093_HB1633

 
                                     LRB093 05275 NHT 05365 b

 1        AN ACT relating to education.

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

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

 6        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income  means  an amount equal to the taxpayer's adjusted
11        gross  income  for  the  taxable  year  as  modified   by
12        paragraph (2).
13             (2)  Modifications.    The   adjusted  gross  income
14        referred to in paragraph (1) shall be modified by  adding
15        thereto the sum of the following amounts:
16                  (A)  An  amount  equal  to  all amounts paid or
17             accrued to the taxpayer  as  interest  or  dividends
18             during  the taxable year to the extent excluded from
19             gross income in the computation  of  adjusted  gross
20             income,  except  stock dividends of qualified public
21             utilities  described  in  Section  305(e)   of   the
22             Internal Revenue Code;
23                  (B)  An  amount  equal  to  the  amount  of tax
24             imposed by this Act  to  the  extent  deducted  from
25             gross  income  in  the computation of adjusted gross
26             income for the taxable year;
27                  (C)  An amount equal  to  the  amount  received
28             during  the  taxable year as a recovery or refund of
29             real  property  taxes  paid  with  respect  to   the
30             taxpayer's principal residence under the Revenue Act
31             of  1939  and  for  which a deduction was previously
 
                            -2-      LRB093 05275 NHT 05365 b
 1             taken under subparagraph (L) of this  paragraph  (2)
 2             prior to July 1, 1991, the retrospective application
 3             date  of Article 4 of Public Act 87-17.  In the case
 4             of  multi-unit  or  multi-use  structures  and  farm
 5             dwellings, the taxes  on  the  taxpayer's  principal
 6             residence  shall  be that portion of the total taxes
 7             for the entire property  which  is  attributable  to
 8             such principal residence;
 9                  (D)  An  amount  equal  to  the  amount  of the
10             capital gain deduction allowable under the  Internal
11             Revenue  Code,  to  the  extent  deducted from gross
12             income in the computation of adjusted gross income;
13                  (D-5)  An amount, to the extent not included in
14             adjusted gross income, equal to the amount of  money
15             withdrawn by the taxpayer in the taxable year from a
16             medical care savings account and the interest earned
17             on  the  account in the taxable year of a withdrawal
18             pursuant to subsection (b)  of  Section  20  of  the
19             Medical  Care  Savings Account Act or subsection (b)
20             of Section 20 of the Medical  Care  Savings  Account
21             Act of 2000;
22                  (D-10)  For taxable years ending after December
23             31,   1997,   an   amount   equal  to  any  eligible
24             remediation costs that the  individual  deducted  in
25             computing  adjusted  gross  income and for which the
26             individual claims a credit under subsection  (l)  of
27             Section 201;
28                  (D-15)  For  taxable years 2001 and thereafter,
29             an amount equal to the bonus depreciation  deduction
30             (30%   of   the  adjusted  basis  of  the  qualified
31             property) taken on the taxpayer's federal income tax
32             return for the taxable year under subsection (k)  of
33             Section 168 of the Internal Revenue Code; and
34                  (D-16)  If  the taxpayer reports a capital gain
 
                            -3-      LRB093 05275 NHT 05365 b
 1             or loss on the taxpayer's federal income tax  return
 2             for  the taxable year based on a sale or transfer of
 3             property for which the taxpayer was required in  any
 4             taxable  year to make an addition modification under
 5             subparagraph (D-15), then an  amount  equal  to  the
 6             aggregate  amount  of  the  deductions  taken in all
 7             taxable years under subparagraph (Z) with respect to
 8             that property.;
 9                  The taxpayer is required to make  the  addition
10             modification  under this subparagraph only once with
11             respect to any one piece of property;. and
12                  (D-20) (D-15)  For taxable years  beginning  on
13             or   after  January  1,  2002,  in  the  case  of  a
14             distribution from a qualified tuition program  under
15             Section 529 of the Internal Revenue Code, other than
16             (i)  a  distribution  from  a  College  Savings Pool
17             created under Section 16.5 of  the  State  Treasurer
18             Act or (ii) a distribution from the Illinois Prepaid
19             Tuition  Trust  Fund,  an amount equal to the amount
20             excluded   from   gross   income    under    Section
21             529(c)(3)(B);
22        and  by  deducting  from the total so obtained the sum of
23        the following amounts:
24                  (E)  For taxable years ending  before  December
25             31,  2001,  any  amount  included  in  such total in
26             respect  of  any  compensation  (including  but  not
27             limited to any compensation paid  or  accrued  to  a
28             serviceman  while  a  prisoner  of war or missing in
29             action) paid to a resident by  reason  of  being  on
30             active duty in the Armed Forces of the United States
31             and  in  respect of any compensation paid or accrued
32             to a resident who as a governmental employee  was  a
33             prisoner of war or missing in action, and in respect
34             of  any  compensation  paid to a resident in 1971 or
 
                            -4-      LRB093 05275 NHT 05365 b
 1             thereafter for annual training performed pursuant to
 2             Sections 502 and 503, Title 32, United  States  Code
 3             as  a  member  of  the  Illinois National Guard. For
 4             taxable years ending on or after December 31,  2001,
 5             any  amount included in such total in respect of any
 6             compensation  (including  but  not  limited  to  any
 7             compensation paid or accrued to a serviceman while a
 8             prisoner of war or missing  in  action)  paid  to  a
 9             resident   by  reason  of  being  a  member  of  any
10             component of the Armed Forces of the  United  States
11             and  in  respect of any compensation paid or accrued
12             to a resident who as a governmental employee  was  a
13             prisoner of war or missing in action, and in respect
14             of  any  compensation  paid to a resident in 2001 or
15             thereafter by  reason  of  being  a  member  of  the
16             Illinois  National  Guard.  The  provisions  of this
17             amendatory Act of  the  92nd  General  Assembly  are
18             exempt from the provisions of Section 250;
19                  (F)  An amount equal to all amounts included in
20             such  total  pursuant  to the provisions of Sections
21             402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
22             408  of  the  Internal  Revenue Code, or included in
23             such total as distributions under the provisions  of
24             any  retirement  or disability plan for employees of
25             any  governmental  agency  or  unit,  or  retirement
26             payments to retired  partners,  which  payments  are
27             excluded   in   computing  net  earnings  from  self
28             employment by Section 1402 of the  Internal  Revenue
29             Code and regulations adopted pursuant thereto;
30                  (G)  The valuation limitation amount;
31                  (H)  An  amount  equal to the amount of any tax
32             imposed by  this  Act  which  was  refunded  to  the
33             taxpayer  and included in such total for the taxable
34             year;
 
                            -5-      LRB093 05275 NHT 05365 b
 1                  (I)  An amount equal to all amounts included in
 2             such total pursuant to the provisions of Section 111
 3             of the Internal Revenue Code as a recovery of  items
 4             previously  deducted  from  adjusted gross income in
 5             the computation of taxable income;
 6                  (J)  An  amount  equal   to   those   dividends
 7             included   in  such  total  which  were  paid  by  a
 8             corporation which conducts business operations in an
 9             Enterprise Zone or zones created under the  Illinois
10             Enterprise  Zone Act, and conducts substantially all
11             of its operations in an Enterprise Zone or zones;
12                  (K)  An  amount  equal   to   those   dividends
13             included   in   such  total  that  were  paid  by  a
14             corporation that conducts business operations  in  a
15             federally  designated Foreign Trade Zone or Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located  in  Illinois;   provided   that   dividends
18             eligible  for the deduction provided in subparagraph
19             (J) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (K);
22                  (L)  For taxable years  ending  after  December
23             31,  1983,  an  amount  equal to all social security
24             benefits and railroad retirement  benefits  included
25             in  such  total pursuant to Sections 72(r) and 86 of
26             the Internal Revenue Code;
27                  (M)  With  the   exception   of   any   amounts
28             subtracted  under  subparagraph (N), an amount equal
29             to the sum of all amounts disallowed  as  deductions
30             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
31             Internal Revenue Code of 1954, as now  or  hereafter
32             amended,  and  all  amounts of expenses allocable to
33             interest and  disallowed as  deductions  by  Section
34             265(1)  of the Internal Revenue Code of 1954, as now
 
