093_HB3881

                                     LRB093 13719 BDD 19121 b

 1        AN ACT concerning taxation.

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

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

 6        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income means an amount equal to the  taxpayer's  adjusted
11        gross   income  for  the  taxable  year  as  modified  by
12        paragraph (2).
13             (2)  Modifications.   The  adjusted   gross   income
14        referred  to in paragraph (1) shall be modified by adding
15        thereto the sum of the following amounts:
16                  (A)  An amount equal to  all  amounts  paid  or
17             accrued  to  the  taxpayer  as interest or dividends
18             during the taxable year to the extent excluded  from
19             gross  income  in  the computation of adjusted gross
20             income, except stock dividends of  qualified  public
21             utilities   described   in  Section  305(e)  of  the
22             Internal Revenue Code;
23                  (B)  An amount  equal  to  the  amount  of  tax
24             imposed  by  this  Act  to  the extent deducted from
25             gross income in the computation  of  adjusted  gross
26             income for the taxable year;
27                  (C)  An  amount  equal  to  the amount received
28             during the taxable year as a recovery or  refund  of
29             real   property  taxes  paid  with  respect  to  the
30             taxpayer's principal residence under the Revenue Act
31             of 1939 and for which  a  deduction  was  previously
 
                            -2-      LRB093 13719 BDD 19121 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
 
                            -3-      LRB093 13719 BDD 19121 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
 
                            -4-      LRB093 13719 BDD 19121 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;
 
                            -5-      LRB093 13719 BDD 19121 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
 
                            -6-      LRB093 13719 BDD 19121 b
 1             or  hereafter  amended;  and  (ii) for taxable years
 2             ending  on  or  after  August  13,  1999,   Sections
 3             171(a)(2),  265,  280C,  and  832(b)(5)(B)(i) of the
 4             Internal  Revenue  Code;  the  provisions  of   this
 5             subparagraph  are  exempt  from  the  provisions  of
 6             Section 250;
 7                  (N)  An amount equal to all amounts included in
 8             such  total  which  are exempt from taxation by this
 9             State  either  by  reason   of   its   statutes   or
10             Constitution  or  by  reason  of  the  Constitution,
11             treaties  or statutes of the United States; provided
12             that, in the case of any statute of this State  that
13             exempts   income   derived   from   bonds  or  other
14             obligations from the tax imposed under this Act, the
15             amount exempted shall be the interest  net  of  bond
16             premium amortization;
17                  (O)  An  amount  equal to any contribution made
18             to a job training project  established  pursuant  to
19             the Tax Increment Allocation Redevelopment Act;
20                  (P)  An  amount  equal  to  the  amount  of the
21             deduction used to compute  the  federal  income  tax
22             credit  for  restoration of substantial amounts held
23             under claim of right for the taxable  year  pursuant
24             to  Section  1341  of  the  Internal Revenue Code of
25             1986;
26                  (Q)  An amount equal to any amounts included in
27             such  total,  received  by  the   taxpayer   as   an
28             acceleration  in  the  payment of life, endowment or
29             annuity benefits in advance of the time  they  would
30             otherwise  be payable as an indemnity for a terminal
31             illness;
32                  (R)  An amount  equal  to  the  amount  of  any
33             federal  or  State  bonus  paid  to  veterans of the
34             Persian Gulf War;
 
                            -7-      LRB093 13719 BDD 19121 b
 1                  (S)  An  amount,  to  the  extent  included  in
 2             adjusted gross income, equal  to  the  amount  of  a
 3             contribution  made  in the taxable year on behalf of
 4             the taxpayer  to  a  medical  care  savings  account
 5             established  under  the Medical Care Savings Account
 6             Act or the Medical Care Savings Account Act of  2000
 7             to  the  extent  the contribution is accepted by the
 8             account administrator as provided in that Act;
 9                  (T)  An  amount,  to  the  extent  included  in
10             adjusted  gross  income,  equal  to  the  amount  of
11             interest earned in the taxable  year  on  a  medical
12             care  savings  account established under the Medical
13             Care Savings Account Act or the Medical Care Savings
14             Account Act of 2000 on behalf of the taxpayer, other
15             than interest added pursuant to item (D-5)  of  this
16             paragraph (2);
17                  (U)  For one taxable year beginning on or after
18             January 1, 1994, an amount equal to the total amount
19             of  tax  imposed  and paid under subsections (a) and
20             (b) of Section 201 of  this  Act  on  grant  amounts
21             received  by  the  taxpayer  under  the Nursing Home
22             Grant Assistance Act during the  taxpayer's  taxable
23             years 1992 and 1993;
24                  (V)  Beginning  with  tax  years  ending  on or
25             after December 31, 1995 and ending  with  tax  years
26             ending  on  or  before  December 31, 2004, an amount
27             equal to the amount paid by  a  taxpayer  who  is  a
28             self-employed  taxpayer, a partner of a partnership,
29             or a shareholder in a Subchapter S  corporation  for
30             health  insurance  or  long-term  care insurance for
31             that  taxpayer  or   that   taxpayer's   spouse   or
32             dependents,  to  the extent that the amount paid for
33             that health insurance or  long-term  care  insurance
34             may  be  deducted  under Section 213 of the Internal
 
                            -8-      LRB093 13719 BDD 19121 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
 
                            -9-      LRB093 13719 BDD 19121 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 13719 BDD 19121 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 13719 BDD 19121 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)  Beginning with taxable years ending on or
 9             after  December  31,  2004,  an  amount equal to the
10             actual cost to the taxpayer to retrofit  a  building
11             owned  by the taxpayer with a fire sprinkler system,
12             as defined in  Section  10  of  the  Fire  Sprinkler
13             Contractor  Licensing  Act.    To  qualify  for this
14             deduction, the building must be in existence on  the
15             effective  date  of  this amendatory Act of the 93rd
16             General Assembly and the fire sprinkler system  must
17             be  installed  by  personnel  who  are  licensed  in
18             accordance   with   the  Fire  Sprinkler  Contractor
19             Licensing Act. This subparagraph is exempt from  the
20             provisions of Section 250.

