section 201;
23

(E-10) 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

(E-11) 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 (E-10), then
6

an amount equal to the aggregate amount of the
7

deductions taken in all taxable years under
8

subparagraph (T) 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 (T) and for which the taxpayer was
13

allowed in any taxable year to make a subtraction
14

modification under subparagraph (T), 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

(E-12) 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

SB0219
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LRB104 07439 HLH 17480 b
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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(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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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;
13

(E-13) 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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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(b)(2)(E-12) 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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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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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

(E-14) 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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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(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
22

Act;
23

(E-15) For taxable years beginning after December
24

31, 2008, any deduction for dividends paid by a
25

captive real estate investment trust that is allowed
26

to a real estate investment trust under Section

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

dividends paid;
3

(E-16) An amount equal to the credit allowable to
4

the taxpayer under Section 218(a) of this Act,
5

determined without regard to Section 218(c) of this
6

Act;
7

(E-17) For taxable years ending on or after
8

December 31, 2017, an amount equal to the deduction
9

allowed under Section 199 of the Internal Revenue Code
10

for the taxable year;
11

(E-18) for taxable years beginning after December
12

31, 2018, an amount equal to the deduction allowed
13

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

Code for the taxable year;
15

(E-19) for taxable years ending on or after June
16

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

under Section 250(a)(1)(B)(i) of the Internal Revenue
18

Code for the taxable year;
19

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

30, 2021, an amount equal to the deduction allowed
21

under Sections 243(e) and 245A(a) of the Internal
22

Revenue Code for the taxable year;
23

(E-21) the amount that is claimed as a federal
24

deduction when computing the taxpayer's federal
25

taxable income for the taxable year and that is
26

attributable to an endowment gift for which the

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taxpayer receives a credit under the Illinois Gives
2

Tax Credit Act;
3

and by deducting from the total so obtained the sum of the
4

following amounts:
5

(F) An amount equal to the amount of any tax
6

imposed by this Act which was refunded to the taxpayer
7

and included in such total for the taxable year;
8

(G) An amount equal to any amount included in such
9

total under Section 78 of the Internal Revenue Code;
10

(H) In the case of a regulated investment company,
11

an amount equal to the amount of exempt interest
12

dividends as defined in subsection (b)(5) of Section
13

852 of the Internal Revenue Code, paid to shareholders
14

for the taxable year;
15

(I) With the exception of any amounts subtracted
16

under subparagraph (J), an amount equal to the sum of
17

all amounts disallowed as deductions by (i) Sections
18

171(a)(2) and 265(a)(2) and amounts disallowed as
19

interest expense by Section 291(a)(3) of the Internal
20

Revenue Code, and all amounts of expenses allocable to
21

interest and disallowed as deductions by Section
22

265(a)(1) of the Internal Revenue Code; and (ii) for
23

taxable years ending on or after August 13, 1999,
24

Sections 171(a)(2), 265, 280C, 291(a)(3), and
25

832(b)(5)(B)(i) of the Internal Revenue Code, plus,
26

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

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amounts disallowed as deductions by Section 45G(e)(3)
2

of the Internal Revenue Code and, for taxable years
3

ending on or after December 31, 2008, any amount
4

included in gross income under Section 87 of the
5

Internal Revenue Code and the policyholders' share of
6

tax-exempt interest of a life insurance company under
7

Section 807(a)(2)(B) of the Internal Revenue Code (in
8

the case of a life insurance company with gross income
9

from a decrease in reserves for the tax year) or
10

Section 807(b)(1)(B) of the Internal Revenue Code (in
11

the case of a life insurance company allowed a
12

deduction for an increase in reserves for the tax
13

year); the provisions of this subparagraph are exempt
14

from the provisions of Section 250;
15

(J) An amount equal to all amounts included in
16

such total which are exempt from taxation by this
17

State either by reason of its statutes or Constitution
18

or by reason of the Constitution, treaties or statutes
19

of the United States; provided that, in the case of any
20

statute of this State that exempts income derived from
21

bonds or other obligations from the tax imposed under
22

this Act, the amount exempted shall be the interest
23

net of bond premium amortization;
24

(K) An amount equal to those dividends included in
25

such total which were paid by a corporation which
26

conducts business operations in a River Edge

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Redevelopment Zone or zones created under the River
2

Edge Redevelopment Zone Act and conducts substantially
3

all of its operations in a River Edge Redevelopment
4

Zone or zones. This subparagraph (K) is exempt from
5

the provisions of Section 250;
6

(L) An amount equal to those dividends included in
7

such total that were paid by a corporation that
8

conducts business operations in a federally designated
9

Foreign Trade Zone or Sub-Zone and that is designated
10

a High Impact Business located in Illinois; provided
11

that dividends eligible for the deduction provided in
12

subparagraph (K) of paragraph 2 of this subsection
13

shall not be eligible for the deduction provided under
14

this subparagraph (L);
15

(M) For any taxpayer that is a financial
16

organization within the meaning of Section 304(c) of
17

this Act, an amount included in such total as interest
18

income from a loan or loans made by such taxpayer to a
19

borrower, to the extent that such a loan is secured by
20

property which is eligible for the River Edge
21

Redevelopment Zone Investment Credit. To determine the
22

portion of a loan or loans that is secured by property
23

eligible for a Section 201(f) investment credit to the
24

borrower, the entire principal amount of the loan or
25

loans between the taxpayer and the borrower should be
26

divided into the basis of the Section 201(f)

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investment credit property which secures the loan or
2

loans, using for this purpose the original basis of
3

such property on the date that it was placed in service
4

in the River Edge Redevelopment Zone. The subtraction
5

modification available to the taxpayer in any year
6

under this subsection shall be that portion of the
7

total interest paid by the borrower with respect to
8

such loan attributable to the eligible property as
9

calculated under the previous sentence. This
10

subparagraph (M) is exempt from the provisions of
11

Section 250;
12

(M-1) For any taxpayer that is a financial
13

organization within the meaning of Section 304(c) of
14

this Act, an amount included in such total as interest
15

income from a loan or loans made by such taxpayer to a
16

borrower, to the extent that such a loan is secured by
17

property which is eligible for the High Impact
18

Business Investment Credit. To determine the portion
19

of a loan or loans that is secured by property eligible
20

for a Section 201(h) investment credit to the
21

borrower, the entire principal amount of the loan or
22

loans between the taxpayer and the borrower should be
23

divided into the basis of the Section 201(h)
24

investment credit property which secures the loan or
25

loans, using for this purpose the original basis of
26

such property on the date that it was placed in service

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in a federally designated Foreign Trade Zone or
2

Sub-Zone located in Illinois. No taxpayer that is
3

eligible for the deduction provided in subparagraph
4

(M) of paragraph (2) of this subsection shall be
5

eligible for the deduction provided under this
6

subparagraph (M-1). The subtraction modification
7

available to taxpayers in any year under this
8

subsection shall be that portion of the total interest
9

paid by the borrower with respect to such loan
10

attributable to the eligible property as calculated
11

under the previous sentence;
12

(N) Two times any contribution made during the
13

taxable year to a designated zone organization to the
14

extent that the contribution (i) qualifies as a
15

charitable contribution under subsection (c) of
16

Section 170 of the Internal Revenue Code and (ii)
17

must, by its terms, be used for a project approved by
18

the Department of Commerce and Economic Opportunity
19

under Section 11 of the Illinois Enterprise Zone Act
20

or under Section 10-10 of the River Edge Redevelopment
21

Zone Act. This subparagraph (N) is exempt from the
22

provisions of Section 250;
23

(O) An amount equal to: (i) 85% for taxable years
24

ending on or before December 31, 1992, or, a
25

percentage equal to the percentage allowable under
26

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

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for taxable years ending after December 31, 1992, of
2

