97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1932

 

Introduced 2/10/2011, by Sen. Matt Murphy

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/203  from Ch. 120, par. 2-203
105 ILCS 5/18-8.05

    Amends the School Code. Creates the Illinois School Choice Program, which shall be administered by the State Board of Education. Provides that any State-certified, non-public school wishing to enroll eligible students and be reimbursed for vouchers available under specified provisions shall notify the State Board of Education in writing of its intent. Specifies the eligibility for reimbursement of vouchers. Specifies reporting requirements for non-public schools that are participating in the Program. Contains provisions concerning the calculation of vouchers and how they may be used by parents. Contains provisions concerning the verification of the household income of participating parents. Provides that the total cost of the vouchers shall come from the portion of general State aid City of Chicago School District 299 receives under the State aid formula for that fiscal year. Provides that the State Board of Education may adopt rules for administration of the Program. Provides that, for purposes of the Act, students receiving a voucher are considered nonpublic school students who have been voluntarily placed in a private setting by the parent or guardian. Makes other changes. Amends the State Finance Act to create the School Choice Fund as a special fund in the State treasury and provides that permitted fees collected by the State Board of Education shall be deposited into the Fund and shall be used by the State Board of Education to cover the administrative costs of the Program. Effective June 30, 2011.


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FISCAL NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1    AN ACT concerning education.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the School
5Choice Act.
 
6    Section 5. Findings and declaration of policy. The General
7Assembly finds and declares the following:
8        (1) There is a crisis in the elementary and secondary
9    education programs in Chicago and elsewhere in Illinois.
10    Many schools and their pupils are performing significantly
11    below relevant national standards and are unable to access
12    functions of federal and State law designed to improve
13    their performance. Consequently, many pupils are dropping
14    out of school before completing the ordinary course of
15    secondary education or are leaving school without the basic
16    skills and knowledge that will enable them to find and hold
17    a job or otherwise become functioning, productive members
18    of our society.
19        (2) Within Chicago and elsewhere in Illinois there are
20    many public and nonpublic schools and independent
21    education services competently and efficiently educating
22    or contributing to the education of children. Most pupils
23    in those schools or receiving those services perform at or

 

 

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1    above relevant national standards, complete their
2    secondary education, and matriculate to institutions of
3    higher education at an extremely high rate. These services
4    and schools should be accessible to all and should enjoy a
5    cooperative relationship with public school districts,
6    schools, and employees of this State.
7        (3) Custodians of school age children in Chicago and
8    elsewhere in Illinois are frequently unable to enroll their
9    children in schools that will provide them a quality
10    education due to a lack of funds.
11        (4) Adopting a pilot school choice program for students
12    enrolled in the lowest performing schools in Chicago, with
13    the potential to expand elsewhere in Illinois, would enable
14    parents to select schools or services they believe will
15    provide a quality education for their children, empower
16    them to influence the educational policies and procedures
17    in the schools their children attend, and provide them with
18    at least a portion of the funds necessary to pay for a
19    quality education. Such a program would help alleviate the
20    crisis in the Chicago school system, assist Chicago
21    children in becoming productive members of society, and
22    test a new approach to education that could be expanded to
23    the rest of the State.
24        (5) The provisions of this Act are in the public
25    interest, for the public benefit, and serve a secular
26    public purpose.
 

 

 

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1    Section 10. Definitions. As used in this Act:
2    "Base year" means the 2010-2011 school year.
3    "Custodian" means, with respect to a qualifying pupil, a
4parent or legal guardian who is a resident of the City of
5Chicago.
6    "Low-performing school" means a school in City of Chicago
7School District 299 that enrolls students in any of grades
8kindergarten through 8 and that is ranked within the lowest 10%
9of schools in that district in terms of the percentage of
10students meeting or exceeding standards on the Illinois
11Standards Achievement Test.
12    "Nonpublic school" means any State-recognized, nonpublic
13elementary school in the City of Chicago that elects to
14participate in the school choice program established under this
15Act and does not discriminate on the basis of race, color, or
16national origin under Title VI of the Civil Rights Act of 1964
17and attendance at which satisfies the requirements of Section
1826-1 of the School Code, except that nothing in Section 26-1
19shall be construed to require a child to attend any particular
20nonpublic school.
21    "Overcrowded school" means a school in City of Chicago
22School District 299 that (i) enrolls students in any of grades
23kindergarten through 8, (ii) has a percentage of low-income
24students of 70% or more, as identified in the most recently
25available School Report Card published by the State Board of

 

 

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1Education, and (iii) is determined by the Chicago Board of
2Education to be in the most severely overcrowded 5% of schools
3in the district. On or before November 1 of each year, the
4Chicago Board of Education shall file a report with the State
5Board of Education on which schools in the district meet the
6definition of "overcrowded school".
7    "Qualified education expenses" means costs reasonably
8incurred on behalf of a qualifying pupil for the services of a
9participating nonpublic school in which the qualifying pupil is
10enrolled during the regular school year. Qualified education
11expenses does not include costs incurred for supplies or
12extra-curricular activities.
13    "Qualifying pupil" means an individual who:
14        (1) is a resident of the City of Chicago;
15        (2) is enrolled in any of grades kindergarten through 7
16    in a low-performing school or an overcrowded school or
17    would enter kindergarten in a low-performing school or
18    overcrowded school during the school year for which a
19    voucher is sought; and
20        (3) during the school year for which a voucher is
21    sought, is a full-time pupil enrolled in a kindergarten
22    through 8th grade education program.
23    "School Choice Voucher" means a written instrument issued
24by the State Board of Education directly to the custodian of a
25qualifying pupil.
26    The custodian may present the instrument only to a

 

 

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1participating nonpublic school as payment for qualified
2education expenses incurred on behalf of the qualifying pupil.
 
3    Section 15. Establishment of program. There is established
4the School Choice Program. Under the program, after the base
5year, a custodian of a qualifying pupil shall be entitled to a
6School Choice Voucher at any participating nonpublic school in
7which the qualifying pupil is enrolled. A qualifying pupil
8shall be entitled to enroll at and attend any participating
9nonpublic school of his or her choice.
 
10    Section 20. Notification of vouchers. The principal of each
11low-performing school and of each overcrowded school in City of
12Chicago School District 299 shall notify custodians of
13qualifying pupils that vouchers under this Act are available
14for the next school year. Notification shall occur in January
15of each school year beginning with the base year.
 
16    Section 25. Request for voucher. A custodian who applies in
17accordance with procedures established by the State Board of
18Education shall receive a voucher for each qualifying pupil
19enrolled in a nonpublic school under this Act within the dollar
20limits set out in Section 35 of this Act. The procedure shall
21require application for the voucher, with documentation as to
22eligibility, between March 1 and May 1 prior to the school year
23in which the voucher is to be used.
 

 

 

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1    Section 30. Issuance and payment of voucher. A voucher may
2only be issued to a custodian who has made proper application
3pursuant to Section 25 of this Act. The custodian shall present
4the voucher for each qualifying pupil to a participating
5nonpublic school of his or her choice as payment for qualified
6education expenses. Upon presentment, the State Board of
7Education shall honor the voucher and, as issuer of the
8instrument, pay the participating nonpublic school in
9accordance with procedures established by the State Board of
10Education. The procedures shall require all of the following:
11        (1) that the applying custodian be notified of the
12    voucher award by August 1 of the school year in which the
13    voucher is to be used;
14        (2) that the voucher instrument be issued to the
15    custodian no later than September 15 of the school year in
16    which the voucher is to be used;
17        (3) that the custodian present the voucher instrument
18    to the participating school no later than October 1 of the
19    school year in which the voucher is to be used;
20        (4) that the participating school present the voucher
21    instrument, with proof of service to the custodian of the
22    qualifying pupil, to the State Board of Education no later
23    than October 31 of the school year in which the voucher is
24    to be used;
25        (5) that the State Board of Education shall honor the

 

 

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1    voucher instrument and as issuer pay the participating
2    school no later than December 31 of the school year in
3    which the voucher is to be used;
4        (6) that participating schools must not be required to
5    accept vouchers as full payment for services but neither
6    shall they charge voucher pupils tuition or any other
7    educational expenses at a higher rate than other pupils;
8    and
9        (7) that if a student attending a nonpublic school
10    under the School Choice Program is expelled or withdraws
11    from the nonpublic school or moves out of the boundaries of
12    City of Chicago School District 299 before the State Board
13    of Education has honored the voucher of the school, then
14    the State Board of Education shall pay the corresponding
15    prorated portion of the voucher amount to the nonpublic
16    school; and that if the State Board of Education has paid
17    the voucher amount to the nonpublic school and the pupil is
18    expelled, withdraws, or moves out of the boundaries of City
19    of Chicago School District 299, then the nonpublic school
20    shall refund the corresponding prorated portion of the
21    voucher to the State Board of Education. Any funds returned
22    to the State Board of Education must be distributed via the
23    general State aid claim to City of Chicago School District
24    299.
 
