093_HB1296

 
                                     LRB093 09156 SJM 09388 b

 1        AN ACT concerning 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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 09156 SJM 09388 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)  For taxable  years  ending  on  or  after
 9             December  31,  2003, an amount equal to the medical,
10             dental, and other expenses allowed  as  a  deduction
11             under  section  213  of the Internal Revenue Code to
12             the extent allowed  as  a  deduction  from  adjusted
13             gross  income in computing federal income taxes.  To
14             obtain this subtraction modification,  the  taxpayer
15             must submit to the Department, along with his or her
16             tax  return,  a  copy  of the schedule A form or any
17             successor form completed and submitted  for  federal
18             income  tax purposes.  This paragraph is exempt from
19             the provisions of Section 250.

20        (b)  Corporations.
21             (1)  In general.  In the case of a corporation, 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.   The taxable income referred to
25        in paragraph (1) shall be modified by adding thereto  the
26        sum of the following amounts:
27                  (A)  An  amount  equal  to  all amounts paid or
28             accrued  to  the  taxpayer  as  interest   and   all
29             distributions  received  from  regulated  investment
30             companies  during  the  taxable  year  to the extent
31             excluded from gross income  in  the  computation  of
32             taxable income;
33                  (B)  An  amount  equal  to  the  amount  of tax
34             imposed by this Act  to  the  extent  deducted  from
 
                            -12-     LRB093 09156 SJM 09388 b
 1             gross  income  in  the computation of taxable income
 2             for the taxable year;
 3                  (C)  In the  case  of  a  regulated  investment
 4             company,  an  amount  equal to the excess of (i) the
 5             net long-term capital gain  for  the  taxable  year,
 6             over  (ii)  the amount of the capital gain dividends
 7             designated  as  such  in  accordance  with   Section
 8             852(b)(3)(C)  of  the  Internal Revenue Code and any
 9             amount designated under Section 852(b)(3)(D) of  the
10             Internal  Revenue  Code, attributable to the taxable
11             year (this amendatory Act of 1995 (Public Act 89-89)
12             is declarative of existing law  and  is  not  a  new
13             enactment);
14                  (D)  The  amount  of  any  net  operating  loss
15             deduction taken in arriving at taxable income, other
16             than  a  net  operating  loss carried forward from a
17             taxable year ending prior to December 31, 1986;
18                  (E)  For taxable years in which a net operating
19             loss carryback or carryforward from a  taxable  year
20             ending  prior  to December 31, 1986 is an element of
21             taxable income under paragraph (1) of subsection (e)
22             or subparagraph (E) of paragraph (2)  of  subsection
23             (e),  the  amount  by  which  addition modifications
24             other than those provided by this  subparagraph  (E)
25             exceeded  subtraction  modifications in such earlier
26             taxable year, with the following limitations applied
27             in the order that they are listed:
28                       (i)  the addition modification relating to
29                  the net operating loss carried back or  forward
30                  to  the  taxable  year  from  any  taxable year
31                  ending prior to  December  31,  1986  shall  be
32                  reduced  by the amount of addition modification
33                  under this subparagraph (E)  which  related  to
34                  that  net  operating  loss  and which was taken
 
                            -13-     LRB093 09156 SJM 09388 b
 1                  into account in calculating the base income  of
 2                  an earlier taxable year, and
 3                       (ii)  the  addition  modification relating
 4                  to the  net  operating  loss  carried  back  or
 5                  forward  to  the  taxable year from any taxable
 6                  year ending prior to December  31,  1986  shall
 7                  not  exceed  the  amount  of  such carryback or
 8                  carryforward;
 9                  For taxable years  in  which  there  is  a  net
10             operating  loss  carryback or carryforward from more
11             than one other taxable year ending prior to December
12             31, 1986, the addition modification provided in this
13             subparagraph (E) shall be the  sum  of  the  amounts
14             computed    independently    under   the   preceding
15             provisions of this subparagraph (E)  for  each  such
16             taxable year;
17                  (E-5)  For  taxable years ending after December
18             31,  1997,  an  amount   equal   to   any   eligible
19             remediation  costs  that the corporation deducted in
20             computing adjusted gross income and  for  which  the
21             corporation  claims a credit under subsection (l) of
22             Section 201;
23                  (E-10)  For taxable years 2001 and  thereafter,
24             an  amount equal to the bonus depreciation deduction
25             (30%  of  the  adjusted  basis  of   the   qualified
26             property) taken on the taxpayer's federal income tax
27             return  for the taxable year under subsection (k) of
28             Section 168 of the Internal Revenue Code; and
29                  (E-11)  If the taxpayer reports a capital  gain
30             or  loss on the taxpayer's federal income tax return
31             for 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  (E-10),  then  an  amount equal to the
 
