093_HB3454

 
                                     LRB093 05097 SJM 05157 b

 1        AN ACT concerning taxes.

 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 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 05097 SJM 05157 b
 1             addition modification.
 2                  The  taxpayer  is allowed to take the deduction
 3             under this subparagraph only once  with  respect  to
 4             any one piece of property; and
 5                  (BB) (Z)  Any amount included in adjusted gross
 6             income, other than salary, received by a driver in a
 7             ridesharing arrangement using a motor vehicle  ; and
 8                  (CC)  For  taxable  years  ending  on  or after
 9             December 31, 2003, any amount included  in  adjusted
10             gross  income  received  by  a teacher for work at a
11             qualifying   school.   For    purposes    of    this
12             subparagraph,  "teacher"  means a person employed in
13             an instructional position at a qualifying school and
14             "qualifying school" means  either  (i)  a  nonprofit
15             elementary  or  secondary  school in Illinois, other
16             than a public school, that  is  in  compliance  with
17             Title  VI  of  the  Civil  Rights  Act  of  1964 and
18             attendance at which satisfies  the  requirements  of
19             Section  26-1  of  the  School Code or (ii) a public
20             elementary or secondary school. This subparagraph is
21             exempt from the provisions of Section 250.

22        (b)  Corporations.
23             (1)  In general.  In the case of a corporation, base
24        income means an amount equal to  the  taxpayer's  taxable
25        income for the taxable year as modified by paragraph (2).
26             (2)  Modifications.   The taxable income referred to
27        in paragraph (1) shall be modified by adding thereto  the
28        sum of the following amounts:
29                  (A)  An  amount  equal  to  all amounts paid or
30             accrued  to  the  taxpayer  as  interest   and   all
31             distributions  received  from  regulated  investment
32             companies  during  the  taxable  year  to the extent
33             excluded from gross income  in  the  computation  of
34             taxable income;
 
                            -12-     LRB093 05097 SJM 05157 b
 1                  (B)  An  amount  equal  to  the  amount  of tax
 2             imposed by this Act  to  the  extent  deducted  from
 3             gross  income  in  the computation of taxable income
 4             for the taxable year;
 5                  (C)  In the  case  of  a  regulated  investment
 6             company,  an  amount  equal to the excess of (i) the
 7             net long-term capital gain  for  the  taxable  year,
 8             over  (ii)  the amount of the capital gain dividends
 9             designated  as  such  in  accordance  with   Section
10             852(b)(3)(C)  of  the  Internal Revenue Code and any
11             amount designated under Section 852(b)(3)(D) of  the
12             Internal  Revenue  Code, attributable to the taxable
13             year (this amendatory Act of 1995 (Public Act 89-89)
14             is declarative of existing law  and  is  not  a  new
15             enactment);
16                  (D)  The  amount  of  any  net  operating  loss
17             deduction taken in arriving at taxable income, other
18             than  a  net  operating  loss carried forward from a
19             taxable year ending prior to December 31, 1986;
20                  (E)  For taxable years in which a net operating
21             loss carryback or carryforward from a  taxable  year
22             ending  prior  to December 31, 1986 is an element of
23             taxable income under paragraph (1) of subsection (e)
24             or subparagraph (E) of paragraph (2)  of  subsection
25             (e),  the  amount  by  which  addition modifications
26             other than those provided by this  subparagraph  (E)
27             exceeded  subtraction  modifications in such earlier
28             taxable year, with the following limitations applied
29             in the order that they are listed:
30                       (i)  the addition modification relating to
31                  the net operating loss carried back or  forward
32                  to  the  taxable  year  from  any  taxable year
33                  ending prior to  December  31,  1986  shall  be
34                  reduced  by the amount of addition modification
 
                            -13-     LRB093 05097 SJM 05157 b
 1                  under this subparagraph (E)  which  related  to
 2                  that  net  operating  loss  and which was taken
 3                  into account in calculating the base income  of
 4                  an earlier taxable year, and
 5                       (ii)  the  addition  modification relating
 6                  to the  net  operating  loss  carried  back  or
 7                  forward  to  the  taxable year from any taxable
 8                  year ending prior to December  31,  1986  shall
 9                  not  exceed  the  amount  of  such carryback or
10                  carryforward;
11                  For taxable years  in  which  there  is  a  net
12             operating  loss  carryback or carryforward from more
13             than one other taxable year ending prior to December
14             31, 1986, the addition modification provided in this
15             subparagraph (E) shall be the  sum  of  the  amounts
16             computed    independently    under   the   preceding
17             provisions of this subparagraph (E)  for  each  such
18             taxable year;
19                  (E-5)  For  taxable years ending after December
20             31,  1997,  an  amount   equal   to   any   eligible
21             remediation  costs  that the corporation deducted in
22             computing adjusted gross income and  for  which  the
23             corporation  claims a credit under subsection (l) of
24             Section 201;
25                  (E-10)  For taxable years 2001 and  thereafter,
26             an  amount equal to the bonus depreciation deduction
27             (30%  of  the  adjusted  basis  of   the   qualified
28             property) taken on the taxpayer's federal income tax
29             return  for the taxable year under subsection (k) of
30             Section 168 of the Internal Revenue Code; and
31                  (E-11)  If the taxpayer reports a capital  gain
32             or  loss on the taxpayer's federal income tax return
33             for the taxable year based on a sale or transfer  of
34             property  for which the taxpayer was required in any
 