25    Section 35. Amount of voucher. A School Choice Voucher for

 

 

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1qualified education expenses incurred through participating
2schools during any school year after the base year shall be for
3the lesser of (i) the amount of the portion of the foundation
4level of support, on a per pupil basis, funded by the State
5pursuant to subsection (B) of Section 18-8.05 of the School
6Code for the previous fiscal year, plus the amount equal to the
7total supplemental general State aid grant awarded to City of
8Chicago School District 299 pursuant to subsection (H) of
9Section 18-8.05 of the School Code for the previous fiscal year
10divided by the total average daily attendance used in the
11calculation of general State aid for City of Chicago School
12District 299 for the previous fiscal year or (ii) the actual
13qualified education expenses related to the qualifying pupil's
14enrollment.
 
15    Section 40. Renewal of voucher. School Choice Vouchers
16shall be renewable every year through grade 8 so long as the
17pupil continues to reside in the City of Chicago and the
18recognized nonpublic school elects to continue participating
19in the School Choice Program.
 
20    Section 45. Assessment. All pupils receiving services
21obtained through School Choice Vouchers shall be assessed
22annually in the same manner as Illinois' public school
23students. The State Board of Education may adopt rules with
24respect to the assessment of such pupils, which may include,

 

 

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1but is not limited to, rules pertaining to test security, test
2administration and location, and reporting procedures.
 
3    Section 50. Longitudinal data system. Recognized nonpublic
4schools participating in this Act must participate in the
5longitudinal data system established under the P-20
6Longitudinal Education Data System Act by disclosing data to
7the State Board of Education for those students attending a
8nonpublic school on a School Choice Voucher issued under this
9Act.
 
10    Section 51. Funding. Nonpublic schools participating in
11the School Choice Program must report the attendance of
12students with School Choice Vouchers to City of Chicago School
13District 299 in the manner requested by the district. Students
14enrolled in nonpublic schools under a School Choice Voucher
15shall not be considered enrolled in City of Chicago School
16District 299 for any purpose.
 
17    Section 52. Nonpublic school student. For the purposes of
18this Act, students receiving a School Choice Voucher are
19considered nonpublic school students who have been voluntarily
20placed in a private setting by the parent or guardian.
 
21    Section 55. Not base income. The amount of any voucher
22redeemed under this Act shall not be considered base income

 

 

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1under subsection (a) of Section 203 of the Illinois Income Tax
2Act and shall not be taxable for Illinois income tax purposes.
 
3    Section 60. Report and expansion. On or before December 31,
42015, the State Board of Education shall submit a report to the
5General Assembly reviewing the current status of the program
6operating under this Act. This report shall include, but not be
7limited to, the numbers of qualifying pupils receiving each
8School Choice Voucher, the names of the schools from which and
9to which pupils transferred, the financial ramifications of the
10program, and the results of pupil assessments. In its report,
11the State Board of Education shall assess whether the program
12has been financially and academically beneficial and shall make
13a recommendation on whether the program should be expanded to
14other schools in the City of Chicago or to other areas of this
15State.
 
16    Section 65. Penalties. It shall be a Class 3 felony to use
17or attempt to use a voucher under this Act for any purpose
18other than those permitted by this Act. It shall also be a
19Class 3 felony for any person, with intent to defraud, to
20knowingly forge, alter, or misrepresent information on a
21voucher application or on any documents submitted in
22application for a voucher, to deliver any such document knowing
23it to have been thus forged, altered, or based on
24misrepresentation, or to possess, with intent to issue or

 

 

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1deliver, any such document knowing it to have been thus forged,
2altered, or based on misrepresentation.
 
3    Section 70. Rules. The State Board of Education shall adopt
4rules to implement this Act. The creation of the School Choice
5Program does not expand the regulatory authority of the State,
6its officers, or any school district to impose any additional
7regulation of nonpublic schools beyond those reasonably
8necessary to enforce the requirements of the program.
 
9    Section 900. The Illinois Income Tax Act is amended by
10changing Section 203 as follows:
 
11    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
12    Sec. 203. Base income defined.
13    (a) Individuals.
14        (1) In general. In the case of an individual, base
15    income means an amount equal to the taxpayer's adjusted
16    gross income for the taxable year as modified by paragraph
17    (2).
18        (2) Modifications. The adjusted gross income referred
19    to in paragraph (1) shall be modified by adding thereto the
20    sum of the following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest or dividends during the
23        taxable year to the extent excluded from gross income

 

 

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1        in the computation of adjusted gross income, except
2        stock dividends of qualified public utilities
3        described in Section 305(e) of the Internal Revenue
4        Code;
5            (B) An amount equal to the amount of tax imposed by
6        this Act to the extent deducted from gross income in
7        the computation of adjusted gross income for the
8        taxable year;
9            (C) An amount equal to the amount received during
10        the taxable year as a recovery or refund of real
11        property taxes paid with respect to the taxpayer's
12        principal residence under the Revenue Act of 1939 and
13        for which a deduction was previously taken under
14        subparagraph (L) of this paragraph (2) prior to July 1,
15        1991, the retrospective application date of Article 4
16        of Public Act 87-17. In the case of multi-unit or
17        multi-use structures and farm dwellings, the taxes on
18        the taxpayer's principal residence shall be that
19        portion of the total taxes for the entire property
20        which is attributable to such principal residence;
21            (D) An amount equal to the amount of the capital
22        gain deduction allowable under the Internal Revenue
23        Code, to the extent deducted from gross income in the
24        computation of adjusted gross income;
25            (D-5) An amount, to the extent not included in
26        adjusted gross income, equal to the amount of money

 

 

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1        withdrawn by the taxpayer in the taxable year from a
2        medical care savings account and the interest earned on
3        the account in the taxable year of a withdrawal
4        pursuant to subsection (b) of Section 20 of the Medical
5        Care Savings Account Act or subsection (b) of Section
6        20 of the Medical Care Savings Account Act of 2000;
7            (D-10) For taxable years ending after December 31,
8        1997, an amount equal to any eligible remediation costs
9        that the individual deducted in computing adjusted
10        gross income and for which the individual claims a
11        credit under subsection (l) of Section 201;
12            (D-15) For taxable years 2001 and thereafter, an
13        amount equal to the bonus depreciation deduction taken
14        on the taxpayer's federal income tax return for the
15        taxable year under subsection (k) of Section 168 of the
16        Internal Revenue Code;
17            (D-16) If the taxpayer sells, transfers, abandons,
18        or otherwise disposes of property for which the
19        taxpayer was required in any taxable year to make an
20        addition modification under subparagraph (D-15), then
21        an amount equal to the aggregate amount of the
22        deductions taken in all taxable years under
23        subparagraph (Z) with respect to that property.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

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1        federal income tax purposes and for which the taxpayer
2        was allowed in any taxable year to make a subtraction
3        modification under subparagraph (Z), then an amount
4        equal to that subtraction modification.
5            The taxpayer is required to make the addition
6        modification under this subparagraph only once with
7        respect to any one piece of property;
8            (D-17) An amount equal to the amount otherwise
9        allowed as a deduction in computing base income for
10        interest paid, accrued, or incurred, directly or
11        indirectly, (i) for taxable years ending on or after
12        December 31, 2004, to a foreign person who would be a
13        member of the same unitary business group but for the
14        fact that foreign person's business activity outside
15        the United States is 80% or more of the foreign
16        person's total business activity and (ii) for taxable
17        years ending on or after December 31, 2008, to a person
18        who would be a member of the same unitary business
19        group but for the fact that the person is prohibited
20        under Section 1501(a)(27) from being included in the
21        unitary business group because he or she is ordinarily
22        required to apportion business income under different
23        subsections of Section 304. The addition modification
24        required by this subparagraph shall be reduced to the
25        extent that dividends were included in base income of
26        the unitary group for the same taxable year and

 

 

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1        received by the taxpayer or by a member of the
2        taxpayer's unitary business group (including amounts
3        included in gross income under Sections 951 through 964
4        of the Internal Revenue Code and amounts included in
5        gross income under Section 78 of the Internal Revenue
6        Code) with respect to the stock of the same person to
7        whom the interest was paid, accrued, or incurred.
8            This paragraph shall not apply to the following:
9                (i) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person who
11            is subject in a foreign country or state, other
12            than a state which requires mandatory unitary
13            reporting, to a tax on or measured by net income
14            with respect to such interest; or
15                (ii) an item of interest paid, accrued, or
16            incurred, directly or indirectly, to a person if
17            the taxpayer can establish, based on a
18            preponderance of the evidence, both of the
19            following:
20                    (a) the person, during the same taxable
21                year, paid, accrued, or incurred, the interest
22                to a person that is not a related member, and
23                    (b) the transaction giving rise to the
24                interest expense between the taxpayer and the
25                person did not have as a principal purpose the
26                avoidance of Illinois income tax, and is paid

 

 