                            -14-     LRB093 09156 SJM 09388 b
 1             aggregate amount of  the  deductions  taken  in  all
 2             taxable years under subparagraph (T) with respect to
 3             that property.;
 4                  The  taxpayer  is required to make the addition
 5             modification under this subparagraph only once  with
 6             respect to any one piece of property;
 7        and  by  deducting  from the total so obtained the sum of
 8        the following amounts:
 9                  (F)  An amount equal to the amount of  any  tax
10             imposed  by  this  Act  which  was  refunded  to the
11             taxpayer and included in such total for the  taxable
12             year;
13                  (G)  An  amount equal to any amount included in
14             such total under Section 78 of the Internal  Revenue
15             Code;
16                  (H)  In  the  case  of  a  regulated investment
17             company, an amount equal to  the  amount  of  exempt
18             interest  dividends as defined in subsection (b) (5)
19             of Section 852 of the Internal Revenue Code, paid to
20             shareholders for the taxable year;
21                  (I)  With  the   exception   of   any   amounts
22             subtracted  under  subparagraph (J), an amount equal
23             to the sum of all amounts disallowed  as  deductions
24             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
25             amounts  disallowed  as  interest expense by Section
26             291(a)(3) of the Internal Revenue Code,  as  now  or
27             hereafter  amended,  and  all  amounts  of  expenses
28             allocable  to  interest and disallowed as deductions
29             by Section 265(a)(1) of the Internal  Revenue  Code,
30             as  now  or  hereafter amended; and (ii) for taxable
31             years ending on or after August 13,  1999,  Sections
32             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
33             of the Internal Revenue Code; the provisions of this
34             subparagraph  are  exempt  from  the  provisions  of
 
                            -15-     LRB093 09156 SJM 09388 b
 1             Section 250;
 2                  (J)  An amount equal to all amounts included in
 3             such  total  which  are exempt from taxation by this
 4             State  either  by  reason   of   its   statutes   or
 5             Constitution  or  by  reason  of  the  Constitution,
 6             treaties  or statutes of the United States; provided
 7             that, in the case of any statute of this State  that
 8             exempts   income   derived   from   bonds  or  other
 9             obligations from the tax imposed under this Act, the
10             amount exempted shall be the interest  net  of  bond
11             premium amortization;
12                  (K)  An   amount   equal   to  those  dividends
13             included  in  such  total  which  were  paid  by   a
14             corporation which conducts business operations in an
15             Enterprise  Zone or zones created under the Illinois
16             Enterprise Zone Act and conducts  substantially  all
17             of its operations in an Enterprise Zone or zones;
18                  (L)  An   amount   equal   to  those  dividends
19             included  in  such  total  that  were  paid   by   a
20             corporation  that  conducts business operations in a
21             federally designated Foreign Trade Zone or  Sub-Zone
22             and  that  is  designated  a  High  Impact  Business
23             located   in   Illinois;   provided  that  dividends
24             eligible for the deduction provided in  subparagraph
25             (K)  of  paragraph 2 of this subsection shall not be
26             eligible  for  the  deduction  provided  under  this
27             subparagraph (L);
28                  (M)  For  any  taxpayer  that  is  a  financial
29             organization within the meaning of Section 304(c) of
30             this Act,  an  amount  included  in  such  total  as
31             interest  income  from  a loan or loans made by such
32             taxpayer to a borrower, to the extent  that  such  a
33             loan  is  secured  by property which is eligible for
34             the Enterprise Zone Investment Credit.  To determine
 
                            -16-     LRB093 09156 SJM 09388 b
 1             the portion of a loan or loans that  is  secured  by
 2             property  eligible  for  a Section 201(f) investment
 3             credit to the borrower, the entire principal  amount
 4             of  the  loan  or loans between the taxpayer and the
 5             borrower should be divided into  the  basis  of  the
 6             Section  201(f)  investment  credit  property  which
 7             secures  the  loan  or loans, using for this purpose
 8             the original basis of such property on the date that
 9             it was placed in service  in  the  Enterprise  Zone.
10             The  subtraction  modification available to taxpayer
11             in any year under  this  subsection  shall  be  that
12             portion  of  the total interest paid by the borrower
13             with  respect  to  such  loan  attributable  to  the
14             eligible property as calculated under  the  previous
15             sentence;
16                  (M-1)  For  any  taxpayer  that  is a financial
17             organization within the meaning of Section 304(c) of
18             this Act,  an  amount  included  in  such  total  as
19             interest  income  from  a loan or loans made by such
20             taxpayer to a borrower, to the extent  that  such  a
21             loan  is  secured  by property which is eligible for
22             the High  Impact  Business  Investment  Credit.   To
23             determine  the  portion  of  a loan or loans that is
24             secured by property eligible for  a  Section  201(h)
25             investment   credit  to  the  borrower,  the  entire
26             principal amount of the loan or  loans  between  the
27             taxpayer and the borrower should be divided into the
28             basis   of  the  Section  201(h)  investment  credit
29             property which secures the loan or loans, using  for
30             this  purpose the original basis of such property on
31             the  date  that  it  was  placed  in  service  in  a
32             federally designated Foreign Trade Zone or  Sub-Zone
33             located  in  Illinois.  No taxpayer that is eligible
34             for the deduction provided in  subparagraph  (M)  of
 