the amount by which dividends included in taxable
3

income and received from a corporation that is not
4

created or organized under the laws of the United
5

States or any state or political subdivision thereof,
6

including, for taxable years ending on or after
7

December 31, 1988, dividends received or deemed
8

received or paid or deemed paid under Sections 951
9

through 965 of the Internal Revenue Code, exceed the
10

amount of the modification provided under subparagraph
11

(G) of paragraph (2) of this subsection (b) which is
12

related to such dividends, and including, for taxable
13

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

received from a captive real estate investment trust;
15

plus (ii) 100% of the amount by which dividends,
16

included in taxable income and received, including,
17

for taxable years ending on or after December 31,
18

1988, dividends received or deemed received or paid or
19

deemed paid under Sections 951 through 964 of the
20

Internal Revenue Code and including, for taxable years
21

ending on or after December 31, 2008, dividends
22

received from a captive real estate investment trust,
23

from any such corporation specified in clause (i) that
24

would but for the provisions of Section 1504(b)(3) of
25

the Internal Revenue Code be treated as a member of the
26

affiliated group which includes the dividend

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1

recipient, exceed the amount of the modification
2

provided under subparagraph (G) of paragraph (2) of
3

this subsection (b) which is related to such
4

dividends. For taxable years ending on or after June
5

30, 2021, (i) for purposes of this subparagraph, the
6

term "dividend" does not include any amount treated as
7

a dividend under Section 1248 of the Internal Revenue
8

Code, and (ii) this subparagraph shall not apply to
9

dividends for which a deduction is allowed under
10

Section 245(a) of the Internal Revenue Code. This
11

subparagraph (O) is exempt from the provisions of
12

Section 250 of this Act;
13

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

job training project established pursuant to the Tax
15

Increment Allocation Redevelopment Act;
16

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

used to compute the federal income tax credit for
18

restoration of substantial amounts held under claim of
19

right for the taxable year pursuant to Section 1341 of
20

the Internal Revenue Code;
21

(R) On and after July 20, 1999, in the case of an
22

attorney-in-fact with respect to whom an interinsurer
23

or a reciprocal insurer has made the election under
24

Section 835 of the Internal Revenue Code, 26 U.S.C.
25

835, an amount equal to the excess, if any, of the
26

amounts paid or incurred by that interinsurer or

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reciprocal insurer in the taxable year to the
2

attorney-in-fact over the deduction allowed to that
3

interinsurer or reciprocal insurer with respect to the
4

attorney-in-fact under Section 835(b) of the Internal
5

Revenue Code for the taxable year; the provisions of
6

this subparagraph are exempt from the provisions of
7

Section 250;
8

(S) For taxable years ending on or after December
9

31, 1997, in the case of a Subchapter S corporation, an
10

amount equal to all amounts of income allocable to a
11

shareholder subject to the Personal Property Tax
12

Replacement Income Tax imposed by subsections (c) and
13

(d) of Section 201 of this Act, including amounts
14

allocable to organizations exempt from federal income
15

tax by reason of Section 501(a) of the Internal
16

Revenue Code. This subparagraph (S) is exempt from the
17

provisions of Section 250;
18

(T) For taxable years 2001 and thereafter, for the
19

taxable year in which the bonus depreciation deduction
20

is taken on the taxpayer's federal income tax return
21

under subsection (k) of Section 168 of the Internal
22

Revenue Code and for each applicable taxable year
23

thereafter, an amount equal to "x", where:
24

(1) "y" equals the amount of the depreciation
25

deduction taken for the taxable year on the
26

taxpayer's federal income tax return on property

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1

for which the bonus depreciation deduction was
2

taken in any year under subsection (k) of Section
3

168 of the Internal Revenue Code, but not
4

including the bonus depreciation deduction;
5

(2) for taxable years ending on or before
6

December 31, 2005, "x" equals "y" multiplied by 30
7

and then divided by 70 (or "y" multiplied by
8

0.429); and
9

(3) for taxable years ending after December
10

31, 2005:
11

(i) for property on which a bonus
12

depreciation deduction of 30% of the adjusted
13

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

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

by 0.429);
16

(ii) for property on which a bonus
17

depreciation deduction of 50% of the adjusted
18

basis was taken, "x" equals "y" multiplied by
19

1.0;
20

(iii) for property on which a bonus
21

depreciation deduction of 100% of the adjusted
22

basis was taken in a taxable year ending on or
23

after December 31, 2021, "x" equals the
24

depreciation deduction that would be allowed
25

on that property if the taxpayer had made the
26

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

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Internal Revenue Code to not claim bonus
2

depreciation on that property; and
3

(iv) for property on which a bonus
4

depreciation deduction of a percentage other
5

than 30%, 50% or 100% of the adjusted basis
6

was taken in a taxable year ending on or after
7

December 31, 2021, "x" equals "y" multiplied
8

by 100 times the percentage bonus depreciation
9

on the property (that is, 100(bonus%)) and
10

then divided by 100 times 1 minus the
11

percentage bonus depreciation on the property
12

(that is, 100(1-bonus%)).
13

The aggregate amount deducted under this
14

subparagraph in all taxable years for any one piece of
15

property may not exceed the amount of the bonus
16

depreciation deduction taken on that property on the
17

taxpayer's federal income tax return under subsection
18

(k) of Section 168 of the Internal Revenue Code. This
19

subparagraph (T) is exempt from the provisions of
20

Section 250;
21

(U) If the taxpayer sells, transfers, abandons, or
22

otherwise disposes of property for which the taxpayer
23

was required in any taxable year to make an addition
24

modification under subparagraph (E-10), then an amount
25

equal to that addition modification.
26

If the taxpayer continues to own property through

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the last day of the last tax year for which a
2

subtraction is allowed with respect to that property
3

under subparagraph (T) and for which the taxpayer was
4

required in any taxable year to make an addition
5

modification under subparagraph (E-10), then an amount
6

equal to that addition modification.
7

The taxpayer is allowed to take the deduction
8

under this subparagraph only once with respect to any
9

one piece of property.
10

This subparagraph (U) is exempt from the
11

provisions of Section 250;
12

(V) The amount of: (i) any interest income (net of
13

the deductions allocable thereto) taken into account
14

for the taxable year with respect to a transaction
15

with a taxpayer that is required to make an addition
16

modification with respect to such transaction under
17

Section 203(a)(2)(D-17), 203(b)(2)(E-12),
18

203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
19

the amount of such addition modification, (ii) any
20

income from intangible property (net of the deductions
21

allocable thereto) taken into account for the taxable
22

year with respect to a transaction with a taxpayer
23

that is required to make an addition modification with
24

respect to such transaction under Section
25

203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
26

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

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addition modification, and (iii) any insurance premium
2

income (net of deductions allocable thereto) taken
3

into account for the taxable year with respect to a
4

transaction with a taxpayer that is required to make
5

an addition modification with respect to such
6

transaction under Section 203(a)(2)(D-19), Section
7

203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
8

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

addition modification. This subparagraph (V) is exempt
10

from the provisions of Section 250;
11

(W) An amount equal to the interest income taken
12

into account for the taxable year (net of the
13

deductions allocable thereto) with respect to
14

transactions with (i) a foreign person who would be a
15

member of the taxpayer's unitary business group but
16

for the fact that the foreign person's business
17

activity outside the United States is 80% or more of
18

that person's total business activity and (ii) for
19

taxable years ending on or after December 31, 2008, to
20

a person who would be a member of the same unitary
21

business group but for the fact that the person is
22

prohibited under Section 1501(a)(27) from being
23

included in the unitary business group because he or
24

she is ordinarily required to apportion business
25

income under different subsections of Section 304, but
26

not to exceed the addition modification required to be

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made for the same taxable year under Section
2

203(b)(2)(E-12) for interest paid, accrued, or
3

incurred, directly or indirectly, to the same person.
4

This subparagraph (W) is exempt from the provisions of
5

Section 250;
6

(X) An amount equal to the income from intangible
7

property taken into account for the taxable year (net
8

of the deductions allocable thereto) with respect to
9

transactions with (i) a foreign person who would be a
10

member of the taxpayer's unitary business group but
11

for the fact that the foreign person's business
12

activity outside the United States is 80% or more of
13

that person's total business activity and (ii) for
14

taxable years ending on or after December 31, 2008, to
15

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

business group but for the fact that the person is
17

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

included in the unitary business group because he or
19

she is ordinarily required to apportion business
20

income under different subsections of Section 304, but
21

not to exceed the addition modification required to be
22

made for the same taxable year under Section
23

203(b)(2)(E-13) for intangible expenses and costs
24

paid, accrued, or incurred, directly or indirectly, to
25

the same foreign person. This subparagraph (X) is
26

exempt from the provisions of Section 250;

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(Y) For taxable years ending on or after December
2

31, 2011, in the case of a taxpayer who was required to
3

add back any insurance premiums under Section
4

203(b)(2)(E-14), such taxpayer may elect to subtract
5

that part of a reimbursement received from the
6

insurance company equal to the amount of the expense
7

or loss (including expenses incurred by the insurance
8

company) that would have been taken into account as a
9

deduction for federal income tax purposes if the
10

expense or loss had been uninsured. If a taxpayer
11

makes the election provided for by this subparagraph
12

(Y), the insurer to which the premiums were paid must
13

add back to income the amount subtracted by the
14

taxpayer pursuant to this subparagraph (Y). This
15

subparagraph (Y) is exempt from the provisions of
16

Section 250;
17

(Z) The difference between the nondeductible
18

controlled foreign corporation dividends under Section
19

965(e)(3) of the Internal Revenue Code over the
20

taxable income of the taxpayer, computed without
21

regard to Section 965(e)(2)(A) of the Internal Revenue
22

Code, and without regard to any net operating loss
23

deduction. This subparagraph (Z) is exempt from the
24

provisions of Section 250; and
25

(AA) For taxable years beginning on or after
26

January 1, 2023, for any cannabis establishment

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operating in this State and licensed under the
2

