093_HB2857

 
                                     LRB093 04442 SJM 04494 b

 1        AN  ACT  to amend the Illinois Income Tax Act by changing
 2    Section 203.

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

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

 7        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 8        Sec. 203.  Base income defined.
 9        (a)  Individuals.
10             (1)  In general.  In the case of an individual, base
11        income means an amount equal to the  taxpayer's  adjusted
12        gross   income  for  the  taxable  year  as  modified  by
13        paragraph (2).
14             (2)  Modifications.   The  adjusted   gross   income
15        referred  to in paragraph (1) shall be modified by adding
16        thereto the sum of the following amounts:
17                  (A)  An amount equal to  all  amounts  paid  or
18             accrued  to  the  taxpayer  as interest or dividends
19             during the taxable year to the extent excluded  from
20             gross  income  in  the computation of adjusted gross
21             income, except stock dividends of  qualified  public
22             utilities   described   in  Section  305(e)  of  the
23             Internal Revenue Code;
24                  (B)  An amount  equal  to  the  amount  of  tax
25             imposed  by  this  Act  to  the extent deducted from
26             gross income in the computation  of  adjusted  gross
27             income for the taxable year;
28                  (C)  An  amount  equal  to  the amount received
29             during the taxable year as a recovery or  refund  of
30             real   property  taxes  paid  with  respect  to  the
31             taxpayer's principal residence under the Revenue Act

 
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 1             of 1939 and for which  a  deduction  was  previously
 2             taken  under  subparagraph (L) of this paragraph (2)
 3             prior to July 1, 1991, the retrospective application
 4             date of Article 4 of Public Act 87-17.  In the  case
 5             of  multi-unit  or  multi-use  structures  and  farm
 6             dwellings,  the  taxes  on  the taxpayer's principal
 7             residence shall be that portion of the  total  taxes
 8             for  the  entire  property  which is attributable to
 9             such principal residence;
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 adjusted gross income;
14                  (D-5)  An amount, to the extent not included in
15             adjusted  gross income, equal to the amount of money
16             withdrawn by the taxpayer in the taxable year from a
17             medical care savings account and the interest earned
18             on the account in the taxable year of  a  withdrawal
19             pursuant  to  subsection  (b)  of  Section 20 of the
20             Medical Care Savings Account Act or  subsection  (b)
21             of  Section  20  of the Medical Care Savings Account
22             Act of 2000;
23                  (D-10)  For taxable years ending after December
24             31,  1997,  an  amount   equal   to   any   eligible
25             remediation  costs  that  the individual deducted in
26             computing adjusted gross income and  for  which  the
27             individual  claims  a credit under subsection (l) of
28             Section 201;
29                  (D-15)  For taxable years 2001 and  thereafter,
30             an  amount equal to the bonus depreciation deduction
31             (30%  of  the  adjusted  basis  of   the   qualified
32             property) taken on the taxpayer's federal income tax
33             return  for the taxable year under subsection (k) of
34             Section 168 of the Internal Revenue Code; and
 
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 1                  (D-16)  If the taxpayer reports a capital  gain
 2             or  loss on the taxpayer's federal income tax return
 3             for the taxable year based on a sale or transfer  of
 4             property  for which the taxpayer was required in any
 5             taxable year to make an addition modification  under
 6             subparagraph  (D-15),  then  an  amount equal to the
 7             aggregate amount of  the  deductions  taken  in  all
 8             taxable years under subparagraph (Z) with respect to
 9             that property.;
10                  The  taxpayer  is required to make the addition
11             modification under this subparagraph only once  with
12             respect to any one piece of property;. and
13                  (D-20)  (D-15)  For  taxable years beginning on
14             or  after  January  1,  2002,  in  the  case  of   a
15             distribution  from a qualified tuition program under
16             Section 529 of the Internal Revenue Code, other than
17             (i) a  distribution  from  a  College  Savings  Pool
18             created  under  Section  16.5 of the State Treasurer
19             Act or (ii) a distribution from the Illinois Prepaid
20             Tuition Trust Fund, an amount equal  to  the  amount
21             excluded    from    gross   income   under   Section
22             529(c)(3)(B);
23        and by deducting from the total so obtained  the  sum  of
24        the following amounts:
25                  (E)  For  taxable  years ending before December
26             31, 2001, any  amount  included  in  such  total  in
27             respect  of  any  compensation  (including  but  not
28             limited  to  any  compensation  paid or accrued to a
29             serviceman while a prisoner of  war  or  missing  in
30             action)  paid  to  a  resident by reason of being on
31             active duty in the Armed Forces of the United States
32             and in respect of any compensation paid  or  accrued
33             to  a  resident who as a governmental employee was a
34             prisoner of war or missing in action, and in respect
 
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 1             of any compensation paid to a resident  in  1971  or
 2             thereafter for annual training performed pursuant to
 3             Sections  502  and 503, Title 32, United States Code
 4             as a member of  the  Illinois  National  Guard.  For
 5             taxable  years ending on or after December 31, 2001,
 6             any amount included in such total in respect of  any
 7             compensation  (including  but  not  limited  to  any
 8             compensation paid or accrued to a serviceman while a
 9             prisoner  of  war  or  missing  in action) paid to a
10             resident  by  reason  of  being  a  member  of   any
11             component  of  the Armed Forces of the United States
12             and in respect of any compensation paid  or  accrued
13             to  a  resident who as a governmental employee was a
14             prisoner of war or missing in action, and in respect
15             of any compensation paid to a resident  in  2001  or
16             thereafter  by  reason  of  being  a  member  of the
17             Illinois National  Guard.  The  provisions  of  this
18             amendatory  Act  of  the  92nd  General Assembly are
19             exempt from the provisions of Section 250;
20                  (F)  An amount equal to all amounts included in
21             such total pursuant to the  provisions  of  Sections
22             402(a),  402(c), 403(a), 403(b), 406(a), 407(a), and
23             408 of the Internal Revenue  Code,  or  included  in
24             such  total as distributions under the provisions of
25             any retirement or disability plan for  employees  of
26             any  governmental  agency  or  unit,  or  retirement
27             payments  to  retired  partners,  which payments are
28             excluded  in  computing  net  earnings   from   self
29             employment  by  Section 1402 of the Internal Revenue
30             Code and regulations adopted pursuant thereto;
31                  (G)  The valuation limitation amount;
32                  (H)  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
 
