93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB5179

 

Introduced 02/05/04, by Robert Rita

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5
35 ILCS 5/203   from Ch. 120, par. 2-203

    Amends the Illinois Income Tax Act. Removes a provision that requires a taxpayer to add to federal adjusted gross income, to arrive at base income for Illinois income tax purposes, distributions from a qualified tuition program under Section 529 of the Internal Revenue Code other than distributions from the College Savings Pool or the Illinois Prepaid Tuition Program to the extent those distributions were excluded from income in arriving at federal adjusted gross income. Amends the State Treasurer Act and further amends the Illinois Income Tax Act to allow an income tax deduction for moneys contributed in the taxable year to the College Savings Pool, the Illinois Prepaid Tuition Program, or to any other qualified tuition program under Section 529 of the Internal Revenue Code (now, deduction limited to College Savings Pool contributions). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5179 LRB093 18832 SJM 44567 b

1     AN ACT concerning college savings.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The State Treasurer Act is amended by changing
5 Section 16.5 as follows:
 
6     (15 ILCS 505/16.5)
7     Sec. 16.5. College Savings Pool. The State Treasurer may
8 establish and administer a College Savings Pool to supplement
9 and enhance the investment opportunities otherwise available
10 to persons seeking to finance the costs of higher education.
11 The State Treasurer, in administering the College Savings Pool,
12 may receive moneys paid into the pool by a participant and may
13 serve as the fiscal agent of that participant for the purpose
14 of holding and investing those moneys.
15     "Participant", as used in this Section, means any person
16 who makes investments in the pool. "Designated beneficiary", as
17 used in this Section, means any person on whose behalf an
18 account is established in the College Savings Pool by a
19 participant. Both in-state and out-of-state persons may be
20 participants and designated beneficiaries in the College
21 Savings Pool.
22     New accounts in the College Savings Pool shall be processed
23 through participating financial institutions. "Participating
24 financial institution", as used in this Section, means any
25 financial institution insured by the Federal Deposit Insurance
26 Corporation and lawfully doing business in the State of
27 Illinois and any credit union approved by the State Treasurer
28 and lawfully doing business in the State of Illinois that
29 agrees to process new accounts in the College Savings Pool.
30 Participating financial institutions may charge a processing
31 fee to participants to open an account in the pool that shall
32 not exceed $30 until the year 2001. Beginning in 2001 and every

 

 

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1 year thereafter, the maximum fee limit shall be adjusted by the
2 Treasurer based on the Consumer Price Index for the North
3 Central Region as published by the United States Department of
4 Labor, Bureau of Labor Statistics for the immediately preceding
5 calendar year. Every contribution received by a financial
6 institution for investment in the College Savings Pool shall be
7 transferred from the financial institution to a location
8 selected by the State Treasurer within one business day
9 following the day that the funds must be made available in
10 accordance with federal law. All communications from the State
11 Treasurer to participants shall reference the participating
12 financial institution at which the account was processed.
13     The Treasurer may invest the moneys in the College Savings
14 Pool in the same manner, in the same types of investments, and
15 subject to the same limitations provided for the investment of
16 moneys by the Illinois State Board of Investment. To enhance
17 the safety and liquidity of the College Savings Pool, to ensure
18 the diversification of the investment portfolio of the pool,
19 and in an effort to keep investment dollars in the State of
20 Illinois, the State Treasurer shall make a percentage of each
21 account available for investment in participating financial
22 institutions doing business in the State. The State Treasurer
23 shall deposit with the participating financial institution at
24 which the account was processed the following percentage of
25 each account at a prevailing rate offered by the institution,
26 provided that the deposit is federally insured or fully
27 collateralized and the institution accepts the deposit: 10% of
28 the total amount of each account for which the current age of
29 the beneficiary is less than 7 years of age, 20% of the total
30 amount of each account for which the beneficiary is at least 7
31 years of age and less than 12 years of age, and 50% of the total
32 amount of each account for which the current age of the
33 beneficiary is at least 12 years of age. The State Treasurer
34 shall adjust each account at least annually to ensure
35 compliance with this Section. The Treasurer shall develop,
36 publish, and implement an investment policy covering the

 

 

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1 investment of the moneys in the College Savings Pool. The
2 policy shall be published (i) at least once each year in at
3 least one newspaper of general circulation in both Springfield
4 and Chicago and (ii) each year as part of the audit of the
5 College Savings Pool by the Auditor General, which shall be
6 distributed to all participants. The Treasurer shall notify all
7 participants in writing, and the Treasurer shall publish in a
8 newspaper of general circulation in both Chicago and
9 Springfield, any changes to the previously published
10 investment policy at least 30 calendar days before implementing
11 the policy. Any investment policy adopted by the Treasurer
12 shall be reviewed and updated if necessary within 90 days
13 following the date that the State Treasurer takes office.
14     Participants shall be required to use moneys distributed
15 from the College Savings Pool for qualified expenses at
16 eligible educational institutions. "Qualified expenses", as
17 used in this Section, means the following: (i) tuition, fees,
18 and the costs of books, supplies, and equipment required for
19 enrollment or attendance at an eligible educational
20 institution and (ii) certain room and board expenses incurred
21 while attending an eligible educational institution at least
22 half-time. "Eligible educational institutions", as used in
23 this Section, means public and private colleges, junior
24 colleges, graduate schools, and certain vocational
25 institutions that are described in Section 481 of the Higher
26 Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
27 participate in Department of Education student aid programs. A
28 student shall be considered to be enrolled at least half-time
29 if the student is enrolled for at least half the full-time
30 academic work load for the course of study the student is
31 pursuing as determined under the standards of the institution
32 at which the student is enrolled. Distributions made from the
33 pool for qualified expenses shall be made directly to the
34 eligible educational institution, directly to a vendor, or in
35 the form of a check payable to both the beneficiary and the
36 institution or vendor. Any moneys that are distributed in any

 

 

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1 other manner or that are used for expenses other than qualified
2 expenses at an eligible educational institution shall be
3 subject to a penalty of 10% of the earnings unless the
4 beneficiary dies, becomes disabled, or receives a scholarship
5 that equals or exceeds the distribution. Penalties shall be
6 withheld at the time the distribution is made.
7     The Treasurer shall limit the contributions that may be
8 made on behalf of a designated beneficiary based on an
9 actuarial estimate of what is required to pay tuition, fees,
10 and room and board for 5 undergraduate years at the highest
11 cost eligible educational institution. The contributions made
12 on behalf of a beneficiary who is also a beneficiary under the
13 Illinois Prepaid Tuition Program shall be further restricted to
14 ensure that the contributions in both programs combined do not
15 exceed the limit established for the College Savings Pool. The
16 Treasurer shall provide the Illinois Student Assistance
17 Commission each year at a time designated by the Commission, an
18 electronic report of all participant accounts in the
19 Treasurer's College Savings Pool, listing total contributions
20 and disbursements from each individual account during the
21 previous calendar year. As soon thereafter as is possible
22 following receipt of the Treasurer's report, the Illinois
23 Student Assistance Commission shall, in turn, provide the
24 Treasurer with an electronic report listing those College
25 Savings Pool participants who also participate in the State's
26 prepaid tuition program, administered by the Commission. The
27 Commission shall be responsible for filing any combined tax
28 reports regarding State qualified savings programs required by
29 the United States Internal Revenue Service. The Treasurer shall
30 work with the Illinois Student Assistance Commission to
31 coordinate the marketing of the College Savings Pool and the
32 Illinois Prepaid Tuition Program when considered beneficial by
33 the Treasurer and the Director of the Illinois Student
34 Assistance Commission. The Treasurer's office shall not
35 publicize or otherwise market the College Savings Pool or
36 accept any moneys into the College Savings Pool prior to March

 

 