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1                pursuant to a contract or agreement that
2                reflects an arm's-length interest rate and
3                terms; or
4                (iii) the taxpayer can establish, based on
5            clear and convincing evidence, that the interest
6            paid, accrued, or incurred relates to a contract or
7            agreement entered into at arm's-length rates and
8            terms and the principal purpose for the payment is
9            not federal or Illinois tax avoidance; or
10                (iv) an item of interest paid, accrued, or
11            incurred, directly or indirectly, to a person if
12            the taxpayer establishes by clear and convincing
13            evidence that the adjustments are unreasonable; or
14            if the taxpayer and the Director agree in writing
15            to the application or use of an alternative method
16            of apportionment under Section 304(f).
17                Nothing in this subsection shall preclude the
18            Director from making any other adjustment
19            otherwise allowed under Section 404 of this Act for
20            any tax year beginning after the effective date of
21            this amendment provided such adjustment is made
22            pursuant to regulation adopted by the Department
23            and such regulations provide methods and standards
24            by which the Department will utilize its authority
25            under Section 404 of this Act;
26            (D-18) An amount equal to the amount of intangible

 

 

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1        expenses and costs otherwise allowed as a deduction in
2        computing base income, and that were paid, accrued, or
3        incurred, directly or indirectly, (i) for taxable
4        years ending on or after December 31, 2004, to a
5        foreign person who would be a member of the same
6        unitary business group but for the fact that the
7        foreign person's business activity outside the United
8        States is 80% or more of that person's total business
9        activity and (ii) for taxable years ending on or after
10        December 31, 2008, to a person who would be a member of
11        the same unitary business group but for the fact that
12        the person is prohibited under Section 1501(a)(27)
13        from being included in the unitary business group
14        because he or she is ordinarily required to apportion
15        business income under different subsections of Section
16        304. The addition modification required by this
17        subparagraph shall be reduced to the extent that
18        dividends were included in base income of the unitary
19        group for the same taxable year and received by the
20        taxpayer or by a member of the taxpayer's unitary
21        business group (including amounts included in gross
22        income under Sections 951 through 964 of the Internal
23        Revenue Code and amounts included in gross income under
24        Section 78 of the Internal Revenue Code) with respect
25        to the stock of the same person to whom the intangible
26        expenses and costs were directly or indirectly paid,

 

 

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1        incurred, or accrued. The preceding sentence does not
2        apply to the extent that the same dividends caused a
3        reduction to the addition modification required under
4        Section 203(a)(2)(D-17) of this Act. As used in this
5        subparagraph, the term "intangible expenses and costs"
6        includes (1) expenses, losses, and costs for, or
7        related to, the direct or indirect acquisition, use,
8        maintenance or management, ownership, sale, exchange,
9        or any other disposition of intangible property; (2)
10        losses incurred, directly or indirectly, from
11        factoring transactions or discounting transactions;
12        (3) royalty, patent, technical, and copyright fees;
13        (4) licensing fees; and (5) other similar expenses and
14        costs. For purposes of this subparagraph, "intangible
15        property" includes patents, patent applications, trade
16        names, trademarks, service marks, copyrights, mask
17        works, trade secrets, and similar types of intangible
18        assets.
19            This paragraph shall not apply to the following:
20                (i) any item of intangible expenses or costs
21            paid, accrued, or incurred, directly or
22            indirectly, from a transaction with a person who is
23            subject in a foreign country or state, other than a
24            state which requires mandatory unitary reporting,
25            to a tax on or measured by net income with respect
26            to such item; or

 

 

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1                (ii) any item of intangible expense or cost
2            paid, accrued, or incurred, directly or
3            indirectly, if the taxpayer can establish, based
4            on a preponderance of the evidence, both of the
5            following:
6                    (a) the person during the same taxable
7                year paid, accrued, or incurred, the
8                intangible expense or cost to a person that is
9                not a related member, and
10                    (b) the transaction giving rise to the
11                intangible expense or cost between the
12                taxpayer and the person did not have as a
13                principal purpose the avoidance of Illinois
14                income tax, and is paid pursuant to a contract
15                or agreement that reflects arm's-length terms;
16                or
17                (iii) any item of intangible expense or cost
18            paid, accrued, or incurred, directly or
19            indirectly, from a transaction with a person if the
20            taxpayer establishes by clear and convincing
21            evidence, that the adjustments are unreasonable;
22            or if the taxpayer and the Director agree in
23            writing to the application or use of an alternative
24            method of apportionment under Section 304(f);
25                Nothing in this subsection shall preclude the
26            Director from making any other adjustment

 

 

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1            otherwise allowed under Section 404 of this Act for
2            any tax year beginning after the effective date of
3            this amendment provided such adjustment is made
4            pursuant to regulation adopted by the Department
5            and such regulations provide methods and standards
6            by which the Department will utilize its authority
7            under Section 404 of this Act;
8            (D-19) For taxable years ending on or after
9        December 31, 2008, an amount equal to the amount of
10        insurance premium expenses and costs otherwise allowed
11        as a deduction in computing base income, and that were
12        paid, accrued, or incurred, directly or indirectly, to
13        a person who would be a member of the same unitary
14        business group but for the fact that the person is
15        prohibited under Section 1501(a)(27) from being
16        included in the unitary business group because he or
17        she is ordinarily required to apportion business
18        income under different subsections of Section 304. The
19        addition modification required by this subparagraph
20        shall be reduced to the extent that dividends were
21        included in base income of the unitary group for the
22        same taxable year and received by the taxpayer or by a
23        member of the taxpayer's unitary business group
24        (including amounts included in gross income under
25        Sections 951 through 964 of the Internal Revenue Code
26        and amounts included in gross income under Section 78

 

 

SB1932- 21 -LRB097 09917 NHT 50080 b

1        of the Internal Revenue Code) with respect to the stock
2        of the same person to whom the premiums and costs were
3        directly or indirectly paid, incurred, or accrued. The
4        preceding sentence does not apply to the extent that
5        the same dividends caused a reduction to the addition
6        modification required under Section 203(a)(2)(D-17) or
7        Section 203(a)(2)(D-18) of this Act.
8            (D-20) For taxable years beginning on or after
9        January 1, 2002 and ending on or before December 31,
10        2006, in the case of a distribution from a qualified
11        tuition program under Section 529 of the Internal
12        Revenue Code, other than (i) a distribution from a
13        College Savings Pool created under Section 16.5 of the
14        State Treasurer Act or (ii) a distribution from the
15        Illinois Prepaid Tuition Trust Fund, an amount equal to
16        the amount excluded from gross income under Section
17        529(c)(3)(B). For taxable years beginning on or after
18        January 1, 2007, in the case of a distribution from a
19        qualified tuition program under Section 529 of the
20        Internal Revenue Code, other than (i) a distribution
21        from a College Savings Pool created under Section 16.5
22        of the State Treasurer Act, (ii) a distribution from
23        the Illinois Prepaid Tuition Trust Fund, or (iii) a
24        distribution from a qualified tuition program under
25        Section 529 of the Internal Revenue Code that (I)
26        adopts and determines that its offering materials

 

 

SB1932- 22 -LRB097 09917 NHT 50080 b

1        comply with the College Savings Plans Network's
2        disclosure principles and (II) has made reasonable
3        efforts to inform in-state residents of the existence
4        of in-state qualified tuition programs by informing
5        Illinois residents directly and, where applicable, to
6        inform financial intermediaries distributing the
7        program to inform in-state residents of the existence
8        of in-state qualified tuition programs at least
9        annually, an amount equal to the amount excluded from
10        gross income under Section 529(c)(3)(B).
11            For the purposes of this subparagraph (D-20), a
12        qualified tuition program has made reasonable efforts
13        if it makes disclosures (which may use the term
14        "in-state program" or "in-state plan" and need not
15        specifically refer to Illinois or its qualified
16        programs by name) (i) directly to prospective
17        participants in its offering materials or makes a
18        public disclosure, such as a website posting; and (ii)
19        where applicable, to intermediaries selling the
20        out-of-state program in the same manner that the
21        out-of-state program distributes its offering
22        materials;
23            (D-21) For taxable years beginning on or after
24        January 1, 2007, in the case of transfer of moneys from
25        a qualified tuition program under Section 529 of the
26        Internal Revenue Code that is administered by the State

 

 

SB1932- 23 -LRB097 09917 NHT 50080 b

1        to an out-of-state program, an amount equal to the
2        amount of moneys previously deducted from base income
3        under subsection (a)(2)(Y) of this Section;
4            (D-22) For taxable years beginning on or after
5        January 1, 2009, in the case of a nonqualified
6        withdrawal or refund of moneys from a qualified tuition
7        program under Section 529 of the Internal Revenue Code
8        administered by the State that is not used for
9        qualified expenses at an eligible education
10        institution, an amount equal to the contribution
11        component of the nonqualified withdrawal or refund
12        that was previously deducted from base income under
13        subsection (a)(2)(y) of this Section, provided that
14        the withdrawal or refund did not result from the
15        beneficiary's death or disability;
16            (D-23) An amount equal to the credit allowable to
17        the taxpayer under Section 218(a) of this Act,
18        determined without regard to Section 218(c) of this
19        Act;
20    and by deducting from the total so obtained the sum of the
21    following amounts:
22            (E) For taxable years ending before December 31,
23        2001, any amount included in such total in respect of
24        any compensation (including but not limited to any
25        compensation paid or accrued to a serviceman while a
26        prisoner of war or missing in action) paid to a