                            -5-      LRB093 04442 SJM 04494 b
 1             year;
 2                  (I)  An amount equal to all amounts included in
 3             such total pursuant to the provisions of Section 111
 4             of  the Internal Revenue Code as a recovery of items
 5             previously deducted from adjusted  gross  income  in
 6             the computation of taxable income;
 7                  (J)  An   amount   equal   to  those  dividends
 8             included  in  such  total  which  were  paid  by   a
 9             corporation which conducts business operations in an
10             Enterprise  Zone or zones created under the Illinois
11             Enterprise Zone Act, and conducts substantially  all
12             of its operations in an Enterprise Zone or zones;
13                  (K)  An   amount   equal   to  those  dividends
14             included  in  such  total  that  were  paid   by   a
15             corporation  that  conducts business operations in a
16             federally designated Foreign Trade Zone or  Sub-Zone
17             and  that  is  designated  a  High  Impact  Business
18             located   in   Illinois;   provided  that  dividends
19             eligible for the deduction provided in  subparagraph
20             (J) of paragraph (2) of this subsection shall not be
21             eligible  for  the  deduction  provided  under  this
22             subparagraph (K);
23                  (L)  For  taxable  years  ending after December
24             31, 1983, an amount equal  to  all  social  security
25             benefits  and  railroad retirement benefits included
26             in such total pursuant to Sections 72(r) and  86  of
27             the Internal Revenue Code;
28                  (M)  With   the   exception   of   any  amounts
29             subtracted under subparagraph (N), an  amount  equal
30             to  the  sum of all amounts disallowed as deductions
31             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
32             Internal  Revenue  Code of 1954, as now or hereafter
33             amended, and all amounts of  expenses  allocable  to
34             interest  and   disallowed  as deductions by Section
 
                            -6-      LRB093 04442 SJM 04494 b
 1             265(1) of the Internal Revenue Code of 1954, as  now
 2             or  hereafter  amended;  and  (ii) for taxable years
 3             ending  on  or  after  August  13,  1999,   Sections
 4             171(a)(2),  265,  280C,  and  832(b)(5)(B)(i) of the
 5             Internal  Revenue  Code;  the  provisions  of   this
 6             subparagraph  are  exempt  from  the  provisions  of
 7             Section 250;
 8                  (N)  An amount equal to all amounts included in
 9             such  total  which  are exempt from taxation by this
10             State  either  by  reason   of   its   statutes   or
11             Constitution  or  by  reason  of  the  Constitution,
12             treaties  or statutes of the United States; provided
13             that, in the case of any statute of this State  that
14             exempts   income   derived   from   bonds  or  other
15             obligations from the tax imposed under this Act, the
16             amount exempted shall be the interest  net  of  bond
17             premium amortization;
18                  (O)  An  amount  equal to any contribution made
19             to a job training project  established  pursuant  to
20             the Tax Increment Allocation Redevelopment Act;
21                  (P)  An  amount  equal  to  the  amount  of the
22             deduction used to compute  the  federal  income  tax
23             credit  for  restoration of substantial amounts held
24             under claim of right for the taxable  year  pursuant
25             to  Section  1341  of  the  Internal Revenue Code of
26             1986;
27                  (Q)  An amount equal to any amounts included in
28             such  total,  received  by  the   taxpayer   as   an
29             acceleration  in  the  payment of life, endowment or
30             annuity benefits in advance of the time  they  would
31             otherwise  be payable as an indemnity for a terminal
32             illness;
33                  (R)  An amount  equal  to  the  amount  of  any
34             federal  or  State  bonus  paid  to  veterans of the
 
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 1             Persian Gulf War;
 2                  (S)  An  amount,  to  the  extent  included  in
 3             adjusted gross income, equal  to  the  amount  of  a
 4             contribution  made  in the taxable year on behalf of
 5             the taxpayer  to  a  medical  care  savings  account
 6             established  under  the Medical Care Savings Account
 7             Act or the Medical Care Savings Account Act of  2000
 8             to  the  extent  the contribution is accepted by the
 9             account administrator as provided in that Act;
10                  (T)  An  amount,  to  the  extent  included  in
11             adjusted  gross  income,  equal  to  the  amount  of
12             interest earned in the taxable  year  on  a  medical
13             care  savings  account established under the Medical
14             Care Savings Account Act or the Medical Care Savings
15             Account Act of 2000 on behalf of the taxpayer, other
16             than interest added pursuant to item (D-5)  of  this
17             paragraph (2);
18                  (U)  For one taxable year beginning on or after
19             January 1, 1994, an amount equal to the total amount
20             of  tax  imposed  and paid under subsections (a) and
21             (b) of Section 201 of  this  Act  on  grant  amounts
22             received  by  the  taxpayer  under  the Nursing Home
23             Grant Assistance Act during the  taxpayer's  taxable
24             years 1992 and 1993;
25                  (V)  Beginning  with  tax  years  ending  on or
26             after December 31, 1995 and ending  with  tax  years
27             ending  on  or  before  December 31, 2004, an amount
28             equal to the amount paid by  a  taxpayer  who  is  a
29             self-employed  taxpayer, a partner of a partnership,
30             or a shareholder in a Subchapter S  corporation  for
31             health  insurance  or  long-term  care insurance for
32             that  taxpayer  or   that   taxpayer's   spouse   or
33             dependents,  to  the extent that the amount paid for
34             that health insurance or  long-term  care  insurance
 
                            -8-      LRB093 04442 SJM 04494 b
 1             may  be  deducted  under Section 213 of the Internal
 2             Revenue Code of 1986, has not been deducted  on  the
 3             federal  income tax return of the taxpayer, and does
 4             not exceed the taxable income attributable  to  that
 5             taxpayer's   income,   self-employment   income,  or
 6             Subchapter S  corporation  income;  except  that  no
 7             deduction  shall  be  allowed under this item (V) if
 8             the taxpayer  is  eligible  to  participate  in  any
 9             health insurance or long-term care insurance plan of
10             an  employer  of  the  taxpayer  or  the  taxpayer's
11             spouse.   The  amount  of  the  health insurance and
12             long-term care insurance subtracted under this  item
13             (V)  shall be determined by multiplying total health
14             insurance and long-term care insurance premiums paid
15             by the taxpayer times a number that  represents  the
16             fractional  percentage  of eligible medical expenses
17             under Section 213 of the Internal  Revenue  Code  of
18             1986 not actually deducted on the taxpayer's federal
19             income tax return;
20                  (W)  For  taxable  years  beginning on or after
21             January  1,  1998,  all  amounts  included  in   the
22             taxpayer's  federal gross income in the taxable year
23             from amounts converted from a regular IRA to a  Roth
24             IRA. This paragraph is exempt from the provisions of
25             Section 250;
26                  (X)  For  taxable  year 1999 and thereafter, an
27             amount equal to the amount of any (i) distributions,
28             to the extent includible in gross income for federal
29             income tax purposes, made to the taxpayer because of
30             his or her status as a  victim  of  persecution  for
31             racial  or  religious reasons by Nazi Germany or any
32             other Axis regime or as an heir of  the  victim  and
33             (ii)  items  of  income, to the extent includible in
34             gross  income  for  federal  income  tax   purposes,
 