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1 1, 2000. The Treasurer shall provide a separate accounting for
2 each designated beneficiary to each participant, the Illinois
3 Student Assistance Commission, and the participating financial
4 institution at which the account was processed. No interest in
5 the program may be pledged as security for a loan.
6     The assets of the College Savings Pool and its income and
7 operation shall be exempt from all taxation by the State of
8 Illinois and any of its subdivisions. The accrued earnings on
9 investments in the Pool once disbursed on behalf of a
10 designated beneficiary shall be similarly exempt from all
11 taxation by the State of Illinois and its subdivisions, so long
12 as they are used for qualified expenses. Contributions during
13 the taxable year to a College Savings Pool account or other
14 qualified tuition program under Section 529 of the Internal
15 Revenue Code (26 U.S.C. 529) during the taxable year may be
16 deducted from adjusted gross income as provided in Section 203
17 of the Illinois Income Tax Act. The provisions of this
18 paragraph are exempt from Section 250 of the Illinois Income
19 Tax Act.
20     The Treasurer shall adopt rules he or she considers
21 necessary for the efficient administration of the College
22 Savings Pool. The rules shall provide whatever additional
23 parameters and restrictions are necessary to ensure that the
24 College Savings Pool meets all of the requirements for a
25 qualified state tuition program under Section 529 of the
26 Internal Revenue Code (26 U.S.C. 529). The rules shall provide
27 for the administration expenses of the pool to be paid from its
28 earnings and for the investment earnings in excess of the
29 expenses and all moneys collected as penalties to be credited
30 or paid monthly to the several participants in the pool in a
31 manner which equitably reflects the differing amounts of their
32 respective investments in the pool and the differing periods of
33 time for which those amounts were in the custody of the pool.
34 Also, the rules shall require the maintenance of records that
35 enable the Treasurer's office to produce a report for each
36 account in the pool at least annually that documents the

 

 

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1 account balance and investment earnings. Notice of any proposed
2 amendments to the rules and regulations shall be provided to
3 all participants prior to adoption. Amendments to rules and
4 regulations shall apply only to contributions made after the
5 adoption of the amendment.
6     Upon creating the College Savings Pool, the State Treasurer
7 shall give bond with 2 or more sufficient sureties, payable to
8 and for the benefit of the participants in the College Savings
9 Pool, in the penal sum of $1,000,000, conditioned upon the
10 faithful discharge of his or her duties in relation to the
11 College Savings Pool.
12     No contributions to the College Savings Pool authorized by
13 this Section shall be considered in evaluating the financial
14 situation of the designated beneficiary or be deemed a
15 financial resource of or a form of financial aid or assistance
16 to the designated beneficiary, for purposes of determining
17 eligibility for any scholarship, grant, or monetary assistance
18 awarded by the Illinois Student Assistance Commission, the
19 State, or any agency thereof; nor shall contributions to the
20 College Savings Pool reduce the amount of any scholarship,
21 grant, or monetary assistance that the designated beneficiary
22 is eligible to be awarded by the Illinois Student Assistance
23 Commission, the State, or any agency thereof in accordance with
24 the provisions of any State law.
25 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 92-16,
26 eff. 6-28-01; 92-439, eff. 8-17-01; 92-626, eff. 7-11-02.)
 
27     Section 10. The Illinois Income Tax Act is amended by
28 changing Section 203 as follows:
 
29     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
30     Sec. 203. Base income defined.
31     (a) Individuals.
32         (1) In general. In the case of an individual, base
33     income means an amount equal to the taxpayer's adjusted
34     gross income for the taxable year as modified by paragraph

 

 

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1     (2).
2         (2) Modifications. The adjusted gross income referred
3     to in paragraph (1) shall be modified by adding thereto the
4     sum of the following amounts:
5             (A) An amount equal to all amounts paid or accrued
6         to the taxpayer as interest or dividends during the
7         taxable year to the extent excluded from gross income
8         in the computation of adjusted gross income, except
9         stock dividends of qualified public utilities
10         described in Section 305(e) of the Internal Revenue
11         Code;
12             (B) An amount equal to the amount of tax imposed by
13         this Act to the extent deducted from gross income in
14         the computation of adjusted gross income for the
15         taxable year;
16             (C) An amount equal to the amount received during
17         the taxable year as a recovery or refund of real
18         property taxes paid with respect to the taxpayer's
19         principal residence under the Revenue Act of 1939 and
20         for which a deduction was previously taken under
21         subparagraph (L) of this paragraph (2) prior to July 1,
22         1991, the retrospective application date of Article 4
23         of Public Act 87-17. In the case of multi-unit or
24         multi-use structures and farm dwellings, the taxes on
25         the taxpayer's principal residence shall be that
26         portion of the total taxes for the entire property
27         which is attributable to such principal residence;
28             (D) An amount equal to the amount of the capital
29         gain deduction allowable under the Internal Revenue
30         Code, to the extent deducted from gross income in the
31         computation of adjusted gross income;
32             (D-5) An amount, to the extent not included in
33         adjusted gross income, equal to the amount of money
34         withdrawn by the taxpayer in the taxable year from a
35         medical care savings account and the interest earned on
36         the account in the taxable year of a withdrawal

 

 

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1         pursuant to subsection (b) of Section 20 of the Medical
2         Care Savings Account Act or subsection (b) of Section
3         20 of the Medical Care Savings Account Act of 2000;
4             (D-10) For taxable years ending after December 31,
5         1997, an amount equal to any eligible remediation costs
6         that the individual deducted in computing adjusted
7         gross income and for which the individual claims a
8         credit under subsection (l) of Section 201;
9             (D-15) For taxable years 2001 and thereafter, an
10         amount equal to the bonus depreciation deduction (30%
11         of the adjusted basis of the qualified property) taken
12         on the taxpayer's federal income tax return for the
13         taxable year under subsection (k) of Section 168 of the
14         Internal Revenue Code; and
15             (D-16) If the taxpayer reports a capital gain or
16         loss on the taxpayer's federal income tax return for
17         the taxable year based on a sale or transfer of
18         property for which the taxpayer was required in any
19         taxable year to make an addition modification under
20         subparagraph (D-15), then an amount equal to the
21         aggregate amount of the deductions taken in all taxable
22         years under subparagraph (Z) with respect to that
23         property. ;
24             The taxpayer is required to make the addition
25         modification under this subparagraph only once with
26         respect to any one piece of property; . and
27             (D-20) (D-15) For taxable years beginning on or
28         after January 1, 2002 and ending on or before December
29         31, 2003, in the case of a distribution from a
30         qualified tuition program under Section 529 of the
31         Internal Revenue Code, other than (i) a distribution
32         from a College Savings Pool created under Section 16.5
33         of the State Treasurer Act or (ii) a distribution from
34         the Illinois Prepaid Tuition Trust Fund, an amount
35         equal to the amount excluded from gross income under
36         Section 529(c)(3)(B);

 

 

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1     and by deducting from the total so obtained the sum of the
2     following amounts:
3             (E) For taxable years ending before December 31,
4         2001, any amount included in such total in respect of
5         any compensation (including but not limited to any
6         compensation paid or accrued to a serviceman while a
7         prisoner of war or missing in action) paid to a
8         resident by reason of being on active duty in the Armed
9         Forces of the United States and in respect of any
10         compensation paid or accrued to a resident who as a
11         governmental employee was a prisoner of war or missing
12         in action, and in respect of any compensation paid to a
13         resident in 1971 or thereafter for annual training
14         performed pursuant to Sections 502 and 503, Title 32,
15         United States Code as a member of the Illinois National
16         Guard. For taxable years ending on or after December
17         31, 2001, any amount included in such total in respect
18         of any compensation (including but not limited to any
19         compensation paid or accrued to a serviceman while a
20         prisoner of war or missing in action) paid to a
21         resident by reason of being a member of any component
22         of the Armed Forces of the United States and in respect
23         of any compensation paid or accrued to a resident who
24         as a governmental employee was a prisoner of war or
25         missing in action, and in respect of any compensation
26         paid to a resident in 2001 or thereafter by reason of
27         being a member of the Illinois National Guard. The
28         provisions of this amendatory Act of the 92nd General
29         Assembly are exempt from the provisions of Section 250;
30             (F) An amount equal to all amounts included in such
31         total pursuant to the provisions of Sections 402(a),
32         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
33         Internal Revenue Code, or included in such total as
34         distributions under the provisions of any retirement
35         or disability plan for employees of any governmental
36         agency or unit, or retirement payments to retired

