093_SB0362eng

 
SB362 Engrossed                      LRB093 02033 SJM 03449 b

 1        AN ACT concerning taxes.

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

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

 6        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income  means  an amount equal to the taxpayer's adjusted
11        gross  income  for  the  taxable  year  as  modified   by
12        paragraph (2).
13             (2)  Modifications.    The   adjusted  gross  income
14        referred to in paragraph (1) shall be modified by  adding
15        thereto the sum of the following amounts:
16                  (A)  An  amount  equal  to  all amounts paid or
17             accrued to the taxpayer  as  interest  or  dividends
18             during  the taxable year to the extent excluded from
19             gross income in the computation  of  adjusted  gross
20             income,  except  stock dividends of qualified public
21             utilities  described  in  Section  305(e)   of   the
22             Internal Revenue Code;
23                  (B)  An  amount  equal  to  the  amount  of tax
24             imposed by this Act  to  the  extent  deducted  from
25             gross  income  in  the computation of adjusted gross
26             income for the taxable year;
27                  (C)  An amount equal  to  the  amount  received
28             during  the  taxable year as a recovery or refund of
29             real  property  taxes  paid  with  respect  to   the
30             taxpayer's principal residence under the Revenue Act
31             of  1939  and  for  which a deduction was previously
 
SB362 Engrossed             -2-      LRB093 02033 SJM 03449 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
 
SB362 Engrossed             -3-      LRB093 02033 SJM 03449 b
 1             or loss on the taxpayer's federal income tax  return
 2             for  the taxable year based on a sale or transfer of
 3             property for which the taxpayer was required in  any
 4             taxable  year to make an addition modification under
 5             subparagraph (D-15), then an  amount  equal  to  the
 6             aggregate  amount  of  the  deductions  taken in all
 7             taxable years under subparagraph (Z) with respect to
 8             that property.;
 9                  The taxpayer is required to make  the  addition
10             modification  under this subparagraph only once with
11             respect to any one piece of property;. and
12                  (D-20) (D-15)  For taxable years  beginning  on
13             or   after  January  1,  2002,  in  the  case  of  a
14             distribution from a qualified tuition program  under
15             Section 529 of the Internal Revenue Code, other than
16             (i)  a  distribution  from  a  College  Savings Pool
17             created under Section 16.5 of  the  State  Treasurer
18             Act or (ii) a distribution from the Illinois Prepaid
19             Tuition  Trust  Fund,  an amount equal to the amount
20             excluded   from   gross   income    under    Section
21             529(c)(3)(B);
22        and  by  deducting  from the total so obtained the sum of
23        the following amounts:
24                  (E)  For taxable years ending  before  December
25             31,  2001,  any  amount  included  in  such total in
26             respect  of  any  compensation  (including  but  not
27             limited to any compensation paid  or  accrued  to  a
28             serviceman  while  a  prisoner  of war or missing in
29             action) paid to a resident by  reason  of  being  on
30             active duty in the Armed Forces of the United States
31             and  in  respect of any compensation paid or accrued
32             to a resident who as a governmental employee  was  a
33             prisoner of war or missing in action, and in respect
34             of  any  compensation  paid to a resident in 1971 or
 
SB362 Engrossed             -4-      LRB093 02033 SJM 03449 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;
 
SB362 Engrossed             -5-      LRB093 02033 SJM 03449 b
 1                  (I)  An amount equal to all amounts included in
 2             such total pursuant to the provisions of Section 111
 3             of the Internal Revenue Code as a recovery of  items
 4             previously  deducted  from  adjusted gross income in
 5             the computation of taxable income;
 6                  (J)  An  amount  equal   to   those   dividends
 7             included   in  such  total  which  were  paid  by  a
 8             corporation which conducts business operations in an
 9             Enterprise Zone or zones created under the  Illinois
10             Enterprise  Zone Act, and conducts substantially all
11             of its operations in an Enterprise Zone or zones;
12                  (K)  An  amount  equal   to   those   dividends
13             included   in   such  total  that  were  paid  by  a
14             corporation that conducts business operations  in  a
15             federally  designated Foreign Trade Zone or Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located  in  Illinois;   provided   that   dividends
18             eligible  for the deduction provided in subparagraph
19             (J) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (K);
22                  (L)  For taxable years  ending  after  December
23             31,  1983,  an  amount  equal to all social security
24             benefits and railroad retirement  benefits  included
25             in  such  total pursuant to Sections 72(r) and 86 of
26             the Internal Revenue Code;
27                  (M)  With  the   exception   of   any   amounts
28             subtracted  under  subparagraph (N), an amount equal
29             to the sum of all amounts disallowed  as  deductions
30             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
31             Internal Revenue Code of 1954, as now  or  hereafter
32             amended,  and  all  amounts of expenses allocable to
33             interest and  disallowed as  deductions  by  Section
34             265(1)  of the Internal Revenue Code of 1954, as now
 
SB362 Engrossed             -6-      LRB093 02033 SJM 03449 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;
 
SB362 Engrossed             -7-      LRB093 02033 SJM 03449 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
 
SB362 Engrossed             -8-      LRB093 02033 SJM 03449 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
 
SB362 Engrossed             -9-      LRB093 02033 SJM 03449 b
 1             to  assets  stolen  from,  hidden from, or otherwise
 2             lost to  a  victim  of  persecution  for  racial  or
 3             religious  reasons by Nazi Germany or any other Axis
 4             regime immediately prior to, during, and immediately
 5             after World War II, including, but not  limited  to,
 6             interest  on  the  proceeds  receivable as insurance
 7             under policies issued to a victim of persecution for
 8             racial or religious reasons by Nazi Germany  or  any
 9             other  Axis  regime  by European insurance companies
10             immediately  prior  to  and  during  World  War  II;
11             provided, however,  this  subtraction  from  federal
12             adjusted  gross  income  does  not  apply  to assets
13             acquired with such assets or with the proceeds  from
14             the  sale  of  such  assets; provided, further, this
15             paragraph shall only apply to a taxpayer who was the
16             first recipient of such assets after their  recovery
17             and  who  is  a  victim of persecution for racial or
18             religious reasons by Nazi Germany or any other  Axis
19             regime  or  as an heir of the victim.  The amount of
20             and  the  eligibility  for  any  public  assistance,
21             benefit, or similar entitlement is not  affected  by
22             the   inclusion  of  items  (i)  and  (ii)  of  this
23             paragraph in gross income  for  federal  income  tax
24             purposes.   This   paragraph   is  exempt  from  the
25             provisions of Section 250;
26                  (Y)  For taxable years beginning  on  or  after
27             January  1,  2002, moneys contributed in the taxable
28             year to a College Savings Pool account under Section
29             16.5 of the State Treasurer Act, except that amounts
30             excluded   from   gross   income    under    Section
31             529(c)(3)(C)(i)  of  the Internal Revenue Code shall
32             not be  considered  moneys  contributed  under  this
33             subparagraph  (Y).   This subparagraph (Y) is exempt
34             from the provisions of Section 250;
 
