93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB6626

 

Introduced 02/09/04, by Chapin Rose

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203   from Ch. 120, par. 2-203
110 ILCS 979/55

    Amends the Illinois Income Tax Act. Provides that, for taxable years beginning on or after January 1, 2004, moneys contributed during the taxable year by the taxpayer for the purchase of an Illinois prepaid tuition contract, excluding moneys rolled over from another qualified tuition program account, may be deducted from the taxpayer's federal adjusted gross income in arriving at base income for Illinois income tax purposes. Exempts the deduction from the sunset provisions of the Act. Amends the Illinois Prepaid Tuition Act to include a reference to the deduction. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB6626 LRB093 16720 SJM 42371 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 paragraph
12     (2).
13         (2) Modifications. The adjusted gross income referred
14     to in paragraph (1) shall be modified by adding thereto the
15     sum of the following amounts:
16             (A) An amount equal to all amounts paid or accrued
17         to the taxpayer as interest or dividends during the
18         taxable year to the extent excluded from gross income
19         in the computation of adjusted gross income, except
20         stock dividends of qualified public utilities
21         described in Section 305(e) of the Internal Revenue
22         Code;
23             (B) An amount equal to the amount of tax imposed by
24         this Act to the extent deducted from gross income in
25         the computation of adjusted gross income for the
26         taxable year;
27             (C) An amount equal to the amount received during
28         the taxable year as a recovery or refund of real
29         property taxes paid with respect to the taxpayer's
30         principal residence under the Revenue Act of 1939 and
31         for which a deduction was previously taken under
32         subparagraph (L) of this paragraph (2) prior to July 1,

 

 

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1         1991, the retrospective application date of Article 4
2         of Public Act 87-17. In the case of multi-unit or
3         multi-use structures and farm dwellings, the taxes on
4         the taxpayer's principal residence shall be that
5         portion of the total taxes for the entire property
6         which is attributable to such principal residence;
7             (D) An amount equal to the amount of the capital
8         gain deduction allowable under the Internal Revenue
9         Code, to the extent deducted from gross income in the
10         computation of adjusted gross income;
11             (D-5) An amount, to the extent not included in
12         adjusted gross income, equal to the amount of money
13         withdrawn by the taxpayer in the taxable year from a
14         medical care savings account and the interest earned on
15         the account in the taxable year of a withdrawal
16         pursuant to subsection (b) of Section 20 of the Medical
17         Care Savings Account Act or subsection (b) of Section
18         20 of the Medical Care Savings Account Act of 2000;
19             (D-10) For taxable years ending after December 31,
20         1997, an amount equal to any eligible remediation costs
21         that the individual deducted in computing adjusted
22         gross income and for which the individual claims a
23         credit under subsection (l) of Section 201;
24             (D-15) For taxable years 2001 and thereafter, an
25         amount equal to the bonus depreciation deduction (30%
26         of the adjusted basis of the qualified property) taken
27         on the taxpayer's federal income tax return for the
28         taxable year under subsection (k) of Section 168 of the
29         Internal Revenue Code; and
30             (D-16) If the taxpayer reports a capital gain or
31         loss on the taxpayer's federal income tax return for
32         the taxable year based on a sale or transfer of
33         property for which the taxpayer was required in any
34         taxable year to make an addition modification under
35         subparagraph (D-15), then an amount equal to the
36         aggregate amount of the deductions taken in all taxable

 

 

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1         years under subparagraph (Z) with respect to that
2         property. ;
3             The taxpayer is required to make the addition
4         modification under this subparagraph only once with
5         respect to any one piece of property; . and
6             (D-20) (D-15) For taxable years beginning on or
7         after January 1, 2002, in the case of a distribution
8         from a qualified tuition program under Section 529 of
9         the Internal Revenue Code, other than (i) a
10         distribution from a College Savings Pool created under
11         Section 16.5 of the State Treasurer Act or (ii) a
12         distribution from the Illinois Prepaid Tuition Trust
13         Fund, an amount equal to the amount excluded from gross
14         income under Section 529(c)(3)(B);
15     and by deducting from the total so obtained the sum of the
16     following amounts:
17             (E) For taxable years ending before December 31,
18         2001, any amount included in such total in respect of
19         any compensation (including but not limited to any
20         compensation paid or accrued to a serviceman while a
21         prisoner of war or missing in action) paid to a
22         resident by reason of being on active duty in the Armed
23         Forces of the United States and in respect of any
24         compensation paid or accrued to a resident who as a
25         governmental employee was a prisoner of war or missing
26         in action, and in respect of any compensation paid to a
27         resident in 1971 or thereafter for annual training
28         performed pursuant to Sections 502 and 503, Title 32,
29         United States Code as a member of the Illinois National
30         Guard. For taxable years ending on or after December
31         31, 2001, any amount included in such total in respect
32         of any compensation (including but not limited to any
33         compensation paid or accrued to a serviceman while a
34         prisoner of war or missing in action) paid to a
35         resident by reason of being a member of any component
36         of the Armed Forces of the United States and in respect

 

 

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1         of any compensation paid or accrued to a resident who
2         as a governmental employee was a prisoner of war or
3         missing in action, and in respect of any compensation
4         paid to a resident in 2001 or thereafter by reason of
5         being a member of the Illinois National Guard. The
6         provisions of this amendatory Act of the 92nd General
7         Assembly are exempt from the provisions of Section 250;
8             (F) An amount equal to all amounts included in such
9         total pursuant to the provisions of Sections 402(a),
10         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
11         Internal Revenue Code, or included in such total as
12         distributions under the provisions of any retirement
13         or disability plan for employees of any governmental
14         agency or unit, or retirement payments to retired
15         partners, which payments are excluded in computing net
16         earnings from self employment by Section 1402 of the
17         Internal Revenue Code and regulations adopted pursuant
18         thereto;
19             (G) The valuation limitation amount;
20             (H) An amount equal to the amount of any tax
21         imposed by this Act which was refunded to the taxpayer
22         and included in such total for the taxable year;
23             (I) An amount equal to all amounts included in such
24         total pursuant to the provisions of Section 111 of the
25         Internal Revenue Code as a recovery of items previously
26         deducted from adjusted gross income in the computation
27         of taxable income;
28             (J) An amount equal to those dividends included in
29         such total which were paid by a corporation which
30         conducts business operations in an Enterprise Zone or
31         zones created under the Illinois Enterprise Zone Act,
32         and conducts substantially all of its operations in an
33         Enterprise Zone or zones;
34             (K) An amount equal to those dividends included in
35         such total that were paid by a corporation that
36         conducts business operations in a federally designated

 

 