 

 

SB1932- 24 -LRB097 09917 NHT 50080 b

1        resident by reason of being on active duty in the Armed
2        Forces of the United States and in respect of any
3        compensation paid or accrued to a resident who as a
4        governmental employee was a prisoner of war or missing
5        in action, and in respect of any compensation paid to a
6        resident in 1971 or thereafter for annual training
7        performed pursuant to Sections 502 and 503, Title 32,
8        United States Code as a member of the Illinois National
9        Guard or, beginning with taxable years ending on or
10        after December 31, 2007, the National Guard of any
11        other state. For taxable years ending on or after
12        December 31, 2001, any amount included in such total in
13        respect of any compensation (including but not limited
14        to any compensation paid or accrued to a serviceman
15        while a prisoner of war or missing in action) paid to a
16        resident by reason of being a member of any component
17        of the Armed Forces of the United States and in respect
18        of any compensation paid or accrued to a resident who
19        as a governmental employee was a prisoner of war or
20        missing in action, and in respect of any compensation
21        paid to a resident in 2001 or thereafter by reason of
22        being a member of the Illinois National Guard or,
23        beginning with taxable years ending on or after
24        December 31, 2007, the National Guard of any other
25        state. The provisions of this amendatory Act of the
26        92nd General Assembly are exempt from the provisions of

 

 

SB1932- 25 -LRB097 09917 NHT 50080 b

1        Section 250;
2            (F) An amount equal to all amounts included in such
3        total pursuant to the provisions of Sections 402(a),
4        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
5        Internal Revenue Code, or included in such total as
6        distributions under the provisions of any retirement
7        or disability plan for employees of any governmental
8        agency or unit, or retirement payments to retired
9        partners, which payments are excluded in computing net
10        earnings from self employment by Section 1402 of the
11        Internal Revenue Code and regulations adopted pursuant
12        thereto;
13            (G) The valuation limitation amount;
14            (H) An amount equal to the amount of any tax
15        imposed by this Act which was refunded to the taxpayer
16        and included in such total for the taxable year;
17            (I) An amount equal to all amounts included in such
18        total pursuant to the provisions of Section 111 of the
19        Internal Revenue Code as a recovery of items previously
20        deducted from adjusted gross income in the computation
21        of taxable income;
22            (J) An amount equal to those dividends included in
23        such total which were paid by a corporation which
24        conducts business operations in an Enterprise Zone or
25        zones created under the Illinois Enterprise Zone Act or
26        a River Edge Redevelopment Zone or zones created under

 

 

SB1932- 26 -LRB097 09917 NHT 50080 b

1        the River Edge Redevelopment Zone Act, and conducts
2        substantially all of its operations in an Enterprise
3        Zone or zones or a River Edge Redevelopment Zone or
4        zones. This subparagraph (J) is exempt from the
5        provisions of Section 250;
6            (K) An amount equal to those dividends included in
7        such total that were paid by a corporation that
8        conducts business operations in a federally designated
9        Foreign Trade Zone or Sub-Zone and that is designated a
10        High Impact Business located in Illinois; provided
11        that dividends eligible for the deduction provided in
12        subparagraph (J) of paragraph (2) of this subsection
13        shall not be eligible for the deduction provided under
14        this subparagraph (K);
15            (L) For taxable years ending after December 31,
16        1983, an amount equal to all social security benefits
17        and railroad retirement benefits included in such
18        total pursuant to Sections 72(r) and 86 of the Internal
19        Revenue Code;
20            (M) With the exception of any amounts subtracted
21        under subparagraph (N), an amount equal to the sum of
22        all amounts disallowed as deductions by (i) Sections
23        171(a) (2), and 265(2) of the Internal Revenue Code of
24        1954, as now or hereafter amended, and all amounts of
25        expenses allocable to interest and disallowed as
26        deductions by Section 265(1) of the Internal Revenue

 

 

SB1932- 27 -LRB097 09917 NHT 50080 b

1        Code of 1954, as now or hereafter amended; and (ii) for
2        taxable years ending on or after August 13, 1999,
3        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
4        the Internal Revenue Code; the provisions of this
5        subparagraph are exempt from the provisions of Section
6        250;
7            (N) An amount equal to all amounts included in such
8        total which are exempt from taxation by this State
9        either by reason of its statutes or Constitution or by
10        reason of the Constitution, treaties or statutes of the
11        United States; provided that, in the case of any
12        statute of this State that exempts income derived from
13        bonds or other obligations from the tax imposed under
14        this Act, the amount exempted shall be the interest net
15        of bond premium amortization;
16            (O) An amount equal to any contribution made to a
17        job training project established pursuant to the Tax
18        Increment Allocation Redevelopment Act;
19            (P) An amount equal to the amount of the deduction
20        used to compute the federal income tax credit for
21        restoration of substantial amounts held under claim of
22        right for the taxable year pursuant to Section 1341 of
23        the Internal Revenue Code of 1986;
24            (Q) An amount equal to any amounts included in such
25        total, received by the taxpayer as an acceleration in
26        the payment of life, endowment or annuity benefits in

 

 

SB1932- 28 -LRB097 09917 NHT 50080 b

1        advance of the time they would otherwise be payable as
2        an indemnity for a terminal illness;
3            (R) An amount equal to the amount of any federal or
4        State bonus paid to veterans of the Persian Gulf War;
5            (S) An amount, to the extent included in adjusted
6        gross income, equal to the amount of a contribution
7        made in the taxable year on behalf of the taxpayer to a
8        medical care savings account established under the
9        Medical Care Savings Account Act or the Medical Care
10        Savings Account Act of 2000 to the extent the
11        contribution is accepted by the account administrator
12        as provided in that Act;
13            (T) An amount, to the extent included in adjusted
14        gross income, equal to the amount of interest earned in
15        the taxable year on a medical care savings account
16        established under the Medical Care Savings Account Act
17        or the Medical Care Savings Account Act of 2000 on
18        behalf of the taxpayer, other than interest added
19        pursuant to item (D-5) of this paragraph (2);
20            (U) For one taxable year beginning on or after
21        January 1, 1994, an amount equal to the total amount of
22        tax imposed and paid under subsections (a) and (b) of
23        Section 201 of this Act on grant amounts received by
24        the taxpayer under the Nursing Home Grant Assistance
25        Act during the taxpayer's taxable years 1992 and 1993;
26            (V) Beginning with tax years ending on or after

 

 

SB1932- 29 -LRB097 09917 NHT 50080 b

1        December 31, 1995 and ending with tax years ending on
2        or before December 31, 2004, an amount equal to the
3        amount paid by a taxpayer who is a self-employed
4        taxpayer, a partner of a partnership, or a shareholder
5        in a Subchapter S corporation for health insurance or
6        long-term care insurance for that taxpayer or that
7        taxpayer's spouse or dependents, to the extent that the
8        amount paid for that health insurance or long-term care
9        insurance may be deducted under Section 213 of the
10        Internal Revenue Code of 1986, has not been deducted on
11        the federal income tax return of the taxpayer, and does
12        not exceed the taxable income attributable to that
13        taxpayer's income, self-employment income, or
14        Subchapter S corporation income; except that no
15        deduction shall be allowed under this item (V) if the
16        taxpayer is eligible to participate in any health
17        insurance or long-term care insurance plan of an
18        employer of the taxpayer or the taxpayer's spouse. The
19        amount of the health insurance and long-term care
20        insurance subtracted under this item (V) shall be
21        determined by multiplying total health insurance and
22        long-term care insurance premiums paid by the taxpayer
23        times a number that represents the fractional
24        percentage of eligible medical expenses under Section
25        213 of the Internal Revenue Code of 1986 not actually
26        deducted on the taxpayer's federal income tax return;

 

 

SB1932- 30 -LRB097 09917 NHT 50080 b

1            (W) For taxable years beginning on or after January
2        1, 1998, all amounts included in the taxpayer's federal
3        gross income in the taxable year from amounts converted
4        from a regular IRA to a Roth IRA. This paragraph is
5        exempt from the provisions of Section 250;
6            (X) For taxable year 1999 and thereafter, an amount
7        equal to the amount of any (i) distributions, to the
8        extent includible in gross income for federal income
9        tax purposes, made to the taxpayer because of his or
10        her status as a victim of persecution for racial or
11        religious reasons by Nazi Germany or any other Axis
12        regime or as an heir of the victim and (ii) items of
13        income, to the extent includible in gross income for
14        federal income tax purposes, attributable to, derived
15        from or in any way related to assets stolen from,
16        hidden from, or otherwise lost to a victim of
17        persecution for racial or religious reasons by Nazi
18        Germany or any other Axis regime immediately prior to,
19        during, and immediately after World War II, including,
20        but not limited to, interest on the proceeds receivable
21        as insurance under policies issued to a victim of
22        persecution for racial or religious reasons by Nazi
23        Germany or any other Axis regime by European insurance
24        companies immediately prior to and during World War II;
25        provided, however, this subtraction from federal
26        adjusted gross income does not apply to assets acquired