Cannabis Regulation and Tax Act or any cannabis
3

cultivation center or medical cannabis dispensing
4

organization operating in this State and licensed
5

under the Compassionate Use of Medical Cannabis
6

Program Act, an amount equal to the deductions that
7

were disallowed under Section 280E of the Internal
8

Revenue Code for the taxable year and that would not be
9

added back under this subsection. The provisions of
10

this subparagraph (AA) are exempt from the provisions
11

of Section 250.
12

(3) Special rule. For purposes of paragraph (2)(A),
13

"gross income" in the case of a life insurance company,
14

for tax years ending on and after December 31, 1994, and
15

prior to December 31, 2011, shall mean the gross
16

investment income for the taxable year and, for tax years
17

ending on or after December 31, 2011, shall mean all
18

amounts included in life insurance gross income under
19

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

20

(c) Trusts and estates.
21

(1) In general. In the case of a trust or estate, base
22

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

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

(2) Modifications. Subject to the provisions of
25

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

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(1) shall be modified by adding thereto the sum of the
2

following amounts:
3

(A) An amount equal to all amounts paid or accrued
4

to the taxpayer as interest or dividends during the
5

taxable year to the extent excluded from gross income
6

in the computation of taxable income;
7

(B) In the case of (i) an estate, $600; (ii) a
8

trust which, under its governing instrument, is
9

required to distribute all of its income currently,
10

$300; and (iii) any other trust, $100, but in each such
11

case, only to the extent such amount was deducted in
12

the computation of taxable income;
13

(C) An amount equal to the amount of tax imposed by
14

this Act to the extent deducted from gross income in
15

the computation of taxable income for the taxable
16

year;
17

(D) The amount of any net operating loss deduction
18

taken in arriving at taxable income, other than a net
19

operating loss carried forward from a taxable year
20

ending prior to December 31, 1986;
21

(E) For taxable years in which a net operating
22

loss carryback or carryforward from a taxable year
23

ending prior to December 31, 1986 is an element of
24

taxable income under paragraph (1) of subsection (e)
25

or subparagraph (E) of paragraph (2) of subsection
26

(e), the amount by which addition modifications other

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than those provided by this subparagraph (E) exceeded
2

subtraction modifications in such taxable year, with
3

the following limitations applied in the order that
4

they are listed:
5

(i) the addition modification relating to the
6

net operating loss carried back or forward to the
7

taxable year from any taxable year ending prior to
8

December 31, 1986 shall be reduced by the amount
9

of addition modification under this subparagraph
10

(E) which related to that net operating loss and
11

which was taken into account in calculating the
12

base income of an earlier taxable year, and
13

(ii) the addition modification relating to the
14

net operating loss carried back or forward to the
15

taxable year from any taxable year ending prior to
16

December 31, 1986 shall not exceed the amount of
17

such carryback or carryforward;
18

For taxable years in which there is a net
19

operating loss carryback or carryforward from more
20

than one other taxable year ending prior to December
21

31, 1986, the addition modification provided in this
22

subparagraph (E) shall be the sum of the amounts
23

computed independently under the preceding provisions
24

of this subparagraph (E) for each such taxable year;
25

(F) For taxable years ending on or after January
26

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

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to Section 164 of the Internal Revenue Code if the
2

trust or estate is claiming the same tax for purposes
3

of the Illinois foreign tax credit under Section 601
4

of this Act;
5

(G) An amount equal to the amount of the capital
6

gain deduction allowable under the Internal Revenue
7

Code, to the extent deducted from gross income in the
8

computation of taxable income;
9

(G-5) For taxable years ending after December 31,
10

1997, an amount equal to any eligible remediation
11

costs that the trust or estate deducted in computing
12

adjusted gross income and for which the trust or
13

estate claims a credit under subsection (l) of Section
14

201;
15

(G-10) For taxable years 2001 and thereafter, an
16

amount equal to the bonus depreciation deduction taken
17

on the taxpayer's federal income tax return for the
18

taxable year under subsection (k) of Section 168 of
19

the Internal Revenue Code; and
20

(G-11) If the taxpayer sells, transfers, abandons,
21

or otherwise disposes of property for which the
22

taxpayer was required in any taxable year to make an
23

addition modification under subparagraph (G-10), then
24

an amount equal to the aggregate amount of the
25

deductions taken in all taxable years under
26

subparagraph (R) with respect to that property.

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If the taxpayer continues to own property through
2

the last day of the last tax year for which a
3

subtraction is allowed with respect to that property
4

under subparagraph (R) and for which the taxpayer was
5

allowed in any taxable year to make a subtraction
6

modification under subparagraph (R), then an amount
7

equal to that subtraction modification.
8

The taxpayer is required to make the addition
9

modification under this subparagraph only once with
10

respect to any one piece of property;
11

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

allowed as a deduction in computing base income for
13

interest paid, accrued, or incurred, directly or
14

indirectly, (i) for taxable years ending on or after
15

December 31, 2004, to a foreign person who would be a
16

member of the same unitary business group but for the
17

fact that the foreign person's business activity
18

outside the United States is 80% or more of the foreign
19

person's total business activity and (ii) for taxable
20

years ending on or after December 31, 2008, to a person
21

who would be a member of the same unitary business
22

group but for the fact that the person is prohibited
23

under Section 1501(a)(27) from being included in the
24

unitary business group because he or she is ordinarily
25

required to apportion business income under different
26

subsections of Section 304. The addition modification

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required by this subparagraph shall be reduced to the
2

extent that dividends were included in base income of
3

the unitary group for the same taxable year and
4

received by the taxpayer or by a member of the
5

taxpayer's unitary business group (including amounts
6

included in gross income pursuant to Sections 951
7

through 964 of the Internal Revenue Code and amounts
8

included in gross income under Section 78 of the
9

Internal Revenue Code) with respect to the stock of
10

the same person to whom the interest was paid,
11

accrued, or incurred.
12

This paragraph shall not apply to the following:
13

(i) an item of interest paid, accrued, or
14

incurred, directly or indirectly, to a person who
15

is subject in a foreign country or state, other
16

than a state which requires mandatory unitary
17

reporting, to a tax on or measured by net income
18

with respect to such interest; or
19

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

incurred, directly or indirectly, to a person if
21

the taxpayer can establish, based on a
22

preponderance of the evidence, both of the
23

following:
24

(a) the person, during the same taxable
25

year, paid, accrued, or incurred, the interest
26

to a person that is not a related member, and

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(b) the transaction giving rise to the
2

interest expense between the taxpayer and the
3

person did not have as a principal purpose the
4

avoidance of Illinois income tax, and is paid
5

pursuant to a contract or agreement that
6

reflects an arm's-length interest rate and
7

terms; or
8

(iii) the taxpayer can establish, based on
9

clear and convincing evidence, that the interest
10

paid, accrued, or incurred relates to a contract
11

or agreement entered into at arm's-length rates
12

and terms and the principal purpose for the
13

payment is not federal or Illinois tax avoidance;
14

or
15

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

incurred, directly or indirectly, to a person if
17

the taxpayer establishes by clear and convincing
18

evidence that the adjustments are unreasonable; or
19

if the taxpayer and the Director agree in writing
20

to the application or use of an alternative method
21

of apportionment under Section 304(f).
22

Nothing in this subsection shall preclude the
23

Director from making any other adjustment
24

otherwise allowed under Section 404 of this Act
25

for any tax year beginning after the effective
26

date of this amendment provided such adjustment is

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made pursuant to regulation adopted by the
2

Department and such regulations provide methods
3

and standards by which the Department will utilize
4

its authority under Section 404 of this Act;
5

(G-13) An amount equal to the amount of intangible
6

expenses and costs otherwise allowed as a deduction in
7

computing base income, and that were paid, accrued, or
8

incurred, directly or indirectly, (i) for taxable
9

years ending on or after December 31, 2004, to a
10

foreign person who would be a member of the same
11

unitary business group but for the fact that the
12

foreign person's business activity outside the United
13

States is 80% or more of that person's total business
14

activity and (ii) for taxable years ending on or after
15

December 31, 2008, to a person who would be a member of
16

the same unitary business group but for the fact that
17

the person is prohibited under Section 1501(a)(27)
18

from being included in the unitary business group
19

because he or she is ordinarily required to apportion
20

business income under different subsections of Section
21

304. The addition modification required by this
22

subparagraph shall be reduced to the extent that
23

dividends were included in base income of the unitary
24

group for the same taxable year and received by the
25

taxpayer or by a member of the taxpayer's unitary
26

business group (including amounts included in gross

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income pursuant to Sections 951 through 964 of the
2