                            -9-      LRB093 04442 SJM 04494 b
 1             attributable  to, derived from or in any way related
 2             to assets stolen from,  hidden  from,  or  otherwise
 3             lost  to  a  victim  of  persecution  for  racial or
 4             religious reasons by Nazi Germany or any other  Axis
 5             regime immediately prior to, during, and immediately
 6             after  World  War II, including, but not limited to,
 7             interest on the  proceeds  receivable  as  insurance
 8             under policies issued to a victim of persecution for
 9             racial  or  religious reasons by Nazi Germany or any
10             other Axis regime by  European  insurance  companies
11             immediately  prior  to  and  during  World  War  II;
12             provided,  however,  this  subtraction  from federal
13             adjusted gross  income  does  not  apply  to  assets
14             acquired  with such assets or with the proceeds from
15             the sale of such  assets;  provided,  further,  this
16             paragraph shall only apply to a taxpayer who was the
17             first  recipient of such assets after their recovery
18             and who is a victim of  persecution  for  racial  or
19             religious  reasons by Nazi Germany or any other Axis
20             regime or as an heir of the victim.  The  amount  of
21             and  the  eligibility  for  any  public  assistance,
22             benefit,  or  similar entitlement is not affected by
23             the  inclusion  of  items  (i)  and  (ii)  of   this
24             paragraph  in  gross  income  for federal income tax
25             purposes.  This  paragraph  is   exempt   from   the
26             provisions of Section 250;
27                  (Y)  For  taxable  years  beginning on or after
28             January 1, 2002, moneys contributed in  the  taxable
29             year to a College Savings Pool account under Section
30             16.5 of the State Treasurer Act, except that amounts
31             excluded    from    gross   income   under   Section
32             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
33             not  be  considered  moneys  contributed  under this
34             subparagraph (Y).  This subparagraph (Y)  is  exempt
 
                            -10-     LRB093 04442 SJM 04494 b
 1             from the provisions of Section 250;
 2                  (Z)  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                  (AA)  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
 
                            -11-     LRB093 04442 SJM 04494 b
 1             subparagraph (D-15), 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; and
 6                  (BB) (Z)  Any amount included in adjusted gross
 7             income, other than salary, received by a driver in a
 8             ridesharing arrangement using a motor vehicle; and
 9                  (CC)  Beginning with taxable years ending on or
10             after  December  31, 2003, for taxpayers 62 years of
11             age and older, an amount equal to  all  amounts  the
12             taxpayer  pays  during the taxable year for Medicare
13             Part B benefits under Title  XVIII  of  the  federal
14             Social  Security Act for costs of, including but not
15             limited to, physician services, outpatient  hospital
16             services,  medical equipment and supplies, and other
17             health services  and  supplies.   This  subparagraph
18             (CC) is exempt from the provisions of Section 250.

19        (b)  Corporations.
20             (1)  In general.  In the case of a corporation, base
21        income  means  an  amount equal to the taxpayer's taxable
22        income for the taxable year as modified by paragraph (2).
23             (2)  Modifications.  The taxable income referred  to
24        in  paragraph (1) shall be modified by adding thereto the
25        sum of the following amounts:
26                  (A)  An amount equal to  all  amounts  paid  or
27             accrued   to   the  taxpayer  as  interest  and  all
28             distributions  received  from  regulated  investment
29             companies during the  taxable  year  to  the  extent
30             excluded  from  gross  income  in the computation of
31             taxable income;
32                  (B)  An amount  equal  to  the  amount  of  tax
33             imposed  by  this  Act  to  the extent deducted from
34             gross income in the computation  of  taxable  income
 
                            -12-     LRB093 04442 SJM 04494 b
 1             for the taxable year;
 2                  (C)  In  the  case  of  a  regulated investment
 3             company, an amount equal to the excess  of  (i)  the
 4             net  long-term  capital  gain  for the taxable year,
 5             over (ii) the amount of the capital  gain  dividends
 6             designated   as  such  in  accordance  with  Section
 7             852(b)(3)(C) of the Internal Revenue  Code  and  any
 8             amount  designated under Section 852(b)(3)(D) of the
 9             Internal Revenue Code, attributable to  the  taxable
10             year (this amendatory Act of 1995 (Public Act 89-89)
11             is  declarative  of  existing  law  and is not a new
12             enactment);
13                  (D)  The  amount  of  any  net  operating  loss
14             deduction taken in arriving at taxable income, other
15             than a net operating loss  carried  forward  from  a
16             taxable year ending prior to December 31, 1986;
17                  (E)  For taxable years in which a net operating
18             loss  carryback  or carryforward from a taxable year
19             ending prior to December 31, 1986 is an  element  of
20             taxable income under paragraph (1) of subsection (e)
21             or  subparagraph  (E) of paragraph (2) of subsection
22             (e), the  amount  by  which  addition  modifications
23             other  than  those provided by this subparagraph (E)
24             exceeded subtraction modifications in  such  earlier
25             taxable year, with the following limitations applied
26             in the order that they are listed:
27                       (i)  the addition modification relating to
28                  the  net operating loss carried back or forward
29                  to the  taxable  year  from  any  taxable  year
30                  ending  prior  to  December  31,  1986 shall be
31                  reduced by the amount of addition  modification
32                  under  this  subparagraph  (E) which related to
33                  that net operating loss  and  which  was  taken
34                  into  account in calculating the base income of
 
                            -13-     LRB093 04442 SJM 04494 b
 1                  an earlier taxable year, and
 2                       (ii)  the addition  modification  relating
 3                  to  the  net  operating  loss  carried  back or
 4                  forward to the taxable year  from  any  taxable
 5                  year  ending  prior  to December 31, 1986 shall
 6                  not exceed the  amount  of  such  carryback  or
 7                  carryforward;
 8                  For  taxable  years  in  which  there  is a net
 9             operating loss carryback or carryforward  from  more
10             than one other taxable year ending prior to December
11             31, 1986, the addition modification provided in this
12             subparagraph  (E)  shall  be  the sum of the amounts
13             computed   independently   under    the    preceding
14             provisions  of  this  subparagraph (E) for each such
15             taxable year;
16                  (E-5)  For taxable years ending after  December
17             31,   1997,   an   amount   equal  to  any  eligible
18             remediation costs that the corporation  deducted  in
19             computing  adjusted  gross  income and for which the
20             corporation claims a credit under subsection (l)  of
21             Section 201;
22                  (E-10)  For  taxable years 2001 and thereafter,
23             an amount equal to the bonus depreciation  deduction
24             (30%   of   the  adjusted  basis  of  the  qualified
25             property) taken on the taxpayer's federal income tax
26             return for the taxable year under subsection (k)  of
27             Section 168 of the Internal Revenue Code; and
28                  (E-11)  If  the taxpayer reports a capital gain
29             or loss on the taxpayer's federal income tax  return
30             for  the taxable year based on a sale or transfer of
31             property for which the taxpayer was required in  any
32             taxable  year to make an addition modification under
33             subparagraph (E-10), then an  amount  equal  to  the
34             aggregate  amount  of  the  deductions  taken in all
 
                            -14-     LRB093 04442 SJM 04494 b
 1             taxable years under subparagraph (T) with respect to
 2             that property.;
 3                  The taxpayer is required to make  the  addition
 4             modification  under this subparagraph only once with
 5             respect to any one piece of property;
 6        and by deducting from the total so obtained  the  sum  of
 7        the following amounts:
 8                  (F)  An  amount  equal to the amount of any tax
 9             imposed by  this  Act  which  was  refunded  to  the
10             taxpayer  and included in such total for the taxable
11             year;
12                  (G)  An amount equal to any amount included  in
13             such  total under Section 78 of the Internal Revenue
14             Code;
15                  (H)  In the  case  of  a  regulated  investment
16             company,  an  amount  equal  to the amount of exempt
17             interest dividends as defined in subsection (b)  (5)
18             of Section 852 of the Internal Revenue Code, paid to
19             shareholders for the taxable year;
20                  (I)  With   the   exception   of   any  amounts
21             subtracted under subparagraph (J), an  amount  equal
22             to  the  sum of all amounts disallowed as deductions
23             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
24             amounts disallowed as interest  expense  by  Section
25             291(a)(3)  of  the  Internal Revenue Code, as now or
26             hereafter  amended,  and  all  amounts  of  expenses
27             allocable to interest and disallowed  as  deductions
28             by  Section  265(a)(1) of the Internal Revenue Code,
29             as now or hereafter amended; and  (ii)  for  taxable
30             years  ending  on or after August 13, 1999, Sections
31             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
32             of the Internal Revenue Code; the provisions of this
33             subparagraph  are  exempt  from  the  provisions  of
34             Section 250;
 