                            -14-     LRB093 05097 SJM 05157 b
 1             taxable year to make an addition modification  under
 2             subparagraph  (E-10),  then  an  amount equal to the
 3             aggregate amount of  the  deductions  taken  in  all
 4             taxable years under subparagraph (T) with respect to
 5             that property.;
 6                  The  taxpayer  is required to make the addition
 7             modification under this subparagraph only once  with
 8             respect to any one piece of property;
 9        and  by  deducting  from the total so obtained the sum of
10        the following amounts:
11                  (F)  An amount equal to the amount of  any  tax
12             imposed  by  this  Act  which  was  refunded  to the
13             taxpayer and included in such total for the  taxable
14             year;
15                  (G)  An  amount equal to any amount included in
16             such total under Section 78 of the Internal  Revenue
17             Code;
18                  (H)  In  the  case  of  a  regulated investment
19             company, an amount equal to  the  amount  of  exempt
20             interest  dividends as defined in subsection (b) (5)
21             of Section 852 of the Internal Revenue Code, paid to
22             shareholders for the taxable year;
23                  (I)  With  the   exception   of   any   amounts
24             subtracted  under  subparagraph (J), an amount equal
25             to the sum of all amounts disallowed  as  deductions
26             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
27             amounts  disallowed  as  interest expense by Section
28             291(a)(3) of the Internal Revenue Code,  as  now  or
29             hereafter  amended,  and  all  amounts  of  expenses
30             allocable  to  interest and disallowed as deductions
31             by Section 265(a)(1) of the Internal  Revenue  Code,
32             as  now  or  hereafter amended; and (ii) for taxable
33             years ending on or after August 13,  1999,  Sections
34             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
 
                            -15-     LRB093 05097 SJM 05157 b
 1             of the Internal Revenue Code; the provisions of this
 2             subparagraph  are  exempt  from  the  provisions  of
 3             Section 250;
 4                  (J)  An amount equal to all amounts included in
 5             such  total  which  are exempt from taxation by this
 6             State  either  by  reason   of   its   statutes   or
 7             Constitution  or  by  reason  of  the  Constitution,
 8             treaties  or statutes of the United States; provided
 9             that, in the case of any statute of this State  that
10             exempts   income   derived   from   bonds  or  other
11             obligations from the tax imposed under this Act, the
12             amount exempted shall be the interest  net  of  bond
13             premium amortization;
14                  (K)  An   amount   equal   to  those  dividends
15             included  in  such  total  which  were  paid  by   a
16             corporation which conducts business operations in an
17             Enterprise  Zone or zones created under the Illinois
18             Enterprise Zone Act and conducts  substantially  all
19             of its operations in an Enterprise Zone or zones;
20                  (L)  An   amount   equal   to  those  dividends
21             included  in  such  total  that  were  paid   by   a
22             corporation  that  conducts business operations in a
23             federally designated Foreign Trade Zone or  Sub-Zone
24             and  that  is  designated  a  High  Impact  Business
25             located   in   Illinois;   provided  that  dividends
26             eligible for the deduction provided in  subparagraph
27             (K)  of  paragraph 2 of this subsection shall not be
28             eligible  for  the  deduction  provided  under  this
29             subparagraph (L);
30                  (M)  For  any  taxpayer  that  is  a  financial
31             organization within the meaning of Section 304(c) of
32             this Act,  an  amount  included  in  such  total  as
33             interest  income  from  a loan or loans made by such
34             taxpayer to a borrower, to the extent  that  such  a
 
                            -16-     LRB093 05097 SJM 05157 b
 1             loan  is  secured  by property which is eligible for
 2             the Enterprise Zone Investment Credit.  To determine
 3             the portion of a loan or loans that  is  secured  by
 4             property  eligible  for  a Section 201(f) investment
 5             credit to the borrower, the entire principal  amount
 6             of  the  loan  or loans between the taxpayer and the
 7             borrower should be divided into  the  basis  of  the
 8             Section  201(f)  investment  credit  property  which
 9             secures  the  loan  or loans, using for this purpose
10             the original basis of such property on the date that
11             it was placed in service  in  the  Enterprise  Zone.
12             The  subtraction  modification available to taxpayer
13             in any year under  this  subsection  shall  be  that
14             portion  of  the total interest paid by the borrower
15             with  respect  to  such  loan  attributable  to  the
16             eligible property as calculated under  the  previous
17             sentence;
18                  (M-1)  For  any  taxpayer  that  is a financial
19             organization within the meaning of Section 304(c) of
20             this Act,  an  amount  included  in  such  total  as
21             interest  income  from  a loan or loans made by such
22             taxpayer to a borrower, to the extent  that  such  a
23             loan  is  secured  by property which is eligible for
24             the High  Impact  Business  Investment  Credit.   To
25             determine  the  portion  of  a loan or loans that is
26             secured by property eligible for  a  Section  201(h)
27             investment   credit  to  the  borrower,  the  entire
28             principal amount of the loan or  loans  between  the
29             taxpayer and the borrower should be divided into the
30             basis   of  the  Section  201(h)  investment  credit
31             property which secures the loan or loans, using  for
32             this  purpose the original basis of such property on
33             the  date  that  it  was  placed  in  service  in  a
34             federally designated Foreign Trade Zone or  Sub-Zone
 