Internal Revenue Code and amounts included in gross
3

income under Section 78 of the Internal Revenue Code)
4

with respect to the stock of the same person to whom
5

the intangible expenses and costs were directly or
6

indirectly paid, incurred, or accrued. The preceding
7

sentence shall not apply to the extent that the same
8

dividends caused a reduction to the addition
9

modification required under Section 203(c)(2)(G-12) of
10

this Act. As used in this subparagraph, the term
11

"intangible expenses and costs" includes: (1)
12

expenses, losses, and costs for or related to the
13

direct or indirect acquisition, use, maintenance or
14

management, ownership, sale, exchange, or any other
15

disposition of intangible property; (2) losses
16

incurred, directly or indirectly, from factoring
17

transactions or discounting transactions; (3) royalty,
18

patent, technical, and copyright fees; (4) licensing
19

fees; and (5) other similar expenses and costs. For
20

purposes of this subparagraph, "intangible property"
21

includes patents, patent applications, trade names,
22

trademarks, service marks, copyrights, mask works,
23

trade secrets, and similar types of intangible assets.
24

This paragraph shall not apply to the following:
25

(i) any item of intangible expenses or costs
26

paid, accrued, or incurred, directly or

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indirectly, from a transaction with a person who
2

is subject in a foreign country or state, other
3

than a state which requires mandatory unitary
4

reporting, to a tax on or measured by net income
5

with respect to such item; or
6

(ii) any item of intangible expense or cost
7

paid, accrued, or incurred, directly or
8

indirectly, if the taxpayer can establish, based
9

on a preponderance of the evidence, both of the
10

following:
11

(a) the person during the same taxable
12

year paid, accrued, or incurred, the
13

intangible expense or cost to a person that is
14

not a related member, and
15

(b) the transaction giving rise to the
16

intangible expense or cost between the
17

taxpayer and the person did not have as a
18

principal purpose the avoidance of Illinois
19

income tax, and is paid pursuant to a contract
20

or agreement that reflects arm's-length terms;
21

or
22

(iii) any item of intangible expense or cost
23

paid, accrued, or incurred, directly or
24

indirectly, from a transaction with a person if
25

the taxpayer establishes by clear and convincing
26

evidence, that the adjustments are unreasonable;

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or if the taxpayer and the Director agree in
2

writing to the application or use of an
3

alternative method of apportionment under Section
4

304(f);
5

Nothing in this subsection shall preclude the
6

Director from making any other adjustment
7

otherwise allowed under Section 404 of this Act
8

for any tax year beginning after the effective
9

date of this amendment provided such adjustment is
10

made pursuant to regulation adopted by the
11

Department and such regulations provide methods
12

and standards by which the Department will utilize
13

its authority under Section 404 of this Act;
14

(G-14) For taxable years ending on or after
15

December 31, 2008, an amount equal to the amount of
16

insurance premium expenses and costs otherwise allowed
17

as a deduction in computing base income, and that were
18

paid, accrued, or incurred, directly or indirectly, to
19

a person who would be a member of the same unitary
20

business group but for the fact that the person is
21

prohibited under Section 1501(a)(27) from being
22

included in the unitary business group because he or
23

she is ordinarily required to apportion business
24

income under different subsections of Section 304. The
25

addition modification required by this subparagraph
26

shall be reduced to the extent that dividends were

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included in base income of the unitary group for the
2

same taxable year and received by the taxpayer or by a
3

member of the taxpayer's unitary business group
4

(including amounts included in gross income under
5

Sections 951 through 964 of the Internal Revenue Code
6

and amounts included in gross income under Section 78
7

of the Internal Revenue Code) with respect to the
8

stock of the same person to whom the premiums and costs
9

were directly or indirectly paid, incurred, or
10

accrued. The preceding sentence does not apply to the
11

extent that the same dividends caused a reduction to
12

the addition modification required under Section
13

203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
14

Act;
15

(G-15) An amount equal to the credit allowable to
16

the taxpayer under Section 218(a) of this Act,
17

determined without regard to Section 218(c) of this
18

Act;
19

(G-16) For taxable years ending on or after
20

December 31, 2017, an amount equal to the deduction
21

allowed under Section 199 of the Internal Revenue Code
22

for the taxable year;
23

(G-17) the amount that is claimed as a federal
24

deduction when computing the taxpayer's federal
25

taxable income for the taxable year and that is
26

attributable to an endowment gift for which the

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taxpayer receives a credit under the Illinois Gives
2

Tax Credit Act;
3

and by deducting from the total so obtained the sum of the
4

following amounts:
5

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

such total pursuant to the provisions of Sections
7

402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
8

of the Internal Revenue Code or included in such total
9

as distributions under the provisions of any
10

retirement or disability plan for employees of any
11

governmental agency or unit, or retirement payments to
12

retired partners, which payments are excluded in
13

computing net earnings from self employment by Section
14

1402 of the Internal Revenue Code and regulations
15

adopted pursuant thereto;
16

(I) The valuation limitation amount;
17

(J) An amount equal to the amount of any tax
18

imposed by this Act which was refunded to the taxpayer
19

and included in such total for the taxable year;
20

(K) An amount equal to all amounts included in
21

taxable income as modified by subparagraphs (A), (B),
22

(C), (D), (E), (F) and (G) which are exempt from
23

taxation by this State either by reason of its
24

statutes or Constitution or by reason of the
25

Constitution, treaties or statutes of the United
26

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

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1

this State that exempts income derived from bonds or
2

other obligations from the tax imposed under this Act,
3

the amount exempted shall be the interest net of bond
4

premium amortization;
5

(L) With the exception of any amounts subtracted
6

under subparagraph (K), an amount equal to the sum of
7

all amounts disallowed as deductions by (i) Sections
8

171(a)(2) and 265(a)(2) of the Internal Revenue Code,
9

and all amounts of expenses allocable to interest and
10

disallowed as deductions by Section 265(a)(1) of the
11

Internal Revenue Code; and (ii) for taxable years
12

ending on or after August 13, 1999, Sections
13

171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
14

Internal Revenue Code, plus, (iii) for taxable years
15

ending on or after December 31, 2011, Section
16

45G(e)(3) of the Internal Revenue Code and, for
17

taxable years ending on or after December 31, 2008,
18

any amount included in gross income under Section 87
19

of the Internal Revenue Code; the provisions of this
20

subparagraph are exempt from the provisions of Section
21

250;
22

(M) An amount equal to those dividends included in
23

such total which were paid by a corporation which
24

conducts business operations in a River Edge
25

Redevelopment Zone or zones created under the River
26

Edge Redevelopment Zone Act and conducts substantially

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1

all of its operations in a River Edge Redevelopment
2

Zone or zones. This subparagraph (M) is exempt from
3

the provisions of Section 250;
4

(N) An amount equal to any contribution made to a
5

job training project established pursuant to the Tax
6

Increment Allocation Redevelopment Act;
7

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

such total that were paid by a corporation that
9

conducts business operations in a federally designated
10

Foreign Trade Zone or Sub-Zone and that is designated
11

a High Impact Business located in Illinois; provided
12

that dividends eligible for the deduction provided in
13

subparagraph (M) of paragraph (2) of this subsection
14

shall not be eligible for the deduction provided under
15

this subparagraph (O);
16

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

used to compute the federal income tax credit for
18

restoration of substantial amounts held under claim of
19

right for the taxable year pursuant to Section 1341 of
20

the Internal Revenue Code;
21

(Q) For taxable year 1999 and thereafter, an
22

amount equal to the amount of any (i) distributions,
23

to the extent includible in gross income for federal
24

income tax purposes, made to the taxpayer because of
25

his or her status as a victim of persecution for racial
26

or religious reasons by Nazi Germany or any other Axis

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regime or as an heir of the victim and (ii) items of
2

income, to the extent includible in gross income for
3

federal income tax purposes, attributable to, derived
4

from or in any way related to assets stolen from,
5

hidden from, or otherwise lost to a victim of
6

persecution for racial or religious reasons by Nazi
7

Germany or any other Axis regime immediately prior to,
8

during, and immediately after World War II, including,
9

but not limited to, interest on the proceeds
10

receivable as insurance under policies issued to a
11

victim of persecution for racial or religious reasons
12

by Nazi Germany or any other Axis regime by European
13

insurance companies immediately prior to and during
14

World War II; provided, however, this subtraction from
15

federal adjusted gross income does not apply to assets
16

acquired with such assets or with the proceeds from
17

the sale of such assets; provided, further, this
18

paragraph shall only apply to a taxpayer who was the
19

first recipient of such assets after their recovery
20

and who is a victim of persecution for racial or
21

religious reasons by Nazi Germany or any other Axis
22

regime or as an heir of the victim. The amount of and
23

the eligibility for any public assistance, benefit, or
24

similar entitlement is not affected by the inclusion
25

of items (i) and (ii) of this paragraph in gross income
26

for federal income tax purposes. This paragraph is

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exempt from the provisions of Section 250;
2