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1         Foreign Trade Zone or Sub-Zone and that is designated a
2         High Impact Business located in Illinois; provided
3         that dividends eligible for the deduction provided in
4         subparagraph (J) of paragraph (2) of this subsection
5         shall not be eligible for the deduction provided under
6         this subparagraph (K);
7             (L) For taxable years ending after December 31,
8         1983, an amount equal to all social security benefits
9         and railroad retirement benefits included in such
10         total pursuant to Sections 72(r) and 86 of the Internal
11         Revenue Code;
12             (M) With the exception of any amounts subtracted
13         under subparagraph (N), an amount equal to the sum of
14         all amounts disallowed as deductions by (i) Sections
15         171(a) (2), and 265(2) of the Internal Revenue Code of
16         1954, as now or hereafter amended, and all amounts of
17         expenses allocable to interest and disallowed as
18         deductions by Section 265(1) of the Internal Revenue
19         Code of 1954, as now or hereafter amended; and (ii) for
20         taxable years ending on or after August 13, 1999,
21         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
22         the Internal Revenue Code; the provisions of this
23         subparagraph are exempt from the provisions of Section
24         250;
25             (N) An amount equal to all amounts included in such
26         total which are exempt from taxation by this State
27         either by reason of its statutes or Constitution or by
28         reason of the Constitution, treaties or statutes of the
29         United States; provided that, in the case of any
30         statute of this State that exempts income derived from
31         bonds or other obligations from the tax imposed under
32         this Act, the amount exempted shall be the interest net
33         of bond premium amortization;
34             (O) An amount equal to any contribution made to a
35         job training project established pursuant to the Tax
36         Increment Allocation Redevelopment Act;

 

 

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1             (P) An amount equal to the amount of the deduction
2         used to compute the federal income tax credit for
3         restoration of substantial amounts held under claim of
4         right for the taxable year pursuant to Section 1341 of
5         the Internal Revenue Code of 1986;
6             (Q) An amount equal to any amounts included in such
7         total, received by the taxpayer as an acceleration in
8         the payment of life, endowment or annuity benefits in
9         advance of the time they would otherwise be payable as
10         an indemnity for a terminal illness;
11             (R) An amount equal to the amount of any federal or
12         State bonus paid to veterans of the Persian Gulf War;
13             (S) An amount, to the extent included in adjusted
14         gross income, equal to the amount of a contribution
15         made in the taxable year on behalf of the taxpayer to a
16         medical care savings account established under the
17         Medical Care Savings Account Act or the Medical Care
18         Savings Account Act of 2000 to the extent the
19         contribution is accepted by the account administrator
20         as provided in that Act;
21             (T) An amount, to the extent included in adjusted
22         gross income, equal to the amount of interest earned in
23         the taxable year on a medical care savings account
24         established under the Medical Care Savings Account Act
25         or the Medical Care Savings Account Act of 2000 on
26         behalf of the taxpayer, other than interest added
27         pursuant to item (D-5) of this paragraph (2);
28             (U) For one taxable year beginning on or after
29         January 1, 1994, an amount equal to the total amount of
30         tax imposed and paid under subsections (a) and (b) of
31         Section 201 of this Act on grant amounts received by
32         the taxpayer under the Nursing Home Grant Assistance
33         Act during the taxpayer's taxable years 1992 and 1993;
34             (V) Beginning with tax years ending on or after
35         December 31, 1995 and ending with tax years ending on
36         or before December 31, 2004, an amount equal to the

 

 

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1         amount paid by a taxpayer who is a self-employed
2         taxpayer, a partner of a partnership, or a shareholder
3         in a Subchapter S corporation for health insurance or
4         long-term care insurance for that taxpayer or that
5         taxpayer's spouse or dependents, to the extent that the
6         amount paid for that health insurance or long-term care
7         insurance may be deducted under Section 213 of the
8         Internal Revenue Code of 1986, has not been deducted on
9         the federal income tax return of the taxpayer, and does
10         not exceed the taxable income attributable to that
11         taxpayer's income, self-employment income, or
12         Subchapter S corporation income; except that no
13         deduction shall be allowed under this item (V) if the
14         taxpayer is eligible to participate in any health
15         insurance or long-term care insurance plan of an
16         employer of the taxpayer or the taxpayer's spouse. The
17         amount of the health insurance and long-term care
18         insurance subtracted under this item (V) shall be
19         determined by multiplying total health insurance and
20         long-term care insurance premiums paid by the taxpayer
21         times a number that represents the fractional
22         percentage of eligible medical expenses under Section
23         213 of the Internal Revenue Code of 1986 not actually
24         deducted on the taxpayer's federal income tax return;
25             (W) For taxable years beginning on or after January
26         1, 1998, all amounts included in the taxpayer's federal
27         gross income in the taxable year from amounts converted
28         from a regular IRA to a Roth IRA. This paragraph is
29         exempt from the provisions of Section 250;
30             (X) For taxable year 1999 and thereafter, an amount
31         equal to the amount of any (i) distributions, to the
32         extent includible in gross income for federal income
33         tax purposes, made to the taxpayer because of his or
34         her status as a victim of persecution for racial or
35         religious reasons by Nazi Germany or any other Axis
36         regime or as an heir of the victim and (ii) items of

 

 

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1         income, to the extent includible in gross income for
2         federal income tax purposes, attributable to, derived
3         from or in any way related to assets stolen from,
4         hidden from, or otherwise lost to a victim of
5         persecution for racial or religious reasons by Nazi
6         Germany or any other Axis regime immediately prior to,
7         during, and immediately after World War II, including,
8         but not limited to, interest on the proceeds receivable
9         as insurance under policies issued to a victim of
10         persecution for racial or religious reasons by Nazi
11         Germany or any other Axis regime by European insurance
12         companies immediately prior to and during World War II;
13         provided, however, this subtraction from federal
14         adjusted gross income does not apply to assets acquired
15         with such assets or with the proceeds from the sale of
16         such assets; provided, further, this paragraph shall
17         only apply to a taxpayer who was the first recipient of
18         such assets after their recovery and who is a victim of
19         persecution for racial or religious reasons by Nazi
20         Germany or any other Axis regime or as an heir of the
21         victim. The amount of and the eligibility for any
22         public assistance, benefit, or similar entitlement is
23         not affected by the inclusion of items (i) and (ii) of
24         this paragraph in gross income for federal income tax
25         purposes. This paragraph is exempt from the provisions
26         of Section 250;
27             (Y) For taxable years beginning on or after January
28         1, 2002, moneys contributed in the taxable year to a
29         College Savings Pool account under Section 16.5 of the
30         State Treasurer Act, except that amounts excluded from
31         gross income under Section 529(c)(3)(C)(i) of the
32         Internal Revenue Code shall not be considered moneys
33         contributed under this subparagraph (Y). This
34         subparagraph (Y) is exempt from the provisions of
35         Section 250;
36             (Z) For taxable years 2001 and thereafter, for the

 

 