                            -15-     LRB093 04442 SJM 04494 b
 1                  (J)  An amount equal to all amounts included in
 2             such total which are exempt from  taxation  by  this
 3             State   either   by   reason   of  its  statutes  or
 4             Constitution  or  by  reason  of  the  Constitution,
 5             treaties or statutes of the United States;  provided
 6             that,  in the case of any statute of this State that
 7             exempts  income  derived   from   bonds   or   other
 8             obligations from the tax imposed under this Act, the
 9             amount  exempted  shall  be the interest net of bond
10             premium amortization;
11                  (K)  An  amount  equal   to   those   dividends
12             included   in  such  total  which  were  paid  by  a
13             corporation which conducts business operations in an
14             Enterprise Zone or zones created under the  Illinois
15             Enterprise  Zone  Act and conducts substantially all
16             of its operations in an Enterprise Zone or zones;
17                  (L)  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 (L);
27                  (M)  For  any  taxpayer  that  is  a  financial
28             organization within the meaning of Section 304(c) of
29             this  Act,  an  amount  included  in  such  total as
30             interest income from a loan or loans  made  by  such
31             taxpayer  to  a  borrower, to the extent that such a
32             loan is secured by property which  is  eligible  for
33             the Enterprise Zone Investment Credit.  To determine
34             the  portion  of  a loan or loans that is secured by
 
                            -16-     LRB093 04442 SJM 04494 b
 1             property eligible for a  Section  201(f)  investment
 2             credit  to the borrower, the entire principal amount
 3             of the loan or loans between the  taxpayer  and  the
 4             borrower  should  be  divided  into the basis of the
 5             Section  201(f)  investment  credit  property  which
 6             secures the loan or loans, using  for  this  purpose
 7             the original basis of such property on the date that
 8             it  was  placed  in  service in the Enterprise Zone.
 9             The subtraction modification available  to  taxpayer
10             in  any  year  under  this  subsection shall be that
11             portion of the total interest paid by  the  borrower
12             with  respect  to  such  loan  attributable  to  the
13             eligible  property  as calculated under the previous
14             sentence;
15                  (M-1)  For any taxpayer  that  is  a  financial
16             organization within the meaning of Section 304(c) of
17             this  Act,  an  amount  included  in  such  total as
18             interest income from a loan or loans  made  by  such
19             taxpayer  to  a  borrower, to the extent that such a
20             loan is secured by property which  is  eligible  for
21             the  High  Impact  Business  Investment  Credit.  To
22             determine the portion of a loan  or  loans  that  is
23             secured  by  property  eligible for a Section 201(h)
24             investment  credit  to  the  borrower,  the   entire
25             principal  amount  of  the loan or loans between the
26             taxpayer and the borrower should be divided into the
27             basis  of  the  Section  201(h)  investment   credit
28             property  which secures the loan or loans, using for
29             this purpose the original basis of such property  on
30             the  date  that  it  was  placed  in  service  in  a
31             federally  designated Foreign Trade Zone or Sub-Zone
32             located in Illinois.  No taxpayer that  is  eligible
33             for  the  deduction  provided in subparagraph (M) of
34             paragraph (2) of this subsection shall  be  eligible
 
                            -17-     LRB093 04442 SJM 04494 b
 1             for  the  deduction provided under this subparagraph
 2             (M-1).  The subtraction  modification  available  to
 3             taxpayers in any year under this subsection shall be
 4             that  portion  of  the  total  interest  paid by the
 5             borrower with respect to such loan  attributable  to
 6             the   eligible  property  as  calculated  under  the
 7             previous sentence;
 8                  (N)  Two times any contribution made during the
 9             taxable year to a designated  zone  organization  to
10             the  extent that the contribution (i) qualifies as a
11             charitable  contribution  under  subsection  (c)  of
12             Section 170 of the Internal Revenue  Code  and  (ii)
13             must,  by  its terms, be used for a project approved
14             by the Department of Commerce and Community  Affairs
15             under  Section  11  of  the Illinois Enterprise Zone
16             Act;
17                  (O)  An amount equal to: (i)  85%  for  taxable
18             years  ending  on or before December 31, 1992, or, a
19             percentage equal to the percentage  allowable  under
20             Section  243(a)(1)  of  the Internal Revenue Code of
21             1986 for taxable years  ending  after  December  31,
22             1992,  of  the amount by which dividends included in
23             taxable income and received from a corporation  that
24             is  not  created  or organized under the laws of the
25             United States or any state or political  subdivision
26             thereof,  including,  for taxable years ending on or
27             after  December  31,  1988,  dividends  received  or
28             deemed  received  or  paid  or  deemed  paid   under
29             Sections  951  through  964  of the Internal Revenue
30             Code, exceed the amount of the modification provided
31             under subparagraph (G)  of  paragraph  (2)  of  this
32             subsection  (b)  which is related to such dividends;
33             plus (ii) 100% of the  amount  by  which  dividends,
34             included  in taxable income and received, including,
 
                            -18-     LRB093 04442 SJM 04494 b
 1             for taxable years ending on or  after  December  31,
 2             1988,  dividends received or deemed received or paid
 3             or deemed paid under Sections 951 through 964 of the
 4             Internal Revenue Code,  from  any  such  corporation
 5             specified  in  clause  (i)  that  would  but for the
 6             provisions of Section 1504 (b) (3) of  the  Internal
 7             Revenue   Code   be  treated  as  a  member  of  the
 8             affiliated  group  which   includes   the   dividend
 9             recipient,  exceed  the  amount  of the modification
10             provided under subparagraph (G) of paragraph (2)  of
11             this   subsection  (b)  which  is  related  to  such
12             dividends;
13                  (P)  An amount equal to any  contribution  made
14             to  a  job  training project established pursuant to
15             the Tax Increment Allocation Redevelopment Act;
16                  (Q)  An amount  equal  to  the  amount  of  the
17             deduction  used  to  compute  the federal income tax
18             credit for restoration of substantial  amounts  held
19             under  claim  of right for the taxable year pursuant
20             to Section 1341 of  the  Internal  Revenue  Code  of
21             1986;
22                  (R)  In  the  case  of an attorney-in-fact with
23             respect to whom  an  interinsurer  or  a  reciprocal
24             insurer  has  made the election under Section 835 of
25             the Internal Revenue Code, 26 U.S.C. 835, an  amount
26             equal  to the excess, if any, of the amounts paid or
27             incurred by that interinsurer or reciprocal  insurer
28             in the taxable year to the attorney-in-fact over the
29             deduction allowed to that interinsurer or reciprocal
30             insurer  with  respect to the attorney-in-fact under
31             Section 835(b) of the Internal Revenue Code for  the
32             taxable year;
33                  (S)  For  taxable  years  ending  on  or  after
34             December  31,  1997,  in  the case of a Subchapter S
 
