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90_SB0167
New Act
35 ILCS 5/203 from Ch. 120, par. 2-203
Creates the Illinois State Ensured College and University
Responsive Education Trust Act and amends the Illinois Income
Tax Act. Provides for advance tuition payment contracts which
assure the payment of tuition for the specified beneficiary
of such a contract at a public university or community
college of the State. Provides for the terms and conditions
to be included in the contracts and for a board of directors
of the Illinois State Ensured College and University
Responsive Education Trust. Provides that a taxpayer may
deduct from State personal income taxes amounts paid for
advance tuition contracts. Effective immediately.
LRB9001905THpk
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1 AN ACT to create the Illinois State Ensured College and
2 University Responsive Education Trust and provide for advance
3 tuition payment contracts, amending an Act therein named.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 1. Short title. This Act may be cited as the
7 Illinois State Ensured College and University Responsive
8 Education Trust Act.
9 Section 5. Findings. The General Assembly hereby finds
10 and declares the following:
11 (1) It is a fundamental goal of this State to allow
12 all persons to obtain the highest education possible at a
13 reasonable cost.
14 (2) It is a primary responsibility of State
15 government to encourage attendance at institutions of
16 higher education.
17 (3) It is an essential function of State government
18 to provide assistance and aid to the People of this State
19 in obtaining an education.
20 (4) The cost of obtaining a higher education places
21 a heavy burden on and is prohibitive for many citizens of
22 this State.
23 (5) The cost of providing assistance for the People
24 of this State to obtain a higher education places a heavy
25 burden on the State and federal government.
26 (6) Many higher education assistance programs are
27 causing more citizens of this State to join a growing
28 "debtor class" of people.
29 Section 10. Purpose. The General Assembly declares the
30 purposes of this Act and of the State Ensured College and
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1 University Responsive Education Trust created by this Act to
2 be:
3 (1) to encourage education and the means of
4 education;
5 (2) to encourage the People of this State to plan
6 in advance for the cost of their higher education and
7 that of their children;
8 (3) to provide wide and affordable access to State
9 institutions of higher education for the residents of
10 this State;
11 (4) to provide protection against the rising cost
12 of obtaining higher education to residents of this State;
13 (5) to reduce the burden on State and federal
14 governments to provide higher education assistance to the
15 citizens of this State;
16 (6) to provide alternatives to current higher
17 education assistance programs; and
18 (7) to provide a secure method by which the
19 citizens of this State may afford access to State
20 institutions of higher education.
21 Section 15. Definitions. As used in this Act, except
22 where the context clearly requires otherwise, the following
23 terms shall have meanings ascribed to them in this Section:
24 (1) "Advance tuition payment contract" means a
25 contract entered into by the trust and a purchaser
26 pursuant to this Act to provide for the higher education
27 of a qualified beneficiary.
28 (2) "Board" means the Board of Directors of the
29 Illinois State Ensured College and University Responsive
30 Education Trust created by this Act.
31 (3) "Fund" means the Advance Tuition Payment Fund
32 created in Section 40.
33 (4) "Purchaser" means a person who makes or is
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1 obligated to make advance tuition payments pursuant to an
2 advance tuition payment contract.
3 (5) "Qualified beneficiary" means any person who is
4 a resident of this State at the time that such person is
5 designated as the person whose tuition may be paid
6 pursuant to an advance tuition payment contract.
7 (6) "State institution of higher education" means
8 Chicago State University, Eastern Illinois University,
9 Governors State University, Illinois State University,
10 Northeastern Illinois University, Northern Illinois
11 University, Southern Illinois University, the University
12 of Illinois, Western Illinois University, the public
13 community colleges of the State, and any other public
14 universities, colleges and community colleges now or
15 hereafter established or authorized by the General
16 Assembly.
17 (7) "Trust" means the Illinois State Ensured
18 College and University Responsive Education Trust created
19 in Section 20.
20 (8) "Prevailing average tuition costs" means the
21 result obtained when the total tuition cost of all State
22 institutions of higher education is divided by the total
23 number of all full-time equivalent students at all of the
24 State institutions of higher education.
25 Section 20. Illinois State Ensured College and
26 University Responsive Education Trust.
27 (a) There is created a public body corporate and politic
28 to be known as the Illinois State Ensured College and
29 University Responsive Education Trust. The trust shall be
30 within the Office of the State Treasurer, but shall exercise
31 its prescribed statutory powers, duties, and functions
32 independently of the State Treasurer.
33 (b) The powers and duties of the Illinois State Ensured
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1 College and University Responsive Education Trust are vested
2 in and shall be exercised by a board of directors established
3 as provided in Section 45.
4 Section 25. Terms of advance tuition payment contracts.
5 (a) The trust, on behalf of itself and the State, may
6 contract with a purchaser who has been made aware of the
7 provisions contained in Section 90 of this Act for the
8 advance payment of tuition, by the purchaser for a qualified
9 beneficiary, to attend any of the State institutions of
10 higher education to which the qualified beneficiary is
11 admitted, without further tuition cost to the qualified
12 beneficiary. In addition, an advance tuition payment
13 contract shall set forth all of the following:
14 (1) The amount of the payment or payments required
15 from the purchaser on behalf of the qualified
16 beneficiary.
17 (2) The terms and conditions for making the
18 payment, including, but not limited to, the date or dates
19 upon which the payment, or portions of the payment, shall
20 be due.
21 (3) Provisions for late payment charges and for
22 default.
23 (4) The name and age of the qualified beneficiary
24 under the contract, provided that the purchaser, with the
25 approval of and on conditions determined by the trust,
26 may subsequently substitute another qualified beneficiary
27 for the qualified beneficiary originally named.
28 (5) The number of credit hours for which the
29 qualified beneficiary may have his or her tuition paid by
30 the trust pursuant to the contract, subject to the terms
31 of this Section.
32 (6) The name of the person entitled to terminate
33 the contract, which, as provided by the contract, may be
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1 the purchaser, the qualified beneficiary, a person to act
2 on behalf of the purchaser or qualified beneficiary, or
3 any combination of these persons.
4 (7) The terms and conditions under which the
5 contract may be terminated and the amount of the refund,
6 if any, to which the person terminating the contract, or
7 specifically the purchaser or designated qualified
8 beneficiary if the contract so provides, shall be
9 entitled upon termination.
10 (8) The assumption of a contractual obligation by
11 the trust to the qualified beneficiary on its own behalf
12 and on behalf of the State to pay tuition for credit
13 hours of higher education, not to exceed the credit hours
14 required for the granting of a baccalaureate degree, at
15 any State institution of higher education to which the
16 qualified beneficiary is admitted. Notwithstanding any
17 other provision of this Act to the contrary, if at the
18 time or times when tuition payments are due the qualified
19 beneficiary is not entitled to in-State tuition rates,
20 the trust's contractual obligation shall be limited to
21 the payment of that portion of such tuition payment as is
22 equal to the tuition payment that would have been due if
23 the qualified beneficiary were entitled to in-State
24 tuition rates.
