093_HB2869

 
                                     LRB093 04447 SJM 04499 b

 1        AN ACT regarding taxation.

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

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

 6        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income means an amount equal to the  taxpayer's  adjusted
11        gross   income  for  the  taxable  year  as  modified  by
12        paragraph (2).
13             (2)  Modifications.   The  adjusted   gross   income
14        referred  to in paragraph (1) shall be modified by adding
15        thereto the sum of the following amounts:
16                  (A)  An amount equal to  all  amounts  paid  or
17             accrued  to  the  taxpayer  as interest or dividends
18             during the taxable year to the extent excluded  from
19             gross  income  in  the computation of adjusted gross
20             income, except stock dividends of  qualified  public
21             utilities   described   in  Section  305(e)  of  the
22             Internal Revenue Code;
23                  (B)  An amount  equal  to  the  amount  of  tax
24             imposed  by  this  Act  to  the extent deducted from
25             gross income in the computation  of  adjusted  gross
26             income for the taxable year;
27                  (C)  An  amount  equal  to  the amount received
28             during the taxable year as a recovery or  refund  of
29             real   property  taxes  paid  with  respect  to  the
30             taxpayer's principal residence under the Revenue Act
31             of 1939 and for which  a  deduction  was  previously
 
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 1             taken  under  subparagraph (L) of this paragraph (2)
 2             prior to July 1, 1991, the retrospective application
 3             date of Article 4 of Public Act 87-17.  In the  case
 4             of  multi-unit  or  multi-use  structures  and  farm
 5             dwellings,  the  taxes  on  the taxpayer's principal
 6             residence shall be that portion of the  total  taxes
 7             for  the  entire  property  which is attributable to
 8             such principal residence;
 9                  (D)  An amount  equal  to  the  amount  of  the
10             capital  gain deduction allowable under the Internal
11             Revenue Code, to  the  extent  deducted  from  gross
12             income in the computation of adjusted gross income;
13                  (D-5)  An amount, to the extent not included in
14             adjusted  gross income, equal to the amount of money
15             withdrawn by the taxpayer in the taxable year from a
16             medical care savings account and the interest earned
17             on the account in the taxable year of  a  withdrawal
18             pursuant  to  subsection  (b)  of  Section 20 of the
19             Medical Care Savings Account Act or  subsection  (b)
20             of  Section  20  of the Medical Care Savings Account
21             Act of 2000;
22                  (D-10)  For taxable years ending after December
23             31,  1997,  an  amount   equal   to   any   eligible
24             remediation  costs  that  the individual deducted in
25             computing adjusted gross income and  for  which  the
26             individual  claims  a credit under subsection (l) of
27             Section 201;
28                  (D-15)  For taxable years 2001 and  thereafter,
29             an  amount equal to the bonus depreciation deduction
30             (30%  of  the  adjusted  basis  of   the   qualified
31             property) taken on the taxpayer's federal income tax
32             return  for the taxable year under subsection (k) of
33             Section 168 of the Internal Revenue Code; and
34                  (D-16)  If the taxpayer reports a capital  gain
 
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 1             or  loss on the taxpayer's federal income tax return
 2             for the taxable year based on a sale or transfer  of
 3             property  for which the taxpayer was required in any
 4             taxable year to make an addition modification  under
 5             subparagraph  (D-15),  then  an  amount equal to the
 6             aggregate amount of  the  deductions  taken  in  all
 7             taxable years under subparagraph (Z) with respect to
 8             that property.;
 9                  The  taxpayer  is required to make the addition
10             modification under this subparagraph only once  with
11             respect to any one piece of property;. and
12                  (D-20)  (D-15)  For  taxable years beginning on
13             or  after  January  1,  2002,  in  the  case  of   a
14             distribution  from a qualified tuition program under
15             Section 529 of the Internal Revenue Code, other than
16             (i) a  distribution  from  a  College  Savings  Pool
17             created  under  Section  16.5 of the State Treasurer
18             Act or (ii) a distribution from the Illinois Prepaid
19             Tuition Trust Fund, an amount equal  to  the  amount
20             excluded    from    gross   income   under   Section
21             529(c)(3)(B);
22        and by deducting from the total so obtained  the  sum  of
23        the following amounts:
24                  (E)  For  taxable  years ending before December
25             31, 2001, any  amount  included  in  such  total  in
26             respect  of  any  compensation  (including  but  not
27             limited  to  any  compensation  paid or accrued to a
28             serviceman while a prisoner of  war  or  missing  in
29             action)  paid  to  a  resident by reason of being on
30             active duty in the Armed Forces of the United States
31             and in respect of any compensation paid  or  accrued
32             to  a  resident who as a governmental employee was a
33             prisoner of war or missing in action, and in respect
34             of any compensation paid to a resident  in  1971  or
 
                            -4-      LRB093 04447 SJM 04499 b
 1             thereafter for annual training performed pursuant to
 2             Sections  502  and 503, Title 32, United States Code
 3             as a member of  the  Illinois  National  Guard.  For
 4             taxable  years ending on or after December 31, 2001,
 5             any amount included in such total in respect of  any
 6             compensation  (including  but  not  limited  to  any
 7             compensation paid or accrued to a serviceman while a
 8             prisoner  of  war  or  missing  in action) paid to a
 9             resident  by  reason  of  being  a  member  of   any
10             component  of  the Armed Forces of the United States
11             and in respect of any compensation paid  or  accrued
12             to  a  resident who as a governmental employee was a
13             prisoner of war or missing in action, and in respect
14             of any compensation paid to a resident  in  2001  or
15             thereafter  by  reason  of  being  a  member  of the
16             Illinois National  Guard.  The  provisions  of  this
17             amendatory  Act  of  the  92nd  General Assembly are
18             exempt from the provisions of Section 250;
19                  (F)  An amount equal to all amounts included in
20             such total pursuant to the  provisions  of  Sections
21             402(a),  402(c), 403(a), 403(b), 406(a), 407(a), and
22             408 of the Internal Revenue  Code,  or  included  in
23             such  total as distributions under the provisions of
24             any retirement or disability plan for  employees  of
25             any  governmental  agency  or  unit,  or  retirement
26             payments  to  retired  partners,  which payments are
27             excluded  in  computing  net  earnings   from   self
28             employment  by  Section 1402 of the Internal Revenue
29             Code and regulations adopted pursuant thereto;
30                  (G)  The valuation limitation amount;
31                  (H)  An amount equal to the amount of  any  tax
32             imposed  by  this  Act  which  was  refunded  to the
33             taxpayer and included in such total for the  taxable
34             year;
 
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 1                  (I)  An amount equal to all amounts included in
 2             such total pursuant to the provisions of Section 111
 3             of  the Internal Revenue Code as a recovery of items
 4             previously deducted from adjusted  gross  income  in
 5             the computation of taxable income;
 6                  (J)  An   amount   equal   to  those  dividends
 7             included  in  such  total  which  were  paid  by   a
 8             corporation which conducts business operations in an
 9             Enterprise  Zone or zones created under the Illinois
10             Enterprise Zone Act, and conducts substantially  all
11             of its operations in an Enterprise Zone or zones;
12                  (K)  An   amount   equal   to  those  dividends
13             included  in  such  total  that  were  paid   by   a
14             corporation  that  conducts business operations in a
15             federally designated Foreign Trade Zone or  Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located   in   Illinois;   provided  that  dividends
18             eligible for the deduction provided in  subparagraph
19             (J) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (K);
22                  (L)  For  taxable  years  ending after December
23             31, 1983, an amount equal  to  all  social  security
24             benefits  and  railroad retirement benefits included
25             in such total pursuant to Sections 72(r) and  86  of
26             the Internal Revenue Code;
27                  (M)  With   the   exception   of   any  amounts
28             subtracted under subparagraph (N), an  amount  equal
29             to  the  sum of all amounts disallowed as deductions
30             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
31             Internal  Revenue  Code of 1954, as now or hereafter
32             amended, and all amounts of  expenses  allocable  to
33             interest  and   disallowed  as deductions by Section
34             265(1) of the Internal Revenue Code of 1954, as  now
 