                            -17-     LRB093 09156 SJM 09388 b
 1             paragraph  (2)  of this subsection shall be eligible
 2             for the deduction provided under  this  subparagraph
 3             (M-1).   The  subtraction  modification available to
 4             taxpayers in any year under this subsection shall be
 5             that portion of  the  total  interest  paid  by  the
 6             borrower  with  respect to such loan attributable to
 7             the  eligible  property  as  calculated  under   the
 8             previous sentence;
 9                  (N)  Two times any contribution made during the
10             taxable  year  to  a designated zone organization to
11             the extent that the contribution (i) qualifies as  a
12             charitable  contribution  under  subsection  (c)  of
13             Section  170  of  the Internal Revenue Code and (ii)
14             must, by its terms, be used for a  project  approved
15             by  the Department of Commerce and Community Affairs
16             under Section 11 of  the  Illinois  Enterprise  Zone
17             Act;
18                  (O)  An  amount  equal  to: (i) 85% for taxable
19             years ending on or before December 31, 1992,  or,  a
20             percentage  equal  to the percentage allowable under
21             Section 243(a)(1) of the Internal  Revenue  Code  of
22             1986  for  taxable  years  ending after December 31,
23             1992, of the amount by which dividends  included  in
24             taxable  income and received from a corporation that
25             is not created or organized under the  laws  of  the
26             United  States or any state or political subdivision
27             thereof, including, for taxable years ending  on  or
28             after  December  31,  1988,  dividends  received  or
29             deemed   received  or  paid  or  deemed  paid  under
30             Sections 951 through 964  of  the  Internal  Revenue
31             Code, exceed the amount of the modification provided
32             under  subparagraph  (G)  of  paragraph  (2) of this
33             subsection (b) which is related to  such  dividends;
34             plus  (ii)  100%  of  the amount by which dividends,
 
                            -18-     LRB093 09156 SJM 09388 b
 1             included in taxable income and received,  including,
 2             for  taxable  years  ending on or after December 31,
 3             1988, dividends received or deemed received or  paid
 4             or deemed paid under Sections 951 through 964 of the
 5             Internal  Revenue  Code,  from  any such corporation
 6             specified in clause  (i)  that  would  but  for  the
 7             provisions  of  Section 1504 (b) (3) of the Internal
 8             Revenue  Code  be  treated  as  a  member   of   the
 9             affiliated   group   which   includes  the  dividend
10             recipient, exceed the  amount  of  the  modification
11             provided  under subparagraph (G) of paragraph (2) of
12             this  subsection  (b)  which  is  related  to   such
13             dividends;
14                  (P)  An  amount  equal to any contribution made
15             to a job training project  established  pursuant  to
16             the Tax Increment Allocation Redevelopment Act;
17                  (Q)  An  amount  equal  to  the  amount  of the
18             deduction used to compute  the  federal  income  tax
19             credit  for  restoration of substantial amounts held
20             under claim of right for the taxable  year  pursuant
21             to  Section  1341  of  the  Internal Revenue Code of
22             1986;
23                  (R)  In the case of  an  attorney-in-fact  with
24             respect  to  whom  an  interinsurer  or a reciprocal
25             insurer has made the election under Section  835  of
26             the  Internal Revenue Code, 26 U.S.C. 835, an amount
27             equal to the excess, if any, of the amounts paid  or
28             incurred  by that interinsurer or reciprocal insurer
29             in the taxable year to the attorney-in-fact over the
30             deduction allowed to that interinsurer or reciprocal
31             insurer with respect to the  attorney-in-fact  under
32             Section  835(b) of the Internal Revenue Code for the
33             taxable year;
34                  (S)  For  taxable  years  ending  on  or  after
 
                            -19-     LRB093 09156 SJM 09388 b
 1             December 31, 1997, in the case  of  a  Subchapter  S
 2             corporation,  an  amount  equal  to  all  amounts of
 3             income allocable to a  shareholder  subject  to  the
 4             Personal Property Tax Replacement Income Tax imposed
 5             by  subsections  (c)  and (d) of Section 201 of this
 6             Act, including amounts  allocable  to  organizations
 7             exempt  from federal income tax by reason of Section
 8             501(a)  of  the   Internal   Revenue   Code.    This
 9             subparagraph  (S)  is  exempt from the provisions of
10             Section 250;
11                  (T)  For taxable years 2001 and thereafter, for
12             the taxable year in  which  the  bonus  depreciation
13             deduction   (30%   of  the  adjusted  basis  of  the
14             qualified  property)  is  taken  on  the  taxpayer's
15             federal income tax return under  subsection  (k)  of
16             Section  168  of  the  Internal Revenue Code and for
17             each applicable taxable year thereafter,  an  amount
18             equal to "x", where:
19                       (1)  "y"   equals   the   amount   of  the
20                  depreciation deduction taken  for  the  taxable
21                  year  on  the  taxpayer's  federal  income  tax
22                  return   on   property   for  which  the  bonus
23                  depreciation deduction  (30%  of  the  adjusted
24                  basis  of  the qualified property) was taken in
25                  any year under subsection (k) of Section 168 of
26                  the Internal Revenue Code,  but  not  including
27                  the bonus depreciation deduction; and
28                       (2)  "x"  equals  "y" multiplied by 30 and
29                  then  divided  by  70  (or  "y"  multiplied  by
30                  0.429).
31                  The  aggregate  amount  deducted   under   this
32             subparagraph  in all taxable years for any one piece
33             of property may not exceed the amount of  the  bonus
34             depreciation deduction (30% of the adjusted basis of
 
                            -20-     LRB093 09156 SJM 09388 b
 1             the  qualified  property)  taken on that property on
 2             the  taxpayer's  federal  income  tax  return  under
 3             subsection  (k)  of  Section  168  of  the  Internal
 4             Revenue Code; and
 5                  (U)  If the taxpayer reports a capital gain  or
 6             loss on the taxpayer's federal income tax return for
 7             the  taxable  year  based  on  a sale or transfer of
 8             property for which the taxpayer was required in  any
 9             taxable  year to make an addition modification under
10             subparagraph (E-10), then an amount  equal  to  that
11             addition modification.
12                  The  taxpayer  is allowed to take the deduction
13             under this subparagraph only once  with  respect  to
14             any one piece of property.
15             (3)  Special  rule.   For  purposes of paragraph (2)
16        (A), "gross income" in  the  case  of  a  life  insurance
17        company,  for  tax years ending on and after December 31,
18        1994, shall mean the  gross  investment  income  for  the
19        taxable year.