                            -19-     LRB093 04442 SJM 04494 b
 1             corporation, an  amount  equal  to  all  amounts  of
 2             income  allocable  to  a  shareholder subject to the
 3             Personal Property Tax Replacement Income Tax imposed
 4             by subsections (c) and (d) of Section  201  of  this
 5             Act,  including  amounts  allocable to organizations
 6             exempt from federal income tax by reason of  Section
 7             501(a)   of   the   Internal   Revenue  Code.   This
 8             subparagraph (S) is exempt from  the  provisions  of
 9             Section 250;
10                  (T)  For taxable years 2001 and thereafter, for
11             the  taxable  year  in  which the bonus depreciation
12             deduction  (30%  of  the  adjusted  basis   of   the
13             qualified  property)  is  taken  on  the  taxpayer's
14             federal  income  tax  return under subsection (k) of
15             Section 168 of the Internal  Revenue  Code  and  for
16             each  applicable  taxable year thereafter, an amount
17             equal to "x", where:
18                       (1)  "y"  equals   the   amount   of   the
19                  depreciation  deduction  taken  for the taxable
20                  year  on  the  taxpayer's  federal  income  tax
21                  return  on  property  for   which   the   bonus
22                  depreciation  deduction  (30%  of  the adjusted
23                  basis of the qualified property) was  taken  in
24                  any year under subsection (k) of Section 168 of
25                  the  Internal  Revenue  Code, but not including
26                  the bonus depreciation deduction; and
27                       (2)  "x" equals "y" multiplied by  30  and
28                  then  divided  by  70  (or  "y"  multiplied  by
29                  0.429).
30                  The   aggregate   amount  deducted  under  this
31             subparagraph in all taxable years for any one  piece
32             of  property  may not exceed the amount of the bonus
33             depreciation deduction (30% of the adjusted basis of
34             the qualified property) taken on  that  property  on
 
                            -20-     LRB093 04442 SJM 04494 b
 1             the  taxpayer's  federal  income  tax  return  under
 2             subsection  (k)  of  Section  168  of  the  Internal
 3             Revenue Code; and
 4                  (U)  If  the taxpayer reports a capital gain or
 5             loss on the taxpayer's federal income tax return for
 6             the taxable year based on  a  sale  or  transfer  of
 7             property  for which the taxpayer was required in any
 8             taxable year to make an addition modification  under
 9             subparagraph  (E-10),  then  an amount equal to that
10             addition modification.
11                  The taxpayer is allowed to take  the  deduction
12             under  this  subparagraph  only once with respect to
13             any one piece of property.
14             (3)  Special rule.  For purposes  of  paragraph  (2)
15        (A),  "gross  income"  in  the  case  of a life insurance
16        company, for tax years ending on and after  December  31,
17        1994,  shall  mean  the  gross  investment income for the
18        taxable year.

19        (c)  Trusts and estates.
20             (1)  In general.  In the case of a trust or  estate,
21        base  income  means  an  amount  equal  to the taxpayer's
22        taxable income  for  the  taxable  year  as  modified  by
23        paragraph (2).
24             (2)  Modifications.   Subject  to  the provisions of
25        paragraph  (3),  the  taxable  income  referred   to   in
26        paragraph (1) shall be modified by adding thereto the sum
27        of the following amounts:
28                  (A)  An  amount  equal  to  all amounts paid or
29             accrued to the taxpayer  as  interest  or  dividends
30             during  the taxable year to the extent excluded from
31             gross income in the computation of taxable income;
32                  (B)  In the case of (i) an estate, $600; (ii) a
33             trust which,  under  its  governing  instrument,  is
34             required  to distribute all of its income currently,
 
                            -21-     LRB093 04442 SJM 04494 b
 1             $300; and (iii) any other trust, $100, but  in  each
 2             such  case,  only  to  the  extent  such  amount was
 3             deducted in the computation of taxable income;
 4                  (C)  An amount  equal  to  the  amount  of  tax
 5             imposed  by  this  Act  to  the extent deducted from
 6             gross income in the computation  of  taxable  income
 7             for the taxable year;
 8                  (D)  The  amount  of  any  net  operating  loss
 9             deduction taken in arriving at taxable income, other
10             than  a  net  operating  loss carried forward from a
11             taxable year ending prior to December 31, 1986;
12                  (E)  For taxable years in which a net operating
13             loss carryback or carryforward from a  taxable  year
14             ending  prior  to December 31, 1986 is an element of
15             taxable income under paragraph (1) of subsection (e)
16             or subparagraph (E) of paragraph (2)  of  subsection
17             (e),  the  amount  by  which  addition modifications
18             other than those provided by this  subparagraph  (E)
19             exceeded  subtraction  modifications in such taxable
20             year, with the following limitations applied in  the
21             order that they are listed:
22                       (i)  the addition modification relating to
23                  the  net operating loss carried back or forward
24                  to the  taxable  year  from  any  taxable  year
25                  ending  prior  to  December  31,  1986 shall be
26                  reduced by the amount of addition  modification
27                  under  this  subparagraph  (E) which related to
28                  that net operating loss  and  which  was  taken
29                  into  account in calculating the base income of
30                  an earlier taxable year, and
31                       (ii)  the addition  modification  relating
32                  to  the  net  operating  loss  carried  back or
33                  forward to the taxable year  from  any  taxable
34                  year  ending  prior  to December 31, 1986 shall
 
                            -22-     LRB093 04442 SJM 04494 b
 1                  not exceed the  amount  of  such  carryback  or
 2                  carryforward;
 3                  For  taxable  years  in  which  there  is a net
 4             operating loss carryback or carryforward  from  more
 5             than one other taxable year ending prior to December
 6             31, 1986, the addition modification provided in this
 7             subparagraph  (E)  shall  be  the sum of the amounts
 8             computed   independently   under    the    preceding
 9             provisions  of  this  subparagraph (E) for each such
10             taxable year;
11                  (F)  For  taxable  years  ending  on  or  after
12             January 1, 1989, an amount equal to the tax deducted
13             pursuant to Section 164 of the Internal Revenue Code
14             if the trust or estate is claiming the same tax  for
15             purposes  of  the  Illinois foreign tax credit under
16             Section 601 of this Act;
17                  (G)  An amount  equal  to  the  amount  of  the
18             capital  gain deduction allowable under the Internal
19             Revenue Code, to  the  extent  deducted  from  gross
20             income in the computation of taxable income;
21                  (G-5)  For  taxable years ending after December
22             31,  1997,  an  amount   equal   to   any   eligible
23             remediation  costs that the trust or estate deducted
24             in computing adjusted gross income and for which the
25             trust or estate claims a credit under subsection (l)
26             of Section 201;
27                  (G-10)  For taxable years 2001 and  thereafter,
28             an  amount equal to the bonus depreciation deduction
29             (30%  of  the  adjusted  basis  of   the   qualified
30             property) taken on the taxpayer's federal income tax
31             return  for the taxable year under subsection (k) of
32             Section 168 of the Internal Revenue Code; and
33                  (G-11)  If the taxpayer reports a capital  gain
34             or  loss on the taxpayer's federal income tax return
 