                            -6-      LRB093 04447 SJM 04499 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;
 
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 1                  (S)  An  amount,  to  the  extent  included  in
 2             adjusted gross income, equal  to  the  amount  of  a
 3             contribution  made  in the taxable year on behalf of
 4             the taxpayer  to  a  medical  care  savings  account
 5             established  under  the Medical Care Savings Account
 6             Act or the Medical Care Savings Account Act of  2000
 7             to  the  extent  the contribution is accepted by the
 8             account administrator as provided in that Act;
 9                  (T)  An  amount,  to  the  extent  included  in
10             adjusted  gross  income,  equal  to  the  amount  of
11             interest earned in the taxable  year  on  a  medical
12             care  savings  account established under the Medical
13             Care Savings Account Act or the Medical Care Savings
14             Account Act of 2000 on behalf of the taxpayer, other
15             than interest added pursuant to item (D-5)  of  this
16             paragraph (2);
17                  (U)  For one taxable year beginning on or after
18             January 1, 1994, an amount equal to the total amount
19             of  tax  imposed  and paid under subsections (a) and
20             (b) of Section 201 of  this  Act  on  grant  amounts
21             received  by  the  taxpayer  under  the Nursing Home
22             Grant Assistance Act during the  taxpayer's  taxable
23             years 1992 and 1993;
24                  (V)  Beginning  with  tax  years  ending  on or
25             after December 31, 1995 and ending  with  tax  years
26             ending  on  or  before  December 31, 2004, an amount
27             equal to the amount paid by  a  taxpayer  who  is  a
28             self-employed  taxpayer, a partner of a partnership,
29             or a shareholder in a Subchapter S  corporation  for
30             health  insurance  or  long-term  care insurance for
31             that  taxpayer  or   that   taxpayer's   spouse   or
32             dependents,  to  the extent that the amount paid for
33             that health insurance or  long-term  care  insurance
34             may  be  deducted  under Section 213 of the Internal
 
                            -8-      LRB093 04447 SJM 04499 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; and
25                  (X)  For  taxable  year 1999 and thereafter, an
26             amount equal to the amount of any (i) distributions,
27             to the extent includible in gross income for federal
28             income tax purposes, made to the taxpayer because of
29             his or her status as a  victim  of  persecution  for
30             racial  or  religious reasons by Nazi Germany or any
31             other Axis regime or as an heir of  the  victim  and
32             (ii)  items  of  income, to the extent includible in
33             gross  income  for  federal  income  tax   purposes,
34             attributable  to, derived from or in any way related
 
                            -9-      LRB093 04447 SJM 04499 b
 1             to assets stolen from,  hidden  from,  or  otherwise
 2             lost  to  a  victim  of  persecution  for  racial or
 3             religious reasons by Nazi Germany or any other  Axis
 4             regime immediately prior to, during, and immediately
 5             after  World  War II, including, but not limited to,
 6             interest on the  proceeds  receivable  as  insurance
 7             under policies issued to a victim of persecution for
 8             racial  or  religious reasons by Nazi Germany or any
 9             other Axis regime by  European  insurance  companies
10             immediately  prior  to  and  during  World  War  II;
11             provided,  however,  this  subtraction  from federal
12             adjusted gross  income  does  not  apply  to  assets
13             acquired  with such assets or with the proceeds from
14             the sale of such  assets;  provided,  further,  this
15             paragraph shall only apply to a taxpayer who was the
16             first  recipient of such assets after their recovery
17             and who is a victim of  persecution  for  racial  or
18             religious  reasons by Nazi Germany or any other Axis
19             regime or as an heir of the victim.  The  amount  of
20             and  the  eligibility  for  any  public  assistance,
21             benefit,  or  similar entitlement is not affected by
22             the  inclusion  of  items  (i)  and  (ii)  of   this
23             paragraph  in  gross  income  for federal income tax
24             purposes.  This  paragraph  is   exempt   from   the
25             provisions of Section 250;
26                  (Y)  For  taxable  years  beginning on or after
27             January 1, 2002, moneys contributed in  the  taxable
28             year to a College Savings Pool account under Section
29             16.5 of the State Treasurer Act, except that amounts
30             excluded    from    gross   income   under   Section
31             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
32             not  be  considered  moneys  contributed  under this
33             subparagraph (Y).  This subparagraph (Y)  is  exempt
34             from the provisions of Section 250;
 
                            -10-     LRB093 04447 SJM 04499 b
 1                  (Z)  For taxable years 2001 and thereafter, for
 2             the  taxable  year  in  which the bonus depreciation
 3             deduction  (30%  of  the  adjusted  basis   of   the
 4             qualified  property)  is  taken  on  the  taxpayer's
 5             federal  income  tax  return under subsection (k) of
 6             Section 168 of the Internal  Revenue  Code  and  for
 7             each  applicable  taxable year thereafter, an amount
 8             equal to "x", where:
 9                       (1)  "y"  equals   the   amount   of   the
10                  depreciation  deduction  taken  for the taxable
11                  year  on  the  taxpayer's  federal  income  tax
12                  return  on  property  for   which   the   bonus
13                  depreciation  deduction  (30%  of  the adjusted
14                  basis of the qualified property) was  taken  in
15                  any year under subsection (k) of Section 168 of
16                  the  Internal  Revenue  Code, but not including
17                  the bonus depreciation deduction; and
18                       (2)  "x" equals "y" multiplied by  30  and
19                  then  divided  by  70  (or  "y"  multiplied  by
20                  0.429).
21                  The   aggregate   amount  deducted  under  this
22             subparagraph in all taxable years for any one  piece
23             of  property  may not exceed the amount of the bonus
24             depreciation deduction (30% of the adjusted basis of
25             the qualified property) taken on  that  property  on
26             the  taxpayer's  federal  income  tax  return  under
27             subsection  (k)  of  Section  168  of  the  Internal
28             Revenue Code; and
29                  (AA)  If the taxpayer reports a capital gain or
30             loss on the taxpayer's federal income tax return for
31             the  taxable  year  based  on  a sale or transfer of
32             property for which the taxpayer was required in  any
33             taxable  year to make an addition modification under
34             subparagraph (D-15), then an amount  equal  to  that
 
                            -11-     LRB093 04447 SJM 04499 b
 1             addition modification.
 2                  The  taxpayer  is allowed to take the deduction
 3             under this subparagraph only once  with  respect  to
 4             any one piece of property; and
 5                  (BB) (Z)  Any amount included in adjusted gross
 6             income, other than salary, received by a driver in a
 7             ridesharing arrangement using a motor vehicle; and
 8                  (CC)  For  taxable  years  ending  on  or after
 9             December 31, 2003, up to $5,000 paid by the taxpayer
10             for dependent care provided for  a  child,  disabled
11             spouse,  or other dependent adult during the taxable
12             year.  No amount paid or incurred for dependent care
13             shall be deducted unless (i) the name, address,  and
14             taxpayer   identification   number   of  the  person
15             performing the services are included on  the  return
16             to which the deduction relates or (ii) if the person
17             performing the services is an organization described
18             in  Section  501(c)(3)  of the Internal Revenue Code
19             and is exempt from tax under Section 501(a)  of  the
20             Internal  Revenue  Code, the name and address of the
21             person are included  on  the  return  to  which  the
22             deduction relates. This paragraph is exempt from the
23             provisions of Section 250.