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1         taxable year in which the bonus depreciation deduction
2         (30% of the adjusted basis of the qualified property)
3         is taken on the taxpayer's federal income tax return
4         under subsection (k) of Section 168 of the Internal
5         Revenue Code and for each applicable taxable year
6         thereafter, an amount equal to "x", where:
7                 (1) "y" equals the amount of the depreciation
8             deduction taken for the taxable year on the
9             taxpayer's federal income tax return on property
10             for which the bonus depreciation deduction (30% of
11             the adjusted basis of the qualified property) was
12             taken in any year under subsection (k) of Section
13             168 of the Internal Revenue Code, but not including
14             the bonus depreciation deduction; and
15                 (2) "x" equals "y" multiplied by 30 and then
16             divided by 70 (or "y" multiplied by 0.429).
17             The aggregate amount deducted under this
18         subparagraph in all taxable years for any one piece of
19         property may not exceed the amount of the bonus
20         depreciation deduction (30% of the adjusted basis of
21         the qualified property) taken on that property on the
22         taxpayer's federal income tax return under subsection
23         (k) of Section 168 of the Internal Revenue Code; and
24             (AA) If the taxpayer reports a capital gain or loss
25         on the taxpayer's federal income tax return for the
26         taxable year based on a sale or transfer of property
27         for which the taxpayer was required in any taxable year
28         to make an addition modification under subparagraph
29         (D-15), then an amount equal to that addition
30         modification.
31             The taxpayer is allowed to take the deduction under
32         this subparagraph only once with respect to any one
33         piece of property; and
34             (BB) (Z) Any amount included in adjusted gross
35         income, other than salary, received by a driver in a
36         ridesharing arrangement using a motor vehicle; and

 

 

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1             (CC) For taxable years beginning on or after
2         January 1, 2004, moneys contributed during the taxable
3         year by the taxpayer for the purchase of an Illinois
4         prepaid tuition contract, as defined in the Illinois
5         Prepaid Tuition Act, except that amounts excluded from
6         gross income under Section 529(c)(3)(C)(i) of the
7         Internal Revenue Code shall not be considered moneys
8         contributed under this subparagraph (CC). This
9         subparagraph is exempt from the provisions of Section
10         250 of this Act.
 
11     (b) Corporations.
12         (1) In general. In the case of a corporation, base
13     income means an amount equal to the taxpayer's taxable
14     income for the taxable year as modified by paragraph (2).
15         (2) Modifications. 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 accrued
19         to the taxpayer as interest and all distributions
20         received from regulated investment companies during
21         the taxable year to the extent excluded from gross
22         income in the computation of taxable income;
23             (B) An amount equal to the amount of tax imposed by
24         this Act to the extent deducted from gross income in
25         the computation of taxable income for the taxable year;
26             (C) In the case of a regulated investment company,
27         an amount equal to the excess of (i) the net long-term
28         capital gain for the taxable year, over (ii) the amount
29         of the capital gain dividends designated as such in
30         accordance with Section 852(b)(3)(C) of the Internal
31         Revenue Code and any amount designated under Section
32         852(b)(3)(D) of the Internal Revenue Code,
33         attributable to the taxable year (this amendatory Act
34         of 1995 (Public Act 89-89) is declarative of existing
35         law and is not a new enactment);

 

 

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1             (D) The amount of any net operating loss deduction
2         taken in arriving at taxable income, other than a net
3         operating loss carried forward from a taxable year
4         ending prior to December 31, 1986;
5             (E) For taxable years in which a net operating loss
6         carryback or carryforward from a taxable year ending
7         prior to December 31, 1986 is an element of taxable
8         income under paragraph (1) of subsection (e) or
9         subparagraph (E) of paragraph (2) of subsection (e),
10         the amount by which addition modifications other than
11         those provided by this subparagraph (E) exceeded
12         subtraction modifications in such earlier taxable
13         year, with the following limitations applied in the
14         order that they are listed:
15                 (i) the addition modification relating to the
16             net operating loss carried back or forward to the
17             taxable year from any taxable year ending prior to
18             December 31, 1986 shall be reduced by the amount of
19             addition modification under this subparagraph (E)
20             which related to that net operating loss and which
21             was taken into account in calculating the base
22             income of an earlier taxable year, and
23                 (ii) the addition modification relating to the
24             net operating loss carried back or forward to the
25             taxable year from any taxable year ending prior to
26             December 31, 1986 shall not exceed the amount of
27             such carryback or carryforward;
28             For taxable years in which there is a net operating
29         loss carryback or carryforward from more than one other
30         taxable year ending prior to December 31, 1986, the
31         addition modification provided in this subparagraph
32         (E) shall be the sum of the amounts computed
33         independently under the preceding provisions of this
34         subparagraph (E) for each such taxable year;
35             (E-5) For taxable years ending after December 31,
36         1997, an amount equal to any eligible remediation costs

 

 

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1         that the corporation deducted in computing adjusted
2         gross income and for which the corporation claims a
3         credit under subsection (l) of Section 201;
4             (E-10) For taxable years 2001 and thereafter, an
5         amount equal to the bonus depreciation deduction (30%
6         of the adjusted basis of the qualified property) taken
7         on the taxpayer's federal income tax return for the
8         taxable year under subsection (k) of Section 168 of the
9         Internal Revenue Code; and
10             (E-11) If the taxpayer reports a capital gain or
11         loss on the taxpayer's federal income tax return for
12         the taxable year based on a sale or transfer of
13         property for which the taxpayer was required in any
14         taxable year to make an addition modification under
15         subparagraph (E-10), then an amount equal to the
16         aggregate amount of the deductions taken in all taxable
17         years under subparagraph (T) with respect to that
18         property. ;
19             The taxpayer is required to make the addition
20         modification under this subparagraph only once with
21         respect to any one piece of property;
22     and by deducting from the total so obtained the sum of the
23     following amounts:
24             (F) An amount equal to the amount of any tax
25         imposed by this Act which was refunded to the taxpayer
26         and included in such total for the taxable year;
27             (G) An amount equal to any amount included in such
28         total under Section 78 of the Internal Revenue Code;
29             (H) In the case of a regulated investment company,
30         an amount equal to the amount of exempt interest
31         dividends as defined in subsection (b) (5) of Section
32         852 of the Internal Revenue Code, paid to shareholders
33         for the taxable year;
34             (I) With the exception of any amounts subtracted
35         under subparagraph (J), an amount equal to the sum of
36         all amounts disallowed as deductions by (i) Sections

 

 

