093_HB0054

 
                                     LRB093 02308 SJM 02316 b

 1        AN ACT in relation to taxes.

 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) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income means an amount equal to the  taxpayer's  adjusted
11        gross   income  for  the  taxable  year  as  modified  by
12        paragraph (2).
13             (2)  Modifications.   The  adjusted   gross   income
14        referred  to in paragraph (1) shall be modified by adding
15        thereto the sum of the following amounts:
16                  (A)  An amount equal to  all  amounts  paid  or
17             accrued  to  the  taxpayer  as interest or dividends
18             during the taxable year to the extent excluded  from
19             gross  income  in  the computation of adjusted gross
20             income, except stock dividends of  qualified  public
21             utilities   described   in  Section  305(e)  of  the
22             Internal Revenue Code;
23                  (B)  An amount  equal  to  the  amount  of  tax
24             imposed  by  this  Act  to  the extent deducted from
25             gross income in the computation  of  adjusted  gross
26             income for the taxable year;
27                  (C)  An  amount  equal  to  the amount received
28             during the taxable year as a recovery or  refund  of
29             real   property  taxes  paid  with  respect  to  the
30             taxpayer's principal residence under the Revenue Act
31             of 1939 and for which  a  deduction  was  previously
 
                            -2-      LRB093 02308 SJM 02316 b
 1             taken  under  subparagraph (L) of this paragraph (2)
 2             prior to July 1, 1991, the retrospective application
 3             date of Article 4 of Public Act 87-17.  In the  case
 4             of  multi-unit  or  multi-use  structures  and  farm
 5             dwellings,  the  taxes  on  the taxpayer's principal
 6             residence shall be that portion of the  total  taxes
 7             for  the  entire  property  which is attributable to
 8             such principal residence;
 9                  (D)  An amount  equal  to  the  amount  of  the
10             capital  gain deduction allowable under the Internal
11             Revenue Code, to  the  extent  deducted  from  gross
12             income in the computation of adjusted gross income;
13                  (D-5)  An amount, to the extent not included in
14             adjusted  gross income, equal to the amount of money
15             withdrawn by the taxpayer in the taxable year from a
16             medical care savings account and the interest earned
17             on the account in the taxable year of  a  withdrawal
18             pursuant  to  subsection  (b)  of  Section 20 of the
19             Medical Care Savings Account Act or  subsection  (b)
20             of  Section  20  of the Medical Care Savings Account
21             Act of 2000;
22                  (D-10)  For taxable years ending after December
23             31,  1997,  an  amount   equal   to   any   eligible
24             remediation  costs  that  the individual deducted in
25             computing adjusted gross income and  for  which  the
26             individual  claims  a credit under subsection (l) of
27             Section 201;
28                  (D-15)  For taxable years 2001 and  thereafter,
29             an  amount equal to the bonus depreciation deduction
30             (30%  of  the  adjusted  basis  of   the   qualified
31             property) taken on the taxpayer's federal income tax
32             return  for the taxable year under subsection (k) of
33             Section 168 of the Internal Revenue Code; and
34                  (D-16)  If the taxpayer reports a capital  gain
 
                            -3-      LRB093 02308 SJM 02316 b
 1             or  loss on the taxpayer's federal income tax return
 2             for the taxable year based on a sale or transfer  of
 3             property  for which the taxpayer was required in any
 4             taxable year to make an addition modification  under
 5             subparagraph  (D-15),  then  an  amount equal to the
 6             aggregate amount of  the  deductions  taken  in  all
 7             taxable years under subparagraph (Z) with respect to
 8             that property.;
 9                  The  taxpayer  is required to make the addition
10             modification under this subparagraph only once  with
11             respect to any one piece of property;. and
12                  (D-20)  (D-15)  For  taxable years beginning on
13             or  after  January  1,  2002,  in  the  case  of   a
14             distribution  from a qualified tuition program under
15             Section 529 of the Internal Revenue Code, other than
16             (i) a  distribution  from  a  College  Savings  Pool
17             created  under  Section  16.5 of the State Treasurer
18             Act or (ii) a distribution from the Illinois Prepaid
19             Tuition Trust Fund, an amount equal  to  the  amount
20             excluded    from    gross   income   under   Section
21             529(c)(3)(B);
22        and by deducting from the total so obtained  the  sum  of
23        the following amounts:
24                  (E)  For  taxable  years ending before December
25             31, 2001, any  amount  included  in  such  total  in
26             respect  of  any  compensation  (including  but  not
27             limited  to  any  compensation  paid or accrued to a
28             serviceman while a prisoner of  war  or  missing  in
29             action)  paid  to  a  resident by reason of being on
30             active duty in the Armed Forces of the United States
31             and in respect of any compensation paid  or  accrued
32             to  a  resident who as a governmental employee was a
33             prisoner of war or missing in action, and in respect
34             of any compensation paid to a resident  in  1971  or
 
                            -4-      LRB093 02308 SJM 02316 b
 1             thereafter for annual training performed pursuant to
 2             Sections  502  and 503, Title 32, United States Code
 3             as a member of  the  Illinois  National  Guard.  For
 4             taxable  years ending on or after December 31, 2001,
 5             any amount included in such total in respect of  any
 6             compensation  (including  but  not  limited  to  any
 7             compensation paid or accrued to a serviceman while a
 8             prisoner  of  war  or  missing  in action) paid to a
 9             resident  by  reason  of  being  a  member  of   any
10             component  of  the Armed Forces of the United States
11             and in respect of any compensation paid  or  accrued
12             to  a  resident who as a governmental employee was a
13             prisoner of war or missing in action, and in respect
14             of any compensation paid to a resident  in  2001  or
15             thereafter  by  reason  of  being  a  member  of the
16             Illinois National  Guard.  The  provisions  of  this
17             amendatory  Act  of  the  92nd  General Assembly are
18             exempt from the provisions 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
23             such  total as distributions under the provisions of
24             any retirement or disability plan for  employees  of
25             any  governmental  agency  or  unit,  or  retirement
26             payments  to  retired  partners,  which payments are
27             excluded  in  computing  net  earnings   from   self
28             employment  by  Section 1402 of the Internal Revenue
29             Code and regulations adopted pursuant thereto;
30                  (G)  The valuation limitation amount;
31                  (H)  An amount equal to the amount of  any  tax
32             imposed  by  this  Act  which  was  refunded  to the
33             taxpayer and included in such total for the  taxable
34             year;
 
                            -5-      LRB093 02308 SJM 02316 b
 1                  (I)  An amount equal to all amounts included in
 2             such total pursuant to the provisions of Section 111
 3             of  the Internal Revenue Code as a recovery of items
 4             previously deducted from adjusted  gross  income  in
 5             the computation of taxable income;
 6                  (J)  An   amount   equal   to  those  dividends
 7             included  in  such  total  which  were  paid  by   a
 8             corporation which conducts business operations in an
 9             Enterprise  Zone or zones created under the Illinois
10             Enterprise Zone Act, and conducts substantially  all
11             of its operations in an Enterprise Zone or zones;
12                  (K)  An   amount   equal   to  those  dividends
13             included  in  such  total  that  were  paid   by   a
14             corporation  that  conducts business operations in a
15             federally designated Foreign Trade Zone or  Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located   in   Illinois;   provided  that  dividends
18             eligible for the deduction provided in  subparagraph
19             (J) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (K);
22                  (L)  For  taxable  years  ending after December
23             31, 1983, an amount equal  to  all  social  security
24             benefits  and  railroad retirement benefits included
25             in such total pursuant to Sections 72(r) and  86  of
26             the Internal Revenue Code;
27                  (M)  With   the   exception   of   any  amounts
28             subtracted under subparagraph (N), an  amount  equal
29             to  the  sum of all amounts disallowed as deductions
30             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
31             Internal  Revenue  Code of 1954, as now or hereafter
32             amended, and all amounts of  expenses  allocable  to
33             interest  and   disallowed  as deductions by Section
34             265(1) of the Internal Revenue Code of 1954, as  now
 