24        (b)  Corporations.
25             (1)  In general.  In the case of a corporation, base
26        income  means  an  amount equal to the taxpayer's taxable
27        income for the taxable year as modified by paragraph (2).
28             (2)  Modifications.  The taxable income referred  to
29        in  paragraph (1) shall be modified by adding thereto the
30        sum of the following amounts:
31                  (A)  An amount equal to  all  amounts  paid  or
32             accrued   to   the  taxpayer  as  interest  and  all
33             distributions  received  from  regulated  investment
34             companies during the  taxable  year  to  the  extent
 
                            -12-     LRB093 04447 SJM 04499 b
 1             excluded  from  gross  income  in the computation of
 2             taxable income;
 3                  (B)  An amount  equal  to  the  amount  of  tax
 4             imposed  by  this  Act  to  the extent deducted from
 5             gross income in the computation  of  taxable  income
 6             for the taxable year;
 7                  (C)  In  the  case  of  a  regulated investment
 8             company, an amount equal to the excess  of  (i)  the
 9             net  long-term  capital  gain  for the taxable year,
10             over (ii) the amount of the capital  gain  dividends
11             designated   as  such  in  accordance  with  Section
12             852(b)(3)(C) of the Internal Revenue  Code  and  any
13             amount  designated under Section 852(b)(3)(D) of the
14             Internal Revenue Code, attributable to  the  taxable
15             year (this amendatory Act of 1995 (Public Act 89-89)
16             is  declarative  of  existing  law  and is not a new
17             enactment);
18                  (D)  The  amount  of  any  net  operating  loss
19             deduction taken in arriving at taxable income, other
20             than a net operating loss  carried  forward  from  a
21             taxable year ending prior to December 31, 1986;
22                  (E)  For taxable years in which a net operating
23             loss  carryback  or carryforward from a taxable year
24             ending prior to December 31, 1986 is an  element  of
25             taxable income under paragraph (1) of subsection (e)
26             or  subparagraph  (E) of paragraph (2) of subsection
27             (e), the  amount  by  which  addition  modifications
28             other  than  those provided by this subparagraph (E)
29             exceeded subtraction modifications in  such  earlier
30             taxable year, with the following limitations applied
31             in the order that they are listed:
32                       (i)  the addition modification relating to
33                  the  net operating loss carried back or forward
34                  to the  taxable  year  from  any  taxable  year
 
                            -13-     LRB093 04447 SJM 04499 b
 1                  ending  prior  to  December  31,  1986 shall be
 2                  reduced by the amount of addition  modification
 3                  under  this  subparagraph  (E) which related to
 4                  that net operating loss  and  which  was  taken
 5                  into  account in calculating the base income of
 6                  an earlier taxable year, and
 7                       (ii)  the addition  modification  relating
 8                  to  the  net  operating  loss  carried  back or
 9                  forward to the taxable year  from  any  taxable
10                  year  ending  prior  to December 31, 1986 shall
11                  not exceed the  amount  of  such  carryback  or
12                  carryforward;
13                  For  taxable  years  in  which  there  is a net
14             operating loss carryback or carryforward  from  more
15             than one other taxable year ending prior to December
16             31, 1986, the addition modification provided in this
17             subparagraph  (E)  shall  be  the sum of the amounts
18             computed   independently   under    the    preceding
19             provisions  of  this  subparagraph (E) for each such
20             taxable year;
21                  (E-5)  For taxable years ending after  December
22             31,   1997,   an   amount   equal  to  any  eligible
23             remediation costs that the corporation  deducted  in
24             computing  adjusted  gross  income and for which the
25             corporation claims a credit under subsection (l)  of
26             Section 201;
27                  (E-10)  For  taxable years 2001 and thereafter,
28             an amount equal to the bonus depreciation  deduction
29             (30%   of   the  adjusted  basis  of  the  qualified
30             property) taken on the taxpayer's federal income tax
31             return for the taxable year under subsection (k)  of
32             Section 168 of the Internal Revenue Code; and
33                  (E-11)  If  the taxpayer reports a capital gain
34             or loss on the taxpayer's federal income tax  return
 
                            -14-     LRB093 04447 SJM 04499 b
 1             for  the taxable year based on a sale or transfer of
 2             property for which the taxpayer was required in  any
 3             taxable  year to make an addition modification under
 4             subparagraph (E-10), then an  amount  equal  to  the
 5             aggregate  amount  of  the  deductions  taken in all
 6             taxable years under subparagraph (T) with respect to
 7             that property.;
 8                  The taxpayer is required to make  the  addition
 9             modification  under this subparagraph only once with
10             respect to any one piece of property;
11        and by deducting from the total so obtained  the  sum  of
12        the following amounts:
13                  (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 any amount included  in
18             such  total under Section 78 of the Internal Revenue
19             Code;
20                  (H)  In the  case  of  a  regulated  investment
21             company,  an  amount  equal  to the amount of exempt
22             interest dividends as defined in subsection (b)  (5)
23             of Section 852 of the Internal Revenue Code, paid to
24             shareholders for the taxable year;
25                  (I)  With   the   exception   of   any  amounts
26             subtracted under subparagraph (J), an  amount  equal
27             to  the  sum of all amounts disallowed as deductions
28             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
29             amounts disallowed as interest  expense  by  Section
30             291(a)(3)  of  the  Internal Revenue Code, as now or
31             hereafter  amended,  and  all  amounts  of  expenses
32             allocable to interest and disallowed  as  deductions
33             by  Section  265(a)(1) of the Internal Revenue Code,
34             as now or hereafter amended; and  (ii)  for  taxable
 
                            -15-     LRB093 04447 SJM 04499 b
 1             years  ending  on or after August 13, 1999, Sections
 2             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
 3             of the Internal Revenue Code; the provisions of this
 4             subparagraph  are  exempt  from  the  provisions  of
 5             Section 250;
 6                  (J)  An amount equal to all amounts included in
 7             such total which are exempt from  taxation  by  this
 8             State   either   by   reason   of  its  statutes  or
 9             Constitution  or  by  reason  of  the  Constitution,
10             treaties or statutes of the United States;  provided
11             that,  in the case of any statute of this State that
12             exempts  income  derived   from   bonds   or   other
13             obligations from the tax imposed under this Act, the
14             amount  exempted  shall  be the interest net of bond
15             premium amortization;
16                  (K)  An  amount  equal   to   those   dividends
17             included   in  such  total  which  were  paid  by  a
18             corporation which conducts business operations in an
19             Enterprise Zone or zones created under the  Illinois
20             Enterprise  Zone  Act and conducts substantially all
21             of its operations in an Enterprise Zone or zones;
22                  (L)  An  amount  equal   to   those   dividends
23             included   in   such  total  that  were  paid  by  a
24             corporation that conducts business operations  in  a
25             federally  designated Foreign Trade Zone or Sub-Zone
26             and  that  is  designated  a  High  Impact  Business
27             located  in  Illinois;   provided   that   dividends
28             eligible  for the deduction provided in subparagraph
29             (K) of paragraph 2 of this subsection shall  not  be
30             eligible  for  the  deduction  provided  under  this
31             subparagraph (L);
32                  (M)  For  any  taxpayer  that  is  a  financial
33             organization within the meaning of Section 304(c) of
34             this  Act,  an  amount  included  in  such  total as
 