25 (9) The period of time from the beginning to the
26 end of which the qualified beneficiary may receive the
27 benefits under the contract.
28 (10) Other terms, conditions, and provisions that
29 the trust, in its sole discretion, considers necessary or
30 appropriate.
31 (b) The form of any advance tuition payment contract to
32 be entered into by the trust shall first be approved by the
33 State Treasurer.
34 (c) The trust shall make any arrangements that are
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1 necessary or appropriate with State institutions of higher
2 education in order to fulfill its obligations under advance
3 tuition payment contracts, which arrangements may include,
4 but need not be limited to, the payment by the trust of the
5 then actual in-State tuition cost on behalf of a qualified
6 beneficiary to the State institution of higher education.
7 (d) An advance tuition payment contract shall provide
8 (i) that the trust pay tuition for the qualified beneficiary
9 to attend a public community college of this State before
10 entering a State institution of higher education if the
11 beneficiary so chooses, and (ii) that the contract may be
12 terminated pursuant to Section 35 after completing the
13 requirements for a degree at the public community college of
14 this State or before entering the State institution of higher
15 education.
16 (e) An advance tuition payment contract may provide that
17 if after a number of years specified in the contract the
18 contract has not been terminated or the qualified
19 beneficiary's rights under the contract have not been
20 exercised, the trust shall retain the amounts otherwise
21 payable and the rights of the qualified beneficiary, the
22 purchaser, or the agent of either shall be considered
23 terminated.
24 (f) An advance tuition payment contract may provide that
25 the trust shall pay to the qualified beneficiary, before the
26 commencement of each academic semester or equivalent academic
27 unit, an amount equal to 10% of the tuition paid by the trust
28 on behalf of the qualified beneficiary for such academic
29 semester or equivalent academic unit, to be used for school
30 books and school supplies.
31 Section 30. Types of advance tuition payment contracts;
32 additional contract terms.
33 (a) In addition to other contracts which the trust may
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1 offer, the trust shall offer contracts of the 2 types set
2 forth in subsections (b) and (c), to be known as Plan A and
3 Plan B, respectively.
4 (b) Under Plan A:
5 (1) A payment or series of payments shall be
6 required from the purchaser on behalf of a qualified
7 beneficiary.
8 (2) The face amount of the payment or payments may
9 be refunded by the trust upon termination of the contract
10 pursuant to Section 35 and in accordance with the terms
11 of the contract, less any administrative fee specified in
12 the contract, but any investment income attributable to
13 the payments shall not be refundable.
14 (3) The trust shall pay tuition for the qualified
15 beneficiary to attend a State institution of higher
16 education for the number of credit hours required by the
17 institution which the qualified beneficiary attends for
18 the awarding of a baccalaureate degree, without further
19 tuition cost to the qualified beneficiary, except as
20 provided in subsection (a) of Section 25 for a qualified
21 beneficiary who is not entitled to in-State tuition
22 rates.
23 (c) Under Plan B:
24 (1) A payment or series of payments shall be
25 required from the purchaser on behalf of a qualified
26 beneficiary.
27 (2) The face amount of the payment or payments may
28 be refunded by the trust upon termination of the contract
29 pursuant to Section 35 and in accordance with the terms
30 of contract, less any administrative fee specified in the
31 contract, together with all or a specified portion of
32 accrued investment income attributable to the payment or
33 payments as may be agreed to in the contract.
34 (3) The trust shall pay tuition for the qualified
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1 beneficiary to attend a State institution of higher
2 education for the number of credit hours required by the
3 institution which the qualified beneficiary attends for
4 the awarding of a baccalaureate degree, without further
5 tuition cost to the qualified beneficiary, except as
6 provided in subsection (a) of Section 25 for a qualified
7 beneficiary who is not entitled to in-State tuition
8 rates.
9 (d) Contracts required to be offered by this Section may
10 require that payment or payments from a purchaser, on behalf
11 of a qualified beneficiary who may attend a State institution
12 of higher education in less than 4 years after the date the
13 contract is entered into by the purchaser, be based upon
14 attendance at a certain State institution of higher education
15 or at that State institution of higher education with the
16 highest prevailing tuition cost for the number of credit
17 hours covered by the contract.
18 Section 35. Termination of advance payment tuition
19 contract; limitation; refund.
20 (a) An advance tuition payment contract shall not
21 authorize termination of the contract except when one of the
22 following occurs:
23 (1) The qualified beneficiary dies.
24 (2) The qualified beneficiary is not admitted to a
25 State institution of higher education after making
26 proper application.
27 (3) The qualified beneficiary certifies to the
28 trust, after attaining the age of majority, that he or
29 she has decided not to attend a State institution of
30 higher education and requests, in writing, that the
31 advance tuition payment contract be terminated.
32 (4) Any circumstance, determined by the trust and
33 set forth in the advance tuition payment contract.
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1 (b) An advance tuition payment contract may provide for
2 a refund pursuant to this Section to a person to whom the
3 refund is payable under the contract upon termination of the
4 contract. The refund may include all or a portion of the
5 payment or payments made by the purchaser under the contract
6 and all or a portion of the accrued investment income
7 attributable to the payment or payments. However, the amount
8 of a refund shall not exceed the prevailing average tuition
9 cost on the date of termination for credit hours covered by
10 the contract at the State institution of higher education.
11 The amount of a refund shall be reduced by all amounts paid
12 by the trust to a public community college of this State on
13 behalf of a qualified beneficiary when the contract is
14 terminated as provided in subsection (d) of Section 25 and
15 by all amounts paid by the trust to a State institution of
16 higher education on behalf of a qualified beneficiary.
17 Termination of a contract and the right to receive a refund
18 shall not be authorized under the contract if the qualified
19 beneficiary has completed more than 50% of the credit hours
20 required by the State institution of higher education for the
21 awarding of a baccalaureate degree. However, this provision
22 shall not affect the termination and refund rights of a
23 graduate of a public community college of this State.
24 (c) An advance tuition payment contract may authorize a
25 person, who is entitled under the advance tuition payment
26 contract to terminate the contract, to direct payment of the
27 refund to an independent degree-granting college or
28 university in this State or to a community or junior college
29 in this State. If directed to make payments pursuant to this
30 subsection, the trust shall transfer to the designated
31 institution in appropriate installments per academic semester
32 or equivalent academic unit an amount equal to the tuition
33 due for the qualified beneficiary per academic semester or
34 equivalent academic unit, but the trust shall not transfer a
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1 cumulative amount greater than the refund to which the person
2 is entitled. If the refund exceeds the total amount of
3 transfers directed to the designated institution, the excess
4 shall be returned to the person to whom the refund is
5 otherwise payable.