                            -17-     LRB093 05097 SJM 05157 b
 1             located  in  Illinois.  No taxpayer that is eligible
 2             for the deduction provided in  subparagraph  (M)  of
 3             paragraph  (2)  of this subsection shall be eligible
 4             for the deduction provided under  this  subparagraph
 5             (M-1).   The  subtraction  modification available to
 6             taxpayers in any year under this subsection shall be
 7             that portion of  the  total  interest  paid  by  the
 8             borrower  with  respect to such loan attributable to
 9             the  eligible  property  as  calculated  under   the
10             previous sentence;
11                  (N)  Two times any contribution made during the
12             taxable  year  to  a designated zone organization to
13             the extent that the contribution (i) qualifies as  a
14             charitable  contribution  under  subsection  (c)  of
15             Section  170  of  the Internal Revenue Code and (ii)
16             must, by its terms, be used for a  project  approved
17             by  the Department of Commerce and Community Affairs
18             under Section 11 of  the  Illinois  Enterprise  Zone
19             Act;
20                  (O)  An  amount  equal  to: (i) 85% for taxable
21             years ending on or before December 31, 1992,  or,  a
22             percentage  equal  to the percentage allowable under
23             Section 243(a)(1) of the Internal  Revenue  Code  of
24             1986  for  taxable  years  ending after December 31,
25             1992, of the amount by which dividends  included  in
26             taxable  income and received from a corporation that
27             is not created or organized under the  laws  of  the
28             United  States or any state or political subdivision
29             thereof, including, for taxable years ending  on  or
30             after  December  31,  1988,  dividends  received  or
31             deemed   received  or  paid  or  deemed  paid  under
32             Sections 951 through 964  of  the  Internal  Revenue
33             Code, exceed the amount of the modification provided
34             under  subparagraph  (G)  of  paragraph  (2) of this
 
                            -18-     LRB093 05097 SJM 05157 b
 1             subsection (b) which is related to  such  dividends;
 2             plus  (ii)  100%  of  the amount by which dividends,
 3             included in taxable income and received,  including,
 4             for  taxable  years  ending on or after December 31,
 5             1988, dividends received or deemed received or  paid
 6             or deemed paid under Sections 951 through 964 of the
 7             Internal  Revenue  Code,  from  any such corporation
 8             specified in clause  (i)  that  would  but  for  the
 9             provisions  of  Section 1504 (b) (3) of the Internal
10             Revenue  Code  be  treated  as  a  member   of   the
11             affiliated   group   which   includes  the  dividend
12             recipient, exceed the  amount  of  the  modification
13             provided  under subparagraph (G) of paragraph (2) of
14             this  subsection  (b)  which  is  related  to   such
15             dividends;
16                  (P)  An  amount  equal to any contribution made
17             to a job training project  established  pursuant  to
18             the Tax Increment Allocation Redevelopment Act;
19                  (Q)  An  amount  equal  to  the  amount  of the
20             deduction used to compute  the  federal  income  tax
21             credit  for  restoration of substantial amounts held
22             under claim of right for the taxable  year  pursuant
23             to  Section  1341  of  the  Internal Revenue Code of
24             1986;
25                  (R)  In the case of  an  attorney-in-fact  with
26             respect  to  whom  an  interinsurer  or a reciprocal
27             insurer has made the election under Section  835  of
28             the  Internal Revenue Code, 26 U.S.C. 835, an amount
29             equal to the excess, if any, of the amounts paid  or
30             incurred  by that interinsurer or reciprocal insurer
31             in the taxable year to the attorney-in-fact over the
32             deduction allowed to that interinsurer or reciprocal
33             insurer with respect to the  attorney-in-fact  under
34             Section  835(b) of the Internal Revenue Code for the
 
                            -19-     LRB093 05097 SJM 05157 b
 1             taxable year;
 2                  (S)  For  taxable  years  ending  on  or  after
 3             December 31, 1997, in the case  of  a  Subchapter  S
 4             corporation,  an  amount  equal  to  all  amounts of
 5             income allocable to a  shareholder  subject  to  the
 6             Personal Property Tax Replacement Income Tax imposed
 7             by  subsections  (c)  and (d) of Section 201 of this
 8             Act, including amounts  allocable  to  organizations
 9             exempt  from federal income tax by reason of Section
10             501(a)  of  the   Internal   Revenue   Code.    This
11             subparagraph  (S)  is  exempt from the provisions of
12             Section 250;
13                  (T)  For taxable years 2001 and thereafter, for
14             the taxable year in  which  the  bonus  depreciation
15             deduction   (30%   of  the  adjusted  basis  of  the
16             qualified  property)  is  taken  on  the  taxpayer's
17             federal income tax return under  subsection  (k)  of
18             Section  168  of  the  Internal Revenue Code and for
19             each applicable taxable year thereafter,  an  amount
20             equal to "x", where:
21                       (1)  "y"   equals   the   amount   of  the
22                  depreciation deduction taken  for  the  taxable
23                  year  on  the  taxpayer's  federal  income  tax
24                  return   on   property   for  which  the  bonus
25                  depreciation deduction  (30%  of  the  adjusted
26                  basis  of  the qualified property) was taken in
27                  any year under subsection (k) of Section 168 of
28                  the Internal Revenue Code,  but  not  including
29                  the bonus depreciation deduction; and
30                       (2)  "x"  equals  "y" multiplied by 30 and
31                  then  divided  by  70  (or  "y"  multiplied  by
32                  0.429).
33                  The  aggregate  amount  deducted   under   this
34             subparagraph  in all taxable years for any one piece
 
                            -20-     LRB093 05097 SJM 05157 b
 1             of property may not exceed the amount of  the  bonus
 2             depreciation deduction (30% of the adjusted basis of
 3             the  qualified  property)  taken on that property on
 4             the  taxpayer's  federal  income  tax  return  under
 5             subsection  (k)  of  Section  168  of  the  Internal
 6             Revenue Code; and
 7                  (U)  If the taxpayer reports a capital gain  or
 8             loss on the taxpayer's federal income tax return for
 9             the  taxable  year  based  on  a sale or transfer of
10             property for which the taxpayer was required in  any
11             taxable  year to make an addition modification under
12             subparagraph (E-10), then an amount  equal  to  that
13             addition modification.
14                  The  taxpayer  is allowed to take the deduction
15             under this subparagraph only once  with  respect  to
16             any one piece of property.
17             (3)  Special  rule.   For  purposes of paragraph (2)
18        (A), "gross income" in  the  case  of  a  life  insurance
19        company,  for  tax years ending on and after December 31,
20        1994, shall mean the  gross  investment  income  for  the
21        taxable year.

