093_HB2898

 
                                     LRB093 04446 SJM 04498 b

 1        AN ACT in relation to taxation.

 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 04446 SJM 04498 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
 
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 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 04446 SJM 04498 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;
 
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 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 04446 SJM 04498 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 04446 SJM 04498 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 04446 SJM 04498 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
 
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 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 04446 SJM 04498 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 04446 SJM 04498 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, all unreimbursed amounts, but not
10             more  than a total amount that would result in a tax
11             liability  of  less  than  zero  for  the  taxpayer,
12             expended by persons 65 years of  age  or  older  for
13             home  health services, as defined by Section 2.05 of
14             the Home Health Agency Licensing Act, if provided by
15             a public or private organization licensed under that
16             Act, or for services provided to a  person  at  that
17             person's  residence by a licensed practical nurse or
18             registered  nurse  in  accordance  with  a  plan  of
19             treatment for illness or infirmity prescribed  by  a
20             physician.

21        (b)  Corporations.
22             (1)  In general.  In the case of a corporation, base
23        income  means  an  amount equal to the taxpayer's taxable
24        income for the taxable year as modified by paragraph (2).
25             (2)  Modifications.  The taxable income referred  to
26        in  paragraph (1) shall be modified by adding thereto the
27        sum of the following amounts:
28                  (A)  An amount equal to  all  amounts  paid  or
29             accrued   to   the  taxpayer  as  interest  and  all
30             distributions  received  from  regulated  investment
31             companies during the  taxable  year  to  the  extent
32             excluded  from  gross  income  in the computation of
33             taxable income;
34                  (B)  An amount  equal  to  the  amount  of  tax
 
                            -12-     LRB093 04446 SJM 04498 b
 1             imposed  by  this  Act  to  the extent deducted from
 2             gross income in the computation  of  taxable  income
 3             for the taxable year;
 4                  (C)  In  the  case  of  a  regulated investment
 5             company, an amount equal to the excess  of  (i)  the
 6             net  long-term  capital  gain  for the taxable year,
 7             over (ii) the amount of the capital  gain  dividends
 8             designated   as  such  in  accordance  with  Section
 9             852(b)(3)(C) of the Internal Revenue  Code  and  any
10             amount  designated under Section 852(b)(3)(D) of the
11             Internal Revenue Code, attributable to  the  taxable
12             year (this amendatory Act of 1995 (Public Act 89-89)
13             is  declarative  of  existing  law  and is not a new
14             enactment);
15                  (D)  The  amount  of  any  net  operating  loss
16             deduction taken in arriving at taxable income, other
17             than a net operating loss  carried  forward  from  a
18             taxable year ending prior to December 31, 1986;
19                  (E)  For taxable years in which a net operating
20             loss  carryback  or carryforward from a taxable year
21             ending prior to December 31, 1986 is an  element  of
22             taxable income under paragraph (1) of subsection (e)
23             or  subparagraph  (E) of paragraph (2) of subsection
24             (e), the  amount  by  which  addition  modifications
25             other  than  those provided by this subparagraph (E)
26             exceeded subtraction modifications in  such  earlier
27             taxable year, with the following limitations applied
28             in the order that they are listed:
29                       (i)  the addition modification relating to
30                  the  net operating loss carried back or forward
31                  to the  taxable  year  from  any  taxable  year
32                  ending  prior  to  December  31,  1986 shall be
33                  reduced by the amount of addition  modification
34                  under  this  subparagraph  (E) which related to
 
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 1                  that net operating loss  and  which  was  taken
 2                  into  account in calculating the base income of
 3                  an earlier taxable year, and
 4                       (ii)  the addition  modification  relating
 5                  to  the  net  operating  loss  carried  back or
 6                  forward to the taxable year  from  any  taxable
 7                  year  ending  prior  to December 31, 1986 shall
 8                  not exceed the  amount  of  such  carryback  or
 9                  carryforward;
10                  For  taxable  years  in  which  there  is a net
11             operating loss carryback or carryforward  from  more
12             than one other taxable year ending prior to December
13             31, 1986, the addition modification provided in this
14             subparagraph  (E)  shall  be  the sum of the amounts
15             computed   independently   under    the    preceding
16             provisions  of  this  subparagraph (E) for each such
17             taxable year;
18                  (E-5)  For taxable years ending after  December
19             31,   1997,   an   amount   equal  to  any  eligible
20             remediation costs that the corporation  deducted  in
21             computing  adjusted  gross  income and for which the
22             corporation claims a credit under subsection (l)  of
23             Section 201;
24                  (E-10)  For  taxable years 2001 and thereafter,
25             an amount equal to the bonus depreciation  deduction
26             (30%   of   the  adjusted  basis  of  the  qualified
27             property) taken on the taxpayer's federal income tax
28             return for the taxable year under subsection (k)  of
29             Section 168 of the Internal Revenue Code; and
30                  (E-11)  If  the taxpayer reports a capital gain
31             or loss on the taxpayer's federal income tax  return
32             for  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
 