20        (c)  Trusts and estates.
21             (1)  In  general.  In the case of a trust or estate,
22        base income means  an  amount  equal  to  the  taxpayer's
23        taxable  income  for  the  taxable  year  as  modified by
24        paragraph (2).
25             (2)  Modifications.  Subject to  the  provisions  of
26        paragraph   (3),   the  taxable  income  referred  to  in
27        paragraph (1) shall be modified by adding thereto the sum
28        of the following amounts:
29                  (A)  An amount equal to  all  amounts  paid  or
30             accrued  to  the  taxpayer  as interest or dividends
31             during the taxable year to the extent excluded  from
32             gross income in the computation of taxable income;
33                  (B)  In the case of (i) an estate, $600; (ii) a
34             trust  which,  under  its  governing  instrument, is
 
                            -21-     LRB093 09156 SJM 09388 b
 1             required to distribute all of its income  currently,
 2             $300;  and  (iii) any other trust, $100, but in each
 3             such case,  only  to  the  extent  such  amount  was
 4             deducted in the computation of taxable income;
 5                  (C)  An  amount  equal  to  the  amount  of tax
 6             imposed by this Act  to  the  extent  deducted  from
 7             gross  income  in  the computation of taxable income
 8             for the taxable year;
 9                  (D)  The  amount  of  any  net  operating  loss
10             deduction taken in arriving at taxable income, other
11             than a net operating loss  carried  forward  from  a
12             taxable year ending prior to December 31, 1986;
13                  (E)  For taxable years in which a net operating
14             loss  carryback  or carryforward from a taxable year
15             ending prior to December 31, 1986 is an  element  of
16             taxable income under paragraph (1) of subsection (e)
17             or  subparagraph  (E) of paragraph (2) of subsection
18             (e), the  amount  by  which  addition  modifications
19             other  than  those provided by this subparagraph (E)
20             exceeded subtraction modifications in  such  taxable
21             year,  with the following limitations applied in the
22             order that they are listed:
23                       (i)  the addition modification relating to
24                  the net operating loss carried back or  forward
25                  to  the  taxable  year  from  any  taxable year
26                  ending prior to  December  31,  1986  shall  be
27                  reduced  by the amount of addition modification
28                  under this subparagraph (E)  which  related  to
29                  that  net  operating  loss  and which was taken
30                  into account in calculating the base income  of
31                  an earlier taxable year, and
32                       (ii)  the  addition  modification relating
33                  to the  net  operating  loss  carried  back  or
34                  forward  to  the  taxable year from any taxable
 
                            -22-     LRB093 09156 SJM 09388 b
 1                  year ending prior to December  31,  1986  shall
 2                  not  exceed  the  amount  of  such carryback or
 3                  carryforward;
 4                  For taxable years  in  which  there  is  a  net
 5             operating  loss  carryback or carryforward from more
 6             than one other taxable year ending prior to December
 7             31, 1986, the addition modification provided in this
 8             subparagraph (E) shall be the  sum  of  the  amounts
 9             computed    independently    under   the   preceding
10             provisions of this subparagraph (E)  for  each  such
11             taxable year;
12                  (F)  For  taxable  years  ending  on  or  after
13             January 1, 1989, an amount equal to the tax deducted
14             pursuant to Section 164 of the Internal Revenue Code
15             if  the trust or estate is claiming the same tax for
16             purposes of the Illinois foreign  tax  credit  under
17             Section 601 of this Act;
18                  (G)  An  amount  equal  to  the  amount  of the
19             capital gain deduction allowable under the  Internal
20             Revenue  Code,  to  the  extent  deducted from gross
21             income in the computation of taxable income;
22                  (G-5)  For taxable years ending after  December
23             31,   1997,   an   amount   equal  to  any  eligible
24             remediation costs that the trust or estate  deducted
25             in computing adjusted gross income and for which the
26             trust or estate claims a credit under subsection (l)
27             of Section 201;
28                  (G-10)  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                  (G-11)  If  the taxpayer reports a capital gain
 
                            -23-     LRB093 09156 SJM 09388 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 (G-10), then an  amount  equal  to  the
 6             aggregate  amount  of  the  deductions  taken in all
 7             taxable years under subparagraph (R) 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;
12        and by deducting from the total so obtained  the  sum  of
13        the following amounts:
14                  (H)  An amount equal to all amounts included in
15             such  total  pursuant  to the provisions of Sections
16             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
17             408 of the Internal Revenue Code or included in such
18             total  as  distributions under the provisions of any
19             retirement or disability plan for employees  of  any
20             governmental  agency or unit, or retirement payments
21             to retired partners, which payments are excluded  in
22             computing  net  earnings  from  self  employment  by
23             Section  1402  of  the  Internal  Revenue  Code  and
24             regulations adopted pursuant thereto;
25                  (I)  The valuation limitation amount;
26                  (J)  An  amount  equal to the amount of any tax
27             imposed by  this  Act  which  was  refunded  to  the
28             taxpayer  and included in such total for the taxable
29             year;
30                  (K)  An amount equal to all amounts included in
31             taxable income as  modified  by  subparagraphs  (A),
32             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
33             from taxation by this State either by reason of  its
34             statutes   or  Constitution  or  by  reason  of  the
 