22        (c)  Trusts and estates.
23             (1)  In  general.  In the case of a trust or estate,
24        base income means  an  amount  equal  to  the  taxpayer's
25        taxable  income  for  the  taxable  year  as  modified by
26        paragraph (2).
27             (2)  Modifications.  Subject to  the  provisions  of
28        paragraph   (3),   the  taxable  income  referred  to  in
29        paragraph (1) shall be modified by adding thereto the sum
30        of the following amounts:
31                  (A)  An amount equal to  all  amounts  paid  or
32             accrued  to  the  taxpayer  as interest or dividends
33             during the taxable year to the extent excluded  from
34             gross income in the computation of taxable income;
 
                            -21-     LRB093 05097 SJM 05157 b
 1                  (B)  In the case of (i) an estate, $600; (ii) a
 2             trust  which,  under  its  governing  instrument, is
 3             required to distribute all of its income  currently,
 4             $300;  and  (iii) any other trust, $100, but in each
 5             such case,  only  to  the  extent  such  amount  was
 6             deducted in the computation of taxable income;
 7                  (C)  An  amount  equal  to  the  amount  of tax
 8             imposed by this Act  to  the  extent  deducted  from
 9             gross  income  in  the computation of taxable income
10             for the taxable year;
11                  (D)  The  amount  of  any  net  operating  loss
12             deduction taken in arriving at taxable income, other
13             than a net operating loss  carried  forward  from  a
14             taxable year ending prior to December 31, 1986;
15                  (E)  For taxable years in which a net operating
16             loss  carryback  or carryforward from a taxable year
17             ending prior to December 31, 1986 is an  element  of
18             taxable income under paragraph (1) of subsection (e)
19             or  subparagraph  (E) of paragraph (2) of subsection
20             (e), the  amount  by  which  addition  modifications
21             other  than  those provided by this subparagraph (E)
22             exceeded subtraction modifications in  such  taxable
23             year,  with the following limitations applied in the
24             order that they are listed:
25                       (i)  the addition modification relating to
26                  the net operating loss carried back or  forward
27                  to  the  taxable  year  from  any  taxable year
28                  ending prior to  December  31,  1986  shall  be
29                  reduced  by the amount of addition modification
30                  under this subparagraph (E)  which  related  to
31                  that  net  operating  loss  and which was taken
32                  into account in calculating the base income  of
33                  an earlier taxable year, and
34                       (ii)  the  addition  modification relating
 
                            -22-     LRB093 05097 SJM 05157 b
 1                  to the  net  operating  loss  carried  back  or
 2                  forward  to  the  taxable year from any taxable
 3                  year ending prior to December  31,  1986  shall
 4                  not  exceed  the  amount  of  such carryback or
 5                  carryforward;
 6                  For taxable years  in  which  there  is  a  net
 7             operating  loss  carryback or carryforward from more
 8             than one other taxable year ending prior to December
 9             31, 1986, the addition modification provided in this
10             subparagraph (E) shall be the  sum  of  the  amounts
11             computed    independently    under   the   preceding
12             provisions of this subparagraph (E)  for  each  such
13             taxable year;
14                  (F)  For  taxable  years  ending  on  or  after
15             January 1, 1989, an amount equal to the tax deducted
16             pursuant to Section 164 of the Internal Revenue Code
17             if  the trust or estate is claiming the same tax for
18             purposes of the Illinois foreign  tax  credit  under
19             Section 601 of this Act;
20                  (G)  An  amount  equal  to  the  amount  of the
21             capital gain deduction allowable under the  Internal
22             Revenue  Code,  to  the  extent  deducted from gross
23             income in the computation of taxable income;
24                  (G-5)  For taxable years ending after  December
25             31,   1997,   an   amount   equal  to  any  eligible
26             remediation costs that the trust or estate  deducted
27             in computing adjusted gross income and for which the
28             trust or estate claims a credit under subsection (l)
29             of Section 201;
30                  (G-10)  For  taxable years 2001 and thereafter,
31             an amount equal to the bonus depreciation  deduction
32             (30%   of   the  adjusted  basis  of  the  qualified
33             property) taken on the taxpayer's federal income tax
34             return for the taxable year under subsection (k)  of
 
                            -23-     LRB093 05097 SJM 05157 b
 1             Section 168 of the Internal Revenue Code; and
 2                  (G-11)  If  the taxpayer reports a capital gain
 3             or loss on the taxpayer's federal income tax  return
 4             for  the taxable year based on a sale or transfer of
 5             property for which the taxpayer was required in  any
 6             taxable  year to make an addition modification under
 7             subparagraph (G-10), then an  amount  equal  to  the
 8             aggregate  amount  of  the  deductions  taken in all
 9             taxable years under subparagraph (R) with respect to
10             that property.;
11                  The taxpayer is required to make  the  addition
12             modification  under this subparagraph only once with
13             respect to any one piece of property;
14        and by deducting from the total so obtained  the  sum  of
15        the following amounts:
16                  (H)  An amount equal to all amounts included in
17             such  total  pursuant  to the provisions of Sections
18             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
19             408 of the Internal Revenue Code or included in such
20             total  as  distributions under the provisions of any
21             retirement or disability plan for employees  of  any
22             governmental  agency or unit, or retirement payments
23             to retired partners, which payments are excluded  in
24             computing  net  earnings  from  self  employment  by
25             Section  1402  of  the  Internal  Revenue  Code  and
26             regulations adopted pursuant thereto;
27                  (I)  The valuation limitation amount;
28                  (J)  An  amount  equal to the amount of any tax
29             imposed by  this  Act  which  was  refunded  to  the
30             taxpayer  and included in such total for the taxable
31             year;
32                  (K)  An amount equal to all amounts included in
33             taxable income as  modified  by  subparagraphs  (A),
34             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
 