21        (b)  Corporations.
22             (1)  In general.  In the case of a corporation, base
23        income  means  an  amount equal to the taxpayer's taxable
24        income for the taxable year as modified by paragraph (2).
25             (2)  Modifications.  The taxable income referred  to
26        in  paragraph (1) shall be modified by adding thereto the
27        sum of the following amounts:
28                  (A)  An amount equal to  all  amounts  paid  or
29             accrued   to   the  taxpayer  as  interest  and  all
30             distributions  received  from  regulated  investment
31             companies during the  taxable  year  to  the  extent
32             excluded  from  gross  income  in the computation of
33             taxable income;
34                  (B)  An amount  equal  to  the  amount  of  tax
 
                            -12-     LRB093 13719 BDD 19121 b
 1             imposed  by  this  Act  to  the extent deducted from
 2             gross income in the computation  of  taxable  income
 3             for the taxable year;
 4                  (C)  In  the  case  of  a  regulated investment
 5             company, an amount equal to the excess  of  (i)  the
 6             net  long-term  capital  gain  for the taxable year,
 7             over (ii) the amount of the capital  gain  dividends
 8             designated   as  such  in  accordance  with  Section
 9             852(b)(3)(C) of the Internal Revenue  Code  and  any
10             amount  designated under Section 852(b)(3)(D) of the
11             Internal Revenue Code, attributable to  the  taxable
12             year (this amendatory Act of 1995 (Public Act 89-89)
13             is  declarative  of  existing  law  and is not a new
14             enactment);
15                  (D)  The  amount  of  any  net  operating  loss
16             deduction taken in arriving at taxable income, other
17             than a net operating loss  carried  forward  from  a
18             taxable year ending prior to December 31, 1986;
19                  (E)  For taxable years in which a net operating
20             loss  carryback  or carryforward from a taxable year
21             ending prior to December 31, 1986 is an  element  of
22             taxable income under paragraph (1) of subsection (e)
23             or  subparagraph  (E) of paragraph (2) of subsection
24             (e), the  amount  by  which  addition  modifications
25             other  than  those provided by this subparagraph (E)
26             exceeded subtraction modifications in  such  earlier
27             taxable year, with the following limitations applied
28             in the order that they are listed:
29                       (i)  the addition modification relating to
30                  the  net operating loss carried back or forward
31                  to the  taxable  year  from  any  taxable  year
32                  ending  prior  to  December  31,  1986 shall be
33                  reduced by the amount of addition  modification
34                  under  this  subparagraph  (E) which related to
 
                            -13-     LRB093 13719 BDD 19121 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                  (E-5)  For taxable years ending after  December
19             31,   1997,   an   amount   equal  to  any  eligible
20             remediation costs that the corporation  deducted  in
21             computing  adjusted  gross  income and for which the
22             corporation claims a credit under subsection (l)  of
23             Section 201;
24                  (E-10)  For  taxable years 2001 and thereafter,
25             an amount equal to the bonus depreciation  deduction
26             (30%   of   the  adjusted  basis  of  the  qualified
27             property) taken on the taxpayer's federal income tax
28             return for the taxable year under subsection (k)  of
29             Section 168 of the Internal Revenue Code; and
30                  (E-11)  If  the taxpayer reports a capital gain
31             or loss on the taxpayer's federal income tax  return
32             for  the taxable year based on a sale or transfer of
33             property for which the taxpayer was required in  any
34             taxable  year to make an addition modification under
 
                            -14-     LRB093 13719 BDD 19121 b
 1             subparagraph (E-10), then an  amount  equal  to  the
 2             aggregate  amount  of  the  deductions  taken in all
 3             taxable years under subparagraph (T) with respect to
 4             that property.;
 5                  The taxpayer is required to make  the  addition
 6             modification  under this subparagraph only once with
 7             respect to any one piece of property;
 8        and by deducting from the total so obtained  the  sum  of
 9        the following amounts:
10                  (F)  An  amount  equal to the amount of any tax
11             imposed by  this  Act  which  was  refunded  to  the
12             taxpayer  and included in such total for the taxable
13             year;
14                  (G)  An amount equal to any amount included  in
15             such  total under Section 78 of the Internal Revenue
16             Code;
17                  (H)  In the  case  of  a  regulated  investment
18             company,  an  amount  equal  to the amount of exempt
19             interest dividends as defined in subsection (b)  (5)
20             of Section 852 of the Internal Revenue Code, paid to
21             shareholders for the taxable year;
22                  (I)  With   the   exception   of   any  amounts
23             subtracted under subparagraph (J), an  amount  equal
24             to  the  sum of all amounts disallowed as deductions
25             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
26             amounts disallowed as interest  expense  by  Section
27             291(a)(3)  of  the  Internal Revenue Code, as now or
28             hereafter  amended,  and  all  amounts  of  expenses
29             allocable to interest and disallowed  as  deductions
30             by  Section  265(a)(1) of the Internal Revenue Code,
31             as now or hereafter amended; and  (ii)  for  taxable
32             years  ending  on or after August 13, 1999, Sections
33             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
34             of the Internal Revenue Code; the provisions of this
 
                            -15-     LRB093 13719 BDD 19121 b
 1             subparagraph  are  exempt  from  the  provisions  of
 2             Section 250;
 3                  (J)  An amount equal to all amounts included in
 4             such total which are exempt from  taxation  by  this
 5             State   either   by   reason   of  its  statutes  or
 6             Constitution  or  by  reason  of  the  Constitution,
 7             treaties or statutes of the United States;  provided
 8             that,  in the case of any statute of this State that
 9             exempts  income  derived   from   bonds   or   other
10             obligations from the tax imposed under this Act, the
11             amount  exempted  shall  be the interest net of bond
12             premium amortization;
13                  (K)  An  amount  equal   to   those   dividends
14             included   in  such  total  which  were  paid  by  a
15             corporation which conducts business operations in an
16             Enterprise Zone or zones created under the  Illinois
17             Enterprise  Zone  Act and conducts substantially all
18             of its operations in an Enterprise Zone or zones;
19                  (L)  An  amount  equal   to   those   dividends
20             included   in   such  total  that  were  paid  by  a
21             corporation that conducts business operations  in  a
22             federally  designated Foreign Trade Zone or Sub-Zone
23             and  that  is  designated  a  High  Impact  Business
24             located  in  Illinois;   provided   that   dividends
25             eligible  for the deduction provided in subparagraph
26             (K) of paragraph 2 of this subsection shall  not  be
27             eligible  for  the  deduction  provided  under  this
28             subparagraph (L);
29                  (M)  For  any  taxpayer  that  is  a  financial
30             organization within the meaning of Section 304(c) of
31             this  Act,  an  amount  included  in  such  total as
32             interest income from a loan or loans  made  by  such
33             taxpayer  to  a  borrower, to the extent that such a
34             loan is secured by property which  is  eligible  for
 