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1         171(a) (2), and 265(a)(2) and amounts disallowed as
2         interest expense by Section 291(a)(3) of the Internal
3         Revenue Code, as now or hereafter amended, and all
4         amounts of expenses allocable to interest and
5         disallowed as deductions by Section 265(a)(1) of the
6         Internal Revenue Code, as now or hereafter amended; and
7         (ii) for taxable years ending on or after August 13,
8         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
9         832(b)(5)(B)(i) of the Internal Revenue Code; the
10         provisions of this subparagraph are exempt from the
11         provisions of Section 250;
12             (J) An amount equal to all amounts included in such
13         total which are exempt from taxation by this State
14         either by reason of its statutes or Constitution or by
15         reason of the Constitution, treaties or statutes of the
16         United States; provided that, in the case of any
17         statute of this State that exempts income derived from
18         bonds or other obligations from the tax imposed under
19         this Act, the amount exempted shall be the interest net
20         of bond premium amortization;
21             (K) An amount equal to those dividends included in
22         such total which were paid by a corporation which
23         conducts business operations in an Enterprise Zone or
24         zones created under the Illinois Enterprise Zone Act
25         and conducts substantially all of its operations in an
26         Enterprise Zone or zones;
27             (L) An amount equal to those dividends included in
28         such total that were paid by a corporation that
29         conducts business operations in a federally designated
30         Foreign Trade Zone or Sub-Zone and that is designated a
31         High Impact Business located in Illinois; provided
32         that dividends eligible for the deduction provided in
33         subparagraph (K) of paragraph 2 of this subsection
34         shall not be eligible for the deduction provided under
35         this subparagraph (L);
36             (M) For any taxpayer that is a financial

 

 

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1         organization within the meaning of Section 304(c) of
2         this Act, an amount included in such total as interest
3         income from a loan or loans made by such taxpayer to a
4         borrower, to the extent that such a loan is secured by
5         property which is eligible for the Enterprise Zone
6         Investment Credit. To determine the portion of a loan
7         or loans that is secured by property eligible for a
8         Section 201(f) investment credit to the borrower, the
9         entire principal amount of the loan or loans between
10         the taxpayer and the borrower should be divided into
11         the basis of the Section 201(f) investment credit
12         property which secures the loan or loans, using for
13         this purpose the original basis of such property on the
14         date that it was placed in service in the Enterprise
15         Zone. The subtraction modification available to
16         taxpayer in any year under this subsection shall be
17         that portion of the total interest paid by the borrower
18         with respect to such loan attributable to the eligible
19         property as calculated under the previous sentence;
20             (M-1) For any taxpayer that is a financial
21         organization within the meaning of Section 304(c) of
22         this Act, an amount included in such total as interest
23         income from a loan or loans made by such taxpayer to a
24         borrower, to the extent that such a loan is secured by
25         property which is eligible for the High Impact Business
26         Investment Credit. To determine the portion of a loan
27         or loans that is secured by property eligible for a
28         Section 201(h) investment credit to the borrower, the
29         entire principal amount of the loan or loans between
30         the taxpayer and the borrower should be divided into
31         the basis of the Section 201(h) investment credit
32         property which secures the loan or loans, using for
33         this purpose the original basis of such property on the
34         date that it was placed in service in a federally
35         designated Foreign Trade Zone or Sub-Zone located in
36         Illinois. No taxpayer that is eligible for the

 

 

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1         deduction provided in subparagraph (M) of paragraph
2         (2) of this subsection shall be eligible for the
3         deduction provided under this subparagraph (M-1). The
4         subtraction modification available to taxpayers in any
5         year under this subsection shall be that portion of the
6         total interest paid by the borrower with respect to
7         such loan attributable to the eligible property as
8         calculated under the previous sentence;
9             (N) Two times any contribution made during the
10         taxable year to a designated zone organization to the
11         extent that the contribution (i) qualifies as a
12         charitable contribution under subsection (c) of
13         Section 170 of the Internal Revenue Code and (ii) must,
14         by its terms, be used for a project approved by the
15         Department of Commerce and Economic Opportunity
16         Community Affairs under Section 11 of the Illinois
17         Enterprise Zone Act;
18             (O) An amount equal to: (i) 85% for taxable years
19         ending on or before December 31, 1992, or, a percentage
20         equal to the percentage allowable under Section
21         243(a)(1) of the Internal Revenue Code of 1986 for
22         taxable years ending after December 31, 1992, of the
23         amount by which dividends included in taxable income
24         and received from a corporation that is not created or
25         organized under the laws of the United States or any
26         state or political subdivision thereof, including, for
27         taxable years ending on or after December 31, 1988,
28         dividends received or deemed received or paid or deemed
29         paid under Sections 951 through 964 of the Internal
30         Revenue Code, exceed the amount of the modification
31         provided under subparagraph (G) of paragraph (2) of
32         this subsection (b) which is related to such dividends;
33         plus (ii) 100% of the amount by which dividends,
34         included in taxable income and received, including,
35         for taxable years ending on or after December 31, 1988,
36         dividends received or deemed received or paid or deemed

 

 

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1         paid under Sections 951 through 964 of the Internal
2         Revenue Code, from any such corporation specified in
3         clause (i) that would but for the provisions of Section
4         1504 (b) (3) of the Internal Revenue Code be treated as
5         a member of the affiliated group which includes the
6         dividend recipient, exceed the amount of the
7         modification provided under subparagraph (G) of
8         paragraph (2) of this subsection (b) which is related
9         to such dividends;
10             (P) An amount equal to any contribution made to a
11         job training project established pursuant to the Tax
12         Increment Allocation Redevelopment Act;
13             (Q) An amount equal to the amount of the deduction
14         used to compute the federal income tax credit for
15         restoration of substantial amounts held under claim of
16         right for the taxable year pursuant to Section 1341 of
17         the Internal Revenue Code of 1986;
18             (R) In the case of an attorney-in-fact with respect
19         to whom an interinsurer or a reciprocal insurer has
20         made the election under Section 835 of the Internal
21         Revenue Code, 26 U.S.C. 835, an amount equal to the
22         excess, if any, of the amounts paid or incurred by that
23         interinsurer or reciprocal insurer in the taxable year
24         to the attorney-in-fact over the deduction allowed to
25         that interinsurer or reciprocal insurer with respect
26         to the attorney-in-fact under Section 835(b) of the
27         Internal Revenue Code for the taxable year;
28             (S) For taxable years ending on or after December
29         31, 1997, in the case of a Subchapter S corporation, an
30         amount equal to all amounts of income allocable to a
31         shareholder subject to the Personal Property Tax
32         Replacement Income Tax imposed by subsections (c) and
33         (d) of Section 201 of this Act, including amounts
34         allocable to organizations exempt from federal income
35         tax by reason of Section 501(a) of the Internal Revenue
36         Code. This subparagraph (S) is exempt from the

 

 

