093_HB3676eng

 
HB3676 Engrossed                     LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -2-      LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -3-      LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -4-      LRB093 09277 SJM 09510 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;
 
HB3676 Engrossed            -5-      LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -6-      LRB093 09277 SJM 09510 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;
 
HB3676 Engrossed            -7-      LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -8-      LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -9-      LRB093 09277 SJM 09510 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;
 
HB3676 Engrossed            -10-     LRB093 09277 SJM 09510 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
 
HB3676 Engrossed            -11-     LRB093 09277 SJM 09510 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.

 8        (b)  Corporations.
 9             (1)  In general.  In the case of a corporation, base
10        income  means  an  amount equal to the taxpayer's taxable
11        income for the taxable year as modified by paragraph (2).
12             (2)  Modifications.  The taxable income referred  to
13        in  paragraph (1) shall be modified by adding thereto the
14        sum of the following amounts:
15                  (A)  An amount equal to  all  amounts  paid  or
16             accrued   to   the  taxpayer  as  interest  and  all
17             distributions  received  from  regulated  investment
18             companies during the  taxable  year  to  the  extent
19             excluded  from  gross  income  in the computation of
20             taxable income;
21                  (B)  An amount  equal  to  the  amount  of  tax
22             imposed  by  this  Act  to  the extent deducted from
23             gross income in the computation  of  taxable  income
24             for the taxable year;
25                  (C)  In  the  case  of  a  regulated investment
26             company, an amount equal to the excess  of  (i)  the
27             net  long-term  capital  gain  for the taxable year,
28             over (ii) the amount of the capital  gain  dividends
29             designated   as  such  in  accordance  with  Section
30             852(b)(3)(C) of the Internal Revenue  Code  and  any
31             amount  designated under Section 852(b)(3)(D) of the
32             Internal Revenue Code, attributable to  the  taxable
33             year  (this  amendatory  Act  of  the  93rd  General
34             Assembly   and   1995  (Public  Act  89-89  are)  is
 
HB3676 Engrossed            -12-     LRB093 09277 SJM 09510 b
 1             declarative of existing law and are  is  not  a  new
 2             enactments enactment);
 3                  (D)  The  amount  of  any  net  operating  loss
 4             deduction taken in arriving at taxable income, other
 5             than  a  net  operating  loss carried forward from a
 6             taxable year ending prior to December 31, 1986;
 7                  (E)  For taxable years in which a net operating
 8             loss carryback or carryforward from a  taxable  year
 9             ending  prior  to December 31, 1986 is an element of
10             taxable income under paragraph (1) of subsection (e)
11             or subparagraph (E) of paragraph (2)  of  subsection
12             (e),  the  amount  by  which  addition modifications
13             other than those provided by this  subparagraph  (E)
14             exceeded  subtraction  modifications in such earlier
15             taxable year, with the following limitations applied
16             in the order that they are listed:
17                       (i)  the addition modification relating to
18                  the net operating loss carried back or  forward
19                  to  the  taxable  year  from  any  taxable year
20                  ending prior to  December  31,  1986  shall  be
21                  reduced  by the amount of addition modification
22                  under this subparagraph (E)  which  related  to
23                  that  net  operating  loss  and which was taken
24                  into account in calculating the base income  of
25                  an earlier taxable year, and
26                       (ii)  the  addition  modification relating
27                  to the  net  operating  loss  carried  back  or
28                  forward  to  the  taxable year from any taxable
29                  year ending prior to December  31,  1986  shall
30                  not  exceed  the  amount  of  such carryback or
31                  carryforward;
32                  For taxable years  in  which  there  is  a  net
33             operating  loss  carryback or carryforward from more
34             than one other taxable year ending prior to December
 
HB3676 Engrossed            -13-     LRB093 09277 SJM 09510 b
 1             31, 1986, the addition modification provided in this
 2             subparagraph (E) shall be the  sum  of  the  amounts
 3             computed    independently    under   the   preceding
 4             provisions of this subparagraph (E)  for  each  such
 5             taxable year;
 6                  (E-5)  For  taxable years ending after December
 7             31,  1997,  an  amount   equal   to   any   eligible
 8             remediation  costs  that the corporation deducted in
 9             computing adjusted gross income and  for  which  the
10             corporation  claims a credit under subsection (l) of
11             Section 201;
12                  (E-10)  For taxable years 2001 and  thereafter,
13             an  amount equal to the bonus depreciation deduction
14             (30%  of  the  adjusted  basis  of   the   qualified
15             property) taken on the taxpayer's federal income tax
16             return  for the taxable year under subsection (k) of
17             Section 168 of the Internal Revenue Code; and
18                  (E-11)  If the taxpayer reports a capital  gain
19             or  loss on the taxpayer's federal income tax return
20             for the taxable year based on a sale or transfer  of
21             property  for which the taxpayer was required in any
22             taxable year to make an addition modification  under
23             subparagraph  (E-10),  then  an  amount equal to the
24             aggregate amount of  the  deductions  taken  in  all
25             taxable years under subparagraph (T) with respect to
26             that property.;
27                  The  taxpayer  is required to make the addition
28             modification under this subparagraph only once  with
29             respect to any one piece of property;
30        and  by  deducting  from the total so obtained the sum of
31        the following amounts:
32                  (F)  An amount equal to the amount of  any  tax
33             imposed  by  this  Act  which  was  refunded  to the
34             taxpayer and included in such total for the  taxable
 