 

 

SB1932- 31 -LRB097 09917 NHT 50080 b

1        with such assets or with the proceeds from the sale of
2        such assets; provided, further, this paragraph shall
3        only apply to a taxpayer who was the first recipient of
4        such assets after their recovery and who is a victim of
5        persecution for racial or religious reasons by Nazi
6        Germany or any other Axis regime or as an heir of the
7        victim. The amount of and the eligibility for any
8        public assistance, benefit, or similar entitlement is
9        not affected by the inclusion of items (i) and (ii) of
10        this paragraph in gross income for federal income tax
11        purposes. This paragraph is exempt from the provisions
12        of Section 250;
13            (Y) For taxable years beginning on or after January
14        1, 2002 and ending on or before December 31, 2004,
15        moneys contributed in the taxable year to a College
16        Savings Pool account under Section 16.5 of the State
17        Treasurer Act, except that amounts excluded from gross
18        income under Section 529(c)(3)(C)(i) of the Internal
19        Revenue Code shall not be considered moneys
20        contributed under this subparagraph (Y). For taxable
21        years beginning on or after January 1, 2005, a maximum
22        of $10,000 contributed in the taxable year to (i) a
23        College Savings Pool account under Section 16.5 of the
24        State Treasurer Act or (ii) the Illinois Prepaid
25        Tuition Trust Fund, except that amounts excluded from
26        gross income under Section 529(c)(3)(C)(i) of the

 

 

SB1932- 32 -LRB097 09917 NHT 50080 b

1        Internal Revenue Code shall not be considered moneys
2        contributed under this subparagraph (Y). For purposes
3        of this subparagraph, contributions made by an
4        employer on behalf of an employee, or matching
5        contributions made by an employee, shall be treated as
6        made by the employee. This subparagraph (Y) is exempt
7        from the provisions of Section 250;
8            (Z) For taxable years 2001 and thereafter, for the
9        taxable year in which the bonus depreciation deduction
10        is taken on the taxpayer's federal income tax return
11        under subsection (k) of Section 168 of the Internal
12        Revenue Code and for each applicable taxable year
13        thereafter, an amount equal to "x", where:
14                (1) "y" equals the amount of the depreciation
15            deduction taken for the taxable year on the
16            taxpayer's federal income tax return on property
17            for which the bonus depreciation deduction was
18            taken in any year under subsection (k) of Section
19            168 of the Internal Revenue Code, but not including
20            the bonus depreciation deduction;
21                (2) for taxable years ending on or before
22            December 31, 2005, "x" equals "y" multiplied by 30
23            and then divided by 70 (or "y" multiplied by
24            0.429); and
25                (3) for taxable years ending after December
26            31, 2005:

 

 

SB1932- 33 -LRB097 09917 NHT 50080 b

1                    (i) for property on which a bonus
2                depreciation deduction of 30% of the adjusted
3                basis was taken, "x" equals "y" multiplied by
4                30 and then divided by 70 (or "y" multiplied by
5                0.429); and
6                    (ii) for property on which a bonus
7                depreciation deduction of 50% of the adjusted
8                basis was taken, "x" equals "y" multiplied by
9                1.0.
10            The aggregate amount deducted under this
11        subparagraph in all taxable years for any one piece of
12        property may not exceed the amount of the bonus
13        depreciation deduction taken on that property on the
14        taxpayer's federal income tax return under subsection
15        (k) of Section 168 of the Internal Revenue Code. This
16        subparagraph (Z) is exempt from the provisions of
17        Section 250;
18            (AA) If the taxpayer sells, transfers, abandons,
19        or otherwise disposes of property for which the
20        taxpayer was required in any taxable year to make an
21        addition modification under subparagraph (D-15), then
22        an amount equal to that addition modification.
23            If the taxpayer continues to own property through
24        the last day of the last tax year for which the
25        taxpayer may claim a depreciation deduction for
26        federal income tax purposes and for which the taxpayer

 

 

SB1932- 34 -LRB097 09917 NHT 50080 b

1        was required in any taxable year to make an addition
2        modification under subparagraph (D-15), then an amount
3        equal to that addition modification.
4            The taxpayer is allowed to take the deduction under
5        this subparagraph only once with respect to any one
6        piece of property.
7            This subparagraph (AA) is exempt from the
8        provisions of Section 250;
9            (BB) Any amount included in adjusted gross income,
10        other than salary, received by a driver in a
11        ridesharing arrangement using a motor vehicle;
12            (CC) The amount of (i) any interest income (net of
13        the deductions allocable thereto) taken into account
14        for the taxable year with respect to a transaction with
15        a taxpayer that is required to make an addition
16        modification with respect to such transaction under
17        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
18        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
19        the amount of that addition modification, and (ii) any
20        income from intangible property (net of the deductions
21        allocable thereto) taken into account for the taxable
22        year with respect to a transaction with a taxpayer that
23        is required to make an addition modification with
24        respect to such transaction under Section
25        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
26        203(d)(2)(D-8), but not to exceed the amount of that

 

 

SB1932- 35 -LRB097 09917 NHT 50080 b

1        addition modification. This subparagraph (CC) is
2        exempt from the provisions of Section 250;
3            (DD) An amount equal to the interest income taken
4        into account for the taxable year (net of the
5        deductions allocable thereto) with respect to
6        transactions with (i) a foreign person who would be a
7        member of the taxpayer's unitary business group but for
8        the fact that the foreign person's business activity
9        outside the United States is 80% or more of that
10        person's total business activity and (ii) for taxable
11        years ending on or after December 31, 2008, to a person
12        who would be a member of the same unitary business
13        group but for the fact that the person is prohibited
14        under Section 1501(a)(27) from being included in the
15        unitary business group because he or she is ordinarily
16        required to apportion business income under different
17        subsections of Section 304, but not to exceed the
18        addition modification required to be made for the same
19        taxable year under Section 203(a)(2)(D-17) for
20        interest paid, accrued, or incurred, directly or
21        indirectly, to the same person. This subparagraph (DD)
22        is exempt from the provisions of Section 250;
23            (EE) An amount equal to the income from intangible
24        property taken into account for the taxable year (net
25        of the deductions allocable thereto) with respect to
26        transactions with (i) a foreign person who would be a

 

 

SB1932- 36 -LRB097 09917 NHT 50080 b

1        member of the taxpayer's unitary business group but for
2        the fact that the foreign person's business activity
3        outside the United States is 80% or more of that
4        person's total business activity and (ii) for taxable
5        years ending on or after December 31, 2008, to a person
6        who would be a member of the same unitary business
7        group but for the fact that the person is prohibited
8        under Section 1501(a)(27) from being included in the
9        unitary business group because he or she is ordinarily
10        required to apportion business income under different
11        subsections of Section 304, but not to exceed the
12        addition modification required to be made for the same
13        taxable year under Section 203(a)(2)(D-18) for
14        intangible expenses and costs paid, accrued, or
15        incurred, directly or indirectly, to the same foreign
16        person. This subparagraph (EE) is exempt from the
17        provisions of Section 250; and
18            (FF) An amount equal to any amount awarded to the
19        taxpayer during the taxable year by the Court of Claims
20        under subsection (c) of Section 8 of the Court of
21        Claims Act for time unjustly served in a State prison.
22        This subparagraph (FF) is exempt from the provisions of
23        Section 250.
24            (GG) For taxable years ending on or after December
25        31, 2011, an amount, to the extent that it is included
26        in adjusted gross income, equal to any voucher redeemed

 

 

SB1932- 37 -LRB097 09917 NHT 50080 b

1        under the School Choice Act. This subparagraph is
2        exempt from the provisions of Section 250.
 