6 (d) The amount of a refund paid upon termination of the
7 advance tuition payment contract by a person who directs the
8 trust pursuant to subsection (c) of this Section to transfer
9 the refund to an independent degree-granting college or
10 university located in this State shall not be greater than
11 the prevailing average tuition cost of State institutions of
12 higher education for the number of credit hours covered by
13 the contract on the date of termination.
14 Section 40. Advance Tuition Payment Fund.
15 (a) There is created outside of the State treasury and
16 under the jurisdiction and control of the board an Advance
17 Tuition Payment Fund. Payments received by the trust from
18 purchasers on behalf of qualified beneficiaries or from any
19 other source, public or private, shall be placed in the fund.
20 The fund may be divided into separate accounts.
21 (b) Assets of the trust shall not be considered State
22 money, common cash of the State, or revenue of the State,
23 except for purposes of carrying out the provisions of this
24 Act.
25 (c) Unless otherwise provided by resolution of the
26 board, assets of the trust shall be expended in the following
27 order of priority:
28 (1) To make payments to State institutions of
29 higher education on behalf of qualified beneficiaries.
30 (2) To make refunds upon termination of advance
31 tuition payment contracts.
32 (3) To pay the costs of administration and
33 organization of the trust and the fund.
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1 (d) Assets of the trust may be invested in any
2 instrument, obligation, security, or property considered
3 appropriate by the trust and may be pooled for investment
4 purposes with investments of the State, including, but not
5 limited to, State pension funds, on such terms and conditions
6 as are agreeable to the trust.
7 Section 45. Board of Directors.
8 (a) The Board of Directors of the Illinois State Ensured
9 College and University Responsive Education Trust shall
10 consist of the State Treasurer, the State Comptroller and 5
11 other members who possess knowledge, skill, and experience in
12 the academic, business, or financial field and who shall be
13 appointed by the Governor, by and with the advice and consent
14 of the Senate, provided that each such field shall have at
15 least one member chosen exclusively for his or her
16 credentials in such field. Not more than 2 of the 5
17 appointed members of the board shall be, during their term of
18 office on the board, either officials, appointees, or
19 employees of this State. Of the members first appointed, 2
20 shall be appointed for a term that expires December 31, 2000,
21 and 3 shall be appointed for a term that expires December 31,
22 2001. Upon completion of each term, a member shall be
23 appointed for a term of 3 years. A member shall serve until
24 a successor is appointed and qualified, and any vacancy shall
25 be filled for the balance of the unexpired term and in the
26 same manner as the original appointment. The chief executive
27 officer or director of any State department, who is a
28 designated member of or an appointee to the board, may
29 appoint a deputy to serve as a voting member of the board in
30 the absence of the chief executive officer or director. The
31 Governor shall designate one member of the board to serve as
32 its chairperson. The board shall appoint a president, who
33 shall be the chief executive officer, and a vice-president of
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1 the trust, neither of whom shall be members of the board.
2 No member of the board shall have any interest in any
3 brokerage fee, commission, or other profit or gain arising
4 out of any investment made by the board. This paragraph does
5 not preclude ownership by any board member of any minority
6 interest in any common stock or any corporate obligation in
7 which investment is made by the board.
8 (b) Members of the board shall serve without
9 compensation, but shall receive reasonable reimbursement for
10 actual and necessary expenses.
11 (c) The board may delegate to its president,
12 vice-president, or others such functions and authority as the
13 board considers necessary or appropriate. These functions
14 may include, but are not limited to, the oversight and
15 supervision of employees of the trust.
16 (d) A majority of the members of the board serving shall
17 constitute a quorum for the transaction of business at a
18 meeting of the board, or the exercise of a power or function
19 of the trust, notwithstanding the existence of one or more
20 vacancies. Voting upon action taken by the board shall be
21 conducted by majority vote of the members serving on the
22 board, and, if authorized by the bylaws of the board and when
23 a quorum is present in person at the meeting, by use of
24 amplified telephonic equipment. The board shall meet at the
25 call of the chair and as may be provided in the bylaws of the
26 trust. Meetings of the board may be held anywhere within the
27 State.
28 (e) The business which the board may perform shall be
29 conducted at a public meeting of the board held in compliance
30 with the Open Meetings Act. Public notice of the time, date,
31 and place of the meeting shall be given in the manner
32 required by Section 2.02 of the Open Meetings Act.
33 (f) Any writing prepared, owned, used, in the possession
34 of, or retained by the board in the performance of an
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1 official function and which is a public record shall be made
2 available to the public in compliance with the Freedom of
3 Information Act.
4 Section 50. Powers of Board of Directors. In addition
5 to the powers granted by other provisions of this Act, the
6 board shall have the powers necessary or convenient to carry
7 out and effectuate the purposes, objectives, and provisions
8 of this Act, the purposes and objectives of the trust, and
9 the powers delegated by other laws or executive orders,
10 including, but not limited to, the power to:
11 (1) Except as provided in Section 55, invest any
12 money of the trust, at the board's discretion, in any
13 instruments, obligations, securities, or property
14 determined proper by the board, and name and use
15 depositories for its money.
16 (2) Pay money to State institutions of higher
17 education from the trust.
18 (3) Impose reasonable residency requirements for
19 qualified beneficiaries.
20 (4) Impose reasonable limits on the number of
21 participants in the trust, provided that if the number of
22 applicants exceed those limits the participants shall be
23 chosen by a lottery system, and preference shall be given
24 to those who have unsuccessfully applied in a previous
25 selection process.
26 (5) Segregate contributions and payments to the
27 trust into various accounts and funds.
28 (6) Contract for goods and services and engage
29 personnel as is necessary and engage the services of
30 private consultants, actuaries, managers, legal counsel,
31 and auditors for rendering professional, managerial, and
32 technical assistance and advice, payable out of any money
33 of the trust.
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1 (7) Solicit and accept gifts, grants, loans, and
2 other aids from any person or the federal, State, or a
3 local government or any agency of the federal, State, or
4 a local government, or to participate in any other way in
5 any federal, State, or local government program.
6 (8) Charge, impose, and collect administrative fees
7 and charges in connection with any transaction and
8 provide for reasonable civil penalties, including
9 default, for delinquent payment of fees or charges or for
10 fraud.
11 (9) Procure insurance against any loss in
12 connection with the trust's property, assets or
13 activities.
14 (10) Sue and be sued; to have a seal and alter the
15 same at pleasure; to have perpetual succession; to make,
16 execute, and deliver contracts, conveyances, and other
17 instruments necessary or convenient to the exercise of
18 its powers; and to make and amend bylaws.
19 (11) Enter into contracts which relate to the
20 purposes of this Act on behalf of the State.
21 (12) Administer the funds of the trust.
22 (13) Indemnify or procure insurance indemnifying
23 any member of the board from personal loss or
24 accountability from liability resulting from a member's
25 good faith action or inaction as a member of the board,
26 including, but not limited to, liability asserted by a
27 person on any bonds or notes of the trust.