SB362 Engrossed             -10-     LRB093 02033 SJM 03449 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
 
SB362 Engrossed             -11-     LRB093 02033 SJM 03449 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 beginning on  or  after
 9             January 1, 2003, and on or before December 31, 2007,
10             moneys  contributed  during  the taxable year by the
11             taxpayer for the purchase  of  an  Illinois  prepaid
12             tuition contract, as defined in the Illinois Prepaid
13             Tuition Act, except that amounts excluded from gross
14             income under Section 529(c)(3)(C)(i) of the Internal
15             Revenue   Code   shall   not  be  considered  moneys
16             contributed under this subparagraph (CC).

17        (b)  Corporations.
18             (1)  In general.  In the case of a corporation, base
19        income means an amount equal to  the  taxpayer's  taxable
20        income for the taxable year as modified by paragraph (2).
21             (2)  Modifications.   The taxable income referred to
22        in paragraph (1) shall be modified by adding thereto  the
23        sum of the following amounts:
24                  (A)  An  amount  equal  to  all amounts paid or
25             accrued  to  the  taxpayer  as  interest   and   all
26             distributions  received  from  regulated  investment
27             companies  during  the  taxable  year  to the extent
28             excluded from gross income  in  the  computation  of
29             taxable income;
30                  (B)  An  amount  equal  to  the  amount  of tax
31             imposed by this Act  to  the  extent  deducted  from
32             gross  income  in  the computation of taxable income
33             for the taxable year;
34                  (C)  In the  case  of  a  regulated  investment
 
SB362 Engrossed             -12-     LRB093 02033 SJM 03449 b
 1             company,  an  amount  equal to the excess of (i) the
 2             net long-term capital gain  for  the  taxable  year,
 3             over  (ii)  the amount of the capital gain dividends
 4             designated  as  such  in  accordance  with   Section
 5             852(b)(3)(C)  of  the  Internal Revenue Code and any
 6             amount designated under Section 852(b)(3)(D) of  the
 7             Internal  Revenue  Code, attributable to the taxable
 8             year (this amendatory Act of 1995 (Public Act 89-89)
 9             is declarative of existing law  and  is  not  a  new
10             enactment);
11                  (D)  The  amount  of  any  net  operating  loss
12             deduction taken in arriving at taxable income, other
13             than  a  net  operating  loss carried forward from a
14             taxable year ending prior to December 31, 1986;
15                  (E)  For taxable years in which a net operating
16             loss carryback or carryforward from a  taxable  year
17             ending  prior  to December 31, 1986 is an element of
18             taxable income under paragraph (1) of subsection (e)
19             or subparagraph (E) of paragraph (2)  of  subsection
20             (e),  the  amount  by  which  addition modifications
21             other than those provided by this  subparagraph  (E)
22             exceeded  subtraction  modifications in such earlier
23             taxable year, with the following limitations applied
24             in the order that they are listed:
25                       (i)  the addition modification relating to
26                  the net operating loss carried back or  forward
27                  to  the  taxable  year  from  any  taxable year
28                  ending prior to  December  31,  1986  shall  be
29                  reduced  by the amount of addition modification
30                  under this subparagraph (E)  which  related  to
31                  that  net  operating  loss  and which was taken
32                  into account in calculating the base income  of
33                  an earlier taxable year, and
34                       (ii)  the  addition  modification relating
 
SB362 Engrossed             -13-     LRB093 02033 SJM 03449 b
 1                  to the  net  operating  loss  carried  back  or
 2                  forward  to  the  taxable year from any taxable
 3                  year ending prior to December  31,  1986  shall
 4                  not  exceed  the  amount  of  such carryback or
 5                  carryforward;
 6                  For taxable years  in  which  there  is  a  net
 7             operating  loss  carryback or carryforward from more
 8             than one other taxable year ending prior to December
 9             31, 1986, the addition modification provided in this
10             subparagraph (E) shall be the  sum  of  the  amounts
11             computed    independently    under   the   preceding
12             provisions of this subparagraph (E)  for  each  such
13             taxable year;
14                  (E-5)  For  taxable years ending after December
15             31,  1997,  an  amount   equal   to   any   eligible
16             remediation  costs  that the corporation deducted in
17             computing adjusted gross income and  for  which  the
18             corporation  claims a credit under subsection (l) of
19             Section 201;
20                  (E-10)  For taxable years 2001 and  thereafter,
21             an  amount equal to the bonus depreciation deduction
22             (30%  of  the  adjusted  basis  of   the   qualified
23             property) taken on the taxpayer's federal income tax
24             return  for the taxable year under subsection (k) of
25             Section 168 of the Internal Revenue Code; and
26                  (E-11)  If the taxpayer reports a capital  gain
27             or  loss on the taxpayer's federal income tax return
28             for the taxable year based on a sale or transfer  of
29             property  for which the taxpayer was required in any
30             taxable year to make an addition modification  under
31             subparagraph  (E-10),  then  an  amount equal to the
32             aggregate amount of  the  deductions  taken  in  all
33             taxable years under subparagraph (T) with respect to
34             that property.;
 
SB362 Engrossed             -14-     LRB093 02033 SJM 03449 b
 1                  The  taxpayer  is required to make the addition
 2             modification under this subparagraph only once  with
 3             respect to any one piece of property;
 4        and  by  deducting  from the total so obtained the sum of
 5        the following amounts:
 6                  (F)  An amount equal to the amount of  any  tax
 7             imposed  by  this  Act  which  was  refunded  to the
 8             taxpayer and included in such total for the  taxable
 9             year;
10                  (G)  An  amount equal to any amount included in
11             such total under Section 78 of the Internal  Revenue
12             Code;
13                  (H)  In  the  case  of  a  regulated investment
14             company, an amount equal to  the  amount  of  exempt
15             interest  dividends as defined in subsection (b) (5)
16             of Section 852 of the Internal Revenue Code, paid to
17             shareholders for the taxable year;
18                  (I)  With  the   exception   of   any   amounts
19             subtracted  under  subparagraph (J), an amount equal
20             to the sum of all amounts disallowed  as  deductions
21             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
22             amounts  disallowed  as  interest expense by Section
23             291(a)(3) of the Internal Revenue Code,  as  now  or
24             hereafter  amended,  and  all  amounts  of  expenses
25             allocable  to  interest and disallowed as deductions
26             by Section 265(a)(1) of the Internal  Revenue  Code,
27             as  now  or  hereafter amended; and (ii) for taxable
28             years ending on or after August 13,  1999,  Sections
29             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
30             of the Internal Revenue Code; the provisions of this
31             subparagraph  are  exempt  from  the  provisions  of
32             Section 250;
33                  (J)  An amount equal to all amounts included in
34             such  total  which  are exempt from taxation by this
 