                            -16-     LRB093 13719 BDD 19121 b
 1             the Enterprise Zone Investment Credit.  To determine
 2             the  portion  of  a loan or loans that is secured by
 3             property eligible for a  Section  201(f)  investment
 4             credit  to the borrower, the entire principal amount
 5             of the loan or loans between the  taxpayer  and  the
 6             borrower  should  be  divided  into the basis of the
 7             Section  201(f)  investment  credit  property  which
 8             secures the loan or loans, using  for  this  purpose
 9             the original basis of such property on the date that
10             it  was  placed  in  service in the Enterprise Zone.
11             The subtraction modification available  to  taxpayer
12             in  any  year  under  this  subsection shall be that
13             portion of the total interest paid by  the  borrower
14             with  respect  to  such  loan  attributable  to  the
15             eligible  property  as calculated under the previous
16             sentence;
17                  (M-1)  For any taxpayer  that  is  a  financial
18             organization within the meaning of Section 304(c) of
19             this  Act,  an  amount  included  in  such  total as
20             interest income from a loan or loans  made  by  such
21             taxpayer  to  a  borrower, to the extent that such a
22             loan is secured by property which  is  eligible  for
23             the  High  Impact  Business  Investment  Credit.  To
24             determine the portion of a loan  or  loans  that  is
25             secured  by  property  eligible for a Section 201(h)
26             investment  credit  to  the  borrower,  the   entire
27             principal  amount  of  the loan or loans between the
28             taxpayer and the borrower should be divided into the
29             basis  of  the  Section  201(h)  investment   credit
30             property  which secures the loan or loans, using for
31             this purpose the original basis of such property  on
32             the  date  that  it  was  placed  in  service  in  a
33             federally  designated Foreign Trade Zone or Sub-Zone
34             located in Illinois.  No taxpayer that  is  eligible
 
                            -17-     LRB093 13719 BDD 19121 b
 1             for  the  deduction  provided in subparagraph (M) of
 2             paragraph (2) of this subsection shall  be  eligible
 3             for  the  deduction provided under this subparagraph
 4             (M-1).  The subtraction  modification  available  to
 5             taxpayers in any year under this subsection shall be
 6             that  portion  of  the  total  interest  paid by the
 7             borrower with respect to such loan  attributable  to
 8             the   eligible  property  as  calculated  under  the
 9             previous sentence;
10                  (N)  Two times any contribution made during the
11             taxable year to a designated  zone  organization  to
12             the  extent that the contribution (i) qualifies as a
13             charitable  contribution  under  subsection  (c)  of
14             Section 170 of the Internal Revenue  Code  and  (ii)
15             must,  by  its terms, be used for a project approved
16             by  the  Department   of   Commerce   and   Economic
17             Opportunity  Community  Affairs  under Section 11 of
18             the Illinois Enterprise Zone Act;
19                  (O)  An amount equal to: (i)  85%  for  taxable
20             years  ending  on or before December 31, 1992, or, a
21             percentage equal to the percentage  allowable  under
22             Section  243(a)(1)  of  the Internal Revenue Code of
23             1986 for taxable years  ending  after  December  31,
24             1992,  of  the amount by which dividends included in
25             taxable income and received from a corporation  that
26             is  not  created  or organized under the laws of the
27             United States or any state or political  subdivision
28             thereof,  including,  for taxable years ending on or
29             after  December  31,  1988,  dividends  received  or
30             deemed  received  or  paid  or  deemed  paid   under
31             Sections  951  through  964  of the Internal Revenue
32             Code, exceed the amount of the modification provided
33             under subparagraph (G)  of  paragraph  (2)  of  this
34             subsection  (b)  which is related to such dividends;
 
                            -18-     LRB093 13719 BDD 19121 b
 1             plus (ii) 100% of the  amount  by  which  dividends,
 2             included  in taxable income and received, including,
 3             for taxable years ending on or  after  December  31,
 4             1988,  dividends received or deemed received or paid
 5             or deemed paid under Sections 951 through 964 of the
 6             Internal Revenue Code,  from  any  such  corporation
 7             specified  in  clause  (i)  that  would  but for the
 8             provisions of Section 1504 (b) (3) of  the  Internal
 9             Revenue   Code   be  treated  as  a  member  of  the
10             affiliated  group  which   includes   the   dividend
11             recipient,  exceed  the  amount  of the modification
12             provided under subparagraph (G) of paragraph (2)  of
13             this   subsection  (b)  which  is  related  to  such
14             dividends;
15                  (P)  An amount equal to any  contribution  made
16             to  a  job  training project established pursuant to
17             the Tax Increment Allocation Redevelopment Act;
18                  (Q)  An amount  equal  to  the  amount  of  the
19             deduction  used  to  compute  the federal income tax
20             credit for restoration of substantial  amounts  held
21             under  claim  of right for the taxable year pursuant
22             to Section 1341 of  the  Internal  Revenue  Code  of
23             1986;
24                  (R)  In  the  case  of an attorney-in-fact with
25             respect to whom  an  interinsurer  or  a  reciprocal
26             insurer  has  made the election under Section 835 of
27             the Internal Revenue Code, 26 U.S.C. 835, an  amount
28             equal  to the excess, if any, of the amounts paid or
29             incurred by that interinsurer or reciprocal  insurer
30             in the taxable year to the attorney-in-fact over the
31             deduction allowed to that interinsurer or reciprocal
32             insurer  with  respect to the attorney-in-fact under
33             Section 835(b) of the Internal Revenue Code for  the
34             taxable year;
 