HB6626 - 17 - LRB093 16720 SJM 42371 b

1         provisions of Section 250;
2             (T) For taxable years 2001 and thereafter, for the
3         taxable year in which the bonus depreciation deduction
4         (30% of the adjusted basis of the qualified property)
5         is taken on the taxpayer's federal income tax return
6         under subsection (k) of Section 168 of the Internal
7         Revenue Code and for each applicable taxable year
8         thereafter, an amount equal to "x", where:
9                 (1) "y" equals the amount of the depreciation
10             deduction taken for the taxable year on the
11             taxpayer's federal income tax return on property
12             for which the bonus depreciation deduction (30% of
13             the adjusted basis of the qualified property) was
14             taken in any year under subsection (k) of Section
15             168 of the Internal Revenue Code, but not including
16             the bonus depreciation deduction; and
17                 (2) "x" equals "y" multiplied by 30 and then
18             divided by 70 (or "y" multiplied by 0.429).
19             The aggregate amount deducted under this
20         subparagraph in all taxable years for any one piece of
21         property may not exceed the amount of the bonus
22         depreciation deduction (30% of the adjusted basis of
23         the qualified property) taken on that property on the
24         taxpayer's federal income tax return under subsection
25         (k) of Section 168 of the Internal Revenue Code; and
26             (U) If the taxpayer reports a capital gain or loss
27         on the taxpayer's federal income tax return for the
28         taxable year based on a sale or transfer of property
29         for which the taxpayer was required in any taxable year
30         to make an addition modification under subparagraph
31         (E-10), then an amount equal to that addition
32         modification.
33             The taxpayer is allowed to take the deduction under
34         this subparagraph only once with respect to any one
35         piece of property; and
36             (V) For taxable years beginning on or after January

 

 

HB6626 - 18 - LRB093 16720 SJM 42371 b

1         1, 2003, moneys contributed during the taxable year by
2         the taxpayer for the purchase of an Illinois prepaid
3         tuition contract, as defined in the Illinois Prepaid
4         Tuition Act, except that amounts excluded from gross
5         income under Section 529(c)(3)(C)(i) of the Internal
6         Revenue Code shall not be considered moneys
7         contributed under this subparagraph (V). This
8         subparagraph is exempt from the provisions of Section
9         250 of this Act.
10         (3) Special rule. For purposes of paragraph (2) (A),
11     "gross income" in the case of a life insurance company, for
12     tax years ending on and after December 31, 1994, shall mean
13     the gross investment income for the taxable year.
 
14     (c) Trusts and estates.
15         (1) In general. In the case of a trust or estate, base
16     income means an amount equal to the taxpayer's taxable
17     income for the taxable year as modified by paragraph (2).
18         (2) Modifications. Subject to the provisions of
19     paragraph (3), the taxable income referred to in paragraph
20     (1) shall be modified by adding thereto the sum of the
21     following amounts:
22             (A) An amount equal to all amounts paid or accrued
23         to the taxpayer as interest or dividends during the
24         taxable year to the extent excluded from gross income
25         in the computation of taxable income;
26             (B) In the case of (i) an estate, $600; (ii) a
27         trust which, under its governing instrument, is
28         required to distribute all of its income currently,
29         $300; and (iii) any other trust, $100, but in each such
30         case, only to the extent such amount was deducted in
31         the computation of taxable income;
32             (C) An amount equal to the amount of tax imposed by
33         this Act to the extent deducted from gross income in
34         the computation of taxable income for the taxable year;
35             (D) The amount of any net operating loss deduction

 

 

HB6626 - 19 - LRB093 16720 SJM 42371 b

1         taken in arriving at taxable income, other than a net
2         operating loss carried forward from a taxable year
3         ending prior to December 31, 1986;
4             (E) For taxable years in which a net operating loss
5         carryback or carryforward from a taxable year ending
6         prior to December 31, 1986 is an element of taxable
7         income under paragraph (1) of subsection (e) or
8         subparagraph (E) of paragraph (2) of subsection (e),
9         the amount by which addition modifications other than
10         those provided by this subparagraph (E) exceeded
11         subtraction modifications in such taxable year, with
12         the following limitations applied in the order that
13         they are listed:
14                 (i) the addition modification relating to the
15             net operating loss carried back or forward to the
16             taxable year from any taxable year ending prior to
17             December 31, 1986 shall be reduced by the amount of
18             addition modification under this subparagraph (E)
19             which related to that net operating loss and which
20             was taken into account in calculating the base
21             income of an earlier taxable year, and
22                 (ii) the addition modification relating to the
23             net operating loss carried back or forward to the
24             taxable year from any taxable year ending prior to
25             December 31, 1986 shall not exceed the amount of
26             such carryback or carryforward;
27             For taxable years in which there is a net operating
28         loss carryback or carryforward from more than one other
29         taxable year ending prior to December 31, 1986, the
30         addition modification provided in this subparagraph
31         (E) shall be the sum of the amounts computed
32         independently under the preceding provisions of this
33         subparagraph (E) for each such taxable year;
34             (F) For taxable years ending on or after January 1,
35         1989, an amount equal to the tax deducted pursuant to
36         Section 164 of the Internal Revenue Code if the trust

 

 

HB6626 - 20 - LRB093 16720 SJM 42371 b

1         or estate is claiming the same tax for purposes of the
2         Illinois foreign tax credit under Section 601 of this
3         Act;
4             (G) An amount equal to the amount of the capital
5         gain deduction allowable under the Internal Revenue
6         Code, to the extent deducted from gross income in the
7         computation of taxable income;
8             (G-5) For taxable years ending after December 31,
9         1997, an amount equal to any eligible remediation costs
10         that the trust or estate deducted in computing adjusted
11         gross income and for which the trust or estate claims a
12         credit under subsection (l) of Section 201;
13             (G-10) For taxable years 2001 and thereafter, an
14         amount equal to the bonus depreciation deduction (30%
15         of the adjusted basis of the qualified property) taken
16         on the taxpayer's federal income tax return for the
17         taxable year under subsection (k) of Section 168 of the
18         Internal Revenue Code; and
19             (G-11) If the taxpayer reports a capital gain or
20         loss on the taxpayer's federal income tax return for
21         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 (G-10), then an amount equal to the
25         aggregate amount of the deductions taken in all taxable
26         years under subparagraph (R) with respect to that
27         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 sum of the
32     following amounts:
33             (H) An amount equal to all amounts included in such
34         total pursuant to the provisions of Sections 402(a),
35         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
36         Internal Revenue Code or included in such total as

 

 