 

 

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1         partners, which payments are excluded in computing net
2         earnings from self employment by Section 1402 of the
3         Internal Revenue Code and regulations adopted pursuant
4         thereto;
5             (G) The valuation limitation amount;
6             (H) An amount equal to the amount of any tax
7         imposed by this Act which was refunded to the taxpayer
8         and included in such total for the taxable year;
9             (I) An amount equal to all amounts included in such
10         total pursuant to the provisions of Section 111 of the
11         Internal Revenue Code as a recovery of items previously
12         deducted from adjusted gross income in the computation
13         of taxable income;
14             (J) An amount equal to those dividends included in
15         such total which were paid by a corporation which
16         conducts business operations in an Enterprise Zone or
17         zones created under the Illinois Enterprise Zone Act,
18         and conducts substantially all of its operations in an
19         Enterprise Zone or zones;
20             (K) An amount equal to those dividends included in
21         such total that were paid by a corporation that
22         conducts business operations in a federally designated
23         Foreign Trade Zone or Sub-Zone and that is designated a
24         High Impact Business located in Illinois; provided
25         that dividends eligible for the deduction provided in
26         subparagraph (J) of paragraph (2) of this subsection
27         shall not be eligible for the deduction provided under
28         this subparagraph (K);
29             (L) For taxable years ending after December 31,
30         1983, an amount equal to all social security benefits
31         and railroad retirement benefits included in such
32         total pursuant to Sections 72(r) and 86 of the Internal
33         Revenue Code;
34             (M) With the exception of any amounts subtracted
35         under subparagraph (N), an amount equal to the sum of
36         all amounts disallowed as deductions by (i) Sections

 

 

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1         171(a) (2), and 265(2) of the Internal Revenue Code of
2         1954, as now or hereafter amended, and all amounts of
3         expenses allocable to interest and disallowed as
4         deductions by Section 265(1) of the Internal Revenue
5         Code of 1954, as now or hereafter amended; and (ii) for
6         taxable years ending on or after August 13, 1999,
7         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
8         the Internal Revenue Code; the provisions of this
9         subparagraph are exempt from the provisions of Section
10         250;
11             (N) An amount equal to all amounts included in such
12         total which are exempt from taxation by this State
13         either by reason of its statutes or Constitution or by
14         reason of the Constitution, treaties or statutes of the
15         United States; provided that, in the case of any
16         statute of this State that exempts income derived from
17         bonds or other obligations from the tax imposed under
18         this Act, the amount exempted shall be the interest net
19         of bond premium amortization;
20             (O) An amount equal to any contribution made to a
21         job training project established pursuant to the Tax
22         Increment Allocation Redevelopment Act;
23             (P) An amount equal to the amount of the deduction
24         used to compute the federal income tax credit for
25         restoration of substantial amounts held under claim of
26         right for the taxable year pursuant to Section 1341 of
27         the Internal Revenue Code of 1986;
28             (Q) An amount equal to any amounts included in such
29         total, received by the taxpayer as an acceleration in
30         the payment of life, endowment or annuity benefits in
31         advance of the time they would otherwise be payable as
32         an indemnity for a terminal illness;
33             (R) An amount equal to the amount of any federal or
34         State bonus paid to veterans of the Persian Gulf War;
35             (S) An amount, to the extent included in adjusted
36         gross income, equal to the amount of a contribution

 

 

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1         made in the taxable year on behalf of the taxpayer to a
2         medical care savings account established under the
3         Medical Care Savings Account Act or the Medical Care
4         Savings Account Act of 2000 to the extent the
5         contribution is accepted by the account administrator
6         as provided in that Act;
7             (T) An amount, to the extent included in adjusted
8         gross income, equal to the amount of interest earned in
9         the taxable year on a medical care savings account
10         established under the Medical Care Savings Account Act
11         or the Medical Care Savings Account Act of 2000 on
12         behalf of the taxpayer, other than interest added
13         pursuant to item (D-5) of this paragraph (2);
14             (U) For one taxable year beginning on or after
15         January 1, 1994, an amount equal to the total amount of
16         tax imposed and paid under subsections (a) and (b) of
17         Section 201 of this Act on grant amounts received by
18         the taxpayer under the Nursing Home Grant Assistance
19         Act during the taxpayer's taxable years 1992 and 1993;
20             (V) Beginning with tax years ending on or after
21         December 31, 1995 and ending with tax years ending on
22         or before December 31, 2004, an amount equal to the
23         amount paid by a taxpayer who is a self-employed
24         taxpayer, a partner of a partnership, or a shareholder
25         in a Subchapter S corporation for health insurance or
26         long-term care insurance for that taxpayer or that
27         taxpayer's spouse or dependents, to the extent that the
28         amount paid for that health insurance or long-term care
29         insurance may be deducted under Section 213 of the
30         Internal Revenue Code of 1986, has not been deducted on
31         the federal income tax return of the taxpayer, and does
32         not exceed the taxable income attributable to that
33         taxpayer's income, self-employment income, or
34         Subchapter S corporation income; except that no
35         deduction shall be allowed under this item (V) if the
36         taxpayer is eligible to participate in any health

 

 

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1         insurance or long-term care insurance plan of an
2         employer of the taxpayer or the taxpayer's spouse. The
3         amount of the health insurance and long-term care
4         insurance subtracted under this item (V) shall be
5         determined by multiplying total health insurance and
6         long-term care insurance premiums paid by the taxpayer
7         times a number that represents the fractional
8         percentage of eligible medical expenses under Section
9         213 of the Internal Revenue Code of 1986 not actually
10         deducted on the taxpayer's federal income tax return;
11             (W) For taxable years beginning on or after January
12         1, 1998, all amounts included in the taxpayer's federal
13         gross income in the taxable year from amounts converted
14         from a regular IRA to a Roth IRA. This paragraph is
15         exempt from the provisions of Section 250;
16             (X) For taxable year 1999 and thereafter, an amount
17         equal to the amount of any (i) distributions, to the
18         extent includible in gross income for federal income
19         tax purposes, made to the taxpayer because of his or
20         her status as a victim of persecution for racial or
21         religious reasons by Nazi Germany or any other Axis
22         regime or as an heir of the victim and (ii) items of
23         income, to the extent includible in gross income for
24         federal income tax purposes, attributable to, derived
25         from or in any way related to assets stolen from,
26         hidden from, or otherwise lost to a victim of
27         persecution for racial or religious reasons by Nazi
28         Germany or any other Axis regime immediately prior to,
29         during, and immediately after World War II, including,
30         but not limited to, interest on the proceeds receivable
31         as insurance under policies issued to a victim of
32         persecution for racial or religious reasons by Nazi
33         Germany or any other Axis regime by European insurance
34         companies immediately prior to and during World War II;
35         provided, however, this subtraction from federal
36         adjusted gross income does not apply to assets acquired

 

 

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1         with such assets or with the proceeds from the sale of
2         such assets; provided, further, this paragraph shall
3         only apply to a taxpayer who was the first recipient of
4         such assets after their recovery and who is a victim of
5         persecution for racial or religious reasons by Nazi
6         Germany or any other Axis regime or as an heir of the
7         victim. The amount of and the eligibility for any
8         public assistance, benefit, or similar entitlement is
9         not affected by the inclusion of items (i) and (ii) of
10         this paragraph in gross income for federal income tax
11         purposes. This paragraph is exempt from the provisions
12         of Section 250;
13             (Y) For taxable years beginning on or after January
14         1, 2002 and ending on or before December 31, 2003,
15         moneys contributed in the taxable year to a College
16         Savings Pool account under Section 16.5 of the State
17         Treasurer Act, except that amounts excluded from gross
18         income under Section 529(c)(3)(C)(i) of the Internal
19         Revenue Code shall not be considered moneys
20         contributed under this subparagraph (Y). For taxable
21         years ending after December 31, 2003, moneys
22         contributed to a College Savings Pool account under
23         Section 16.5 of the State Treasurer Act, to the
24         Illinois Prepaid Tuition Trust Fund under the Illinois
25         Prepaid Tuition Act, or to any other qualified tuition
26         program under Section 529 of the Internal Revenue Code,
27         except that amounts rolled over into a program under
28         Section 529(c)(3)(C)(i) of the Internal Revenue Code
29         shall not be considered moneys contributed under this
30         subparagraph (Y). This subparagraph (Y) is exempt from
31         the provisions of Section 250;
32             (Z) For taxable years 2001 and thereafter, for the
33         taxable year in which the bonus depreciation deduction
34         (30% of the adjusted basis of the qualified property)
35         is taken on the taxpayer's federal income tax return
36         under subsection (k) of Section 168 of the Internal