                            -19-     LRB093 13719 BDD 19121 b
 1                  (S)  For  taxable  years  ending  on  or  after
 2             December  31,  1997,  in  the case of a Subchapter S
 3             corporation, an  amount  equal  to  all  amounts  of
 4             income  allocable  to  a  shareholder subject to the
 5             Personal Property Tax Replacement Income Tax imposed
 6             by subsections (c) and (d) of Section  201  of  this
 7             Act,  including  amounts  allocable to organizations
 8             exempt from federal income tax by reason of  Section
 9             501(a)   of   the   Internal   Revenue  Code.   This
10             subparagraph (S) is exempt from  the  provisions  of
11             Section 250;
12                  (T)  For taxable years 2001 and thereafter, for
13             the  taxable  year  in  which the bonus depreciation
14             deduction  (30%  of  the  adjusted  basis   of   the
15             qualified  property)  is  taken  on  the  taxpayer's
16             federal  income  tax  return under subsection (k) of
17             Section 168 of the Internal  Revenue  Code  and  for
18             each  applicable  taxable year thereafter, an amount
19             equal to "x", where:
20                       (1)  "y"  equals   the   amount   of   the
21                  depreciation  deduction  taken  for the taxable
22                  year  on  the  taxpayer's  federal  income  tax
23                  return  on  property  for   which   the   bonus
24                  depreciation  deduction  (30%  of  the adjusted
25                  basis of the qualified property) was  taken  in
26                  any year under subsection (k) of Section 168 of
27                  the  Internal  Revenue  Code, but not including
28                  the bonus depreciation deduction; and
29                       (2)  "x" equals "y" multiplied by  30  and
30                  then  divided  by  70  (or  "y"  multiplied  by
31                  0.429).
32                  The   aggregate   amount  deducted  under  this
33             subparagraph in all taxable years for any one  piece
34             of  property  may not exceed the amount of the bonus
 
                            -20-     LRB093 13719 BDD 19121 b
 1             depreciation deduction (30% of the adjusted basis of
 2             the qualified property) taken on  that  property  on
 3             the  taxpayer's  federal  income  tax  return  under
 4             subsection  (k)  of  Section  168  of  the  Internal
 5             Revenue Code; and
 6                  (U)  If  the taxpayer reports a capital gain or
 7             loss on the taxpayer's federal income tax return for
 8             the taxable year based on  a  sale  or  transfer  of
 9             property  for which the taxpayer was required in any
10             taxable year to make an addition modification  under
11             subparagraph  (E-10),  then  an amount equal to that
12             addition modification.
13                  The taxpayer is allowed to take  the  deduction
14             under  this  subparagraph  only once with respect to
15             any one piece of property; and
16                  (V)  Beginning with taxable years ending on  or
17             after  December  31,  2004,  an  amount equal to the
18             actual cost to the taxpayer to retrofit  a  building
19             owned  by the taxpayer with a fire sprinkler system,
20             as defined in  Section  10  of  the  Fire  Sprinkler
21             Contractor  Licensing  Act.   To  qualify  for  this
22             deduction,  the building must be in existence on the
23             effective date of this amendatory Act  of  the  93rd
24             General  Assembly and the fire sprinkler system must
25             be  installed  by  personnel  who  are  licensed  in
26             accordance  with  the  Fire   Sprinkler   Contractor
27             Licensing  Act. This subparagraph is exempt from the
28             provisions of Section 250.
29             (3)  Special rule.  For purposes  of  paragraph  (2)
30        (A),  "gross  income"  in  the  case  of a life insurance
31        company, for tax years ending on and after  December  31,
32        1994,  shall  mean  the  gross  investment income for the
33        taxable year.

34        (c)  Trusts and estates.
 
                            -21-     LRB093 13719 BDD 19121 b
 1             (1)  In general.  In the case of a trust or  estate,
 2        base  income  means  an  amount  equal  to the taxpayer's
 3        taxable income  for  the  taxable  year  as  modified  by
 4        paragraph (2).
 5             (2)  Modifications.   Subject  to  the provisions of
 6        paragraph  (3),  the  taxable  income  referred   to   in
 7        paragraph (1) shall be modified by adding thereto the sum
 8        of the following amounts:
 9                  (A)  An  amount  equal  to  all amounts paid or
10             accrued to the taxpayer  as  interest  or  dividends
11             during  the taxable year to the extent excluded from
12             gross income in the computation of taxable income;
13                  (B)  In the case of (i) an estate, $600; (ii) a
14             trust which,  under  its  governing  instrument,  is
15             required  to distribute all of its income currently,
16             $300; and (iii) any other trust, $100, but  in  each
17             such  case,  only  to  the  extent  such  amount was
18             deducted in the computation of taxable income;
19                  (C)  An amount  equal  to  the  amount  of  tax
20             imposed  by  this  Act  to  the extent deducted from
21             gross income in the computation  of  taxable  income
22             for the taxable year;
23                  (D)  The  amount  of  any  net  operating  loss
24             deduction taken in arriving at taxable income, other
25             than  a  net  operating  loss carried forward from a
26             taxable year ending prior to December 31, 1986;
27                  (E)  For taxable years in which a net operating
28             loss carryback or carryforward from a  taxable  year
29             ending  prior  to December 31, 1986 is an element of
30             taxable income under paragraph (1) of subsection (e)
31             or subparagraph (E) of paragraph (2)  of  subsection
32             (e),  the  amount  by  which  addition modifications
33             other than those provided by this  subparagraph  (E)
34             exceeded  subtraction  modifications in such taxable
 
                            -22-     LRB093 13719 BDD 19121 b
 1             year, with the following limitations applied in  the
 2             order that they are listed:
 3                       (i)  the addition modification relating to
 4                  the  net operating loss carried back or forward
 5                  to the  taxable  year  from  any  taxable  year
 6                  ending  prior  to  December  31,  1986 shall be
 7                  reduced by the amount of addition  modification
 8                  under  this  subparagraph  (E) which related to
 9                  that net operating loss  and  which  was  taken
10                  into  account in calculating the base income of
11                  an earlier taxable year, and
12                       (ii)  the addition  modification  relating
13                  to  the  net  operating  loss  carried  back or
14                  forward to the taxable year  from  any  taxable
15                  year  ending  prior  to December 31, 1986 shall
16                  not exceed the  amount  of  such  carryback  or
17                  carryforward;
18                  For  taxable  years  in  which  there  is a net
19             operating loss carryback or carryforward  from  more
20             than one other taxable year ending prior to December
21             31, 1986, the addition modification provided in this
22             subparagraph  (E)  shall  be  the sum of the amounts
23             computed   independently   under    the    preceding
24             provisions  of  this  subparagraph (E) for each such
25             taxable year;
26                  (F)  For  taxable  years  ending  on  or  after
27             January 1, 1989, an amount equal to the tax deducted
28             pursuant to Section 164 of the Internal Revenue Code
29             if the trust or estate is claiming the same tax  for
30             purposes  of  the  Illinois foreign tax credit under
31             Section 601 of this Act;
32                  (G)  An amount  equal  to  the  amount  of  the
33             capital  gain deduction allowable under the Internal
34             Revenue Code, to  the  extent  deducted  from  gross
 