HB6626 - 21 - LRB093 16720 SJM 42371 b

1         distributions under the provisions of any retirement
2         or disability plan for employees of any governmental
3         agency or unit, or retirement payments to retired
4         partners, which payments are excluded in computing net
5         earnings from self employment by Section 1402 of the
6         Internal Revenue Code and regulations adopted pursuant
7         thereto;
8             (I) The valuation limitation amount;
9             (J) An amount equal to the amount of any tax
10         imposed by this Act which was refunded to the taxpayer
11         and included in such total for the taxable year;
12             (K) An amount equal to all amounts included in
13         taxable income as modified by subparagraphs (A), (B),
14         (C), (D), (E), (F) and (G) which are exempt from
15         taxation by this State either by reason of its statutes
16         or Constitution or by reason of the Constitution,
17         treaties or statutes of the United States; provided
18         that, in the case of any statute of this State that
19         exempts income derived from bonds or other obligations
20         from the tax imposed under this Act, the amount
21         exempted shall be the interest net of bond premium
22         amortization;
23             (L) With the exception of any amounts subtracted
24         under subparagraph (K), an amount equal to the sum of
25         all amounts disallowed as deductions by (i) Sections
26         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
27         as now or hereafter amended, and all amounts of
28         expenses allocable to interest and disallowed as
29         deductions by Section 265(1) of the Internal Revenue
30         Code of 1954, as now or hereafter amended; and (ii) for
31         taxable years ending on or after August 13, 1999,
32         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
33         the Internal Revenue Code; the provisions of this
34         subparagraph are exempt from the provisions of Section
35         250;
36             (M) An amount equal to those dividends included in

 

 

HB6626 - 22 - LRB093 16720 SJM 42371 b

1         such total which were paid by a corporation which
2         conducts business operations in an Enterprise Zone or
3         zones created under the Illinois Enterprise Zone Act
4         and conducts substantially all of its operations in an
5         Enterprise Zone or Zones;
6             (N) An amount equal to any contribution made to a
7         job training project established pursuant to the Tax
8         Increment Allocation Redevelopment Act;
9             (O) An amount equal to those dividends included in
10         such total that were paid by a corporation that
11         conducts business operations in a federally designated
12         Foreign Trade Zone or Sub-Zone and that is designated a
13         High Impact Business located in Illinois; provided
14         that dividends eligible for the deduction provided in
15         subparagraph (M) of paragraph (2) of this subsection
16         shall not be eligible for the deduction provided under
17         this subparagraph (O);
18             (P) An amount equal to the amount of the deduction
19         used to compute the federal income tax credit for
20         restoration of substantial amounts held under claim of
21         right for the taxable year pursuant to Section 1341 of
22         the Internal Revenue Code of 1986;
23             (Q) For taxable year 1999 and thereafter, an amount
24         equal to the amount of any (i) distributions, to the
25         extent includible in gross income for federal income
26         tax purposes, made to the taxpayer because of his or
27         her status as a victim of persecution for racial or
28         religious reasons by Nazi Germany or any other Axis
29         regime or as an heir of the victim and (ii) items of
30         income, to the extent includible in gross income for
31         federal income tax purposes, attributable to, derived
32         from or in any way related to assets stolen from,
33         hidden from, or otherwise lost to a victim of
34         persecution for racial or religious reasons by Nazi
35         Germany or any other Axis regime immediately prior to,
36         during, and immediately after World War II, including,

 

 

HB6626 - 23 - LRB093 16720 SJM 42371 b

1         but not limited to, interest on the proceeds receivable
2         as insurance under policies issued to a victim of
3         persecution for racial or religious reasons by Nazi
4         Germany or any other Axis regime by European insurance
5         companies immediately prior to and during World War II;
6         provided, however, this subtraction from federal
7         adjusted gross income does not apply to assets acquired
8         with such assets or with the proceeds from the sale of
9         such assets; provided, further, this paragraph shall
10         only apply to a taxpayer who was the first recipient of
11         such assets after their recovery and who is a victim of
12         persecution for racial or religious reasons by Nazi
13         Germany or any other Axis regime or as an heir of the
14         victim. The amount of and the eligibility for any
15         public assistance, benefit, or similar entitlement is
16         not affected by the inclusion of items (i) and (ii) of
17         this paragraph in gross income for federal income tax
18         purposes. This paragraph is exempt from the provisions
19         of Section 250;
20             (R) For taxable years 2001 and thereafter, for the
21         taxable year in which the bonus depreciation deduction
22         (30% of the adjusted basis of the qualified property)
23         is taken on the taxpayer's federal income tax return
24         under subsection (k) of Section 168 of the Internal
25         Revenue Code and for each applicable taxable year
26         thereafter, an amount equal to "x", where:
27                 (1) "y" equals the amount of the depreciation
28             deduction taken for the taxable year on the
29             taxpayer's federal income tax return on property
30             for which the bonus depreciation deduction (30% of
31             the adjusted basis of the qualified property) was
32             taken in any year under subsection (k) of Section
33             168 of the Internal Revenue Code, but not including
34             the bonus depreciation deduction; and
35                 (2) "x" equals "y" multiplied by 30 and then
36             divided by 70 (or "y" multiplied by 0.429).

 

 

HB6626 - 24 - LRB093 16720 SJM 42371 b

1             The aggregate amount deducted under this
2         subparagraph in all taxable years for any one piece of
3         property may not exceed the amount of the bonus
4         depreciation deduction (30% of the adjusted basis of
5         the qualified property) taken on that property on the
6         taxpayer's federal income tax return under subsection
7         (k) of Section 168 of the Internal Revenue Code; and
8             (S) If the taxpayer reports a capital gain or loss
9         on the taxpayer's federal income tax return for the
10         taxable year based on a sale or transfer of property
11         for which the taxpayer was required in any taxable year
12         to make an addition modification under subparagraph
13         (G-10), then an amount equal to that addition
14         modification.
15             The taxpayer is allowed to take the deduction under
16         this subparagraph only once with respect to any one
17         piece of property; and
18             (T) For taxable years beginning on or after January
19         1, 2004, moneys contributed during the taxable year by
20         the taxpayer for the purchase of an Illinois prepaid
21         tuition contract, as defined in the Illinois Prepaid
22         Tuition Act, except that amounts excluded from gross
23         income under Section 529(c)(3)(C)(i) of the Internal
24         Revenue Code shall not be considered moneys
25         contributed under this subparagraph (T). This
26         subparagraph is exempt from the provisions of Section
27         250 of this Act.
28         (3) Limitation. The amount of any modification
29     otherwise required under this subsection shall, under
30     regulations prescribed by the Department, be adjusted by
31     any amounts included therein which were properly paid,
32     credited, or required to be distributed, or permanently set
33     aside for charitable purposes pursuant to Internal Revenue
34     Code Section 642(c) during the taxable year.
 
35     (d) Partnerships.