                            -24-     LRB093 05097 SJM 05157 b
 1             from taxation by this State either by reason of  its
 2             statutes   or  Constitution  or  by  reason  of  the
 3             Constitution, treaties or  statutes  of  the  United
 4             States; provided that, in the case of any statute of
 5             this State that exempts income derived from bonds or
 6             other  obligations  from  the tax imposed under this
 7             Act, the amount exempted shall be the  interest  net
 8             of bond premium amortization;
 9                  (L)  With   the   exception   of   any  amounts
10             subtracted under subparagraph (K), an  amount  equal
11             to  the  sum of all amounts disallowed as deductions
12             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
13             Internal  Revenue Code, as now or hereafter amended,
14             and all amounts of expenses  allocable  to  interest
15             and  disallowed  as  deductions by Section 265(1) of
16             the  Internal  Revenue  Code  of  1954,  as  now  or
17             hereafter amended; and (ii) for taxable years ending
18             on or after August  13,  1999,  Sections  171(a)(2),
19             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
20             Revenue  Code;  the  provisions of this subparagraph
21             are exempt from the provisions of Section 250;
22                  (M)  An  amount  equal   to   those   dividends
23             included   in  such  total  which  were  paid  by  a
24             corporation which conducts business operations in an
25             Enterprise Zone or zones created under the  Illinois
26             Enterprise  Zone  Act and conducts substantially all
27             of its operations in an Enterprise Zone or Zones;
28                  (N)  An amount equal to any  contribution  made
29             to  a  job  training project established pursuant to
30             the Tax Increment Allocation Redevelopment Act;
31                  (O)  An  amount  equal   to   those   dividends
32             included   in   such  total  that  were  paid  by  a
33             corporation that conducts business operations  in  a
34             federally  designated Foreign Trade Zone or Sub-Zone
 
                            -25-     LRB093 05097 SJM 05157 b
 1             and  that  is  designated  a  High  Impact  Business
 2             located  in  Illinois;   provided   that   dividends
 3             eligible  for the deduction provided in subparagraph
 4             (M) of paragraph (2) of this subsection shall not be
 5             eligible  for  the  deduction  provided  under  this
 6             subparagraph (O);
 7                  (P)  An amount  equal  to  the  amount  of  the
 8             deduction  used  to  compute  the federal income tax
 9             credit for restoration of substantial  amounts  held
10             under  claim  of right for the taxable year pursuant
11             to Section 1341 of  the  Internal  Revenue  Code  of
12             1986;
13                  (Q)  For  taxable  year 1999 and thereafter, an
14             amount equal to the amount of any (i) distributions,
15             to the extent includible in gross income for federal
16             income tax purposes, made to the taxpayer because of
17             his or her status as a  victim  of  persecution  for
18             racial  or  religious reasons by Nazi Germany or any
19             other Axis regime or as an heir of  the  victim  and
20             (ii)  items  of  income, to the extent includible in
21             gross  income  for  federal  income  tax   purposes,
22             attributable  to, derived from or in any way related
23             to assets stolen from,  hidden  from,  or  otherwise
24             lost  to  a  victim  of  persecution  for  racial or
25             religious reasons by Nazi Germany or any other  Axis
26             regime immediately prior to, during, and immediately
27             after  World  War II, including, but not limited to,
28             interest on the  proceeds  receivable  as  insurance
29             under policies issued to a victim of persecution for
30             racial  or  religious reasons by Nazi Germany or any
31             other Axis regime by  European  insurance  companies
32             immediately  prior  to  and  during  World  War  II;
33             provided,  however,  this  subtraction  from federal
34             adjusted gross  income  does  not  apply  to  assets
 
                            -26-     LRB093 05097 SJM 05157 b
 1             acquired  with such assets or with the proceeds from
 2             the sale of such  assets;  provided,  further,  this
 3             paragraph shall only apply to a taxpayer who was the
 4             first  recipient of such assets after their recovery
 5             and who is a victim of  persecution  for  racial  or
 6             religious  reasons by Nazi Germany or any other Axis
 7             regime or as an heir of the victim.  The  amount  of
 8             and  the  eligibility  for  any  public  assistance,
 9             benefit,  or  similar entitlement is not affected by
10             the  inclusion  of  items  (i)  and  (ii)  of   this
11             paragraph  in  gross  income  for federal income tax
12             purposes.  This  paragraph  is   exempt   from   the
13             provisions of Section 250;
14                  (R)  For taxable years 2001 and thereafter, for
15             the  taxable  year  in  which the bonus depreciation
16             deduction  (30%  of  the  adjusted  basis   of   the
17             qualified  property)  is  taken  on  the  taxpayer's
18             federal  income  tax  return under subsection (k) of
19             Section 168 of the Internal  Revenue  Code  and  for
20             each  applicable  taxable year thereafter, an amount
21             equal to "x", where:
22                       (1)  "y"  equals   the   amount   of   the
23                  depreciation  deduction  taken  for the taxable
24                  year  on  the  taxpayer's  federal  income  tax
25                  return  on  property  for   which   the   bonus
26                  depreciation  deduction  (30%  of  the adjusted
27                  basis of the qualified property) was  taken  in
28                  any year under subsection (k) of Section 168 of
29                  the  Internal  Revenue  Code, but not including
30                  the bonus depreciation deduction; and
31                       (2)  "x" equals "y" multiplied by  30  and
32                  then  divided  by  70  (or  "y"  multiplied  by
33                  0.429).
34                  The   aggregate   amount  deducted  under  this
 
