State of Illinois
Public Acts
92nd General Assembly

[ Home ]  [ ILCS ] [ Search ] [ Bottom ]
 [ Other General Assemblies ]

Public Act 92-0603

SB1543 Enrolled                                LRB9211240AGgc

    AN ACT concerning taxes.

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

    Section  3.   The  Illinois  Income Tax Act is amended by
changing Section 203 as follows:

    (35 ILCS 5/203) (from Ch. 120, par. 2-203)
    Sec. 203.  Base income defined.
    (a)  Individuals.
         (1)  In general.  In the case of an individual, base
    income means an amount equal to the  taxpayer's  adjusted
    gross   income  for  the  taxable  year  as  modified  by
    paragraph (2).
         (2)  Modifications.   The  adjusted   gross   income
    referred  to in paragraph (1) shall be modified by adding
    thereto the sum of the following amounts:
              (A)  An amount equal to  all  amounts  paid  or
         accrued  to  the  taxpayer  as interest or dividends
         during the taxable year to the extent excluded  from
         gross  income  in  the computation of adjusted gross
         income, except stock dividends of  qualified  public
         utilities   described   in  Section  305(e)  of  the
         Internal Revenue Code;
              (B)  An amount  equal  to  the  amount  of  tax
         imposed  by  this  Act  to  the extent deducted from
         gross income in the computation  of  adjusted  gross
         income for the taxable year;
              (C)  An  amount  equal  to  the amount received
         during the taxable year as a recovery or  refund  of
         real   property  taxes  paid  with  respect  to  the
         taxpayer's principal residence under the Revenue Act
         of 1939 and for which  a  deduction  was  previously
         taken  under  subparagraph (L) of this paragraph (2)
         prior to July 1, 1991, the retrospective application
         date of Article 4 of Public Act 87-17.  In the  case
         of  multi-unit  or  multi-use  structures  and  farm
         dwellings,  the  taxes  on  the taxpayer's principal
         residence shall be that portion of the  total  taxes
         for  the  entire  property  which is attributable to
         such principal residence;
              (D)  An amount  equal  to  the  amount  of  the
         capital  gain deduction allowable under the Internal
         Revenue Code, to  the  extent  deducted  from  gross
         income in the computation of adjusted gross income;
              (D-5)  An amount, to the extent not included in
         adjusted  gross income, equal to the amount of money
         withdrawn by the taxpayer in the taxable year from a
         medical care savings account and the interest earned
         on the account in the taxable year of  a  withdrawal
         pursuant  to  subsection  (b)  of  Section 20 of the
         Medical Care Savings Account Act or  subsection  (b)
         of  Section  20  of the Medical Care Savings Account
         Act of 2000; and
              (D-10)  For taxable years ending after December
         31,  1997,  an  amount   equal   to   any   eligible
         remediation  costs  that  the individual deducted in
         computing adjusted gross income and  for  which  the
         individual  claims  a credit under subsection (l) of
         Section 201;
              (D-15)  For taxable years 2001 and  thereafter,
         an  amount equal to the bonus depreciation deduction
         (30%  of  the  adjusted  basis  of   the   qualified
         property) taken on the taxpayer's federal income tax
         return  for the taxable year under subsection (k) of
         Section 168 of the Internal Revenue Code; and
              (D-16)  If the taxpayer reports a capital  gain
         or  loss on the taxpayer's federal income tax return
         for the taxable year based on a sale or transfer  of
         property  for which the taxpayer was required in any
         taxable year to make an addition modification  under
         subparagraph  (D-15),  then  an  amount equal to the
         aggregate amount of  the  deductions  taken  in  all
         taxable years under subparagraph (Z) with respect to
         that property;
              The  taxpayer  is required to make the addition
         modification under this subparagraph only once  with
         respect to any one piece of property.
    and  by  deducting  from the total so obtained the sum of
    the following amounts:
              (E)  For taxable years ending  before  December
         31,  2001,  any  amount  included  in  such total in
         respect  of  any  compensation  (including  but  not
         limited to any compensation paid  or  accrued  to  a
         serviceman  while  a  prisoner  of war or missing in