(R) For taxable years 2001 and thereafter, for the
3

taxable year in which the bonus depreciation deduction
4

is taken on the taxpayer's federal income tax return
5

under subsection (k) of Section 168 of the Internal
6

Revenue Code and for each applicable taxable year
7

thereafter, an amount equal to "x", where:
8

(1) "y" equals the amount of the depreciation
9

deduction taken for the taxable year on the
10

taxpayer's federal income tax return on property
11

for which the bonus depreciation deduction was
12

taken in any year under subsection (k) of Section
13

168 of the Internal Revenue Code, but not
14

including the bonus depreciation deduction;
15

(2) for taxable years ending on or before
16

December 31, 2005, "x" equals "y" multiplied by 30
17

and then divided by 70 (or "y" multiplied by
18

0.429); and
19

(3) for taxable years ending after December
20

31, 2005:
21

(i) for property on which a bonus
22

depreciation deduction of 30% of the adjusted
23

basis was taken, "x" equals "y" multiplied by
24

30 and then divided by 70 (or "y" multiplied
25

by 0.429);
26

(ii) for property on which a bonus

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1

depreciation deduction of 50% of the adjusted
2

basis was taken, "x" equals "y" multiplied by
3

1.0;
4

(iii) for property on which a bonus
5

depreciation deduction of 100% of the adjusted
6

basis was taken in a taxable year ending on or
7

after December 31, 2021, "x" equals the
8

depreciation deduction that would be allowed
9

on that property if the taxpayer had made the
10

election under Section 168(k)(7) of the
11

Internal Revenue Code to not claim bonus
12

depreciation on that property; and
13

(iv) for property on which a bonus
14

depreciation deduction of a percentage other
15

than 30%, 50% or 100% of the adjusted basis
16

was taken in a taxable year ending on or after
17

December 31, 2021, "x" equals "y" multiplied
18

by 100 times the percentage bonus depreciation
19

on the property (that is, 100(bonus%)) and
20

then divided by 100 times 1 minus the
21

percentage bonus depreciation on the property
22

(that is, 100(1-bonus%)).
23

The aggregate amount deducted under this
24

subparagraph in all taxable years for any one piece of
25

property may not exceed the amount of the bonus
26

depreciation deduction taken on that property on the

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taxpayer's federal income tax return under subsection
2

(k) of Section 168 of the Internal Revenue Code. This
3

subparagraph (R) is exempt from the provisions of
4

Section 250;
5

(S) If the taxpayer sells, transfers, abandons, or
6

otherwise disposes of property for which the taxpayer
7

was required in any taxable year to make an addition
8

modification under subparagraph (G-10), then an amount
9

equal to that addition modification.
10

If the taxpayer continues to own property through
11

the last day of the last tax year for which a
12

subtraction is allowed with respect to that property
13

under subparagraph (R) and for which the taxpayer was
14

required in any taxable year to make an addition
15

modification under subparagraph (G-10), then an amount
16

equal to that addition modification.
17

The taxpayer is allowed to take the deduction
18

under this subparagraph only once with respect to any
19

one piece of property.
20

This subparagraph (S) is exempt from the
21

provisions of Section 250;
22

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

the deductions allocable thereto) taken into account
24

for the taxable year with respect to a transaction
25

with a taxpayer that is required to make an addition
26

modification with respect to such transaction under

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

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

the amount of such addition modification and (ii) any
4

income from intangible property (net of the deductions
5

allocable thereto) taken into account for the taxable
6

year with respect to a transaction with a taxpayer
7

that is required to make an addition modification with
8

respect to such transaction under Section
9

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

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

addition modification. This subparagraph (T) is exempt
12

from the provisions of Section 250;
13

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

into account for the taxable year (net of the
15

deductions allocable thereto) with respect to
16

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

member of the taxpayer's unitary business group but
18

for the fact the foreign person's business activity
19

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

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

years ending on or after December 31, 2008, to a person
22

who would be a member of the same unitary business
23

group but for the fact that the person is prohibited
24

under Section 1501(a)(27) from being included in the
25

unitary business group because he or she is ordinarily
26

required to apportion business income under different

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subsections of Section 304, but not to exceed the
2

addition modification required to be made for the same
3

taxable year under Section 203(c)(2)(G-12) for
4

interest paid, accrued, or incurred, directly or
5

indirectly, to the same person. This subparagraph (U)
6

is exempt from the provisions of Section 250;
7

(V) An amount equal to the income from intangible
8

property taken into account for the taxable year (net
9

of the deductions allocable thereto) with respect to
10

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

member of the taxpayer's unitary business group but
12

for the fact that the foreign person's business
13

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

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

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

not to exceed the addition modification required to be
23

made for the same taxable year under Section
24

203(c)(2)(G-13) for intangible expenses and costs
25

paid, accrued, or incurred, directly or indirectly, to
26

the same foreign person. This subparagraph (V) is

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exempt from the provisions of Section 250;
2

(W) in the case of an estate, an amount equal to
3

all amounts included in such total pursuant to the
4

provisions of Section 111 of the Internal Revenue Code
5

as a recovery of items previously deducted by the
6

decedent from adjusted gross income in the computation
7

of taxable income. This subparagraph (W) is exempt
8

from Section 250;
9

(X) an amount equal to the refund included in such
10

total of any tax deducted for federal income tax
11

purposes, to the extent that deduction was added back
12

under subparagraph (F). This subparagraph (X) is
13

exempt from the provisions of Section 250;
14

(Y) For taxable years ending on or after December
15

31, 2011, in the case of a taxpayer who was required to
16

add back any insurance premiums under Section
17

203(c)(2)(G-14), such taxpayer may elect to subtract
18

that part of a reimbursement received from the
19

insurance company equal to the amount of the expense
20

or loss (including expenses incurred by the insurance
21

company) that would have been taken into account as a
22

deduction for federal income tax purposes if the
23

expense or loss had been uninsured. If a taxpayer
24

makes the election provided for by this subparagraph
25

(Y), the insurer to which the premiums were paid must
26

add back to income the amount subtracted by the

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taxpayer pursuant to this subparagraph (Y). This
2

subparagraph (Y) is exempt from the provisions of
3

Section 250;
4

(Z) For taxable years beginning after December 31,
5

2018 and before January 1, 2026, the amount of excess
6

business loss of the taxpayer disallowed as a
7

deduction by Section 461(l)(1)(B) of the Internal
8

Revenue Code; and
9

(AA) For taxable years beginning on or after
10

January 1, 2023, for any cannabis establishment
11

operating in this State and licensed under the
12

Cannabis Regulation and Tax Act or any cannabis
13

cultivation center or medical cannabis dispensing
14

organization operating in this State and licensed
15

under the Compassionate Use of Medical Cannabis
16

Program Act, an amount equal to the deductions that
17

were disallowed under Section 280E of the Internal
18

Revenue Code for the taxable year and that would not be
19

added back under this subsection. The provisions of
20

this subparagraph (AA) are exempt from the provisions
21

of Section 250.
22

(3) Limitation. The amount of any modification
23

otherwise required under this subsection shall, under
24

regulations prescribed by the Department, be adjusted by
25

any amounts included therein which were properly paid,
26

credited, or required to be distributed, or permanently

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set aside for charitable purposes pursuant to Internal
2

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

3

(d) Partnerships.
4

(1) In general. In the case of a partnership, base
5

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

income for the taxable year as modified by paragraph (2).
7

(2) Modifications. The taxable income referred to in
8

paragraph (1) shall be modified by adding thereto the sum
9

of the following amounts:
10

(A) An amount equal to all amounts paid or accrued
11

to the taxpayer as interest or dividends during the
12

taxable year to the extent excluded from gross income
13

in the computation of taxable income;
14

(B) An amount equal to the amount of tax imposed by
15

this Act to the extent deducted from gross income for
16

the taxable year;
17

(C) The amount of deductions allowed to the
18

partnership pursuant to Section 707 (c) of the
19

Internal Revenue Code in calculating its taxable
20

income;
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 taxable income;
25

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

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amount equal to the bonus depreciation deduction taken
2