                            -14-     LRB093 04446 SJM 04498 b
 1             subparagraph (E-10), then an  amount  equal  to  the
 2             aggregate  amount  of  the  deductions  taken in all
 3             taxable years under subparagraph (T) with respect to
 4             that property.;
 5                  The taxpayer is required to make  the  addition
 6             modification  under this subparagraph only once with
 7             respect to any one piece of property;
 8        and by deducting from the total so obtained  the  sum  of
 9        the following amounts:
10                  (F)  An  amount  equal to the amount of any tax
11             imposed by  this  Act  which  was  refunded  to  the
12             taxpayer  and included in such total for the taxable
13             year;
14                  (G)  An amount equal to any amount included  in
15             such  total under Section 78 of the Internal Revenue
16             Code;
17                  (H)  In the  case  of  a  regulated  investment
18             company,  an  amount  equal  to the amount of exempt
19             interest dividends as defined in subsection (b)  (5)
20             of Section 852 of the Internal Revenue Code, paid to
21             shareholders for the taxable year;
22                  (I)  With   the   exception   of   any  amounts
23             subtracted under subparagraph (J), an  amount  equal
24             to  the  sum of all amounts disallowed as deductions
25             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
26             amounts disallowed as interest  expense  by  Section
27             291(a)(3)  of  the  Internal Revenue Code, as now or
28             hereafter  amended,  and  all  amounts  of  expenses
29             allocable to interest and disallowed  as  deductions
30             by  Section  265(a)(1) of the Internal Revenue Code,
31             as now or hereafter amended; and  (ii)  for  taxable
32             years  ending  on or after August 13, 1999, Sections
33             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
34             of the Internal Revenue Code; the provisions of this
 
                            -15-     LRB093 04446 SJM 04498 b
 1             subparagraph  are  exempt  from  the  provisions  of
 2             Section 250;
 3                  (J)  An amount equal to all amounts included in
 4             such total which are exempt from  taxation  by  this
 5             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                  (K)  An  amount  equal   to   those   dividends
14             included   in  such  total  which  were  paid  by  a
15             corporation which conducts business operations in an
16             Enterprise Zone or zones created under the  Illinois
17             Enterprise  Zone  Act and conducts substantially all
18             of its operations in an Enterprise Zone or zones;
19                  (L)  An  amount  equal   to   those   dividends
20             included   in   such  total  that  were  paid  by  a
21             corporation that conducts business operations  in  a
22             federally  designated Foreign Trade Zone or Sub-Zone
23             and  that  is  designated  a  High  Impact  Business
24             located  in  Illinois;   provided   that   dividends
25             eligible  for the deduction provided in subparagraph
26             (K) of paragraph 2 of this subsection shall  not  be
27             eligible  for  the  deduction  provided  under  this
28             subparagraph (L);
29                  (M)  For  any  taxpayer  that  is  a  financial
30             organization within the meaning of Section 304(c) of
31             this  Act,  an  amount  included  in  such  total as
32             interest income from a loan or loans  made  by  such
33             taxpayer  to  a  borrower, to the extent that such a
34             loan is secured by property which  is  eligible  for
 
                            -16-     LRB093 04446 SJM 04498 b
 1             the Enterprise Zone Investment Credit.  To determine
 2             the  portion  of  a loan or loans that is secured by
 3             property eligible for a  Section  201(f)  investment
 4             credit  to the borrower, the entire principal amount
 5             of the loan or loans between the  taxpayer  and  the
 6             borrower  should  be  divided  into the basis of the
 7             Section  201(f)  investment  credit  property  which
 8             secures the loan or loans, using  for  this  purpose
 9             the original basis of such property on the date that
10             it  was  placed  in  service in the Enterprise Zone.
11             The subtraction modification available  to  taxpayer
12             in  any  year  under  this  subsection shall be that
13             portion of the total interest paid by  the  borrower
14             with  respect  to  such  loan  attributable  to  the
15             eligible  property  as calculated under the previous
16             sentence;
17                  (M-1)  For any taxpayer  that  is  a  financial
18             organization within the meaning of Section 304(c) of
19             this  Act,  an  amount  included  in  such  total as
20             interest income from a loan or loans  made  by  such
21             taxpayer  to  a  borrower, to the extent that such a
22             loan is secured by property which  is  eligible  for
23             the  High  Impact  Business  Investment  Credit.  To
24             determine the portion of a loan  or  loans  that  is
25             secured  by  property  eligible for a Section 201(h)
26             investment  credit  to  the  borrower,  the   entire
27             principal  amount  of  the loan or loans between the
28             taxpayer and the borrower should be divided into the
29             basis  of  the  Section  201(h)  investment   credit
30             property  which secures the loan or loans, using for
31             this purpose the original basis of such property  on
32             the  date  that  it  was  placed  in  service  in  a
33             federally  designated Foreign Trade Zone or Sub-Zone
34             located in Illinois.  No taxpayer that  is  eligible
 