         action) paid to a resident by  reason  of  being  on
         active duty in the Armed Forces of the United States
         and  in  respect of any compensation paid or accrued
         to a resident who as a governmental employee  was  a
         prisoner of war or missing in action, and in respect
         of  any  compensation  paid to a resident in 1971 or
         thereafter for annual training performed pursuant to
         Sections 502 and 503, Title 32, United  States  Code
         as  a  member  of  the  Illinois National Guard. For
         taxable years ending on or after December 31,  2001,
         any  amount included in such total in respect of any
         compensation  (including  but  not  limited  to  any
         compensation paid or accrued to a serviceman while a
         prisoner of war or missing  in  action)  paid  to  a
         resident   by  reason  of  being  a  member  of  any
         component of the Armed Forces of the  United  States
         and  in  respect of any compensation paid or accrued
         to a resident who as a governmental employee  was  a
         prisoner of war or missing in action, and in respect
         of  any  compensation  paid to a resident in 2001 or
         thereafter by  reason  of  being  a  member  of  the
         Illinois  National  Guard.  The  provisions  of this
         amendatory Act of  the  92nd  General  Assembly  are
         exempt from the provisions of Section 250;
              (F)  An amount equal to all amounts included in
         such  total  pursuant  to the provisions of Sections
         402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
         408  of  the  Internal  Revenue Code, or included in
         such total as distributions under the provisions  of
         any  retirement  or disability plan for employees of
         any  governmental  agency  or  unit,  or  retirement
         payments to retired  partners,  which  payments  are
         excluded   in   computing  net  earnings  from  self
         employment by Section 1402 of the  Internal  Revenue
         Code and regulations adopted pursuant thereto;
              (G)  The valuation limitation amount;
              (H)  An  amount  equal to the amount of any tax
         imposed by  this  Act  which  was  refunded  to  the
         taxpayer  and included in such total for the taxable
         year;
              (I)  An amount equal to all amounts included in
         such total pursuant to the provisions of Section 111
         of the Internal Revenue Code as a recovery of  items
         previously  deducted  from  adjusted gross income in
         the computation of taxable income;
              (J)  An  amount  equal   to   those   dividends
         included   in  such  total  which  were  paid  by  a
         corporation which conducts business operations in an
         Enterprise Zone or zones created under the  Illinois
         Enterprise  Zone Act, and conducts substantially all
         of its operations in an Enterprise Zone or zones;
              (K)  An  amount  equal   to   those   dividends
         included   in   such  total  that  were  paid  by  a
         corporation that conducts business operations  in  a
         federally  designated Foreign Trade Zone or Sub-Zone
         and  that  is  designated  a  High  Impact  Business
         located  in  Illinois;   provided   that   dividends
         eligible  for the deduction provided in subparagraph
         (J) of paragraph (2) of this subsection shall not be
         eligible  for  the  deduction  provided  under  this
         subparagraph (K);
              (L)  For taxable years  ending  after  December
         31,  1983,  an  amount  equal to all social security
         benefits and railroad retirement  benefits  included
         in  such  total pursuant to Sections 72(r) and 86 of
         the Internal Revenue Code;
              (M)  With  the   exception   of   any   amounts
         subtracted  under  subparagraph (N), an amount equal
         to the sum of all amounts disallowed  as  deductions
         by  (i)  Sections  171(a)  (2),  and  265(2)  of the
         Internal Revenue Code of 1954, as now  or  hereafter
         amended,  and  all  amounts of expenses allocable to
         interest and  disallowed as  deductions  by  Section
         265(1)  of the Internal Revenue Code of 1954, as now
         or hereafter amended; and  (ii)  for  taxable  years
         ending   on  or  after  August  13,  1999,  Sections
         171(a)(2), 265, 280C,  and  832(b)(5)(B)(i)  of  the
         Internal   Revenue  Code;  the  provisions  of  this
         subparagraph  are  exempt  from  the  provisions  of
         Section 250;