3    (b) Corporations.
4        (1) In general. In the case of a corporation, base
5    income means an amount equal to the taxpayer's taxable
6    income for the taxable year as modified by paragraph (2).
7        (2) Modifications. The taxable income referred to in
8    paragraph (1) shall be modified by adding thereto the sum
9    of the following amounts:
10            (A) An amount equal to all amounts paid or accrued
11        to the taxpayer as interest and all distributions
12        received from regulated investment companies during
13        the taxable year to the extent excluded from gross
14        income in the computation of taxable income;
15            (B) An amount equal to the amount of tax imposed by
16        this Act to the extent deducted from gross income in
17        the computation of taxable income for the taxable year;
18            (C) In the case of a regulated investment company,
19        an amount equal to the excess of (i) the net long-term
20        capital gain for the taxable year, over (ii) the amount
21        of the capital gain dividends designated as such in
22        accordance with Section 852(b)(3)(C) of the Internal
23        Revenue Code and any amount designated under Section
24        852(b)(3)(D) of the Internal Revenue Code,
25        attributable to the taxable year (this amendatory Act

 

 

SB1932- 38 -LRB097 09917 NHT 50080 b

1        of 1995 (Public Act 89-89) is declarative of existing
2        law and is not a new enactment);
3            (D) The amount of any net operating loss deduction
4        taken in arriving at taxable income, other than a net
5        operating loss carried forward from a taxable year
6        ending prior to December 31, 1986;
7            (E) For taxable years in which a net operating loss
8        carryback or carryforward from a taxable year ending
9        prior to December 31, 1986 is an element of taxable
10        income under paragraph (1) of subsection (e) or
11        subparagraph (E) of paragraph (2) of subsection (e),
12        the amount by which addition modifications other than
13        those provided by this subparagraph (E) exceeded
14        subtraction modifications in such earlier taxable
15        year, with the following limitations applied in the
16        order that they are listed:
17                (i) the addition modification relating to the
18            net operating loss carried back or forward to the
19            taxable year from any taxable year ending prior to
20            December 31, 1986 shall be reduced by the amount of
21            addition modification under this subparagraph (E)
22            which related to that net operating loss and which
23            was taken into account in calculating the base
24            income of an earlier taxable year, and
25                (ii) the addition modification relating to the
26            net operating loss carried back or forward to the

 

 

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1            taxable year from any taxable year ending prior to
2            December 31, 1986 shall not exceed the amount of
3            such carryback or carryforward;
4            For taxable years in which there is a net operating
5        loss carryback or carryforward from more than one other
6        taxable year ending prior to December 31, 1986, the
7        addition modification provided in this subparagraph
8        (E) shall be the sum of the amounts computed
9        independently under the preceding provisions of this
10        subparagraph (E) for each such taxable year;
11            (E-5) For taxable years ending after December 31,
12        1997, an amount equal to any eligible remediation costs
13        that the corporation deducted in computing adjusted
14        gross income and for which the corporation claims a
15        credit under subsection (l) of Section 201;
16            (E-10) For taxable years 2001 and thereafter, an
17        amount equal to the bonus depreciation deduction taken
18        on the taxpayer's federal income tax return for the
19        taxable year under subsection (k) of Section 168 of the
20        Internal Revenue Code;
21            (E-11) If the taxpayer sells, transfers, abandons,
22        or otherwise disposes of property for which the
23        taxpayer was required in any taxable year to make an
24        addition modification under subparagraph (E-10), then
25        an amount equal to the aggregate amount of the
26        deductions taken in all taxable years under

 

 

SB1932- 40 -LRB097 09917 NHT 50080 b

1        subparagraph (T) with respect to that property.
2            If the taxpayer continues to own property through
3        the last day of the last tax year for which the
4        taxpayer may claim a depreciation deduction for
5        federal income tax purposes and for which the taxpayer
6        was allowed in any taxable year to make a subtraction
7        modification under subparagraph (T), then an amount
8        equal to that subtraction modification.
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;
12            (E-12) An amount equal to the amount otherwise
13        allowed as a deduction in computing base income for
14        interest paid, accrued, or incurred, directly or
15        indirectly, (i) for taxable years ending on or after
16        December 31, 2004, to a foreign person who would be a
17        member of the same unitary business group but for the
18        fact the foreign person's business activity outside
19        the United States is 80% or more of the foreign
20        person's total business activity and (ii) for taxable
21        years ending on or after December 31, 2008, to a person
22        who would be a member of the same unitary business
23        group but for the fact that the person is prohibited
24        under Section 1501(a)(27) from being included in the
25        unitary business group because he or she is ordinarily
26        required to apportion business income under different

 

 

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1        subsections of Section 304. The addition modification
2        required by this subparagraph shall be reduced to the
3        extent that dividends were included in base income of
4        the unitary group for the same taxable year and
5        received by the taxpayer or by a member of the
6        taxpayer's unitary business group (including amounts
7        included in gross income pursuant to Sections 951
8        through 964 of the Internal Revenue Code and amounts
9        included in gross income under Section 78 of the
10        Internal Revenue Code) with respect to the stock of the
11        same person to whom the interest was paid, accrued, or
12        incurred.
13            This paragraph shall not apply to the following:
14                (i) an item of interest paid, accrued, or
15            incurred, directly or indirectly, to a person who
16            is subject in a foreign country or state, other
17            than a state which requires mandatory unitary
18            reporting, to a tax on or measured by net income
19            with respect to such interest; or
20                (ii) an item of interest paid, accrued, or
21            incurred, directly or indirectly, to a person if
22            the taxpayer can establish, based on a
23            preponderance of the evidence, both of the
24            following:
25                    (a) the person, during the same taxable
26                year, paid, accrued, or incurred, the interest

 

 

SB1932- 42 -LRB097 09917 NHT 50080 b

1                to a person that is not a related member, and
2                    (b) the transaction giving rise to the
3                interest expense between the taxpayer and the
4                person did not have as a principal purpose the
5                avoidance of Illinois income tax, and is paid
6                pursuant to a contract or agreement that
7                reflects an arm's-length interest rate and
8                terms; or
9                (iii) the taxpayer can establish, based on
10            clear and convincing evidence, that the interest
11            paid, accrued, or incurred relates to a contract or
12            agreement entered into at arm's-length rates and
13            terms and the principal purpose for the payment is
14            not federal or Illinois tax avoidance; or
15                (iv) an item of interest paid, accrued, or
16            incurred, directly or indirectly, to a person if
17            the taxpayer establishes by clear and convincing
18            evidence that the adjustments are unreasonable; or
19            if the taxpayer and the Director agree in writing
20            to the application or use of an alternative method
21            of apportionment under Section 304(f).
22                Nothing in this subsection shall preclude the
23            Director from making any other adjustment
24            otherwise allowed under Section 404 of this Act for
25            any tax year beginning after the effective date of
26            this amendment provided such adjustment is made

 

 

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1            pursuant to regulation adopted by the Department
2            and such regulations provide methods and standards
3            by which the Department will utilize its authority
4            under Section 404 of this Act;
5            (E-13) An amount equal to the amount of intangible
6        expenses and costs otherwise allowed as a deduction in
7        computing base income, and that were paid, accrued, or
8        incurred, directly or indirectly, (i) for taxable
9        years ending on or after December 31, 2004, to a
10        foreign person who would be a member of the same
11        unitary business group but for the fact that the
12        foreign person's business activity outside the United
13        States is 80% or more of that person's total business
14        activity and (ii) for taxable years ending on or after
15        December 31, 2008, to a person who would be a member of
16        the same unitary business group but for the fact that
17        the person is prohibited under Section 1501(a)(27)
18        from being included in the unitary business group
19        because he or she is ordinarily required to apportion
20        business income under different subsections of Section
21        304. The addition modification required by this
22        subparagraph shall be reduced to the extent that
23        dividends were included in base income of the unitary
24        group for the same taxable year and received by the
25        taxpayer or by a member of the taxpayer's unitary
26        business group (including amounts included in gross

 

 

SB1932- 44 -LRB097 09917 NHT 50080 b

1        income pursuant to Sections 951 through 964 of the
2        Internal Revenue Code and amounts included in gross
3        income under Section 78 of the Internal Revenue Code)
4        with respect to the stock of the same person to whom
5        the intangible expenses and costs were directly or
6        indirectly paid, incurred, or accrued. The preceding
7        sentence shall not apply to the extent that the same
8        dividends caused a reduction to the addition
9        modification required under Section 203(b)(2)(E-12) of
10        this Act. As used in this subparagraph, the term
11        "intangible expenses and costs" includes (1) expenses,
12        losses, and costs for, or related to, the direct or
13        indirect acquisition, use, maintenance or management,
14        ownership, sale, exchange, or any other disposition of
15        intangible property; (2) losses incurred, directly or
16        indirectly, from factoring transactions or discounting
17        transactions; (3) royalty, patent, technical, and
18        copyright fees; (4) licensing fees; and (5) other
19        similar expenses and costs. For purposes of this
20        subparagraph, "intangible property" includes patents,
21        patent applications, trade names, trademarks, service
22        marks, copyrights, mask works, trade secrets, and
23        similar types of intangible assets.
24            This paragraph shall not apply to the following:
25                (i) any item of intangible expenses or costs
26            paid, accrued, or incurred, directly or

 

 