 

 

HB5179 - 15 - LRB093 18832 SJM 44567 b

1         Revenue Code and for each applicable taxable year
2         thereafter, an amount equal to "x", where:
3                 (1) "y" equals the amount of the depreciation
4             deduction taken for the taxable year on the
5             taxpayer's federal income tax return on property
6             for which the bonus depreciation deduction (30% of
7             the adjusted basis of the qualified property) was
8             taken in any year under subsection (k) of Section
9             168 of the Internal Revenue Code, but not including
10             the bonus depreciation deduction; and
11                 (2) "x" equals "y" multiplied by 30 and then
12             divided by 70 (or "y" multiplied by 0.429).
13             The aggregate amount deducted under this
14         subparagraph in all taxable years for any one piece of
15         property may not exceed the amount of the bonus
16         depreciation deduction (30% of the adjusted basis of
17         the qualified property) taken on that property on the
18         taxpayer's federal income tax return under subsection
19         (k) of Section 168 of the Internal Revenue Code; and
20             (AA) If the taxpayer reports a capital gain or loss
21         on the taxpayer's federal income tax return for the
22         taxable year based on a sale or transfer of property
23         for which the taxpayer was required in any taxable year
24         to make an addition modification under subparagraph
25         (D-15), then an amount equal to that addition
26         modification.
27             The taxpayer is allowed to take the deduction under
28         this subparagraph only once with respect to any one
29         piece of property; and
30             (BB) (Z) Any amount included in adjusted gross
31         income, other than salary, received by a driver in a
32         ridesharing arrangement using a motor vehicle.
 
33     (b) Corporations.
34         (1) In general. In the case of a corporation, base
35     income means an amount equal to the taxpayer's taxable

 

 

HB5179 - 16 - LRB093 18832 SJM 44567 b

1     income for the taxable year as modified by paragraph (2).
2         (2) Modifications. The taxable income referred to in
3     paragraph (1) shall be modified by adding thereto the sum
4     of the following amounts:
5             (A) An amount equal to all amounts paid or accrued
6         to the taxpayer as interest and all distributions
7         received from regulated investment companies during
8         the taxable year to the extent excluded from gross
9         income in the computation of taxable income;
10             (B) An amount equal to the amount of tax imposed by
11         this Act to the extent deducted from gross income in
12         the computation of taxable income for the taxable year;
13             (C) In the case of a regulated investment company,
14         an amount equal to the excess of (i) the net long-term
15         capital gain for the taxable year, over (ii) the amount
16         of the capital gain dividends designated as such in
17         accordance with Section 852(b)(3)(C) of the Internal
18         Revenue Code and any amount designated under Section
19         852(b)(3)(D) of the Internal Revenue Code,
20         attributable to the taxable year (this amendatory Act
21         of 1995 (Public Act 89-89) is declarative of existing
22         law and is not a new enactment);
23             (D) The amount of any net operating loss deduction
24         taken in arriving at taxable income, other than a net
25         operating loss carried forward from a taxable year
26         ending prior to December 31, 1986;
27             (E) For taxable years in which a net operating loss
28         carryback or carryforward from a taxable year ending
29         prior to December 31, 1986 is an element of taxable
30         income under paragraph (1) of subsection (e) or
31         subparagraph (E) of paragraph (2) of subsection (e),
32         the amount by which addition modifications other than
33         those provided by this subparagraph (E) exceeded
34         subtraction modifications in such earlier taxable
35         year, with the following limitations applied in the
36         order that they are listed:

 

 

HB5179 - 17 - LRB093 18832 SJM 44567 b

1                 (i) the addition modification relating to the
2             net operating loss carried back or forward to the
3             taxable year from any taxable year ending prior to
4             December 31, 1986 shall be reduced by the amount of
5             addition modification under this subparagraph (E)
6             which related to that net operating loss and which
7             was taken into account in calculating the base
8             income of an earlier taxable year, and
9                 (ii) the addition modification relating to the
10             net operating loss carried back or forward to the
11             taxable year from any taxable year ending prior to
12             December 31, 1986 shall not exceed the amount of
13             such carryback or carryforward;
14             For taxable years in which there is a net operating
15         loss carryback or carryforward from more than one other
16         taxable year ending prior to December 31, 1986, the
17         addition modification provided in this subparagraph
18         (E) shall be the sum of the amounts computed
19         independently under the preceding provisions of this
20         subparagraph (E) for each such taxable year;
21             (E-5) For taxable years ending after December 31,
22         1997, an amount equal to any eligible remediation costs
23         that the corporation deducted in computing adjusted
24         gross income and for which the corporation claims a
25         credit under subsection (l) of Section 201;
26             (E-10) For taxable years 2001 and thereafter, an
27         amount equal to the bonus depreciation deduction (30%
28         of the adjusted basis of the qualified property) taken
29         on the taxpayer's federal income tax return for the
30         taxable year under subsection (k) of Section 168 of the
31         Internal Revenue Code; and
32             (E-11) If the taxpayer reports a capital gain or
33         loss on the taxpayer's federal income tax return for
34         the taxable year based on a sale or transfer of
35         property for which the taxpayer was required in any
36         taxable year to make an addition modification under

 

 

HB5179 - 18 - LRB093 18832 SJM 44567 b

1         subparagraph (E-10), then an amount equal to the
2         aggregate amount of the deductions taken in all taxable
3         years under subparagraph (T) with respect to that
4         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 the
9     following amounts:
10             (F) An amount equal to the amount of any tax
11         imposed by this Act which was refunded to the taxpayer
12         and included in such total for the taxable year;
13             (G) An amount equal to any amount included in such
14         total under Section 78 of the Internal Revenue Code;
15             (H) In the case of a regulated investment company,
16         an amount equal to the amount of exempt interest
17         dividends as defined in subsection (b) (5) of Section
18         852 of the Internal Revenue Code, paid to shareholders
19         for the taxable year;
20             (I) With the exception of any amounts subtracted
21         under subparagraph (J), an amount equal to the sum of
22         all amounts disallowed as deductions by (i) Sections
23         171(a) (2), and 265(a)(2) and amounts disallowed as
24         interest expense by Section 291(a)(3) of the Internal
25         Revenue Code, as now or hereafter amended, and all
26         amounts of expenses allocable to interest and
27         disallowed as deductions by Section 265(a)(1) of the
28         Internal Revenue Code, as now or hereafter amended; and
29         (ii) for taxable years ending on or after August 13,
30         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
31         832(b)(5)(B)(i) of the Internal Revenue Code; the
32         provisions of this subparagraph are exempt from the
33         provisions of Section 250;
34             (J) An amount equal to all amounts included in such
35         total which are exempt from taxation by this State
36         either by reason of its statutes or Constitution or by

 

 