                            -17-     LRB093 04446 SJM 04498 b
 1             for  the  deduction  provided in subparagraph (M) of
 2             paragraph (2) of this subsection shall  be  eligible
 3             for  the  deduction provided under this subparagraph
 4             (M-1).  The subtraction  modification  available  to
 5             taxpayers in any year under this subsection shall be
 6             that  portion  of  the  total  interest  paid by the
 7             borrower with respect to such loan  attributable  to
 8             the   eligible  property  as  calculated  under  the
 9             previous sentence;
10                  (N)  Two times any contribution made during the
11             taxable year to a designated  zone  organization  to
12             the  extent that the contribution (i) qualifies as a
13             charitable  contribution  under  subsection  (c)  of
14             Section 170 of the Internal Revenue  Code  and  (ii)
15             must,  by  its terms, be used for a project approved
16             by the Department of Commerce and Community  Affairs
17             under  Section  11  of  the Illinois Enterprise Zone
18             Act;
19                  (O)  An amount equal to: (i)  85%  for  taxable
20             years  ending  on or before December 31, 1992, or, a
21             percentage equal to the percentage  allowable  under
22             Section  243(a)(1)  of  the Internal Revenue Code of
23             1986 for taxable years  ending  after  December  31,
24             1992,  of  the amount by which dividends included in
25             taxable income and received from a corporation  that
26             is  not  created  or organized under the laws of the
27             United States or any state or political  subdivision
28             thereof,  including,  for taxable years ending on or
29             after  December  31,  1988,  dividends  received  or
30             deemed  received  or  paid  or  deemed  paid   under
31             Sections  951  through  964  of the Internal Revenue
32             Code, exceed the amount of the modification provided
33             under subparagraph (G)  of  paragraph  (2)  of  this
34             subsection  (b)  which is related to such dividends;
 
                            -18-     LRB093 04446 SJM 04498 b
 1             plus (ii) 100% of the  amount  by  which  dividends,
 2             included  in taxable income and received, including,
 3             for taxable years ending on or  after  December  31,
 4             1988,  dividends received or deemed received or paid
 5             or deemed paid under Sections 951 through 964 of the
 6             Internal Revenue Code,  from  any  such  corporation
 7             specified  in  clause  (i)  that  would  but for the
 8             provisions of Section 1504 (b) (3) of  the  Internal
 9             Revenue   Code   be  treated  as  a  member  of  the
10             affiliated  group  which   includes   the   dividend
11             recipient,  exceed  the  amount  of the modification
12             provided under subparagraph (G) of paragraph (2)  of
13             this   subsection  (b)  which  is  related  to  such
14             dividends;
15                  (P)  An amount equal to any  contribution  made
16             to  a  job  training project established pursuant to
17             the Tax Increment Allocation Redevelopment Act;
18                  (Q)  An amount  equal  to  the  amount  of  the
19             deduction  used  to  compute  the federal income tax
20             credit for restoration of substantial  amounts  held
21             under  claim  of right for the taxable year pursuant
22             to Section 1341 of  the  Internal  Revenue  Code  of
23             1986;
24                  (R)  In  the  case  of an attorney-in-fact with
25             respect to whom  an  interinsurer  or  a  reciprocal
26             insurer  has  made the election under Section 835 of
27             the Internal Revenue Code, 26 U.S.C. 835, an  amount
28             equal  to the excess, if any, of the amounts paid or
29             incurred by that interinsurer or reciprocal  insurer
30             in the taxable year to the attorney-in-fact over the
31             deduction allowed to that interinsurer or reciprocal
32             insurer  with  respect to the attorney-in-fact under
33             Section 835(b) of the Internal Revenue Code for  the
34             taxable year;
 
                            -19-     LRB093 04446 SJM 04498 b
 1                  (S)  For  taxable  years  ending  on  or  after
 2             December  31,  1997,  in  the case of a Subchapter S
 3             corporation, an  amount  equal  to  all  amounts  of
 4             income  allocable  to  a  shareholder subject to the
 5             Personal Property Tax Replacement Income Tax imposed
 6             by subsections (c) and (d) of Section  201  of  this
 7             Act,  including  amounts  allocable to organizations
 8             exempt from federal income tax by reason of  Section
 9             501(a)   of   the   Internal   Revenue  Code.   This
10             subparagraph (S) is exempt from  the  provisions  of
11             Section 250;
12                  (T)  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
 
                            -20-     LRB093 04446 SJM 04498 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                  (U)  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  (E-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)  Special rule.  For purposes  of  paragraph  (2)
17        (A),  "gross  income"  in  the  case  of a life insurance
18        company, for tax years ending on and after  December  31,
19        1994,  shall  mean  the  gross  investment income for the
20        taxable year.

21        (c)  Trusts and estates.
22             (1)  In general.  In the case of a trust or  estate,
23        base  income  means  an  amount  equal  to the taxpayer's
24        taxable income  for  the  taxable  year  as  modified  by
25        paragraph (2).
26             (2)  Modifications.   Subject  to  the provisions of
27        paragraph  (3),  the  taxable  income  referred   to   in
28        paragraph (1) shall be modified by adding thereto the sum
29        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)  In the case of (i) an estate, $600; (ii) a
 