                            -16-     LRB093 04447 SJM 04499 b
 1             interest income from a loan or loans  made  by  such
 2             taxpayer  to  a  borrower, to the extent that such a
 3             loan is secured by property which  is  eligible  for
 4             the Enterprise Zone Investment Credit.  To determine
 5             the  portion  of  a loan or loans that is secured by
 6             property  eligible  for  a  Section  201(f)   201(h)
 7             investment   credit  to  the  borrower,  the  entire
 8             principal amount of the loan or  loans  between  the
 9             taxpayer and the borrower should be divided into the
10             basis of the Section 201(f) 201(h) investment credit
11             property  which secures the loan or loans, using for
12             this purpose the original basis of such property  on
13             the  date  that  it  was  placed  in  service in the
14             Enterprise  Zone.   The   subtraction   modification
15             available   to  taxpayer  in  any  year  under  this
16             subsection  shall  be  that  portion  of  the  total
17             interest paid by the borrower with respect  to  such
18             loan   attributable  to  the  eligible  property  as
19             calculated under the previous sentence;
20                  (M-1)  For any taxpayer  that  is  a  financial
21             organization within the meaning of Section 304(c) of
22             this  Act,  an  amount  included  in  such  total as
23             interest income from a loan or loans  made  by  such
24             taxpayer  to  a  borrower, to the extent that such a
25             loan is secured by property which  is  eligible  for
26             the  High  Impact  Business  Investment  Credit.  To
27             determine the portion of a loan  or  loans  that  is
28             secured  by  property  eligible for a Section 201(f)
29             201(h) investment credit to the borrower, the entire
30             principal amount of the loan or  loans  between  the
31             taxpayer and the borrower should be divided into the
32             basis of the Section 201(f) 201(h) investment credit
33             property  which secures the loan or loans, using for
34             this purpose the original basis of such property  on
 
                            -17-     LRB093 04447 SJM 04499 b
 1             the  date  that  it  was  placed  in  service  in  a
 2             federally  designated Foreign Trade Zone or Sub-Zone
 3             located in Illinois.  No taxpayer that  is  eligible
 4             for  the  deduction  provided in subparagraph (M) of
 5             paragraph (2) of this subsection shall  be  eligible
 6             for  the  deduction provided under this subparagraph
 7             (M-1).  The subtraction  modification  available  to
 8             taxpayers in any year under this subsection shall be
 9             that  portion  of  the  total  interest  paid by the
10             borrower with respect to such loan  attributable  to
11             the   eligible  property  as  calculated  under  the
12             previous sentence;
13                  (N)  Two times any contribution made during the
14             taxable year to a designated  zone  organization  to
15             the  extent that the contribution (i) qualifies as a
16             charitable  contribution  under  subsection  (c)  of
17             Section 170 of the Internal Revenue  Code  and  (ii)
18             must,  by  its terms, be used for a project approved
19             by the Department of Commerce and Community  Affairs
20             under  Section  11  of  the Illinois Enterprise Zone
21             Act;
22                  (O)  An amount equal to: (i)  85%  for  taxable
23             years  ending  on or before December 31, 1992, or, a
24             percentage equal to the percentage  allowable  under
25             Section  243(a)(1)  of  the Internal Revenue Code of
26             1986 for taxable years  ending  after  December  31,
27             1992,  of  the amount by which dividends included in
28             taxable income and received from a corporation  that
29             is  not  created  or organized under the laws of the
30             United States or any state or political  subdivision
31             thereof,  including,  for taxable years ending on or
32             after  December  31,  1988,  dividends  received  or
33             deemed  received  or  paid  or  deemed  paid   under
34             Sections  951  through  964  of the Internal Revenue
 
                            -18-     LRB093 04447 SJM 04499 b
 1             Code, exceed the amount of the modification provided
 2             under subparagraph (G)  of  paragraph  (2)  of  this
 3             subsection  (b)  which is related to such dividends;
 4             plus (ii) 100% of the  amount  by  which  dividends,
 5             included  in taxable income and received, including,
 6             for taxable years ending on or  after  December  31,
 7             1988,  dividends received or deemed received or paid
 8             or deemed paid under Sections 951 through 964 of the
 9             Internal Revenue Code,  from  any  such  corporation
10             specified  in  clause  (i)  that  would  but for the
11             provisions of Section 1504 (b) (3) of  the  Internal
12             Revenue   Code   be  treated  as  a  member  of  the
13             affiliated  group  which   includes   the   dividend
14             recipient,  exceed  the  amount  of the modification
15             provided under subparagraph (G) of paragraph (2)  of
16             this   subsection  (b)  which  is  related  to  such
17             dividends;
18                  (P)  An amount equal to any  contribution  made
19             to  a  job  training project established pursuant to
20             the Tax Increment Allocation Redevelopment Act;
21                  (Q)  An amount  equal  to  the  amount  of  the
22             deduction  used  to  compute  the federal income tax
23             credit for restoration of substantial  amounts  held
24             under  claim  of right for the taxable year pursuant
25             to Section 1341 of  the  Internal  Revenue  Code  of
26             1986;
27                  (R)  In  the  case  of an attorney-in-fact with
28             respect to whom  an  interinsurer  or  a  reciprocal
29             insurer  has  made the election under Section 835 of
30             the Internal Revenue Code, 26 U.S.C. 835, an  amount
31             equal  to the excess, if any, of the amounts paid or
32             incurred by that interinsurer or reciprocal  insurer
33             in the taxable year to the attorney-in-fact over the
34             deduction allowed to that interinsurer or reciprocal
 
                            -19-     LRB093 04447 SJM 04499 b
 1             insurer  with  respect to the attorney-in-fact under
 2             Section 835(b) of the Internal Revenue Code for  the
 3             taxable year;
 4                  (S)  For  taxable  years  ending  on  or  after
 5             December  31,  1997,  in  the case of a Subchapter S
 6             corporation, an  amount  equal  to  all  amounts  of
 7             income  allocable  to  a  shareholder subject to the
 8             Personal Property Tax Replacement Income Tax imposed
 9             by subsections (c) and (d) of Section  201  of  this
10             Act,  including  amounts  allocable to organizations
11             exempt from federal income tax by reason of  Section
12             501(a)   of   the   Internal   Revenue  Code.   This
13             subparagraph (S) is exempt from  the  provisions  of
14             Section 250;
15                  (T)  For taxable years 2001 and thereafter, for
16             the  taxable  year  in  which the bonus depreciation
17             deduction  (30%  of  the  adjusted  basis   of   the
18             qualified  property)  is  taken  on  the  taxpayer's
19             federal  income  tax  return under subsection (k) of
20             Section 168 of the Internal  Revenue  Code  and  for
21             each  applicable  taxable year thereafter, an amount
22             equal to "x", where:
23                       (1)  "y"  equals   the   amount   of   the
24                  depreciation  deduction  taken  for the taxable
25                  year  on  the  taxpayer's  federal  income  tax
26                  return  on  property  for   which   the   bonus
27                  depreciation  deduction  (30%  of  the adjusted
28                  basis of the qualified property) was  taken  in
29                  any year under subsection (k) of Section 168 of
30                  the  Internal  Revenue  Code, but not including
31                  the bonus depreciation deduction; and
32                       (2)  "x" equals "y" multiplied by  30  and
33                  then  divided  by  70  (or  "y"  multiplied  by
34                  0.429).
 