HB5179 - 19 - LRB093 18832 SJM 44567 b

1         reason of the Constitution, treaties or statutes of the
2         United States; provided that, in the case of any
3         statute of this State that exempts income derived from
4         bonds or other obligations from the tax imposed under
5         this Act, the amount exempted shall be the interest net
6         of bond premium amortization;
7             (K) An amount equal to those dividends included in
8         such total which were paid by a corporation which
9         conducts business operations in an Enterprise Zone or
10         zones created under the Illinois Enterprise Zone Act
11         and conducts substantially all of its operations in an
12         Enterprise Zone or zones;
13             (L) An amount equal to those dividends included in
14         such total that were paid by a corporation that
15         conducts business operations in a federally designated
16         Foreign Trade Zone or Sub-Zone and that is designated a
17         High Impact Business located in Illinois; provided
18         that dividends eligible for the deduction provided in
19         subparagraph (K) of paragraph 2 of this subsection
20         shall not be eligible for the deduction provided under
21         this subparagraph (L);
22             (M) For any taxpayer that is a financial
23         organization within the meaning of Section 304(c) of
24         this Act, an amount included in such total as interest
25         income from a loan or loans made by such taxpayer to a
26         borrower, to the extent that such a loan is secured by
27         property which is eligible for the Enterprise Zone
28         Investment Credit. To determine the portion of a loan
29         or loans that is secured by property eligible for a
30         Section 201(f) investment credit to the borrower, the
31         entire principal amount of the loan or loans between
32         the taxpayer and the borrower should be divided into
33         the basis of the Section 201(f) investment credit
34         property which secures the loan or loans, using for
35         this purpose the original basis of such property on the
36         date that it was placed in service in the Enterprise

 

 

HB5179 - 20 - LRB093 18832 SJM 44567 b

1         Zone. The subtraction modification available to
2         taxpayer in any year under this subsection shall be
3         that portion of the total interest paid by the borrower
4         with respect to such loan attributable to the eligible
5         property as calculated under the previous sentence;
6             (M-1) For any taxpayer that is a financial
7         organization within the meaning of Section 304(c) of
8         this Act, an amount included in such total as interest
9         income from a loan or loans made by such taxpayer to a
10         borrower, to the extent that such a loan is secured by
11         property which is eligible for the High Impact Business
12         Investment Credit. To determine the portion of a loan
13         or loans that is secured by property eligible for a
14         Section 201(h) investment credit to the borrower, the
15         entire principal amount of the loan or loans between
16         the taxpayer and the borrower should be divided into
17         the basis of the Section 201(h) investment credit
18         property which secures the loan or loans, using for
19         this purpose the original basis of such property on the
20         date that it was placed in service in a federally
21         designated Foreign Trade Zone or Sub-Zone located in
22         Illinois. No taxpayer that is eligible for the
23         deduction provided in subparagraph (M) of paragraph
24         (2) of this subsection shall be eligible for the
25         deduction provided under this subparagraph (M-1). The
26         subtraction modification available to taxpayers in any
27         year under this subsection shall be that portion of the
28         total interest paid by the borrower with respect to
29         such loan attributable to the eligible property as
30         calculated under the previous sentence;
31             (N) Two times any contribution made during the
32         taxable year to a designated zone organization to the
33         extent that the contribution (i) qualifies as a
34         charitable contribution under subsection (c) of
35         Section 170 of the Internal Revenue Code and (ii) must,
36         by its terms, be used for a project approved by the

 

 

HB5179 - 21 - LRB093 18832 SJM 44567 b

1         Department of Commerce and Economic Opportunity
2         Community Affairs under Section 11 of the Illinois
3         Enterprise Zone Act;
4             (O) An amount equal to: (i) 85% for taxable years
5         ending on or before December 31, 1992, or, a percentage
6         equal to the percentage allowable under Section
7         243(a)(1) of the Internal Revenue Code of 1986 for
8         taxable years ending after December 31, 1992, of the
9         amount by which dividends included in taxable income
10         and received from a corporation that is not created or
11         organized under the laws of the United States or any
12         state or political subdivision thereof, including, for
13         taxable years ending on or after December 31, 1988,
14         dividends received or deemed received or paid or deemed
15         paid under Sections 951 through 964 of the Internal
16         Revenue Code, exceed the amount of the modification
17         provided under subparagraph (G) of paragraph (2) of
18         this subsection (b) which is related to such dividends;
19         plus (ii) 100% of the amount by which dividends,
20         included in taxable income and received, including,
21         for taxable years ending on or after December 31, 1988,
22         dividends received or deemed received or paid or deemed
23         paid under Sections 951 through 964 of the Internal
24         Revenue Code, from any such corporation specified in
25         clause (i) that would but for the provisions of Section
26         1504 (b) (3) of the Internal Revenue Code be treated as
27         a member of the affiliated group which includes the
28         dividend recipient, exceed the amount of the
29         modification provided under subparagraph (G) of
30         paragraph (2) of this subsection (b) which is related
31         to such dividends;
32             (P) An amount equal to any contribution made to a
33         job training project established pursuant to the Tax
34         Increment Allocation Redevelopment Act;
35             (Q) An amount equal to the amount of the deduction
36         used to compute the federal income tax credit for

 

 

HB5179 - 22 - LRB093 18832 SJM 44567 b

1         restoration of substantial amounts held under claim of
2         right for the taxable year pursuant to Section 1341 of
3         the Internal Revenue Code of 1986;
4             (R) In the case of an attorney-in-fact with respect
5         to whom an interinsurer or a reciprocal insurer has
6         made the election under Section 835 of the Internal
7         Revenue Code, 26 U.S.C. 835, an amount equal to the
8         excess, if any, of the amounts paid or incurred by that
9         interinsurer or reciprocal insurer in the taxable year
10         to the attorney-in-fact over the deduction allowed to
11         that interinsurer or reciprocal insurer with respect
12         to the attorney-in-fact under Section 835(b) of the
13         Internal Revenue Code for the taxable year;
14             (S) For taxable years ending on or after December
15         31, 1997, in the case of a Subchapter S corporation, an
16         amount equal to all amounts of income allocable to a
17         shareholder subject to the Personal Property Tax
18         Replacement Income Tax imposed by subsections (c) and
19         (d) of Section 201 of this Act, including amounts
20         allocable to organizations exempt from federal income
21         tax by reason of Section 501(a) of the Internal Revenue
22         Code. This subparagraph (S) is exempt from the
23         provisions of Section 250;
24             (T) For taxable years 2001 and thereafter, for the
25         taxable year in which the bonus depreciation deduction
26         (30% of the adjusted basis of the qualified property)
27         is taken on the taxpayer's federal income tax return
28         under subsection (k) of Section 168 of the Internal
29         Revenue Code and for each applicable taxable year
30         thereafter, an amount equal to "x", where:
31                 (1) "y" equals the amount of the depreciation
32             deduction taken for the taxable year on the
33             taxpayer's federal income tax return on property
34             for which the bonus depreciation deduction (30% of
35             the adjusted basis of the qualified property) was
36             taken in any year under subsection (k) of Section

 

 

HB5179 - 23 - LRB093 18832 SJM 44567 b

1             168 of the Internal Revenue Code, but not including
2             the bonus depreciation deduction; and
3                 (2) "x" equals "y" multiplied by 30 and then
4             divided by 70 (or "y" multiplied by 0.429).
5             The aggregate amount deducted under this
6         subparagraph in all taxable years for any one piece of
7         property may not exceed the amount of the bonus
8         depreciation deduction (30% of the adjusted basis of
9         the qualified property) taken on that property on the
10         taxpayer's federal income tax return under subsection
11         (k) of Section 168 of the Internal Revenue Code; and
12             (U) If the taxpayer reports a capital gain or loss
13         on the taxpayer's federal income tax return for the
14         taxable year based on a sale or transfer of property
15         for which the taxpayer was required in any taxable year
16         to make an addition modification under subparagraph
17         (E-10), then an amount equal to that addition
18         modification.
19             The taxpayer is allowed to take the deduction under
20         this subparagraph only once with respect to any one
21         piece of property.
22         (3) Special rule. For purposes of paragraph (2) (A),
23     "gross income" in the case of a life insurance company, for
24     tax years ending on and after December 31, 1994, shall mean
25     the gross investment income for the taxable year.
 