                            -23-     LRB093 04442 SJM 04494 b
 1             for the taxable year based on a sale or transfer  of
 2             property  for which the taxpayer was required in any
 3             taxable year to make an addition modification  under
 4             subparagraph  (G-10),  then  an  amount equal to the
 5             aggregate amount of  the  deductions  taken  in  all
 6             taxable years under subparagraph (R) with respect to
 7             that property.;
 8                  The  taxpayer  is required to make the addition
 9             modification under this subparagraph only once  with
10             respect to any one piece of property;
11        and  by  deducting  from the total so obtained the sum of
12        the following amounts:
13                  (H)  An amount equal to all amounts included in
14             such total pursuant to the  provisions  of  Sections
15             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
16             408 of the Internal Revenue Code or included in such
17             total as distributions under the provisions  of  any
18             retirement  or  disability plan for employees of any
19             governmental agency or unit, or retirement  payments
20             to  retired partners, which payments are excluded in
21             computing  net  earnings  from  self  employment  by
22             Section  1402  of  the  Internal  Revenue  Code  and
23             regulations adopted pursuant thereto;
24                  (I)  The valuation limitation amount;
25                  (J)  An amount equal to the amount of  any  tax
26             imposed  by  this  Act  which  was  refunded  to the
27             taxpayer and included in such total for the  taxable
28             year;
29                  (K)  An amount equal to all amounts included in
30             taxable  income  as  modified  by subparagraphs (A),
31             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
32             from  taxation by this State either by reason of its
33             statutes  or  Constitution  or  by  reason  of   the
34             Constitution,  treaties  or  statutes  of the United
 
                            -24-     LRB093 04442 SJM 04494 b
 1             States; provided that, in the case of any statute of
 2             this State that exempts income derived from bonds or
 3             other obligations from the tax  imposed  under  this
 4             Act,  the  amount exempted shall be the interest net
 5             of bond premium amortization;
 6                  (L)  With  the   exception   of   any   amounts
 7             subtracted  under  subparagraph (K), an amount equal
 8             to the sum of all amounts disallowed  as  deductions
 9             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
10             Internal Revenue Code, as now or hereafter  amended,
11             and  all  amounts  of expenses allocable to interest
12             and disallowed as deductions by  Section  265(1)  of
13             the  Internal  Revenue  Code  of  1954,  as  now  or
14             hereafter amended; and (ii) for taxable years ending
15             on  or  after  August  13, 1999, Sections 171(a)(2),
16             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
17             Revenue Code; the provisions  of  this  subparagraph
18             are exempt from the provisions of Section 250;
19                  (M)  An   amount   equal   to  those  dividends
20             included  in  such  total  which  were  paid  by   a
21             corporation which conducts business operations in an
22             Enterprise  Zone or zones created under the Illinois
23             Enterprise Zone Act and conducts  substantially  all
24             of its operations in an Enterprise Zone or Zones;
25                  (N)  An  amount  equal to any contribution made
26             to a job training project  established  pursuant  to
27             the Tax Increment Allocation Redevelopment Act;
28                  (O)  An   amount   equal   to  those  dividends
29             included  in  such  total  that  were  paid   by   a
30             corporation  that  conducts business operations in a
31             federally designated Foreign Trade Zone or  Sub-Zone
32             and  that  is  designated  a  High  Impact  Business
33             located   in   Illinois;   provided  that  dividends
34             eligible for the deduction provided in  subparagraph
 
                            -25-     LRB093 04442 SJM 04494 b
 1             (M) of paragraph (2) of this subsection shall not be
 2             eligible  for  the  deduction  provided  under  this
 3             subparagraph (O);
 4                  (P)  An  amount  equal  to  the  amount  of the
 5             deduction used to compute  the  federal  income  tax
 6             credit  for  restoration of substantial amounts held
 7             under claim of right for the taxable  year  pursuant
 8             to  Section  1341  of  the  Internal Revenue Code of
 9             1986;
10                  (Q)  For taxable year 1999 and  thereafter,  an
11             amount equal to the amount of any (i) distributions,
12             to the extent includible in gross income for federal
13             income tax purposes, made to the taxpayer because of
14             his  or  her  status  as a victim of persecution for
15             racial or religious reasons by Nazi Germany  or  any
16             other  Axis  regime  or as an heir of the victim and
17             (ii) items of income, to the  extent  includible  in
18             gross   income  for  federal  income  tax  purposes,
19             attributable to, derived from or in any way  related
20             to  assets  stolen  from,  hidden from, or otherwise
21             lost to  a  victim  of  persecution  for  racial  or
22             religious  reasons by Nazi Germany or any other Axis
23             regime immediately prior to, during, and immediately
24             after World War II, including, but not  limited  to,
25             interest  on  the  proceeds  receivable as insurance
26             under policies issued to a victim of persecution for
27             racial or religious reasons by Nazi Germany  or  any
28             other  Axis  regime  by European insurance companies
29             immediately  prior  to  and  during  World  War  II;
30             provided, however,  this  subtraction  from  federal
31             adjusted  gross  income  does  not  apply  to assets
32             acquired with such assets or with the proceeds  from
33             the  sale  of  such  assets; provided, further, this
34             paragraph shall only apply to a taxpayer who was the
 
                            -26-     LRB093 04442 SJM 04494 b
 1             first recipient of such assets after their  recovery
 2             and  who  is  a victim of  persecution for racial or
 3             religious reasons by Nazi Germany or any other  Axis
 4             regime  or  as an heir of the victim.  The amount of
 5             and  the  eligibility  for  any  public  assistance,
 6             benefit, or similar entitlement is not  affected  by
 7             the   inclusion  of  items  (i)  and  (ii)  of  this
 8             paragraph in gross income  for  federal  income  tax
 9             purposes.   This   paragraph   is  exempt  from  the
10             provisions of Section 250;
11                  (R)  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
 
                            -27-     LRB093 04442 SJM 04494 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                  (S)  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 (G-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)  Limitation.   The  amount  of  any modification
16        otherwise required under  this  subsection  shall,  under
17        regulations  prescribed by the Department, be adjusted by
18        any amounts included therein which  were  properly  paid,
19        credited,  or  required to be distributed, or permanently
20        set aside for charitable purposes pursuant   to  Internal
21        Revenue Code Section 642(c) during the taxable year.