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

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

the Internal Revenue Code;
5

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

or otherwise disposes of property for which the
7

taxpayer was required in any taxable year to make an
8

addition modification under subparagraph (D-5), then
9

an amount equal to the aggregate amount of the
10

deductions taken in all taxable years under
11

subparagraph (O) with respect to that property.
12

If the taxpayer continues to own property through
13

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

subtraction is allowed with respect to that property
15

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

allowed in any taxable year to make a subtraction
17

modification under subparagraph (O), then an amount
18

equal to that subtraction modification.
19

The taxpayer is required to make the addition
20

modification under this subparagraph only once with
21

respect to any one piece of property;
22

(D-7) An amount equal to the amount otherwise
23

allowed as a deduction in computing base income for
24

interest paid, accrued, or incurred, directly or
25

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

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

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member of the same unitary business group but for the
2

fact the foreign person's business activity outside
3

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

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

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

who would be a member of the same unitary business
7

group but for the fact that the person is prohibited
8

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

unitary business group because he or she is ordinarily
10

required to apportion business income under different
11

subsections of Section 304. The addition modification
12

required by this subparagraph shall be reduced to the
13

extent that dividends were included in base income of
14

the unitary group for the same taxable year and
15

received by the taxpayer or by a member of the
16

taxpayer's unitary business group (including amounts
17

included in gross income pursuant to Sections 951
18

through 964 of the Internal Revenue Code and amounts
19

included in gross income under Section 78 of the
20

Internal Revenue Code) with respect to the stock of
21

the same person to whom the interest was paid,
22

accrued, or incurred.
23

This paragraph shall not apply to the following:
24

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

incurred, directly or indirectly, to a person who
26

is subject in a foreign country or state, other

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than a state which requires mandatory unitary
2

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

with respect to such interest; or
4

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

incurred, directly or indirectly, to a person if
6

the taxpayer can establish, based on a
7

preponderance of the evidence, both of the
8

following:
9

(a) the person, during the same taxable
10

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

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

(b) the transaction giving rise to the
13

interest expense between the taxpayer and the
14

person did not have as a principal purpose the
15

avoidance of Illinois income tax, and is paid
16

pursuant to a contract or agreement that
17

reflects an arm's-length interest rate and
18

terms; or
19

(iii) the taxpayer can establish, based on
20

clear and convincing evidence, that the interest
21

paid, accrued, or incurred relates to a contract
22

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

and terms and the principal purpose for the
24

payment is not federal or Illinois tax avoidance;
25

or
26

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

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incurred, directly or indirectly, to a person if
2

the taxpayer establishes by clear and convincing
3

evidence that the adjustments are unreasonable; or
4

if the taxpayer and the Director agree in writing
5

to the application or use of an alternative method
6

of apportionment under Section 304(f).
7

Nothing in this subsection shall preclude the
8

Director from making any other adjustment
9

otherwise allowed under Section 404 of this Act
10

for any tax year beginning after the effective
11

date of this amendment provided such adjustment is
12

made pursuant to regulation adopted by the
13

Department and such regulations provide methods
14

and standards by which the Department will utilize
15

its authority under Section 404 of this Act; and
16

(D-8) An amount equal to the amount of intangible
17

expenses and costs otherwise allowed as a deduction in
18

computing base income, and that were paid, accrued, or
19

incurred, directly or indirectly, (i) for taxable
20

years ending on or after December 31, 2004, to a
21

foreign person who would be a member of the same
22

unitary business group but for the fact that the
23

foreign person's business activity outside the United
24

States is 80% or more of that person's total business
25

activity and (ii) for taxable years ending on or after
26

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

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the same unitary business group but for the fact that
2

the person is prohibited under Section 1501(a)(27)
3

from being included in the unitary business group
4

because he or she is ordinarily required to apportion
5

business income under different subsections of Section
6

304. The addition modification required by this
7

subparagraph shall be reduced to the extent that
8

dividends were included in base income of the unitary
9

group for the same taxable year and received by the
10

taxpayer or by a member of the taxpayer's unitary
11

business group (including amounts included in gross
12

income pursuant to Sections 951 through 964 of the
13

Internal Revenue Code and amounts included in gross
14

income under Section 78 of the Internal Revenue Code)
15

with respect to the stock of the same person to whom
16

the intangible expenses and costs were directly or
17

indirectly paid, incurred or accrued. The preceding
18

sentence shall not apply to the extent that the same
19

dividends caused a reduction to the addition
20

modification required under Section 203(d)(2)(D-7) of
21

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

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

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

indirect acquisition, use, maintenance or management,
25

ownership, sale, exchange, or any other disposition of
26

intangible property; (2) losses incurred, directly or

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indirectly, from factoring transactions or discounting
2

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

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

similar expenses and costs. For purposes of this
5

subparagraph, "intangible property" includes patents,
6

patent applications, trade names, trademarks, service
7

marks, copyrights, mask works, trade secrets, and
8

similar types of intangible assets;
9

This paragraph shall not apply to the following:
10

(i) any item of intangible expenses or costs
11

paid, accrued, or incurred, directly or
12

indirectly, from a transaction with 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 item; or
17

(ii) any item of intangible expense or cost
18

paid, accrued, or incurred, directly or
19

indirectly, if the taxpayer can establish, based
20

on a preponderance of the evidence, both of the
21

following:
22

(a) the person during the same taxable
23

year paid, accrued, or incurred, the
24

intangible expense or cost to a person that is
25

not a related member, and
26

(b) the transaction giving rise to the

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intangible expense or cost between the
2

taxpayer and the person did not have as a
3

principal purpose the avoidance of Illinois
4

income tax, and is paid pursuant to a contract
5

or agreement that reflects arm's-length terms;
6

or
7

(iii) any item of intangible expense or cost
8

paid, accrued, or incurred, directly or
9

indirectly, from a transaction with a person if
10

the taxpayer establishes by clear and convincing
11

evidence, that the adjustments are unreasonable;
12

or if the taxpayer and the Director agree in
13

writing to the application or use of an
14

alternative method of apportionment under Section
15

304(f);
16

Nothing in this subsection shall preclude the
17

Director from making any other adjustment
18

otherwise allowed under Section 404 of this Act
19

for any tax year beginning after the effective
20

date of this amendment provided such adjustment is
21

made pursuant to regulation adopted by the
22

Department and such regulations provide methods
23

and standards by which the Department will utilize
24

its authority under Section 404 of this Act;
25

(D-9) For taxable years ending on or after
26

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

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insurance premium expenses and costs otherwise allowed
2

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

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

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

business group but for the fact that the person is
6

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

included in the unitary business group because he or
8

she is ordinarily required to apportion business
9

income under different subsections of Section 304. The
10

addition modification required by this subparagraph
11

shall be reduced to the extent that dividends were
12

included in base income of the unitary group for the
13

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

member of the taxpayer's unitary business group
15

(including amounts included in gross income under
16

Sections 951 through 964 of the Internal Revenue Code
17

and amounts included in gross income under Section 78
18

of the Internal Revenue Code) with respect to the
19

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

were directly or indirectly paid, incurred, or
21

accrued. The preceding sentence does not apply to the
22

extent that the same dividends caused a reduction to
23

the addition modification required under Section
24

203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
25

(D-10) An amount equal to the credit allowable to
26

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

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1

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

Act;
3

(D-11) For taxable years ending on or after
4

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

allowed under Section 199 of the Internal Revenue Code
6

for the taxable year;
7

(D-12) the amount that is claimed as a federal
8

deduction when computing the taxpayer's federal
9

taxable income for the taxable year and that is
10

attributable to an endowment gift for which the
11

taxpayer receives a credit under the Illinois Gives
12

Tax Credit Act;
13

and by deducting from the total so obtained the following
14

amounts:
15

(E) The valuation limitation amount;
16

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

imposed by this Act which was refunded to the taxpayer
18

and included in such total for the taxable year;
19

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

taxable income as modified by subparagraphs (A), (B),
21

(C) and (D) which are exempt from taxation by this
22

State either by reason of its statutes or Constitution
23

or by reason of the Constitution, treaties or statutes
24

of the United States; provided that, in the case of any
25

statute of this State that exempts income derived from
26

bonds or other obligations from the tax imposed under

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this Act, the amount exempted shall be the interest
2