HB3676 Engrossed            -14-     LRB093 09277 SJM 09510 b
 1             year;
 2                  (G)  An  amount equal to any amount included in
 3             such total under Section 78 of the Internal  Revenue
 4             Code;
 5                  (H)  In  the  case  of  a  regulated investment
 6             company, an amount equal to  the  amount  of  exempt
 7             interest  dividends as defined in subsection (b) (5)
 8             of Section 852 of the Internal Revenue Code, paid to
 9             shareholders for the taxable year;
10                  (I)  With  the   exception   of   any   amounts
11             subtracted  under  subparagraph (J), an amount equal
12             to the sum of all amounts disallowed  as  deductions
13             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
14             amounts  disallowed  as  interest expense by Section
15             291(a)(3) of the Internal Revenue Code,  as  now  or
16             hereafter  amended,  and  all  amounts  of  expenses
17             allocable  to  interest and disallowed as deductions
18             by Section 265(a)(1) of the Internal  Revenue  Code,
19             as  now  or  hereafter amended; and (ii) for taxable
20             years ending on or after August 13,  1999,  Sections
21             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
22             of the Internal Revenue Code; the provisions of this
23             subparagraph  are  exempt  from  the  provisions  of
24             Section 250;
25                  (J)  An amount equal to all amounts included in
26             such  total  which  are exempt from taxation by this
27             State  either  by  reason   of   its   statutes   or
28             Constitution  or  by  reason  of  the  Constitution,
29             treaties  or statutes of the United States; provided
30             that, in the case of any statute of this State  that
31             exempts   income   derived   from   bonds  or  other
32             obligations from the tax imposed under this Act, the
33             amount exempted shall be the interest  net  of  bond
34             premium amortization;
 
HB3676 Engrossed            -15-     LRB093 09277 SJM 09510 b
 1                  (K)  An   amount   equal   to  those  dividends
 2             included  in  such  total  which  were  paid  by   a
 3             corporation which conducts business operations in an
 4             Enterprise  Zone or zones created under the Illinois
 5             Enterprise Zone Act and conducts  substantially  all
 6             of its operations in an Enterprise Zone or zones;
 7                  (L)  An   amount   equal   to  those  dividends
 8             included  in  such  total  that  were  paid   by   a
 9             corporation  that  conducts business operations in a
10             federally designated Foreign Trade Zone or  Sub-Zone
11             and  that  is  designated  a  High  Impact  Business
12             located   in   Illinois;   provided  that  dividends
13             eligible for the deduction provided in  subparagraph
14             (K)  of  paragraph 2 of this subsection shall not be
15             eligible  for  the  deduction  provided  under  this
16             subparagraph (L);
17                  (M)  For  any  taxpayer  that  is  a  financial
18             organization within the meaning of Section 304(c) of
19             this Act,  an  amount  included  in  such  total  as
20             interest  income  from  a loan or loans made by such
21             taxpayer to a borrower, to the extent  that  such  a
22             loan  is  secured  by property which is eligible for
23             the Enterprise Zone Investment Credit.  To determine
24             the portion of a loan or loans that  is  secured  by
25             property  eligible  for  a Section 201(f) investment
26             credit to the borrower, the entire principal  amount
27             of  the  loan  or loans between the taxpayer and the
28             borrower should be divided into  the  basis  of  the
29             Section  201(f)  investment  credit  property  which
30             secures  the  loan  or loans, using for this purpose
31             the original basis of such property on the date that
32             it was placed in service  in  the  Enterprise  Zone.
33             The  subtraction  modification available to taxpayer
34             in any year under  this  subsection  shall  be  that
 
HB3676 Engrossed            -16-     LRB093 09277 SJM 09510 b
 1             portion  of  the total interest paid by the borrower
 2             with  respect  to  such  loan  attributable  to  the
 3             eligible property as calculated under  the  previous
 4             sentence;
 5                  (M-1)  For  any  taxpayer  that  is a financial
 6             organization within the meaning of Section 304(c) of
 7             this Act,  an  amount  included  in  such  total  as
 8             interest  income  from  a loan or loans made by such
 9             taxpayer to a borrower, to the extent  that  such  a
10             loan  is  secured  by property which is eligible for
11             the High  Impact  Business  Investment  Credit.   To
12             determine  the  portion  of  a loan or loans that is
13             secured by property eligible for  a  Section  201(h)
14             investment   credit  to  the  borrower,  the  entire
15             principal amount of the loan or  loans  between  the
16             taxpayer and the borrower should be divided into the
17             basis   of  the  Section  201(h)  investment  credit
18             property which secures the loan or loans, using  for
19             this  purpose the original basis of such property on
20             the  date  that  it  was  placed  in  service  in  a
21             federally designated Foreign Trade Zone or  Sub-Zone
22             located  in  Illinois.  No taxpayer that is eligible
23             for the deduction provided in  subparagraph  (M)  of
24             paragraph  (2)  of this subsection shall be eligible
25             for the deduction provided under  this  subparagraph
26             (M-1).   The  subtraction  modification available to
27             taxpayers in any year under this subsection shall be
28             that portion of  the  total  interest  paid  by  the
29             borrower  with  respect to such loan attributable to
30             the  eligible  property  as  calculated  under   the
31             previous sentence;
32                  (N)  Two times any contribution made during the
33             taxable  year  to  a designated zone organization to
34             the extent that the contribution (i) qualifies as  a
 