                            -24-     LRB093 09156 SJM 09388 b
 1             Constitution, treaties or  statutes  of  the  United
 2             States; provided that, in the case of any statute of
 3             this State that exempts income derived from bonds or
 4             other  obligations  from  the tax imposed under this
 5             Act, the amount exempted shall be the  interest  net
 6             of bond premium amortization;
 7                  (L)  With   the   exception   of   any  amounts
 8             subtracted under subparagraph (K), an  amount  equal
 9             to  the  sum of all amounts disallowed as deductions
10             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
11             Internal  Revenue Code, as now or hereafter amended,
12             and all amounts of expenses  allocable  to  interest
13             and  disallowed  as  deductions by Section 265(1) of
14             the  Internal  Revenue  Code  of  1954,  as  now  or
15             hereafter amended; and (ii) for taxable years ending
16             on or after August  13,  1999,  Sections  171(a)(2),
17             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
18             Revenue  Code;  the  provisions of this subparagraph
19             are exempt from the provisions of Section 250;
20                  (M)  An  amount  equal   to   those   dividends
21             included   in  such  total  which  were  paid  by  a
22             corporation which conducts business operations in an
23             Enterprise Zone or zones created under the  Illinois
24             Enterprise  Zone  Act and conducts substantially all
25             of its operations in an Enterprise Zone or Zones;
26                  (N)  An amount equal to any  contribution  made
27             to  a  job  training project established pursuant to
28             the Tax Increment Allocation Redevelopment Act;
29                  (O)  An  amount  equal   to   those   dividends
30             included   in   such  total  that  were  paid  by  a
31             corporation that conducts business operations  in  a
32             federally  designated Foreign Trade Zone or Sub-Zone
33             and  that  is  designated  a  High  Impact  Business
34             located  in  Illinois;   provided   that   dividends
 
                            -25-     LRB093 09156 SJM 09388 b
 1             eligible  for the deduction provided in subparagraph
 2             (M) of paragraph (2) of this subsection shall not be
 3             eligible  for  the  deduction  provided  under  this
 4             subparagraph (O);
 5                  (P)  An amount  equal  to  the  amount  of  the
 6             deduction  used  to  compute  the federal income tax
 7             credit for restoration of substantial  amounts  held
 8             under  claim  of right for the taxable year pursuant
 9             to Section 1341 of  the  Internal  Revenue  Code  of
10             1986;
11                  (Q)  For  taxable  year 1999 and thereafter, an
12             amount equal to the amount of any (i) distributions,
13             to the extent includible in gross income for federal
14             income tax purposes, made to the taxpayer because of
15             his or her status as a  victim  of  persecution  for
16             racial  or  religious reasons by Nazi Germany or any
17             other Axis regime or as an heir of  the  victim  and
18             (ii)  items  of  income, to the extent includible in
19             gross  income  for  federal  income  tax   purposes,
20             attributable  to, derived from or in any way related
21             to assets stolen from,  hidden  from,  or  otherwise
22             lost  to  a  victim  of  persecution  for  racial or
23             religious reasons by Nazi Germany or any other  Axis
24             regime immediately prior to, during, and immediately
25             after  World  War II, including, but not limited to,
26             interest on the  proceeds  receivable  as  insurance
27             under policies issued to a victim of persecution for
28             racial  or  religious reasons by Nazi Germany or any
29             other Axis regime by  European  insurance  companies
30             immediately  prior  to  and  during  World  War  II;
31             provided,  however,  this  subtraction  from federal
32             adjusted gross  income  does  not  apply  to  assets
33             acquired  with such assets or with the proceeds from
34             the sale of such  assets;  provided,  further,  this
 
                            -26-     LRB093 09156 SJM 09388 b
 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
 6             and  the  eligibility  for  any  public  assistance,
 7             benefit,  or  similar entitlement is not affected by
 8             the  inclusion  of  items  (i)  and  (ii)  of   this
 9             paragraph  in  gross  income  for federal income tax
10             purposes.  This  paragraph  is   exempt   from   the
11             provisions of Section 250;
12                  (R)  For taxable years 2001 and thereafter, for
13             the  taxable  year  in  which the bonus depreciation
14             deduction  (30%  of  the  adjusted  basis   of   the
15             qualified  property)  is  taken  on  the  taxpayer's
16             federal  income  tax  return under subsection (k) of
17             Section 168 of the Internal  Revenue  Code  and  for
18             each  applicable  taxable year thereafter, an amount
19             equal to "x", where:
20                       (1)  "y"  equals   the   amount   of   the
21                  depreciation  deduction  taken  for the taxable
22                  year  on  the  taxpayer's  federal  income  tax
23                  return  on  property  for   which   the   bonus
24                  depreciation  deduction  (30%  of  the adjusted
25                  basis of the qualified property) was  taken  in
26                  any year under subsection (k) of Section 168 of
27                  the  Internal  Revenue  Code, but not including
28                  the bonus depreciation deduction; and
29                       (2)  "x" equals "y" multiplied by  30  and
30                  then  divided  by  70  (or  "y"  multiplied  by
31                  0.429).
32                  The   aggregate   amount  deducted  under  this
33             subparagraph in all taxable years for any one  piece
34             of  property  may not exceed the amount of the bonus
 