SB362 Engrossed             -15-     LRB093 02033 SJM 03449 b
 1             State  either  by  reason   of   its   statutes   or
 2             Constitution  or  by  reason  of  the  Constitution,
 3             treaties  or statutes of the United States; provided
 4             that, in the case of any statute of this State  that
 5             exempts   income   derived   from   bonds  or  other
 6             obligations from the tax imposed under this Act, the
 7             amount exempted shall be the interest  net  of  bond
 8             premium amortization;
 9                  (K)  An   amount   equal   to  those  dividends
10             included  in  such  total  which  were  paid  by   a
11             corporation which conducts business operations in an
12             Enterprise  Zone or zones created under the Illinois
13             Enterprise Zone Act and conducts  substantially  all
14             of its operations in an Enterprise Zone or zones;
15                  (L)  An   amount   equal   to  those  dividends
16             included  in  such  total  that  were  paid   by   a
17             corporation  that  conducts business operations in a
18             federally designated Foreign Trade Zone or  Sub-Zone
19             and  that  is  designated  a  High  Impact  Business
20             located   in   Illinois;   provided  that  dividends
21             eligible for the deduction provided in  subparagraph
22             (K)  of  paragraph 2 of this subsection shall not be
23             eligible  for  the  deduction  provided  under  this
24             subparagraph (L);
25                  (M)  For  any  taxpayer  that  is  a  financial
26             organization within the meaning of Section 304(c) of
27             this Act,  an  amount  included  in  such  total  as
28             interest  income  from  a loan or loans made by such
29             taxpayer to a borrower, to the extent  that  such  a
30             loan  is  secured  by property which is eligible for
31             the Enterprise Zone Investment Credit.  To determine
32             the portion of a loan or loans that  is  secured  by
33             property  eligible  for  a Section 201(f) investment
34             credit to the borrower, the entire principal  amount
 
SB362 Engrossed             -16-     LRB093 02033 SJM 03449 b
 1             of  the  loan  or loans between the taxpayer and the
 2             borrower should be divided into  the  basis  of  the
 3             Section  201(f)  investment  credit  property  which
 4             secures  the  loan  or loans, using for this purpose
 5             the original basis of such property on the date that
 6             it was placed in service  in  the  Enterprise  Zone.
 7             The  subtraction  modification available to taxpayer
 8             in any year under  this  subsection  shall  be  that
 9             portion  of  the total interest paid by the borrower
10             with  respect  to  such  loan  attributable  to  the
11             eligible property as calculated under  the  previous
12             sentence;
13                  (M-1)  For  any  taxpayer  that  is a financial
14             organization within the meaning of Section 304(c) of
15             this Act,  an  amount  included  in  such  total  as
16             interest  income  from  a loan or loans made by such
17             taxpayer to a borrower, to the extent  that  such  a
18             loan  is  secured  by property which is eligible for
19             the High  Impact  Business  Investment  Credit.   To
20             determine  the  portion  of  a loan or loans that is
21             secured by property eligible for  a  Section  201(h)
22             investment   credit  to  the  borrower,  the  entire
23             principal amount of the loan or  loans  between  the
24             taxpayer and the borrower should be divided into the
25             basis   of  the  Section  201(h)  investment  credit
26             property which secures the loan or loans, using  for
27             this  purpose the original basis of such property on
28             the  date  that  it  was  placed  in  service  in  a
29             federally designated Foreign Trade Zone or  Sub-Zone
30             located  in  Illinois.  No taxpayer that is eligible
31             for the deduction provided in  subparagraph  (M)  of
32             paragraph  (2)  of this subsection shall be eligible
33             for the deduction provided under  this  subparagraph
34             (M-1).   The  subtraction  modification available to
 
SB362 Engrossed             -17-     LRB093 02033 SJM 03449 b
 1             taxpayers in any year under this subsection shall be
 2             that portion of  the  total  interest  paid  by  the
 3             borrower  with  respect to such loan attributable to
 4             the  eligible  property  as  calculated  under   the
 5             previous sentence;
 6                  (N)  Two times any contribution made during the
 7             taxable  year  to  a designated zone organization to
 8             the extent that the contribution (i) qualifies as  a
 9             charitable  contribution  under  subsection  (c)  of
10             Section  170  of  the Internal Revenue Code and (ii)
11             must, by its terms, be used for a  project  approved
12             by  the Department of Commerce and Community Affairs
13             under Section 11 of  the  Illinois  Enterprise  Zone
14             Act;
15                  (O)  An  amount  equal  to: (i) 85% for taxable
16             years ending on or before December 31, 1992,  or,  a
17             percentage  equal  to the percentage allowable under
18             Section 243(a)(1) of the Internal  Revenue  Code  of
19             1986  for  taxable  years  ending after December 31,
20             1992, of the amount by which dividends  included  in
21             taxable  income and received from a corporation that
22             is not created or organized under the  laws  of  the
23             United  States or any state or political subdivision
24             thereof, including, for taxable years ending  on  or
25             after  December  31,  1988,  dividends  received  or
26             deemed   received  or  paid  or  deemed  paid  under
27             Sections 951 through 964  of  the  Internal  Revenue
28             Code, exceed the amount of the modification provided
29             under  subparagraph  (G)  of  paragraph  (2) of this
30             subsection (b) which is related to  such  dividends;
31             plus  (ii)  100%  of  the amount by which dividends,
32             included in taxable income and received,  including,
33             for  taxable  years  ending on or after December 31,
34             1988, dividends received or deemed received or  paid
 