28 (14) Impose reasonable time limits on use of the
29 tuition benefits provided by the trust, if the limits are
30 made a part of the contract.
31 (15) Define the terms and conditions under which
32 money may be withdrawn from the trust, including, but not
33 limited to, reasonable charges and fees for any such
34 withdrawal, if the terms and conditions are made a part
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1 of the contract.
2 (16) Provide for receiving contributions and
3 payments in lump sums or periodic sums.
4 (17) Establish policies, procedures, and
5 eligibility criteria to implement this Act.
6 Section 55. Prohibited Transactions.
7 (a) A fiduciary with respect to the trust or the fund
8 shall not cause the trust or fund to engage in a transaction
9 if he or she knows or should know that such transaction
10 constitutes a direct or indirect:
11 (1) Sale or exchange, or leasing of any property
12 from the trust or fund to a party in interest for less
13 than adequate consideration, or from a party in interest
14 to the trust or fund for more than adequate
15 consideration;
16 (2) Lending of money or other extension of credit
17 from the trust or fund to a party in interest without the
18 receipt of adequate security and a reasonable rate of
19 interest, or from a party in interest to the trust or
20 fund with the provision of excessive security or an
21 unreasonably high rate of interest;
22 (3) Furnishing of goods, services or facilities
23 from the trust or fund to a party in interest for less
24 than adequate consideration, or from a party in interest
25 to the trust or fund for more than adequate
26 consideration; or
27 (4) Transfer to, or use by or for the benefit of, a
28 party in interest of any assets of the trust or fund for
29 less than adequate consideration.
30 (b) A fiduciary with respect to the trust or fund
31 established under this Act shall not:
32 (1) Deal with the assets of the trust or fund in
33 his own interest or for his own account;
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1 (2) In his individual or any other capacity act in
2 any transaction involving the trust or fund on behalf of
3 a party whose interests are adverse to the interests of
4 the trust or fund or the interests of its participants or
5 beneficiaries; or
6 (3) Receive any consideration for his own personal
7 account from any party dealing with the trust or fund in
8 connection with a transaction involving the assets of the
9 trust or fund.
10 (c) Nothing in this Section shall be construed to
11 prohibit any member of the board from:
12 (1) Receiving any benefit to which he or she may be
13 entitled as a participant or qualified beneficiary in the
14 trust or fund;
15 (2) Receiving any reimbursement of expenses
16 properly and actually incurred in the performance of his
17 duties with the trust or fund; or
18 (3) Serving as a member of the board in addition to
19 being an officer, employee, agent or other representative
20 of a party in interest.
21 Section 60. Accounting and audit. The board shall
22 annually prepare or cause to be prepared an accounting of the
23 trust and shall transmit a copy of the accounting to the
24 Governor, the President of the Senate, the Speaker of the
25 House of Representatives, and the respective minority leaders
26 of the Senate and House of Representatives. The board shall
27 also make available the accounting of the trust to the
28 purchasers of the trust. The accounts of the board shall be
29 subject to annual audits by the State Auditor General or a
30 certified public accountant appointed by the Auditor General.
31 Section 65. Trust administration.
32 (a) The trust shall be administered in a manner
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1 reasonably designed to be actuarially sound so that the
2 assets of the trust will be sufficient to defray the
3 obligations of the trust.
4 (b) In the accounting of the trust made pursuant to
5 Section 60, the board shall annually evaluate or cause to be
6 evaluated the actuarial soundness of the trust and determine
7 the additional assets needed, if any, to defray the
8 obligations of the trust. If there are not funds sufficient
9 to ensure the actuarial soundness of the trust, the trust
10 shall adjust payments of subsequent purchases to ensure its
11 actuarial soundness.
12 (c) Before the trust may enter into advance tuition
13 payment contracts with purchasers, the State Department of
14 Revenue shall have solicited and received answers to
15 appropriate ruling requests from the Internal Revenue Service
16 regarding the tax status of the value received under the
17 contract to the purchaser or qualified beneficiary. The
18 Department of Revenue shall promptly furnish any information
19 relating to the request to the board. No contracts may be
20 entered into without the board providing, in writing, to any
21 prospective purchaser, the status of the request.
22 (d) Before entering into advance tuition payment
23 contracts with purchasers, the State shall solicit answers to
24 appropriate ruling requests from the Securities and Exchange
25 Commission regarding the application of federal security laws
26 to the trust. No contracts shall be entered without the
27 board making known the status of the request.
28 Section 70. Enforcement. State institutions of higher
29 education, purchasers, and qualified beneficiaries may
30 enforce this Act and any contract entered into pursuant to
31 this Act in the circuit court of Sangamon County.
32 Section 75. Trust property and income; exemption from
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1 State taxation. The property of the trust and its income and
2 operation shall be exempt from all taxation by this State or
3 any of its political subdivisions.
4 Section 80. Other contracts; related programs. The
5 trust, in its discretion, may contract with others, public or
6 private, for the provision of all or a portion of the
7 services necessary for the management and operation of the
8 trust. The trust shall also endeavor to work with private
9 sector investment managers and independent degree-granting
10 colleges and universities in this State to study the
11 feasibility of instituting programs between these parties
12 that insure full tuition payment upon purchase of a
13 prepayment plan with the private college or university.
14 Section 85. Use of trust assets. The assets of the trust
15 shall be preserved, invested, and expended solely pursuant to
16 and for the purposes set forth in this Act and shall not be
17 loaned or otherwise transferred or used by the State for any
18 purpose other than the purposes of this Act. This Section
19 shall not be construed to prohibit the trust from investing
20 in, by purchase or otherwise, bonds, notes, or other
21 obligations of the State, an agency of the State, or an
22 instrumentality of the State.
23 Section 90. Limitation. Nothing in this Act or in an
24 advance tuition payment contract entered into pursuant to
25 this Act shall be construed as a promise or guarantee by the
26 trust or the State that a person will be admitted to a State
27 institution of higher education or to a particular State
28 institution of higher education; will be allowed to continue
29 to attend a State institution of higher education after
30 having been admitted; or will be graduated from a State
31 institution of higher education.
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1 Section 95. Securities exemption. An advance tuition
2 payment contract shall be exempt from the provision of the
3 Illinois Securities Law of 1953. An advance tuition payment
4 contract may not be sold or otherwise transferred by the
5 purchaser or qualified beneficiary without the prior approval
6 of the trust.
7 Section 100. Income tax deduction. Pursuant to Section
8 203 of the Illinois Income Tax Act, the purchaser may deduct
9 the amount of an advance tuition payment from taxable income
10 in the tax year in which the payment is made, but any refund
11 pursuant to Section 35 shall be taxable to the recipient in
12 the taxable year in which the refund is received.