                            -6-      LRB093 05275 NHT 05365 b
 1             or hereafter amended; and  (ii)  for  taxable  years
 2             ending   on  or  after  August  13,  1999,  Sections
 3             171(a)(2), 265, 280C,  and  832(b)(5)(B)(i)  of  the
 4             Internal   Revenue  Code;  the  provisions  of  this
 5             subparagraph  are  exempt  from  the  provisions  of
 6             Section 250;
 7                  (N)  An amount equal to all amounts included in
 8             such total which are exempt from  taxation  by  this
 9             State   either   by   reason   of  its  statutes  or
10             Constitution  or  by  reason  of  the  Constitution,
11             treaties or statutes of the United States;  provided
12             that,  in the case of any statute of this State that
13             exempts  income  derived   from   bonds   or   other
14             obligations from the tax imposed under this Act, the
15             amount  exempted  shall  be the interest net of bond
16             premium amortization;
17                  (O)  An amount equal to any  contribution  made
18             to  a  job  training project established pursuant to
19             the Tax Increment Allocation Redevelopment Act;
20                  (P)  An amount  equal  to  the  amount  of  the
21             deduction  used  to  compute  the federal income tax
22             credit for restoration of substantial  amounts  held
23             under  claim  of right for the taxable year pursuant
24             to Section 1341 of  the  Internal  Revenue  Code  of
25             1986;
26                  (Q)  An amount equal to any amounts included in
27             such   total,   received   by  the  taxpayer  as  an
28             acceleration in the payment of  life,  endowment  or
29             annuity  benefits  in advance of the time they would
30             otherwise be payable as an indemnity for a  terminal
31             illness;
32                  (R)  An  amount  equal  to  the  amount  of any
33             federal or State  bonus  paid  to  veterans  of  the
34             Persian Gulf War;
 
                            -7-      LRB093 05275 NHT 05365 b
 1                  (S)  An  amount,  to  the  extent  included  in
 2             adjusted  gross  income,  equal  to  the amount of a
 3             contribution made in the taxable year on  behalf  of
 4             the  taxpayer  to  a  medical  care  savings account
 5             established under the Medical Care  Savings  Account
 6             Act  or the Medical Care Savings Account Act of 2000
 7             to the extent the contribution is  accepted  by  the
 8             account administrator as provided in that Act;
 9                  (T)  An  amount,  to  the  extent  included  in
10             adjusted  gross  income,  equal  to  the  amount  of
11             interest  earned  in  the  taxable year on a medical
12             care savings account established under  the  Medical
13             Care Savings Account Act or the Medical Care Savings
14             Account Act of 2000 on behalf of the taxpayer, other
15             than  interest  added pursuant to item (D-5) of this
16             paragraph (2);
17                  (U)  For one taxable year beginning on or after
18             January 1, 1994, an amount equal to the total amount
19             of tax imposed and paid under  subsections  (a)  and
20             (b)  of  Section  201  of  this Act on grant amounts
21             received by the  taxpayer  under  the  Nursing  Home
22             Grant  Assistance  Act during the taxpayer's taxable
23             years 1992 and 1993;
24                  (V)  Beginning with  tax  years  ending  on  or
25             after  December  31,  1995 and ending with tax years
26             ending on or before December  31,  2004,  an  amount
27             equal  to  the  amount  paid  by a taxpayer who is a
28             self-employed taxpayer, a partner of a  partnership,
29             or  a  shareholder in a Subchapter S corporation for
30             health insurance or  long-term  care  insurance  for
31             that   taxpayer   or   that   taxpayer's  spouse  or
32             dependents, to the extent that the amount  paid  for
33             that  health  insurance  or long-term care insurance
34             may be deducted under Section 213  of  the  Internal
 
                            -8-      LRB093 05275 NHT 05365 b
 1             Revenue  Code  of 1986, has not been deducted on the
 2             federal income tax return of the taxpayer, and  does
 3             not  exceed  the taxable income attributable to that
 4             taxpayer's  income,   self-employment   income,   or
 5             Subchapter  S  corporation  income;  except  that no
 6             deduction shall be allowed under this  item  (V)  if
 7             the  taxpayer  is  eligible  to  participate  in any
 8             health insurance or long-term care insurance plan of
 9             an  employer  of  the  taxpayer  or  the  taxpayer's
10             spouse.  The amount  of  the  health  insurance  and
11             long-term  care insurance subtracted under this item
12             (V) shall be determined by multiplying total  health
13             insurance and long-term care insurance premiums paid
14             by  the  taxpayer times a number that represents the
15             fractional percentage of eligible  medical  expenses
16             under  Section  213  of the Internal Revenue Code of
17             1986 not actually deducted on the taxpayer's federal
18             income tax return;
19                  (W)  For taxable years beginning  on  or  after
20             January   1,  1998,  all  amounts  included  in  the
21             taxpayer's federal gross income in the taxable  year
22             from  amounts converted from a regular IRA to a Roth
23             IRA. This paragraph is exempt from the provisions of
24             Section 250;
25                  (X)  For taxable year 1999 and  thereafter,  an
26             amount equal to the amount of any (i) distributions,
27             to the extent includible in gross income for federal
28             income tax purposes, made to the taxpayer because of
29             his  or  her  status  as a victim of persecution for
30             racial or religious reasons by Nazi Germany  or  any
31             other  Axis  regime  or as an heir of the victim and
32             (ii) items of income, to the  extent  includible  in
33             gross   income  for  federal  income  tax  purposes,
34             attributable to, derived from or in any way  related
 
                            -9-      LRB093 05275 NHT 05365 b
 1             to  assets  stolen  from,  hidden from, or otherwise
 2             lost to  a  victim  of  persecution  for  racial  or
 3             religious  reasons by Nazi Germany or any other Axis
 4             regime immediately prior to, during, and immediately
 5             after World War II, including, but not  limited  to,
 6             interest  on  the  proceeds  receivable as insurance
 7             under policies issued to a victim of persecution for
 8             racial or religious reasons by Nazi Germany  or  any
 9             other  Axis  regime  by European insurance companies
10             immediately  prior  to  and  during  World  War  II;
11             provided, however,  this  subtraction  from  federal
12             adjusted  gross  income  does  not  apply  to assets
13             acquired with such assets or with the proceeds  from
14             the  sale  of  such  assets; provided, further, this
15             paragraph shall only apply to a taxpayer who was the
16             first recipient of such assets after their  recovery
17             and  who  is  a  victim of persecution for racial or
18             religious reasons by Nazi Germany or any other  Axis
19             regime  or  as an heir of the victim.  The amount of
20             and  the  eligibility  for  any  public  assistance,
21             benefit, or similar entitlement is not  affected  by
22             the   inclusion  of  items  (i)  and  (ii)  of  this
23             paragraph in gross income  for  federal  income  tax
24             purposes.   This   paragraph   is  exempt  from  the
25             provisions of Section 250;
26                  (Y)  For taxable years beginning  on  or  after
27             January  1,  2002, moneys contributed in the taxable
28             year to a College Savings Pool account under Section
29             16.5 of the State Treasurer Act, except that amounts
30             excluded   from   gross   income    under    Section
31             529(c)(3)(C)(i)  of  the Internal Revenue Code shall
32             not be  considered  moneys  contributed  under  this
33             subparagraph  (Y).   This subparagraph (Y) is exempt
34             from the provisions of Section 250;
 
                            -10-     LRB093 05275 NHT 05365 b
 1                  (Z)  For taxable years 2001 and thereafter, for
 2             the taxable year in  which  the  bonus  depreciation
 3             deduction   (30%   of  the  adjusted  basis  of  the
 4             qualified  property)  is  taken  on  the  taxpayer's
 5             federal income tax return under  subsection  (k)  of
 6             Section  168  of  the  Internal Revenue Code and for
 7             each applicable taxable year thereafter,  an  amount
 8             equal to "x", where:
 9                       (1)  "y"   equals   the   amount   of  the
10                  depreciation deduction taken  for  the  taxable
11                  year  on  the  taxpayer's  federal  income  tax
12                  return   on   property   for  which  the  bonus
13                  depreciation deduction  (30%  of  the  adjusted
14                  basis  of  the qualified property) was taken in
15                  any year under subsection (k) of Section 168 of
16                  the Internal Revenue Code,  but  not  including
17                  the bonus depreciation deduction; and
18                       (2)  "x"  equals  "y" multiplied by 30 and
19                  then  divided  by  70  (or  "y"  multiplied  by
20                  0.429).
21                  The  aggregate  amount  deducted   under   this
22             subparagraph  in all taxable years for any one piece
23             of property may not exceed the amount of  the  bonus
24             depreciation deduction (30% of the adjusted basis of
25             the  qualified  property)  taken on that property on
26             the  taxpayer's  federal  income  tax  return  under
27             subsection  (k)  of  Section  168  of  the  Internal
28             Revenue Code; and
29                  (AA)  If the taxpayer reports a capital gain or
30             loss on the taxpayer's federal income tax return for
31             the taxable year based on  a  sale  or  transfer  of
32             property  for which the taxpayer was required in any
33             taxable year to make an addition modification  under
34             subparagraph  (D-15),  then  an amount equal to that
 
                            -11-     LRB093 05275 NHT 05365 b
 1             addition modification.
 2                  The taxpayer is allowed to take  the  deduction
 3             under  this  subparagraph  only once with respect to
 4             any one piece of property; and
 5                  (BB) (Z)  Any amount included in adjusted gross
 6             income, other than salary, received by a driver in a
 7             ridesharing arrangement using a motor vehicle; and
 8                  (CC)  Beginning with taxable years ending on or
 9             after December 31,  2003, $500 for a person  holding
10             a teaching certificate issued under the  School Code
11             and  employed  as  a  teacher  in  a  public  school
12             district  governed by the School Code.