26     (c) Trusts and estates.
27         (1) In general. In the case of a trust or estate, base
28     income means an amount equal to the taxpayer's taxable
29     income for the taxable year as modified by paragraph (2).
30         (2) Modifications. Subject to the provisions of
31     paragraph (3), the taxable income referred to in paragraph
32     (1) shall be modified by adding thereto the sum of the
33     following amounts:
34             (A) An amount equal to all amounts paid or accrued
35         to the taxpayer as interest or dividends during the

 

 

HB5179 - 24 - LRB093 18832 SJM 44567 b

1         taxable year to the extent excluded from gross income
2         in the computation of taxable income;
3             (B) In the case of (i) an estate, $600; (ii) a
4         trust which, under its governing instrument, is
5         required to distribute all of its income currently,
6         $300; and (iii) any other trust, $100, but in each such
7         case, only to the extent such amount was deducted in
8         the computation of taxable income;
9             (C) An amount equal to the amount of tax imposed by
10         this Act to the extent deducted from gross income in
11         the computation of taxable income for the taxable year;
12             (D) The amount of any net operating loss deduction
13         taken in arriving at taxable income, other than a net
14         operating loss carried forward from a taxable year
15         ending prior to December 31, 1986;
16             (E) For taxable years in which a net operating loss
17         carryback or carryforward from a taxable year ending
18         prior to December 31, 1986 is an element of taxable
19         income under paragraph (1) of subsection (e) or
20         subparagraph (E) of paragraph (2) of subsection (e),
21         the amount by which addition modifications other than
22         those provided by this subparagraph (E) exceeded
23         subtraction modifications in such taxable year, with
24         the following limitations applied in the order that
25         they are listed:
26                 (i) the addition modification relating to the
27             net operating loss carried back or forward to the
28             taxable year from any taxable year ending prior to
29             December 31, 1986 shall be reduced by the amount of
30             addition modification under this subparagraph (E)
31             which related to that net operating loss and which
32             was taken into account in calculating the base
33             income of an earlier taxable year, and
34                 (ii) the addition modification relating to the
35             net operating loss carried back or forward to the
36             taxable year from any taxable year ending prior to

 

 

HB5179 - 25 - LRB093 18832 SJM 44567 b

1             December 31, 1986 shall not exceed the amount of
2             such carryback or carryforward;
3             For taxable years in which there is a net operating
4         loss carryback or carryforward from more than one other
5         taxable year ending prior to December 31, 1986, the
6         addition modification provided in this subparagraph
7         (E) shall be the sum of the amounts computed
8         independently under the preceding provisions of this
9         subparagraph (E) for each such taxable year;
10             (F) For taxable years ending on or after January 1,
11         1989, an amount equal to the tax deducted pursuant to
12         Section 164 of the Internal Revenue Code if the trust
13         or estate is claiming the same tax for purposes of the
14         Illinois foreign tax credit under Section 601 of this
15         Act;
16             (G) An amount equal to the amount of the capital
17         gain deduction allowable under the Internal Revenue
18         Code, to the extent deducted from gross income in the
19         computation of taxable income;
20             (G-5) For taxable years ending after December 31,
21         1997, an amount equal to any eligible remediation costs
22         that the trust or estate deducted in computing adjusted
23         gross income and for which the trust or estate claims a
24         credit under subsection (l) of Section 201;
25             (G-10) For taxable years 2001 and thereafter, an
26         amount equal to the bonus depreciation deduction (30%
27         of the adjusted basis of the qualified property) taken
28         on the taxpayer's federal income tax return for the
29         taxable year under subsection (k) of Section 168 of the
30         Internal Revenue Code; and
31             (G-11) If the taxpayer reports a capital gain or
32         loss on the taxpayer's federal income tax return for
33         the taxable year based on a sale or transfer of
34         property for which the taxpayer was required in any
35         taxable year to make an addition modification under
36         subparagraph (G-10), then an amount equal to the

 

 

HB5179 - 26 - LRB093 18832 SJM 44567 b

1         aggregate amount of the deductions taken in all taxable
2         years under subparagraph (R) with respect to that
3         property. ;
4             The taxpayer is required to make the addition
5         modification under this subparagraph only once with
6         respect to any one piece of property;
7     and by deducting from the total so obtained the sum of the
8     following amounts:
9             (H) An amount equal to all amounts included in such
10         total pursuant to the provisions of Sections 402(a),
11         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
12         Internal Revenue Code or included in such total as
13         distributions under the provisions of any retirement
14         or disability plan for employees of any governmental
15         agency or unit, or retirement payments to retired
16         partners, which payments are excluded in computing net
17         earnings from self employment by Section 1402 of the
18         Internal Revenue Code and regulations adopted pursuant
19         thereto;
20             (I) The valuation limitation amount;
21             (J) An amount equal to the amount of any tax
22         imposed by this Act which was refunded to the taxpayer
23         and included in such total for the taxable year;
24             (K) An amount equal to all amounts included in
25         taxable income as modified by subparagraphs (A), (B),
26         (C), (D), (E), (F) and (G) which are exempt from
27         taxation by this State either by reason of its statutes
28         or Constitution or by reason of the Constitution,
29         treaties or statutes of the United States; provided
30         that, in the case of any statute of this State that
31         exempts income derived from bonds or other obligations
32         from the tax imposed under this Act, the amount
33         exempted shall be the interest net of bond premium
34         amortization;
35             (L) With the exception of any amounts subtracted
36         under subparagraph (K), an amount equal to the sum of

 

 

HB5179 - 27 - LRB093 18832 SJM 44567 b

1         all amounts disallowed as deductions by (i) Sections
2         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
3         as now or hereafter amended, and all amounts of
4         expenses allocable to interest and disallowed as
5         deductions by Section 265(1) of the Internal Revenue
6         Code of 1954, as now or hereafter amended; and (ii) for
7         taxable years ending on or after August 13, 1999,
8         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
9         the Internal Revenue Code; the provisions of this
10         subparagraph are exempt from the provisions of Section
11         250;
12             (M) An amount equal to those dividends included in
13         such total which were paid by a corporation which
14         conducts business operations in an Enterprise Zone or
15         zones created under the Illinois Enterprise Zone Act
16         and conducts substantially all of its operations in an
17         Enterprise Zone or Zones;
18             (N) An amount equal to any contribution made to a
19         job training project established pursuant to the Tax
20         Increment Allocation Redevelopment Act;
21             (O) An amount equal to those dividends included in
22         such total that were paid by a corporation that
23         conducts business operations in a federally designated
24         Foreign Trade Zone or Sub-Zone and that is designated a
25         High Impact Business located in Illinois; provided
26         that dividends eligible for the deduction provided in
27         subparagraph (M) of paragraph (2) of this subsection
28         shall not be eligible for the deduction provided under
29         this subparagraph (O);
30             (P) An amount equal to the amount of the deduction
31         used to compute the federal income tax credit for
32         restoration of substantial amounts held under claim of
33         right for the taxable year pursuant to Section 1341 of
34         the Internal Revenue Code of 1986;
35             (Q) For taxable year 1999 and thereafter, an amount
36         equal to the amount of any (i) distributions, to the

 

 

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1         extent includible in gross income for federal income
2         tax purposes, made to the taxpayer because of his or
3         her status as a victim of persecution for racial or
4         religious reasons by Nazi Germany or any other Axis
5         regime or as an heir of the victim and (ii) items of
6         income, to the extent includible in gross income for
7         federal income tax purposes, attributable to, derived
8         from or in any way related to assets stolen from,
9         hidden from, or otherwise lost to a victim of
10         persecution for racial or religious reasons by Nazi
11         Germany or any other Axis regime immediately prior to,
12         during, and immediately after World War II, including,
13         but not limited to, interest on the proceeds receivable
14         as insurance under policies issued to a victim of
15         persecution for racial or religious reasons by Nazi
16         Germany or any other Axis regime by European insurance
17         companies immediately prior to and during World War II;
18         provided, however, this subtraction from federal
19         adjusted gross income does not apply to assets acquired
20         with such assets or with the proceeds from the sale of
21         such assets; provided, further, this paragraph shall
22         only apply to a taxpayer who was the first recipient of
23         such assets after their recovery and who is a victim of
24         persecution for racial or religious reasons by Nazi
25         Germany or any other Axis regime or as an heir of the
26         victim. The amount of and the eligibility for any
27         public assistance, benefit, or similar entitlement is
28         not affected by the inclusion of items (i) and (ii) of
29         this paragraph in gross income for federal income tax
30         purposes. This paragraph is exempt from the provisions
31         of Section 250;
32             (R) For taxable years 2001 and thereafter, for the
33         taxable year in which the bonus depreciation deduction
34         (30% of the adjusted basis of the qualified property)
35         is taken on the taxpayer's federal income tax return
36         under subsection (k) of Section 168 of the Internal