              (N)  An amount equal to all amounts included in
         such total which are exempt from  taxation  by  this
         State   either   by   reason   of  its  statutes  or
         Constitution  or  by  reason  of  the  Constitution,
         treaties or statutes of the United States;  provided
         that,  in the case of any statute of this State that
         exempts  income  derived   from   bonds   or   other
         obligations from the tax imposed under this Act, the
         amount  exempted  shall  be the interest net of bond
         premium amortization;
              (O)  An amount equal to any  contribution  made
         to  a  job  training project established pursuant to
         the Tax Increment Allocation Redevelopment Act;
              (P)  An amount  equal  to  the  amount  of  the
         deduction  used  to  compute  the federal income tax
         credit for restoration of substantial  amounts  held
         under  claim  of right for the taxable year pursuant
         to Section 1341 of  the  Internal  Revenue  Code  of
         1986;
              (Q)  An amount equal to any amounts included in
         such   total,   received   by  the  taxpayer  as  an
         acceleration in the payment of  life,  endowment  or
         annuity  benefits  in advance of the time they would
         otherwise be payable as an indemnity for a  terminal
         illness;
              (R)  An  amount  equal  to  the  amount  of any
         federal or State  bonus  paid  to  veterans  of  the
         Persian Gulf War;
              (S)  An  amount,  to  the  extent  included  in
         adjusted  gross  income,  equal  to  the amount of a
         contribution made in the taxable year on  behalf  of
         the  taxpayer  to  a  medical  care  savings account
         established under the Medical Care  Savings  Account
         Act  or the Medical Care Savings Account Act of 2000
         to the extent the contribution is  accepted  by  the
         account administrator as provided in that Act;
              (T)  An  amount,  to  the  extent  included  in
         adjusted  gross  income,  equal  to  the  amount  of
         interest  earned  in  the  taxable year on a medical
         care savings account established under  the  Medical
         Care Savings Account Act or the Medical Care Savings
         Account Act of 2000 on behalf of the taxpayer, other
         than  interest  added pursuant to item (D-5) of this
         paragraph (2);
              (U)  For one taxable year beginning on or after
         January 1, 1994, an amount equal to the total amount
         of tax imposed and paid under  subsections  (a)  and
         (b)  of  Section  201  of  this Act on grant amounts
         received by the  taxpayer  under  the  Nursing  Home
         Grant  Assistance  Act during the taxpayer's taxable
         years 1992 and 1993;
              (V)  Beginning with  tax  years  ending  on  or
         after  December  31,  1995 and ending with tax years
         ending on or before December  31,  2004,  an  amount
         equal  to  the  amount  paid  by a taxpayer who is a
         self-employed taxpayer, a partner of a  partnership,
         or  a  shareholder in a Subchapter S corporation for
         health insurance or  long-term  care  insurance  for
         that   taxpayer   or   that   taxpayer's  spouse  or
         dependents, to the extent that the amount  paid  for
         that  health  insurance  or long-term care insurance
         may be deducted under Section 213  of  the  Internal
         Revenue  Code  of 1986, has not been deducted on the
         federal income tax return of the taxpayer, and  does
         not  exceed  the taxable income attributable to that
         taxpayer's  income,   self-employment   income,   or
         Subchapter  S  corporation  income;  except  that no
         deduction shall be allowed under this  item  (V)  if
         the  taxpayer  is  eligible  to  participate  in any
         health insurance or long-term care insurance plan of
         an  employer  of  the  taxpayer  or  the  taxpayer's
         spouse.  The amount  of  the  health  insurance  and
         long-term  care insurance subtracted under this item
         (V) shall be determined by multiplying total  health
         insurance and long-term care insurance premiums paid
         by  the  taxpayer times a number that represents the
         fractional percentage of eligible  medical  expenses
         under  Section  213  of the Internal Revenue Code of
         1986 not actually deducted on the taxpayer's federal
         income tax return;
              (W)  For taxable years beginning  on  or  after
         January   1,  1998,  all  amounts  included  in  the
         taxpayer's federal gross income in the taxable  year