13        (b)  Corporations.
14             (1)  In general.  In the case of a corporation, base
15        income  means  an  amount equal to the taxpayer's taxable
16        income for the taxable year as modified by paragraph (2).
17             (2)  Modifications.  The taxable income referred  to
18        in  paragraph (1) shall be modified by adding thereto the
19        sum of the following amounts:
20                  (A)  An amount equal to  all  amounts  paid  or
21             accrued   to   the  taxpayer  as  interest  and  all
22             distributions  received  from  regulated  investment
23             companies during the  taxable  year  to  the  extent
24             excluded  from  gross  income  in the computation of
25             taxable income;
26                  (B)  An amount  equal  to  the  amount  of  tax
27             imposed  by  this  Act  to  the extent deducted from
28             gross income in the computation  of  taxable  income
29             for the taxable year;
30                  (C)  In  the  case  of  a  regulated investment
31             company, an amount equal to the excess  of  (i)  the
32             net  long-term  capital  gain  for the taxable year,
33             over (ii) the amount of the capital  gain  dividends
34             designated   as  such  in  accordance  with  Section
 
                            -12-     LRB093 05275 NHT 05365 b
 1             852(b)(3)(C) of the Internal Revenue  Code  and  any
 2             amount  designated under Section 852(b)(3)(D) of the
 3             Internal Revenue Code, attributable to  the  taxable
 4             year (this amendatory Act of 1995 (Public Act 89-89)
 5             is  declarative  of  existing  law  and is not a new
 6             enactment);
 7                  (D)  The  amount  of  any  net  operating  loss
 8             deduction taken in arriving at taxable income, other
 9             than a net operating loss  carried  forward  from  a
10             taxable year ending prior to December 31, 1986;
11                  (E)  For taxable years in which a net operating
12             loss  carryback  or carryforward from a taxable year
13             ending prior to December 31, 1986 is an  element  of
14             taxable income under paragraph (1) of subsection (e)
15             or  subparagraph  (E) of paragraph (2) of subsection
16             (e), the  amount  by  which  addition  modifications
17             other  than  those provided by this subparagraph (E)
18             exceeded subtraction modifications in  such  earlier
19             taxable year, with the following limitations applied
20             in the order that they are listed:
21                       (i)  the addition modification relating to
22                  the  net operating loss carried back or forward
23                  to the  taxable  year  from  any  taxable  year
24                  ending  prior  to  December  31,  1986 shall be
25                  reduced by the amount of addition  modification
26                  under  this  subparagraph  (E) which related to
27                  that net operating loss  and  which  was  taken
28                  into  account in calculating the base income of
29                  an earlier taxable year, and
30                       (ii)  the addition  modification  relating
31                  to  the  net  operating  loss  carried  back or
32                  forward to the taxable year  from  any  taxable
33                  year  ending  prior  to December 31, 1986 shall
34                  not exceed the  amount  of  such  carryback  or
 
                            -13-     LRB093 05275 NHT 05365 b
 1                  carryforward;
 2                  For  taxable  years  in  which  there  is a net
 3             operating loss carryback or carryforward  from  more
 4             than one other taxable year ending prior to December
 5             31, 1986, the addition modification provided in this
 6             subparagraph  (E)  shall  be  the sum of the amounts
 7             computed   independently   under    the    preceding
 8             provisions  of  this  subparagraph (E) for each such
 9             taxable year;
10                  (E-5)  For taxable years ending after  December
11             31,   1997,   an   amount   equal  to  any  eligible
12             remediation costs that the corporation  deducted  in
13             computing  adjusted  gross  income and for which the
14             corporation claims a credit under subsection (l)  of
15             Section 201;
16                  (E-10)  For  taxable years 2001 and thereafter,
17             an amount equal to the bonus depreciation  deduction
18             (30%   of   the  adjusted  basis  of  the  qualified
19             property) taken on the taxpayer's federal income tax
20             return for the taxable year under subsection (k)  of
21             Section 168 of the Internal Revenue Code; and
22                  (E-11)  If  the taxpayer reports a capital gain
23             or loss on the taxpayer's federal income tax  return
24             for  the taxable year based on a sale or transfer of
25             property for which the taxpayer was required in  any
26             taxable  year to make an addition modification under
27             subparagraph (E-10), then an  amount  equal  to  the
28             aggregate  amount  of  the  deductions  taken in all
29             taxable years under subparagraph (T) with respect to
30             that property.;
31                  The taxpayer is required to make  the  addition
32             modification  under this subparagraph only once with
33             respect to any one piece of property;
34        and by deducting from the total so obtained  the  sum  of
 
                            -14-     LRB093 05275 NHT 05365 b
 1        the following amounts:
 2                  (F)  An  amount  equal to the amount of any tax
 3             imposed by  this  Act  which  was  refunded  to  the
 4             taxpayer  and included in such total for the taxable
 5             year;
 6                  (G)  An amount equal to any amount included  in
 7             such  total under Section 78 of the Internal Revenue
 8             Code;
 9                  (H)  In the  case  of  a  regulated  investment
10             company,  an  amount  equal  to the amount of exempt
11             interest dividends as defined in subsection (b)  (5)
12             of Section 852 of the Internal Revenue Code, paid to
13             shareholders for the taxable year;
14                  (I)  With   the   exception   of   any  amounts
15             subtracted under subparagraph (J), an  amount  equal
16             to  the  sum of all amounts disallowed as deductions
17             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
18             amounts disallowed as interest  expense  by  Section
19             291(a)(3)  of  the  Internal Revenue Code, as now or
20             hereafter  amended,  and  all  amounts  of  expenses
21             allocable to interest and disallowed  as  deductions
22             by  Section  265(a)(1) of the Internal Revenue Code,
23             as now or hereafter amended; and  (ii)  for  taxable
24             years  ending  on or after August 13, 1999, Sections
25             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
26             of the Internal Revenue Code; the provisions of this
27             subparagraph  are  exempt  from  the  provisions  of
28             Section 250;
29                  (J)  An amount equal to all amounts included in
30             such total which are exempt from  taxation  by  this
31             State   either   by   reason   of  its  statutes  or
32             Constitution  or  by  reason  of  the  Constitution,
33             treaties or statutes of the United States;  provided
34             that,  in the case of any statute of this State that
 
                            -15-     LRB093 05275 NHT 05365 b
 1             exempts  income  derived   from   bonds   or   other
 2             obligations from the tax imposed under this Act, the
 3             amount  exempted  shall  be the interest net of bond
 4             premium amortization;
 5                  (K)  An  amount  equal   to   those   dividends
 6             included   in  such  total  which  were  paid  by  a
 7             corporation which conducts business operations in an
 8             Enterprise Zone or zones created under the  Illinois
 9             Enterprise  Zone  Act and conducts substantially all
10             of its operations in an Enterprise Zone or zones;
11                  (L)  An  amount  equal   to   those   dividends
12             included   in   such  total  that  were  paid  by  a
13             corporation that conducts business operations  in  a
14             federally  designated Foreign Trade Zone or Sub-Zone
15             and  that  is  designated  a  High  Impact  Business
16             located  in  Illinois;   provided   that   dividends
17             eligible  for the deduction provided in subparagraph
18             (K) of paragraph 2 of this subsection shall  not  be
19             eligible  for  the  deduction  provided  under  this
20             subparagraph (L);
21                  (M)  For  any  taxpayer  that  is  a  financial
22             organization within the meaning of Section 304(c) of
23             this  Act,  an  amount  included  in  such  total as
24             interest income from a loan or loans  made  by  such
25             taxpayer  to  a  borrower, to the extent that such a
26             loan is secured by property which  is  eligible  for
27             the Enterprise Zone Investment Credit.  To determine
28             the  portion  of  a loan or loans that is secured by
29             property eligible for a  Section  201(f)  investment
30             credit  to the borrower, the entire principal amount
31             of the loan or loans between the  taxpayer  and  the
32             borrower  should  be  divided  into the basis of the
33             Section  201(f)  investment  credit  property  which
34             secures the loan or loans, using  for  this  purpose
 