                            -21-     LRB093 04446 SJM 04498 b
 1             trust which,  under  its  governing  instrument,  is
 2             required  to distribute all of its income currently,
 3             $300; and (iii) any other trust, $100, but  in  each
 4             such  case,  only  to  the  extent  such  amount was
 5             deducted in the computation of taxable income;
 6                  (C)  An amount  equal  to  the  amount  of  tax
 7             imposed  by  this  Act  to  the extent deducted from
 8             gross income in the computation  of  taxable  income
 9             for the taxable year;
10                  (D)  The  amount  of  any  net  operating  loss
11             deduction taken in arriving at taxable income, other
12             than  a  net  operating  loss carried forward from a
13             taxable year ending prior to December 31, 1986;
14                  (E)  For taxable years in which a net operating
15             loss carryback or carryforward from a  taxable  year
16             ending  prior  to December 31, 1986 is an element of
17             taxable income under paragraph (1) of subsection (e)
18             or subparagraph (E) of paragraph (2)  of  subsection
19             (e),  the  amount  by  which  addition modifications
20             other than those provided by this  subparagraph  (E)
21             exceeded  subtraction  modifications in such taxable
22             year, with the following limitations applied in  the
23             order that they are listed:
24                       (i)  the addition modification relating to
25                  the  net operating loss carried back or forward
26                  to the  taxable  year  from  any  taxable  year
27                  ending  prior  to  December  31,  1986 shall be
28                  reduced by the amount of addition  modification
29                  under  this  subparagraph  (E) which related to
30                  that net operating loss  and  which  was  taken
31                  into  account in calculating the base income of
32                  an earlier taxable year, and
33                       (ii)  the addition  modification  relating
34                  to  the  net  operating  loss  carried  back or
 
                            -22-     LRB093 04446 SJM 04498 b
 1                  forward to the taxable year  from  any  taxable
 2                  year  ending  prior  to December 31, 1986 shall
 3                  not exceed the  amount  of  such  carryback  or
 4                  carryforward;
 5                  For  taxable  years  in  which  there  is a net
 6             operating loss carryback or carryforward  from  more
 7             than one other taxable year ending prior to December
 8             31, 1986, the addition modification provided in this
 9             subparagraph  (E)  shall  be  the sum of the amounts
10             computed   independently   under    the    preceding
11             provisions  of  this  subparagraph (E) for each such
12             taxable year;
13                  (F)  For  taxable  years  ending  on  or  after
14             January 1, 1989, an amount equal to the tax deducted
15             pursuant to Section 164 of the Internal Revenue Code
16             if the trust or estate is claiming the same tax  for
17             purposes  of  the  Illinois foreign tax credit under
18             Section 601 of this Act;
19                  (G)  An amount  equal  to  the  amount  of  the
20             capital  gain deduction allowable under the Internal
21             Revenue Code, to  the  extent  deducted  from  gross
22             income in the computation of taxable income;
23                  (G-5)  For  taxable years ending after December
24             31,  1997,  an  amount   equal   to   any   eligible
25             remediation  costs that the trust or estate deducted
26             in computing adjusted gross income and for which the
27             trust or estate claims a credit under subsection (l)
28             of Section 201;
29                  (G-10)  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
 
                            -23-     LRB093 04446 SJM 04498 b
 1                  (G-11)  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  (G-10),  then  an  amount equal to the
 7             aggregate amount of  the  deductions  taken  in  all
 8             taxable years under subparagraph (R) 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;
13        and  by  deducting  from the total so obtained the sum of
14        the following amounts:
15                  (H)  An amount equal to all amounts included in
16             such total pursuant to the  provisions  of  Sections
17             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
18             408 of the Internal Revenue Code or included in such
19             total as distributions under the provisions  of  any
20             retirement  or  disability plan for employees of any
21             governmental agency or unit, or retirement  payments
22             to  retired partners, which payments are excluded in
23             computing  net  earnings  from  self  employment  by
24             Section  1402  of  the  Internal  Revenue  Code  and
25             regulations adopted pursuant thereto;
26                  (I)  The valuation limitation amount;
27                  (J)  An amount equal to the amount of  any  tax
28             imposed  by  this  Act  which  was  refunded  to the
29             taxpayer and included in such total for the  taxable
30             year;
31                  (K)  An amount equal to all amounts included in
32             taxable  income  as  modified  by subparagraphs (A),
33             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
34             from  taxation by this State either by reason of its
 
                            -24-     LRB093 04446 SJM 04498 b
 1             statutes  or  Constitution  or  by  reason  of   the
 2             Constitution,  treaties  or  statutes  of the United
 3             States; provided that, in the case of any statute of
 4             this State that exempts income derived from bonds or
 5             other obligations from the tax  imposed  under  this
 6             Act,  the  amount exempted shall be the interest net
 7             of bond premium amortization;
 8                  (L)  With  the   exception   of   any   amounts
 9             subtracted  under  subparagraph (K), an amount equal
10             to the sum of all amounts disallowed  as  deductions
11             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
12             Internal Revenue Code, as now or hereafter  amended,
13             and  all  amounts  of expenses allocable to interest
14             and disallowed as deductions by  Section  265(1)  of
15             the  Internal  Revenue  Code  of  1954,  as  now  or
16             hereafter amended; and (ii) for taxable years ending
17             on  or  after  August  13, 1999, Sections 171(a)(2),
18             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
19             Revenue Code; the provisions  of  this  subparagraph
20             are exempt from the provisions of Section 250;
21                  (M)  An   amount   equal   to  those  dividends
22             included  in  such  total  which  were  paid  by   a
23             corporation which conducts business operations in an
24             Enterprise  Zone or zones created under the Illinois
25             Enterprise Zone Act and conducts  substantially  all
26             of its operations in an Enterprise Zone or Zones;
27                  (N)  An  amount  equal to any contribution made
28             to a job training project  established  pursuant  to
29             the Tax Increment Allocation Redevelopment Act;
30                  (O)  An   amount   equal   to  those  dividends
31             included  in  such  total  that  were  paid   by   a
32             corporation  that  conducts business operations in a
33             federally designated Foreign Trade Zone or  Sub-Zone
34             and  that  is  designated  a  High  Impact  Business
 