13 Section 105. Construction of Act. This Act (i) shall be
14 construed liberally to effectuate legislative intent and the
15 purposes of the Act, and (ii) constitutes complete and
16 independent authority for the performance of each and every
17 act and thing authorized in the Act. All powers granted in
18 this Act shall be broadly interpreted to effectuate such
19 intent and purposes and not as a limitation of powers.
20 Section 500. The Illinois Income Tax Act is amended by
21 changing Section 203 as follows:
22 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
23 Sec. 203. Base income defined.
24 (a) Individuals.
25 (1) In general. In the case of an individual, base
26 income means an amount equal to the taxpayer's adjusted
27 gross income for the taxable year as modified by
28 paragraph (2).
29 (2) Modifications. The adjusted gross income
30 referred to in paragraph (1) shall be modified by adding
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1 thereto the sum of the following amounts:
2 (A) An amount equal to all amounts paid or
3 accrued to the taxpayer as interest or dividends
4 during the taxable year to the extent excluded from
5 gross income in the computation of adjusted gross
6 income, except stock dividends of qualified public
7 utilities described in Section 305(e) of the
8 Internal Revenue Code;
9 (B) 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 adjusted gross
12 income for the taxable year;
13 (C) An amount equal to the amount received
14 during the taxable year as a recovery or refund of
15 real property taxes paid with respect to the
16 taxpayer's principal residence under the Revenue Act
17 of 1939 and for which a deduction was previously
18 taken under subparagraph (L) of this paragraph (2)
19 prior to July 1, 1991, the retrospective application
20 date of Article 4 of Public Act 87-17. In the case
21 of multi-unit or multi-use structures and farm
22 dwellings, the taxes on the taxpayer's principal
23 residence shall be that portion of the total taxes
24 for the entire property which is attributable to
25 such principal residence;
26 (D) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of adjusted gross income;
30 and
31 (D-5) An amount, to the extent not included in
32 adjusted gross income, equal to the amount of money
33 withdrawn by the taxpayer in the taxable year from a
34 medical care savings account and the interest earned
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1 on the account in the taxable year of a withdrawal
2 pursuant to subsection (b) of Section 20 of the
3 Medical Care Savings Account Act;
4 and by deducting from the total so obtained the sum of
5 the following amounts:
6 (E) Any amount included in such total in
7 respect of any compensation (including but not
8 limited to any compensation paid or accrued to a
9 serviceman while a prisoner of war or missing in
10 action) paid to a resident by reason of being on
11 active duty in the Armed Forces of the United States
12 and in respect of any compensation paid or accrued
13 to a resident who as a governmental employee was a
14 prisoner of war or missing in action, and in respect
15 of any compensation paid to a resident in 1971 or
16 thereafter for annual training performed pursuant to
17 Sections 502 and 503, Title 32, United States Code
18 as a member of the Illinois National Guard;
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 Sections 171(a) (2), and 265(2) of the Internal
31 Revenue Code of 1954, as now or hereafter amended,
32 and all amounts of expenses allocable to interest
33 and disallowed as deductions by Section 265(1) of
34 the Internal Revenue Code of 1954, as now or
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1 hereafter amended;
2 (N) An amount equal to all amounts included in
3 such total which are exempt from taxation by this
4 State either by reason of its statutes or
5 Constitution or by reason of the Constitution,
6 treaties or statutes of the United States; provided
7 that, in the case of any statute of this State that
8 exempts income derived from bonds or other
9 obligations from the tax imposed under this Act, the
10 amount exempted shall be the interest net of bond
11 premium amortization;
12 (O) An amount equal to any contribution made
13 to a job training project established pursuant to
14 the Tax Increment Allocation Redevelopment Act;
15 (P) An amount equal to the amount of the
16 deduction used to compute the federal income tax
17 credit for restoration of substantial amounts held
18 under claim of right for the taxable year pursuant
19 to Section 1341 of the Internal Revenue Code of
20 1986;
21 (Q) An amount equal to any amounts included in
22 such total, received by the taxpayer as an
23 acceleration in the payment of life, endowment or
24 annuity benefits in advance of the time they would
25 otherwise be payable as an indemnity for a terminal
26 illness;
27 (R) An amount equal to the amount of any
28 federal or State bonus paid to veterans of the
29 Persian Gulf War;
30 (S) An amount, to the extent included in
31 adjusted gross income, equal to the amount of a
32 contribution made in the taxable year on behalf of
33 the taxpayer to a medical care savings account
34 established under the Medical Care Savings Account
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1 Act to the extent the contribution is accepted by
2 the account administrator as provided in that Act;
3 (T) An amount, to the extent included in
4 adjusted gross income, equal to the amount of
5 interest earned in the taxable year on a medical
6 care savings account established under the Medical
7 Care Savings Account Act on behalf of the taxpayer,
8 other than interest added pursuant to item (D-5) of
9 this paragraph (2);
10 (U) For one taxable year beginning on or after
11 January 1, 1994, an amount equal to the total amount
12 of tax imposed and paid under subsections (a) and
13 (b) of Section 201 of this Act on grant amounts
14 received by the taxpayer under the Nursing Home
15 Grant Assistance Act during the taxpayer's taxable
16 years 1992 and 1993; and
17 (V) Beginning with tax years ending on or
18 after December 31, 1995 and ending with tax years
19 ending on or before December 31, 1999, an amount
20 equal to the amount paid by a taxpayer who is a
21 self-employed taxpayer, a partner of a partnership,
22 or a shareholder in a Subchapter S corporation for
23 health insurance or long-term care insurance for
24 that taxpayer or that taxpayer's spouse or
25 dependents, to the extent that the amount paid for
26 that health insurance or long-term care insurance
27 may be deducted under Section 213 of the Internal
28 Revenue Code of 1986, has not been deducted on the
29 federal income tax return of the taxpayer, and does
30 not exceed the taxable income attributable to that
31 taxpayer's income, self-employment income, or
32 Subchapter S corporation income; except that no
33 deduction shall be allowed under this item (V) if
34 the taxpayer is eligible to participate in any
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1 health insurance or long-term care insurance plan of
2 an employer of the taxpayer or the taxpayer's
3 spouse. The amount of the health insurance and
4 long-term care insurance subtracted under this item
5 (V) shall be determined by multiplying total health
6 insurance and long-term care insurance premiums paid
7 by the taxpayer times a number that represents the
8 fractional percentage of eligible medical expenses
9 under Section 213 of the Internal Revenue Code of
10 1986 not actually deducted on the taxpayer's federal
11 income tax return; and.
12 (W) An amount equal to any advance tuition
13 payment made pursuant to the Illinois State Ensured
14 College and University Responsive Education Trust
15 Act.
16 (b) Corporations.