                            -6-      LRB093 02308 SJM 02316 b
 1             or  hereafter  amended;  and  (ii) for taxable years
 2             ending  on  or  after  August  13,  1999,   Sections
 3             171(a)(2),  265,  280C,  and  832(b)(5)(B)(i) of the
 4             Internal  Revenue  Code;  the  provisions  of   this
 5             subparagraph  are  exempt  from  the  provisions  of
 6             Section 250;
 7                  (N)  An amount equal to all amounts included in
 8             such  total  which  are exempt from taxation by this
 9             State  either  by  reason   of   its   statutes   or
10             Constitution  or  by  reason  of  the  Constitution,
11             treaties  or statutes of the United States; provided
12             that, in the case of any statute of this State  that
13             exempts   income   derived   from   bonds  or  other
14             obligations from the tax imposed under this Act, the
15             amount exempted shall be the interest  net  of  bond
16             premium amortization;
17                  (O)  An  amount  equal to any contribution made
18             to a job training project  established  pursuant  to
19             the Tax Increment Allocation Redevelopment Act;
20                  (P)  An  amount  equal  to  the  amount  of the
21             deduction used to compute  the  federal  income  tax
22             credit  for  restoration of substantial amounts held
23             under claim of right for the taxable  year  pursuant
24             to  Section  1341  of  the  Internal Revenue Code of
25             1986;
26                  (Q)  An amount equal to any amounts included in
27             such  total,  received  by  the   taxpayer   as   an
28             acceleration  in  the  payment of life, endowment or
29             annuity benefits in advance of the time  they  would
30             otherwise  be payable as an indemnity for a terminal
31             illness;
32                  (R)  An amount  equal  to  the  amount  of  any
33             federal  or  State  bonus  paid  to  veterans of the
34             Persian Gulf War;
 
                            -7-      LRB093 02308 SJM 02316 b
 1                  (S)  An  amount,  to  the  extent  included  in
 2             adjusted gross income, equal  to  the  amount  of  a
 3             contribution  made  in the taxable year on behalf of
 4             the taxpayer  to  a  medical  care  savings  account
 5             established  under  the Medical Care Savings Account
 6             Act or the Medical Care Savings Account Act of  2000
 7             to  the  extent  the contribution is accepted by the
 8             account administrator as provided in that Act;
 9                  (T)  An  amount,  to  the  extent  included  in
10             adjusted  gross  income,  equal  to  the  amount  of
11             interest earned in the taxable  year  on  a  medical
12             care  savings  account established under the Medical
13             Care Savings Account Act or the Medical Care Savings
14             Account Act of 2000 on behalf of the taxpayer, other
15             than interest added pursuant to item (D-5)  of  this
16             paragraph (2);
17                  (U)  For one taxable year beginning on or after
18             January 1, 1994, an amount equal to the total amount
19             of  tax  imposed  and paid under subsections (a) and
20             (b) of Section 201 of  this  Act  on  grant  amounts
21             received  by  the  taxpayer  under  the Nursing Home
22             Grant Assistance Act during the  taxpayer's  taxable
23             years 1992 and 1993;
24                  (V)  Beginning  with  tax  years  ending  on or
25             after December 31, 1995 and ending  with  tax  years
26             ending  on  or  before  December 31, 2004, an amount
27             equal to the amount paid by  a  taxpayer  who  is  a
28             self-employed  taxpayer, a partner of a partnership,
29             or a shareholder in a Subchapter S  corporation  for
30             health  insurance  or  long-term  care insurance for
31             that  taxpayer  or   that   taxpayer's   spouse   or
32             dependents,  to  the extent that the amount paid for
33             that health insurance or  long-term  care  insurance
34             may  be  deducted  under Section 213 of the Internal
 
                            -8-      LRB093 02308 SJM 02316 b
 1             Revenue Code of 1986, has not been deducted  on  the
 2             federal  income tax return of the taxpayer, and does
 3             not exceed the taxable income attributable  to  that
 4             taxpayer's   income,   self-employment   income,  or
 5             Subchapter S  corporation  income;  except  that  no
 6             deduction  shall  be  allowed under this item (V) if
 7             the taxpayer  is  eligible  to  participate  in  any
 8             health insurance or long-term care insurance plan of
 9             an  employer  of  the  taxpayer  or  the  taxpayer's
10             spouse.   The  amount  of  the  health insurance and
11             long-term care insurance subtracted under this  item
12             (V)  shall be determined by multiplying total health
13             insurance and long-term care insurance premiums paid
14             by the taxpayer times a number that  represents  the
15             fractional  percentage  of eligible medical expenses
16             under Section 213 of the Internal  Revenue  Code  of
17             1986 not actually deducted on the taxpayer's federal
18             income tax return;
19                  (W)  For  taxable  years  beginning on or after
20             January  1,  1998,  all  amounts  included  in   the
21             taxpayer's  federal gross income in the taxable year
22             from amounts converted from a regular IRA to a  Roth
23             IRA. This paragraph is exempt from the provisions of
24             Section 250;
25                  (X)  For  taxable  year 1999 and thereafter, an
26             amount equal to the amount of any (i) distributions,
27             to the extent includible in gross income for federal
28             income tax purposes, made to the taxpayer because of
29             his or her status as a  victim  of  persecution  for
30             racial  or  religious reasons by Nazi Germany or any
31             other Axis regime or as an heir of  the  victim  and
32             (ii)  items  of  income, to the extent includible in
33             gross  income  for  federal  income  tax   purposes,
34             attributable  to, derived from or in any way related
 
                            -9-      LRB093 02308 SJM 02316 b
 1             to assets stolen from,  hidden  from,  or  otherwise
 2             lost  to  a  victim  of  persecution  for  racial or
 3             religious reasons by Nazi Germany or any other  Axis
 4             regime immediately prior to, during, and immediately
 5             after  World  War II, including, but not limited to,
 6             interest on the  proceeds  receivable  as  insurance
 7             under policies issued to a victim of persecution for
 8             racial  or  religious reasons by Nazi Germany or any
 9             other Axis regime by  European  insurance  companies
10             immediately  prior  to  and  during  World  War  II;
11             provided,  however,  this  subtraction  from federal
12             adjusted gross  income  does  not  apply  to  assets
13             acquired  with such assets or with the proceeds from
14             the sale of such  assets;  provided,  further,  this
15             paragraph shall only apply to a taxpayer who was the
16             first  recipient of such assets after their recovery
17             and who is a victim of  persecution  for  racial  or
18             religious  reasons by Nazi Germany or any other Axis
19             regime or as an heir of the victim.  The  amount  of
20             and  the  eligibility  for  any  public  assistance,
21             benefit,  or  similar entitlement is not affected by
22             the  inclusion  of  items  (i)  and  (ii)  of   this
23             paragraph  in  gross  income  for federal income tax
24             purposes.  This  paragraph  is   exempt   from   the
25             provisions of Section 250;
26                  (Y)  For  taxable  years  beginning on or after
27             January 1, 2002, moneys contributed in  the  taxable
28             year to a College Savings Pool account under Section
29             16.5 of the State Treasurer Act, except that amounts
30             excluded    from    gross   income   under   Section
31             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
32             not  be  considered  moneys  contributed  under this
33             subparagraph (Y).  This subparagraph (Y)  is  exempt
34             from the provisions of Section 250;
 