HB3676 Engrossed            -17-     LRB093 09277 SJM 09510 b
 1             charitable  contribution  under  subsection  (c)  of
 2             Section  170  of  the Internal Revenue Code and (ii)
 3             must, by its terms, be used for a  project  approved
 4             by  the Department of Commerce and Community Affairs
 5             under Section 11 of  the  Illinois  Enterprise  Zone
 6             Act;
 7                  (O)  An  amount  equal  to: (i) 85% for taxable
 8             years ending on or before December 31, 1992,  or,  a
 9             percentage  equal  to the percentage allowable under
10             Section 243(a)(1) of the Internal  Revenue  Code  of
11             1986  for  taxable  years  ending after December 31,
12             1992, of the amount by which dividends  included  in
13             taxable  income and received from a corporation that
14             is not created or organized under the  laws  of  the
15             United  States or any state or political subdivision
16             thereof, including, for taxable years ending  on  or
17             after  December  31,  1988,  dividends  received  or
18             deemed   received  or  paid  or  deemed  paid  under
19             Sections 951 through 964  of  the  Internal  Revenue
20             Code, exceed the amount of the modification provided
21             under  subparagraph  (G)  of  paragraph  (2) of this
22             subsection (b) which is related to  such  dividends;
23             plus  (ii)  100%  of  the amount by which dividends,
24             included in taxable income and received,  including,
25             for  taxable  years  ending on or after December 31,
26             1988, dividends received or deemed received or  paid
27             or deemed paid under Sections 951 through 964 of the
28             Internal  Revenue  Code,  from  any such corporation
29             specified in clause  (i)  that  would  but  for  the
30             provisions  of  Section 1504 (b) (3) of the Internal
31             Revenue  Code  be  treated  as  a  member   of   the
32             affiliated   group   which   includes  the  dividend
33             recipient, exceed the  amount  of  the  modification
34             provided  under subparagraph (G) of paragraph (2) of
 
HB3676 Engrossed            -18-     LRB093 09277 SJM 09510 b
 1             this  subsection  (b)  which  is  related  to   such
 2             dividends;
 3                  (P)  An  amount  equal to any contribution made
 4             to a job training project  established  pursuant  to
 5             the Tax Increment Allocation Redevelopment Act;
 6                  (Q)  An  amount  equal  to  the  amount  of the
 7             deduction used to compute  the  federal  income  tax
 8             credit  for  restoration of substantial amounts held
 9             under claim of right for the taxable  year  pursuant
10             to  Section  1341  of  the  Internal Revenue Code of
11             1986;
12                  (R)  In the case of  an  attorney-in-fact  with
13             respect  to  whom  an  interinsurer  or a reciprocal
14             insurer has made the election under Section  835  of
15             the  Internal Revenue Code, 26 U.S.C. 835, an amount
16             equal to the excess, if any, of the amounts paid  or
17             incurred  by that interinsurer or reciprocal insurer
18             in the taxable year to the attorney-in-fact over the
19             deduction allowed to that interinsurer or reciprocal
20             insurer with respect to the  attorney-in-fact  under
21             Section  835(b) of the Internal Revenue Code for the
22             taxable year;
23                  (S)  For  taxable  years  ending  on  or  after
24             December 31, 1997, in the case  of  a  Subchapter  S
25             corporation,  an  amount  equal  to  all  amounts of
26             income allocable to a  shareholder  subject  to  the
27             Personal Property Tax Replacement Income Tax imposed
28             by  subsections  (c)  and (d) of Section 201 of this
29             Act, including amounts  allocable  to  organizations
30             exempt  from federal income tax by reason of Section
31             501(a)  of  the   Internal   Revenue   Code.    This
32             subparagraph  (S)  is  exempt from the provisions of
33             Section 250;
34                  (T)  For taxable years 2001 and thereafter, for
 
HB3676 Engrossed            -19-     LRB093 09277 SJM 09510 b
 1             the taxable year in  which  the  bonus  depreciation
 2             deduction   (30%   of  the  adjusted  basis  of  the
 3             qualified  property)  is  taken  on  the  taxpayer's
 4             federal income tax return under  subsection  (k)  of
 5             Section  168  of  the  Internal Revenue Code and for
 6             each applicable taxable year thereafter,  an  amount
 7             equal to "x", where:
 8                       (1)  "y"   equals   the   amount   of  the
 9                  depreciation deduction taken  for  the  taxable
10                  year  on  the  taxpayer's  federal  income  tax
11                  return   on   property   for  which  the  bonus
12                  depreciation deduction  (30%  of  the  adjusted
13                  basis  of  the qualified property) was taken in
14                  any year under subsection (k) of Section 168 of
15                  the Internal Revenue Code,  but  not  including
16                  the bonus depreciation deduction; and
17                       (2)  "x"  equals  "y" multiplied by 30 and
18                  then  divided  by  70  (or  "y"  multiplied  by
19                  0.429).
20                  The  aggregate  amount  deducted   under   this
21             subparagraph  in all taxable years for any one piece
22             of property may not exceed the amount of  the  bonus
23             depreciation deduction (30% of the adjusted basis of
24             the  qualified  property)  taken on that property on
25             the  taxpayer's  federal  income  tax  return  under
26             subsection  (k)  of  Section  168  of  the  Internal
27             Revenue Code; and
28                  (U)  If the taxpayer reports a capital gain  or
29             loss on the taxpayer's federal income tax return for
30             the  taxable  year  based  on  a sale or transfer of
31             property for which the taxpayer was required in  any
32             taxable  year to make an addition modification under
33             subparagraph (E-10), then an amount  equal  to  that
34             addition modification.
 