17 (1) In general. In the case of a corporation, 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 and all
25 distributions received from regulated investment
26 companies during the taxable year to the extent
27 excluded from gross income in the computation of
28 taxable income;
29 (B) An amount equal to the amount of tax
30 imposed by this Act to the extent deducted from
31 gross income in the computation of taxable income
32 for the taxable year;
33 (C) In the case of a regulated investment
34 company or real estate investment trust, an amount
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1 equal to the excess of (i) the net long-term capital
2 gain for the taxable year, over (ii) the amount of
3 the capital gain dividends designated as such in
4 accordance with Section 852(b)(3)(C) or Section
5 857(b)(3)(C) of the Internal Revenue Code and any
6 amount designated under Section 852(b)(3)(D) of the
7 Internal Revenue Code, attributable to the taxable
8 year.
9 This amendatory Act of 1995 is declarative of existing
10 law and is not a new enactment.
11 (D) The amount of any net operating loss
12 deduction taken in arriving at taxable income, other
13 than a net operating loss carried forward from a
14 taxable year ending prior to December 31, 1986; and
15 (E) For taxable years in which a net operating
16 loss carryback or carryforward from a taxable year
17 ending prior to December 31, 1986 is an element of
18 taxable income under paragraph (1) of subsection (e)
19 or subparagraph (E) of paragraph (2) of subsection
20 (e), the amount by which addition modifications
21 other than those provided by this subparagraph (E)
22 exceeded subtraction modifications in such earlier
23 taxable year, with the following limitations applied
24 in the order that they are listed:
25 (i) the addition modification relating to
26 the net operating loss carried back or forward
27 to the taxable year from any taxable year
28 ending prior to December 31, 1986 shall be
29 reduced by the amount of addition modification
30 under this subparagraph (E) which related to
31 that net operating loss and which was taken
32 into account in calculating the base income of
33 an earlier taxable year, and
34 (ii) the addition modification relating
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1 to the net operating loss carried back or
2 forward to the taxable year from any taxable
3 year ending prior to December 31, 1986 shall
4 not exceed the amount of such carryback or
5 carryforward;
6 For taxable years in which there is a net
7 operating loss carryback or carryforward from more
8 than one other taxable year ending prior to December
9 31, 1986, the addition modification provided in this
10 subparagraph (E) shall be the sum of the amounts
11 computed independently under the preceding
12 provisions of this subparagraph (E) for each such
13 taxable year,
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (F) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (G) An amount equal to any amount included in
21 such total under Section 78 of the Internal Revenue
22 Code;
23 (H) In the case of a regulated investment
24 company, an amount equal to the amount of exempt
25 interest dividends as defined in subsection (b) (5)
26 of Section 852 of the Internal Revenue Code, paid to
27 shareholders for the taxable year;
28 (I) With the exception of any amounts
29 subtracted under subparagraph (J), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2), and 265(a)(2) and amounts
32 disallowed as interest expense by Section 291(a)(3)
33 of the Internal Revenue Code, as now or hereafter
34 amended, and all amounts of expenses allocable to
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1 interest and disallowed as deductions by Section
2 265(a)(1) of the Internal Revenue Code, as now or
3 hereafter amended;
4 (J) An amount equal to all amounts included in
5 such total which are exempt from taxation by this
6 State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (K) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act and conducts substantially all
19 of its operations in an Enterprise Zone or zones;
20 (L) An amount equal to those dividends
21 included in such total that were paid by a
22 corporation that conducts business operations in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 and that is designated a High Impact Business
25 located in Illinois; provided that dividends
26 eligible for the deduction provided in subparagraph
27 (K) of paragraph 2 of this subsection shall not be
28 eligible for the deduction provided under this
29 subparagraph (L);
30 (M) For any taxpayer that is a financial
31 organization within the meaning of Section 304(c) of
32 this Act, an amount included in such total as
33 interest income from a loan or loans made by such
34 taxpayer to a borrower, to the extent that such a
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1 loan is secured by property which is eligible for
2 the Enterprise Zone Investment Credit. To determine
3 the portion of a loan or loans that is secured by
4 property eligible for a Section 201(h) investment
5 credit to the borrower, the entire principal amount
6 of the loan or loans between the taxpayer and the
7 borrower should be divided into the basis of the
8 Section 201(h) investment credit property which
9 secures the loan or loans, using for this purpose
10 the original basis of such property on the date that
11 it was placed in service in the Enterprise Zone.
12 The subtraction modification available to taxpayer
13 in any year under this subsection shall be that
14 portion of the total interest paid by the borrower
15 with respect to such loan attributable to the
16 eligible property as calculated under the previous
17 sentence;
18 (M-1) For any taxpayer that is a financial
19 organization within the meaning of Section 304(c) of
20 this Act, an amount included in such total as
21 interest income from a loan or loans made by such
22 taxpayer to a borrower, to the extent that such a
23 loan is secured by property which is eligible for
24 the High Impact Business Investment Credit. To
25 determine the portion of a loan or loans that is
26 secured by property eligible for a Section 201(i)
27 investment credit to the borrower, the entire
28 principal amount of the loan or loans between the
29 taxpayer and the borrower should be divided into the
30 basis of the Section 201(i) investment credit
31 property which secures the loan or loans, using for
32 this purpose the original basis of such property on
33 the date that it was placed in service in a
34 federally designated Foreign Trade Zone or Sub-Zone
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1 located in Illinois. No taxpayer that is eligible
2 for the deduction provided in subparagraph (M) of
3 paragraph (2) of this subsection shall be eligible
4 for the deduction provided under this subparagraph
5 (M-1). The subtraction modification available to
6 taxpayers in any year under this subsection shall be
7 that portion of the total interest paid by the
8 borrower with respect to such loan attributable to
9 the eligible property as calculated under the
10 previous sentence;
11 (N) Two times any contribution made during the
12 taxable year to a designated zone organization to
13 the extent that the contribution (i) qualifies as a
14 charitable contribution under subsection (c) of
15 Section 170 of the Internal Revenue Code and (ii)
16 must, by its terms, be used for a project approved
17 by the Department of Commerce and Community Affairs
18 under Section 11 of the Illinois Enterprise Zone
19 Act;
20 (O) An amount equal to: (i) 85% for taxable
21 years ending on or before December 31, 1992, or, a
22 percentage equal to the percentage allowable under
23 Section 243(a)(1) of the Internal Revenue Code of
24 1986 for taxable years ending after December 31,
25 1992, of the amount by which dividends included in
26 taxable income and received from a corporation that
27 is not created or organized under the laws of the
28 United States or any state or political subdivision
29 thereof, including, for taxable years ending on or
30 after December 31, 1988, dividends received or
31 deemed received or paid or deemed paid under
32 Sections 951 through 964 of the Internal Revenue
33 Code, exceed the amount of the modification provided
34 under subparagraph (G) of paragraph (2) of this
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1 subsection (b) which is related to such dividends;
2 plus (ii) 100% of the amount by which dividends,
3 included in taxable income and received, including,
4 for taxable years ending on or after December 31,
5 1988, dividends received or deemed received or paid
6 or deemed paid under Sections 951 through 964 of the
7 Internal Revenue Code, from any such corporation
8 specified in clause (i) that would but for the
9 provisions of Section 1504 (b) (3) of the Internal
10 Revenue Code be treated as a member of the
11 affiliated group which includes the dividend
12 recipient, exceed the amount of the modification
13 provided under subparagraph (G) of paragraph (2) of
14 this subsection (b) which is related to such
15 dividends;
16 (P) An amount equal to any contribution made
17 to a job training project established pursuant to
18 the Tax Increment Allocation Redevelopment Act; and
19 (Q) 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; and.