                            -20-     LRB093 04447 SJM 04499 b
 1                  The   aggregate   amount  deducted  under  this
 2             subparagraph in all taxable years for any one  piece
 3             of  property  may not exceed the amount of the bonus
 4             depreciation deduction (30% of the adjusted basis of
 5             the qualified property) taken on  that  property  on
 6             the  taxpayer's  federal  income  tax  return  under
 7             subsection  (k)  of  Section  168  of  the  Internal
 8             Revenue Code; and
 9                  (U)  If  the taxpayer reports a capital gain or
10             loss on the taxpayer's federal income tax return for
11             the taxable year based on  a  sale  or  transfer  of
12             property  for which the taxpayer was required in any
13             taxable year to make an addition modification  under
14             subparagraph  (E-10),  then  an amount equal to that
15             addition modification.
16                  The taxpayer is allowed to take  the  deduction
17             under  this  subparagraph  only once with respect to
18             any one piece of property.
19             (3)  Special rule.  For purposes  of  paragraph  (2)
20        (A),  "gross  income"  in  the  case  of a life insurance
21        company, for tax years ending on and after  December  31,
22        1994,  shall  mean  the  gross  investment income for the
23        taxable year.

24        (c)  Trusts and estates.
25             (1)  In general.  In the case of a trust or  estate,
26        base  income  means  an  amount  equal  to the taxpayer's
27        taxable income  for  the  taxable  year  as  modified  by
28        paragraph (2).
29             (2)  Modifications.   Subject  to  the provisions of
30        paragraph  (3),  the  taxable  income  referred   to   in
31        paragraph (1) shall be modified by adding thereto the sum
32        of the following amounts:
33                  (A)  An  amount  equal  to  all amounts paid or
34             accrued to the taxpayer  as  interest  or  dividends
 
                            -21-     LRB093 04447 SJM 04499 b
 1             during  the taxable year to the extent excluded from
 2             gross income 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
 7             such  case,  only  to  the  extent  such  amount was
 8             deducted in the computation of taxable income;
 9                  (C)  An amount  equal  to  the  amount  of  tax
10             imposed  by  this  Act  to  the extent deducted from
11             gross income in the computation  of  taxable  income
12             for the taxable year;
13                  (D)  The  amount  of  any  net  operating  loss
14             deduction taken in arriving at taxable income, other
15             than  a  net  operating  loss carried forward from a
16             taxable year ending prior to December 31, 1986;
17                  (E)  For taxable years in which a net operating
18             loss carryback or carryforward from a  taxable  year
19             ending  prior  to December 31, 1986 is an element of
20             taxable income under paragraph (1) of subsection (e)
21             or subparagraph (E) of paragraph (2)  of  subsection
22             (e),  the  amount  by  which  addition modifications
23             other than those provided by this  subparagraph  (E)
24             exceeded  subtraction  modifications in such taxable
25             year, with the following limitations applied in  the
26             order that they are listed:
27                       (i)  the addition modification relating to
28                  the  net operating loss carried back or forward
29                  to the  taxable  year  from  any  taxable  year
30                  ending  prior  to  December  31,  1986 shall be
31                  reduced by the amount of addition  modification
32                  under  this  subparagraph  (E) which related to
33                  that net operating loss  and  which  was  taken
34                  into  account in calculating the base income of
 
                            -22-     LRB093 04447 SJM 04499 b
 1                  an earlier taxable year, and
 2                       (ii)  the addition  modification  relating
 3                  to  the  net  operating  loss  carried  back or
 4                  forward to the taxable year  from  any  taxable
 5                  year  ending  prior  to December 31, 1986 shall
 6                  not exceed the  amount  of  such  carryback  or
 7                  carryforward;
 8                  For  taxable  years  in  which  there  is a net
 9             operating loss carryback or carryforward  from  more
10             than one other taxable year ending prior to December
11             31, 1986, the addition modification provided in this
12             subparagraph  (E)  shall  be  the sum of the amounts
13             computed   independently   under    the    preceding
14             provisions  of  this  subparagraph (E) for each such
15             taxable year;
16                  (F)  For  taxable  years  ending  on  or  after
17             January 1, 1989, an amount equal to the tax deducted
18             pursuant to Section 164 of the Internal Revenue Code
19             if the trust or estate is claiming the same tax  for
20             purposes  of  the  Illinois foreign tax credit under
21             Section 601 of this Act;
22                  (G)  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                  (G-5)  For  taxable years ending after December
27             31,  1997,  an  amount   equal   to   any   eligible
28             remediation  costs that the trust or estate deducted
29             in computing adjusted gross income and for which the
30             trust or estate claims a credit under subsection (l)
31             of Section 201;
32                  (G-10)  For taxable years 2001 and  thereafter,
33             an  amount equal to the bonus depreciation deduction
34             (30%  of  the  adjusted  basis  of   the   qualified
 
                            -23-     LRB093 04447 SJM 04499 b
 1             property) taken on the taxpayer's federal income tax
 2             return  for the taxable year under subsection (k) of
 3             Section 168 of the Internal Revenue Code; and
 4                  (G-11)  If the taxpayer reports a capital  gain
 5             or  loss on the taxpayer's federal income tax return
 6             for the taxable year based on a sale or transfer  of
 7             property  for which the taxpayer was required in any
 8             taxable year to make an addition modification  under
 9             subparagraph  (G-10),  then  an  amount equal to the
10             aggregate amount of  the  deductions  taken  in  all
11             taxable years under subparagraph (R) with respect to
12             that property.;
13                  The  taxpayer  is required to make the addition
14             modification under this subparagraph only once  with
15             respect to any one piece of property;
16        and  by  deducting  from the total so obtained the sum of
17        the following amounts:
18                  (H)  An amount equal to all amounts included in
19             such total pursuant to the  provisions  of  Sections
20             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
21             408 of the Internal Revenue Code or included in such
22             total as distributions under the provisions  of  any
23             retirement  or  disability plan for employees of any
24             governmental agency or unit, or retirement  payments
25             to  retired partners, which payments are excluded in
26             computing  net  earnings  from  self  employment  by
27             Section  1402  of  the  Internal  Revenue  Code  and
28             regulations adopted pursuant thereto;
29                  (I)  The valuation limitation amount;
30                  (J)  An amount equal to the amount of  any  tax
31             imposed  by  this  Act  which  was  refunded  to the
32             taxpayer and included in such total for the  taxable
33             year;
34                  (K)  An amount equal to all amounts included in
 