 

 

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1         Revenue Code and for each applicable taxable year
2         thereafter, an amount equal to "x", where:
3                 (1) "y" equals the amount of the depreciation
4             deduction taken for the taxable year on the
5             taxpayer's federal income tax return on property
6             for which the bonus depreciation deduction (30% of
7             the adjusted basis of the qualified property) was
8             taken in any year under subsection (k) of Section
9             168 of the Internal Revenue Code, but not including
10             the bonus depreciation deduction; and
11                 (2) "x" equals "y" multiplied by 30 and then
12             divided by 70 (or "y" multiplied by 0.429).
13             The aggregate amount deducted under this
14         subparagraph in all taxable years for any one piece of
15         property may not exceed the amount of the bonus
16         depreciation deduction (30% of the adjusted basis of
17         the qualified property) taken on that property on the
18         taxpayer's federal income tax return under subsection
19         (k) of Section 168 of the Internal Revenue Code; and
20             (S) If the taxpayer reports a capital gain or loss
21         on the taxpayer's federal income tax return for the
22         taxable year based on a sale or transfer of property
23         for which the taxpayer was required in any taxable year
24         to make an addition modification under subparagraph
25         (G-10), then an amount equal to that addition
26         modification.
27             The taxpayer is allowed to take the deduction under
28         this subparagraph only once with respect to any one
29         piece of property.
30         (3) Limitation. The amount of any modification
31     otherwise required under this subsection shall, under
32     regulations prescribed by the Department, be adjusted by
33     any amounts included therein which were properly paid,
34     credited, or required to be distributed, or permanently set
35     aside for charitable purposes pursuant to Internal Revenue
36     Code Section 642(c) during the taxable year.
 

 

 

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1     (d) Partnerships.
2         (1) In general. In the case of a partnership, base
3     income means an amount equal to the taxpayer's taxable
4     income for the taxable year as modified by paragraph (2).
5         (2) Modifications. The taxable income referred to in
6     paragraph (1) shall be modified by adding thereto the sum
7     of the following amounts:
8             (A) An amount equal to all amounts paid or accrued
9         to the taxpayer as interest or dividends during the
10         taxable year to the extent excluded from gross income
11         in the computation of taxable income;
12             (B) An amount equal to the amount of tax imposed by
13         this Act to the extent deducted from gross income for
14         the taxable year;
15             (C) The amount of deductions allowed to the
16         partnership pursuant to Section 707 (c) of the Internal
17         Revenue Code in calculating its taxable income;
18             (D) An amount equal to the amount of the capital
19         gain deduction allowable under the Internal Revenue
20         Code, to the extent deducted from gross income in the
21         computation of taxable income;
22             (D-5) For taxable years 2001 and thereafter, an
23         amount equal to the bonus depreciation deduction (30%
24         of the adjusted basis of the qualified property) taken
25         on the taxpayer's federal income tax return for the
26         taxable year under subsection (k) of Section 168 of the
27         Internal Revenue Code; and
28             (D-6) 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 the
34         aggregate amount of the deductions taken in all taxable
35         years under subparagraph (O) with respect to that

 

 

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1         property. ;
2             The taxpayer is required to make the addition
3         modification under this subparagraph only once with
4         respect to any one piece of property;
5     and by deducting from the total so obtained the following
6     amounts:
7             (E) The valuation limitation amount;
8             (F) An amount equal to the amount of any tax
9         imposed by this Act which was refunded to the taxpayer
10         and included in such total for the taxable year;
11             (G) An amount equal to all amounts included in
12         taxable income as modified by subparagraphs (A), (B),
13         (C) and (D) which are exempt from taxation by this
14         State either by reason of its statutes or Constitution
15         or by reason of the Constitution, treaties or statutes
16         of the United States; provided that, in the case of any
17         statute of this State that exempts income derived from
18         bonds or other obligations from the tax imposed under
19         this Act, the amount exempted shall be the interest net
20         of bond premium amortization;
21             (H) Any income of the partnership which
22         constitutes personal service income as defined in
23         Section 1348 (b) (1) of the Internal Revenue Code (as
24         in effect December 31, 1981) or a reasonable allowance
25         for compensation paid or accrued for services rendered
26         by partners to the partnership, whichever is greater;
27             (I) An amount equal to all amounts of income
28         distributable to an entity subject to the Personal
29         Property Tax Replacement Income Tax imposed by
30         subsections (c) and (d) of Section 201 of this Act
31         including amounts distributable to organizations
32         exempt from federal income tax by reason of Section
33         501(a) of the Internal Revenue Code;
34             (J) With the exception of any amounts subtracted
35         under subparagraph (G), an amount equal to the sum of
36         all amounts disallowed as deductions by (i) Sections

 

 

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1         171(a) (2), and 265(2) of the Internal Revenue Code of
2         1954, as now or hereafter amended, and all amounts of
3         expenses allocable to interest and disallowed as
4         deductions by Section 265(1) of the Internal Revenue
5         Code, as now or hereafter amended; and (ii) for taxable
6         years ending on or after August 13, 1999, Sections
7         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
8         Internal Revenue Code; the provisions of this
9         subparagraph are exempt from the provisions of Section
10         250;
11             (K) An amount equal to those dividends included in
12         such total which were paid by a corporation which
13         conducts business operations in an Enterprise Zone or
14         zones created under the Illinois Enterprise Zone Act,
15         enacted by the 82nd General Assembly, and conducts
16         substantially all of its operations in an Enterprise
17         Zone or Zones;
18             (L) An amount equal to any contribution made to a
19         job training project established pursuant to the Real
20         Property Tax Increment Allocation Redevelopment Act;
21             (M) An amount equal to those dividends included in
22         such total that were paid by a corporation that
23         conducts business operations in a federally designated
24         Foreign Trade Zone or Sub-Zone and that is designated a
25         High Impact Business located in Illinois; provided
26         that dividends eligible for the deduction provided in
27         subparagraph (K) of paragraph (2) of this subsection
28         shall not be eligible for the deduction provided under
29         this subparagraph (M);
30             (N) An amount equal to the amount of the deduction
31         used to compute the federal income tax credit for
32         restoration of substantial amounts held under claim of
33         right for the taxable year pursuant to Section 1341 of
34         the Internal Revenue Code of 1986;
35             (O) For taxable years 2001 and thereafter, for the
36         taxable year in which the bonus depreciation deduction

 

 

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1         (30% of the adjusted basis of the qualified property)
2         is taken on the taxpayer's federal income tax return
3         under subsection (k) of Section 168 of the Internal
4         Revenue Code and for each applicable taxable year
5         thereafter, an amount equal to "x", where:
6                 (1) "y" equals the amount of the depreciation
7             deduction taken for the taxable year on the
8             taxpayer's federal income tax return on property
9             for which the bonus depreciation deduction (30% of
10             the adjusted basis of the qualified property) was
11             taken in any year under subsection (k) of Section
12             168 of the Internal Revenue Code, but not including
13             the bonus depreciation deduction; and
14                 (2) "x" equals "y" multiplied by 30 and then
15             divided by 70 (or "y" multiplied by 0.429).
16             The aggregate amount deducted under this
17         subparagraph in all taxable years for any one piece of
18         property may not exceed the amount of the bonus
19         depreciation deduction (30% of the adjusted basis of
20         the qualified property) taken on that property on the
21         taxpayer's federal income tax return under subsection
22         (k) of Section 168 of the Internal Revenue Code; and
23             (P) If the taxpayer reports a capital gain or loss
24         on the taxpayer's federal income tax return for the
25         taxable year based on a sale or transfer of property
26         for which the taxpayer was required in any taxable year
27         to make an addition modification under subparagraph
28         (D-5), then an amount equal to that addition
29         modification.
30             The taxpayer is allowed to take the deduction under
31         this subparagraph only once with respect to any one
32         piece of property.
 