SB362 Engrossed             -18-     LRB093 02033 SJM 03449 b
 1             or deemed paid under Sections 951 through 964 of the
 2             Internal  Revenue  Code,  from  any such corporation
 3             specified in clause  (i)  that  would  but  for  the
 4             provisions  of  Section 1504 (b) (3) of the Internal
 5             Revenue  Code  be  treated  as  a  member   of   the
 6             affiliated   group   which   includes  the  dividend
 7             recipient, exceed the  amount  of  the  modification
 8             provided  under subparagraph (G) of paragraph (2) of
 9             this  subsection  (b)  which  is  related  to   such
10             dividends;
11                  (P)  An  amount  equal to any contribution made
12             to a job training project  established  pursuant  to
13             the Tax Increment Allocation Redevelopment Act;
14                  (Q)  An  amount  equal  to  the  amount  of the
15             deduction used to compute  the  federal  income  tax
16             credit  for  restoration of substantial amounts held
17             under claim of right for the taxable  year  pursuant
18             to  Section  1341  of  the  Internal Revenue Code of
19             1986;
20                  (R)  In the case of  an  attorney-in-fact  with
21             respect  to  whom  an  interinsurer  or a reciprocal
22             insurer has made the election under Section  835  of
23             the  Internal Revenue Code, 26 U.S.C. 835, an amount
24             equal to the excess, if any, of the amounts paid  or
25             incurred  by that interinsurer or reciprocal insurer
26             in the taxable year to the attorney-in-fact over the
27             deduction allowed to that interinsurer or reciprocal
28             insurer with respect to the  attorney-in-fact  under
29             Section  835(b) of the Internal Revenue Code for the
30             taxable year;
31                  (S)  For  taxable  years  ending  on  or  after
32             December 31, 1997, in the case  of  a  Subchapter  S
33             corporation,  an  amount  equal  to  all  amounts of
34             income allocable to a  shareholder  subject  to  the
 
SB362 Engrossed             -19-     LRB093 02033 SJM 03449 b
 1             Personal Property Tax Replacement Income Tax imposed
 2             by  subsections  (c)  and (d) of Section 201 of this
 3             Act, including amounts  allocable  to  organizations
 4             exempt  from federal income tax by reason of Section
 5             501(a)  of  the   Internal   Revenue   Code.    This
 6             subparagraph  (S)  is  exempt from the provisions of
 7             Section 250;
 8                  (T)  For taxable years 2001 and thereafter, for
 9             the taxable year in  which  the  bonus  depreciation
10             deduction   (30%   of  the  adjusted  basis  of  the
11             qualified  property)  is  taken  on  the  taxpayer's
12             federal income tax return under  subsection  (k)  of
13             Section  168  of  the  Internal Revenue Code and for
14             each applicable taxable year thereafter,  an  amount
15             equal to "x", where:
16                       (1)  "y"   equals   the   amount   of  the
17                  depreciation deduction taken  for  the  taxable
18                  year  on  the  taxpayer's  federal  income  tax
19                  return   on   property   for  which  the  bonus
20                  depreciation deduction  (30%  of  the  adjusted
21                  basis  of  the qualified property) was taken in
22                  any year under subsection (k) of Section 168 of
23                  the Internal Revenue Code,  but  not  including
24                  the bonus depreciation deduction; and
25                       (2)  "x"  equals  "y" multiplied by 30 and
26                  then  divided  by  70  (or  "y"  multiplied  by
27                  0.429).
28                  The  aggregate  amount  deducted   under   this
29             subparagraph  in all taxable years for any one piece
30             of property may not exceed the amount of  the  bonus
31             depreciation deduction (30% of the adjusted basis of
32             the  qualified  property)  taken on that property on
33             the  taxpayer's  federal  income  tax  return  under
34             subsection  (k)  of  Section  168  of  the  Internal
 
SB362 Engrossed             -20-     LRB093 02033 SJM 03449 b
 1             Revenue Code; and
 2                  (U)  If the taxpayer reports a capital gain  or
 3             loss on the taxpayer's federal income tax return for
 4             the  taxable  year  based  on  a sale or transfer of
 5             property for which the taxpayer was required in  any
 6             taxable  year to make an addition modification under
 7             subparagraph (E-10), then an amount  equal  to  that
 8             addition modification.
 9                  The  taxpayer  is allowed to take the deduction
10             under this subparagraph only once  with  respect  to
11             any one piece of property; and
12                  (V)  For  taxable  years  beginning on or after
13             January 1, 2003, and on or before December 31, 2007,
14             moneys contributed during the taxable  year  by  the
15             taxpayer  for  the  purchase  of an Illinois prepaid
16             tuition contract, as defined in the Illinois Prepaid
17             Tuition 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 (V).
21             (3)  Special  rule.   For  purposes of paragraph (2)
22        (A), "gross income" in  the  case  of  a  life  insurance
23        company,  for  tax years ending on and after December 31,
24        1994, shall mean the  gross  investment  income  for  the
25        taxable year.

26        (c)  Trusts and estates.
27             (1)  In  general.  In the case of a trust or estate,
28        base income means  an  amount  equal  to  the  taxpayer's
29        taxable  income  for  the  taxable  year  as  modified by
30        paragraph (2).
31             (2)  Modifications.  Subject to  the  provisions  of
32        paragraph   (3),   the  taxable  income  referred  to  in
33        paragraph (1) shall be modified by adding thereto the sum
34        of the following amounts:
 
SB362 Engrossed             -21-     LRB093 02033 SJM 03449 b
 1                  (A)  An amount equal to  all  amounts  paid  or
 2             accrued  to  the  taxpayer  as interest or dividends
 3             during the taxable year to the extent excluded  from
 4             gross income in the computation of taxable income;
 5                  (B)  In the case of (i) an estate, $600; (ii) a
 6             trust  which,  under  its  governing  instrument, is
 7             required to distribute all of its income  currently,
 8             $300;  and  (iii) any other trust, $100, but in each
 9             such case,  only  to  the  extent  such  amount  was
10             deducted in the computation of taxable income;
11                  (C)  An  amount  equal  to  the  amount  of tax
12             imposed by this Act  to  the  extent  deducted  from
13             gross  income  in  the computation of taxable income
14             for the taxable year;
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  taxable
27             year,  with the following limitations applied in the
28             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
 
SB362 Engrossed             -22-     LRB093 02033 SJM 03449 b
 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                  (F)  For  taxable  years  ending  on  or  after
19             January 1, 1989, an amount equal to the tax deducted
20             pursuant to Section 164 of the Internal Revenue Code
21             if  the trust or estate is claiming the same tax for
22             purposes of the Illinois foreign  tax  credit  under
23             Section 601 of this Act;
24                  (G)  An  amount  equal  to  the  amount  of the
25             capital gain deduction allowable under the  Internal
26             Revenue  Code,  to  the  extent  deducted from gross
27             income in the computation of taxable income;
28                  (G-5)  For taxable years ending after  December
29             31,   1997,   an   amount   equal  to  any  eligible
30             remediation costs that the trust or estate  deducted
31             in computing adjusted gross income and for which the
32             trust or estate claims a credit under subsection (l)
33             of Section 201;
34                  (G-10)  For  taxable years 2001 and thereafter,
 