HB3676 Engrossed            -20-     LRB093 09277 SJM 09510 b
 1                  The  taxpayer  is allowed to take the deduction
 2             under this subparagraph only once  with  respect  to
 3             any one piece of property.
 4             (3)  Special  rule.   For  purposes of paragraph (2)
 5        (A), "gross income" in  the  case  of  a  life  insurance
 6        company,  for  tax years ending on and after December 31,
 7        1994, shall mean the  gross  investment  income  for  the
 8        taxable year.

 9        (c)  Trusts and estates.
10             (1)  In  general.  In the case of a trust or estate,
11        base income means  an  amount  equal  to  the  taxpayer's
12        taxable  income  for  the  taxable  year  as  modified by
13        paragraph (2).
14             (2)  Modifications.  Subject to  the  provisions  of
15        paragraph   (3),   the  taxable  income  referred  to  in
16        paragraph (1) shall be modified by adding thereto the sum
17        of the following amounts:
18                  (A)  An amount equal to  all  amounts  paid  or
19             accrued  to  the  taxpayer  as interest or dividends
20             during the taxable year to the extent excluded  from
21             gross income in the computation of taxable income;
22                  (B)  In the case of (i) an estate, $600; (ii) a
23             trust  which,  under  its  governing  instrument, is
24             required to distribute all of its income  currently,
25             $300;  and  (iii) any other trust, $100, but in each
26             such case,  only  to  the  extent  such  amount  was
27             deducted in the computation of taxable income;
28                  (C)  An  amount  equal  to  the  amount  of tax
29             imposed by this Act  to  the  extent  deducted  from
30             gross  income  in  the computation of taxable income
31             for the taxable year;
32                  (D)  The  amount  of  any  net  operating  loss
33             deduction taken in arriving at taxable income, other
34             than a net operating loss  carried  forward  from  a
 
HB3676 Engrossed            -21-     LRB093 09277 SJM 09510 b
 1             taxable year ending prior to December 31, 1986;
 2                  (E)  For taxable years in which a net operating
 3             loss  carryback  or carryforward from a taxable year
 4             ending prior to December 31, 1986 is an  element  of
 5             taxable income under paragraph (1) of subsection (e)
 6             or  subparagraph  (E) of paragraph (2) of subsection
 7             (e), the  amount  by  which  addition  modifications
 8             other  than  those provided by this subparagraph (E)
 9             exceeded subtraction modifications in  such  taxable
10             year,  with the following limitations applied in the
11             order that they are listed:
12                       (i)  the addition modification relating to
13                  the net operating loss carried back or  forward
14                  to  the  taxable  year  from  any  taxable year
15                  ending prior to  December  31,  1986  shall  be
16                  reduced  by the amount of addition modification
17                  under this subparagraph (E)  which  related  to
18                  that  net  operating  loss  and which was taken
19                  into account in calculating the base income  of
20                  an earlier taxable year, and
21                       (ii)  the  addition  modification relating
22                  to the  net  operating  loss  carried  back  or
23                  forward  to  the  taxable year from any taxable
24                  year ending prior to December  31,  1986  shall
25                  not  exceed  the  amount  of  such carryback or
26                  carryforward;
27                  For taxable years  in  which  there  is  a  net
28             operating  loss  carryback or carryforward from more
29             than one other taxable year ending prior to December
30             31, 1986, the addition modification provided in this
31             subparagraph (E) shall be the  sum  of  the  amounts
32             computed    independently    under   the   preceding
33             provisions of this subparagraph (E)  for  each  such
34             taxable year;
 
HB3676 Engrossed            -22-     LRB093 09277 SJM 09510 b
 1                  (F)  For  taxable  years  ending  on  or  after
 2             January 1, 1989, an amount equal to the tax deducted
 3             pursuant to Section 164 of the Internal Revenue Code
 4             if  the trust or estate is claiming the same tax for
 5             purposes of the Illinois foreign  tax  credit  under
 6             Section 601 of this Act;
 7                  (G)  An  amount  equal  to  the  amount  of the
 8             capital gain deduction allowable under the  Internal
 9             Revenue  Code,  to  the  extent  deducted from gross
10             income in the computation of taxable income;
11                  (G-5)  For taxable years ending after  December
12             31,   1997,   an   amount   equal  to  any  eligible
13             remediation costs that the trust or estate  deducted
14             in computing adjusted gross income and for which the
15             trust or estate claims a credit under subsection (l)
16             of Section 201;
17                  (G-10)  For  taxable years 2001 and thereafter,
18             an amount equal to the bonus depreciation  deduction
19             (30%   of   the  adjusted  basis  of  the  qualified
20             property) taken on the taxpayer's federal income tax
21             return for the taxable year under subsection (k)  of
22             Section 168 of the Internal Revenue Code; and
23                  (G-11)  If  the taxpayer reports a capital gain
24             or loss on the taxpayer's federal income tax  return
25             for  the taxable year based on a sale or transfer of
26             property for which the taxpayer was required in  any
27             taxable  year to make an addition modification under
28             subparagraph (G-10), then an  amount  equal  to  the
29             aggregate  amount  of  the  deductions  taken in all
30             taxable years under subparagraph (R) with respect to
31             that property.;
32                  The taxpayer is required to make  the  addition
33             modification  under this subparagraph only once with
34             respect to any one piece of property;
 