                            -27-     LRB093 09156 SJM 09388 b
 1             depreciation deduction (30% of the adjusted basis of
 2             the qualified property) taken on  that  property  on
 3             the  taxpayer's  federal  income  tax  return  under
 4             subsection  (k)  of  Section  168  of  the  Internal
 5             Revenue Code; and
 6                  (S)  If  the taxpayer reports a capital gain or
 7             loss on the taxpayer's federal income tax return for
 8             the taxable year based on  a  sale  or  transfer  of
 9             property  for which the taxpayer was required in any
10             taxable year to make an addition modification  under
11             subparagraph  (G-10),  then  an amount equal to that
12             addition modification.
13                  The taxpayer is allowed to take  the  deduction
14             under  this  subparagraph  only once with respect to
15             any one piece of property.
16             (3)  Limitation.  The  amount  of  any  modification
17        otherwise  required  under  this  subsection shall, under
18        regulations prescribed by the Department, be adjusted  by
19        any  amounts  included  therein which were properly paid,
20        credited, or required to be distributed,  or  permanently
21        set  aside  for charitable purposes pursuant  to Internal
22        Revenue Code Section 642(c) during the taxable year.

23        (d)  Partnerships.
24             (1)  In general. In the case of a partnership,  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 or dividends
32             during the taxable year to the extent excluded  from
33             gross income in the computation of taxable income;
34                  (B)  An  amount  equal  to  the  amount  of tax
 
                            -28-     LRB093 09156 SJM 09388 b
 1             imposed by this Act  to  the  extent  deducted  from
 2             gross income for the taxable year;
 3                  (C)  The  amount  of  deductions allowed to the
 4             partnership pursuant  to  Section  707  (c)  of  the
 5             Internal  Revenue  Code  in  calculating its taxable
 6             income;
 7                  (D)  An amount  equal  to  the  amount  of  the
 8             capital  gain deduction allowable under the Internal
 9             Revenue Code, to  the  extent  deducted  from  gross
10             income in the computation of taxable income;
11                  (D-5)  For  taxable  years 2001 and thereafter,
12             an amount equal to the bonus depreciation  deduction
13             (30%   of   the  adjusted  basis  of  the  qualified
14             property) taken on the taxpayer's federal income tax
15             return for the taxable year under subsection (k)  of
16             Section 168 of the Internal Revenue Code; and
17                  (D-6)  If  the  taxpayer reports a capital gain
18             or loss on the taxpayer's federal income tax  return
19             for  the taxable year based on a sale or transfer of
20             property for which the taxpayer was required in  any
21             taxable  year to make an addition modification under
22             subparagraph (D-5), then  an  amount  equal  to  the
23             aggregate  amount  of  the  deductions  taken in all
24             taxable years under subparagraph (O) with respect to
25             that property.;
26                  The taxpayer is required to make  the  addition
27             modification  under this subparagraph only once with
28             respect to any one piece of property;
29        and by deducting from the total so obtained the following
30        amounts:
31                  (E)  The valuation limitation amount;
32                  (F)  An amount equal to the amount of  any  tax
33             imposed  by  this  Act  which  was  refunded  to the
34             taxpayer and included in such total for the  taxable
 
                            -29-     LRB093 09156 SJM 09388 b
 1             year;
 2                  (G)  An amount equal to all amounts included in
 3             taxable  income  as  modified  by subparagraphs (A),
 4             (B), (C) and (D) which are exempt from  taxation  by
 5             this  State  either  by  reason  of  its statutes or
 6             Constitution  or  by  reason  of  the  Constitution,
 7             treaties or statutes of the United States;  provided
 8             that,  in the case of any statute of this State that
 9             exempts  income  derived   from   bonds   or   other
10             obligations from the tax imposed under this Act, the
11             amount  exempted  shall  be the interest net of bond
12             premium amortization;
13                  (H)  Any  income  of  the   partnership   which
14             constitutes  personal  service  income as defined in
15             Section 1348 (b) (1) of the  Internal  Revenue  Code
16             (as  in  effect  December  31, 1981) or a reasonable
17             allowance  for  compensation  paid  or  accrued  for
18             services rendered by partners  to  the  partnership,
19             whichever is greater;
20                  (I)  An  amount  equal to all amounts of income
21             distributable to an entity subject to  the  Personal
22             Property  Tax  Replacement  Income  Tax  imposed  by
23             subsections  (c)  and (d) of Section 201 of this Act
24             including  amounts  distributable  to  organizations
25             exempt from federal income tax by reason of  Section
26             501(a) of the Internal Revenue Code;
27                  (J)  With   the   exception   of   any  amounts
28             subtracted under subparagraph (G), 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,  as  now  or
 
                            -30-     LRB093 09156 SJM 09388 b
 1             hereafter amended; and (ii) for taxable years ending
 2             on  or  after  August  13, 1999, Sections 171(a)(2),
 3             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 4             Revenue Code; the provisions  of  this  subparagraph
 5             are exempt from the provisions of Section 250;
 6                  (K)  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, enacted  by  the  82nd  General
11             Assembly,  and  conducts  substantially  all  of its
12             operations in an Enterprise Zone or Zones;
13                  (L)  An amount equal to any  contribution  made
14             to  a  job  training project established pursuant to
15             the   Real   Property   Tax   Increment   Allocation
16             Redevelopment Act;
17                  (M)  An  amount  equal   to   those   dividends
18             included   in   such  total  that  were  paid  by  a
19             corporation that conducts business operations  in  a
20             federally  designated Foreign Trade Zone or Sub-Zone
21             and  that  is  designated  a  High  Impact  Business
22             located  in  Illinois;   provided   that   dividends
23             eligible  for the deduction provided in subparagraph
24             (K) of paragraph (2) of this subsection shall not be
25             eligible  for  the  deduction  provided  under  this
26             subparagraph (M);
27                  (N)  An amount  equal  to  the  amount  of  the
28             deduction  used  to  compute  the federal income tax
29             credit for restoration of substantial  amounts  held
30             under  claim  of right for the taxable year pursuant
31             to Section 1341 of  the  Internal  Revenue  Code  of
32             1986;
33                  (O)  For taxable years 2001 and thereafter, for
34             the  taxable  year  in  which the bonus depreciation
 