 

 

HB6626 - 25 - LRB093 16720 SJM 42371 b

1         (1) In general. In the case of a partnership, base
2     income means an amount equal to the taxpayer's taxable
3     income for the taxable year as modified by paragraph (2).
4         (2) Modifications. The taxable income referred to in
5     paragraph (1) shall be modified by adding thereto the sum
6     of the following amounts:
7             (A) An amount equal to all amounts paid or accrued
8         to the taxpayer as interest or dividends during the
9         taxable year to the extent excluded from gross income
10         in the computation of taxable income;
11             (B) An amount equal to the amount of tax imposed by
12         this Act to the extent deducted from gross income for
13         the taxable year;
14             (C) The amount of deductions allowed to the
15         partnership pursuant to Section 707 (c) of the Internal
16         Revenue Code in calculating its taxable income;
17             (D) An amount equal to the amount of the capital
18         gain deduction allowable under the Internal Revenue
19         Code, to the extent deducted from gross income in the
20         computation of taxable income;
21             (D-5) For taxable years 2001 and thereafter, an
22         amount equal to the bonus depreciation deduction (30%
23         of the adjusted basis of the qualified property) taken
24         on the taxpayer's federal income tax return for the
25         taxable year under subsection (k) of Section 168 of the
26         Internal Revenue Code; and
27             (D-6) If the taxpayer reports a capital gain or
28         loss on the taxpayer's federal income tax return for
29         the taxable year based on a sale or transfer of
30         property for which the taxpayer was required in any
31         taxable year to make an addition modification under
32         subparagraph (D-5), then an amount equal to the
33         aggregate amount of the deductions taken in all taxable
34         years under subparagraph (O) with respect to that
35         property. ;
36             The taxpayer is required to make the addition

 

 

HB6626 - 26 - LRB093 16720 SJM 42371 b

1         modification under this subparagraph only once with
2         respect to any one piece of property;
3     and by deducting from the total so obtained the following
4     amounts:
5             (E) The valuation limitation amount;
6             (F) An amount equal to the amount of any tax
7         imposed by this Act which was refunded to the taxpayer
8         and included in such total for the taxable year;
9             (G) An amount equal to all amounts included in
10         taxable income as modified by subparagraphs (A), (B),
11         (C) and (D) which are exempt from taxation by this
12         State either by reason of its statutes or Constitution
13         or by reason of the Constitution, treaties or statutes
14         of the United States; provided that, in the case of any
15         statute of this State that exempts income derived from
16         bonds or other obligations from the tax imposed under
17         this Act, the amount exempted shall be the interest net
18         of bond premium amortization;
19             (H) Any income of the partnership which
20         constitutes personal service income as defined in
21         Section 1348 (b) (1) of the Internal Revenue Code (as
22         in effect December 31, 1981) or a reasonable allowance
23         for compensation paid or accrued for services rendered
24         by partners to the partnership, whichever is greater;
25             (I) An amount equal to all amounts of income
26         distributable to an entity subject to the Personal
27         Property Tax Replacement Income Tax imposed by
28         subsections (c) and (d) of Section 201 of this Act
29         including amounts distributable to organizations
30         exempt from federal income tax by reason of Section
31         501(a) of the Internal Revenue Code;
32             (J) With the exception of any amounts subtracted
33         under subparagraph (G), an amount equal to the sum of
34         all amounts disallowed as deductions by (i) Sections
35         171(a) (2), and 265(2) of the Internal Revenue Code of
36         1954, as now or hereafter amended, and all amounts of

 

 

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1         expenses allocable to interest and disallowed as
2         deductions by Section 265(1) of the Internal Revenue
3         Code, as now or hereafter amended; and (ii) for taxable
4         years ending on or after August 13, 1999, Sections
5         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
6         Internal Revenue Code; the provisions of this
7         subparagraph are exempt from the provisions of Section
8         250;
9             (K) An amount equal to those dividends included in
10         such total which were paid by a corporation which
11         conducts business operations in an Enterprise Zone or
12         zones created under the Illinois Enterprise Zone Act,
13         enacted by the 82nd General Assembly, and conducts
14         substantially all of its operations in an Enterprise
15         Zone or Zones;
16             (L) An amount equal to any contribution made to a
17         job training project established pursuant to the Real
18         Property Tax Increment Allocation Redevelopment Act;
19             (M) An amount equal to those dividends included in
20         such total that were paid by a corporation that
21         conducts business operations in a federally designated
22         Foreign Trade Zone or Sub-Zone and that is designated a
23         High Impact Business located in Illinois; provided
24         that dividends eligible for the deduction provided in
25         subparagraph (K) of paragraph (2) of this subsection
26         shall not be eligible for the deduction provided under
27         this subparagraph (M);
28             (N) An amount equal to the amount of the deduction
29         used to compute the federal income tax credit for
30         restoration of substantial amounts held under claim of
31         right for the taxable year pursuant to Section 1341 of
32         the Internal Revenue Code of 1986;
33             (O) For taxable years 2001 and thereafter, for the
34         taxable year in which the bonus depreciation deduction
35         (30% of the adjusted basis of the qualified property)
36         is taken on the taxpayer's federal income tax return

 

 

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1         under subsection (k) of Section 168 of the Internal
2         Revenue Code and for each applicable taxable year
3         thereafter, an amount equal to "x", where:
4                 (1) "y" equals the amount of the depreciation
5             deduction taken for the taxable year on the
6             taxpayer's federal income tax return on property
7             for which the bonus depreciation deduction (30% of
8             the adjusted basis of the qualified property) was
9             taken in any year under subsection (k) of Section
10             168 of the Internal Revenue Code, but not including
11             the bonus depreciation deduction; and
12                 (2) "x" equals "y" multiplied by 30 and then
13             divided by 70 (or "y" multiplied by 0.429).
14             The aggregate amount deducted under this
15         subparagraph in all taxable years for any one piece of
16         property may not exceed the amount of the bonus
17         depreciation deduction (30% of the adjusted basis of
18         the qualified property) taken on that property on the
19         taxpayer's federal income tax return under subsection
20         (k) of Section 168 of the Internal Revenue Code; and
21             (P) If the taxpayer reports a capital gain or loss
22         on the taxpayer's federal income tax return for the
23         taxable year based on a sale or transfer of property
24         for which the taxpayer was required in any taxable year
25         to make an addition modification under subparagraph
26         (D-5), then an amount equal to that addition
27         modification.
28             The taxpayer is allowed to take the deduction under
29         this subparagraph only once with respect to any one
30         piece of property; and
31             (Q) For taxable years beginning on or after January
32         1, 2004, moneys contributed during the taxable year by
33         the taxpayer for the purchase of an Illinois prepaid
34         tuition contract, as defined in the Illinois Prepaid
35         Tuition Act, except that amounts excluded from gross
36         income under Section 529(c)(3)(C)(i) of the Internal

 

 

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1         Revenue Code shall not be considered moneys
2         contributed under this subparagraph (Q). This
3         subparagraph is exempt from the provisions of Section
4         250 of this Act.
 