SB1932- 45 -LRB097 09917 NHT 50080 b

1            indirectly, from a transaction with a person who is
2            subject in a foreign country or state, other than a
3            state which requires mandatory unitary reporting,
4            to a tax on or measured by net income with respect
5            to such item; or
6                (ii) any item of intangible expense or cost
7            paid, accrued, or incurred, directly or
8            indirectly, if the taxpayer can establish, based
9            on a preponderance of the evidence, both of the
10            following:
11                    (a) the person during the same taxable
12                year paid, accrued, or incurred, the
13                intangible expense or cost to a person that is
14                not a related member, and
15                    (b) the transaction giving rise to the
16                intangible expense or cost between the
17                taxpayer and the person did not have as a
18                principal purpose the avoidance of Illinois
19                income tax, and is paid pursuant to a contract
20                or agreement that reflects arm's-length terms;
21                or
22                (iii) any item of intangible expense or cost
23            paid, accrued, or incurred, directly or
24            indirectly, from a transaction with a person if the
25            taxpayer establishes by clear and convincing
26            evidence, that the adjustments are unreasonable;

 

 

SB1932- 46 -LRB097 09917 NHT 50080 b

1            or if the taxpayer and the Director agree in
2            writing to the application or use of an alternative
3            method of apportionment under Section 304(f);
4                Nothing in this subsection shall preclude the
5            Director from making any other adjustment
6            otherwise allowed under Section 404 of this Act for
7            any tax year beginning after the effective date of
8            this amendment provided such adjustment is made
9            pursuant to regulation adopted by the Department
10            and such regulations provide methods and standards
11            by which the Department will utilize its authority
12            under Section 404 of this Act;
13            (E-14) For taxable years ending on or after
14        December 31, 2008, an amount equal to the amount of
15        insurance premium expenses and costs otherwise allowed
16        as a deduction in computing base income, and that were
17        paid, accrued, or incurred, directly or indirectly, to
18        a person who would be a member of the same unitary
19        business group but for the fact that the person is
20        prohibited under Section 1501(a)(27) from being
21        included in the unitary business group because he or
22        she is ordinarily required to apportion business
23        income under different subsections of Section 304. The
24        addition modification required by this subparagraph
25        shall be reduced to the extent that dividends were
26        included in base income of the unitary group for the

 

 

SB1932- 47 -LRB097 09917 NHT 50080 b

1        same taxable year and received by the taxpayer or by a
2        member of the taxpayer's unitary business group
3        (including amounts included in gross income under
4        Sections 951 through 964 of the Internal Revenue Code
5        and amounts included in gross income under Section 78
6        of the Internal Revenue Code) with respect to the stock
7        of the same person to whom the premiums and costs were
8        directly or indirectly paid, incurred, or accrued. The
9        preceding sentence does not apply to the extent that
10        the same dividends caused a reduction to the addition
11        modification required under Section 203(b)(2)(E-12) or
12        Section 203(b)(2)(E-13) of this Act;
13            (E-15) For taxable years beginning after December
14        31, 2008, any deduction for dividends paid by a captive
15        real estate investment trust that is allowed to a real
16        estate investment trust under Section 857(b)(2)(B) of
17        the Internal Revenue Code for dividends paid;
18            (E-16) An amount equal to the credit allowable to
19        the taxpayer under Section 218(a) of this Act,
20        determined without regard to Section 218(c) of this
21        Act;
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;

 

 

SB1932- 48 -LRB097 09917 NHT 50080 b

1            (G) An amount equal to any amount included in such
2        total under Section 78 of the Internal Revenue Code;
3            (H) In the case of a regulated investment company,
4        an amount equal to the amount of exempt interest
5        dividends as defined in subsection (b) (5) of Section
6        852 of the Internal Revenue Code, paid to shareholders
7        for the taxable year;
8            (I) With the exception of any amounts subtracted
9        under subparagraph (J), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2), and 265(a)(2) and amounts disallowed as
12        interest expense by Section 291(a)(3) of the Internal
13        Revenue Code, as now or hereafter amended, and all
14        amounts of expenses allocable to interest and
15        disallowed as deductions by Section 265(a)(1) of the
16        Internal Revenue Code, as now or hereafter amended; and
17        (ii) for taxable years ending on or after August 13,
18        1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
19        832(b)(5)(B)(i) of the Internal Revenue Code; the
20        provisions of this subparagraph are exempt from the
21        provisions of Section 250;
22            (J) An amount equal to all amounts included in such
23        total which are exempt from taxation by this State
24        either by reason of its statutes or Constitution or by
25        reason of the Constitution, treaties or statutes of the
26        United States; provided that, in the case of any

 

 

SB1932- 49 -LRB097 09917 NHT 50080 b

1        statute of this State that exempts income derived from
2        bonds or other obligations from the tax imposed under
3        this Act, the amount exempted shall be the interest net
4        of bond premium amortization;
5            (K) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in an Enterprise Zone or
8        zones created under the Illinois Enterprise Zone Act or
9        a River Edge Redevelopment Zone or zones created under
10        the River Edge Redevelopment Zone Act and conducts
11        substantially all of its operations in an Enterprise
12        Zone or zones or a River Edge Redevelopment Zone or
13        zones. This subparagraph (K) is exempt from the
14        provisions of Section 250;
15            (L) An amount equal to those dividends included in
16        such total that were paid by a corporation that
17        conducts business operations in a federally designated
18        Foreign Trade Zone or Sub-Zone and that is designated a
19        High Impact Business located in Illinois; provided
20        that dividends eligible for the deduction provided in
21        subparagraph (K) of paragraph 2 of this subsection
22        shall not be eligible for the deduction provided under
23        this subparagraph (L);
24            (M) For any taxpayer that is a financial
25        organization within the meaning of Section 304(c) of
26        this Act, an amount included in such total as interest

 

 

SB1932- 50 -LRB097 09917 NHT 50080 b

1        income from a loan or loans made by such taxpayer to a
2        borrower, to the extent that such a loan is secured by
3        property which is eligible for the Enterprise Zone
4        Investment Credit or the River Edge Redevelopment Zone
5        Investment Credit. To determine the portion of a loan
6        or loans that is secured by property eligible for a
7        Section 201(f) investment credit to the borrower, the
8        entire principal amount of the loan or loans between
9        the taxpayer and the borrower should be divided into
10        the basis of the Section 201(f) investment credit
11        property which secures the loan or loans, using for
12        this purpose the original basis of such property on the
13        date that it was placed in service in the Enterprise
14        Zone or the River Edge Redevelopment Zone. The
15        subtraction modification available to taxpayer in any
16        year under this subsection shall be that portion of the
17        total interest paid by the borrower with respect to
18        such loan attributable to the eligible property as
19        calculated under the previous sentence. This
20        subparagraph (M) is exempt from the provisions of
21        Section 250;
22            (M-1) For any taxpayer that is a financial
23        organization within the meaning of Section 304(c) of
24        this Act, an amount included in such total as interest
25        income from a loan or loans made by such taxpayer to a
26        borrower, to the extent that such a loan is secured by

 

 

SB1932- 51 -LRB097 09917 NHT 50080 b

1        property which is eligible for the High Impact Business
2        Investment Credit. To determine the portion of a loan
3        or loans that is secured by property eligible for a
4        Section 201(h) investment credit to the borrower, the
5        entire principal amount of the loan or loans between
6        the taxpayer and the borrower should be divided into
7        the basis of the Section 201(h) investment credit
8        property which secures the loan or loans, using for
9        this purpose the original basis of such property on the
10        date that it was placed in service in a federally
11        designated Foreign Trade Zone or Sub-Zone located in
12        Illinois. No taxpayer that is eligible for the
13        deduction provided in subparagraph (M) of paragraph
14        (2) of this subsection shall be eligible for the
15        deduction provided under this subparagraph (M-1). The
16        subtraction modification available to taxpayers in any
17        year under this subsection shall be that portion of the
18        total interest paid by the borrower with respect to
19        such loan attributable to the eligible property as
20        calculated under the previous sentence;
21            (N) Two times any contribution made during the
22        taxable year to a designated zone organization to the
23        extent that the contribution (i) qualifies as a
24        charitable contribution under subsection (c) of
25        Section 170 of the Internal Revenue Code and (ii) must,
26        by its terms, be used for a project approved by the

 

 

SB1932- 52 -LRB097 09917 NHT 50080 b

1        Department of Commerce and Economic Opportunity under
2        Section 11 of the Illinois Enterprise Zone Act or under
3        Section 10-10 of the River Edge Redevelopment Zone Act.
4        This subparagraph (N) is exempt from the provisions of
5        Section 250;
6            (O) An amount equal to: (i) 85% for taxable years
7        ending on or before December 31, 1992, or, a percentage
8        equal to the percentage allowable under Section
9        243(a)(1) of the Internal Revenue Code of 1986 for
10        taxable years ending after December 31, 1992, of the
11        amount by which dividends included in taxable income
12        and received from a corporation that is not created or
13        organized under the laws of the United States or any
14        state or political subdivision thereof, including, for
15        taxable years ending on or after December 31, 1988,
16        dividends received or deemed received or paid or deemed
17        paid under Sections 951 through 964 of the Internal
18        Revenue Code, exceed the amount of the modification
19        provided under subparagraph (G) of paragraph (2) of
20        this subsection (b) which is related to such dividends,
21        and including, for taxable years ending on or after
22        December 31, 2008, dividends received from a captive
23        real estate investment trust; plus (ii) 100% of the
24        amount by which dividends, included in taxable income
25        and received, including, for taxable years ending on or
26        after December 31, 1988, dividends received or deemed