                            -16-     LRB093 05275 NHT 05365 b
 1             the original basis of such property on the date that
 2             it  was  placed  in  service in the Enterprise Zone.
 3             The subtraction modification available  to  taxpayer
 4             in  any  year  under  this  subsection shall be that
 5             portion of the total interest paid by  the  borrower
 6             with  respect  to  such  loan  attributable  to  the
 7             eligible  property  as calculated under the previous
 8             sentence;
 9                  (M-1)  For any taxpayer  that  is  a  financial
10             organization within the meaning of Section 304(c) of
11             this  Act,  an  amount  included  in  such  total as
12             interest income from a loan or loans  made  by  such
13             taxpayer  to  a  borrower, to the extent that such a
14             loan is secured by property which  is  eligible  for
15             the  High  Impact  Business  Investment  Credit.  To
16             determine the portion of a loan  or  loans  that  is
17             secured  by  property  eligible for a Section 201(h)
18             investment  credit  to  the  borrower,  the   entire
19             principal  amount  of  the loan or loans between the
20             taxpayer and the borrower should be divided into the
21             basis  of  the  Section  201(h)  investment   credit
22             property  which secures the loan or loans, using for
23             this purpose the original basis of such property  on
24             the  date  that  it  was  placed  in  service  in  a
25             federally  designated Foreign Trade Zone or Sub-Zone
26             located in Illinois.  No taxpayer that  is  eligible
27             for  the  deduction  provided in subparagraph (M) of
28             paragraph (2) of this subsection shall  be  eligible
29             for  the  deduction provided under this subparagraph
30             (M-1).  The subtraction  modification  available  to
31             taxpayers in any year under this subsection shall be
32             that  portion  of  the  total  interest  paid by the
33             borrower with respect to such loan  attributable  to
34             the   eligible  property  as  calculated  under  the
 
                            -17-     LRB093 05275 NHT 05365 b
 1             previous sentence;
 2                  (N)  Two times any contribution made during the
 3             taxable year to a designated  zone  organization  to
 4             the  extent that the contribution (i) qualifies as a
 5             charitable  contribution  under  subsection  (c)  of
 6             Section 170 of the Internal Revenue  Code  and  (ii)
 7             must,  by  its terms, be used for a project approved
 8             by the Department of Commerce and Community  Affairs
 9             under  Section  11  of  the Illinois Enterprise Zone
10             Act;
11                  (O)  An amount equal to: (i)  85%  for  taxable
12             years  ending  on or before December 31, 1992, or, a
13             percentage equal to the percentage  allowable  under
14             Section  243(a)(1)  of  the Internal Revenue Code of
15             1986 for taxable years  ending  after  December  31,
16             1992,  of  the amount by which dividends included in
17             taxable income and received from a corporation  that
18             is  not  created  or organized under the laws of the
19             United States or any state or political  subdivision
20             thereof,  including,  for taxable years ending on or
21             after  December  31,  1988,  dividends  received  or
22             deemed  received  or  paid  or  deemed  paid   under
23             Sections  951  through  964  of the Internal Revenue
24             Code, exceed the amount of the modification provided
25             under subparagraph (G)  of  paragraph  (2)  of  this
26             subsection  (b)  which is related to such dividends;
27             plus (ii) 100% of the  amount  by  which  dividends,
28             included  in taxable income and received, including,
29             for taxable years ending on or  after  December  31,
30             1988,  dividends received or deemed received or paid
31             or deemed paid under Sections 951 through 964 of the
32             Internal Revenue Code,  from  any  such  corporation
33             specified  in  clause  (i)  that  would  but for the
34             provisions of Section 1504 (b) (3) of  the  Internal
 
                            -18-     LRB093 05275 NHT 05365 b
 1             Revenue   Code   be  treated  as  a  member  of  the
 2             affiliated  group  which   includes   the   dividend
 3             recipient,  exceed  the  amount  of the modification
 4             provided under subparagraph (G) of paragraph (2)  of
 5             this   subsection  (b)  which  is  related  to  such
 6             dividends;
 7                  (P)  An amount equal to any  contribution  made
 8             to  a  job  training project established pursuant to
 9             the Tax Increment Allocation Redevelopment Act;
10                  (Q)  An amount  equal  to  the  amount  of  the
11             deduction  used  to  compute  the federal income tax
12             credit for restoration of substantial  amounts  held
13             under  claim  of right for the taxable year pursuant
14             to Section 1341 of  the  Internal  Revenue  Code  of
15             1986;
16                  (R)  In  the  case  of an attorney-in-fact with
17             respect to whom  an  interinsurer  or  a  reciprocal
18             insurer  has  made the election under Section 835 of
19             the Internal Revenue Code, 26 U.S.C. 835, an  amount
20             equal  to the excess, if any, of the amounts paid or
21             incurred by that interinsurer or reciprocal  insurer
22             in the taxable year to the attorney-in-fact over the
23             deduction allowed to that interinsurer or reciprocal
24             insurer  with  respect to the attorney-in-fact under
25             Section 835(b) of the Internal Revenue Code for  the
26             taxable year;
27                  (S)  For  taxable  years  ending  on  or  after
28             December  31,  1997,  in  the case of a Subchapter S
29             corporation, an  amount  equal  to  all  amounts  of
30             income  allocable  to  a  shareholder subject to the
31             Personal Property Tax Replacement Income Tax imposed
32             by subsections (c) and (d) of Section  201  of  this
33             Act,  including  amounts  allocable to organizations
34             exempt from federal income tax by reason of  Section
 
                            -19-     LRB093 05275 NHT 05365 b
 1             501(a)   of   the   Internal   Revenue  Code.   This
 2             subparagraph (S) is exempt from  the  provisions  of
 3             Section 250;
 4                  (T)  For taxable years 2001 and thereafter, for
 5             the  taxable  year  in  which the bonus depreciation
 6             deduction  (30%  of  the  adjusted  basis   of   the
 7             qualified  property)  is  taken  on  the  taxpayer's
 8             federal  income  tax  return under subsection (k) of
 9             Section 168 of the Internal  Revenue  Code  and  for
10             each  applicable  taxable year thereafter, an amount
11             equal to "x", where:
12                       (1)  "y"  equals   the   amount   of   the
13                  depreciation  deduction  taken  for the taxable
14                  year  on  the  taxpayer's  federal  income  tax
15                  return  on  property  for   which   the   bonus
16                  depreciation  deduction  (30%  of  the adjusted
17                  basis of the qualified property) was  taken  in
18                  any year under subsection (k) of Section 168 of
19                  the  Internal  Revenue  Code, but not including
20                  the bonus depreciation deduction; and
21                       (2)  "x" equals "y" multiplied by  30  and
22                  then  divided  by  70  (or  "y"  multiplied  by
23                  0.429).
24                  The   aggregate   amount  deducted  under  this
25             subparagraph in all taxable years for any one  piece
26             of  property  may not exceed the amount of the bonus
27             depreciation deduction (30% of the adjusted basis of
28             the qualified property) taken on  that  property  on
29             the  taxpayer's  federal  income  tax  return  under
30             subsection  (k)  of  Section  168  of  the  Internal
31             Revenue Code; and
32                  (U)  If  the taxpayer reports a capital gain or
33             loss on the taxpayer's federal income tax return for
34             the taxable year based on  a  sale  or  transfer  of
 
                            -20-     LRB093 05275 NHT 05365 b
 1             property  for which the taxpayer was required in any
 2             taxable year to make an addition modification  under
 3             subparagraph  (E-10),  then  an amount equal to that
 4             addition modification.
 5                  The taxpayer is allowed to take  the  deduction
 6             under  this  subparagraph  only once with respect to
 7             any one piece of property.
 8             (3)  Special rule.  For purposes  of  paragraph  (2)
 9        (A),  "gross  income"  in  the  case  of a life insurance
10        company, for tax years ending on and after  December  31,
11        1994,  shall  mean  the  gross  investment income for the
12        taxable year.

13        (c)  Trusts and estates.
14             (1)  In general.  In the case of a trust or  estate,
15        base  income  means  an  amount  equal  to the taxpayer's
16        taxable income  for  the  taxable  year  as  modified  by
17        paragraph (2).
18             (2)  Modifications.   Subject  to  the provisions of
19        paragraph  (3),  the  taxable  income  referred   to   in
20        paragraph (1) shall be modified by adding thereto the sum
21        of the following amounts:
22                  (A)  An  amount  equal  to  all amounts paid or
23             accrued to the taxpayer  as  interest  or  dividends
24             during  the taxable year to the extent excluded from
25             gross income in the computation of taxable income;
26                  (B)  In the case of (i) an estate, $600; (ii) a
27             trust which,  under  its  governing  instrument,  is
28             required  to distribute all of its income currently,
29             $300; and (iii) any other trust, $100, but  in  each
30             such  case,  only  to  the  extent  such  amount was
31             deducted in the computation of taxable income;
32                  (C)  An amount  equal  to  the  amount  of  tax
33             imposed  by  this  Act  to  the extent deducted from
34             gross income in the computation  of  taxable  income
 