net of bond premium amortization;
3

(H) Any income of the partnership which
4

constitutes personal service income as defined in
5

Section 1348(b)(1) of the Internal Revenue Code (as in
6

effect December 31, 1981) or a reasonable allowance
7

for compensation paid or accrued for services rendered
8

by partners to the partnership, whichever is greater;
9

this subparagraph (H) is exempt from the provisions of
10

Section 250;
11

(I) An amount equal to all amounts of income
12

distributable to an entity subject to the Personal
13

Property Tax Replacement Income Tax imposed by
14

subsections (c) and (d) of Section 201 of this Act
15

including amounts distributable to organizations
16

exempt from federal income tax by reason of Section
17

501(a) of the Internal Revenue Code; this subparagraph
18

(I) is exempt from the provisions of Section 250;
19

(J) With the exception of any amounts subtracted
20

under subparagraph (G), an amount equal to the sum of
21

all amounts disallowed as deductions by (i) Sections
22

171(a)(2) and 265(a)(2) of the Internal Revenue Code,
23

and all amounts of expenses allocable to interest and
24

disallowed as deductions by Section 265(a)(1) of the
25

Internal Revenue Code; and (ii) for taxable years
26

ending on or after August 13, 1999, Sections

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1

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

Internal Revenue Code, plus, (iii) for taxable years
3

ending on or after December 31, 2011, Section
4

45G(e)(3) of the Internal Revenue Code and, for
5

taxable years ending on or after December 31, 2008,
6

any amount included in gross income under Section 87
7

of the Internal Revenue Code; the provisions of this
8

subparagraph are exempt from the provisions of Section
9

250;
10

(K) An amount equal to those dividends included in
11

such total which were paid by a corporation which
12

conducts business operations in a River Edge
13

Redevelopment Zone or zones created under the River
14

Edge Redevelopment Zone Act and conducts substantially
15

all of its operations from a River Edge Redevelopment
16

Zone or zones. This subparagraph (K) is exempt from
17

the provisions of Section 250;
18

(L) An amount equal to any contribution made to a
19

job training project established pursuant to the Real
20

Property Tax Increment Allocation Redevelopment Act;
21

(M) An amount equal to those dividends included in
22

such total that were paid by a corporation that
23

conducts business operations in a federally designated
24

Foreign Trade Zone or Sub-Zone and that is designated
25

a High Impact Business located in Illinois; provided
26

that dividends eligible for the deduction provided in

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subparagraph (K) of paragraph (2) of this subsection
2

shall not be eligible for the deduction provided under
3

this subparagraph (M);
4

(N) An amount equal to the amount of the deduction
5

used to compute the federal income tax credit for
6

restoration of substantial amounts held under claim of
7

right for the taxable year pursuant to Section 1341 of
8

the Internal Revenue Code;
9

(O) For taxable years 2001 and thereafter, for the
10

taxable year in which the bonus depreciation deduction
11

is taken on the taxpayer's federal income tax return
12

under subsection (k) of Section 168 of the Internal
13

Revenue Code and for each applicable taxable year
14

thereafter, an amount equal to "x", where:
15

(1) "y" equals the amount of the depreciation
16

deduction taken for the taxable year on the
17

taxpayer's federal income tax return on property
18

for which the bonus depreciation deduction was
19

taken in any year under subsection (k) of Section
20

168 of the Internal Revenue Code, but not
21

including the bonus depreciation deduction;
22

(2) for taxable years ending on or before
23

December 31, 2005, "x" equals "y" multiplied by 30
24

and then divided by 70 (or "y" multiplied by
25

0.429); and
26

(3) for taxable years ending after December

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31, 2005:
2

(i) for property on which a bonus
3

depreciation deduction of 30% of the adjusted
4

basis was taken, "x" equals "y" multiplied by
5

30 and then divided by 70 (or "y" multiplied
6

by 0.429);
7

(ii) for property on which a bonus
8

depreciation deduction of 50% of the adjusted
9

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

1.0;
11

(iii) for property on which a bonus
12

depreciation deduction of 100% of the adjusted
13

basis was taken in a taxable year ending on or
14

after December 31, 2021, "x" equals the
15

depreciation deduction that would be allowed
16

on that property if the taxpayer had made the
17

election under Section 168(k)(7) of the
18

Internal Revenue Code to not claim bonus
19

depreciation on that property; and
20

(iv) for property on which a bonus
21

depreciation deduction of a percentage other
22

than 30%, 50% or 100% of the adjusted basis
23

was taken in a taxable year ending on or after
24

December 31, 2021, "x" equals "y" multiplied
25

by 100 times the percentage bonus depreciation
26

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

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then divided by 100 times 1 minus the
2

percentage bonus depreciation on the property
3

(that is, 100(1-bonus%)).
4

The aggregate amount deducted under this
5

subparagraph in all taxable years for any one piece of
6

property may not exceed the amount of the bonus
7

depreciation deduction taken on that property on the
8

taxpayer's federal income tax return under subsection
9

(k) of Section 168 of the Internal Revenue Code. This
10

subparagraph (O) is exempt from the provisions of
11

Section 250;
12

(P) If the taxpayer sells, transfers, abandons, or
13

otherwise disposes of property for which the taxpayer
14

was required in any taxable year to make an addition
15

modification under subparagraph (D-5), then an amount
16

equal to that addition modification.
17

If the taxpayer continues to own property through
18

the last day of the last tax year for which a
19

subtraction is allowed with respect to that property
20

under subparagraph (O) and for which the taxpayer was
21

required in any taxable year to make an addition
22

modification under subparagraph (D-5), then an amount
23

equal to that addition modification.
24

The taxpayer is allowed to take the deduction
25

under this subparagraph only once with respect to any
26

one piece of property.

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1

This subparagraph (P) is exempt from the
2

provisions of Section 250;
3

(Q) The amount of (i) any interest income (net of
4

the deductions allocable thereto) taken into account
5

for the taxable year with respect to a transaction
6

with a taxpayer that is required to make an addition
7

modification with respect to such transaction under
8

Section 203(a)(2)(D-17), 203(b)(2)(E-12),
9

203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
10

the amount of such addition modification and (ii) any
11

income from intangible property (net of the deductions
12

allocable thereto) taken into account for the taxable
13

year with respect to a transaction with a taxpayer
14

that is required to make an addition modification with
15

respect to such transaction under Section
16

203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
17

203(d)(2)(D-8), but not to exceed the amount of such
18

addition modification. This subparagraph (Q) is exempt
19

from Section 250;
20

(R) An amount equal to the interest income taken
21

into account for the taxable year (net of the
22

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(d)(2)(D-7) for interest paid, accrued, or
12

incurred, directly or indirectly, to the same person.
13

This subparagraph (R) is exempt from Section 250;
14

(S) An amount equal to the income from intangible
15

property taken into account for the taxable year (net
16

of the deductions allocable thereto) with respect to
17

transactions with (i) a foreign person who would be a
18

member of the taxpayer's unitary business group but
19

for the fact that the foreign person's business
20

activity outside the United States is 80% or more of
21

that person's total business activity and (ii) for
22

taxable years ending on or after December 31, 2008, to
23

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

business group but for the fact that the person is
25

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

included in the unitary business group because he or

SB0219
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1

she is ordinarily required to apportion business
2

income under different subsections of Section 304, but
3

not to exceed the addition modification required to be
4

made for the same taxable year under Section
5

203(d)(2)(D-8) for intangible expenses and costs paid,
6

accrued, or incurred, directly or indirectly, to the
7

same person. This subparagraph (S) is exempt from
8

Section 250;
9

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

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

add back any insurance premiums under Section
12

203(d)(2)(D-9), such taxpayer may elect to subtract
13

that part of a reimbursement received from the
14

insurance company equal to the amount of the expense
15

or loss (including expenses incurred by the insurance
16

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

deduction for federal income tax purposes if the
18

expense or loss had been uninsured. If a taxpayer
19

makes the election provided for by this subparagraph
20

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

add back to income the amount subtracted by the
22

taxpayer pursuant to this subparagraph (T). This
23

subparagraph (T) is exempt from the provisions of
24

Section 250; and
25

(U) For taxable years beginning on or after
26

January 1, 2023, for any cannabis establishment

SB0219
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1

operating in this State and licensed under the
2

Cannabis Regulation and Tax Act or any cannabis
3

cultivation center or medical cannabis dispensing
4

organization operating in this State and licensed
5

under the Compassionate Use of Medical Cannabis
6

Program Act, an amount equal to the deductions that
7

were disallowed under Section 280E of the Internal
8

Revenue Code for the taxable year and that would not be
9

added back under this subsection. The provisions of
10

this subparagraph (U) are exempt from the provisions
11

of Section 250.