                            -24-     LRB093 04447 SJM 04499 b
 1             taxable  income  as  modified  by subparagraphs (A),
 2             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
 3             from  taxation by this State either by reason of its
 4             statutes  or  Constitution  or  by  reason  of   the
 5             Constitution,  treaties  or  statutes  of the United
 6             States; provided that, in the case of any statute of
 7             this State that exempts income derived from bonds or
 8             other obligations from the tax  imposed  under  this
 9             Act,  the  amount exempted shall be the interest net
10             of bond premium amortization;
11                  (L)  With  the   exception   of   any   amounts
12             subtracted  under  subparagraph (K), an amount equal
13             to the sum of all amounts disallowed  as  deductions
14             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
15             Internal Revenue Code, as now or hereafter  amended,
16             and  all  amounts  of expenses allocable to interest
17             and disallowed as deductions by  Section  265(1)  of
18             the  Internal  Revenue  Code  of  1954,  as  now  or
19             hereafter amended; and (ii) for taxable years ending
20             on  or  after  August  13, 1999, Sections 171(a)(2),
21             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
22             Revenue Code; the provisions  of  this  subparagraph
23             are exempt from the provisions of Section 250;
24                  (M)  An   amount   equal   to  those  dividends
25             included  in  such  total  which  were  paid  by   a
26             corporation which conducts business operations in an
27             Enterprise  Zone or zones created under the Illinois
28             Enterprise Zone Act and conducts  substantially  all
29             of its operations in an Enterprise Zone or Zones;
30                  (N)  An  amount  equal to any contribution made
31             to a job training project  established  pursuant  to
32             the Tax Increment Allocation Redevelopment Act;
33                  (O)  An   amount   equal   to  those  dividends
34             included  in  such  total  that  were  paid   by   a
 
                            -25-     LRB093 04447 SJM 04499 b
 1             corporation  that  conducts business operations in a
 2             federally designated Foreign Trade Zone or  Sub-Zone
 3             and  that  is  designated  a  High  Impact  Business
 4             located   in   Illinois;   provided  that  dividends
 5             eligible for the deduction provided in  subparagraph
 6             (M) of paragraph (2) of this subsection shall not be
 7             eligible  for  the  deduction  provided  under  this
 8             subparagraph (O);
 9                  (P)  An  amount  equal  to  the  amount  of the
10             deduction used to compute  the  federal  income  tax
11             credit  for  restoration of substantial amounts held
12             under claim of right for the taxable  year  pursuant
13             to  Section  1341  of  the  Internal Revenue Code of
14             1986;
15                  (Q)  For taxable year 1999 and  thereafter,  an
16             amount equal to the amount of any (i) distributions,
17             to the extent includible in gross income for federal
18             income tax purposes, made to the taxpayer because of
19             his  or  her  status  as a victim of persecution for
20             racial or religious reasons by Nazi Germany  or  any
21             other  Axis  regime  or as an heir of the victim and
22             (ii) items of income, to the  extent  includible  in
23             gross   income  for  federal  income  tax  purposes,
24             attributable to, derived from or in any way  related
25             to  assets  stolen  from,  hidden from, or otherwise
26             lost to  a  victim  of  persecution  for  racial  or
27             religious  reasons by Nazi Germany or any other Axis
28             regime immediately prior to, during, and immediately
29             after World War II, including, but not  limited  to,
30             interest  on  the  proceeds  receivable as insurance
31             under policies issued to a victim of persecution for
32             racial or religious reasons by Nazi Germany  or  any
33             other  Axis  regime  by European insurance companies
34             immediately  prior  to  and  during  World  War  II;
 
                            -26-     LRB093 04447 SJM 04499 b
 1             provided, however,  this  subtraction  from  federal
 2             adjusted  gross  income  does  not  apply  to assets
 3             acquired with such assets or with the proceeds  from
 4             the  sale  of  such  assets; provided, further, this
 5             paragraph shall only apply to a taxpayer who was the
 6             first recipient of such assets after their  recovery
 7             and  who  is  a victim of  persecution for racial or
 8             religious reasons by Nazi Germany or any other  Axis
 9             regime  or  as an heir of the victim.  The amount of
10             and  the  eligibility  for  any  public  assistance,
11             benefit, or similar entitlement is not  affected  by
12             the   inclusion  of  items  (i)  and  (ii)  of  this
13             paragraph in gross income  for  federal  income  tax
14             purposes.   This   paragraph   is  exempt  from  the
15             provisions of Section 250;
16                  (R)  For taxable years 2001 and thereafter, for
17             the taxable year in  which  the  bonus  depreciation
18             deduction   (30%   of  the  adjusted  basis  of  the
19             qualified  property)  is  taken  on  the  taxpayer's
20             federal income tax return under  subsection  (k)  of
21             Section  168  of  the  Internal Revenue Code and for
22             each applicable taxable year thereafter,  an  amount
23             equal to "x", where:
24                       (1)  "y"   equals   the   amount   of  the
25                  depreciation deduction taken  for  the  taxable
26                  year  on  the  taxpayer's  federal  income  tax
27                  return   on   property   for  which  the  bonus
28                  depreciation deduction  (30%  of  the  adjusted
29                  basis  of  the qualified property) was taken in
30                  any year under subsection (k) of Section 168 of
31                  the Internal Revenue Code,  but  not  including
32                  the bonus depreciation deduction; and
33                       (2)  "x"  equals  "y" multiplied by 30 and
34                  then  divided  by  70  (or  "y"  multiplied  by
 
                            -27-     LRB093 04447 SJM 04499 b
 1                  0.429).
 2                  The  aggregate  amount  deducted   under   this
 3             subparagraph  in all taxable years for any one piece
 4             of property may not exceed the amount of  the  bonus
 5             depreciation deduction (30% of the adjusted basis of
 6             the  qualified  property)  taken on that property on
 7             the  taxpayer's  federal  income  tax  return  under
 8             subsection  (k)  of  Section  168  of  the  Internal
 9             Revenue Code; and
10                  (S)  If the taxpayer reports a capital gain  or
11             loss on the taxpayer's federal income tax return for
12             the  taxable  year  based  on  a sale or transfer of
13             property for which the taxpayer was required in  any
14             taxable  year to make an addition modification under
15             subparagraph (G-10), then an amount  equal  to  that
16             addition modification.
17                  The  taxpayer  is allowed to take the deduction
18             under this subparagraph only once  with  respect  to
19             any one piece of property.
20             (3)  Limitation.   The  amount  of  any modification
21        otherwise required under  this  subsection  shall,  under
22        regulations  prescribed by the Department, be adjusted by
23        any amounts included therein which  were  properly  paid,
24        credited,  or  required to be distributed, or permanently
25        set aside for charitable purposes pursuant   to  Internal
26        Revenue Code Section 642(c) during the taxable year.

27        (d)  Partnerships.
28             (1)  In  general. In the case of a partnership, base
29        income means an amount equal to  the  taxpayer's  taxable
30        income for the taxable year as modified by paragraph (2).
31             (2)  Modifications.  The  taxable income referred to
32        in paragraph (1) shall be modified by adding thereto  the
33        sum of the following amounts:
34                  (A)  An  amount  equal  to  all amounts paid or
 
                            -28-     LRB093 04447 SJM 04499 b
 1             accrued to the taxpayer  as  interest  or  dividends
 2             during  the taxable year to the extent excluded from
 3             gross income in the computation of taxable income;
 4                  (B)  An amount  equal  to  the  amount  of  tax
 5             imposed  by  this  Act  to  the extent deducted from
 6             gross income for the taxable year;
 7                  (C)  The amount of deductions  allowed  to  the
 8             partnership  pursuant  to  Section  707  (c)  of the
 9             Internal Revenue Code  in  calculating  its  taxable
10             income;
11                  (D)  An  amount  equal  to  the  amount  of the
12             capital gain deduction allowable under the  Internal
13             Revenue  Code,  to  the  extent  deducted from gross
14             income in the computation of taxable income;
15                  (D-5)  For taxable years 2001  and  thereafter,
16             an  amount equal to the bonus depreciation deduction
17             (30%  of  the  adjusted  basis  of   the   qualified
18             property) taken on the taxpayer's federal income tax
19             return  for the taxable year under subsection (k) of
20             Section 168 of the Internal Revenue Code; and
21                  (D-6)  If the taxpayer reports a  capital  gain
22             or  loss on the taxpayer's federal income tax return
23             for the taxable year based on a sale or transfer  of
24             property  for which the taxpayer was required in any
25             taxable year to make an addition modification  under
26             subparagraph  (D-5),  then  an  amount  equal to the
27             aggregate amount of  the  deductions  taken  in  all
28             taxable years under subparagraph (O) with respect to
29             that property.;
30                  The  taxpayer  is required to make the addition
31             modification under this subparagraph only once  with
32             respect to any one piece of property;
33        and by deducting from the total so obtained the following
34        amounts:
 