                            -21-     LRB093 05275 NHT 05365 b
 1             for the taxable year;
 2                  (D)  The  amount  of  any  net  operating  loss
 3             deduction taken in arriving at taxable income, other
 4             than  a  net  operating  loss carried forward from a
 5             taxable year ending prior to December 31, 1986;
 6                  (E)  For taxable years in which a net operating
 7             loss carryback or carryforward from a  taxable  year
 8             ending  prior  to December 31, 1986 is an element of
 9             taxable income under paragraph (1) of subsection (e)
10             or subparagraph (E) of paragraph (2)  of  subsection
11             (e),  the  amount  by  which  addition modifications
12             other than those provided by this  subparagraph  (E)
13             exceeded  subtraction  modifications in such taxable
14             year, with the following limitations applied in  the
15             order that they are listed:
16                       (i)  the addition modification relating to
17                  the  net operating loss carried back or forward
18                  to the  taxable  year  from  any  taxable  year
19                  ending  prior  to  December  31,  1986 shall be
20                  reduced by the amount of addition  modification
21                  under  this  subparagraph  (E) which related to
22                  that net operating loss  and  which  was  taken
23                  into  account in calculating the base income of
24                  an earlier taxable year, and
25                       (ii)  the addition  modification  relating
26                  to  the  net  operating  loss  carried  back or
27                  forward to the taxable year  from  any  taxable
28                  year  ending  prior  to December 31, 1986 shall
29                  not exceed the  amount  of  such  carryback  or
30                  carryforward;
31                  For  taxable  years  in  which  there  is a net
32             operating loss carryback or carryforward  from  more
33             than one other taxable year ending prior to December
34             31, 1986, the addition modification provided in this
 
                            -22-     LRB093 05275 NHT 05365 b
 1             subparagraph  (E)  shall  be  the sum of the amounts
 2             computed   independently   under    the    preceding
 3             provisions  of  this  subparagraph (E) for each such
 4             taxable year;
 5                  (F)  For  taxable  years  ending  on  or  after
 6             January 1, 1989, an amount equal to the tax deducted
 7             pursuant to Section 164 of the Internal Revenue Code
 8             if the trust or estate is claiming the same tax  for
 9             purposes  of  the  Illinois foreign tax credit under
10             Section 601 of this Act;
11                  (G)  An amount  equal  to  the  amount  of  the
12             capital  gain deduction allowable under the Internal
13             Revenue Code, to  the  extent  deducted  from  gross
14             income in the computation of taxable income;
15                  (G-5)  For  taxable years ending after December
16             31,  1997,  an  amount   equal   to   any   eligible
17             remediation  costs that the trust or estate deducted
18             in computing adjusted gross income and for which the
19             trust or estate claims a credit under subsection (l)
20             of Section 201;
21                  (G-10)  For taxable years 2001 and  thereafter,
22             an  amount equal to the bonus depreciation deduction
23             (30%  of  the  adjusted  basis  of   the   qualified
24             property) taken on the taxpayer's federal income tax
25             return  for the taxable year under subsection (k) of
26             Section 168 of the Internal Revenue Code; and
27                  (G-11)  If the taxpayer reports a capital  gain
28             or  loss on the taxpayer's federal income tax return
29             for the taxable year based on a sale or transfer  of
30             property  for which the taxpayer was required in any
31             taxable year to make an addition modification  under
32             subparagraph  (G-10),  then  an  amount equal to the
33             aggregate amount of  the  deductions  taken  in  all
34             taxable years under subparagraph (R) with respect to
 
                            -23-     LRB093 05275 NHT 05365 b
 1             that property.;
 2                  The  taxpayer  is required to make the addition
 3             modification under this subparagraph only once  with
 4             respect to any one piece of property;
 5        and  by  deducting  from the total so obtained the sum of
 6        the following amounts:
 7                  (H)  An amount equal to all amounts included in
 8             such total pursuant to the  provisions  of  Sections
 9             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
10             408 of the Internal Revenue Code or included in such
11             total as distributions under the provisions  of  any
12             retirement  or  disability plan for employees of any
13             governmental agency or unit, or retirement  payments
14             to  retired partners, which payments are excluded in
15             computing  net  earnings  from  self  employment  by
16             Section  1402  of  the  Internal  Revenue  Code  and
17             regulations adopted pursuant thereto;
18                  (I)  The valuation limitation amount;
19                  (J)  An amount equal to the amount of  any  tax
20             imposed  by  this  Act  which  was  refunded  to the
21             taxpayer and included in such total for the  taxable
22             year;
23                  (K)  An amount equal to all amounts included in
24             taxable  income  as  modified  by subparagraphs (A),
25             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
26             from  taxation by this State either by reason of its
27             statutes  or  Constitution  or  by  reason  of   the
28             Constitution,  treaties  or  statutes  of the United
29             States; provided that, in the case of any statute of
30             this State that exempts income derived from bonds or
31             other obligations from the tax  imposed  under  this
32             Act,  the  amount exempted shall be the interest net
33             of bond premium amortization;
34                  (L)  With  the   exception   of   any   amounts
 
                            -24-     LRB093 05275 NHT 05365 b
 1             subtracted  under  subparagraph (K), an amount equal
 2             to the sum of all amounts disallowed  as  deductions
 3             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
 4             Internal Revenue Code, as now or hereafter  amended,
 5             and  all  amounts  of expenses allocable to interest
 6             and disallowed as deductions by  Section  265(1)  of
 7             the  Internal  Revenue  Code  of  1954,  as  now  or
 8             hereafter amended; and (ii) for taxable years ending
 9             on  or  after  August  13, 1999, Sections 171(a)(2),
10             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
11             Revenue Code; the provisions  of  this  subparagraph
12             are exempt from the provisions of Section 250;
13                  (M)  An   amount   equal   to  those  dividends
14             included  in  such  total  which  were  paid  by   a
15             corporation which conducts business operations in an
16             Enterprise  Zone or zones created under the Illinois
17             Enterprise Zone Act and conducts  substantially  all
18             of its operations in an Enterprise Zone or Zones;
19                  (N)  An  amount  equal to any contribution made
20             to a job training project  established  pursuant  to
21             the Tax Increment Allocation Redevelopment Act;
22                  (O)  An   amount   equal   to  those  dividends
23             included  in  such  total  that  were  paid   by   a
24             corporation  that  conducts business operations in a
25             federally designated Foreign Trade Zone or  Sub-Zone
26             and  that  is  designated  a  High  Impact  Business
27             located   in   Illinois;   provided  that  dividends
28             eligible for the deduction provided in  subparagraph
29             (M) of paragraph (2) of this subsection shall not be
30             eligible  for  the  deduction  provided  under  this
31             subparagraph (O);
32                  (P)  An  amount  equal  to  the  amount  of the
33             deduction used to compute  the  federal  income  tax
34             credit  for  restoration of substantial amounts held
 
                            -25-     LRB093 05275 NHT 05365 b
 1             under claim of right for the taxable  year  pursuant
 2             to  Section  1341  of  the  Internal Revenue Code of
 3             1986;
 4                  (Q)  For taxable year 1999 and  thereafter,  an
 5             amount equal to the amount of any (i) distributions,
 6             to the extent includible in gross income for federal
 7             income tax purposes, made to the taxpayer because of
 8             his  or  her  status  as a victim of persecution for
 9             racial or religious reasons by Nazi Germany  or  any
10             other  Axis  regime  or as an heir of the victim and
11             (ii) items of income, to the  extent  includible  in
12             gross   income  for  federal  income  tax  purposes,
13             attributable to, derived from or in any way  related
14             to  assets  stolen  from,  hidden from, or otherwise
15             lost to  a  victim  of  persecution  for  racial  or
16             religious  reasons by Nazi Germany or any other Axis
17             regime immediately prior to, during, and immediately
18             after World War II, including, but not  limited  to,
19             interest  on  the  proceeds  receivable as insurance
20             under policies issued to a victim of persecution for
21             racial or religious reasons by Nazi Germany  or  any
22             other  Axis  regime  by European insurance companies
23             immediately  prior  to  and  during  World  War  II;
24             provided, however,  this  subtraction  from  federal
25             adjusted  gross  income  does  not  apply  to assets
26             acquired with such assets or with the proceeds  from
27             the  sale  of  such  assets; provided, further, this
28             paragraph shall only apply to a taxpayer who was the
29             first recipient of such assets after their  recovery
30             and  who  is  a victim of  persecution for racial or
31             religious reasons by Nazi Germany or any other  Axis
32             regime  or  as an heir of the victim.  The amount of
33             and  the  eligibility  for  any  public  assistance,
34             benefit, or similar entitlement is not  affected  by
 