                            -10-     LRB093 02308 SJM 02316 b
 1                  (Z)  For taxable years 2001 and thereafter, for
 2             the  taxable  year  in  which the bonus depreciation
 3             deduction  (30%  of  the  adjusted  basis   of   the
 4             qualified  property)  is  taken  on  the  taxpayer's
 5             federal  income  tax  return under subsection (k) of
 6             Section 168 of the Internal  Revenue  Code  and  for
 7             each  applicable  taxable year thereafter, an amount
 8             equal to "x", where:
 9                       (1)  "y"  equals   the   amount   of   the
10                  depreciation  deduction  taken  for the taxable
11                  year  on  the  taxpayer's  federal  income  tax
12                  return  on  property  for   which   the   bonus
13                  depreciation  deduction  (30%  of  the adjusted
14                  basis of the qualified property) was  taken  in
15                  any year under subsection (k) of Section 168 of
16                  the  Internal  Revenue  Code, but not including
17                  the bonus depreciation deduction; and
18                       (2)  "x" equals "y" multiplied by  30  and
19                  then  divided  by  70  (or  "y"  multiplied  by
20                  0.429).
21                  The   aggregate   amount  deducted  under  this
22             subparagraph in all taxable years for any one  piece
23             of  property  may not exceed the amount of the bonus
24             depreciation deduction (30% of the adjusted basis of
25             the qualified property) taken on  that  property  on
26             the  taxpayer's  federal  income  tax  return  under
27             subsection  (k)  of  Section  168  of  the  Internal
28             Revenue Code; and
29                  (AA)  If the taxpayer reports a capital gain or
30             loss on the taxpayer's federal income tax return for
31             the  taxable  year  based  on  a sale or transfer of
32             property for which the taxpayer was required in  any
33             taxable  year to make an addition modification under
34             subparagraph (D-15), then an amount  equal  to  that
 
                            -11-     LRB093 02308 SJM 02316 b
 1             addition modification.
 2                  The  taxpayer  is allowed to take the deduction
 3             under this subparagraph only once  with  respect  to
 4             any one piece of property; and
 5                  (BB) (Z)  Any amount included in adjusted gross
 6             income, other than salary, received by a driver in a
 7             ridesharing arrangement using a motor vehicle; and.
 8                  (CC)  Beginning  with  tax  years  ending on or
 9             after December 31, 2003, and ending with  tax  years
10             ending   on   or   before  December  30,  2013,  all
11             unreimbursed amounts, but  not  more  than  a  total
12             amount  that would result in a tax liability of less
13             than zero for the taxpayer, expended by  persons  65
14             years  of  age or older for home health services, as
15             defined by Section 2.05 of the  Home  Health  Agency
16             Licensing  Act,  if  provided by a public or private
17             organization  licensed  under  that  Act,   or   for
18             services  provided  to  a  person  at  that person's
19             residence  by  a   licensed   practical   nurse   or
20             registered  nurse  in  accordance  with  a  plan  of
21             treatment  for  illness or infirmity prescribed by a
22             physician.

23        (b)  Corporations.
24             (1)  In general.  In the case of a corporation, base
25        income means an amount equal to  the  taxpayer's  taxable
26        income for the taxable year as modified by paragraph (2).
27             (2)  Modifications.   The taxable income referred to
28        in paragraph (1) shall be modified by adding thereto  the
29        sum of the following amounts:
30                  (A)  An  amount  equal  to  all amounts paid or
31             accrued  to  the  taxpayer  as  interest   and   all
32             distributions  received  from  regulated  investment
33             companies  during  the  taxable  year  to the extent
34             excluded from gross income  in  the  computation  of
 
                            -12-     LRB093 02308 SJM 02316 b
 1             taxable income;
 2                  (B)  An  amount  equal  to  the  amount  of tax
 3             imposed by this Act  to  the  extent  deducted  from
 4             gross  income  in  the computation of taxable income
 5             for the taxable year;
 6                  (C)  In the  case  of  a  regulated  investment
 7             company,  an  amount  equal to the excess of (i) the
 8             net long-term capital gain  for  the  taxable  year,
 9             over  (ii)  the amount of the capital gain dividends
10             designated  as  such  in  accordance  with   Section
11             852(b)(3)(C)  of  the  Internal Revenue Code and any
12             amount designated under Section 852(b)(3)(D) of  the
13             Internal  Revenue  Code, attributable to the taxable
14             year (this amendatory Act of 1995 (Public Act 89-89)
15             is declarative of existing law  and  is  not  a  new
16             enactment);
17                  (D)  The  amount  of  any  net  operating  loss
18             deduction taken in arriving at taxable income, other
19             than  a  net  operating  loss carried forward from a
20             taxable year 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
27             other than those provided by this  subparagraph  (E)
28             exceeded  subtraction  modifications in such earlier
29             taxable year, with the following limitations applied
30             in the order that they are listed:
31                       (i)  the addition modification relating to
32                  the net operating loss carried back or  forward
33                  to  the  taxable  year  from  any  taxable year
34                  ending prior to  December  31,  1986  shall  be
 
                            -13-     LRB093 02308 SJM 02316 b
 1                  reduced  by the amount of addition modification
 2                  under this subparagraph (E)  which  related  to
 3                  that  net  operating  loss  and which was taken
 4                  into account in calculating the base income  of
 5                  an earlier taxable year, and
 6                       (ii)  the  addition  modification relating
 7                  to the  net  operating  loss  carried  back  or
 8                  forward  to  the  taxable year from any taxable
 9                  year ending prior to December  31,  1986  shall
10                  not  exceed  the  amount  of  such carryback or
11                  carryforward;
12                  For taxable years  in  which  there  is  a  net
13             operating  loss  carryback or carryforward from more
14             than one other taxable year ending prior to December
15             31, 1986, the addition modification provided in this
16             subparagraph (E) shall be the  sum  of  the  amounts
17             computed    independently    under   the   preceding
18             provisions of this subparagraph (E)  for  each  such
19             taxable year;
20                  (E-5)  For  taxable years ending after December
21             31,  1997,  an  amount   equal   to   any   eligible
22             remediation  costs  that the corporation deducted in
23             computing adjusted gross income and  for  which  the
24             corporation  claims a credit under subsection (l) of
25             Section 201;
26                  (E-10)  For taxable years 2001 and  thereafter,
27             an  amount equal to the bonus depreciation deduction
28             (30%  of  the  adjusted  basis  of   the   qualified
29             property) taken on the taxpayer's federal income tax
30             return  for the taxable year under subsection (k) of
31             Section 168 of the Internal Revenue Code; and
32                  (E-11)  If the taxpayer reports a capital  gain
33             or  loss on the taxpayer's federal income tax return
34             for the taxable year based on a sale or transfer  of
 
                            -14-     LRB093 02308 SJM 02316 b
 1             property  for which the taxpayer was required in any
 2             taxable year to make an addition modification  under
 3             subparagraph  (E-10),  then  an  amount equal to the
 4             aggregate amount of  the  deductions  taken  in  all
 5             taxable years under subparagraph (T) with respect to
 6             that property.;
 7                  The  taxpayer  is required to make the addition
 8             modification under this subparagraph only once  with
 9             respect to any one piece of property;
10        and  by  deducting  from the total so obtained the sum of
11        the following amounts:
12                  (F)  An amount equal to the amount of  any  tax
13             imposed  by  this  Act  which  was  refunded  to the
14             taxpayer and included in such total for the  taxable
15             year;
16                  (G)  An  amount equal to any amount included in
17             such total under Section 78 of the Internal  Revenue
18             Code;
19                  (H)  In  the  case  of  a  regulated investment
20             company, an amount equal to  the  amount  of  exempt
21             interest  dividends as defined in subsection (b) (5)
22             of Section 852 of the Internal Revenue Code, paid to
23             shareholders for the taxable year;
24                  (I)  With  the   exception   of   any   amounts
25             subtracted  under  subparagraph (J), an amount equal
26             to the sum of all amounts disallowed  as  deductions
27             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
28             amounts  disallowed  as  interest expense by Section
29             291(a)(3) of the Internal Revenue Code,  as  now  or
30             hereafter  amended,  and  all  amounts  of  expenses
31             allocable  to  interest and disallowed as deductions
32             by Section 265(a)(1) of the Internal  Revenue  Code,
33             as  now  or  hereafter amended; and (ii) for taxable
34             years ending on or after August 13,  1999,  Sections
 