22        (d)  Partnerships.
23             (1)  In  general. In the case of a partnership, base
24        income means an amount equal to  the  taxpayer's  taxable
25        income for the taxable year as modified by paragraph (2).
26             (2)  Modifications.  The  taxable income referred to
27        in paragraph (1) shall be modified by adding thereto  the
28        sum 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)  An amount  equal  to  the  amount  of  tax
34             imposed  by  this  Act  to  the extent deducted from
 
                            -28-     LRB093 04442 SJM 04494 b
 1             gross income for the taxable year;
 2                  (C)  The amount of deductions  allowed  to  the
 3             partnership  pursuant  to  Section  707  (c)  of the
 4             Internal Revenue Code  in  calculating  its  taxable
 5             income;
 6                  (D)  An  amount  equal  to  the  amount  of the
 7             capital gain deduction allowable under the  Internal
 8             Revenue  Code,  to  the  extent  deducted from gross
 9             income in the computation of taxable income;
10                  (D-5)  For taxable years 2001  and  thereafter,
11             an  amount equal to the bonus depreciation deduction
12             (30%  of  the  adjusted  basis  of   the   qualified
13             property) taken on the taxpayer's federal income tax
14             return  for the taxable year under subsection (k) of
15             Section 168 of the Internal Revenue Code; and
16                  (D-6)  If the taxpayer reports a  capital  gain
17             or  loss on the taxpayer's federal income tax return
18             for the taxable year based on a sale or transfer  of
19             property  for which the taxpayer was required in any
20             taxable year to make an addition modification  under
21             subparagraph  (D-5),  then  an  amount  equal to the
22             aggregate amount of  the  deductions  taken  in  all
23             taxable years under subparagraph (O) with respect to
24             that property.;
25                  The  taxpayer  is required to make the addition
26             modification under this subparagraph only once  with
27             respect to any one piece of property;
28        and by deducting from the total so obtained the following
29        amounts:
30                  (E)  The valuation limitation amount;
31                  (F)  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;
 
                            -29-     LRB093 04442 SJM 04494 b
 1                  (G)  An amount equal to all amounts included in
 2             taxable income as  modified  by  subparagraphs  (A),
 3             (B),  (C)  and (D) which are exempt from taxation by
 4             this 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                  (H)  Any   income   of  the  partnership  which
13             constitutes personal service income  as  defined  in
14             Section  1348  (b)  (1) of the Internal Revenue Code
15             (as in effect December 31,  1981)  or  a  reasonable
16             allowance  for  compensation  paid  or  accrued  for
17             services  rendered  by  partners to the partnership,
18             whichever is greater;
19                  (I)  An amount equal to all amounts  of  income
20             distributable  to  an entity subject to the Personal
21             Property  Tax  Replacement  Income  Tax  imposed  by
22             subsections (c) and (d) of Section 201 of  this  Act
23             including  amounts  distributable  to  organizations
24             exempt  from federal income tax by reason of Section
25             501(a) of the Internal Revenue Code;
26                  (J)  With  the   exception   of   any   amounts
27             subtracted  under  subparagraph (G), an amount equal
28             to the sum of all amounts disallowed  as  deductions
29             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
30             Internal Revenue Code of 1954, as now  or  hereafter
31             amended,  and  all  amounts of expenses allocable to
32             interest and disallowed  as  deductions  by  Section
33             265(1)  of  the  Internal  Revenue  Code,  as now or
34             hereafter amended; and (ii) for taxable years ending
 
                            -30-     LRB093 04442 SJM 04494 b
 1             on or after August  13,  1999,  Sections  171(a)(2),
 2             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 3             Revenue  Code;  the  provisions of this subparagraph
 4             are exempt from the provisions of Section 250;
 5                  (K)  An  amount  equal   to   those   dividends
 6             included   in  such  total  which  were  paid  by  a
 7             corporation which conducts business operations in an
 8             Enterprise Zone or zones created under the  Illinois
 9             Enterprise  Zone  Act,  enacted  by the 82nd General
10             Assembly, and  conducts  substantially  all  of  its
11             operations in an Enterprise Zone or Zones;
12                  (L)  An  amount  equal to any contribution made
13             to a job training project  established  pursuant  to
14             the   Real   Property   Tax   Increment   Allocation
15             Redevelopment Act;
16                  (M)  An   amount   equal   to  those  dividends
17             included  in  such  total  that  were  paid   by   a
18             corporation  that  conducts business operations in a
19             federally designated Foreign Trade Zone or  Sub-Zone
20             and  that  is  designated  a  High  Impact  Business
21             located   in   Illinois;   provided  that  dividends
22             eligible for the deduction provided in  subparagraph
23             (K) of paragraph (2) of this subsection shall not be
24             eligible  for  the  deduction  provided  under  this
25             subparagraph (M);
26                  (N)  An  amount  equal  to  the  amount  of the
27             deduction used to compute  the  federal  income  tax
28             credit  for  restoration of substantial amounts held
29             under claim of right for the taxable  year  pursuant
30             to  Section  1341  of  the  Internal Revenue Code of
31             1986;
32                  (O)  For taxable years 2001 and thereafter, for
33             the taxable year in  which  the  bonus  depreciation
34             deduction   (30%   of  the  adjusted  basis  of  the
 
                            -31-     LRB093 04442 SJM 04494 b
 1             qualified  property)  is  taken  on  the  taxpayer's
 2             federal income tax return under  subsection  (k)  of
 3             Section  168  of  the  Internal Revenue Code and for
 4             each applicable taxable year thereafter,  an  amount
 5             equal to "x", where:
 6                       (1)  "y"   equals   the   amount   of  the
 7                  depreciation deduction taken  for  the  taxable
 8                  year  on  the  taxpayer's  federal  income  tax
 9                  return   on   property   for  which  the  bonus
10                  depreciation deduction  (30%  of  the  adjusted
11                  basis  of  the qualified property) was taken in
12                  any year under subsection (k) of Section 168 of
13                  the Internal Revenue Code,  but  not  including
14                  the bonus depreciation deduction; and
15                       (2)  "x"  equals  "y" multiplied by 30 and
16                  then  divided  by  70  (or  "y"  multiplied  by
17                  0.429).
18                  The  aggregate  amount  deducted   under   this
19             subparagraph  in all taxable years for any one piece
20             of property may not exceed the amount of  the  bonus
21             depreciation deduction (30% of the adjusted basis of
22             the  qualified  property)  taken on that property on
23             the  taxpayer's  federal  income  tax  return  under
24             subsection  (k)  of  Section  168  of  the  Internal
25             Revenue Code; and
26                  (P)  If the taxpayer reports a capital gain  or
27             loss on the taxpayer's federal income tax return for
28             the  taxable  year  based  on  a sale or transfer of
29             property for which the taxpayer was required in  any
30             taxable  year to make an addition modification under
31             subparagraph (D-5), then an  amount  equal  to  that
32             addition modification.
33                  The  taxpayer  is allowed to take the deduction
34             under this subparagraph only once  with  respect  to
 
                            -32-     LRB093 04442 SJM 04494 b
 1             any one piece of property.