                            -27-     LRB093 05097 SJM 05157 b
 1             subparagraph in all taxable years for any one  piece
 2             of  property  may not exceed the amount of the bonus
 3             depreciation deduction (30% of the adjusted basis of
 4             the qualified property) taken on  that  property  on
 5             the  taxpayer's  federal  income  tax  return  under
 6             subsection  (k)  of  Section  168  of  the  Internal
 7             Revenue Code; and
 8                  (S)  If  the taxpayer reports a capital gain or
 9             loss on the taxpayer's federal income tax return for
10             the taxable year based on  a  sale  or  transfer  of
11             property  for which the taxpayer was required in any
12             taxable year to make an addition modification  under
13             subparagraph  (G-10),  then  an amount equal to that
14             addition modification.
15                  The taxpayer is allowed to take  the  deduction
16             under  this  subparagraph  only once with respect to
17             any one piece of property.
18             (3)  Limitation.  The  amount  of  any  modification
19        otherwise  required  under  this  subsection shall, under
20        regulations prescribed by the Department, be adjusted  by
21        any  amounts  included  therein which were properly paid,
22        credited, or required to be distributed,  or  permanently
23        set  aside  for charitable purposes pursuant  to Internal
24        Revenue Code Section 642(c) during the taxable year.

25        (d)  Partnerships.
26             (1)  In general. In the case of a partnership,  base
27        income  means  an  amount equal to the taxpayer's taxable
28        income for the taxable year as modified by paragraph (2).
29             (2)  Modifications. The taxable income  referred  to
30        in  paragraph (1) shall be modified by adding thereto the
31        sum of the following amounts:
32                  (A)  An amount equal to  all  amounts  paid  or
33             accrued  to  the  taxpayer  as interest or dividends
34             during the taxable year to the extent excluded  from
 
                            -28-     LRB093 05097 SJM 05157 b
 1             gross income in the computation of taxable income;
 2                  (B)  An  amount  equal  to  the  amount  of tax
 3             imposed by this Act  to  the  extent  deducted  from
 4             gross income for the taxable year;
 5                  (C)  The  amount  of  deductions allowed to the
 6             partnership pursuant  to  Section  707  (c)  of  the
 7             Internal  Revenue  Code  in  calculating its taxable
 8             income;
 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 taxable income;
13                  (D-5)  For  taxable  years 2001 and thereafter,
14             an amount equal to the bonus depreciation  deduction
15             (30%   of   the  adjusted  basis  of  the  qualified
16             property) taken on the taxpayer's federal income tax
17             return for the taxable year under subsection (k)  of
18             Section 168 of the Internal Revenue Code; and
19                  (D-6)  If  the  taxpayer reports a capital gain
20             or loss on the taxpayer's federal income tax  return
21             for  the taxable year based on a sale or transfer of
22             property for which the taxpayer was required in  any
23             taxable  year to make an addition modification under
24             subparagraph (D-5), then  an  amount  equal  to  the
25             aggregate  amount  of  the  deductions  taken in all
26             taxable years under subparagraph (O) with respect to
27             that property.;
28                  The taxpayer is required to make  the  addition
29             modification  under this subparagraph only once with
30             respect to any one piece of property;
31        and by deducting from the total so obtained the following
32        amounts:
33                  (E)  The valuation limitation amount;
34                  (F)  An amount equal to the amount of  any  tax
 
                            -29-     LRB093 05097 SJM 05157 b
 1             imposed  by  this  Act  which  was  refunded  to the
 2             taxpayer and included in such total for the  taxable
 3             year;
 4                  (G)  An amount equal to all amounts included in
 5             taxable  income  as  modified  by subparagraphs (A),
 6             (B), (C) and (D) which are exempt from  taxation  by
 7             this  State  either  by  reason  of  its statutes or
 8             Constitution  or  by  reason  of  the  Constitution,
 9             treaties or statutes of the United States;  provided
10             that,  in the case of any statute of this State that
11             exempts  income  derived   from   bonds   or   other
12             obligations from the tax imposed under this Act, the
13             amount  exempted  shall  be the interest net of bond
14             premium amortization;
15                  (H)  Any  income  of  the   partnership   which
16             constitutes  personal  service  income as defined in
17             Section 1348 (b) (1) of the  Internal  Revenue  Code
18             (as  in  effect  December  31, 1981) or a reasonable
19             allowance  for  compensation  paid  or  accrued  for
20             services rendered by partners  to  the  partnership,
21             whichever is greater;
22                  (I)  An  amount  equal to all amounts of income
23             distributable to an entity subject to  the  Personal
24             Property  Tax  Replacement  Income  Tax  imposed  by
25             subsections  (c)  and (d) of Section 201 of this Act
26             including  amounts  distributable  to  organizations
27             exempt from federal income tax by reason of  Section
28             501(a) of the Internal Revenue Code;
29                  (J)  With   the   exception   of   any  amounts
30             subtracted under subparagraph (G), an  amount  equal
31             to  the  sum of all amounts disallowed as deductions
32             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
33             Internal  Revenue  Code of 1954, as now or hereafter
34             amended, and all amounts of  expenses  allocable  to
 