                            -23-     LRB093 13719 BDD 19121 b
 1             income in the computation of taxable income;
 2                  (G-5)  For  taxable years ending after December
 3             31,  1997,  an  amount   equal   to   any   eligible
 4             remediation  costs that the trust or estate deducted
 5             in computing adjusted gross income and for which the
 6             trust or estate claims a credit under subsection (l)
 7             of Section 201;
 8                  (G-10)  For taxable years 2001 and  thereafter,
 9             an  amount equal to the bonus depreciation deduction
10             (30%  of  the  adjusted  basis  of   the   qualified
11             property) taken on the taxpayer's federal income tax
12             return  for the taxable year under subsection (k) of
13             Section 168 of the Internal Revenue Code; and
14                  (G-11)  If the taxpayer reports a capital  gain
15             or  loss on the taxpayer's federal income tax return
16             for the taxable year based on a sale or transfer  of
17             property  for which the taxpayer was required in any
18             taxable year to make an addition modification  under
19             subparagraph  (G-10),  then  an  amount equal to the
20             aggregate amount of  the  deductions  taken  in  all
21             taxable years under subparagraph (R) with respect to
22             that property.;
23                  The  taxpayer  is required to make the addition
24             modification under this subparagraph only once  with
25             respect to any one piece of property;
26        and  by  deducting  from the total so obtained the sum of
27        the following amounts:
28                  (H)  An amount equal to all amounts included in
29             such total pursuant to the  provisions  of  Sections
30             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
31             408 of the Internal Revenue Code or included in such
32             total as distributions under the provisions  of  any
33             retirement  or  disability plan for employees of any
34             governmental agency or unit, or retirement  payments
 
                            -24-     LRB093 13719 BDD 19121 b
 1             to  retired partners, which payments are excluded in
 2             computing  net  earnings  from  self  employment  by
 3             Section  1402  of  the  Internal  Revenue  Code  and
 4             regulations adopted pursuant thereto;
 5                  (I)  The valuation limitation amount;
 6                  (J)  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                  (K)  An amount equal to all amounts included in
11             taxable  income  as  modified  by subparagraphs (A),
12             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
13             from  taxation by this State either by reason of its
14             statutes  or  Constitution  or  by  reason  of   the
15             Constitution,  treaties  or  statutes  of the United
16             States; provided that, in the case of any statute of
17             this State that exempts income derived from bonds or
18             other obligations from the tax  imposed  under  this
19             Act,  the  amount exempted shall be the interest net
20             of bond premium amortization;
21                  (L)  With  the   exception   of   any   amounts
22             subtracted  under  subparagraph (K), an amount equal
23             to the sum of all amounts disallowed  as  deductions
24             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
25             Internal Revenue Code, as now or hereafter  amended,
26             and  all  amounts  of expenses allocable to interest
27             and disallowed as deductions by  Section  265(1)  of
28             the  Internal  Revenue  Code  of  1954,  as  now  or
29             hereafter amended; and (ii) for taxable years ending
30             on  or  after  August  13, 1999, Sections 171(a)(2),
31             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
32             Revenue Code; the provisions  of  this  subparagraph
33             are exempt from the provisions of Section 250;
34                  (M)  An   amount   equal   to  those  dividends
 
                            -25-     LRB093 13719 BDD 19121 b
 1             included  in  such  total  which  were  paid  by   a
 2             corporation which conducts business operations in an
 3             Enterprise  Zone or zones created under the Illinois
 4             Enterprise Zone Act and conducts  substantially  all
 5             of its operations in an Enterprise Zone or Zones;
 6                  (N)  An  amount  equal to any contribution made
 7             to a job training project  established  pursuant  to
 8             the Tax Increment Allocation Redevelopment Act;
 9                  (O)  An   amount   equal   to  those  dividends
10             included  in  such  total  that  were  paid   by   a
11             corporation  that  conducts business operations in a
12             federally designated Foreign Trade Zone or  Sub-Zone
13             and  that  is  designated  a  High  Impact  Business
14             located   in   Illinois;   provided  that  dividends
15             eligible for the deduction provided in  subparagraph
16             (M) of paragraph (2) of this subsection shall not be
17             eligible  for  the  deduction  provided  under  this
18             subparagraph (O);
19                  (P)  An  amount  equal  to  the  amount  of the
20             deduction used to compute  the  federal  income  tax
21             credit  for  restoration of substantial amounts held
22             under claim of right for the taxable  year  pursuant
23             to  Section  1341  of  the  Internal Revenue Code of
24             1986;
25                  (Q)  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
 
                            -26-     LRB093 13719 BDD 19121 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                  (R)  For taxable years 2001 and thereafter, for
27             the taxable year in  which  the  bonus  depreciation
28             deduction   (30%   of  the  adjusted  basis  of  the
29             qualified  property)  is  taken  on  the  taxpayer's
30             federal income tax return under  subsection  (k)  of
31             Section  168  of  the  Internal Revenue Code and for
32             each applicable taxable year thereafter,  an  amount
33             equal to "x", where:
34                       (1)  "y"   equals   the   amount   of  the
 
                            -27-     LRB093 13719 BDD 19121 b
 1                  depreciation deduction taken  for  the  taxable
 2                  year  on  the  taxpayer's  federal  income  tax
 3                  return   on   property   for  which  the  bonus
 4                  depreciation deduction  (30%  of  the  adjusted
 5                  basis  of  the qualified property) was taken in
 6                  any year under subsection (k) of Section 168 of
 7                  the Internal Revenue Code,  but  not  including
 8                  the bonus depreciation deduction; and
 9                       (2)  "x"  equals  "y" multiplied by 30 and
10                  then  divided  by  70  (or  "y"  multiplied  by
11                  0.429).
12                  The  aggregate  amount  deducted   under   this
13             subparagraph  in all taxable years for any one piece
14             of property may not exceed the amount of  the  bonus
15             depreciation deduction (30% of the adjusted basis of
16             the  qualified  property)  taken on that property on
17             the  taxpayer's  federal  income  tax  return  under
18             subsection  (k)  of  Section  168  of  the  Internal
19             Revenue Code; and
20                  (S)  If the taxpayer reports a capital gain  or
21             loss on the taxpayer's federal income tax return for
22             the  taxable  year  based  on  a sale or transfer of
23             property for which the taxpayer was required in  any
24             taxable  year to make an addition modification under
25             subparagraph (G-10), then an amount  equal  to  that
26             addition modification.
27                  The  taxpayer  is allowed to take the deduction
28             under this subparagraph only once  with  respect  to
29             any one piece of property; and
30                  (T)  Beginning  with taxable years ending on or
31             after December 31, 2004,  an  amount  equal  to  the
32             actual  cost  to the taxpayer to retrofit a building
33             owned by the taxpayer with a fire sprinkler  system,
34             as  defined  in  Section  10  of  the Fire Sprinkler
 