                            -25-     LRB093 04446 SJM 04498 b
 1             located   in   Illinois;   provided  that  dividends
 2             eligible for the deduction provided in  subparagraph
 3             (M) of paragraph (2) of this subsection shall not be
 4             eligible  for  the  deduction  provided  under  this
 5             subparagraph (O);
 6                  (P)  An  amount  equal  to  the  amount  of the
 7             deduction used to compute  the  federal  income  tax
 8             credit  for  restoration of substantial amounts held
 9             under claim of right for the taxable  year  pursuant
10             to  Section  1341  of  the  Internal Revenue Code of
11             1986;
12                  (Q)  For taxable year 1999 and  thereafter,  an
13             amount equal to the amount of any (i) distributions,
14             to the extent includible in gross income for federal
15             income tax purposes, made to the taxpayer because of
16             his  or  her  status  as a victim of persecution for
17             racial or religious reasons by Nazi Germany  or  any
18             other  Axis  regime  or as an heir of the victim and
19             (ii) items of income, to the  extent  includible  in
20             gross   income  for  federal  income  tax  purposes,
21             attributable to, derived from or in any way  related
22             to  assets  stolen  from,  hidden from, or otherwise
23             lost to  a  victim  of  persecution  for  racial  or
24             religious  reasons by Nazi Germany or any other Axis
25             regime immediately prior to, during, and immediately
26             after World War II, including, but not  limited  to,
27             interest  on  the  proceeds  receivable as insurance
28             under policies issued to a victim of persecution for
29             racial or religious reasons by Nazi Germany  or  any
30             other  Axis  regime  by European insurance companies
31             immediately  prior  to  and  during  World  War  II;
32             provided, however,  this  subtraction  from  federal
33             adjusted  gross  income  does  not  apply  to assets
34             acquired with such assets or with the proceeds  from
 
                            -26-     LRB093 04446 SJM 04498 b
 1             the  sale  of  such  assets; provided, further, this
 2             paragraph shall only apply to a taxpayer who was the
 3             first recipient of such assets after their  recovery
 4             and  who  is  a victim of  persecution for racial or
 5             religious reasons by Nazi Germany or any other  Axis
 6             regime  or  as an heir of the victim.  The amount of
 7             and  the  eligibility  for  any  public  assistance,
 8             benefit, or similar entitlement is not  affected  by
 9             the   inclusion  of  items  (i)  and  (ii)  of  this
10             paragraph in gross income  for  federal  income  tax
11             purposes.   This   paragraph   is  exempt  from  the
12             provisions of Section 250;
13                  (R)  For taxable years 2001 and thereafter, for
14             the taxable year in  which  the  bonus  depreciation
15             deduction   (30%   of  the  adjusted  basis  of  the
16             qualified  property)  is  taken  on  the  taxpayer's
17             federal income tax return under  subsection  (k)  of
18             Section  168  of  the  Internal Revenue Code and for
19             each applicable taxable year thereafter,  an  amount
20             equal to "x", where:
21                       (1)  "y"   equals   the   amount   of  the
22                  depreciation deduction taken  for  the  taxable
23                  year  on  the  taxpayer's  federal  income  tax
24                  return   on   property   for  which  the  bonus
25                  depreciation deduction  (30%  of  the  adjusted
26                  basis  of  the qualified property) was taken in
27                  any year under subsection (k) of Section 168 of
28                  the Internal Revenue Code,  but  not  including
29                  the bonus depreciation deduction; and
30                       (2)  "x"  equals  "y" multiplied by 30 and
31                  then  divided  by  70  (or  "y"  multiplied  by
32                  0.429).
33                  The  aggregate  amount  deducted   under   this
34             subparagraph  in all taxable years for any one piece
 
                            -27-     LRB093 04446 SJM 04498 b
 1             of property may not exceed the amount of  the  bonus
 2             depreciation deduction (30% of the adjusted basis of
 3             the  qualified  property)  taken on that property on
 4             the  taxpayer's  federal  income  tax  return  under
 5             subsection  (k)  of  Section  168  of  the  Internal
 6             Revenue Code; and
 7                  (S)  If the taxpayer reports a capital gain  or
 8             loss on the taxpayer's federal income tax return for
 9             the  taxable  year  based  on  a sale or transfer of
10             property for which the taxpayer was required in  any
11             taxable  year to make an addition modification under
12             subparagraph (G-10), then an amount  equal  to  that
13             addition modification.
14                  The  taxpayer  is allowed to take the deduction
15             under this subparagraph only once  with  respect  to
16             any one piece of property.
17             (3)  Limitation.   The  amount  of  any modification
18        otherwise required under  this  subsection  shall,  under
19        regulations  prescribed by the Department, be adjusted by
20        any amounts included therein which  were  properly  paid,
21        credited,  or  required to be distributed, or permanently
22        set aside for charitable purposes pursuant   to  Internal
23        Revenue Code Section 642(c) during the taxable year.