                            -15-     LRB093 02308 SJM 02316 b
 1             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
 2             of the Internal Revenue Code; the provisions of this
 3             subparagraph  are  exempt  from  the  provisions  of
 4             Section 250;
 5                  (J)  An amount equal to all amounts included in
 6             such  total  which  are exempt from taxation by this
 7             State  either  by  reason   of   its   statutes   or
 8             Constitution  or  by  reason  of  the  Constitution,
 9             treaties  or statutes of the United States; provided
10             that, in the case of any statute of this State  that
11             exempts   income   derived   from   bonds  or  other
12             obligations from the tax imposed under this Act, the
13             amount exempted shall be the interest  net  of  bond
14             premium amortization;
15                  (K)  An   amount   equal   to  those  dividends
16             included  in  such  total  which  were  paid  by   a
17             corporation which conducts business operations in an
18             Enterprise  Zone or zones created under the Illinois
19             Enterprise Zone Act and conducts  substantially  all
20             of its operations in an Enterprise Zone or zones;
21                  (L)  An   amount   equal   to  those  dividends
22             included  in  such  total  that  were  paid   by   a
23             corporation  that  conducts business operations in a
24             federally designated Foreign Trade Zone or  Sub-Zone
25             and  that  is  designated  a  High  Impact  Business
26             located   in   Illinois;   provided  that  dividends
27             eligible for the deduction provided in  subparagraph
28             (K)  of  paragraph 2 of this subsection shall not be
29             eligible  for  the  deduction  provided  under  this
30             subparagraph (L);
31                  (M)  For  any  taxpayer  that  is  a  financial
32             organization within the meaning of Section 304(c) of
33             this Act,  an  amount  included  in  such  total  as
34             interest  income  from  a loan or loans made by such
 
                            -16-     LRB093 02308 SJM 02316 b
 1             taxpayer to a borrower, to the extent  that  such  a
 2             loan  is  secured  by property which is eligible for
 3             the Enterprise Zone Investment Credit.  To determine
 4             the portion of a loan or loans that  is  secured  by
 5             property  eligible  for  a Section 201(f) investment
 6             credit to the borrower, the entire principal  amount
 7             of  the  loan  or loans between the taxpayer and the
 8             borrower should be divided into  the  basis  of  the
 9             Section  201(f)  investment  credit  property  which
10             secures  the  loan  or loans, using for this purpose
11             the original basis of such property on the date that
12             it was placed in service  in  the  Enterprise  Zone.
13             The  subtraction  modification available to taxpayer
14             in any year under  this  subsection  shall  be  that
15             portion  of  the total interest paid by the borrower
16             with  respect  to  such  loan  attributable  to  the
17             eligible property as calculated under  the  previous
18             sentence;
19                  (M-1)  For  any  taxpayer  that  is a financial
20             organization within the meaning of Section 304(c) of
21             this Act,  an  amount  included  in  such  total  as
22             interest  income  from  a loan or loans made by such
23             taxpayer to a borrower, to the extent  that  such  a
24             loan  is  secured  by property which is eligible for
25             the High  Impact  Business  Investment  Credit.   To
26             determine  the  portion  of  a loan or loans that is
27             secured by property eligible for  a  Section  201(h)
28             investment   credit  to  the  borrower,  the  entire
29             principal amount of the loan or  loans  between  the
30             taxpayer and the borrower should be divided into the
31             basis   of  the  Section  201(h)  investment  credit
32             property which secures the loan or loans, using  for
33             this  purpose the original basis of such property on
34             the  date  that  it  was  placed  in  service  in  a
 
                            -17-     LRB093 02308 SJM 02316 b
 1             federally designated Foreign Trade Zone or  Sub-Zone
 2             located  in  Illinois.  No taxpayer that is eligible
 3             for the deduction provided in  subparagraph  (M)  of
 4             paragraph  (2)  of this subsection shall be eligible
 5             for the deduction provided under  this  subparagraph
 6             (M-1).   The  subtraction  modification available to
 7             taxpayers in any year under this subsection shall be
 8             that portion of  the  total  interest  paid  by  the
 9             borrower  with  respect to such loan attributable to
10             the  eligible  property  as  calculated  under   the
11             previous sentence;
12                  (N)  Two times any contribution made during the
13             taxable  year  to  a designated zone organization to
14             the 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
18             by  the Department of Commerce and Community Affairs
19             under Section 11 of  the  Illinois  Enterprise  Zone
20             Act;
21                  (O)  An  amount  equal  to: (i) 85% for taxable
22             years ending on or before December 31, 1992,  or,  a
23             percentage  equal  to the percentage allowable under
24             Section 243(a)(1) of the Internal  Revenue  Code  of
25             1986  for  taxable  years  ending after December 31,
26             1992, of the amount by which dividends  included  in
27             taxable  income and received from a corporation that
28             is not created or organized under the  laws  of  the
29             United  States or any state or political subdivision
30             thereof, including, for taxable years ending  on  or
31             after  December  31,  1988,  dividends  received  or
32             deemed   received  or  paid  or  deemed  paid  under
33             Sections 951 through 964  of  the  Internal  Revenue
34             Code, exceed the amount of the modification provided
 
                            -18-     LRB093 02308 SJM 02316 b
 1             under  subparagraph  (G)  of  paragraph  (2) of this
 2             subsection (b) which is related to  such  dividends;
 3             plus  (ii)  100%  of  the amount by which dividends,
 4             included in taxable income and received,  including,
 5             for  taxable  years  ending on or after December 31,
 6             1988, dividends received or deemed received or  paid
 7             or deemed paid under Sections 951 through 964 of the
 8             Internal  Revenue  Code,  from  any such corporation
 9             specified in clause  (i)  that  would  but  for  the
10             provisions  of  Section 1504 (b) (3) of the Internal
11             Revenue  Code  be  treated  as  a  member   of   the
12             affiliated   group   which   includes  the  dividend
13             recipient, exceed the  amount  of  the  modification
14             provided  under subparagraph (G) of paragraph (2) of
15             this  subsection  (b)  which  is  related  to   such
16             dividends;
17                  (P)  An  amount  equal to any contribution made
18             to a job training project  established  pursuant  to
19             the Tax Increment Allocation Redevelopment Act;
20                  (Q)  An  amount  equal  to  the  amount  of the
21             deduction used to compute  the  federal  income  tax
22             credit  for  restoration of substantial amounts held
23             under claim of right for the taxable  year  pursuant
24             to  Section  1341  of  the  Internal Revenue Code of
25             1986;
26                  (R)  In the case of  an  attorney-in-fact  with
27             respect  to  whom  an  interinsurer  or a reciprocal
28             insurer has made the election under Section  835  of
29             the  Internal Revenue Code, 26 U.S.C. 835, an amount
30             equal to the excess, if any, of the amounts paid  or
31             incurred  by that interinsurer or reciprocal insurer
32             in the taxable year to the attorney-in-fact over the
33             deduction allowed to that interinsurer or reciprocal
34             insurer with respect to the  attorney-in-fact  under
 