                            -28-     LRB093 13719 BDD 19121 b
 1             Contractor  Licensing  Act.   To  qualify  for  this
 2             deduction, the building must be in existence on  the
 3             effective  date  of  this amendatory Act of the 93rd
 4             General Assembly and the fire sprinkler system  must
 5             be  installed  by  personnel  who  are  licensed  in
 6             accordance   with   the  Fire  Sprinkler  Contractor
 7             Licensing Act. This subparagraph is exempt from  the
 8             provisions of Section 250.
 9             (3)  Limitation.   The  amount  of  any modification
10        otherwise required under  this  subsection  shall,  under
11        regulations  prescribed by the Department, be adjusted by
12        any amounts included therein which  were  properly  paid,
13        credited,  or  required to be distributed, or permanently
14        set aside for charitable purposes pursuant   to  Internal
15        Revenue Code Section 642(c) during the taxable year.

16        (d)  Partnerships.
17             (1)  In  general. In the case of a partnership, base
18        income means an amount equal to  the  taxpayer's  taxable
19        income for the taxable year as modified by paragraph (2).
20             (2)  Modifications.  The  taxable income referred to
21        in paragraph (1) shall be modified by adding thereto  the
22        sum of the following amounts:
23                  (A)  An  amount  equal  to  all amounts paid or
24             accrued to the taxpayer  as  interest  or  dividends
25             during  the taxable year to the extent excluded from
26             gross income in the computation of taxable income;
27                  (B)  An amount  equal  to  the  amount  of  tax
28             imposed  by  this  Act  to  the extent deducted from
29             gross income for the taxable year;
30                  (C)  The amount of deductions  allowed  to  the
31             partnership  pursuant  to  Section  707  (c)  of the
32             Internal Revenue Code  in  calculating  its  taxable
33             income;
34                  (D)  An  amount  equal  to  the  amount  of the
 
                            -29-     LRB093 13719 BDD 19121 b
 1             capital gain deduction allowable under the  Internal
 2             Revenue  Code,  to  the  extent  deducted from gross
 3             income in the computation of taxable income;
 4                  (D-5)  For taxable years 2001  and  thereafter,
 5             an  amount equal to the bonus depreciation deduction
 6             (30%  of  the  adjusted  basis  of   the   qualified
 7             property) taken on the taxpayer's federal income tax
 8             return  for the taxable year under subsection (k) of
 9             Section 168 of the Internal Revenue Code; and
10                  (D-6)  If the taxpayer reports a  capital  gain
11             or  loss on the taxpayer's federal income tax return
12             for 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  (D-5),  then  an  amount  equal to the
16             aggregate amount of  the  deductions  taken  in  all
17             taxable years under subparagraph (O) with respect to
18             that property.;
19                  The  taxpayer  is required to make the addition
20             modification under this subparagraph only once  with
21             respect to any one piece of property;
22        and by deducting from the total so obtained the following
23        amounts:
24                  (E)  The valuation limitation amount;
25                  (F)  An  amount  equal to the amount of any tax
26             imposed by  this  Act  which  was  refunded  to  the
27             taxpayer  and included in such total for the taxable
28             year;
29                  (G)  An amount equal to all amounts included in
30             taxable income as  modified  by  subparagraphs  (A),
31             (B),  (C)  and (D) which are exempt from taxation by
32             this State either  by  reason  of  its  statutes  or
33             Constitution  or  by  reason  of  the  Constitution,
34             treaties  or statutes of the United States; provided
 
                            -30-     LRB093 13719 BDD 19121 b
 1             that, in the case of any statute of this State  that
 2             exempts   income   derived   from   bonds  or  other
 3             obligations from the tax imposed under this Act, the
 4             amount exempted shall be the interest  net  of  bond
 5             premium amortization;
 6                  (H)  Any   income   of  the  partnership  which
 7             constitutes personal service income  as  defined  in
 8             Section  1348  (b)  (1) of the Internal Revenue Code
 9             (as in effect December 31,  1981)  or  a  reasonable
10             allowance  for  compensation  paid  or  accrued  for
11             services  rendered  by  partners to the partnership,
12             whichever is greater;
13                  (I)  An amount equal to all amounts  of  income
14             distributable  to  an entity subject to the Personal
15             Property  Tax  Replacement  Income  Tax  imposed  by
16             subsections (c) and (d) of Section 201 of  this  Act
17             including  amounts  distributable  to  organizations
18             exempt  from federal income tax by reason of Section
19             501(a) of the Internal Revenue Code;
20                  (J)  With  the   exception   of   any   amounts
21             subtracted  under  subparagraph (G), an amount equal
22             to the sum of all amounts disallowed  as  deductions
23             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
24             Internal Revenue Code of 1954, as now  or  hereafter
25             amended,  and  all  amounts of expenses allocable to
26             interest and disallowed  as  deductions  by  Section
27             265(1)  of  the  Internal  Revenue  Code,  as now or
28             hereafter amended; and (ii) for taxable years ending
29             on or after August  13,  1999,  Sections  171(a)(2),
30             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
31             Revenue  Code;  the  provisions of this subparagraph
32             are exempt from the provisions of Section 250;
33                  (K)  An  amount  equal   to   those   dividends
34             included   in  such  total  which  were  paid  by  a
 