25 (R) An amount equal to any advance tuition
26 payment made pursuant to the Illinois State Ensured
27 College and University Responsive Education Trust
28 Act.
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.
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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
-33- LRB9001905THpk
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; and
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
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1 income in the computation of taxable income;
2 and by deducting from the total so obtained the sum of
3 the following amounts:
4 (H) An amount equal to all amounts included in
5 such total pursuant to the provisions of Sections
6 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
7 408 of the Internal Revenue Code or included in such
8 total as distributions under the provisions of any
9 retirement or disability plan for employees of any
10 governmental agency or unit, or retirement payments
11 to retired partners, which payments are excluded in
12 computing net earnings from self employment by
13 Section 1402 of the Internal Revenue Code and
14 regulations adopted pursuant thereto;
15 (I) The valuation limitation amount;
16 (J) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (K) An amount equal to all amounts included in
21 taxable income as modified by subparagraphs (A),
22 (B), (C), (D), (E), (F) and (G) which are exempt
23 from taxation by this State either by reason of its
24 statutes or Constitution or by reason of the
25 Constitution, treaties or statutes of the United
26 States; provided that, in the case of any statute of
27 this State that exempts income derived from bonds or
28 other obligations from the tax imposed under this
29 Act, the amount exempted shall be the interest net
30 of bond premium amortization;
31 (L) With the exception of any amounts
32 subtracted under subparagraph (K), an amount equal
33 to the sum of all amounts disallowed as deductions
34 by Sections 171(a) (2) and 265(a)(2) of the Internal
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1 Revenue Code, as now or hereafter amended, and all
2 amounts of expenses allocable to interest and
3 disallowed as deductions by Section 265(1) of the
4 Internal Revenue Code of 1954, as now or hereafter
5 amended;
6 (M) 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 (N) An amount equal to any contribution made
13 to a job training project established pursuant to
14 the Tax Increment Allocation Redevelopment Act;
15 (O) An amount equal to those dividends
16 included in such total that were paid by a
17 corporation that conducts business operations in a
18 federally designated Foreign Trade Zone or Sub-Zone
19 and that is designated a High Impact Business
20 located in Illinois; provided that dividends
21 eligible for the deduction provided in subparagraph
22 (M) of paragraph (2) of this subsection shall not be
23 eligible for the deduction provided under this
24 subparagraph (O); and
25 (P) An amount equal to the amount of the
26 deduction used to compute the federal income tax
27 credit for restoration of substantial amounts held
28 under claim of right for the taxable year pursuant
29 to Section 1341 of the Internal Revenue Code of
30 1986; and.
31 (Q) An amount equal to any advance tuition
32 payment made pursuant to the Illinois State Ensured
33 College and University Responsive Education Trust
34 Act.
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1 (3) Limitation. The amount of any modification
2 otherwise required under this subsection shall, under
3 regulations prescribed by the Department, be adjusted by
4 any amounts included therein which were properly paid,
5 credited, or required to be distributed, or permanently
6 set aside for charitable purposes pursuant to Internal
7 Revenue Code Section 642(c) during the taxable year.
8 (d) Partnerships.
9 (1) In general. In the case of a partnership, base
10 income means an amount equal to the taxpayer's taxable
11 income for the taxable year as modified by paragraph (2).
12 (2) Modifications. The taxable income referred to
13 in paragraph (1) shall be modified by adding thereto the
14 sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income for the taxable year; and
22 (C) The amount of deductions allowed to the
23 partnership pursuant to Section 707 (c) of the
24 Internal Revenue Code in calculating its taxable
25 income;
26 (D) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of taxable income;
30 and by deducting from the total so obtained the following
31 amounts:
32 (E) The valuation limitation amount;
33 (F) An amount equal to the amount of any tax
34 imposed by this Act which was refunded to the
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1 taxpayer and included in such total for the taxable
2 year;
3 (G) An amount equal to all amounts included in
4 taxable income as modified by subparagraphs (A),
5 (B), (C) and (D) which are exempt from taxation by
6 this State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (H) Any income of the partnership which
15 constitutes personal service income as defined in
16 Section 1348 (b) (1) of the Internal Revenue Code
17 (as in effect December 31, 1981) or a reasonable
18 allowance for compensation paid or accrued for
19 services rendered by partners to the partnership,
20 whichever is greater;
21 (I) An amount equal to all amounts of income
22 distributable to an entity subject to the Personal
23 Property Tax Replacement Income Tax imposed by
24 subsections (c) and (d) of Section 201 of this Act
25 including amounts distributable to organizations
26 exempt from federal income tax by reason of Section
27 501(a) of the Internal Revenue Code;
28 (J) With the exception of any amounts
29 subtracted under subparagraph (G), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2), and 265(2) of the Internal
32 Revenue Code of 1954, as now or hereafter amended,
33 and all amounts of expenses allocable to interest
34 and disallowed as deductions by Section 265(1) of
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1 the Internal Revenue Code, as now or hereafter
2 amended;
3 (K) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act, enacted by the 82nd General
8 Assembly, and which does not conduct such operations
9 other than in an Enterprise Zone or Zones;
10 (L) An amount equal to any contribution made
11 to a job training project established pursuant to
12 the Real Property Tax Increment Allocation
13 Redevelopment Act;
14 (M) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (K) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (M); and
24 (N) An amount equal to the amount of the
25 deduction used to compute the federal income tax
26 credit for restoration of substantial amounts held
27 under claim of right for the taxable year pursuant
28 to Section 1341 of the Internal Revenue Code of
29 1986; and.
30 (O) An amount equal to any advance tuition
31 payment made pursuant to the Illinois State Ensured
32 College and University Responsive Education Trust
33 Act.
34 (e) Gross income; adjusted gross income; taxable income.