                            -19-     LRB093 02308 SJM 02316 b
 1             Section  835(b) of the Internal Revenue Code for the
 2             taxable year;
 3                  (S)  For  taxable  years  ending  on  or  after
 4             December 31, 1997, in the case  of  a  Subchapter  S
 5             corporation,  an  amount  equal  to  all  amounts of
 6             income allocable to a  shareholder  subject  to  the
 7             Personal Property Tax Replacement Income Tax imposed
 8             by  subsections  (c)  and (d) of Section 201 of this
 9             Act, including amounts  allocable  to  organizations
10             exempt  from federal income tax by reason of Section
11             501(a)  of  the   Internal   Revenue   Code.    This
12             subparagraph  (S)  is  exempt from the provisions of
13             Section 250;
14                  (T)  For taxable years 2001 and thereafter, for
15             the taxable year in  which  the  bonus  depreciation
16             deduction   (30%   of  the  adjusted  basis  of  the
17             qualified  property)  is  taken  on  the  taxpayer's
18             federal income tax return under  subsection  (k)  of
19             Section  168  of  the  Internal Revenue Code and for
20             each applicable taxable year thereafter,  an  amount
21             equal to "x", where:
22                       (1)  "y"   equals   the   amount   of  the
23                  depreciation deduction taken  for  the  taxable
24                  year  on  the  taxpayer's  federal  income  tax
25                  return   on   property   for  which  the  bonus
26                  depreciation deduction  (30%  of  the  adjusted
27                  basis  of  the qualified property) was taken in
28                  any year under subsection (k) of Section 168 of
29                  the Internal Revenue Code,  but  not  including
30                  the bonus depreciation deduction; and
31                       (2)  "x"  equals  "y" multiplied by 30 and
32                  then  divided  by  70  (or  "y"  multiplied  by
33                  0.429).
34                  The  aggregate  amount  deducted   under   this
 
                            -20-     LRB093 02308 SJM 02316 b
 1             subparagraph  in all taxable years for any one piece
 2             of property may not exceed the amount of  the  bonus
 3             depreciation deduction (30% of the adjusted basis of
 4             the  qualified  property)  taken on that property on
 5             the  taxpayer's  federal  income  tax  return  under
 6             subsection  (k)  of  Section  168  of  the  Internal
 7             Revenue Code; and
 8                  (U)  If the taxpayer reports a capital gain  or
 9             loss on the taxpayer's federal income tax return for
10             the  taxable  year  based  on  a sale or transfer of
11             property for which the taxpayer was required in  any
12             taxable  year to make an addition modification under
13             subparagraph (E-10), then an amount  equal  to  that
14             addition modification.
15                  The  taxpayer  is allowed to take the deduction
16             under this subparagraph only once  with  respect  to
17             any one piece of property.
18             (3)  Special  rule.   For  purposes of paragraph (2)
19        (A), "gross income" in  the  case  of  a  life  insurance
20        company,  for  tax years ending on and after December 31,
21        1994, shall mean the  gross  investment  income  for  the
22        taxable year.

23        (c)  Trusts and estates.
24             (1)  In  general.  In the case of a trust or estate,
25        base income means  an  amount  equal  to  the  taxpayer's
26        taxable  income  for  the  taxable  year  as  modified by
27        paragraph (2).
28             (2)  Modifications.  Subject to  the  provisions  of
29        paragraph   (3),   the  taxable  income  referred  to  in
30        paragraph (1) shall be modified by adding thereto the sum
31        of the following amounts:
32                  (A)  An amount equal to  all  amounts  paid  or
33             accrued  to  the  taxpayer  as interest or dividends
34             during the taxable year to the extent excluded  from
 
                            -21-     LRB093 02308 SJM 02316 b
 1             gross income in the computation of taxable income;
 2                  (B)  In the case of (i) an estate, $600; (ii) a
 3             trust  which,  under  its  governing  instrument, is
 4             required to distribute all of its income  currently,
 5             $300;  and  (iii) any other trust, $100, but in each
 6             such case,  only  to  the  extent  such  amount  was
 7             deducted in the computation of taxable income;
 8                  (C)  An  amount  equal  to  the  amount  of tax
 9             imposed by this Act  to  the  extent  deducted  from
10             gross  income  in  the computation of taxable income
11             for the taxable year;
12                  (D)  The  amount  of  any  net  operating  loss
13             deduction taken in arriving at taxable income, other
14             than a net operating loss  carried  forward  from  a
15             taxable year ending prior to December 31, 1986;
16                  (E)  For taxable years in which a net operating
17             loss  carryback  or carryforward from a taxable year
18             ending prior to December 31, 1986 is an  element  of
19             taxable income under paragraph (1) of subsection (e)
20             or  subparagraph  (E) of paragraph (2) of subsection
21             (e), the  amount  by  which  addition  modifications
22             other  than  those provided by this subparagraph (E)
23             exceeded subtraction modifications in  such  taxable
24             year,  with the following limitations applied in the
25             order that they are listed:
26                       (i)  the addition modification relating to
27                  the net operating loss carried back or  forward
28                  to  the  taxable  year  from  any  taxable year
29                  ending prior to  December  31,  1986  shall  be
30                  reduced  by the amount of addition modification
31                  under this subparagraph (E)  which  related  to
32                  that  net  operating  loss  and which was taken
33                  into account in calculating the base income  of
34                  an earlier taxable year, and
 
                            -22-     LRB093 02308 SJM 02316 b
 1                       (ii)  the  addition  modification relating
 2                  to the  net  operating  loss  carried  back  or
 3                  forward  to  the  taxable year from any taxable
 4                  year ending prior to December  31,  1986  shall
 5                  not  exceed  the  amount  of  such carryback or
 6                  carryforward;
 7                  For taxable years  in  which  there  is  a  net
 8             operating  loss  carryback or carryforward from more
 9             than one other taxable year ending prior to December
10             31, 1986, the addition modification provided in this
11             subparagraph (E) shall be the  sum  of  the  amounts
12             computed    independently    under   the   preceding
13             provisions of this subparagraph (E)  for  each  such
14             taxable year;
15                  (F)  For  taxable  years  ending  on  or  after
16             January 1, 1989, an amount equal to the tax deducted
17             pursuant to Section 164 of the Internal Revenue Code
18             if  the trust or estate is claiming the same tax for
19             purposes of the Illinois foreign  tax  credit  under
20             Section 601 of this Act;
21                  (G)  An  amount  equal  to  the  amount  of the
22             capital gain deduction allowable under the  Internal
23             Revenue  Code,  to  the  extent  deducted from gross
24             income in the computation of taxable income;
25                  (G-5)  For taxable years ending after  December
26             31,   1997,   an   amount   equal  to  any  eligible
27             remediation costs that the trust or estate  deducted
28             in computing adjusted gross income and for which the
29             trust or estate claims a credit under subsection (l)
30             of Section 201;
31                  (G-10)  For  taxable years 2001 and thereafter,
32             an amount equal to the bonus depreciation  deduction
33             (30%   of   the  adjusted  basis  of  the  qualified
34             property) taken on the taxpayer's federal income tax
 
                            -23-     LRB093 02308 SJM 02316 b
 1             return for the taxable year under subsection (k)  of
 2             Section 168 of the Internal Revenue Code; and
 3                  (G-11)  If  the taxpayer reports a capital gain
 4             or loss on the taxpayer's federal income tax  return
 5             for  the taxable year based on a sale or transfer of
 6             property for which the taxpayer was required in  any
 7             taxable  year to make an addition modification under
 8             subparagraph (G-10), then an  amount  equal  to  the
 9             aggregate  amount  of  the  deductions  taken in all
10             taxable years under subparagraph (R) with respect to
11             that property.;
12                  The taxpayer is required to make  the  addition
13             modification  under this subparagraph only once with
14             respect to any one piece of property;
15        and by deducting from the total so obtained  the  sum  of
16        the following amounts:
17                  (H)  An amount equal to all amounts included in
18             such  total  pursuant  to the provisions of Sections
19             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
20             408 of the Internal Revenue Code or included in such
21             total  as  distributions under the provisions of any
22             retirement or disability plan for employees  of  any
23             governmental  agency or unit, or retirement payments
24             to retired partners, which payments are excluded  in
25             computing  net  earnings  from  self  employment  by
26             Section  1402  of  the  Internal  Revenue  Code  and
27             regulations adopted pursuant thereto;
28                  (I)  The valuation limitation amount;
29                  (J)  An  amount  equal to the amount of any tax
30             imposed by  this  Act  which  was  refunded  to  the
31             taxpayer  and included in such total for the taxable
32             year;
33                  (K)  An amount equal to all amounts included in
34             taxable income as  modified  by  subparagraphs  (A),
 