HB3676 Engrossed            -23-     LRB093 09277 SJM 09510 b
 1        and by deducting from the total so obtained  the  sum  of
 2        the following amounts:
 3                  (H)  An amount equal to all amounts included in
 4             such  total  pursuant  to the provisions of Sections
 5             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
 6             408 of the Internal Revenue Code or included in such
 7             total  as  distributions under the provisions of any
 8             retirement or disability plan for employees  of  any
 9             governmental  agency or unit, or retirement payments
10             to retired partners, which payments are excluded  in
11             computing  net  earnings  from  self  employment  by
12             Section  1402  of  the  Internal  Revenue  Code  and
13             regulations adopted pursuant thereto;
14                  (I)  The valuation limitation amount;
15                  (J)  An  amount  equal to the amount of any tax
16             imposed by  this  Act  which  was  refunded  to  the
17             taxpayer  and included in such total for the taxable
18             year;
19                  (K)  An amount equal to all amounts included in
20             taxable income as  modified  by  subparagraphs  (A),
21             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
22             from taxation by this State either by reason of  its
23             statutes   or  Constitution  or  by  reason  of  the
24             Constitution, treaties or  statutes  of  the  United
25             States; provided that, in the case of any statute of
26             this State that exempts income derived from bonds or
27             other  obligations  from  the tax imposed under this
28             Act, the amount exempted shall be the  interest  net
29             of bond premium amortization;
30                  (L)  With   the   exception   of   any  amounts
31             subtracted under subparagraph (K), an  amount  equal
32             to  the  sum of all amounts disallowed as deductions
33             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
34             Internal  Revenue Code, as now or hereafter amended,
 
HB3676 Engrossed            -24-     LRB093 09277 SJM 09510 b
 1             and all amounts of expenses  allocable  to  interest
 2             and  disallowed  as  deductions by Section 265(1) of
 3             the  Internal  Revenue  Code  of  1954,  as  now  or
 4             hereafter amended; and (ii) for taxable years ending
 5             on or after August  13,  1999,  Sections  171(a)(2),
 6             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
 7             Revenue  Code;  the  provisions of this subparagraph
 8             are exempt from the provisions of Section 250;
 9                  (M)  An  amount  equal   to   those   dividends
10             included   in  such  total  which  were  paid  by  a
11             corporation which conducts business operations in an
12             Enterprise Zone or zones created under the  Illinois
13             Enterprise  Zone  Act and conducts substantially all
14             of its operations in an Enterprise Zone or Zones;
15                  (N)  An amount equal to any  contribution  made
16             to  a  job  training project established pursuant to
17             the Tax Increment Allocation Redevelopment Act;
18                  (O)  An  amount  equal   to   those   dividends
19             included   in   such  total  that  were  paid  by  a
20             corporation that conducts business operations  in  a
21             federally  designated Foreign Trade Zone or Sub-Zone
22             and  that  is  designated  a  High  Impact  Business
23             located  in  Illinois;   provided   that   dividends
24             eligible  for the deduction provided in subparagraph
25             (M) of paragraph (2) of this subsection shall not be
26             eligible  for  the  deduction  provided  under  this
27             subparagraph (O);
28                  (P)  An amount  equal  to  the  amount  of  the
29             deduction  used  to  compute  the federal income tax
30             credit for restoration of substantial  amounts  held
31             under  claim  of right for the taxable year pursuant
32             to Section 1341 of  the  Internal  Revenue  Code  of
33             1986;
34                  (Q)  For  taxable  year 1999 and thereafter, an
 
HB3676 Engrossed            -25-     LRB093 09277 SJM 09510 b
 1             amount equal to the amount of any (i) distributions,
 2             to the extent includible in gross income for federal
 3             income tax purposes, made to the taxpayer because of
 4             his or her status as a  victim  of  persecution  for
 5             racial  or  religious reasons by Nazi Germany or any
 6             other Axis regime or as an heir of  the  victim  and
 7             (ii)  items  of  income, to the extent includible in
 8             gross  income  for  federal  income  tax   purposes,
 9             attributable  to, derived from or in any way related
10             to assets stolen from,  hidden  from,  or  otherwise
11             lost  to  a  victim  of  persecution  for  racial or
12             religious reasons by Nazi Germany or any other  Axis
13             regime immediately prior to, during, and immediately
14             after  World  War II, including, but not limited to,
15             interest on the  proceeds  receivable  as  insurance
16             under policies issued to a victim of persecution for
17             racial  or  religious reasons by Nazi Germany or any
18             other Axis regime by  European  insurance  companies
19             immediately  prior  to  and  during  World  War  II;
20             provided,  however,  this  subtraction  from federal
21             adjusted gross  income  does  not  apply  to  assets
22             acquired  with such assets or with the proceeds from
23             the sale of such  assets;  provided,  further,  this
24             paragraph shall only apply to a taxpayer who was the
25             first  recipient of such assets after their recovery
26             and who is a victim of  persecution  for  racial  or
27             religious  reasons by Nazi Germany or any other Axis
28             regime or as an heir of the victim.  The  amount  of
29             and  the  eligibility  for  any  public  assistance,
30             benefit,  or  similar entitlement is not affected by
31             the  inclusion  of  items  (i)  and  (ii)  of   this
32             paragraph  in  gross  income  for federal income tax
33             purposes.  This  paragraph  is   exempt   from   the
34             provisions of Section 250;
 
HB3676 Engrossed            -26-     LRB093 09277 SJM 09510 b
 1                  (R)  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                  (S)  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  (G-10),  then  an amount equal to that
 
HB3676 Engrossed            -27-     LRB093 09277 SJM 09510 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             (3)  Limitation.  The  amount  of  any  modification
 6        otherwise  required  under  this  subsection shall, under
 7        regulations prescribed by the Department, be adjusted  by
 8        any  amounts  included  therein which were properly paid,
 9        credited, or required to be distributed,  or  permanently
10        set  aside  for charitable purposes pursuant  to Internal
11        Revenue Code Section 642(c) during the taxable year.