                            -29-     LRB093 04447 SJM 04499 b
 1                  (E)  The valuation limitation amount;
 2                  (F)  An  amount  equal to the amount of any tax
 3             imposed by  this  Act  which  was  refunded  to  the
 4             taxpayer  and included in such total for the taxable
 5             year;
 6                  (G)  An amount equal to all amounts included in
 7             taxable income as  modified  by  subparagraphs  (A),
 8             (B),  (C)  and (D) which are exempt from taxation by
 9             this 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                  (H)  Any   income   of  the  partnership  which
18             constitutes personal service income  as  defined  in
19             Section  1348  (b)  (1) of the Internal Revenue Code
20             (as in effect December 31,  1981)  or  a  reasonable
21             allowance  for  compensation  paid  or  accrued  for
22             services  rendered  by  partners to the partnership,
23             whichever is greater;
24                  (I)  An amount equal to all amounts  of  income
25             distributable  to  an entity subject to the Personal
26             Property  Tax  Replacement  Income  Tax  imposed  by
27             subsections (c) and (d) of Section 201 of  this  Act
28             including  amounts  distributable  to  organizations
29             exempt  from federal income tax by reason of Section
30             501(a) of the Internal Revenue Code;
31                  (J)  With  the   exception   of   any   amounts
32             subtracted  under  subparagraph (G), an amount equal
33             to the sum of all amounts disallowed  as  deductions
34             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
 
                            -30-     LRB093 04447 SJM 04499 b
 1             Internal Revenue Code of 1954, as now  or  hereafter
 2             amended,  and  all  amounts of expenses allocable to
 3             interest and disallowed  as  deductions  by  Section
 4             265(1)  of  the  Internal  Revenue  Code,  as now or
 5             hereafter amended; and (ii) for taxable years ending
 6             on or after August  13,  1999,  Sections  171(a)(2),
 7             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 8             Revenue  Code;  the  provisions of this subparagraph
 9             are exempt from the provisions of Section 250;
10                  (K)  An  amount  equal   to   those   dividends
11             included   in  such  total  which  were  paid  by  a
12             corporation which conducts business operations in an
13             Enterprise Zone or zones created under the  Illinois
14             Enterprise  Zone  Act,  enacted  by the 82nd General
15             Assembly, and  conducts  substantially  all  of  its
16             operations in an Enterprise Zone or Zones;
17                  (L)  An  amount  equal to any contribution made
18             to a job training project  established  pursuant  to
19             the   Real   Property   Tax   Increment   Allocation
20             Redevelopment Act;
21                  (M)  An   amount   equal   to  those  dividends
22             included  in  such  total  that  were  paid   by   a
23             corporation  that  conducts business operations in a
24             federally designated Foreign Trade Zone or  Sub-Zone
25             and  that  is  designated  a  High  Impact  Business
26             located   in   Illinois;   provided  that  dividends
27             eligible for the deduction provided in  subparagraph
28             (K) of paragraph (2) of this subsection shall not be
29             eligible  for  the  deduction  provided  under  this
30             subparagraph (M);
31                  (N)  An  amount  equal  to  the  amount  of the
32             deduction used to compute  the  federal  income  tax
33             credit  for  restoration of substantial amounts held
34             under claim of right for the taxable  year  pursuant
 
                            -31-     LRB093 04447 SJM 04499 b
 1             to  Section  1341  of  the  Internal Revenue Code of
 2             1986;
 3                  (O)  For taxable years 2001 and thereafter, for
 4             the taxable year in  which  the  bonus  depreciation
 5             deduction   (30%   of  the  adjusted  basis  of  the
 6             qualified  property)  is  taken  on  the  taxpayer's
 7             federal income tax return under  subsection  (k)  of
 8             Section  168  of  the  Internal Revenue Code and for
 9             each applicable taxable year thereafter,  an  amount
10             equal to "x", where:
11                       (1)  "y"   equals   the   amount   of  the
12                  depreciation deduction taken  for  the  taxable
13                  year  on  the  taxpayer's  federal  income  tax
14                  return   on   property   for  which  the  bonus
15                  depreciation deduction  (30%  of  the  adjusted
16                  basis  of  the qualified property) was taken in
17                  any year under subsection (k) of Section 168 of
18                  the Internal Revenue Code,  but  not  including
19                  the bonus depreciation deduction; and
20                       (2)  "x"  equals  "y" multiplied by 30 and
21                  then  divided  by  70  (or  "y"  multiplied  by
22                  0.429).
23                  The  aggregate  amount  deducted   under   this
24             subparagraph  in all taxable years for any one piece
25             of property may not exceed the amount of  the  bonus
26             depreciation deduction (30% of the adjusted basis of
27             the  qualified  property)  taken on that property on
28             the  taxpayer's  federal  income  tax  return  under
29             subsection  (k)  of  Section  168  of  the  Internal
30             Revenue Code; and
31                  (P)  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
 
                            -32-     LRB093 04447 SJM 04499 b
 1             taxable  year to make an addition modification under
 2             subparagraph (D-5), then an  amount  equal  to  that
 3             addition modification.
 4                  The  taxpayer  is allowed to take the deduction
 5             under this subparagraph only once  with  respect  to
 6             any one piece of property.

 7        (e)  Gross income; adjusted gross income; taxable income.
 8             (1)  In  general.   Subject  to  the  provisions  of
 9        paragraph  (2)  and  subsection  (b) (3), for purposes of
10        this Section  and  Section  803(e),  a  taxpayer's  gross
11        income,  adjusted gross income, or taxable income for the
12        taxable year shall  mean  the  amount  of  gross  income,
13        adjusted   gross   income   or  taxable  income  properly
14        reportable  for  federal  income  tax  purposes  for  the
15        taxable year under the provisions of the Internal Revenue
16        Code. Taxable income may be less than zero. However,  for
17        taxable  years  ending on or after December 31, 1986, net
18        operating loss carryforwards from  taxable  years  ending
19        prior  to  December  31,  1986, may not exceed the sum of
20        federal taxable income for the taxable  year  before  net
21        operating  loss  deduction,  plus  the excess of addition
22        modifications  over  subtraction  modifications  for  the
23        taxable year.  For taxable years ending prior to December
24        31, 1986, taxable income may never be an amount in excess
25        of the net operating loss for the taxable year as defined
26        in subsections (c) and (d) of Section 172 of the Internal
27        Revenue Code, provided that  when  taxable  income  of  a
28        corporation  (other  than  a  Subchapter  S corporation),
29        trust,  or  estate  is  less  than  zero   and   addition
30        modifications,  other than those provided by subparagraph
31        (E) of paragraph (2) of subsection (b)  for  corporations
32        or  subparagraph  (E)  of paragraph (2) of subsection (c)
33        for trusts and estates, exceed subtraction modifications,
34        an  addition  modification  must  be  made  under   those
 