24        (d)  Partnerships.
25             (1)  In  general. In the case of a partnership, base
26        income means an amount equal to  the  taxpayer's  taxable
27        income for the taxable year as modified by paragraph (2).
28             (2)  Modifications.  The  taxable income referred to
29        in paragraph (1) shall be modified by adding thereto  the
30        sum of the following amounts:
31                  (A)  An  amount  equal  to  all amounts paid or
32             accrued to the taxpayer  as  interest  or  dividends
33             during  the taxable year to the extent excluded from
34             gross income in the computation of taxable income;
 
                            -28-     LRB093 04446 SJM 04498 b
 1                  (B)  An amount  equal  to  the  amount  of  tax
 2             imposed  by  this  Act  to  the extent deducted from
 3             gross income for the taxable year;
 4                  (C)  The amount of deductions  allowed  to  the
 5             partnership  pursuant  to  Section  707  (c)  of the
 6             Internal Revenue Code  in  calculating  its  taxable
 7             income;
 8                  (D)  An  amount  equal  to  the  amount  of the
 9             capital gain deduction allowable under the  Internal
10             Revenue  Code,  to  the  extent  deducted from gross
11             income in the computation of taxable income;
12                  (D-5)  For taxable years 2001  and  thereafter,
13             an  amount equal to the bonus depreciation deduction
14             (30%  of  the  adjusted  basis  of   the   qualified
15             property) taken on the taxpayer's federal income tax
16             return  for the taxable year under subsection (k) of
17             Section 168 of the Internal Revenue Code; and
18                  (D-6)  If the taxpayer reports a  capital  gain
19             or  loss on the taxpayer's federal income tax return
20             for the taxable year based on a sale or transfer  of
21             property  for which the taxpayer was required in any
22             taxable year to make an addition modification  under
23             subparagraph  (D-5),  then  an  amount  equal to the
24             aggregate amount of  the  deductions  taken  in  all
25             taxable years under subparagraph (O) with respect to
26             that property.;
27                  The  taxpayer  is required to make the addition
28             modification under this subparagraph only once  with
29             respect to any one piece of property;
30        and by deducting from the total so obtained the following
31        amounts:
32                  (E)  The valuation limitation amount;
33                  (F)  An  amount  equal to the amount of any tax
34             imposed by  this  Act  which  was  refunded  to  the
 
                            -29-     LRB093 04446 SJM 04498 b
 1             taxpayer  and included in such total for the taxable
 2             year;
 3                  (G)  An amount equal to all amounts included in
 4             taxable income as  modified  by  subparagraphs  (A),
 5             (B),  (C)  and (D) which are exempt from taxation by
 6             this State either  by  reason  of  its  statutes  or
 7             Constitution  or  by  reason  of  the  Constitution,
 8             treaties  or statutes of the United States; provided
 9             that, in the case of any statute of this State  that
10             exempts   income   derived   from   bonds  or  other
11             obligations from the tax imposed under this Act, the
12             amount exempted shall be the interest  net  of  bond
13             premium amortization;
14                  (H)  Any   income   of  the  partnership  which
15             constitutes personal service income  as  defined  in
16             Section  1348  (b)  (1) of the Internal Revenue Code
17             (as in effect December 31,  1981)  or  a  reasonable
18             allowance  for  compensation  paid  or  accrued  for
19             services  rendered  by  partners to the partnership,
20             whichever is greater;
21                  (I)  An amount equal to all amounts  of  income
22             distributable  to  an entity subject to the Personal
23             Property  Tax  Replacement  Income  Tax  imposed  by
24             subsections (c) and (d) of Section 201 of  this  Act
25             including  amounts  distributable  to  organizations
26             exempt  from federal income tax by reason of Section
27             501(a) of the Internal Revenue Code;
28                  (J)  With  the   exception   of   any   amounts
29             subtracted  under  subparagraph (G), 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
 
                            -30-     LRB093 04446 SJM 04498 b
 1             265(1)  of  the  Internal  Revenue  Code,  as now or
 2             hereafter amended; and (ii) for taxable years ending
 3             on or after August  13,  1999,  Sections  171(a)(2),
 4             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 5             Revenue  Code;  the  provisions of this subparagraph
 6             are exempt from the provisions of Section 250;
 7                  (K)  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,  enacted  by the 82nd General
12             Assembly, and  conducts  substantially  all  of  its
13             operations in an Enterprise Zone or Zones;
14                  (L)  An  amount  equal to any contribution made
15             to a job training project  established  pursuant  to
16             the   Real   Property   Tax   Increment   Allocation
17             Redevelopment Act;
18                  (M)  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 (M);
28                  (N)  An  amount  equal  to  the  amount  of the
29             deduction used to compute  the  federal  income  tax
30             credit  for  restoration of substantial amounts held
31             under claim of right for the taxable  year  pursuant
32             to  Section  1341  of  the  Internal Revenue Code of
33             1986;
34                  (O)  For taxable years 2001 and thereafter, for
 