SB362 Engrossed             -23-     LRB093 02033 SJM 03449 b
 1             an amount equal to the bonus depreciation  deduction
 2             (30%   of   the  adjusted  basis  of  the  qualified
 3             property) taken on the taxpayer's federal income tax
 4             return for the taxable year under subsection (k)  of
 5             Section 168 of the Internal Revenue Code; and
 6                  (G-11)  If  the taxpayer reports a capital gain
 7             or loss on the taxpayer's federal income tax  return
 8             for  the taxable year based on a sale or transfer of
 9             property for which the taxpayer was required in  any
10             taxable  year to make an addition modification under
11             subparagraph (G-10), then an  amount  equal  to  the
12             aggregate  amount  of  the  deductions  taken in all
13             taxable years under subparagraph (R) with respect to
14             that property.;
15                  The taxpayer is required to make  the  addition
16             modification  under this subparagraph only once with
17             respect to any one piece of property;
18        and by deducting from the total so obtained  the  sum  of
19        the following amounts:
20                  (H)  An amount equal to all amounts included in
21             such  total  pursuant  to the provisions of Sections
22             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
23             408 of the Internal Revenue Code or included in such
24             total  as  distributions under the provisions of any
25             retirement or disability plan for employees  of  any
26             governmental  agency or unit, or retirement payments
27             to retired partners, which payments are excluded  in
28             computing  net  earnings  from  self  employment  by
29             Section  1402  of  the  Internal  Revenue  Code  and
30             regulations adopted pursuant thereto;
31                  (I)  The valuation limitation amount;
32                  (J)  An  amount  equal to the amount of any tax
33             imposed by  this  Act  which  was  refunded  to  the
34             taxpayer  and included in such total for the taxable
 
SB362 Engrossed             -24-     LRB093 02033 SJM 03449 b
 1             year;
 2                  (K)  An amount equal to all amounts included in
 3             taxable income as  modified  by  subparagraphs  (A),
 4             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
 5             from taxation by this State either by reason of  its
 6             statutes   or  Constitution  or  by  reason  of  the
 7             Constitution, treaties or  statutes  of  the  United
 8             States; provided that, in the case of any statute of
 9             this State that exempts income derived from bonds or
10             other  obligations  from  the tax imposed under this
11             Act, the amount exempted shall be the  interest  net
12             of bond premium amortization;
13                  (L)  With   the   exception   of   any  amounts
14             subtracted under subparagraph (K), an  amount  equal
15             to  the  sum of all amounts disallowed as deductions
16             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
17             Internal  Revenue Code, as now or hereafter amended,
18             and all amounts of expenses  allocable  to  interest
19             and  disallowed  as  deductions by Section 265(1) of
20             the  Internal  Revenue  Code  of  1954,  as  now  or
21             hereafter amended; and (ii) for taxable years ending
22             on or after August  13,  1999,  Sections  171(a)(2),
23             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
24             Revenue  Code;  the  provisions of this subparagraph
25             are exempt from the provisions of Section 250;
26                  (M)  An  amount  equal   to   those   dividends
27             included   in  such  total  which  were  paid  by  a
28             corporation which conducts business operations in an
29             Enterprise Zone or zones created under the  Illinois
30             Enterprise  Zone  Act and conducts substantially all
31             of its operations in an Enterprise Zone or Zones;
32                  (N)  An amount equal to any  contribution  made
33             to  a  job  training project established pursuant to
34             the Tax Increment Allocation Redevelopment Act;
 
SB362 Engrossed             -25-     LRB093 02033 SJM 03449 b
 1                  (O)  An  amount  equal   to   those   dividends
 2             included   in   such  total  that  were  paid  by  a
 3             corporation that conducts business operations  in  a
 4             federally  designated Foreign Trade Zone or Sub-Zone
 5             and  that  is  designated  a  High  Impact  Business
 6             located  in  Illinois;   provided   that   dividends
 7             eligible  for the deduction provided in subparagraph
 8             (M) of paragraph (2) of this subsection shall not be
 9             eligible  for  the  deduction  provided  under  this
10             subparagraph (O);
11                  (P)  An amount  equal  to  the  amount  of  the
12             deduction  used  to  compute  the federal income tax
13             credit for restoration of substantial  amounts  held
14             under  claim  of right for the taxable year pursuant
15             to Section 1341 of  the  Internal  Revenue  Code  of
16             1986;
17                  (Q)  For  taxable  year 1999 and thereafter, an
18             amount equal to the amount of any (i) distributions,
19             to the extent includible in gross income for federal
20             income tax purposes, made to the taxpayer because of
21             his or her status as a  victim  of  persecution  for
22             racial  or  religious reasons by Nazi Germany or any
23             other Axis regime or as an heir of  the  victim  and
24             (ii)  items  of  income, to the extent includible in
25             gross  income  for  federal  income  tax   purposes,
26             attributable  to, derived from or in any way related
27             to assets stolen from,  hidden  from,  or  otherwise
28             lost  to  a  victim  of  persecution  for  racial or
29             religious reasons by Nazi Germany or any other  Axis
30             regime immediately prior to, during, and immediately
31             after  World  War II, including, but not limited to,
32             interest on the  proceeds  receivable  as  insurance
33             under policies issued to a victim of persecution for
34             racial  or  religious reasons by Nazi Germany or any
 
SB362 Engrossed             -26-     LRB093 02033 SJM 03449 b
 1             other Axis regime by  European  insurance  companies
 2             immediately  prior  to  and  during  World  War  II;
 3             provided,  however,  this  subtraction  from federal
 4             adjusted gross  income  does  not  apply  to  assets
 5             acquired  with such assets or with the proceeds from
 6             the sale of such  assets;  provided,  further,  this
 7             paragraph shall only apply to a taxpayer who was the
 8             first  recipient of such assets after their recovery
 9             and who is a victim of  persecution  for  racial  or
10             religious  reasons by Nazi Germany or any other Axis
11             regime or as an heir of the victim.  The  amount  of
12             and  the  eligibility  for  any  public  assistance,
13             benefit,  or  similar entitlement is not affected by
14             the  inclusion  of  items  (i)  and  (ii)  of   this
15             paragraph  in  gross  income  for federal income tax
16             purposes.  This  paragraph  is   exempt   from   the
17             provisions of Section 250;
18                  (R)  For taxable years 2001 and thereafter, for
19             the  taxable  year  in  which the bonus depreciation
20             deduction  (30%  of  the  adjusted  basis   of   the
21             qualified  property)  is  taken  on  the  taxpayer's
22             federal  income  tax  return under subsection (k) of
23             Section 168 of the Internal  Revenue  Code  and  for
24             each  applicable  taxable year thereafter, an amount
25             equal to "x", where:
26                       (1)  "y"  equals   the   amount   of   the
27                  depreciation  deduction  taken  for the taxable
28                  year  on  the  taxpayer's  federal  income  tax
29                  return  on  property  for   which   the   bonus
30                  depreciation  deduction  (30%  of  the adjusted
31                  basis of the qualified property) was  taken  in
32                  any year under subsection (k) of Section 168 of
33                  the  Internal  Revenue  Code, but not including
34                  the bonus depreciation deduction; and
 