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1 (1) In general. Subject to the provisions of
2 paragraph (2) and subsection (b) (3), for purposes of
3 this Section and Section 803(e), a taxpayer's gross
4 income, adjusted gross income, or taxable income for the
5 taxable year shall mean the amount of gross income,
6 adjusted gross income or taxable income properly
7 reportable for federal income tax purposes for the
8 taxable year under the provisions of the Internal Revenue
9 Code. Taxable income may be less than zero. However, for
10 taxable years ending on or after December 31, 1986, net
11 operating loss carryforwards from taxable years ending
12 prior to December 31, 1986, may not exceed the sum of
13 federal taxable income for the taxable year before net
14 operating loss deduction, plus the excess of addition
15 modifications over subtraction modifications for the
16 taxable year. For taxable years ending prior to December
17 31, 1986, taxable income may never be an amount in excess
18 of the net operating loss for the taxable year as defined
19 in subsections (c) and (d) of Section 172 of the Internal
20 Revenue Code, provided that when taxable income of a
21 corporation (other than a Subchapter S corporation),
22 trust, or estate is less than zero and addition
23 modifications, other than those provided by subparagraph
24 (E) of paragraph (2) of subsection (b) for corporations
25 or subparagraph (E) of paragraph (2) of subsection (c)
26 for trusts and estates, exceed subtraction modifications,
27 an addition modification must be made under those
28 subparagraphs for any other taxable year to which the
29 taxable income less than zero (net operating loss) is
30 applied under Section 172 of the Internal Revenue Code or
31 under subparagraph (E) of paragraph (2) of this
32 subsection (e) applied in conjunction with Section 172 of
33 the Internal Revenue Code.
34 (2) Special rule. For purposes of paragraph (1) of
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1 this subsection, the taxable income properly reportable
2 for federal income tax purposes shall mean:
3 (A) Certain life insurance companies. In the
4 case of a life insurance company subject to the tax
5 imposed by Section 801 of the Internal Revenue Code,
6 life insurance company taxable income, plus the
7 amount of distribution from pre-1984 policyholder
8 surplus accounts as calculated under Section 815a of
9 the Internal Revenue Code;
10 (B) Certain other insurance companies. In the
11 case of mutual insurance companies subject to the
12 tax imposed by Section 831 of the Internal Revenue
13 Code, insurance company taxable income;
14 (C) Regulated investment companies. In the
15 case of a regulated investment company subject to
16 the tax imposed by Section 852 of the Internal
17 Revenue Code, investment company taxable income;
18 (D) Real estate investment trusts. In the
19 case of a real estate investment trust subject to
20 the tax imposed by Section 857 of the Internal
21 Revenue Code, real estate investment trust taxable
22 income;
23 (E) Consolidated corporations. In the case of
24 a corporation which is a member of an affiliated
25 group of corporations filing a consolidated income
26 tax return for the taxable year for federal income
27 tax purposes, taxable income determined as if such
28 corporation had filed a separate return for federal
29 income tax purposes for the taxable year and each
30 preceding taxable year for which it was a member of
31 an affiliated group. For purposes of this
32 subparagraph, the taxpayer's separate taxable income
33 shall be determined as if the election provided by
34 Section 243(b) (2) of the Internal Revenue Code had
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1 been in effect for all such years;
2 (F) Cooperatives. In the case of a
3 cooperative corporation or association, the taxable
4 income of such organization determined in accordance
5 with the provisions of Section 1381 through 1388 of
6 the Internal Revenue Code;
7 (G) Subchapter S corporations. In the case
8 of: (i) a Subchapter S corporation for which there
9 is in effect an election for the taxable year under
10 Section 1362 of the Internal Revenue Code, the
11 taxable income of such corporation determined in
12 accordance with Section 1363(b) of the Internal
13 Revenue Code, except that taxable income shall take
14 into account those items which are required by
15 Section 1363(b)(1) of the Internal Revenue Code to
16 be separately stated; and (ii) a Subchapter S
17 corporation for which there is in effect a federal
18 election to opt out of the provisions of the
19 Subchapter S Revision Act of 1982 and have applied
20 instead the prior federal Subchapter S rules as in
21 effect on July 1, 1982, the taxable income of such
22 corporation determined in accordance with the
23 federal Subchapter S rules as in effect on July 1,
24 1982; and
25 (H) Partnerships. In the case of a
26 partnership, taxable income determined in accordance
27 with Section 703 of the Internal Revenue Code,
28 except that taxable income shall take into account
29 those items which are required by Section 703(a)(1)
30 to be separately stated but which would be taken
31 into account by an individual in calculating his
32 taxable income.
33 (f) Valuation limitation amount.
34 (1) In general. The valuation limitation amount
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1 referred to in subsections (a) (2) (G), (c) (2) (I) and
2 (d)(2) (E) is an amount equal to:
3 (A) The sum of the pre-August 1, 1969
4 appreciation amounts (to the extent consisting of
5 gain reportable under the provisions of Section 1245
6 or 1250 of the Internal Revenue Code) for all
7 property in respect of which such gain was reported
8 for the taxable year; plus
9 (B) The lesser of (i) the sum of the
10 pre-August 1, 1969 appreciation amounts (to the
11 extent consisting of capital gain) for all property
12 in respect of which such gain was reported for
13 federal income tax purposes for the taxable year, or
14 (ii) the net capital gain for the taxable year,
15 reduced in either case by any amount of such gain
16 included in the amount determined under subsection
17 (a) (2) (F) or (c) (2) (H).
18 (2) Pre-August 1, 1969 appreciation amount.
19 (A) If the fair market value of property
20 referred to in paragraph (1) was readily
21 ascertainable on August 1, 1969, the pre-August 1,
22 1969 appreciation amount for such property is the
23 lesser of (i) the excess of such fair market value
24 over the taxpayer's basis (for determining gain) for
25 such property on that date (determined under the
26 Internal Revenue Code as in effect on that date), or
27 (ii) the total gain realized and reportable for
28 federal income tax purposes in respect of the sale,
29 exchange or other disposition of such property.
30 (B) If the fair market value of property
31 referred to in paragraph (1) was not readily
32 ascertainable on August 1, 1969, the pre-August 1,
33 1969 appreciation amount for such property is that
34 amount which bears the same ratio to the total gain
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1 reported in respect of the property for federal
2 income tax purposes for the taxable year, as the
3 number of full calendar months in that part of the
4 taxpayer's holding period for the property ending
5 July 31, 1969 bears to the number of full calendar
6 months in the taxpayer's entire holding period for
7 the property.
8 (C) The Department shall prescribe such
9 regulations as may be necessary to carry out the
10 purposes of this paragraph.
11 (g) Double deductions. Unless specifically provided
12 otherwise, nothing in this Section shall permit the same item
13 to be deducted more than once.
14 (h) Legislative intention. Except as expressly provided
15 by this Section there shall be no modifications or
16 limitations on the amounts of income, gain, loss or deduction
17 taken into account in determining gross income, adjusted
18 gross income or taxable income for federal income tax
19 purposes for the taxable year, or in the amount of such items
20 entering into the computation of base income and net income
21 under this Act for such taxable year, whether in respect of
22 property values as of August 1, 1969 or otherwise.
23 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
24 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
25 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
26 89-626, eff. 8-9-96.)
27 Section 999. Effective date. This Act takes effect upon
28 becoming law.