                            -31-     LRB093 04446 SJM 04498 b
 1             the taxable year in  which  the  bonus  depreciation
 2             deduction   (30%   of  the  adjusted  basis  of  the
 3             qualified  property)  is  taken  on  the  taxpayer's
 4             federal income tax return under  subsection  (k)  of
 5             Section  168  of  the  Internal Revenue Code and for
 6             each applicable taxable year thereafter,  an  amount
 7             equal to "x", where:
 8                       (1)  "y"   equals   the   amount   of  the
 9                  depreciation deduction taken  for  the  taxable
10                  year  on  the  taxpayer's  federal  income  tax
11                  return   on   property   for  which  the  bonus
12                  depreciation deduction  (30%  of  the  adjusted
13                  basis  of  the qualified property) was taken in
14                  any year under subsection (k) of Section 168 of
15                  the Internal Revenue Code,  but  not  including
16                  the bonus depreciation deduction; and
17                       (2)  "x"  equals  "y" multiplied by 30 and
18                  then  divided  by  70  (or  "y"  multiplied  by
19                  0.429).
20                  The  aggregate  amount  deducted   under   this
21             subparagraph  in all taxable years for any one piece
22             of property may not exceed the amount of  the  bonus
23             depreciation deduction (30% of the adjusted basis of
24             the  qualified  property)  taken on that property on
25             the  taxpayer's  federal  income  tax  return  under
26             subsection  (k)  of  Section  168  of  the  Internal
27             Revenue Code; and
28                  (P)  If the taxpayer reports a capital gain  or
29             loss on the taxpayer's federal income tax return for
30             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 (D-5), then an  amount  equal  to  that
34             addition modification.
 
                            -32-     LRB093 04446 SJM 04498 b
 1                  The  taxpayer  is allowed to take the deduction
 2             under this subparagraph only once  with  respect  to
 3             any one piece of property.

 4        (e)  Gross income; adjusted gross income; taxable income.
 5             (1)  In  general.   Subject  to  the  provisions  of
 6        paragraph  (2)  and  subsection  (b) (3), for purposes of
 7        this Section  and  Section  803(e),  a  taxpayer's  gross
 8        income,  adjusted gross income, or taxable income for the
 9        taxable year shall  mean  the  amount  of  gross  income,
10        adjusted   gross   income   or  taxable  income  properly
11        reportable  for  federal  income  tax  purposes  for  the
12        taxable year under the provisions of the Internal Revenue
13        Code. Taxable income may be less than zero. However,  for
14        taxable  years  ending on or after December 31, 1986, net
15        operating loss carryforwards from  taxable  years  ending
16        prior  to  December  31,  1986, may not exceed the sum of
17        federal taxable income for the taxable  year  before  net
18        operating  loss  deduction,  plus  the excess of addition
19        modifications  over  subtraction  modifications  for  the
20        taxable year.  For taxable years ending prior to December
21        31, 1986, taxable income may never be an amount in excess
22        of the net operating loss for the taxable year as defined
23        in subsections (c) and (d) of Section 172 of the Internal
24        Revenue Code, provided that  when  taxable  income  of  a
25        corporation  (other  than  a  Subchapter  S corporation),
26        trust,  or  estate  is  less  than  zero   and   addition
27        modifications,  other than those provided by subparagraph
28        (E) of paragraph (2) of subsection (b)  for  corporations
29        or  subparagraph  (E)  of paragraph (2) of subsection (c)
30        for trusts and estates, exceed subtraction modifications,
31        an  addition  modification  must  be  made  under   those
32        subparagraphs  for  any  other  taxable year to which the
33        taxable income less than zero  (net  operating  loss)  is
34        applied under Section 172 of the Internal Revenue Code or
 
                            -33-     LRB093 04446 SJM 04498 b
 1        under   subparagraph   (E)   of  paragraph  (2)  of  this
 2        subsection (e) applied in conjunction with Section 172 of
 3        the Internal Revenue Code.
 4             (2)  Special rule.  For purposes of paragraph (1) of
 5        this subsection, the taxable income  properly  reportable
 6        for federal income tax purposes shall mean:
 7                  (A)  Certain  life insurance companies.  In the
 8             case of a life insurance company subject to the  tax
 9             imposed by Section 801 of the Internal Revenue Code,
10             life  insurance  company  taxable  income,  plus the
11             amount of distribution  from  pre-1984  policyholder
12             surplus accounts as calculated under Section 815a of
13             the Internal Revenue Code;
14                  (B)  Certain other insurance companies.  In the
15             case  of  mutual  insurance companies subject to the
16             tax imposed by Section 831 of the  Internal  Revenue
17             Code, insurance company taxable income;
18                  (C)  Regulated  investment  companies.   In the
19             case of a regulated investment  company  subject  to
20             the  tax  imposed  by  Section  852  of the Internal
21             Revenue Code, investment company taxable income;
22                  (D)  Real estate  investment  trusts.   In  the
23             case  of  a  real estate investment trust subject to
24             the tax imposed  by  Section  857  of  the  Internal
25             Revenue  Code,  real estate investment trust taxable
26             income;
27                  (E)  Consolidated corporations.  In the case of
28             a corporation which is a  member  of  an  affiliated
29             group  of  corporations filing a consolidated income
30             tax return for the taxable year for  federal  income
31             tax  purposes,  taxable income determined as if such
32             corporation had filed a separate return for  federal
33             income  tax  purposes  for the taxable year and each
34             preceding taxable year for which it was a member  of
 