                            -26-     LRB093 05275 NHT 05365 b
 1             the   inclusion  of  items  (i)  and  (ii)  of  this
 2             paragraph in gross income  for  federal  income  tax
 3             purposes.   This   paragraph   is  exempt  from  the
 4             provisions of Section 250;
 5                  (R)  For taxable years 2001 and thereafter, for
 6             the taxable year in  which  the  bonus  depreciation
 7             deduction   (30%   of  the  adjusted  basis  of  the
 8             qualified  property)  is  taken  on  the  taxpayer's
 9             federal income tax return under  subsection  (k)  of
10             Section  168  of  the  Internal Revenue Code and for
11             each applicable taxable year thereafter,  an  amount
12             equal to "x", where:
13                       (1)  "y"   equals   the   amount   of  the
14                  depreciation deduction taken  for  the  taxable
15                  year  on  the  taxpayer's  federal  income  tax
16                  return   on   property   for  which  the  bonus
17                  depreciation deduction  (30%  of  the  adjusted
18                  basis  of  the qualified property) was taken in
19                  any year under subsection (k) of Section 168 of
20                  the Internal Revenue Code,  but  not  including
21                  the bonus depreciation deduction; and
22                       (2)  "x"  equals  "y" multiplied by 30 and
23                  then  divided  by  70  (or  "y"  multiplied  by
24                  0.429).
25                  The  aggregate  amount  deducted   under   this
26             subparagraph  in all taxable years for any one piece
27             of property may not exceed the amount of  the  bonus
28             depreciation deduction (30% of the adjusted basis of
29             the  qualified  property)  taken on that property on
30             the  taxpayer's  federal  income  tax  return  under
31             subsection  (k)  of  Section  168  of  the  Internal
32             Revenue Code; and
33                  (S)  If the taxpayer reports a capital gain  or
34             loss on the taxpayer's federal income tax return for
 
                            -27-     LRB093 05275 NHT 05365 b
 1             the  taxable  year  based  on  a sale or transfer of
 2             property for which the taxpayer was required in  any
 3             taxable  year to make an addition modification under
 4             subparagraph (G-10), then an amount  equal  to  that
 5             addition modification.
 6                  The  taxpayer  is allowed to take the deduction
 7             under this subparagraph only once  with  respect  to
 8             any one piece of property.
 9             (3)  Limitation.   The  amount  of  any modification
10        otherwise required under  this  subsection  shall,  under
11        regulations  prescribed by the Department, be adjusted by
12        any amounts included therein which  were  properly  paid,
13        credited,  or  required to be distributed, or permanently
14        set aside for charitable purposes pursuant   to  Internal
15        Revenue Code Section 642(c) during the taxable year.

16        (d)  Partnerships.
17             (1)  In  general. In the case of a partnership, base
18        income means an amount equal to  the  taxpayer's  taxable
19        income for the taxable year as modified by paragraph (2).
20             (2)  Modifications.  The  taxable income referred to
21        in paragraph (1) shall be modified by adding thereto  the
22        sum of the following amounts:
23                  (A)  An  amount  equal  to  all amounts paid or
24             accrued to the taxpayer  as  interest  or  dividends
25             during  the taxable year to the extent excluded from
26             gross income in the computation of taxable income;
27                  (B)  An amount  equal  to  the  amount  of  tax
28             imposed  by  this  Act  to  the extent deducted from
29             gross income for the taxable year;
30                  (C)  The amount of deductions  allowed  to  the
31             partnership  pursuant  to  Section  707  (c)  of the
32             Internal Revenue Code  in  calculating  its  taxable
33             income;
34                  (D)  An  amount  equal  to  the  amount  of the
 
                            -28-     LRB093 05275 NHT 05365 b
 1             capital gain deduction allowable under the  Internal
 2             Revenue  Code,  to  the  extent  deducted from gross
 3             income in the computation of taxable income;
 4                  (D-5)  For taxable years 2001  and  thereafter,
 5             an  amount equal to the bonus depreciation deduction
 6             (30%  of  the  adjusted  basis  of   the   qualified
 7             property) taken on the taxpayer's federal income tax
 8             return  for the taxable year under subsection (k) of
 9             Section 168 of the Internal Revenue Code; and
10                  (D-6)  If the taxpayer reports a  capital  gain
11             or  loss on the taxpayer's federal income tax return
12             for the taxable year based on a sale or transfer  of
13             property  for which the taxpayer was required in any
14             taxable year to make an addition modification  under
15             subparagraph  (D-5),  then  an  amount  equal to the
16             aggregate amount of  the  deductions  taken  in  all
17             taxable years under subparagraph (O) with respect to
18             that property.;
19                  The  taxpayer  is required to make the addition
20             modification under this subparagraph only once  with
21             respect to any one piece of property;
22        and by deducting from the total so obtained the following
23        amounts:
24                  (E)  The valuation limitation amount;
25                  (F)  An  amount  equal to the amount of any tax
26             imposed by  this  Act  which  was  refunded  to  the
27             taxpayer  and included in such total for the taxable
28             year;
29                  (G)  An amount equal to all amounts included in
30             taxable income as  modified  by  subparagraphs  (A),
31             (B),  (C)  and (D) which are exempt from taxation by
32             this State either  by  reason  of  its  statutes  or
33             Constitution  or  by  reason  of  the  Constitution,
34             treaties  or statutes of the United States; provided
 
                            -29-     LRB093 05275 NHT 05365 b
 1             that, in the case of any statute of this State  that
 2             exempts   income   derived   from   bonds  or  other
 3             obligations from the tax imposed under this Act, the
 4             amount exempted shall be the interest  net  of  bond
 5             premium amortization;
 6                  (H)  Any   income   of  the  partnership  which
 7             constitutes personal service income  as  defined  in
 8             Section  1348  (b)  (1) of the Internal Revenue Code
 9             (as in effect December 31,  1981)  or  a  reasonable
10             allowance  for  compensation  paid  or  accrued  for
11             services  rendered  by  partners to the partnership,
12             whichever is greater;
13                  (I)  An amount equal to all amounts  of  income
14             distributable  to  an entity subject to the Personal
15             Property  Tax  Replacement  Income  Tax  imposed  by
16             subsections (c) and (d) of Section 201 of  this  Act
17             including  amounts  distributable  to  organizations
18             exempt  from federal income tax by reason of Section
19             501(a) of the Internal Revenue Code;
20                  (J)  With  the   exception   of   any   amounts
21             subtracted  under  subparagraph (G), an amount equal
22             to the sum of all amounts disallowed  as  deductions
23             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
24             Internal Revenue Code of 1954, as now  or  hereafter
25             amended,  and  all  amounts of expenses allocable to
26             interest and disallowed  as  deductions  by  Section
27             265(1)  of  the  Internal  Revenue  Code,  as now or
28             hereafter amended; and (ii) for taxable years ending
29             on or after August  13,  1999,  Sections  171(a)(2),
30             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
31             Revenue  Code;  the  provisions of this subparagraph
32             are exempt from the provisions of Section 250;
33                  (K)  An  amount  equal   to   those   dividends
34             included   in  such  total  which  were  paid  by  a
 
                            -30-     LRB093 05275 NHT 05365 b
 1             corporation which conducts business operations in an
 2             Enterprise Zone or zones created under the  Illinois
 3             Enterprise  Zone  Act,  enacted  by the 82nd General
 4             Assembly, and  conducts  substantially  all  of  its
 5             operations in an Enterprise Zone or Zones;
 6                  (L)  An  amount  equal to any contribution made
 7             to a job training project  established  pursuant  to
 8             the   Real   Property   Tax   Increment   Allocation
 9             Redevelopment Act;
10                  (M)  An   amount   equal   to  those  dividends
11             included  in  such  total  that  were  paid   by   a
12             corporation  that  conducts business operations in a
13             federally designated Foreign Trade Zone or  Sub-Zone
14             and  that  is  designated  a  High  Impact  Business
15             located   in   Illinois;   provided  that  dividends
16             eligible for the deduction provided in  subparagraph
17             (K) of paragraph (2) of this subsection shall not be
18             eligible  for  the  deduction  provided  under  this
19             subparagraph (M);
20                  (N)  An  amount  equal  to  the  amount  of the
21             deduction used to compute  the  federal  income  tax
22             credit  for  restoration of substantial amounts held
23             under claim of right for the taxable  year  pursuant
24             to  Section  1341  of  the  Internal Revenue Code of
25             1986;
26                  (O)  For taxable years 2001 and thereafter, for
27             the taxable year in  which  the  bonus  depreciation
28             deduction   (30%   of  the  adjusted  basis  of  the
29             qualified  property)  is  taken  on  the  taxpayer's
30             federal income tax return under  subsection  (k)  of
31             Section  168  of  the  Internal Revenue Code and for
32             each applicable taxable year thereafter,  an  amount
33             equal to "x", where:
34                       (1)  "y"   equals   the   amount   of  the
 
                            -31-     LRB093 05275 NHT 05365 b
 1                  depreciation deduction taken  for  the  taxable
 2                  year  on  the  taxpayer's  federal  income  tax
 3                  return   on   property   for  which  the  bonus
 4                  depreciation deduction  (30%  of  the  adjusted
 5                  basis  of  the qualified property) was taken in
 6                  any year under subsection (k) of Section 168 of
 7                  the Internal Revenue Code,  but  not  including
 8                  the bonus depreciation deduction; and
 9                       (2)  "x"  equals  "y" multiplied by 30 and
10                  then  divided  by  70  (or  "y"  multiplied  by
11                  0.429).
12                  The  aggregate  amount  deducted   under   this
13             subparagraph  in all taxable years for any one piece
14             of property may not exceed the amount of  the  bonus
15             depreciation deduction (30% of the adjusted basis of
16             the  qualified  property)  taken on that property on
17             the  taxpayer's  federal  income  tax  return  under
18             subsection  (k)  of  Section  168  of  the  Internal
19             Revenue Code; and
20                  (P)  If the taxpayer reports a capital gain  or
21             loss on the taxpayer's federal income tax return for
22             the  taxable  year  based  on  a sale or transfer of
23             property for which the taxpayer was required in  any
24             taxable  year to make an addition modification under
25             subparagraph (D-5), then an  amount  equal  to  that
26             addition modification.
27                  The  taxpayer  is allowed to take the deduction
28             under this subparagraph only once  with  respect  to
29             any one piece of property.