                            -30-     LRB093 05097 SJM 05157 b
 1             interest  and  disallowed  as  deductions by Section
 2             265(1) of the  Internal  Revenue  Code,  as  now  or
 3             hereafter amended; and (ii) for taxable years ending
 4             on  or  after  August  13, 1999, Sections 171(a)(2),
 5             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 6             Revenue Code; the provisions  of  this  subparagraph
 7             are exempt from the provisions of Section 250;
 8                  (K)  An   amount   equal   to  those  dividends
 9             included  in  such  total  which  were  paid  by   a
10             corporation which conducts business operations in an
11             Enterprise  Zone or zones created under the Illinois
12             Enterprise Zone Act, enacted  by  the  82nd  General
13             Assembly,  and  conducts  substantially  all  of its
14             operations in an Enterprise Zone or Zones;
15                  (L)  An amount equal to any  contribution  made
16             to  a  job  training project established pursuant to
17             the   Real   Property   Tax   Increment   Allocation
18             Redevelopment Act;
19                  (M)  An  amount  equal   to   those   dividends
20             included   in   such  total  that  were  paid  by  a
21             corporation that conducts business operations  in  a
22             federally  designated Foreign Trade Zone or Sub-Zone
23             and  that  is  designated  a  High  Impact  Business
24             located  in  Illinois;   provided   that   dividends
25             eligible  for the deduction provided in subparagraph
26             (K) of paragraph (2) of this subsection shall not be
27             eligible  for  the  deduction  provided  under  this
28             subparagraph (M);
29                  (N)  An amount  equal  to  the  amount  of  the
30             deduction  used  to  compute  the federal income tax
31             credit for restoration of substantial  amounts  held
32             under  claim  of right for the taxable year pursuant
33             to Section 1341 of  the  Internal  Revenue  Code  of
34             1986;
 
                            -31-     LRB093 05097 SJM 05157 b
 1                  (O)  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                  (P)  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-5),  then  an  amount equal to that
 
                            -32-     LRB093 05097 SJM 05157 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.

 5        (e)  Gross income; adjusted gross income; taxable income.
 6             (1)  In  general.   Subject  to  the  provisions  of
 7        paragraph (2) and subsection (b)  (3),  for  purposes  of
 8        this  Section  and  Section  803(e),  a  taxpayer's gross
 9        income, adjusted gross income, or taxable income for  the
10        taxable  year  shall  mean  the  amount  of gross income,
11        adjusted  gross  income  or   taxable   income   properly
12        reportable  for  federal  income  tax  purposes  for  the
13        taxable year under the provisions of the Internal Revenue
14        Code.  Taxable income may be less than zero. However, for
15        taxable years ending on or after December 31,  1986,  net
16        operating  loss  carryforwards  from taxable years ending
17        prior to December 31, 1986, may not  exceed  the  sum  of
18        federal  taxable  income  for the taxable year before net
19        operating loss deduction, plus  the  excess  of  addition
20        modifications  over  subtraction  modifications  for  the
21        taxable year.  For taxable years ending prior to December
22        31, 1986, taxable income may never be an amount in excess
23        of the net operating loss for the taxable year as defined
24        in subsections (c) and (d) of Section 172 of the Internal
25        Revenue  Code,  provided  that  when  taxable income of a
26        corporation (other  than  a  Subchapter  S  corporation),
27        trust,   or   estate  is  less  than  zero  and  addition
28        modifications, other than those provided by  subparagraph
29        (E)  of  paragraph (2) of subsection (b) for corporations
30        or subparagraph (E) of paragraph (2)  of  subsection  (c)
31        for trusts and estates, exceed subtraction modifications,
32        an   addition  modification  must  be  made  under  those
33        subparagraphs for any other taxable  year  to  which  the
34        taxable  income  less  than  zero (net operating loss) is
 
                            -33-     LRB093 05097 SJM 05157 b
 1        applied under Section 172 of the Internal Revenue Code or
 2        under  subparagraph  (E)  of  paragraph   (2)   of   this
 3        subsection (e) applied in conjunction with Section 172 of
 4        the Internal Revenue Code.
 5             (2)  Special rule.  For purposes of paragraph (1) of
 6        this  subsection,  the taxable income properly reportable
 7        for federal income tax purposes shall mean:
 8                  (A)  Certain life insurance companies.  In  the
 9             case  of a life insurance company subject to the tax
10             imposed by Section 801 of the Internal Revenue Code,
11             life insurance  company  taxable  income,  plus  the
12             amount  of  distribution  from pre-1984 policyholder
13             surplus accounts as calculated under Section 815a of
14             the Internal Revenue Code;
15                  (B)  Certain other insurance companies.  In the
16             case of mutual insurance companies  subject  to  the
17             tax  imposed  by Section 831 of the Internal Revenue
18             Code, insurance company taxable income;
19                  (C)  Regulated investment  companies.   In  the
20             case  of  a  regulated investment company subject to
21             the tax imposed  by  Section  852  of  the  Internal
22             Revenue Code, investment company taxable income;
23                  (D)  Real  estate  investment  trusts.   In the
24             case of a real estate investment  trust  subject  to
25             the  tax  imposed  by  Section  857  of the Internal
26             Revenue Code, real estate investment  trust  taxable
27             income;
28                  (E)  Consolidated corporations.  In the case of
29             a  corporation  which  is  a member of an affiliated
30             group of corporations filing a  consolidated  income
31             tax  return  for the taxable year for federal income
32             tax purposes, taxable income determined as  if  such
33             corporation  had filed a separate return for federal
34             income tax purposes for the taxable  year  and  each
 