         from  amounts converted from a regular IRA to a Roth
         IRA. This paragraph is exempt from the provisions of
         Section 250;
              (X)  For taxable year 1999 and  thereafter,  an
         amount equal to the amount of any (i) distributions,
         to the extent includible in gross income for federal
         income tax purposes, made to the taxpayer because of
         his  or  her  status  as a victim of persecution for
         racial or religious reasons by Nazi Germany  or  any
         other  Axis  regime  or as an heir of the victim and
         (ii) items of income, to the  extent  includible  in
         gross   income  for  federal  income  tax  purposes,
         attributable to, derived from or in any way  related
         to  assets  stolen  from,  hidden from, or otherwise
         lost to  a  victim  of  persecution  for  racial  or
         religious  reasons by Nazi Germany or any other Axis
         regime immediately prior to, during, and immediately
         after World War II, including, but not  limited  to,
         interest  on  the  proceeds  receivable as insurance
         under policies issued to a victim of persecution for
         racial or religious reasons by Nazi Germany  or  any
         other  Axis  regime  by European insurance companies
         immediately  prior  to  and  during  World  War  II;
         provided, however,  this  subtraction  from  federal
         adjusted  gross  income  does  not  apply  to assets
         acquired with such assets or with the proceeds  from
         the  sale  of  such  assets; provided, further, this
         paragraph shall only apply to a taxpayer who was the
         first recipient of such assets after their  recovery
         and  who  is  a  victim of persecution for racial or
         religious reasons by Nazi Germany or any other  Axis
         regime  or  as an heir of the victim.  The amount of
         and  the  eligibility  for  any  public  assistance,
         benefit, or similar entitlement is not  affected  by
         the   inclusion  of  items  (i)  and  (ii)  of  this
         paragraph in gross income  for  federal  income  tax
         purposes.   This   paragraph   is  exempt  from  the
         provisions of Section 250; and
              (Y)  For taxable years beginning  on  or  after
         January  1,  2002, moneys contributed in the taxable
         year to a College Savings Pool account under Section
         16.5 of the State Treasurer Act.  This  subparagraph
         (Y) is exempt from the provisions of Section 250;
              (Z)  For taxable years 2001 and thereafter, for
         the  taxable  year  in  which the bonus depreciation
         deduction  (30%  of  the  adjusted  basis   of   the
         qualified  property)  is  taken  on  the  taxpayer's
         federal  income  tax  return under subsection (k) of
         Section 168 of the Internal  Revenue  Code  and  for
         each  applicable  taxable year thereafter, an amount
         equal to "x", where:
                   (1)  "y"  equals   the   amount   of   the
              depreciation  deduction  taken  for the taxable
              year  on  the  taxpayer's  federal  income  tax
              return  on  property  for   which   the   bonus
              depreciation  deduction  (30%  of  the adjusted
              basis of the qualified property) was  taken  in
              any year under subsection (k) of Section 168 of
              the  Internal  Revenue  Code, but not including
              the bonus depreciation deduction; and
                   (2)  "x" equals "y" multiplied by  30  and
              then  divided  by  70  (or  "y"  multiplied  by
              0.429).
              The   aggregate   amount  deducted  under  this
         subparagraph in all taxable years for any one  piece
         of  property  may not exceed the amount of the bonus
         depreciation deduction (30% of the adjusted basis of
         the qualified property) taken on  that  property  on
         the  taxpayer's  federal  income  tax  return  under
         subsection  (k)  of  Section  168  of  the  Internal
         Revenue Code; and
              (AA)  If the taxpayer reports a capital gain or
         loss on the taxpayer's federal income tax return for
         the  taxable  year  based  on  a sale or transfer of
         property for which the taxpayer was required in  any
         taxable  year to make an addition modification under
         subparagraph (D-15), then an amount  equal  to  that
         addition modification.
              The  taxpayer  is allowed to take the deduction
         under this subparagraph only once  with  respect  to
         any one piece of property.