5     (e) Gross income; adjusted gross income; taxable income.
6         (1) In general. Subject to the provisions of paragraph
7     (2) and subsection (b) (3), for purposes of this Section
8     and Section 803(e), a taxpayer's gross income, adjusted
9     gross income, or taxable income for the taxable year shall
10     mean the amount of gross income, adjusted gross income or
11     taxable income properly reportable for federal income tax
12     purposes for the taxable year under the provisions of the
13     Internal Revenue Code. Taxable income may be less than
14     zero. However, for taxable years ending on or after
15     December 31, 1986, net operating loss carryforwards from
16     taxable years ending prior to December 31, 1986, may not
17     exceed the sum of federal taxable income for the taxable
18     year before net operating loss deduction, plus the excess
19     of addition modifications over subtraction modifications
20     for the taxable year. For taxable years ending prior to
21     December 31, 1986, taxable income may never be an amount in
22     excess of the net operating loss for the taxable year as
23     defined in subsections (c) and (d) of Section 172 of the
24     Internal Revenue Code, provided that when taxable income of
25     a corporation (other than a Subchapter S corporation),
26     trust, or estate is less than zero and addition
27     modifications, other than those provided by subparagraph
28     (E) of paragraph (2) of subsection (b) for corporations or
29     subparagraph (E) of paragraph (2) of subsection (c) for
30     trusts and estates, exceed subtraction modifications, an
31     addition modification must be made under those
32     subparagraphs for any other taxable year to which the
33     taxable income less than zero (net operating loss) is
34     applied under Section 172 of the Internal Revenue Code or
35     under subparagraph (E) of paragraph (2) of this subsection

 

 

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1     (e) applied in conjunction with Section 172 of the Internal
2     Revenue Code.
3         (2) Special rule. For purposes of paragraph (1) of this
4     subsection, the taxable income properly reportable for
5     federal income tax purposes shall mean:
6             (A) Certain life insurance companies. In the case
7         of a life insurance company subject to the tax imposed
8         by Section 801 of the Internal Revenue Code, life
9         insurance company taxable income, plus the amount of
10         distribution from pre-1984 policyholder surplus
11         accounts as calculated under Section 815a of the
12         Internal Revenue Code;
13             (B) Certain other insurance companies. In the case
14         of mutual insurance companies subject to the tax
15         imposed by Section 831 of the Internal Revenue Code,
16         insurance company taxable income;
17             (C) Regulated investment companies. In the case of
18         a regulated investment company subject to the tax
19         imposed by Section 852 of the Internal Revenue Code,
20         investment company taxable income;
21             (D) Real estate investment trusts. In the case of a
22         real estate investment trust subject to the tax imposed
23         by Section 857 of the Internal Revenue Code, real
24         estate investment trust taxable income;
25             (E) Consolidated corporations. In the case of a
26         corporation which is a member of an affiliated group of
27         corporations filing a consolidated income tax return
28         for the taxable year for federal income tax purposes,
29         taxable income determined as if such corporation had
30         filed a separate return for federal income tax purposes
31         for the taxable year and each preceding taxable year
32         for which it was a member of an affiliated group. For
33         purposes of this subparagraph, the taxpayer's separate
34         taxable income shall be determined as if the election
35         provided by Section 243(b) (2) of the Internal Revenue
36         Code had been in effect for all such years;

 

 

HB6626 - 31 - LRB093 16720 SJM 42371 b

1             (F) Cooperatives. In the case of a cooperative
2         corporation or association, the taxable income of such
3         organization determined in accordance with the
4         provisions of Section 1381 through 1388 of the Internal
5         Revenue Code;
6             (G) Subchapter S corporations. In the case of: (i)
7         a Subchapter S corporation for which there is in effect
8         an election for the taxable year under Section 1362 of
9         the Internal Revenue Code, the taxable income of such
10         corporation determined in accordance with Section
11         1363(b) of the Internal Revenue Code, except that
12         taxable income shall take into account those items
13         which are required by Section 1363(b)(1) of the
14         Internal Revenue Code to be separately stated; and (ii)
15         a Subchapter S corporation for which there is in effect
16         a federal election to opt out of the provisions of the
17         Subchapter S Revision Act of 1982 and have applied
18         instead the prior federal Subchapter S rules as in
19         effect on July 1, 1982, the taxable income of such
20         corporation determined in accordance with the federal
21         Subchapter S rules as in effect on July 1, 1982; and
22             (H) Partnerships. In the case of a partnership,
23         taxable income determined in accordance with Section
24         703 of the Internal Revenue Code, except that taxable
25         income shall take into account those items which are
26         required by Section 703(a)(1) to be separately stated
27         but which would be taken into account by an individual
28         in calculating his taxable income.
 
29     (f) Valuation limitation amount.
30         (1) In general. The valuation limitation amount
31     referred to in subsections (a) (2) (G), (c) (2) (I) and
32     (d)(2) (E) is an amount equal to:
33             (A) The sum of the pre-August 1, 1969 appreciation
34         amounts (to the extent consisting of gain reportable
35         under the provisions of Section 1245 or 1250 of the

 

 

HB6626 - 32 - LRB093 16720 SJM 42371 b

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

 

 

HB6626 - 33 - LRB093 16720 SJM 42371 b

1     (g) Double deductions. Unless specifically provided
2 otherwise, nothing in this Section shall permit the same item
3 to be deducted more than once.
 
4     (h) Legislative intention. Except as expressly provided by
5 this Section there shall be no modifications or limitations on
6 the amounts of income, gain, loss or deduction taken into
7 account in determining gross income, adjusted gross income or
8 taxable income for federal income tax purposes for the taxable
9 year, or in the amount of such items entering into the
10 computation of base income and net income under this Act for
11 such taxable year, whether in respect of property values as of
12 August 1, 1969 or otherwise.
13 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
14 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
15 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
16 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
17 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
18 7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
 
19     Section 10. The Illinois Prepaid Tuition Act is amended by
20 changing Section 55 as follows:
 
21     (110 ILCS 979/55)
22     Sec. 55. Tax exemption. The assets of the Illinois Prepaid
23 Tuition Trust Fund and its income and operation shall be exempt
24 from all taxation by the State of Illinois and any of its
25 subdivisions. The accrued earnings of Illinois prepaid tuition
26 contracts once disbursed on behalf of an eligible beneficiary
27 shall be similarly exempt from all taxation by the State of
28 Illinois and any of its subdivisions, so long as they are used
29 for educational purposes in accordance with the provisions of
30 an Illinois prepaid tuition contract. In addition, for taxable
31 years beginning on or after January 1, 2004, moneys contributed
32 during the taxable year by the taxpayer for the purchase of an

 

 

HB6626 - 34 - LRB093 16720 SJM 42371 b

1 Illinois prepaid tuition contract, except for amounts excluded
2 from gross income under Section 529(c)(3)(C)(i) of the Internal
3 Revenue Code, may be deducted from the taxpayer's adjusted
4 gross income as provided in Section 203 of the Illinois Income
5 Tax Act. The provisions of this Section are exempt from the
6 provisions of Section 250 of the Illinois Income Tax Act.
7 (Source: P.A. 90-546, eff. 12-1-97; 91-867, eff. 6-22-00.)
 
8     Section 99. Effective date. This Act takes effect upon
9 becoming law.