                            -24-     LRB093 02308 SJM 02316 b
 1             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
 2             from taxation by this State either by reason of  its
 3             statutes   or  Constitution  or  by  reason  of  the
 4             Constitution, treaties or  statutes  of  the  United
 5             States; provided that, in the case of any statute of
 6             this State that exempts income derived from bonds or
 7             other  obligations  from  the tax imposed under this
 8             Act, the amount exempted shall be the  interest  net
 9             of bond premium amortization;
10                  (L)  With   the   exception   of   any  amounts
11             subtracted under subparagraph (K), an  amount  equal
12             to  the  sum of all amounts disallowed as deductions
13             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
14             Internal  Revenue Code, as now or hereafter amended,
15             and all amounts of expenses  allocable  to  interest
16             and  disallowed  as  deductions by Section 265(1) of
17             the  Internal  Revenue  Code  of  1954,  as  now  or
18             hereafter amended; and (ii) for taxable years ending
19             on or after August  13,  1999,  Sections  171(a)(2),
20             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
21             Revenue  Code;  the  provisions of this subparagraph
22             are exempt from the provisions of Section 250;
23                  (M)  An  amount  equal   to   those   dividends
24             included   in  such  total  which  were  paid  by  a
25             corporation which conducts business operations in an
26             Enterprise Zone or zones created under the  Illinois
27             Enterprise  Zone  Act and conducts substantially all
28             of its operations in an Enterprise Zone or Zones;
29                  (N)  An amount equal to any  contribution  made
30             to  a  job  training project established pursuant to
31             the Tax Increment Allocation Redevelopment Act;
32                  (O)  An  amount  equal   to   those   dividends
33             included   in   such  total  that  were  paid  by  a
34             corporation that conducts business operations  in  a
 
                            -25-     LRB093 02308 SJM 02316 b
 1             federally  designated Foreign Trade Zone or Sub-Zone
 2             and  that  is  designated  a  High  Impact  Business
 3             located  in  Illinois;   provided   that   dividends
 4             eligible  for the deduction provided in subparagraph
 5             (M) of paragraph (2) of this subsection shall not be
 6             eligible  for  the  deduction  provided  under  this
 7             subparagraph (O);
 8                  (P)  An amount  equal  to  the  amount  of  the
 9             deduction  used  to  compute  the federal income tax
10             credit for restoration of substantial  amounts  held
11             under  claim  of right for the taxable year pursuant
12             to Section 1341 of  the  Internal  Revenue  Code  of
13             1986;
14                  (Q)  For  taxable  year 1999 and thereafter, an
15             amount equal to the amount of any (i) distributions,
16             to the extent includible in gross income for federal
17             income tax purposes, made to the taxpayer because of
18             his or her status as a  victim  of  persecution  for
19             racial  or  religious reasons by Nazi Germany or any
20             other Axis regime or as an heir of  the  victim  and
21             (ii)  items  of  income, to the extent includible in
22             gross  income  for  federal  income  tax   purposes,
23             attributable  to, derived from or in any way related
24             to assets stolen from,  hidden  from,  or  otherwise
25             lost  to  a  victim  of  persecution  for  racial or
26             religious reasons by Nazi Germany or any other  Axis
27             regime immediately prior to, during, and immediately
28             after  World  War II, including, but not limited to,
29             interest on the  proceeds  receivable  as  insurance
30             under policies issued to a victim of persecution for
31             racial  or  religious reasons by Nazi Germany or any
32             other Axis regime by  European  insurance  companies
33             immediately  prior  to  and  during  World  War  II;
34             provided,  however,  this  subtraction  from federal
 
                            -26-     LRB093 02308 SJM 02316 b
 1             adjusted gross  income  does  not  apply  to  assets
 2             acquired  with such assets or with the proceeds from
 3             the sale of such  assets;  provided,  further,  this
 4             paragraph shall only apply to a taxpayer who was the
 5             first  recipient of such assets after their recovery
 6             and who is a victim of  persecution  for  racial  or
 7             religious  reasons by Nazi Germany or any other Axis
 8             regime or as an heir of the victim.  The  amount  of
 9             and  the  eligibility  for  any  public  assistance,
10             benefit,  or  similar entitlement is not affected by
11             the  inclusion  of  items  (i)  and  (ii)  of   this
12             paragraph  in  gross  income  for federal income tax
13             purposes.  This  paragraph  is   exempt   from   the
14             provisions of Section 250;
15                  (R)  For taxable years 2001 and thereafter, for
16             the  taxable  year  in  which the bonus depreciation
17             deduction  (30%  of  the  adjusted  basis   of   the
18             qualified  property)  is  taken  on  the  taxpayer's
19             federal  income  tax  return under subsection (k) of
20             Section 168 of the Internal  Revenue  Code  and  for
21             each  applicable  taxable year thereafter, an amount
22             equal to "x", where:
23                       (1)  "y"  equals   the   amount   of   the
24                  depreciation  deduction  taken  for the taxable
25                  year  on  the  taxpayer's  federal  income  tax
26                  return  on  property  for   which   the   bonus
27                  depreciation  deduction  (30%  of  the adjusted
28                  basis of the qualified property) was  taken  in
29                  any year under subsection (k) of Section 168 of
30                  the  Internal  Revenue  Code, but not including
31                  the bonus depreciation deduction; and
32                       (2)  "x" equals "y" multiplied by  30  and
33                  then  divided  by  70  (or  "y"  multiplied  by
34                  0.429).
 
                            -27-     LRB093 02308 SJM 02316 b
 1                  The   aggregate   amount  deducted  under  this
 2             subparagraph in all taxable years for any one  piece
 3             of  property  may not exceed the amount of the bonus
 4             depreciation deduction (30% of the adjusted basis of
 5             the qualified property) taken on  that  property  on
 6             the  taxpayer's  federal  income  tax  return  under
 7             subsection  (k)  of  Section  168  of  the  Internal
 8             Revenue Code; and
 9                  (S)  If  the taxpayer reports a capital gain or
10             loss on the taxpayer's federal income tax return for
11             the taxable year based on  a  sale  or  transfer  of
12             property  for which the taxpayer was required in any
13             taxable year to make an addition modification  under
14             subparagraph  (G-10),  then  an amount equal to that
15             addition modification.
16                  The taxpayer is allowed to take  the  deduction
17             under  this  subparagraph  only once with respect to
18             any one piece of property.
19             (3)  Limitation.  The  amount  of  any  modification
20        otherwise  required  under  this  subsection shall, under
21        regulations prescribed by the Department, be adjusted  by
22        any  amounts  included  therein which were properly paid,
23        credited, or required to be distributed,  or  permanently
24        set  aside  for charitable purposes pursuant  to Internal
25        Revenue Code Section 642(c) during the taxable year.