 2        (e)  Gross income; adjusted gross income; taxable income.
 3             (1)  In  general.   Subject  to  the  provisions  of
 4        paragraph  (2)  and  subsection  (b) (3), for purposes of
 5        this Section  and  Section  803(e),  a  taxpayer's  gross
 6        income,  adjusted gross income, or taxable income for the
 7        taxable year shall  mean  the  amount  of  gross  income,
 8        adjusted   gross   income   or  taxable  income  properly
 9        reportable  for  federal  income  tax  purposes  for  the
10        taxable year under the provisions of the Internal Revenue
11        Code. Taxable income may be less than zero. However,  for
12        taxable  years  ending on or after December 31, 1986, net
13        operating loss carryforwards from  taxable  years  ending
14        prior  to  December  31,  1986, may not exceed the sum of
15        federal taxable income for the taxable  year  before  net
16        operating  loss  deduction,  plus  the excess of addition
17        modifications  over  subtraction  modifications  for  the
18        taxable year.  For taxable years ending prior to December
19        31, 1986, taxable income may never be an amount in excess
20        of the net operating loss for the taxable year as defined
21        in subsections (c) and (d) of Section 172 of the Internal
22        Revenue Code, provided that  when  taxable  income  of  a
23        corporation  (other  than  a  Subchapter  S corporation),
24        trust,  or  estate  is  less  than  zero   and   addition
25        modifications,  other than those provided by subparagraph
26        (E) of paragraph (2) of subsection (b)  for  corporations
27        or  subparagraph  (E)  of paragraph (2) of subsection (c)
28        for trusts and estates, exceed subtraction modifications,
29        an  addition  modification  must  be  made  under   those
30        subparagraphs  for  any  other  taxable year to which the
31        taxable income less than zero  (net  operating  loss)  is
32        applied under Section 172 of the Internal Revenue Code or
33        under   subparagraph   (E)   of  paragraph  (2)  of  this
34        subsection (e) applied in conjunction with Section 172 of
 
                            -33-     LRB093 04442 SJM 04494 b
 1        the Internal Revenue Code.
 2             (2)  Special rule.  For purposes of paragraph (1) of
 3        this subsection, the taxable income  properly  reportable
 4        for federal income tax purposes shall mean:
 5                  (A)  Certain  life insurance companies.  In the
 6             case of a life insurance company subject to the  tax
 7             imposed by Section 801 of the Internal Revenue Code,
 8             life  insurance  company  taxable  income,  plus the
 9             amount of distribution  from  pre-1984  policyholder
10             surplus accounts as calculated under Section 815a of
11             the Internal Revenue Code;
12                  (B)  Certain other insurance companies.  In the
13             case  of  mutual  insurance companies subject to the
14             tax imposed by Section 831 of the  Internal  Revenue
15             Code, insurance company taxable income;
16                  (C)  Regulated  investment  companies.   In the
17             case of a regulated investment  company  subject  to
18             the  tax  imposed  by  Section  852  of the Internal
19             Revenue Code, investment company taxable income;
20                  (D)  Real estate  investment  trusts.   In  the
21             case  of  a  real estate investment trust subject to
22             the tax imposed  by  Section  857  of  the  Internal
23             Revenue  Code,  real estate investment trust taxable
24             income;
25                  (E)  Consolidated corporations.  In the case of
26             a corporation which is a  member  of  an  affiliated
27             group  of  corporations filing a consolidated income
28             tax return for the taxable year for  federal  income
29             tax  purposes,  taxable income determined as if such
30             corporation had filed a separate return for  federal
31             income  tax  purposes  for the taxable year and each
32             preceding taxable year for which it was a member  of
33             an   affiliated   group.   For   purposes   of  this
34             subparagraph, the taxpayer's separate taxable income
 
                            -34-     LRB093 04442 SJM 04494 b
 1             shall be determined as if the election  provided  by
 2             Section  243(b) (2) of the Internal Revenue Code had
 3             been in effect for all such years;
 4                  (F)  Cooperatives.    In   the   case   of    a
 5             cooperative  corporation or association, the taxable
 6             income of such organization determined in accordance
 7             with the provisions of Section 1381 through 1388  of
 8             the Internal Revenue Code;
 9                  (G)  Subchapter  S  corporations.   In the case
10             of: (i) a Subchapter S corporation for  which  there
11             is  in effect an election for the taxable year under
12             Section 1362  of  the  Internal  Revenue  Code,  the
13             taxable  income  of  such  corporation determined in
14             accordance with  Section  1363(b)  of  the  Internal
15             Revenue  Code, except that taxable income shall take
16             into account  those  items  which  are  required  by
17             Section  1363(b)(1)  of the Internal Revenue Code to
18             be  separately  stated;  and  (ii)  a  Subchapter  S
19             corporation for which there is in effect  a  federal
20             election  to  opt  out  of  the  provisions  of  the
21             Subchapter  S  Revision Act of 1982 and have applied
22             instead the prior federal Subchapter S rules  as  in
23             effect  on  July 1, 1982, the taxable income of such
24             corporation  determined  in  accordance   with   the
25             federal  Subchapter  S rules as in effect on July 1,
26             1982; and
27                  (H)  Partnerships.    In   the   case   of    a
28             partnership, taxable income determined in accordance
29             with  Section  703  of  the  Internal  Revenue Code,
30             except that taxable income shall take  into  account
31             those  items which are required by Section 703(a)(1)
32             to be separately stated but  which  would  be  taken
33             into  account  by  an  individual in calculating his
34             taxable income.
 
                            -35-     LRB093 04442 SJM 04494 b
 1        (f)  Valuation limitation amount.
 2             (1)  In general.  The  valuation  limitation  amount
 3        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
 4        (d)(2) (E) is an amount equal to:
 5                  (A)  The  sum  of  the   pre-August   1,   1969
 6             appreciation  amounts  (to  the extent consisting of
 7             gain reportable under the provisions of Section 1245
 8             or 1250  of  the  Internal  Revenue  Code)  for  all
 9             property  in respect of which such gain was reported
10             for the taxable year; plus
11                  (B)  The  lesser  of  (i)  the   sum   of   the
12             pre-August  1,  1969  appreciation  amounts  (to the
13             extent consisting of capital gain) for all  property
14             in  respect  of  which  such  gain  was reported for
15             federal income tax purposes for the taxable year, or
16             (ii) the net capital  gain  for  the  taxable  year,
17             reduced  in  either  case by any amount of such gain
18             included in the amount determined  under  subsection
19             (a) (2) (F) or (c) (2) (H).
20             (2)  Pre-August 1, 1969 appreciation amount.
21                  (A)  If  the  fair  market  value  of  property
22             referred   to   in   paragraph   (1)   was   readily
23             ascertainable  on  August 1, 1969, the pre-August 1,
24             1969 appreciation amount for such  property  is  the
25             lesser  of  (i) the excess of such fair market value
26             over the taxpayer's basis (for determining gain) for
27             such property on that  date  (determined  under  the
28             Internal Revenue Code as in effect on that date), or
29             (ii)  the  total  gain  realized  and reportable for
30             federal income tax purposes in respect of the  sale,
31             exchange or other disposition of such property.
32                  (B)  If  the  fair  market  value  of  property
33             referred   to  in  paragraph  (1)  was  not  readily
34             ascertainable on August 1, 1969, the  pre-August  1,
 
                            -36-     LRB093 04442 SJM 04494 b
 1             1969  appreciation  amount for such property is that
 2             amount which bears the same ratio to the total  gain
 3             reported  in  respect  of  the  property for federal
 4             income tax purposes for the  taxable  year,  as  the
 5             number  of  full calendar months in that part of the
 6             taxpayer's holding period for  the  property  ending
 7             July  31,  1969 bears to the number of full calendar
 8             months in the taxpayer's entire holding  period  for
 9             the property.
10                  (C)  The   Department   shall   prescribe  such
11             regulations as may be necessary  to  carry  out  the
12             purposes of this paragraph.

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

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

31        Section 99.  Effective date.  This Act takes effect  upon
32    becoming law.