                            -31-     LRB093 09156 SJM 09388 b
 1             deduction  (30%  of  the  adjusted  basis   of   the
 2             qualified  property)  is  taken  on  the  taxpayer's
 3             federal  income  tax  return under subsection (k) of
 4             Section 168 of the Internal  Revenue  Code  and  for
 5             each  applicable  taxable year thereafter, an amount
 6             equal to "x", where:
 7                       (1)  "y"  equals   the   amount   of   the
 8                  depreciation  deduction  taken  for the taxable
 9                  year  on  the  taxpayer's  federal  income  tax
10                  return  on  property  for   which   the   bonus
11                  depreciation  deduction  (30%  of  the adjusted
12                  basis of the qualified property) was  taken  in
13                  any year under subsection (k) of Section 168 of
14                  the  Internal  Revenue  Code, but not including
15                  the bonus depreciation deduction; and
16                       (2)  "x" equals "y" multiplied by  30  and
17                  then  divided  by  70  (or  "y"  multiplied  by
18                  0.429).
19                  The   aggregate   amount  deducted  under  this
20             subparagraph in all taxable years for any one  piece
21             of  property  may not exceed the amount of the bonus
22             depreciation deduction (30% of the adjusted basis of
23             the qualified property) taken on  that  property  on
24             the  taxpayer's  federal  income  tax  return  under
25             subsection  (k)  of  Section  168  of  the  Internal
26             Revenue Code; and
27                  (P)  If  the taxpayer reports a capital gain or
28             loss on the taxpayer's federal income tax return for
29             the taxable year based on  a  sale  or  transfer  of
30             property  for which the taxpayer was required in any
31             taxable year to make an addition modification  under
32             subparagraph  (D-5),  then  an  amount equal to that
33             addition modification.
34                  The taxpayer is allowed to take  the  deduction
 
                            -32-     LRB093 09156 SJM 09388 b
 1             under  this  subparagraph  only once with respect to
 2             any one piece of property.

 3        (e)  Gross income; adjusted gross income; taxable income.
 4             (1)  In  general.   Subject  to  the  provisions  of
 5        paragraph (2) and subsection (b)  (3),  for  purposes  of
 6        this  Section  and  Section  803(e),  a  taxpayer's gross
 7        income, adjusted gross income, or taxable income for  the
 8        taxable  year  shall  mean  the  amount  of gross income,
 9        adjusted  gross  income  or   taxable   income   properly
10        reportable  for  federal  income  tax  purposes  for  the
11        taxable year under the provisions of the Internal Revenue
12        Code.  Taxable income may be less than zero. However, for
13        taxable years ending on or after December 31,  1986,  net
14        operating  loss  carryforwards  from taxable years ending
15        prior to December 31, 1986, may not  exceed  the  sum  of
16        federal  taxable  income  for the taxable year before net
17        operating loss deduction, plus  the  excess  of  addition
18        modifications  over  subtraction  modifications  for  the
19        taxable year.  For taxable years ending prior to December
20        31, 1986, taxable income may never be an amount in excess
21        of the net operating loss for the taxable year as defined
22        in subsections (c) and (d) of Section 172 of the Internal
23        Revenue  Code,  provided  that  when  taxable income of a
24        corporation (other  than  a  Subchapter  S  corporation),
25        trust,   or   estate  is  less  than  zero  and  addition
26        modifications, other than those provided by  subparagraph
27        (E)  of  paragraph (2) of subsection (b) for corporations
28        or subparagraph (E) of paragraph (2)  of  subsection  (c)
29        for trusts and estates, exceed subtraction modifications,
30        an   addition  modification  must  be  made  under  those
31        subparagraphs for any other taxable  year  to  which  the
32        taxable  income  less  than  zero (net operating loss) is
33        applied under Section 172 of the Internal Revenue Code or
34        under  subparagraph  (E)  of  paragraph   (2)   of   this
 