30        (e)  Gross income; adjusted gross income; taxable income.
31             (1)  In  general.   Subject  to  the  provisions  of
32        paragraph  (2)  and  subsection  (b) (3), for purposes of
33        this Section  and  Section  803(e),  a  taxpayer's  gross
34        income,  adjusted gross income, or taxable income for the
 
                            -32-     LRB093 05275 NHT 05365 b
 1        taxable year shall  mean  the  amount  of  gross  income,
 2        adjusted   gross   income   or  taxable  income  properly
 3        reportable  for  federal  income  tax  purposes  for  the
 4        taxable year under the provisions of the Internal Revenue
 5        Code. Taxable income may be less than zero. However,  for
 6        taxable  years  ending on or after December 31, 1986, net
 7        operating loss carryforwards from  taxable  years  ending
 8        prior  to  December  31,  1986, may not exceed the sum of
 9        federal taxable income for the taxable  year  before  net
10        operating  loss  deduction,  plus  the excess of addition
11        modifications  over  subtraction  modifications  for  the
12        taxable year.  For taxable years ending prior to December
13        31, 1986, taxable income may never be an amount in excess
14        of the net operating loss for the taxable year as defined
15        in subsections (c) and (d) of Section 172 of the Internal
16        Revenue Code, provided that  when  taxable  income  of  a
17        corporation  (other  than  a  Subchapter  S corporation),
18        trust,  or  estate  is  less  than  zero   and   addition
19        modifications,  other than those provided by subparagraph
20        (E) of paragraph (2) of subsection (b)  for  corporations
21        or  subparagraph  (E)  of paragraph (2) of subsection (c)
22        for trusts and estates, exceed subtraction modifications,
23        an  addition  modification  must  be  made  under   those
24        subparagraphs  for  any  other  taxable year to which the
25        taxable income less than zero  (net  operating  loss)  is
26        applied under Section 172 of the Internal Revenue Code or
27        under   subparagraph   (E)   of  paragraph  (2)  of  this
28        subsection (e) applied in conjunction with Section 172 of
29        the Internal Revenue Code.
30             (2)  Special rule.  For purposes of paragraph (1) of
31        this subsection, the taxable income  properly  reportable
32        for federal income tax purposes shall mean:
33                  (A)  Certain  life insurance companies.  In the
34             case of a life insurance company subject to the  tax
 
                            -33-     LRB093 05275 NHT 05365 b
 1             imposed by Section 801 of the Internal Revenue Code,
 2             life  insurance  company  taxable  income,  plus the
 3             amount of distribution  from  pre-1984  policyholder
 4             surplus accounts as calculated under Section 815a of
 5             the Internal Revenue Code;
 6                  (B)  Certain other insurance companies.  In the
 7             case  of  mutual  insurance companies subject to the
 8             tax imposed by Section 831 of the  Internal  Revenue
 9             Code, insurance company taxable income;
10                  (C)  Regulated  investment  companies.   In the
11             case of a regulated investment  company  subject  to
12             the  tax  imposed  by  Section  852  of the Internal
13             Revenue Code, investment company taxable income;
14                  (D)  Real estate  investment  trusts.   In  the
15             case  of  a  real estate investment trust subject to
16             the tax imposed  by  Section  857  of  the  Internal
17             Revenue  Code,  real estate investment trust taxable
18             income;
19                  (E)  Consolidated corporations.  In the case of
20             a corporation which is a  member  of  an  affiliated
21             group  of  corporations filing a consolidated income
22             tax return for the taxable year for  federal  income
23             tax  purposes,  taxable income determined as if such
24             corporation had filed a separate return for  federal
25             income  tax  purposes  for the taxable year and each
26             preceding taxable year for which it was a member  of
27             an   affiliated   group.   For   purposes   of  this
28             subparagraph, the taxpayer's separate taxable income
29             shall be determined as if the election  provided  by
30             Section  243(b) (2) of the Internal Revenue Code had
31             been in effect for all such years;
32                  (F)  Cooperatives.    In   the   case   of    a
33             cooperative  corporation or association, the taxable
34             income of such organization determined in accordance
 
                            -34-     LRB093 05275 NHT 05365 b
 1             with the provisions of Section 1381 through 1388  of
 2             the Internal Revenue Code;
 3                  (G)  Subchapter  S  corporations.   In the case
 4             of: (i) a Subchapter S corporation for  which  there
 5             is  in effect an election for the taxable year under
 6             Section 1362  of  the  Internal  Revenue  Code,  the
 7             taxable  income  of  such  corporation determined in
 8             accordance with  Section  1363(b)  of  the  Internal
 9             Revenue  Code, except that taxable income shall take
10             into account  those  items  which  are  required  by
11             Section  1363(b)(1)  of the Internal Revenue Code to
12             be  separately  stated;  and  (ii)  a  Subchapter  S
13             corporation for which there is in effect  a  federal
14             election  to  opt  out  of  the  provisions  of  the
15             Subchapter  S  Revision Act of 1982 and have applied
16             instead the prior federal Subchapter S rules  as  in
17             effect  on  July 1, 1982, the taxable income of such
18             corporation  determined  in  accordance   with   the
19             federal  Subchapter  S rules as in effect on July 1,
20             1982; and
21                  (H)  Partnerships.    In   the   case   of    a
22             partnership, taxable income determined in accordance
23             with  Section  703  of  the  Internal  Revenue Code,
24             except that taxable income shall take  into  account
25             those  items which are required by Section 703(a)(1)
26             to be separately stated but  which  would  be  taken
27             into  account  by  an  individual in calculating his
28             taxable income.

29        (f)  Valuation limitation amount.
30             (1)  In general.  The  valuation  limitation  amount
31        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
32        (d)(2) (E) is an amount equal to:
33                  (A)  The  sum  of  the   pre-August   1,   1969
34             appreciation  amounts  (to  the extent consisting of
 
                            -35-     LRB093 05275 NHT 05365 b
 1             gain reportable under the provisions of Section 1245
 2             or 1250  of  the  Internal  Revenue  Code)  for  all
 3             property  in respect of which such gain was reported
 4             for the taxable year; plus
 5                  (B)  The  lesser  of  (i)  the   sum   of   the
 6             pre-August  1,  1969  appreciation  amounts  (to the
 7             extent consisting of capital gain) for all  property
 8             in  respect  of  which  such  gain  was reported for
 9             federal income tax purposes for the taxable year, or
10             (ii) the net capital  gain  for  the  taxable  year,
11             reduced  in  either  case by any amount of such gain
12             included in the amount determined  under  subsection
13             (a) (2) (F) or (c) (2) (H).
14             (2)  Pre-August 1, 1969 appreciation amount.
15                  (A)  If  the  fair  market  value  of  property
16             referred   to   in   paragraph   (1)   was   readily
17             ascertainable  on  August 1, 1969, the pre-August 1,
18             1969 appreciation amount for such  property  is  the
19             lesser  of  (i) the excess of such fair market value
20             over the taxpayer's basis (for determining gain) for
21             such property on that  date  (determined  under  the
22             Internal Revenue Code as in effect on that date), or
23             (ii)  the  total  gain  realized  and reportable for
24             federal income tax purposes in respect of the  sale,
25             exchange or other disposition of such property.
26                  (B)  If  the  fair  market  value  of  property
27             referred   to  in  paragraph  (1)  was  not  readily
28             ascertainable on August 1, 1969, the  pre-August  1,
29             1969  appreciation  amount for such property is that
30             amount which bears the same ratio to the total  gain
31             reported  in  respect  of  the  property for federal
32             income tax purposes for the  taxable  year,  as  the
33             number  of  full calendar months in that part of the
34             taxpayer's holding period for  the  property  ending
 
                            -36-     LRB093 05275 NHT 05365 b
 1             July  31,  1969 bears to the number of full calendar
 2             months in the taxpayer's entire holding  period  for
 3             the property.
 4                  (C)  The   Department   shall   prescribe  such
 5             regulations as may be necessary  to  carry  out  the
 6             purposes of this paragraph.