26        (d)  Partnerships.
27             (1)  In general. In the case of a partnership,  base
28        income  means  an  amount equal to the taxpayer's taxable
29        income for the taxable year as modified by paragraph (2).
30             (2)  Modifications. The taxable income  referred  to
31        in  paragraph (1) shall be modified by adding thereto the
32        sum of the following amounts:
33                  (A)  An amount equal to  all  amounts  paid  or
34             accrued  to  the  taxpayer  as interest or dividends
 
                            -28-     LRB093 02308 SJM 02316 b
 1             during the taxable year to the extent excluded  from
 2             gross income in the computation of taxable income;
 3                  (B)  An  amount  equal  to  the  amount  of tax
 4             imposed by this Act  to  the  extent  deducted  from
 5             gross income for the taxable year;
 6                  (C)  The  amount  of  deductions allowed to the
 7             partnership pursuant  to  Section  707  (c)  of  the
 8             Internal  Revenue  Code  in  calculating its taxable
 9             income;
10                  (D)  An amount  equal  to  the  amount  of  the
11             capital  gain deduction allowable under the Internal
12             Revenue Code, to  the  extent  deducted  from  gross
13             income in the computation of taxable income;
14                  (D-5)  For  taxable  years 2001 and thereafter,
15             an amount equal to the bonus depreciation  deduction
16             (30%   of   the  adjusted  basis  of  the  qualified
17             property) taken on the taxpayer's federal income tax
18             return for the taxable year under subsection (k)  of
19             Section 168 of the Internal Revenue Code; and
20                  (D-6)  If  the  taxpayer reports a capital gain
21             or loss on the taxpayer's federal income tax  return
22             for  the taxable year based on a sale or transfer of
23             property for which the taxpayer was required in  any
24             taxable  year to make an addition modification under
25             subparagraph (D-5), then  an  amount  equal  to  the
26             aggregate  amount  of  the  deductions  taken in all
27             taxable years under subparagraph (O) with respect to
28             that property.;
29                  The taxpayer is required to make  the  addition
30             modification  under this subparagraph only once with
31             respect to any one piece of property;
32        and by deducting from the total so obtained the following
33        amounts:
34                  (E)  The valuation limitation amount;
 
                            -29-     LRB093 02308 SJM 02316 b
 1                  (F)  An amount equal to the amount of  any  tax
 2             imposed  by  this  Act  which  was  refunded  to the
 3             taxpayer and included in such total for the  taxable
 4             year;
 5                  (G)  An amount equal to all amounts included in
 6             taxable  income  as  modified  by subparagraphs (A),
 7             (B), (C) and (D) which are exempt from  taxation  by
 8             this  State  either  by  reason  of  its statutes or
 9             Constitution  or  by  reason  of  the  Constitution,
10             treaties or statutes of the United States;  provided
11             that,  in the case of any statute of this State that
12             exempts  income  derived   from   bonds   or   other
13             obligations from the tax imposed under this Act, the
14             amount  exempted  shall  be the interest net of bond
15             premium amortization;
16                  (H)  Any  income  of  the   partnership   which
17             constitutes  personal  service  income as defined in
18             Section 1348 (b) (1) of the  Internal  Revenue  Code
19             (as  in  effect  December  31, 1981) or a reasonable
20             allowance  for  compensation  paid  or  accrued  for
21             services rendered by partners  to  the  partnership,
22             whichever is greater;
23                  (I)  An  amount  equal to all amounts of income
24             distributable to an entity subject to  the  Personal
25             Property  Tax  Replacement  Income  Tax  imposed  by
26             subsections  (c)  and (d) of Section 201 of this Act
27             including  amounts  distributable  to  organizations
28             exempt from federal income tax by reason of  Section
29             501(a) of the Internal Revenue Code;
30                  (J)  With   the   exception   of   any  amounts
31             subtracted under subparagraph (G), an  amount  equal
32             to  the  sum of all amounts disallowed as deductions
33             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
34             Internal  Revenue  Code of 1954, as now or hereafter
 
                            -30-     LRB093 02308 SJM 02316 b
 1             amended, and all amounts of  expenses  allocable  to
 2             interest  and  disallowed  as  deductions by Section
 3             265(1) of the  Internal  Revenue  Code,  as  now  or
 4             hereafter amended; and (ii) for taxable years ending
 5             on  or  after  August  13, 1999, Sections 171(a)(2),
 6             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 7             Revenue Code; the provisions  of  this  subparagraph
 8             are exempt from the provisions of Section 250;
 9                  (K)  An   amount   equal   to  those  dividends
10             included  in  such  total  which  were  paid  by   a
11             corporation which conducts business operations in an
12             Enterprise  Zone or zones created under the Illinois
13             Enterprise Zone Act, enacted  by  the  82nd  General
14             Assembly,  and  conducts  substantially  all  of its
15             operations in an Enterprise Zone or Zones;
16                  (L)  An amount equal to any  contribution  made
17             to  a  job  training project established pursuant to
18             the   Real   Property   Tax   Increment   Allocation
19             Redevelopment Act;
20                  (M)  An  amount  equal   to   those   dividends
21             included   in   such  total  that  were  paid  by  a
22             corporation that conducts business operations  in  a
23             federally  designated Foreign Trade Zone or Sub-Zone
24             and  that  is  designated  a  High  Impact  Business
25             located  in  Illinois;   provided   that   dividends
26             eligible  for the deduction provided in subparagraph
27             (K) of paragraph (2) of this subsection shall not be
28             eligible  for  the  deduction  provided  under  this
29             subparagraph (M);
30                  (N)  An amount  equal  to  the  amount  of  the
31             deduction  used  to  compute  the federal income tax
32             credit for restoration of substantial  amounts  held
33             under  claim  of right for the taxable year pursuant
34             to Section 1341 of  the  Internal  Revenue  Code  of
 
                            -31-     LRB093 02308 SJM 02316 b
 1             1986;
 2                  (O)  For taxable years 2001 and thereafter, for
 3             the  taxable  year  in  which the bonus depreciation
 4             deduction  (30%  of  the  adjusted  basis   of   the
 5             qualified  property)  is  taken  on  the  taxpayer's
 6             federal  income  tax  return under subsection (k) of
 7             Section 168 of the Internal  Revenue  Code  and  for
 8             each  applicable  taxable year thereafter, an amount
 9             equal to "x", where:
10                       (1)  "y"  equals   the   amount   of   the
11                  depreciation  deduction  taken  for the taxable
12                  year  on  the  taxpayer's  federal  income  tax
13                  return  on  property  for   which   the   bonus
14                  depreciation  deduction  (30%  of  the adjusted
15                  basis of the qualified property) was  taken  in
16                  any year under subsection (k) of Section 168 of
17                  the  Internal  Revenue  Code, but not including
18                  the bonus depreciation deduction; and
19                       (2)  "x" equals "y" multiplied by  30  and
20                  then  divided  by  70  (or  "y"  multiplied  by
21                  0.429).
22                  The   aggregate   amount  deducted  under  this
23             subparagraph in all taxable years for any one  piece
24             of  property  may not exceed the amount of the bonus
25             depreciation deduction (30% of the adjusted basis of
26             the qualified property) taken on  that  property  on
27             the  taxpayer's  federal  income  tax  return  under
28             subsection  (k)  of  Section  168  of  the  Internal
29             Revenue Code; and
30                  (P)  If  the taxpayer reports a capital gain or
31             loss on the taxpayer's federal income tax return for
32             the taxable year based on  a  sale  or  transfer  of
33             property  for which the taxpayer was required in any
34             taxable year to make an addition modification  under
 
                            -32-     LRB093 02308 SJM 02316 b
 1             subparagraph  (D-5),  then  an  amount equal to that
 2             addition modification.
 3                  The taxpayer is allowed to take  the  deduction
 4             under  this  subparagraph  only once with respect to
 5             any one piece of property.