SB362 Engrossed             -27-     LRB093 02033 SJM 03449 b
 1                       (2)  "x" equals "y" multiplied by  30  and
 2                  then  divided  by  70  (or  "y"  multiplied  by
 3                  0.429).
 4                  The   aggregate   amount  deducted  under  this
 5             subparagraph in all taxable years for any one  piece
 6             of  property  may not exceed the amount of the bonus
 7             depreciation deduction (30% of the adjusted basis of
 8             the qualified property) taken on  that  property  on
 9             the  taxpayer's  federal  income  tax  return  under
10             subsection  (k)  of  Section  168  of  the  Internal
11             Revenue Code; and
12                  (S)  If  the taxpayer reports a capital gain or
13             loss on the taxpayer's federal income tax return for
14             the taxable year based on  a  sale  or  transfer  of
15             property  for which the taxpayer was required in any
16             taxable year to make an addition modification  under
17             subparagraph  (G-10),  then  an amount equal to that
18             addition modification.
19                  The taxpayer is allowed to take  the  deduction
20             under  this  subparagraph  only once with respect to
21             any one piece of property; and
22                  (T)  For taxable years beginning  on  or  after
23             January 1, 2003, and on or before December 31, 2007,
24             moneys  contributed  during  the taxable year by the
25             taxpayer for the purchase  of  an  Illinois  prepaid
26             tuition contract, as defined in the Illinois Prepaid
27             Tuition Act, except that amounts excluded from gross
28             income under Section 529(c)(3)(C)(i) of the Internal
29             Revenue   Code   shall   not  be  considered  moneys
30             contributed under this subparagraph (T).
31             (3)  Limitation.  The  amount  of  any  modification
32        otherwise  required  under  this  subsection shall, under
33        regulations prescribed by the Department, be adjusted  by
34        any  amounts  included  therein which were properly paid,
 
SB362 Engrossed             -28-     LRB093 02033 SJM 03449 b
 1        credited, or required to be distributed,  or  permanently
 2        set  aside  for charitable purposes pursuant  to Internal
 3        Revenue Code Section 642(c) during the taxable year.

 4        (d)  Partnerships.
 5             (1)  In general. In the case of a partnership,  base
 6        income  means  an  amount equal to the taxpayer's taxable
 7        income for the taxable year as modified by paragraph (2).
 8             (2)  Modifications. The taxable income  referred  to
 9        in  paragraph (1) shall be modified by adding thereto the
10        sum of the following amounts:
11                  (A)  An amount equal to  all  amounts  paid  or
12             accrued  to  the  taxpayer  as interest or dividends
13             during the taxable year to the extent excluded  from
14             gross income in the computation of taxable income;
15                  (B)  An  amount  equal  to  the  amount  of tax
16             imposed by this Act  to  the  extent  deducted  from
17             gross income for the taxable year;
18                  (C)  The  amount  of  deductions allowed to the
19             partnership pursuant  to  Section  707  (c)  of  the
20             Internal  Revenue  Code  in  calculating its taxable
21             income;
22                  (D)  An amount  equal  to  the  amount  of  the
23             capital  gain deduction allowable under the Internal
24             Revenue Code, to  the  extent  deducted  from  gross
25             income in the computation of taxable income;
26                  (D-5)  For  taxable  years 2001 and thereafter,
27             an amount equal to the bonus depreciation  deduction
28             (30%   of   the  adjusted  basis  of  the  qualified
29             property) taken on the taxpayer's federal income tax
30             return for the taxable year under subsection (k)  of
31             Section 168 of the Internal Revenue Code; and
32                  (D-6)  If  the  taxpayer reports a capital gain
33             or loss on the taxpayer's federal income tax  return
34             for  the taxable year based on a sale or transfer of
 
SB362 Engrossed             -29-     LRB093 02033 SJM 03449 b
 1             property for which the taxpayer was required in  any
 2             taxable  year to make an addition modification under
 3             subparagraph (D-5), then  an  amount  equal  to  the
 4             aggregate  amount  of  the  deductions  taken in all
 5             taxable years under subparagraph (O) with respect to
 6             that property.;
 7                  The taxpayer is required to make  the  addition
 8             modification  under this subparagraph only once with
 9             respect to any one piece of property;
10        and by deducting from the total so obtained the following
11        amounts:
12                  (E)  The valuation limitation amount;
13                  (F)  An amount equal to the amount of  any  tax
14             imposed  by  this  Act  which  was  refunded  to the
15             taxpayer and included in such total for the  taxable
16             year;
17                  (G)  An amount equal to all amounts included in
18             taxable  income  as  modified  by subparagraphs (A),
19             (B), (C) and (D) which are exempt from  taxation  by
20             this  State  either  by  reason  of  its statutes or
21             Constitution  or  by  reason  of  the  Constitution,
22             treaties or statutes of the United States;  provided
23             that,  in the case of any statute of this State that
24             exempts  income  derived   from   bonds   or   other
25             obligations from the tax imposed under this Act, the
26             amount  exempted  shall  be the interest net of bond
27             premium amortization;
28                  (H)  Any  income  of  the   partnership   which
29             constitutes  personal  service  income as defined in
30             Section 1348 (b) (1) of the  Internal  Revenue  Code
31             (as  in  effect  December  31, 1981) or a reasonable
32             allowance  for  compensation  paid  or  accrued  for
33             services rendered by partners  to  the  partnership,
34             whichever is greater;
 