                            -34-     LRB093 04446 SJM 04498 b
 1             an   affiliated   group.   For   purposes   of  this
 2             subparagraph, the taxpayer's separate taxable income
 3             shall be determined as if the election  provided  by
 4             Section  243(b) (2) of the Internal Revenue Code had
 5             been in effect for all such years;
 6                  (F)  Cooperatives.    In   the   case   of    a
 7             cooperative  corporation or association, the taxable
 8             income of such organization determined in accordance
 9             with the provisions of Section 1381 through 1388  of
10             the Internal Revenue Code;
11                  (G)  Subchapter  S  corporations.   In the case
12             of: (i) a Subchapter S corporation for  which  there
13             is  in effect an election for the taxable year under
14             Section 1362  of  the  Internal  Revenue  Code,  the
15             taxable  income  of  such  corporation determined in
16             accordance with  Section  1363(b)  of  the  Internal
17             Revenue  Code, except that taxable income shall take
18             into account  those  items  which  are  required  by
19             Section  1363(b)(1)  of the Internal Revenue Code to
20             be  separately  stated;  and  (ii)  a  Subchapter  S
21             corporation for which there is in effect  a  federal
22             election  to  opt  out  of  the  provisions  of  the
23             Subchapter  S  Revision Act of 1982 and have applied
24             instead the prior federal Subchapter S rules  as  in
25             effect  on  July 1, 1982, the taxable income of such
26             corporation  determined  in  accordance   with   the
27             federal  Subchapter  S rules as in effect on July 1,
28             1982; and
29                  (H)  Partnerships.    In   the   case   of    a
30             partnership, taxable income determined in accordance
31             with  Section  703  of  the  Internal  Revenue Code,
32             except that taxable income shall take  into  account
33             those  items which are required by Section 703(a)(1)
34             to be separately stated but  which  would  be  taken
 
                            -35-     LRB093 04446 SJM 04498 b
 1             into  account  by  an  individual in calculating his
 2             taxable income.

 3        (f)  Valuation limitation amount.
 4             (1)  In general.  The  valuation  limitation  amount
 5        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
 6        (d)(2) (E) is an amount equal to:
 7                  (A)  The  sum  of  the   pre-August   1,   1969
 8             appreciation  amounts  (to  the extent consisting of
 9             gain reportable under the provisions of Section 1245
10             or 1250  of  the  Internal  Revenue  Code)  for  all
11             property  in respect of which such gain was reported
12             for the taxable year; plus
13                  (B)  The  lesser  of  (i)  the   sum   of   the
14             pre-August  1,  1969  appreciation  amounts  (to the
15             extent consisting of capital gain) for all  property
16             in  respect  of  which  such  gain  was reported for
17             federal income tax purposes for the taxable year, or
18             (ii) the net capital  gain  for  the  taxable  year,
19             reduced  in  either  case by any amount of such gain
20             included in the amount determined  under  subsection
21             (a) (2) (F) or (c) (2) (H).
22             (2)  Pre-August 1, 1969 appreciation amount.
23                  (A)  If  the  fair  market  value  of  property
24             referred   to   in   paragraph   (1)   was   readily
25             ascertainable  on  August 1, 1969, the pre-August 1,
26             1969 appreciation amount for such  property  is  the
27             lesser  of  (i) the excess of such fair market value
28             over the taxpayer's basis (for determining gain) for
29             such property on that  date  (determined  under  the
30             Internal Revenue Code as in effect on that date), or
31             (ii)  the  total  gain  realized  and reportable for
32             federal income tax purposes in respect of the  sale,
33             exchange or other disposition of such property.
34                  (B)  If  the  fair  market  value  of  property
 
                            -36-     LRB093 04446 SJM 04498 b
 1             referred   to  in  paragraph  (1)  was  not  readily
 2             ascertainable on August 1, 1969, the  pre-August  1,
 3             1969  appreciation  amount for such property is that
 4             amount which bears the same ratio to the total  gain
 5             reported  in  respect  of  the  property for federal
 6             income tax purposes for the  taxable  year,  as  the
 7             number  of  full calendar months in that part of the
 8             taxpayer's holding period for  the  property  ending
 9             July  31,  1969 bears to the number of full calendar
10             months in the taxpayer's entire holding  period  for
11             the property.
12                  (C)  The   Department   shall   prescribe  such
13             regulations as may be necessary  to  carry  out  the
14             purposes of this paragraph.

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

18        (h)  Legislative intention.  Except as expressly provided
19    by   this   Section   there  shall  be  no  modifications  or
20    limitations on the amounts of income, gain, loss or deduction
21    taken into account  in  determining  gross  income,  adjusted
22    gross  income  or  taxable  income  for  federal  income  tax
23    purposes for the taxable year, or in the amount of such items
24    entering  into  the computation of base income and net income
25    under this Act for such taxable year, whether in  respect  of
26    property values as of August 1, 1969 or otherwise.
27    (Source:  P.A.  91-192,  eff.  7-20-99; 91-205, eff. 7-20-99;
28    91-357, eff. 7-29-99;  91-541,  eff.  8-13-99;  91-676,  eff.
29    12-23-99;  91-845,  eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
30    eff. 6-28-01; 92-244,  eff.  8-3-01;  92-439,  eff.  8-17-01;
31    92-603,  eff.  6-28-02;  92-626,  eff.  7-11-02; 92-651, eff.
32    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)
 
                            -37-     LRB093 04446 SJM 04498 b
 1        Section 99.  Effective date.  This Act takes effect  upon
 2    becoming law.