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

10        (h)  Legislative intention.  Except as expressly provided
11    by   this   Section   there  shall  be  no  modifications  or
12    limitations on the amounts of income, gain, loss or deduction
13    taken into account  in  determining  gross  income,  adjusted
14    gross  income  or  taxable  income  for  federal  income  tax
15    purposes for the taxable year, or in the amount of such items
16    entering  into  the computation of base income and net income
17    under this Act for such taxable year, whether in  respect  of
18    property values as of August 1, 1969 or otherwise.
19    (Source:  P.A.  91-192,  eff.  7-20-99; 91-205, eff. 7-20-99;
20    91-357, eff. 7-29-99;  91-541,  eff.  8-13-99;  91-676,  eff.
21    12-23-99;  91-845,  eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
22    eff. 6-28-01; 92-244,  eff.  8-3-01;  92-439,  eff.  8-17-01;
23    92-603,  eff.  6-28-02;  92-626,  eff.  7-11-02; 92-651, eff.
24    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)

25        Section 10.  The Higher Education Student Assistance  Act
26    is amended by changing Section 65.25 as follows:

27        (110 ILCS 947/65.25)
28        Sec.   65.25.    Teacher   shortage   scholarships;  loan
29    forgiveness.
30        (a)  The  Commission  may  annually  award  a  number  of
31    scholarships to  persons  preparing  to  teach  in  areas  of
 
                            -37-     LRB093 05275 NHT 05365 b
 1    identified  staff  shortages.   Such  scholarships  shall  be
 2    issued  to individuals who make application to the Commission
 3    and who agree to take courses at  qualified  institutions  of
 4    higher  learning which will prepare them to teach in areas of
 5    identified staff shortages.
 6        (b)  Scholarships awarded under  this  Section  shall  be
 7    issued pursuant to regulations promulgated by the Commission;
 8    provided  that no rule or regulation promulgated by the State
 9    Board of Education  prior  to  the  effective  date  of  this
10    amendatory Act of 1993 pursuant to the exercise of any right,
11    power,  duty,  responsibility  or  matter of pending business
12    transferred  from  the  State  Board  of  Education  to   the
13    Commission  under this Section shall be affected thereby, and
14    all such rules and regulations shall  become  the  rules  and
15    regulations  of  the  Commission until modified or changed by
16    the Commission in accordance with law.  The Commission  shall
17    allocate  the  scholarships awarded between persons initially
18    preparing  to   teach,   persons   holding   valid   teaching
19    certificates  issued  under  Articles 21 and 34 of the School
20    Code, and  persons  holding  a  bachelor's  degree  from  any
21    accredited college or university who have been employed for a
22    minimum of 10 years in a field other than teaching.
23        (c)  Each scholarship shall be utilized by its holder for
24    the  payment  of  tuition  and  non-revenue  bond fees at any
25    qualified institution of higher learning.  Such  tuition  and
26    fees shall be available only for courses that will enable the
27    individual  to  be  certified to teach in areas of identified
28    staff  shortages.   The  Commission  shall  determine   which
29    courses are eligible for tuition payments under this Section.
30        (d)  The Commission may make tuition payments directly to
31    the  qualified  institution  of  higher  learning  which  the
32    individual  attends  for  the  courses prescribed or may make
33    payments to the teacher.  Any teacher who  received  payments
34    and  who  fails  to  enroll  in  the courses prescribed shall
 
                            -38-     LRB093 05275 NHT 05365 b
 1    refund the payments to the Commission.
 2        (e)  Following the completion of the  program  of  study,
 3    persons  who  held  valid  teaching  certificates and persons
 4    holding a bachelor's degree from any  accredited  college  or
 5    university  who  have been employed for a minimum of 10 years
 6    in a field other than teaching prior to receiving  a  teacher
 7    shortage scholarship must accept employment within 2 years in
 8    a  school  in  Illinois  within  60  miles  of  the  person's
 9    residence  to  teach  in an area of identified staff shortage
10    for a period of at least 3 years; provided, however that  any
11    such  person  instead  may  elect to accept employment within
12    such 2 year period to teach in an area  of  identified  staff
13    shortage  for  a  period  of  at least 3 years in a school in
14    Illinois which is more  than  60  miles  from  such  person's
15    residence.  Persons  initially  preparing  to  teach prior to
16    receiving  a  teacher  shortage   scholarship   must   accept
17    employment within 2 years in a school in Illinois to teach in
18    an area of identified staff shortage for a period of at least
19    3  years.  Individuals who fail to comply with this provision
20    shall  refund  all  of  the  scholarships  awarded   to   the
21    Commission,  whether  payments  were  made  directly  to  the
22    institutions  of  higher  learning or to the individuals, and
23    this  condition  shall  be  agreed  to  in  writing  by   all
24    scholarship   recipients  at  the  time  the  scholarship  is
25    awarded.  No individual shall be required to  refund  tuition
26    payments  if  his  or  her  failure to obtain employment as a
27    teacher in a school is the  result  of  financial  conditions
28    within   school   districts.    The   rules  and  regulations
29    promulgated  as  provided  in  this  Section  shall   contain
30    provisions   regarding  the  waiving  and  deferral  of  such
31    payments.
32        (f)  The Commission, with the cooperation  of  the  State
33    Board   of  Education,  shall  assist  individuals  who  have
34    participated in the scholarship program established  by  this
 
                            -39-     LRB093 05275 NHT 05365 b
 1    Section  in  finding  employment in areas of identified staff
 2    shortages.
 3        (g)  Beginning   in   September,   1994   and    annually
 4    thereafter,  the  Commission, using data annually supplied by
 5    the State Board of Education under procedures developed by it
 6    to measure the  level  of  shortage  of  qualified  bilingual
 7    personnel  serving students with disabilities, shall annually
 8    publish (i) the level  of  shortage  of  qualified  bilingual
 9    personnel   serving  students  with  disabilities,  and  (ii)
10    allocations  of  scholarships   for   personnel   preparation
11    training programs in the areas of bilingual special education
12    teacher training and bilingual school service personnel.
13        (h)  Appropriations for the scholarships outlined in this
14    Section   shall   be   made  to  the  Commission  from  funds
15    appropriated by the General Assembly.  The  Commission  shall
16    request  an  appropriation  each year to sufficiently fund at
17    least 25 scholarships.
18        (i)  This Section is substantially the  same  as  Section
19    30-4c  of  the School Code, which Section is repealed by this
20    amendatory  Act  of  1993,  and  shall  be  construed  as   a
21    continuation  of  the  teacher  shortage  scholarship program
22    established under that  prior  law,  and  not  as  a  new  or
23    different  teacher  shortage  scholarship program.  The State
24    Board of Education shall transfer to the Commission,  as  the
25    successor to the State Board of Education for all purposes of
26    administering    and  implementing  the  provisions  of  this
27    Section,  all  books,  accounts,  records, papers, documents,
28    contracts,  agreements,  and  pending  business  in  any  way
29    relating  to  the  teacher   shortage   scholarship   program
30    continued  under  this  Section;  and all scholarships at any
31    time awarded under that program by, and all applications  for
32    any such scholarships at any time made to, the State Board of
33    Education   shall  be  unaffected  by  the  transfer  to  the
34    Commission of all responsibility for the  administration  and
 
                            -40-     LRB093 05275 NHT 05365 b
 1    implementation  of  the  teacher shortage scholarship program
 2    continued under this Section.  The State Board  of  Education
 3    shall furnish to the Commission such other information as the
 4    Commission  may  request  to  assist it in administering this
 5    Section.
 6        (i-5)  The Commission shall establish a loan  forgiveness
 7    program in which 15% of a person's student loans are forgiven
 8    by  teaching  in  a public school in this State in an area of
 9    identified staff shortage for a period of one year,  with  an
10    additional  5%  in loan forgiveness for each year thereafter.
11    However, the maximum rate  of  loan  forgiveness  per  person
12    under this program may not exceed 30%.
13        (j)  For the purposes of this Section:
14        "Qualified  institution  of  higher  learning"  means the
15    University of Illinois, Southern Illinois University, Chicago
16    State  University,  Eastern  Illinois  University,  Governors
17    State University,  Illinois  State  University,  Northeastern
18    Illinois  University,  Northern  Illinois University, Western
19    Illinois University, the public community colleges subject to
20    the Public Community College Act and any  Illinois  privately
21    operated  college,  community  college or university offering
22    degrees and instructional  programs  above  the  high  school
23    level either in residence or by correspondence.  The Board of
24    Higher Education and the Commission, in consultation with the
25    State   Board   of   Education,   shall   identify  qualified
26    institutions to  supply  the  demand  for  bilingual  special
27    education teachers and bilingual school service personnel.
28        "Areas  of  identified  staff shortages" means courses of
29    study in which the number of teachers is insufficient to meet
30    student or school district demand  for  such  instruction  as
31    determined by the State Board of Education.
32    (Source: P.A. 88-228; 89-4, eff. 1-1-96.)

33        Section  99.   Effective  date.  This Act takes effect on
 
                            -41-     LRB093 05275 NHT 05365 b
 1    July 1, 2003.