                            -31-     LRB093 13719 BDD 19121 b
 1             corporation which conducts business operations in an
 2             Enterprise Zone or zones created under the  Illinois
 3             Enterprise  Zone  Act,  enacted  by the 82nd General
 4             Assembly, and  conducts  substantially  all  of  its
 5             operations in an Enterprise Zone or Zones;
 6                  (L)  An  amount  equal to any contribution made
 7             to a job training project  established  pursuant  to
 8             the   Real   Property   Tax   Increment   Allocation
 9             Redevelopment Act;
10                  (M)  An   amount   equal   to  those  dividends
11             included  in  such  total  that  were  paid   by   a
12             corporation  that  conducts business operations in a
13             federally designated Foreign Trade Zone or  Sub-Zone
14             and  that  is  designated  a  High  Impact  Business
15             located   in   Illinois;   provided  that  dividends
16             eligible for the deduction provided in  subparagraph
17             (K) of paragraph (2) of this subsection shall not be
18             eligible  for  the  deduction  provided  under  this
19             subparagraph (M);
20                  (N)  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                  (O)  For taxable years 2001 and thereafter, for
27             the taxable year in  which  the  bonus  depreciation
28             deduction   (30%   of  the  adjusted  basis  of  the
29             qualified  property)  is  taken  on  the  taxpayer's
30             federal income tax return under  subsection  (k)  of
31             Section  168  of  the  Internal Revenue Code and for
32             each applicable taxable year thereafter,  an  amount
33             equal to "x", where:
34                       (1)  "y"   equals   the   amount   of  the
 
                            -32-     LRB093 13719 BDD 19121 b
 1                  depreciation deduction taken  for  the  taxable
 2                  year  on  the  taxpayer's  federal  income  tax
 3                  return   on   property   for  which  the  bonus
 4                  depreciation deduction  (30%  of  the  adjusted
 5                  basis  of  the qualified property) was taken in
 6                  any year under subsection (k) of Section 168 of
 7                  the Internal Revenue Code,  but  not  including
 8                  the bonus depreciation deduction; and
 9                       (2)  "x"  equals  "y" multiplied by 30 and
10                  then  divided  by  70  (or  "y"  multiplied  by
11                  0.429).
12                  The  aggregate  amount  deducted   under   this
13             subparagraph  in all taxable years for any one piece
14             of property may not exceed the amount of  the  bonus
15             depreciation deduction (30% of the adjusted basis of
16             the  qualified  property)  taken on that property on
17             the  taxpayer's  federal  income  tax  return  under
18             subsection  (k)  of  Section  168  of  the  Internal
19             Revenue Code; and
20                  (P)  If the taxpayer reports a capital gain  or
21             loss on the taxpayer's federal income tax return for
22             the  taxable  year  based  on  a sale or transfer of
23             property for which the taxpayer was required in  any
24             taxable  year to make an addition modification under
25             subparagraph (D-5), then an  amount  equal  to  that
26             addition modification.
27                  The  taxpayer  is allowed to take the deduction
28             under this subparagraph only once  with  respect  to
29             any one piece of property; and
30                  (Q)  Beginning  with taxable years ending on or
31             after December 31, 2004,  an  amount  equal  to  the
32             actual  cost  to the taxpayer to retrofit a building
33             owned by the taxpayer with a fire sprinkler  system,
34             as  defined  in  Section  10  of  the Fire Sprinkler
 
                            -33-     LRB093 13719 BDD 19121 b
 1             Contractor  Licensing  Act.   To  qualify  for  this
 2             deduction, the building must be in existence on  the
 3             effective  date  of  this amendatory Act of the 93rd
 4             General Assembly and the fire sprinkler system  must
 5             be  installed  by  personnel  who  are  licensed  in
 6             accordance   with   the  Fire  Sprinkler  Contractor
 7             Licensing Act. This subparagraph is exempt from  the
 8             provisions of Section 250.

 9        (e)  Gross income; adjusted gross income; taxable income.
10             (1)  In  general.   Subject  to  the  provisions  of
11        paragraph  (2)  and  subsection  (b) (3), for purposes of
12        this Section  and  Section  803(e),  a  taxpayer's  gross
13        income,  adjusted gross income, or taxable income for the
14        taxable year shall  mean  the  amount  of  gross  income,
15        adjusted   gross   income   or  taxable  income  properly
16        reportable  for  federal  income  tax  purposes  for  the
17        taxable year under the provisions of the Internal Revenue
18        Code. Taxable income may be less than zero. However,  for
19        taxable  years  ending on or after December 31, 1986, net
20        operating loss carryforwards from  taxable  years  ending
21        prior  to  December  31,  1986, may not exceed the sum of
22        federal taxable income for the taxable  year  before  net
23        operating  loss  deduction,  plus  the excess of addition
24        modifications  over  subtraction  modifications  for  the
25        taxable year.  For taxable years ending prior to December
26        31, 1986, taxable income may never be an amount in excess
27        of the net operating loss for the taxable year as defined
28        in subsections (c) and (d) of Section 172 of the Internal
29        Revenue Code, provided that  when  taxable  income  of  a
30        corporation  (other  than  a  Subchapter  S corporation),
31        trust,  or  estate  is  less  than  zero   and   addition
32        modifications,  other than those provided by subparagraph
33        (E) of paragraph (2) of subsection (b)  for  corporations
34        or  subparagraph  (E)  of paragraph (2) of subsection (c)
 
                            -34-     LRB093 13719 BDD 19121 b
 1        for trusts and estates, exceed subtraction modifications,
 2        an  addition  modification  must  be  made  under   those
 3        subparagraphs  for  any  other  taxable year to which the
 4        taxable income less than zero  (net  operating  loss)  is
 5        applied under Section 172 of the Internal Revenue Code or
 6        under   subparagraph   (E)   of  paragraph  (2)  of  this
 7        subsection (e) applied in conjunction with Section 172 of
 8        the Internal Revenue Code.
 9             (2)  Special rule.  For purposes of paragraph (1) of
10        this subsection, the taxable income  properly  reportable
11        for federal income tax purposes shall mean:
12                  (A)  Certain  life insurance companies.  In the
13             case of a life insurance company subject to the  tax
14             imposed by Section 801 of the Internal Revenue Code,
15             life  insurance  company  taxable  income,  plus the
16             amount of distribution  from  pre-1984  policyholder
17             surplus accounts as calculated under Section 815a of
18             the Internal Revenue Code;
19                  (B)  Certain other insurance companies.  In the
20             case  of  mutual  insurance companies subject to the
21             tax imposed by Section 831 of the  Internal  Revenue
22             Code, insurance company taxable income;
23                  (C)  Regulated  investment  companies.   In the
24             case of a regulated investment  company  subject  to
25             the  tax  imposed  by  Section  852  of the Internal
26             Revenue Code, investment company taxable income;
27                  (D)  Real estate  investment  trusts.   In  the
28             case  of  a  real estate investment trust subject to
29             the tax imposed  by  Section  857  of  the  Internal
30             Revenue  Code,  real estate investment trust taxable
31             income;
32                  (E)  Consolidated corporations.  In the case of
33             a corporation which is a  member  of  an  affiliated
34             group  of  corporations filing a consolidated income
 