                            -33-     LRB093 09156 SJM 09388 b
 1        subsection (e) applied in conjunction with Section 172 of
 2        the Internal Revenue Code.
 3             (2)  Special rule.  For purposes of paragraph (1) of
 4        this  subsection,  the taxable income properly reportable
 5        for federal income tax purposes shall mean:
 6                  (A)  Certain life insurance companies.  In  the
 7             case  of a life insurance company subject to the tax
 8             imposed by Section 801 of the Internal Revenue Code,
 9             life insurance  company  taxable  income,  plus  the
10             amount  of  distribution  from pre-1984 policyholder
11             surplus accounts as calculated under Section 815a of
12             the Internal Revenue Code;
13                  (B)  Certain other insurance companies.  In the
14             case of mutual insurance companies  subject  to  the
15             tax  imposed  by Section 831 of the Internal Revenue
16             Code, insurance company taxable income;
17                  (C)  Regulated investment  companies.   In  the
18             case  of  a  regulated investment company subject to
19             the tax imposed  by  Section  852  of  the  Internal
20             Revenue Code, investment company taxable income;
21                  (D)  Real  estate  investment  trusts.   In the
22             case of a real estate investment  trust  subject  to
23             the  tax  imposed  by  Section  857  of the Internal
24             Revenue Code, real estate investment  trust  taxable
25             income;
26                  (E)  Consolidated corporations.  In the case of
27             a  corporation  which  is  a member of an affiliated
28             group of corporations filing a  consolidated  income
29             tax  return  for the taxable year for federal income
30             tax purposes, taxable income determined as  if  such
31             corporation  had filed a separate return for federal
32             income tax purposes for the taxable  year  and  each
33             preceding  taxable year for which it was a member of
34             an  affiliated   group.   For   purposes   of   this
 
                            -34-     LRB093 09156 SJM 09388 b
 1             subparagraph, the taxpayer's separate taxable income
 2             shall  be  determined as if the election provided by
 3             Section 243(b) (2) of the Internal Revenue Code  had
 4             been in effect for all such years;
 5                  (F)  Cooperatives.     In   the   case   of   a
 6             cooperative corporation or association, the  taxable
 7             income of such organization determined in accordance
 8             with  the provisions of Section 1381 through 1388 of
 9             the Internal Revenue Code;
10                  (G)  Subchapter S corporations.   In  the  case
11             of:  (i)  a Subchapter S corporation for which there
12             is in effect an election for the taxable year  under
13             Section  1362  of  the  Internal  Revenue  Code, the
14             taxable income of  such  corporation  determined  in
15             accordance  with  Section  1363(b)  of  the Internal
16             Revenue Code, except that taxable income shall  take
17             into  account  those  items  which  are  required by
18             Section 1363(b)(1) of the Internal Revenue  Code  to
19             be  separately  stated;  and  (ii)  a  Subchapter  S
20             corporation  for  which there is in effect a federal
21             election  to  opt  out  of  the  provisions  of  the
22             Subchapter S Revision Act of 1982 and  have  applied
23             instead  the  prior federal Subchapter S rules as in
24             effect on July 1, 1982, the taxable income  of  such
25             corporation   determined   in  accordance  with  the
26             federal Subchapter S rules as in effect on  July  1,
27             1982; and
28                  (H)  Partnerships.     In   the   case   of   a
29             partnership, taxable income determined in accordance
30             with Section  703  of  the  Internal  Revenue  Code,
31             except  that  taxable income shall take into account
32             those items which are required by Section  703(a)(1)
33             to  be  separately  stated  but which would be taken
34             into account by an  individual  in  calculating  his
 
                            -35-     LRB093 09156 SJM 09388 b
 1             taxable income.

 2        (f)  Valuation limitation amount.
 3             (1)  In  general.   The  valuation limitation amount
 4        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
 5        (d)(2) (E) is an amount equal to:
 6                  (A)  The   sum   of   the  pre-August  1,  1969
 7             appreciation amounts (to the  extent  consisting  of
 8             gain reportable under the provisions of Section 1245
 9             or  1250  of  the  Internal  Revenue  Code)  for all
10             property in respect of which such gain was  reported
11             for the taxable year; plus
12                  (B)  The   lesser   of   (i)  the  sum  of  the
13             pre-August 1,  1969  appreciation  amounts  (to  the
14             extent  consisting of capital gain) for all property
15             in respect of  which  such  gain  was  reported  for
16             federal income tax purposes for the taxable year, or
17             (ii)  the  net  capital  gain  for the taxable year,
18             reduced in either case by any amount  of  such  gain
19             included  in  the amount determined under subsection
20             (a) (2) (F) or (c) (2) (H).
21             (2)  Pre-August 1, 1969 appreciation amount.
22                  (A)  If  the  fair  market  value  of  property
23             referred   to   in   paragraph   (1)   was   readily
24             ascertainable on August 1, 1969, the  pre-August  1,
25             1969  appreciation  amount  for such property is the
26             lesser of (i) the excess of such fair  market  value
27             over the taxpayer's basis (for determining gain) for
28             such  property  on  that  date (determined under the
29             Internal Revenue Code as in effect on that date), or
30             (ii) the total  gain  realized  and  reportable  for
31             federal  income tax purposes in respect of the sale,
32             exchange or other disposition of such property.
33                  (B)  If  the  fair  market  value  of  property
34             referred  to  in  paragraph  (1)  was  not   readily
 
                            -36-     LRB093 09156 SJM 09388 b
 1             ascertainable  on  August 1, 1969, the pre-August 1,
 2             1969 appreciation amount for such property  is  that
 3             amount  which bears the same ratio to the total gain
 4             reported in respect  of  the  property  for  federal
 5             income  tax  purposes  for  the taxable year, as the
 6             number of full calendar months in that part  of  the
 7             taxpayer's  holding  period  for the property ending
 8             July 31, 1969 bears to the number of  full  calendar
 9             months  in  the taxpayer's entire holding period for
10             the property.
11                  (C)  The  Department   shall   prescribe   such
12             regulations  as  may  be  necessary to carry out the
13             purposes of this paragraph.

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

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

32        Section  99.  Effective date.  This Act takes effect upon
 
                            -37-     LRB093 09156 SJM 09388 b
 1    becoming law.