                            -34-     LRB093 05097 SJM 05157 b
 1             preceding  taxable year for which it was a member of
 2             an  affiliated   group.   For   purposes   of   this
 3             subparagraph, the taxpayer's separate taxable income
 4             shall  be  determined as if the election provided by
 5             Section 243(b) (2) of the Internal Revenue Code  had
 6             been in effect for all such years;
 7                  (F)  Cooperatives.     In   the   case   of   a
 8             cooperative corporation or association, the  taxable
 9             income of such organization determined in accordance
10             with  the provisions of Section 1381 through 1388 of
11             the Internal Revenue Code;
12                  (G)  Subchapter S corporations.   In  the  case
13             of:  (i)  a Subchapter S corporation for which there
14             is in effect an election for the taxable year  under
15             Section  1362  of  the  Internal  Revenue  Code, the
16             taxable income of  such  corporation  determined  in
17             accordance  with  Section  1363(b)  of  the Internal
18             Revenue Code, except that taxable income shall  take
19             into  account  those  items  which  are  required by
20             Section 1363(b)(1) of the Internal Revenue  Code  to
21             be  separately  stated;  and  (ii)  a  Subchapter  S
22             corporation  for  which there is in effect a federal
23             election  to  opt  out  of  the  provisions  of  the
24             Subchapter S Revision Act of 1982 and  have  applied
25             instead  the  prior federal Subchapter S rules as in
26             effect on July 1, 1982, the taxable income  of  such
27             corporation   determined   in  accordance  with  the
28             federal Subchapter S rules as in effect on  July  1,
29             1982; and
30                  (H)  Partnerships.     In   the   case   of   a
31             partnership, taxable income determined in accordance
32             with Section  703  of  the  Internal  Revenue  Code,
33             except  that  taxable income shall take into account
34             those items which are required by Section  703(a)(1)
 
                            -35-     LRB093 05097 SJM 05157 b
 1             to  be  separately  stated  but which would be taken
 2             into account by an  individual  in  calculating  his
 3             taxable income.

 4        (f)  Valuation limitation amount.
 5             (1)  In  general.   The  valuation limitation amount
 6        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
 7        (d)(2) (E) is an amount equal to:
 8                  (A)  The   sum   of   the  pre-August  1,  1969
 9             appreciation amounts (to the  extent  consisting  of
10             gain reportable under the provisions of Section 1245
11             or  1250  of  the  Internal  Revenue  Code)  for all
12             property in respect of which such gain was  reported
13             for the taxable year; plus
14                  (B)  The   lesser   of   (i)  the  sum  of  the
15             pre-August 1,  1969  appreciation  amounts  (to  the
16             extent  consisting of capital gain) for all property
17             in respect of  which  such  gain  was  reported  for
18             federal income tax purposes for the taxable year, or
19             (ii)  the  net  capital  gain  for the taxable year,
20             reduced in either case by any amount  of  such  gain
21             included  in  the amount determined under subsection
22             (a) (2) (F) or (c) (2) (H).
23             (2)  Pre-August 1, 1969 appreciation amount.
24                  (A)  If  the  fair  market  value  of  property
25             referred   to   in   paragraph   (1)   was   readily
26             ascertainable on August 1, 1969, the  pre-August  1,
27             1969  appreciation  amount  for such property is the
28             lesser of (i) the excess of such fair  market  value
29             over the taxpayer's basis (for determining gain) for
30             such  property  on  that  date (determined under the
31             Internal Revenue Code as in effect on that date), or
32             (ii) the total  gain  realized  and  reportable  for
33             federal  income tax purposes in respect of the sale,
34             exchange or other disposition of such property.
 
                            -36-     LRB093 05097 SJM 05157 b
 1                  (B)  If  the  fair  market  value  of  property
 2             referred  to  in  paragraph  (1)  was  not   readily
 3             ascertainable  on  August 1, 1969, the pre-August 1,
 4             1969 appreciation amount for such property  is  that
 5             amount  which bears the same ratio to the total gain
 6             reported in respect  of  the  property  for  federal
 7             income  tax  purposes  for  the taxable year, as the
 8             number of full calendar months in that part  of  the
 9             taxpayer's  holding  period  for the property ending
10             July 31, 1969 bears to the number of  full  calendar
11             months  in  the taxpayer's entire holding period for
12             the property.
13                  (C)  The  Department   shall   prescribe   such
14             regulations  as  may  be  necessary to carry out the
15             purposes of this paragraph.

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

19        (h)  Legislative intention.  Except as expressly provided
20    by  this  Section  there  shall  be   no   modifications   or
21    limitations on the amounts of income, gain, loss or deduction
22    taken  into  account  in  determining  gross income, adjusted
23    gross  income  or  taxable  income  for  federal  income  tax
24    purposes for the taxable year, or in the amount of such items
25    entering into the computation of base income and  net  income
26    under  this  Act for such taxable year, whether in respect of
27    property values as of August 1, 1969 or otherwise.
28    (Source: P.A. 91-192, eff.  7-20-99;  91-205,  eff.  7-20-99;
29    91-357,  eff.  7-29-99;  91-541,  eff.  8-13-99; 91-676, eff.
30    12-23-99; 91-845, eff. 6-22-00; 91-913, eff.  1-1-01;  92-16,
31    eff.  6-28-01;  92-244,  eff.  8-3-01;  92-439, eff. 8-17-01;
32    92-603, eff. 6-28-02;  92-626,  eff.  7-11-02;  92-651,  eff.
33    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)
 
                            -37-     LRB093 05097 SJM 05157 b
 1        Section  99.  Effective date.  This Act takes effect upon
 2    becoming law.