12        (d)  Partnerships.
13             (1)  In general. In the case of a partnership,  base
14        income  means  an  amount equal to the taxpayer's taxable
15        income for the taxable year as modified by paragraph (2).
16             (2)  Modifications. The taxable income  referred  to
17        in  paragraph (1) shall be modified by adding thereto the
18        sum of the following amounts:
19                  (A)  An amount equal to  all  amounts  paid  or
20             accrued  to  the  taxpayer  as interest or dividends
21             during the taxable year to the extent excluded  from
22             gross income in the computation of taxable income;
23                  (B)  An  amount  equal  to  the  amount  of tax
24             imposed by this Act  to  the  extent  deducted  from
25             gross income for the taxable year;
26                  (C)  The  amount  of  deductions allowed to the
27             partnership pursuant  to  Section  707  (c)  of  the
28             Internal  Revenue  Code  in  calculating its taxable
29             income;
30                  (D)  An amount  equal  to  the  amount  of  the
31             capital  gain deduction allowable under the Internal
32             Revenue Code, to  the  extent  deducted  from  gross
33             income in the computation of taxable income;
34                  (D-5)  For  taxable  years 2001 and thereafter,
 
HB3676 Engrossed            -28-     LRB093 09277 SJM 09510 b
 1             an amount equal to the bonus depreciation  deduction
 2             (30%   of   the  adjusted  basis  of  the  qualified
 3             property) taken on the taxpayer's federal income tax
 4             return for the taxable year under subsection (k)  of
 5             Section 168 of the Internal Revenue Code; and
 6                  (D-6)  If  the  taxpayer reports a capital gain
 7             or loss on the taxpayer's federal income tax  return
 8             for  the taxable year based on a sale or transfer of
 9             property for which the taxpayer was required in  any
10             taxable  year to make an addition modification under
11             subparagraph (D-5), then  an  amount  equal  to  the
12             aggregate  amount  of  the  deductions  taken in all
13             taxable years under subparagraph (O) with respect to
14             that property.;
15                  The taxpayer is required to make  the  addition
16             modification  under this subparagraph only once with
17             respect to any one piece of property;
18        and by deducting from the total so obtained the following
19        amounts:
20                  (E)  The valuation limitation amount;
21                  (F)  An amount equal to the amount of  any  tax
22             imposed  by  this  Act  which  was  refunded  to the
23             taxpayer and included in such total for the  taxable
24             year;
25                  (G)  An amount equal to all amounts included in
26             taxable  income  as  modified  by subparagraphs (A),
27             (B), (C) and (D) which are exempt from  taxation  by
28             this  State  either  by  reason  of  its statutes or
29             Constitution  or  by  reason  of  the  Constitution,
30             treaties or statutes of the United States;  provided
31             that,  in the case of any statute of this State that
32             exempts  income  derived   from   bonds   or   other
33             obligations from the tax imposed under this Act, the
34             amount  exempted  shall  be the interest net of bond
 
HB3676 Engrossed            -29-     LRB093 09277 SJM 09510 b
 1             premium amortization;
 2                  (H)  Any  income  of  the   partnership   which
 3             constitutes  personal  service  income as defined in
 4             Section 1348 (b) (1) of the  Internal  Revenue  Code
 5             (as  in  effect  December  31, 1981) or a reasonable
 6             allowance  for  compensation  paid  or  accrued  for
 7             services rendered by partners  to  the  partnership,
 8             whichever is greater;
 9                  (I)  An  amount  equal to all amounts of income
10             distributable to an entity subject to  the  Personal
11             Property  Tax  Replacement  Income  Tax  imposed  by
12             subsections  (c)  and (d) of Section 201 of this Act
13             including  amounts  distributable  to  organizations
14             exempt from federal income tax by reason of  Section
15             501(a) of the Internal Revenue Code;
16                  (J)  With   the   exception   of   any  amounts
17             subtracted under subparagraph (G), an  amount  equal
18             to  the  sum of all amounts disallowed as deductions
19             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
20             Internal  Revenue  Code of 1954, as now or hereafter
21             amended, and all amounts of  expenses  allocable  to
22             interest  and  disallowed  as  deductions by Section
23             265(1) of the  Internal  Revenue  Code,  as  now  or
24             hereafter amended; and (ii) for taxable years ending
25             on  or  after  August  13, 1999, Sections 171(a)(2),
26             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
27             Revenue Code; the provisions  of  this  subparagraph
28             are exempt from the provisions of Section 250;
29                  (K)  An   amount   equal   to  those  dividends
30             included  in  such  total  which  were  paid  by   a
31             corporation which conducts business operations in an
32             Enterprise  Zone or zones created under the Illinois
33             Enterprise Zone Act, enacted  by  the  82nd  General
34             Assembly,  and  conducts  substantially  all  of its
 