12

(e) Gross income; adjusted gross income; taxable income.
13

(1) In general. Subject to the provisions of paragraph
14

(2) and subsection (b)(3), for purposes of this Section
15

and Section 803(e), a taxpayer's gross income, adjusted
16

gross income, or taxable income for the taxable year shall
17

mean the amount of gross income, adjusted gross income or
18

taxable income properly reportable for federal income tax
19

purposes for the taxable year under the provisions of the
20

Internal Revenue Code. Taxable income may be less than
21

zero. However, for taxable years ending on or after
22

December 31, 1986, net operating loss carryforwards from
23

taxable years ending prior to December 31, 1986, may not
24

exceed the sum of federal taxable income for the taxable
25

year before net operating loss deduction, plus the excess

SB0219
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1

of addition modifications over subtraction modifications
2

for the taxable year. For taxable years ending prior to
3

December 31, 1986, taxable income may never be an amount
4

in excess of the net operating loss for the taxable year as
5

defined in subsections (c) and (d) of Section 172 of the
6

Internal Revenue Code, provided that when taxable income
7

of a corporation (other than a Subchapter S corporation),
8

trust, or estate is less than zero and addition
9

modifications, other than those provided by subparagraph
10

(E) of paragraph (2) of subsection (b) for corporations or
11

subparagraph (E) of paragraph (2) of subsection (c) for
12

trusts and estates, exceed subtraction modifications, an
13

addition modification must be made under those
14

subparagraphs for any other taxable year to which the
15

taxable income less than zero (net operating loss) is
16

applied under Section 172 of the Internal Revenue Code or
17

under subparagraph (E) of paragraph (2) of this subsection
18

(e) applied in conjunction with Section 172 of the
19

Internal Revenue Code.
20

(2) Special rule. For purposes of paragraph (1) of
21

this subsection, the taxable income properly reportable
22

for federal income tax purposes shall mean:
23

(A) Certain life insurance companies. In the case
24

of a life insurance company subject to the tax imposed
25

by Section 801 of the Internal Revenue Code, life
26

insurance company taxable income, plus the amount of

SB0219
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LRB104 07439 HLH 17480 b
1

distribution from pre-1984 policyholder surplus
2

accounts as calculated under Section 815a of the
3

Internal Revenue Code;
4

(B) Certain other insurance companies. In the case
5

of mutual insurance companies subject to the tax
6

imposed by Section 831 of the Internal Revenue Code,
7

insurance company taxable income;
8

(C) Regulated investment companies. In the case of
9

a regulated investment company subject to the tax
10

imposed by Section 852 of the Internal Revenue Code,
11

investment company taxable income;
12

(D) Real estate investment trusts. In the case of
13

a real estate investment trust subject to the tax
14

imposed by Section 857 of the Internal Revenue Code,
15

real estate investment trust taxable income;
16

(E) Consolidated corporations. In the case of a
17

corporation which is a member of an affiliated group
18

of corporations filing a consolidated income tax
19

return for the taxable year for federal income tax
20

purposes, taxable income determined as if such
21

corporation had filed a separate return for federal
22

income tax purposes for the taxable year and each
23

preceding taxable year for which it was a member of an
24

affiliated group. For purposes of this subparagraph,
25

the taxpayer's separate taxable income shall be
26

determined as if the election provided by Section

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1

243(b)(2) of the Internal Revenue Code had been in
2

effect for all such years;
3

(F) Cooperatives. In the case of a cooperative
4

corporation or association, the taxable income of such
5

organization determined in accordance with the
6

provisions of Section 1381 through 1388 of the
7

Internal Revenue Code, but without regard to the
8

prohibition against offsetting losses from patronage
9

activities against income from nonpatronage
10

activities; except that a cooperative corporation or
11

association may make an election to follow its federal
12

income tax treatment of patronage losses and
13

nonpatronage losses. In the event such election is
14

made, such losses shall be computed and carried over
15

in a manner consistent with subsection (a) of Section
16

207 of this Act and apportioned by the apportionment
17

factor reported by the cooperative on its Illinois
18

income tax return filed for the taxable year in which
19

the losses are incurred. The election shall be
20

effective for all taxable years with original returns
21

due on or after the date of the election. In addition,
22

the cooperative may file an amended return or returns,
23

as allowed under this Act, to provide that the
24

election shall be effective for losses incurred or
25

carried forward for taxable years occurring prior to
26

the date of the election. Once made, the election may

SB0219
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LRB104 07439 HLH 17480 b
1

only be revoked upon approval of the Director. The
2

Department shall adopt rules setting forth
3

requirements for documenting the elections and any
4

resulting Illinois net loss and the standards to be
5

used by the Director in evaluating requests to revoke
6

elections. Public Act 96-932 is declaratory of
7

existing law;
8

(G) Subchapter S corporations. In the case of: (i)
9

a Subchapter S corporation for which there is in
10

effect an election for the taxable year under Section
11

1362 of the Internal Revenue Code, the taxable income
12

of such corporation determined in accordance with
13

Section 1363(b) of the Internal Revenue Code, except
14

that taxable income shall take into account those
15

items which are required by Section 1363(b)(1) of the
16

Internal Revenue Code to be separately stated; and
17

(ii) a Subchapter S corporation for which there is in
18

effect a federal election to opt out of the provisions
19

of the Subchapter S Revision Act of 1982 and have
20

applied instead the prior federal Subchapter S rules
21

as in effect on July 1, 1982, the taxable income of
22

such corporation determined in accordance with the
23

federal Subchapter S rules as in effect on July 1,
24

1982; and
25

(H) Partnerships. In the case of a partnership,
26

taxable income determined in accordance with Section

SB0219
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LRB104 07439 HLH 17480 b
1

703 of the Internal Revenue Code, except that taxable
2

income shall take into account those items which are
3

required by Section 703(a)(1) to be separately stated
4

but which would be taken into account by an individual
5

in calculating his taxable income.
6

(3) Recapture of business expenses on disposition of
7

asset or business. Notwithstanding any other law to the
8

contrary, if in prior years income from an asset or
9

business has been classified as business income and in a
10

later year is demonstrated to be non-business income, then
11

all expenses, without limitation, deducted in such later
12

year and in the 2 immediately preceding taxable years
13

related to that asset or business that generated the
14

non-business income shall be added back and recaptured as
15

business income in the year of the disposition of the
16

asset or business. Such amount shall be apportioned to
17

Illinois using the greater of the apportionment fraction
18

computed for the business under Section 304 of this Act
19

for the taxable year or the average of the apportionment
20

fractions computed for the business under Section 304 of
21

this Act for the taxable year and for the 2 immediately
22

preceding taxable years.

23

(f) Valuation limitation amount.
24

(1) In general. The valuation limitation amount
25

referred to in subsections (a)(2)(G), (c)(2)(I) and

SB0219
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LRB104 07439 HLH 17480 b
1

(d)(2)(E) is an amount equal to:
2

(A) The sum of the pre-August 1, 1969 appreciation
3

amounts (to the extent consisting of gain reportable
4

under the provisions of Section 1245 or 1250 of the
5

Internal Revenue Code) for all property in respect of
6

which such gain was reported for the taxable year;
7

plus
8

(B) The lesser of (i) the sum of the pre-August 1,
9

1969 appreciation amounts (to the extent consisting of
10

capital gain) for all property in respect of which
11

such gain was reported for federal income tax purposes
12

for the taxable year, or (ii) the net capital gain for
13

the taxable year, reduced in either case by any amount
14

of such gain included in the amount determined under
15

subsection (a)(2)(F) or (c)(2)(H).
16

(2) Pre-August 1, 1969 appreciation amount.
17

(A) If the fair market value of property referred
18

to in paragraph (1) was readily ascertainable on
19

August 1, 1969, the pre-August 1, 1969 appreciation
20

amount for such property is the lesser of (i) the
21

excess of such fair market value over the taxpayer's
22

basis (for determining gain) for such property on that
23

date (determined under the Internal Revenue Code as in
24

effect on that date), or (ii) the total gain realized
25

and reportable for federal income tax purposes in
26

respect of the sale, exchange or other disposition of

SB0219
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LRB104 07439 HLH 17480 b
1

such property.
2

(B) If the fair market value of property referred
3

to in paragraph (1) was not readily ascertainable on
4

August 1, 1969, the pre-August 1, 1969 appreciation
5

amount for such property is that amount which bears
6

the same ratio to the total gain reported in respect of
7

the property for federal income tax purposes for the
8

taxable year, as the number of full calendar months in
9

that part of the taxpayer's holding period for the
10

property ending July 31, 1969 bears to the number of
11

full calendar months in the taxpayer's entire holding
12

period for the property.
13

(C) The Department shall prescribe such
14

regulations as may be necessary to carry out the
15

purposes of this paragraph.

16

(g) Double deductions. Unless specifically provided
17
otherwise, nothing in this Section shall permit the same item
18
to be deducted more than once.

19

(h) Legislative intention. Except as expressly provided by
20
this Section there shall be no modifications or limitations on
21
the amounts of income, gain, loss or deduction taken into
22
account in determining gross income, adjusted gross income or
23
taxable income for federal income tax purposes for the taxable
24
year, or in the amount of such items entering into the

SB0219
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1
computation of base income and net income under this Act for
2
such taxable year, whether in respect of property values as of
3
August 1, 1969 or otherwise.
4
(Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
5
102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
6
12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; 103-592,
7
Article 10, Section 10-900, eff. 6-7-24; 103-592, Article 170,
8
Section 170-90, eff. 6-7-24; 103-605, eff. 7-1-24; 103-647,
9
eff. 7-1-24; revised 8-20-24.)

10

Section 99.
Effective date.
This Act takes effect upon
11
becoming law.

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