SB362 Engrossed             -30-     LRB093 02033 SJM 03449 b
 1                  (I)  An  amount  equal to all amounts of income
 2             distributable to an entity subject to  the  Personal
 3             Property  Tax  Replacement  Income  Tax  imposed  by
 4             subsections  (c)  and (d) of Section 201 of this Act
 5             including  amounts  distributable  to  organizations
 6             exempt from federal income tax by reason of  Section
 7             501(a) of the Internal Revenue Code;
 8                  (J)  With   the   exception   of   any  amounts
 9             subtracted under subparagraph (G), an  amount  equal
10             to  the  sum of all amounts disallowed as deductions
11             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
12             Internal  Revenue  Code of 1954, as now or hereafter
13             amended, and all amounts of  expenses  allocable  to
14             interest  and  disallowed  as  deductions by Section
15             265(1) of the  Internal  Revenue  Code,  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                  (K)  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, enacted  by  the  82nd  General
26             Assembly,  and  conducts  substantially  all  of its
27             operations in an Enterprise Zone or Zones;
28                  (L)  An amount equal to any  contribution  made
29             to  a  job  training project established pursuant to
30             the   Real   Property   Tax   Increment   Allocation
31             Redevelopment Act;
32                  (M)  An  amount  equal   to   those   dividends
33             included   in   such  total  that  were  paid  by  a
34             corporation that conducts business operations  in  a
 
SB362 Engrossed             -31-     LRB093 02033 SJM 03449 b
 1             federally  designated Foreign Trade Zone or Sub-Zone
 2             and  that  is  designated  a  High  Impact  Business
 3             located  in  Illinois;   provided   that   dividends
 4             eligible  for the deduction provided in subparagraph
 5             (K) of paragraph (2) of this subsection shall not be
 6             eligible  for  the  deduction  provided  under  this
 7             subparagraph (M);
 8                  (N)  An amount  equal  to  the  amount  of  the
 9             deduction  used  to  compute  the federal income tax
10             credit for restoration of substantial  amounts  held
11             under  claim  of right for the taxable year pursuant
12             to Section 1341 of  the  Internal  Revenue  Code  of
13             1986;
14                  (O)  For taxable years 2001 and thereafter, for
15             the  taxable  year  in  which the bonus depreciation
16             deduction  (30%  of  the  adjusted  basis   of   the
17             qualified  property)  is  taken  on  the  taxpayer's
18             federal  income  tax  return under subsection (k) of
19             Section 168 of the Internal  Revenue  Code  and  for
20             each  applicable  taxable year thereafter, an amount
21             equal to "x", where:
22                       (1)  "y"  equals   the   amount   of   the
23                  depreciation  deduction  taken  for the taxable
24                  year  on  the  taxpayer's  federal  income  tax
25                  return  on  property  for   which   the   bonus
26                  depreciation  deduction  (30%  of  the adjusted
27                  basis of the qualified property) was  taken  in
28                  any year under subsection (k) of Section 168 of
29                  the  Internal  Revenue  Code, but not including
30                  the bonus depreciation deduction; and
31                       (2)  "x" equals "y" multiplied by  30  and
32                  then  divided  by  70  (or  "y"  multiplied  by
33                  0.429).
34                  The   aggregate   amount  deducted  under  this
 
SB362 Engrossed             -32-     LRB093 02033 SJM 03449 b
 1             subparagraph in all taxable years for any one  piece
 2             of  property  may not exceed the amount of the bonus
 3             depreciation deduction (30% of the adjusted basis of
 4             the qualified property) taken on  that  property  on
 5             the  taxpayer's  federal  income  tax  return  under
 6             subsection  (k)  of  Section  168  of  the  Internal
 7             Revenue Code; and
 8                  (P)  If  the taxpayer reports a capital gain or
 9             loss on the taxpayer's federal income tax return for
10             the taxable year based on  a  sale  or  transfer  of
11             property  for which the taxpayer was required in any
12             taxable year to make an addition modification  under
13             subparagraph  (D-5),  then  an  amount equal to that
14             addition modification.
15                  The taxpayer is allowed to take  the  deduction
16             under  this  subparagraph  only once with respect to
17             any one piece of property.
18                  (Q)  For taxable years beginning  on  or  after
19             January 1, 2003, and on or before December 31, 2007,
20             moneys  contributed  during  the taxable year by the
21             taxpayer for the purchase  of  an  Illinois  prepaid
22             tuition contract, as defined in the Illinois Prepaid
23             Tuition Act, except that amounts excluded from gross
24             income under Section 529(c)(3)(C)(i) of the Internal
25             Revenue   Code   shall   not  be  considered  moneys
26             contributed under this subparagraph (Q).

27        (e)  Gross income; adjusted gross income; taxable income.
28             (1)  In  general.   Subject  to  the  provisions  of
29        paragraph (2) and subsection (b)  (3),  for  purposes  of
30        this  Section  and  Section  803(e),  a  taxpayer's gross
31        income, adjusted gross income, or taxable income for  the
32        taxable  year  shall  mean  the  amount  of gross income,
33        adjusted  gross  income  or   taxable   income   properly
34        reportable  for  federal  income  tax  purposes  for  the
 
SB362 Engrossed             -33-     LRB093 02033 SJM 03449 b
 1        taxable year under the provisions of the Internal Revenue
 2        Code.  Taxable income may be less than zero. However, for
 3        taxable years ending on or after December 31,  1986,  net
 4        operating  loss  carryforwards  from taxable years ending
 5        prior to December 31, 1986, may not  exceed  the  sum  of
 6        federal  taxable  income  for the taxable year before net
 7        operating loss deduction, plus  the  excess  of  addition
 8        modifications  over  subtraction  modifications  for  the
 9        taxable year.  For taxable years ending prior to December
10        31, 1986, taxable income may never be an amount in excess
11        of the net operating loss for the taxable year as defined
12        in subsections (c) and (d) of Section 172 of the Internal
13        Revenue  Code,  provided  that  when  taxable income of a
14        corporation (other  than  a  Subchapter  S  corporation),
15        trust,   or   estate  is  less  than  zero  and  addition
16        modifications, other than those provided by  subparagraph
17        (E)  of  paragraph (2) of subsection (b) for corporations
18        or subparagraph (E) of paragraph (2)  of  subsection  (c)
19        for trusts and estates, exceed subtraction modifications,
20        an   addition  modification  must  be  made  under  those
21        subparagraphs for any other taxable  year  to  which  the
22        taxable  income  less  than  zero (net operating loss) is
23        applied under Section 172 of the Internal Revenue Code or
24        under  subparagraph  (E)  of  paragraph   (2)   of   this
25        subsection (e) applied in conjunction with Section 172 of
26        the Internal Revenue Code.
27             (2)  Special rule.  For purposes of paragraph (1) of
28        this  subsection,  the taxable income properly reportable
29        for federal income tax purposes shall mean:
30                  (A)  Certain life insurance companies.  In  the
31             case  of a life insurance company subject to the tax
32             imposed by Section 801 of the Internal Revenue Code,
33             life insurance  company  taxable  income,  plus  the
34             amount  of  distribution  from pre-1984 policyholder
 