HB3676 Engrossed            -30-     LRB093 09277 SJM 09510 b
 1             operations in an Enterprise Zone or Zones;
 2                  (L)  An amount equal to any  contribution  made
 3             to  a  job  training project established pursuant to
 4             the   Real   Property   Tax   Increment   Allocation
 5             Redevelopment Act;
 6                  (M)  An  amount  equal   to   those   dividends
 7             included   in   such  total  that  were  paid  by  a
 8             corporation that conducts business operations  in  a
 9             federally  designated Foreign Trade Zone or Sub-Zone
10             and  that  is  designated  a  High  Impact  Business
11             located  in  Illinois;   provided   that   dividends
12             eligible  for the deduction provided in subparagraph
13             (K) of paragraph (2) of this subsection shall not be
14             eligible  for  the  deduction  provided  under  this
15             subparagraph (M);
16                  (N)  An amount  equal  to  the  amount  of  the
17             deduction  used  to  compute  the federal income tax
18             credit for restoration of substantial  amounts  held
19             under  claim  of right for the taxable year pursuant
20             to Section 1341 of  the  Internal  Revenue  Code  of
21             1986;
22                  (O)  For taxable years 2001 and thereafter, for
23             the  taxable  year  in  which the bonus depreciation
24             deduction  (30%  of  the  adjusted  basis   of   the
25             qualified  property)  is  taken  on  the  taxpayer's
26             federal  income  tax  return under subsection (k) of
27             Section 168 of the Internal  Revenue  Code  and  for
28             each  applicable  taxable year thereafter, an amount
29             equal to "x", where:
30                       (1)  "y"  equals   the   amount   of   the
31                  depreciation  deduction  taken  for the taxable
32                  year  on  the  taxpayer's  federal  income  tax
33                  return  on  property  for   which   the   bonus
34                  depreciation  deduction  (30%  of  the adjusted
 
HB3676 Engrossed            -31-     LRB093 09277 SJM 09510 b
 1                  basis of the qualified property) was  taken  in
 2                  any year under subsection (k) of Section 168 of
 3                  the  Internal  Revenue  Code, but not including
 4                  the bonus depreciation deduction; and
 5                       (2)  "x" equals "y" multiplied by  30  and
 6                  then  divided  by  70  (or  "y"  multiplied  by
 7                  0.429).
 8                  The   aggregate   amount  deducted  under  this
 9             subparagraph in all taxable years for any one  piece
10             of  property  may not exceed the amount of the bonus
11             depreciation deduction (30% of the adjusted basis of
12             the qualified property) taken on  that  property  on
13             the  taxpayer's  federal  income  tax  return  under
14             subsection  (k)  of  Section  168  of  the  Internal
15             Revenue Code; and
16                  (P)  If  the taxpayer reports a capital gain or
17             loss on the taxpayer's federal income tax return for
18             the taxable year based on  a  sale  or  transfer  of
19             property  for which the taxpayer was required in any
20             taxable year to make an addition modification  under
21             subparagraph  (D-5),  then  an  amount equal to that
22             addition modification.
23                  The taxpayer is allowed to take  the  deduction
24             under  this  subparagraph  only once with respect to
25             any one piece of property.

26        (e)  Gross income; adjusted gross income; taxable income.
27             (1)  In  general.   Subject  to  the  provisions  of
28        paragraph (2) and subsection (b)  (3),  for  purposes  of
29        this  Section  and  Section  803(e),  a  taxpayer's gross
30        income, adjusted gross income, or taxable income for  the
31        taxable  year  shall  mean  the  amount  of gross income,
32        adjusted  gross  income  or   taxable   income   properly
33        reportable  for  federal  income  tax  purposes  for  the
34        taxable year under the provisions of the Internal Revenue
 
HB3676 Engrossed            -32-     LRB093 09277 SJM 09510 b
 1        Code.  Taxable income may be less than zero. However, for
 2        taxable years ending on or after December 31,  1986,  net
 3        operating  loss  carryforwards  from taxable years ending
 4        prior to December 31, 1986, may not  exceed  the  sum  of
 5        federal  taxable  income  for the taxable year before net
 6        operating loss deduction, plus  the  excess  of  addition
 7        modifications  over  subtraction  modifications  for  the
 8        taxable year.  For taxable years ending prior to December
 9        31, 1986, taxable income may never be an amount in excess
10        of the net operating loss for the taxable year as defined
11        in subsections (c) and (d) of Section 172 of the Internal
12        Revenue  Code,  provided  that  when  taxable income of a
13        corporation (other  than  a  Subchapter  S  corporation),
14        trust,   or   estate  is  less  than  zero  and  addition
15        modifications, other than those provided by  subparagraph
16        (E)  of  paragraph (2) of subsection (b) for corporations
17        or subparagraph (E) of paragraph (2)  of  subsection  (c)
18        for trusts and estates, exceed subtraction modifications,
19        an   addition  modification  must  be  made  under  those
20        subparagraphs for any other taxable  year  to  which  the
21        taxable  income  less  than  zero (net operating loss) is
22        applied under Section 172 of the Internal Revenue Code or
23        under  subparagraph  (E)  of  paragraph   (2)   of   this
24        subsection (e) applied in conjunction with Section 172 of
25        the Internal Revenue Code.
26             (2)  Special rule.  For purposes of paragraph (1) of
27        this  subsection,  the taxable income properly reportable
28        for federal income tax purposes shall mean:
29                  (A)  Certain life insurance companies.  In  the
30             case  of a life insurance company subject to the tax
31             imposed by Section 801 of the Internal Revenue Code,
32             life insurance  company  taxable  income,  plus  the
33             amount  of  distribution  from pre-1984 policyholder
34             surplus accounts as calculated under Section 815a of
 