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

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

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

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

    (f)  Valuation limitation amount.
         (1)  In  general.   The  valuation limitation amount
    referred to in subsections (a) (2) (G), (c) (2)  (I)  and
    (d)(2) (E) is an amount equal to:
              (A)  The   sum   of   the  pre-August  1,  1969
         appreciation amounts (to the  extent  consisting  of
         gain reportable under the provisions of Section 1245
         or  1250  of  the  Internal  Revenue  Code)  for all
         property in respect of which such gain was  reported
         for the taxable year; plus
              (B)  The   lesser   of   (i)  the  sum  of  the
         pre-August 1,  1969  appreciation  amounts  (to  the
         extent  consisting of capital gain) for all property
         in respect of  which  such  gain  was  reported  for
         federal income tax purposes for the taxable year, or
         (ii)  the  net  capital  gain  for the taxable year,
         reduced in either case by any amount  of  such  gain
         included  in  the amount determined under subsection
         (a) (2) (F) or (c) (2) (H).
         (2)  Pre-August 1, 1969 appreciation amount.
              (A)  If  the  fair  market  value  of  property
         referred   to   in   paragraph   (1)   was   readily
         ascertainable on August 1, 1969, the  pre-August  1,
         1969  appreciation  amount  for such property is the
         lesser of (i) the excess of such fair  market  value
         over the taxpayer's basis (for determining gain) for
         such  property  on  that  date (determined under the
         Internal Revenue Code as in effect on that date), or
         (ii) the total  gain  realized  and  reportable  for
         federal  income tax purposes in respect of the sale,
         exchange or other disposition of such property.
              (B)  If  the  fair  market  value  of  property
         referred  to  in  paragraph  (1)  was  not   readily
         ascertainable  on  August 1, 1969, the pre-August 1,
         1969 appreciation amount for such property  is  that
         amount  which bears the same ratio to the total gain
         reported in respect  of  the  property  for  federal
         income  tax  purposes  for  the taxable year, as the
         number of full calendar months in that part  of  the
         taxpayer's  holding  period  for the property ending
         July 31, 1969 bears to the number of  full  calendar
         months  in  the taxpayer's entire holding period for
         the property.
              (C)  The  Department   shall   prescribe   such
         regulations  as  may  be  necessary to carry out the
         purposes of this paragraph.

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

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

    Section 5.  The  Use  Tax  Act  is  amended  by  changing
Section 3-7 as follows:

    (35 ILCS 105/3-7)
    Sec.  3-7.  Aggregate  manufacturing  exemption.  Through
December  31, 2007, the use of aggregate exploration, mining,
offhighway hauling, processing, maintenance, and  reclamation
equipment,  including  replacement  parts  and equipment, and
including equipment purchased for lease, but excluding  motor
vehicles required to be registered under the Illinois Vehicle
Code, is exempt from the tax imposed by this Act.
(Source: P.A. 90-529, eff. 11-14-97.)

    Section  10.  The  Service  Use  Tax  Act  is  amended by
changing Section 3-7 as follows:

    (35 ILCS 110/3-7)
    Sec.  3-7.  Aggregate  manufacturing  exemption.  Through
December 31, 2007, the use of aggregate exploration,  mining,
offhighway  hauling, processing, maintenance, and reclamation
equipment, including replacement  parts  and  equipment,  and
including equipment purchased  for lease, but excluding motor
vehicles required to be registered under the Illinois Vehicle
Code, is exempt from the tax imposed by this Act.
(Source: P.A. 90-529, eff. 11-14-97.)

    Section 15.  The Service Occupation Tax Act is amended by
changing Section 3-7 as follows:

    (35 ILCS 115/3-7)
    Sec.  3-7.   Aggregate  manufacturing  exemption. Through
December 31, 2007, aggregate exploration, mining,  offhighway
hauling,  processing, maintenance, and reclamation equipment,
including replacement  parts  and  equipment,  and  including
equipment  purchased  for lease, but excluding motor vehicles
required to be registered under the Illinois Vehicle Code, is
exempt from the tax imposed by this Act.
(Source: P.A. 90-529, eff. 11-14-97.)

    Section 20.  The Retailers' Occupation Tax Act is amended
by changing Section 2-7 as follows:

    (35 ILCS 120/2-7)
    Sec.  2-7.  Aggregate  manufacturing  exemption.  Through
December 31, 2007, gross receipts from proceeds from the sale
of  aggregate  exploration,   mining,   offhighway   hauling,
processing, maintenance, and reclamation equipment, including
replacement  parts  and  equipment,  and  including equipment
purchased for lease, but excluding motor vehicles required to
be registered under the Illinois  Vehicle  Code,  are  exempt
from the tax imposed by this Act.
(Source: P.A. 90-529, eff. 11-14-97.)

    Section  99.  Effective date.  This Act takes effect upon
becoming law.
    Passed in the General Assembly June 02, 2002.
    Approved June 28, 2002.
    Effective June 28, 2002.

[ Top ]