                            -33-     LRB093 04447 SJM 04499 b
 1        subparagraphs  for  any  other  taxable year to which the
 2        taxable income less than zero  (net  operating  loss)  is
 3        applied under Section 172 of the Internal Revenue Code or
 4        under   subparagraph   (E)   of  paragraph  (2)  of  this
 5        subsection (e) applied in conjunction with Section 172 of
 6        the Internal Revenue Code.
 7             (2)  Special rule.  For purposes of paragraph (1) of
 8        this subsection, the taxable income  properly  reportable
 9        for federal income tax purposes shall mean:
10                  (A)  Certain  life insurance companies.  In the
11             case of a life insurance company subject to the  tax
12             imposed by Section 801 of the Internal Revenue Code,
13             life  insurance  company  taxable  income,  plus the
14             amount of distribution  from  pre-1984  policyholder
15             surplus accounts as calculated under Section 815a of
16             the Internal Revenue Code;
17                  (B)  Certain other insurance companies.  In the
18             case  of  mutual  insurance companies subject to the
19             tax imposed by Section 831 of the  Internal  Revenue
20             Code, insurance company taxable income;
21                  (C)  Regulated  investment  companies.   In the
22             case of a regulated investment  company  subject  to
23             the  tax  imposed  by  Section  852  of the Internal
24             Revenue Code, investment company taxable income;
25                  (D)  Real estate  investment  trusts.   In  the
26             case  of  a  real estate investment trust subject to
27             the tax imposed  by  Section  857  of  the  Internal
28             Revenue  Code,  real estate investment trust taxable
29             income;
30                  (E)  Consolidated corporations.  In the case of
31             a corporation which is a  member  of  an  affiliated
32             group  of  corporations filing a consolidated income
33             tax return for the taxable year for  federal  income
34             tax  purposes,  taxable income determined as if such
 
                            -34-     LRB093 04447 SJM 04499 b
 1             corporation had filed a separate return for  federal
 2             income  tax  purposes  for the taxable year and each
 3             preceding taxable year for which it was a member  of
 4             an   affiliated   group.   For   purposes   of  this
 5             subparagraph, the taxpayer's separate taxable income
 6             shall be determined as if the election  provided  by
 7             Section  243(b) (2) of the Internal Revenue Code had
 8             been in effect for all such years;
 9                  (F)  Cooperatives.    In   the   case   of    a
10             cooperative  corporation or association, the taxable
11             income of such organization determined in accordance
12             with the provisions of Section 1381 through 1388  of
13             the Internal Revenue Code;
14                  (G)  Subchapter  S  corporations.   In the case
15             of: (i) a Subchapter S corporation for  which  there
16             is  in effect an election for the taxable year under
17             Section 1362  of  the  Internal  Revenue  Code,  the
18             taxable  income  of  such  corporation determined in
19             accordance with  Section  1363(b)  of  the  Internal
20             Revenue  Code, except that taxable income shall take
21             into account  those  items  which  are  required  by
22             Section  1363(b)(1)  of the Internal Revenue Code to
23             be  separately  stated;  and  (ii)  a  Subchapter  S
24             corporation for which there is in effect  a  federal
25             election  to  opt  out  of  the  provisions  of  the
26             Subchapter  S  Revision Act of 1982 and have applied
27             instead the prior federal Subchapter S rules  as  in
28             effect  on  July 1, 1982, the taxable income of such
29             corporation  determined  in  accordance   with   the
30             federal  Subchapter  S rules as in effect on July 1,
31             1982; and
32                  (H)  Partnerships.    In   the   case   of    a
33             partnership, taxable income determined in accordance
34             with  Section  703  of  the  Internal  Revenue Code,
 
                            -35-     LRB093 04447 SJM 04499 b
 1             except that taxable income shall take  into  account
 2             those  items which are required by Section 703(a)(1)
 3             to be separately stated but  which  would  be  taken
 4             into  account  by  an  individual in calculating his
 5             taxable income.

 6        (f)  Valuation limitation amount.
 7             (1)  In general.  The  valuation  limitation  amount
 8        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
 9        (d)(2) (E) is an amount equal to:
10                  (A)  The  sum  of  the   pre-August   1,   1969
11             appreciation  amounts  (to  the extent consisting of
12             gain reportable under the provisions of Section 1245
13             or 1250  of  the  Internal  Revenue  Code)  for  all
14             property  in respect of which such gain was reported
15             for the taxable year; plus
16                  (B)  The  lesser  of  (i)  the   sum   of   the
17             pre-August  1,  1969  appreciation  amounts  (to the
18             extent consisting of capital gain) for all  property
19             in  respect  of  which  such  gain  was reported for
20             federal income tax purposes for the taxable year, or
21             (ii) the net capital  gain  for  the  taxable  year,
22             reduced  in  either  case by any amount of such gain
23             included in the amount determined  under  subsection
24             (a) (2) (F) or (c) (2) (H).
25             (2)  Pre-August 1, 1969 appreciation amount.
26                  (A)  If  the  fair  market  value  of  property
27             referred   to   in   paragraph   (1)   was   readily
28             ascertainable  on  August 1, 1969, the pre-August 1,
29             1969 appreciation amount for such  property  is  the
30             lesser  of  (i) the excess of such fair market value
31             over the taxpayer's basis (for determining gain) for
32             such property on that  date  (determined  under  the
33             Internal Revenue Code as in effect on that date), or
34             (ii)  the  total  gain  realized  and reportable for
 
                            -36-     LRB093 04447 SJM 04499 b
 1             federal income tax purposes in respect of the  sale,
 2             exchange or other disposition of such property.
 3                  (B)  If  the  fair  market  value  of  property
 4             referred   to  in  paragraph  (1)  was  not  readily
 5             ascertainable on August 1, 1969, the  pre-August  1,
 6             1969  appreciation  amount for such property is that
 7             amount which bears the same ratio to the total  gain
 8             reported  in  respect  of  the  property for federal
 9             income tax purposes for the  taxable  year,  as  the
10             number  of  full calendar months in that part of the
11             taxpayer's holding period for  the  property  ending
12             July  31,  1969 bears to the number of full calendar
13             months in the taxpayer's entire holding  period  for
14             the                  property.                 133h2
15                                                (C)  The
16             Department shall prescribe such regulations  as  may
17             be  necessary  to  carry  out  the  purposes of this
18             paragraph.

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

22        (h)  Legislative intention.  Except as expressly provided
23    by  this  Section  there  shall  be   no   modifications   or
24    limitations on the amounts of income, gain, loss or deduction
25    taken  into  account  in  determining  gross income, adjusted
26    gross  income  or  taxable  income  for  federal  income  tax
27    purposes for the taxable year, or in the amount of such items
28    entering into the computation of base income and  net  income
29    under  this  Act for such taxable year, whether in respect of
30    property values as of August 1, 1969 or otherwise.
31    (Source: P.A. 91-192, eff.  7-20-99;  91-205,  eff.  7-20-99;
32    91-357,  eff.  7-29-99;  91-541,  eff.  8-13-99; 91-676, eff.
33    12-23-99; 91-845, eff. 6-22-00; 91-913, eff.  1-1-01;  92-16,
 
                            -37-     LRB093 04447 SJM 04499 b
 1    eff.  6-28-01;  92-244,  eff.  8-3-01;  92-439, eff. 8-17-01;
 2    92-603, eff. 6-28-02;  92-626,  eff.  7-11-02;  92-651,  eff.
 3    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)

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