33     (e) Gross income; adjusted gross income; taxable income.
34         (1) In general. Subject to the provisions of paragraph
35     (2) and subsection (b) (3), for purposes of this Section

 

 

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1     and Section 803(e), a taxpayer's gross income, adjusted
2     gross income, or taxable income for the taxable year shall
3     mean the amount of gross income, adjusted gross income or
4     taxable income properly reportable for federal income tax
5     purposes for the taxable year under the provisions of the
6     Internal Revenue Code. Taxable income may be less than
7     zero. However, for taxable years ending on or after
8     December 31, 1986, net operating loss carryforwards from
9     taxable years ending prior to December 31, 1986, may not
10     exceed the sum of federal taxable income for the taxable
11     year before net operating loss deduction, plus the excess
12     of addition modifications over subtraction modifications
13     for the taxable year. For taxable years ending prior to
14     December 31, 1986, taxable income may never be an amount in
15     excess of the net operating loss for the taxable year as
16     defined in subsections (c) and (d) of Section 172 of the
17     Internal Revenue Code, provided that when taxable income of
18     a corporation (other than a Subchapter S corporation),
19     trust, or estate is less than zero and addition
20     modifications, other than those provided by subparagraph
21     (E) of paragraph (2) of subsection (b) for corporations or
22     subparagraph (E) of paragraph (2) of subsection (c) for
23     trusts and estates, exceed subtraction modifications, an
24     addition modification must be made under those
25     subparagraphs for any other taxable year to which the
26     taxable income less than zero (net operating loss) is
27     applied under Section 172 of the Internal Revenue Code or
28     under subparagraph (E) of paragraph (2) of this subsection
29     (e) applied in conjunction with Section 172 of the Internal
30     Revenue Code.
31         (2) Special rule. For purposes of paragraph (1) of this
32     subsection, the taxable income properly reportable for
33     federal income tax purposes shall mean:
34             (A) Certain life insurance companies. In the case
35         of a life insurance company subject to the tax imposed
36         by Section 801 of the Internal Revenue Code, life

 

 

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1         insurance company taxable income, plus the amount of
2         distribution from pre-1984 policyholder surplus
3         accounts as calculated under Section 815a of the
4         Internal Revenue Code;
5             (B) Certain other insurance companies. In the case
6         of mutual insurance companies subject to the tax
7         imposed by Section 831 of the Internal Revenue Code,
8         insurance company taxable income;
9             (C) Regulated investment companies. In the case of
10         a regulated investment company subject to the tax
11         imposed by Section 852 of the Internal Revenue Code,
12         investment company taxable income;
13             (D) Real estate investment trusts. In the case of a
14         real estate investment trust subject to the tax imposed
15         by Section 857 of the Internal Revenue Code, real
16         estate investment trust taxable income;
17             (E) Consolidated corporations. In the case of a
18         corporation which is a member of an affiliated group of
19         corporations filing a consolidated income tax return
20         for the taxable year for federal income tax purposes,
21         taxable income determined as if such corporation had
22         filed a separate return for federal income tax purposes
23         for the taxable year and each preceding taxable year
24         for which it was a member of an affiliated group. For
25         purposes of this subparagraph, the taxpayer's separate
26         taxable income shall be determined as if the election
27         provided by Section 243(b) (2) of the Internal Revenue
28         Code had been in effect for all such years;
29             (F) Cooperatives. In the case of a cooperative
30         corporation or association, the taxable income of such
31         organization determined in accordance with the
32         provisions of Section 1381 through 1388 of the Internal
33         Revenue Code;
34             (G) Subchapter S corporations. In the case of: (i)
35         a Subchapter S corporation for which there is in effect
36         an election for the taxable year under Section 1362 of

 

 

HB5179 - 36 - LRB093 18832 SJM 44567 b

1         the Internal Revenue Code, the taxable income of such
2         corporation determined in accordance with Section
3         1363(b) of the Internal Revenue Code, except that
4         taxable income shall take into account those items
5         which are required by Section 1363(b)(1) of the
6         Internal Revenue Code to be separately stated; and (ii)
7         a Subchapter S corporation for which there is in effect
8         a federal election to opt out of the provisions of the
9         Subchapter S Revision Act of 1982 and have applied
10         instead the prior federal Subchapter S rules as in
11         effect on July 1, 1982, the taxable income of such
12         corporation determined in accordance with the federal
13         Subchapter S rules as in effect on July 1, 1982; and
14             (H) Partnerships. In the case of a partnership,
15         taxable income determined in accordance with Section
16         703 of the Internal Revenue Code, except that taxable
17         income shall take into account those items which are
18         required by Section 703(a)(1) to be separately stated
19         but which would be taken into account by an individual
20         in calculating his taxable income.
 
21     (f) Valuation limitation amount.
22         (1) In general. The valuation limitation amount
23     referred to in subsections (a) (2) (G), (c) (2) (I) and
24     (d)(2) (E) is an amount equal to:
25             (A) The sum of the pre-August 1, 1969 appreciation
26         amounts (to the extent consisting of gain reportable
27         under the provisions of Section 1245 or 1250 of the
28         Internal Revenue Code) for all property in respect of
29         which such gain was reported for the taxable year; plus
30             (B) The lesser of (i) the sum of the pre-August 1,
31         1969 appreciation amounts (to the extent consisting of
32         capital gain) for all property in respect of which such
33         gain was reported for federal income tax purposes for
34         the taxable year, or (ii) the net capital gain for the
35         taxable year, reduced in either case by any amount of

 

 

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1         such gain included in the amount determined under
2         subsection (a) (2) (F) or (c) (2) (H).
3         (2) Pre-August 1, 1969 appreciation amount.
4             (A) If the fair market value of property referred
5         to in paragraph (1) was readily ascertainable on August
6         1, 1969, the pre-August 1, 1969 appreciation amount for
7         such property is the lesser of (i) the excess of such
8         fair market value over the taxpayer's basis (for
9         determining gain) for such property on that date
10         (determined under the Internal Revenue Code as in
11         effect on that date), or (ii) the total gain realized
12         and reportable for federal income tax purposes in
13         respect of the sale, exchange or other disposition of
14         such property.
15             (B) If the fair market value of property referred
16         to in paragraph (1) was not readily ascertainable on
17         August 1, 1969, the pre-August 1, 1969 appreciation
18         amount for such property is that amount which bears the
19         same ratio to the total gain reported in respect of the
20         property for federal income tax purposes for the
21         taxable year, as the number of full calendar months in
22         that part of the taxpayer's holding period for the
23         property ending July 31, 1969 bears to the number of
24         full calendar months in the taxpayer's entire holding
25         period for the property.
26             (C) The Department shall prescribe such
27         regulations as may be necessary to carry out the
28         purposes of this paragraph.
 
29     (g) Double deductions. Unless specifically provided
30 otherwise, nothing in this Section shall permit the same item
31 to be deducted more than once.
 
32     (h) Legislative intention. Except as expressly provided by
33 this Section there shall be no modifications or limitations on
34 the amounts of income, gain, loss or deduction taken into

 

 

HB5179 - 38 - LRB093 18832 SJM 44567 b

1 account in determining gross income, adjusted gross income or
2 taxable income for federal income tax purposes for the taxable
3 year, or in the amount of such items entering into the
4 computation of base income and net income under this Act for
5 such taxable year, whether in respect of property values as of
6 August 1, 1969 or otherwise.
7 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
8 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
9 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
10 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
11 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
12 7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
 
13     Section 99. Effective date. This Act takes effect upon
14 becoming law.