                            -35-     LRB093 13719 BDD 19121 b
 1             tax return for the taxable year for  federal  income
 2             tax  purposes,  taxable income determined as if such
 3             corporation had filed a separate return for  federal
 4             income  tax  purposes  for the taxable year and each
 5             preceding taxable year for which it was a member  of
 6             an   affiliated   group.   For   purposes   of  this
 7             subparagraph, the taxpayer's separate taxable income
 8             shall be determined as if the election  provided  by
 9             Section  243(b) (2) of the Internal Revenue Code had
10             been in effect for all such years;
11                  (F)  Cooperatives.    In   the   case   of    a
12             cooperative  corporation or association, the taxable
13             income of such organization determined in accordance
14             with the provisions of Section 1381 through 1388  of
15             the Internal Revenue Code;
16                  (G)  Subchapter  S  corporations.   In the case
17             of: (i) a Subchapter S corporation for  which  there
18             is  in effect an election for the taxable year under
19             Section 1362  of  the  Internal  Revenue  Code,  the
20             taxable  income  of  such  corporation determined in
21             accordance with  Section  1363(b)  of  the  Internal
22             Revenue  Code, except that taxable income shall take
23             into account  those  items  which  are  required  by
24             Section  1363(b)(1)  of the Internal Revenue Code to
25             be  separately  stated;  and  (ii)  a  Subchapter  S
26             corporation for which there is in effect  a  federal
27             election  to  opt  out  of  the  provisions  of  the
28             Subchapter  S  Revision Act of 1982 and have applied
29             instead the prior federal Subchapter S rules  as  in
30             effect  on  July 1, 1982, the taxable income of such
31             corporation  determined  in  accordance   with   the
32             federal  Subchapter  S rules as in effect on July 1,
33             1982; and
34                  (H)  Partnerships.    In   the   case   of    a
 
                            -36-     LRB093 13719 BDD 19121 b
 1             partnership, taxable income determined in accordance
 2             with  Section  703  of  the  Internal  Revenue Code,
 3             except that taxable income shall take  into  account
 4             those  items which are required by Section 703(a)(1)
 5             to be separately stated but  which  would  be  taken
 6             into  account  by  an  individual in calculating his
 7             taxable income.

 8        (f)  Valuation limitation amount.
 9             (1)  In general.  The  valuation  limitation  amount
10        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
11        (d)(2) (E) is an amount equal to:
12                  (A)  The  sum  of  the   pre-August   1,   1969
13             appreciation  amounts  (to  the extent consisting of
14             gain reportable under the provisions of Section 1245
15             or 1250  of  the  Internal  Revenue  Code)  for  all
16             property  in respect of which such gain was reported
17             for the taxable year; plus
18                  (B)  The  lesser  of  (i)  the   sum   of   the
19             pre-August  1,  1969  appreciation  amounts  (to the
20             extent consisting of capital gain) for all  property
21             in  respect  of  which  such  gain  was reported for
22             federal income tax purposes for the taxable year, or
23             (ii) the net capital  gain  for  the  taxable  year,
24             reduced  in  either  case by any amount of such gain
25             included in the amount determined  under  subsection
26             (a) (2) (F) or (c) (2) (H).
27             (2)  Pre-August 1, 1969 appreciation amount.
28                  (A)  If  the  fair  market  value  of  property
29             referred   to   in   paragraph   (1)   was   readily
30             ascertainable  on  August 1, 1969, the pre-August 1,
31             1969 appreciation amount for such  property  is  the
32             lesser  of  (i) the excess of such fair market value
33             over the taxpayer's basis (for determining gain) for
34             such property on that  date  (determined  under  the
 
                            -37-     LRB093 13719 BDD 19121 b
 1             Internal Revenue Code as in effect on that date), or
 2             (ii)  the  total  gain  realized  and reportable for
 3             federal income tax purposes in respect of the  sale,
 4             exchange or other disposition of such property.
 5                  (B)  If  the  fair  market  value  of  property
 6             referred   to  in  paragraph  (1)  was  not  readily
 7             ascertainable on August 1, 1969, the  pre-August  1,
 8             1969  appreciation  amount for such property is that
 9             amount which bears the same ratio to the total  gain
10             reported  in  respect  of  the  property for federal
11             income tax purposes for the  taxable  year,  as  the
12             number  of  full calendar months in that part of the
13             taxpayer's holding period for  the  property  ending
14             July  31,  1969 bears to the number of full calendar
15             months in the taxpayer's entire holding  period  for
16             the property.
17                  (C)  The   Department   shall   prescribe  such
18             regulations as may be necessary  to  carry  out  the
19             purposes of this paragraph.

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

23        (h)  Legislative intention.  Except as expressly provided
24    by   this   Section   there  shall  be  no  modifications  or
25    limitations on the amounts of income, gain, loss or deduction
26    taken into account  in  determining  gross  income,  adjusted
27    gross  income  or  taxable  income  for  federal  income  tax
28    purposes for the taxable year, or in the amount of such items
29    entering  into  the computation of base income and net income
30    under this Act for such taxable year, whether in  respect  of
31    property values as of August 1, 1969 or otherwise.
32    (Source:  P.A.  91-192,  eff.  7-20-99; 91-205, eff. 7-20-99;
33    91-357, eff. 7-29-99;  91-541,  eff.  8-13-99;  91-676,  eff.
 
                            -38-     LRB093 13719 BDD 19121 b
 1    12-23-99;  91-845,  eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
 2    eff. 6-28-01; 92-244,  eff.  8-3-01;  92-439,  eff.  8-17-01;
 3    92-603,  eff.  6-28-02;  92-626,  eff.  7-11-02; 92-651, eff.
 4    7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)