HB3676 Engrossed            -33-     LRB093 09277 SJM 09510 b
 1             the Internal Revenue Code;
 2                  (B)  Certain other insurance companies.  In the
 3             case of mutual insurance companies  subject  to  the
 4             tax  imposed  by Section 831 of the Internal Revenue
 5             Code, insurance company taxable income;
 6                  (C)  Regulated investment  companies.   In  the
 7             case  of  a  regulated investment company subject to
 8             the tax imposed  by  Section  852  of  the  Internal
 9             Revenue Code, investment company taxable income;
10                  (D)  Real  estate  investment  trusts.   In the
11             case of a real estate investment  trust  subject  to
12             the  tax  imposed  by  Section  857  of the Internal
13             Revenue Code, real estate investment  trust  taxable
14             income;
15                  (E)  Consolidated corporations.  In the case of
16             a  corporation  which  is  a member of an affiliated
17             group of corporations filing a  consolidated  income
18             tax  return  for the taxable year for federal income
19             tax purposes, taxable income determined as  if  such
20             corporation  had filed a separate return for federal
21             income tax purposes for the taxable  year  and  each
22             preceding  taxable year for which it was a member of
23             an  affiliated   group.   For   purposes   of   this
24             subparagraph, the taxpayer's separate taxable income
25             shall  be  determined as if the election provided by
26             Section 243(b) (2) of the Internal Revenue Code  had
27             been in effect for all such years;
28                  (F)  Cooperatives.     In   the   case   of   a
29             cooperative corporation or association, the  taxable
30             income of such organization determined in accordance
31             with  the provisions of Section 1381 through 1388 of
32             the Internal Revenue Code;
33                  (G)  Subchapter S corporations.   In  the  case
34             of:  (i)  a Subchapter S corporation for which there
 
HB3676 Engrossed            -34-     LRB093 09277 SJM 09510 b
 1             is in effect an election for the taxable year  under
 2             Section  1362  of  the  Internal  Revenue  Code, the
 3             taxable income of  such  corporation  determined  in
 4             accordance  with  Section  1363(b)  of  the Internal
 5             Revenue Code, except that taxable income shall  take
 6             into  account  those  items  which  are  required by
 7             Section 1363(b)(1) of the Internal Revenue  Code  to
 8             be  separately  stated;  and  (ii)  a  Subchapter  S
 9             corporation  for  which there is in effect a federal
10             election  to  opt  out  of  the  provisions  of  the
11             Subchapter S Revision Act of 1982 and  have  applied
12             instead  the  prior federal Subchapter S rules as in
13             effect on July 1, 1982, the taxable income  of  such
14             corporation   determined   in  accordance  with  the
15             federal Subchapter S rules as in effect on  July  1,
16             1982; and
17                  (H)  Partnerships.     In   the   case   of   a
18             partnership, taxable income determined in accordance
19             with Section  703  of  the  Internal  Revenue  Code,
20             except  that  taxable income shall take into account
21             those items which are required by Section  703(a)(1)
22             to  be  separately  stated  but which would be taken
23             into account by an  individual  in  calculating  his
24             taxable income.

25        (f)  Valuation limitation amount.
26             (1)  In  general.   The  valuation limitation amount
27        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
28        (d)(2) (E) is an amount equal to:
29                  (A)  The   sum   of   the  pre-August  1,  1969
30             appreciation amounts (to the  extent  consisting  of
31             gain reportable under the provisions of Section 1245
32             or  1250  of  the  Internal  Revenue  Code)  for all
33             property in respect of which such gain was  reported
34             for the taxable year; plus
 
HB3676 Engrossed            -35-     LRB093 09277 SJM 09510 b
 1                  (B)  The   lesser   of   (i)  the  sum  of  the
 2             pre-August 1,  1969  appreciation  amounts  (to  the
 3             extent  consisting of capital gain) for all property
 4             in respect of  which  such  gain  was  reported  for
 5             federal income tax purposes for the taxable year, or
 6             (ii)  the  net  capital  gain  for the taxable year,
 7             reduced in either case by any amount  of  such  gain
 8             included  in  the amount determined under subsection
 9             (a) (2) (F) or (c) (2) (H).
10             (2)  Pre-August 1, 1969 appreciation amount.
11                  (A)  If  the  fair  market  value  of  property
12             referred   to   in   paragraph   (1)   was   readily
13             ascertainable on August 1, 1969, the  pre-August  1,
14             1969  appreciation  amount  for such property is the
15             lesser of (i) the excess of such fair  market  value
16             over the taxpayer's basis (for determining gain) for
17             such  property  on  that  date (determined under the
18             Internal Revenue Code as in effect on that date), or
19             (ii) the total  gain  realized  and  reportable  for
20             federal  income tax purposes in respect of the sale,
21             exchange or other disposition of such property.
22                  (B)  If  the  fair  market  value  of  property
23             referred  to  in  paragraph  (1)  was  not   readily
24             ascertainable  on  August 1, 1969, the pre-August 1,
25             1969 appreciation amount for such property  is  that
26             amount  which bears the same ratio to the total gain
27             reported in respect  of  the  property  for  federal
28             income  tax  purposes  for  the taxable year, as the
29             number of full calendar months in that part  of  the
30             taxpayer's  holding  period  for the property ending
31             July 31, 1969 bears to the number of  full  calendar
32             months  in  the taxpayer's entire holding period for
33             the property.
34                  (C)  The  Department   shall   prescribe   such
 
HB3676 Engrossed            -36-     LRB093 09277 SJM 09510 b
 1             regulations  as  may  be  necessary to carry out the
 2             purposes of this paragraph.

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

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

21        Section  99.  Effective date.  This Act takes effect upon
22    becoming law.