 6        (e)  Gross income; adjusted gross income; taxable income.
 7             (1)  In  general.   Subject  to  the  provisions  of
 8        paragraph (2) and subsection (b)  (3),  for  purposes  of
 9        this  Section  and  Section  803(e),  a  taxpayer's gross
10        income, adjusted gross income, or taxable income for  the
11        taxable  year  shall  mean  the  amount  of gross income,
12        adjusted  gross  income  or   taxable   income   properly
13        reportable  for  federal  income  tax  purposes  for  the
14        taxable year under the provisions of the Internal Revenue
15        Code.  Taxable income may be less than zero. However, for
16        taxable years ending on or after December 31,  1986,  net
17        operating  loss  carryforwards  from taxable years ending
18        prior to December 31, 1986, may not  exceed  the  sum  of
19        federal  taxable  income  for the taxable year before net
20        operating loss deduction, plus  the  excess  of  addition
21        modifications  over  subtraction  modifications  for  the
22        taxable year.  For taxable years ending prior to December
23        31, 1986, taxable income may never be an amount in excess
24        of the net operating loss for the taxable year as defined
25        in subsections (c) and (d) of Section 172 of the Internal
26        Revenue  Code,  provided  that  when  taxable income of a
27        corporation (other  than  a  Subchapter  S  corporation),
28        trust,   or   estate  is  less  than  zero  and  addition
29        modifications, other than those provided by  subparagraph
30        (E)  of  paragraph (2) of subsection (b) for corporations
31        or subparagraph (E) of paragraph (2)  of  subsection  (c)
32        for trusts and estates, exceed subtraction modifications,
33        an   addition  modification  must  be  made  under  those
34        subparagraphs for any other taxable  year  to  which  the
 
                            -33-     LRB093 02308 SJM 02316 b
 1        taxable  income  less  than  zero (net operating loss) is
 2        applied under Section 172 of the Internal Revenue Code or
 3        under  subparagraph  (E)  of  paragraph   (2)   of   this
 4        subsection (e) applied in conjunction with Section 172 of
 5        the Internal Revenue Code.
 6             (2)  Special rule.  For purposes of paragraph (1) of
 7        this  subsection,  the taxable income properly reportable
 8        for federal income tax purposes shall mean:
 9                  (A)  Certain life insurance companies.  In  the
10             case  of a life insurance company subject to the tax
11             imposed by Section 801 of the Internal Revenue Code,
12             life insurance  company  taxable  income,  plus  the
13             amount  of  distribution  from pre-1984 policyholder
14             surplus accounts as calculated under Section 815a of
15             the Internal Revenue Code;
16                  (B)  Certain other insurance companies.  In the
17             case of mutual insurance companies  subject  to  the
18             tax  imposed  by Section 831 of the Internal Revenue
19             Code, insurance company taxable income;
20                  (C)  Regulated investment  companies.   In  the
21             case  of  a  regulated investment company subject to
22             the tax imposed  by  Section  852  of  the  Internal
23             Revenue Code, investment company taxable income;
24                  (D)  Real  estate  investment  trusts.   In the
25             case of a real estate investment  trust  subject  to
26             the  tax  imposed  by  Section  857  of the Internal
27             Revenue Code, real estate investment  trust  taxable
28             income;
29                  (E)  Consolidated corporations.  In the case of
30             a  corporation  which  is  a member of an affiliated
31             group of corporations filing a  consolidated  income
32             tax  return  for the taxable year for federal income
33             tax purposes, taxable income determined as  if  such
34             corporation  had filed a separate return for federal
 
                            -34-     LRB093 02308 SJM 02316 b
 1             income tax purposes for the taxable  year  and  each
 2             preceding  taxable year for which it was a member of
 3             an  affiliated   group.   For   purposes   of   this
 4             subparagraph, the taxpayer's separate taxable income
 5             shall  be  determined as if the election provided by
 6             Section 243(b) (2) of the Internal Revenue Code  had
 7             been in effect for all such years;
 8                  (F)  Cooperatives.     In   the   case   of   a
 9             cooperative corporation or association, the  taxable
10             income of such organization determined in accordance
11             with  the provisions of Section 1381 through 1388 of
12             the Internal Revenue Code;
13                  (G)  Subchapter S corporations.   In  the  case
14             of:  (i)  a Subchapter S corporation for which there
15             is in effect an election for the taxable year  under
16             Section  1362  of  the  Internal  Revenue  Code, the
17             taxable income of  such  corporation  determined  in
18             accordance  with  Section  1363(b)  of  the Internal
19             Revenue Code, except that taxable income shall  take
20             into  account  those  items  which  are  required by
21             Section 1363(b)(1) of the Internal Revenue  Code  to
22             be  separately  stated;  and  (ii)  a  Subchapter  S
23             corporation  for  which there is in effect a federal
24             election  to  opt  out  of  the  provisions  of  the
25             Subchapter S Revision Act of 1982 and  have  applied
26             instead  the  prior federal Subchapter S rules as in
27             effect on July 1, 1982, the taxable income  of  such
28             corporation   determined   in  accordance  with  the
29             federal Subchapter S rules as in effect on  July  1,
30             1982; and
31                  (H)  Partnerships.     In   the   case   of   a
32             partnership, taxable income determined in accordance
33             with Section  703  of  the  Internal  Revenue  Code,
34             except  that  taxable income shall take into account
 
                            -35-     LRB093 02308 SJM 02316 b
 1             those items which are required by Section  703(a)(1)
 2             to  be  separately  stated  but which would be taken
 3             into account by an  individual  in  calculating  his
 4             taxable income.

 5        (f)  Valuation limitation amount.
 6             (1)  In  general.   The  valuation limitation amount
 7        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
 8        (d)(2) (E) is an amount equal to:
 9                  (A)  The   sum   of   the  pre-August  1,  1969
10             appreciation amounts (to the  extent  consisting  of
11             gain reportable under the provisions of Section 1245
12             or  1250  of  the  Internal  Revenue  Code)  for all
13             property in respect of which such gain was  reported
14             for the taxable year; plus
15                  (B)  The   lesser   of   (i)  the  sum  of  the
16             pre-August 1,  1969  appreciation  amounts  (to  the
17             extent  consisting of capital gain) for all property
18             in respect of  which  such  gain  was  reported  for
19             federal income tax purposes for the taxable year, or
20             (ii)  the  net  capital  gain  for the taxable year,
21             reduced in either case by any amount  of  such  gain
22             included  in  the amount determined under subsection
23             (a) (2) (F) or (c) (2) (H).
24             (2)  Pre-August 1, 1969 appreciation amount.
25                  (A)  If  the  fair  market  value  of  property
26             referred   to   in   paragraph   (1)   was   readily
27             ascertainable on August 1, 1969, the  pre-August  1,
28             1969  appreciation  amount  for such property is the
29             lesser of (i) the excess of such fair  market  value
30             over the taxpayer's basis (for determining gain) for
31             such  property  on  that  date (determined under the
32             Internal Revenue Code as in effect on that date), or
33             (ii) the total  gain  realized  and  reportable  for
34             federal  income tax purposes in respect of the sale,
 
                            -36-     LRB093 02308 SJM 02316 b
 1             exchange or other disposition of such property.
 2                  (B)  If  the  fair  market  value  of  property
 3             referred  to  in  paragraph  (1)  was  not   readily
 4             ascertainable  on  August 1, 1969, the pre-August 1,
 5             1969 appreciation amount for such property  is  that
 6             amount  which bears the same ratio to the total gain
 7             reported in respect  of  the  property  for  federal
 8             income  tax  purposes  for  the taxable year, as the
 9             number of full calendar months in that part  of  the
10             taxpayer's  holding  period  for the property ending
11             July 31, 1969 bears to the number of  full  calendar
12             months  in  the taxpayer's entire holding period for
13             the property.
14                  (C)  The  Department   shall   prescribe   such
15             regulations  as  may  be  necessary to carry out the
16             purposes of this paragraph.

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

20        (h)  Legislative intention.  Except as expressly provided
21    by  this  Section  there  shall  be   no   modifications   or
22    limitations on the amounts of income, gain, loss or deduction
23    taken  into  account  in  determining  gross income, adjusted
24    gross  income  or  taxable  income  for  federal  income  tax
25    purposes for the taxable year, or in the amount of such items
26    entering into the computation of base income and  net  income
27    under  this  Act for such taxable year, whether in respect of
28    property values as of August 1, 1969 or otherwise.
29    (Source: P.A. 91-192, eff.  7-20-99;  91-205,  eff.  7-20-99;
30    91-357,  eff.  7-29-99;  91-541,  eff.  8-13-99; 91-676, eff.
31    12-23-99; 91-845, eff. 6-22-00; 91-913, eff.  1-1-01;  92-16,
32    eff.  6-28-01;  92-244,  eff.  8-3-01;  92-439, eff. 8-17-01;
33    92-603, eff. 6-28-02;  92-626,  eff.  7-11-02;  92-651,  eff.
 
                            -37-     LRB093 02308 SJM 02316 b
 1    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)

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