SB362 Engrossed             -34-     LRB093 02033 SJM 03449 b
 1             surplus accounts as calculated under Section 815a of
 2             the Internal Revenue Code;
 3                  (B)  Certain other insurance companies.  In the
 4             case of mutual insurance companies  subject  to  the
 5             tax  imposed  by Section 831 of the Internal Revenue
 6             Code, insurance company taxable income;
 7                  (C)  Regulated investment  companies.   In  the
 8             case  of  a  regulated investment company subject to
 9             the tax imposed  by  Section  852  of  the  Internal
10             Revenue Code, investment company taxable income;
11                  (D)  Real  estate  investment  trusts.   In the
12             case of a real estate investment  trust  subject  to
13             the  tax  imposed  by  Section  857  of the Internal
14             Revenue Code, real estate investment  trust  taxable
15             income;
16                  (E)  Consolidated corporations.  In the case of
17             a  corporation  which  is  a member of an affiliated
18             group of corporations filing a  consolidated  income
19             tax  return  for the taxable year for federal income
20             tax purposes, taxable income determined as  if  such
21             corporation  had filed a separate return for federal
22             income tax purposes for the taxable  year  and  each
23             preceding  taxable year for which it was a member of
24             an  affiliated   group.   For   purposes   of   this
25             subparagraph, the taxpayer's separate taxable income
26             shall  be  determined as if the election provided by
27             Section 243(b) (2) of the Internal Revenue Code  had
28             been in effect for all such years;
29                  (F)  Cooperatives.     In   the   case   of   a
30             cooperative corporation or association, the  taxable
31             income of such organization determined in accordance
32             with  the provisions of Section 1381 through 1388 of
33             the Internal Revenue Code;
34                  (G)  Subchapter S corporations.   In  the  case
 
SB362 Engrossed             -35-     LRB093 02033 SJM 03449 b
 1             of:  (i)  a Subchapter S corporation for which there
 2             is in effect an election for the taxable year  under
 3             Section  1362  of  the  Internal  Revenue  Code, the
 4             taxable income of  such  corporation  determined  in
 5             accordance  with  Section  1363(b)  of  the Internal
 6             Revenue Code, except that taxable income shall  take
 7             into  account  those  items  which  are  required by
 8             Section 1363(b)(1) of the Internal Revenue  Code  to
 9             be  separately  stated;  and  (ii)  a  Subchapter  S
10             corporation  for  which there is in effect a federal
11             election  to  opt  out  of  the  provisions  of  the
12             Subchapter S Revision Act of 1982 and  have  applied
13             instead  the  prior federal Subchapter S rules as in
14             effect on July 1, 1982, the taxable income  of  such
15             corporation   determined   in  accordance  with  the
16             federal Subchapter S rules as in effect on  July  1,
17             1982; and
18                  (H)  Partnerships.     In   the   case   of   a
19             partnership, taxable income determined in accordance
20             with Section  703  of  the  Internal  Revenue  Code,
21             except  that  taxable income shall take into account
22             those items which are required by Section  703(a)(1)
23             to  be  separately  stated  but which would be taken
24             into account by an  individual  in  calculating  his
25             taxable income.

26        (f)  Valuation limitation amount.
27             (1)  In  general.   The  valuation limitation amount
28        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
29        (d)(2) (E) is an amount equal to:
30                  (A)  The   sum   of   the  pre-August  1,  1969
31             appreciation amounts (to the  extent  consisting  of
32             gain reportable under the provisions of Section 1245
33             or  1250  of  the  Internal  Revenue  Code)  for all
34             property in respect of which such gain was  reported
 
SB362 Engrossed             -36-     LRB093 02033 SJM 03449 b
 1             for the taxable year; plus
 2                  (B)  The   lesser   of   (i)  the  sum  of  the
 3             pre-August 1,  1969  appreciation  amounts  (to  the
 4             extent  consisting of capital gain) for all property
 5             in respect of  which  such  gain  was  reported  for
 6             federal income tax purposes for the taxable year, or
 7             (ii)  the  net  capital  gain  for the taxable year,
 8             reduced in either case by any amount  of  such  gain
 9             included  in  the amount determined under subsection
10             (a) (2) (F) or (c) (2) (H).
11             (2)  Pre-August 1, 1969 appreciation amount.
12                  (A)  If  the  fair  market  value  of  property
13             referred   to   in   paragraph   (1)   was   readily
14             ascertainable on August 1, 1969, the  pre-August  1,
15             1969  appreciation  amount  for such property is the
16             lesser of (i) the excess of such fair  market  value
17             over the taxpayer's basis (for determining gain) for
18             such  property  on  that  date (determined under the
19             Internal Revenue Code as in effect on that date), or
20             (ii) the total  gain  realized  and  reportable  for
21             federal  income tax purposes in respect of the sale,
22             exchange or other disposition of such property.
23                  (B)  If  the  fair  market  value  of  property
24             referred  to  in  paragraph  (1)  was  not   readily
25             ascertainable  on  August 1, 1969, the pre-August 1,
26             1969 appreciation amount for such property  is  that
27             amount  which bears the same ratio to the total gain
28             reported in respect  of  the  property  for  federal
29             income  tax  purposes  for  the taxable year, as the
30             number of full calendar months in that part  of  the
31             taxpayer's  holding  period  for the property ending
32             July 31, 1969 bears to the number of  full  calendar
33             months  in  the taxpayer's entire holding period for
34             the property.
 
SB362 Engrossed             -37-     LRB093 02033 SJM 03449 b
 1                  (C)  The  Department   shall   prescribe   such
 2             regulations  as  may  be  necessary to carry out the
 3             purposes of this paragraph.

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

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

22        Section  10.  The Illinois Prepaid Tuition Act is amended
23    by adding Section 55.1 as follows:

24        (110 ILCS 979/55.1 new)
25        Sec.  55.1.  Income  tax  deduction.  For  taxable  years
26    beginning on or after January  1,  2003,  and  on  or  before
27    December 31, 2007, moneys contributed during the taxable year
28    by  the  taxpayer  for  the  purchase  of an Illinois prepaid
29    tuition contract, except  for  amounts  excluded  from  gross
30    income  under Section 529(c)(3)(C)(i) of the Internal Revenue
31    Code, may be deducted  from  the  taxpayer's  adjusted  gross
 
SB362 Engrossed             -38-     LRB093 02033 SJM 03449 b
 1    income  as provided in Section 203 of the Illinois Income Tax
 2    Act.

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