 

 

SB1932- 53 -LRB097 09917 NHT 50080 b

1        received or paid or deemed paid under Sections 951
2        through 964 of the Internal Revenue Code and including,
3        for taxable years ending on or after December 31, 2008,
4        dividends received from a captive real estate
5        investment trust, from any such corporation specified
6        in clause (i) that would but for the provisions of
7        Section 1504 (b) (3) of the Internal Revenue Code be
8        treated as a member of the affiliated group which
9        includes the dividend recipient, exceed the amount of
10        the modification provided under subparagraph (G) of
11        paragraph (2) of this subsection (b) which is related
12        to such dividends. This subparagraph (O) is exempt from
13        the provisions of Section 250 of this Act;
14            (P) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (Q) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code of 1986;
22            (R) On and after July 20, 1999, in the case of an
23        attorney-in-fact with respect to whom an interinsurer
24        or a reciprocal insurer has made the election under
25        Section 835 of the Internal Revenue Code, 26 U.S.C.
26        835, an amount equal to the excess, if any, of the

 

 

SB1932- 54 -LRB097 09917 NHT 50080 b

1        amounts paid or incurred by that interinsurer or
2        reciprocal insurer in the taxable year to the
3        attorney-in-fact over the deduction allowed to that
4        interinsurer or reciprocal insurer with respect to the
5        attorney-in-fact under Section 835(b) of the Internal
6        Revenue Code for the taxable year; the provisions of
7        this subparagraph are exempt from the provisions of
8        Section 250;
9            (S) For taxable years ending on or after December
10        31, 1997, in the case of a Subchapter S corporation, an
11        amount equal to all amounts of income allocable to a
12        shareholder subject to the Personal Property Tax
13        Replacement Income Tax imposed by subsections (c) and
14        (d) of Section 201 of this Act, including amounts
15        allocable to organizations exempt from federal income
16        tax by reason of Section 501(a) of the Internal Revenue
17        Code. This subparagraph (S) is exempt from the
18        provisions of Section 250;
19            (T) For taxable years 2001 and thereafter, for the
20        taxable year in which the bonus depreciation deduction
21        is taken on the taxpayer's federal income tax return
22        under subsection (k) of Section 168 of the Internal
23        Revenue Code and for each applicable taxable year
24        thereafter, an amount equal to "x", where:
25                (1) "y" equals the amount of the depreciation
26            deduction taken for the taxable year on the

 

 

SB1932- 55 -LRB097 09917 NHT 50080 b

1            taxpayer's federal income tax return on property
2            for which the bonus depreciation deduction was
3            taken in any year under subsection (k) of Section
4            168 of the Internal Revenue Code, but not including
5            the bonus depreciation deduction;
6                (2) for taxable years ending on or before
7            December 31, 2005, "x" equals "y" multiplied by 30
8            and then divided by 70 (or "y" multiplied by
9            0.429); and
10                (3) for taxable years ending after December
11            31, 2005:
12                    (i) for property on which a bonus
13                depreciation deduction of 30% of the adjusted
14                basis was taken, "x" equals "y" multiplied by
15                30 and then divided by 70 (or "y" multiplied by
16                0.429); and
17                    (ii) for property on which a bonus
18                depreciation deduction of 50% of the adjusted
19                basis was taken, "x" equals "y" multiplied by
20                1.0.
21            The aggregate amount deducted under this
22        subparagraph in all taxable years for any one piece of
23        property may not exceed the amount of the bonus
24        depreciation deduction taken on that property on the
25        taxpayer's federal income tax return under subsection
26        (k) of Section 168 of the Internal Revenue Code. This

 

 

SB1932- 56 -LRB097 09917 NHT 50080 b

1        subparagraph (T) is exempt from the provisions of
2        Section 250;
3            (U) If the taxpayer sells, transfers, abandons, or
4        otherwise disposes of property for which the taxpayer
5        was required in any taxable year to make an addition
6        modification under subparagraph (E-10), then an amount
7        equal to that addition modification.
8            If the taxpayer continues to own property through
9        the last day of the last tax year for which the
10        taxpayer may claim a depreciation deduction for
11        federal income tax purposes and for which the taxpayer
12        was required in any taxable year to make an addition
13        modification under subparagraph (E-10), then an amount
14        equal to that addition 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.
18            This subparagraph (U) is exempt from the
19        provisions of Section 250;
20            (V) The amount of: (i) any interest income (net of
21        the deductions allocable thereto) taken into account
22        for the taxable year with respect to a transaction with
23        a taxpayer that is required to make an addition
24        modification with respect to such transaction under
25        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
26        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

 

 

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1        the amount of such addition modification, (ii) any
2        income from intangible property (net of the deductions
3        allocable thereto) taken into account for the taxable
4        year with respect to a transaction with a taxpayer that
5        is required to make an addition modification with
6        respect to such transaction under Section
7        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
8        203(d)(2)(D-8), but not to exceed the amount of such
9        addition modification, and (iii) any insurance premium
10        income (net of deductions allocable thereto) taken
11        into account for the taxable year with respect to a
12        transaction with a taxpayer that is required to make an
13        addition modification with respect to such transaction
14        under Section 203(a)(2)(D-19), Section
15        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
16        203(d)(2)(D-9), but not to exceed the amount of that
17        addition modification. This subparagraph (V) is exempt
18        from the provisions of Section 250;
19            (W) An amount equal to the interest income taken
20        into account for the taxable year (net of the
21        deductions allocable thereto) with respect to
22        transactions with (i) a foreign person who would be a
23        member of the taxpayer's unitary business group but for
24        the fact that the foreign person's business activity
25        outside the United States is 80% or more of that
26        person's total business activity and (ii) for taxable

 

 

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1        years ending on or after December 31, 2008, to a person
2        who would be a member of the same unitary business
3        group but for the fact that the person is prohibited
4        under Section 1501(a)(27) from being included in the
5        unitary business group because he or she is ordinarily
6        required to apportion business income under different
7        subsections of Section 304, but not to exceed the
8        addition modification required to be made for the same
9        taxable year under Section 203(b)(2)(E-12) for
10        interest paid, accrued, or incurred, directly or
11        indirectly, to the same person. This subparagraph (W)
12        is exempt from the provisions of Section 250; and
13            (X) An amount equal to the income from intangible
14        property taken into account for the taxable year (net
15        of the deductions allocable thereto) with respect to
16        transactions with (i) a foreign person who would be a
17        member of the taxpayer's unitary business group but for
18        the fact that the foreign person's business activity
19        outside the United States is 80% or more of that
20        person's total business activity and (ii) for taxable
21        years ending on or after December 31, 2008, to a person
22        who would be a member of the same unitary business
23        group but for the fact that the person is prohibited
24        under Section 1501(a)(27) from being included in the
25        unitary business group because he or she is ordinarily
26        required to apportion business income under different

 

 

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1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(b)(2)(E-13) for
4        intangible expenses and costs paid, accrued, or
5        incurred, directly or indirectly, to the same foreign
6        person. This subparagraph (X) is exempt from the
7        provisions of Section 250.
8        (3) Special rule. For purposes of paragraph (2) (A),
9    "gross income" in the case of a life insurance company, for
10    tax years ending on and after December 31, 1994, shall mean
11    the gross investment income for the taxable year.
 
12    (c) Trusts and estates.
13        (1) In general. In the case of a trust or estate, 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. Subject to the provisions of
17    paragraph (3), the taxable income referred to in paragraph
18    (1) shall be modified by adding thereto the sum of the
19    following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of taxable income;
24            (B) In the case of (i) an estate, $600; (ii) a
25        trust which, under its governing instrument, is

 

 

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1        required to distribute all of its income currently,
2        $300; and (iii) any other trust, $100, but in each such
3        case, only to the extent such amount was deducted in
4        the computation of taxable income;
5            (C) An amount equal to the amount of tax imposed by
6        this Act to the extent deducted from gross income in
7        the computation of taxable income for the taxable year;
8            (D) The amount of any net operating loss deduction
9        taken in arriving at taxable income, other than a net
10        operating loss carried forward from a taxable year
11        ending prior to December 31, 1986;
12            (E) For taxable years in which a net operating loss
13        carryback or carryforward from a taxable year ending
14        prior to December 31, 1986 is an element of taxable
15        income under paragraph (1) of subsection (e) or
16        subparagraph (E) of paragraph (2) of subsection (e),
17        the amount by which addition modifications other than
18        those provided by this subparagraph (E) exceeded
19        subtraction modifications in such taxable year, with
20        the following limitations applied in the order that
21        they are listed:
22                (i) 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 be reduced by the amount of
26            addition modification under this subparagraph (E)

 

 

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1            which related to that net operating loss and which
2            was taken into account in calculating the base
3            income of an earlier taxable year, and
4                (ii) the addition modification relating to the
5            net operating loss carried back or forward to the
6            taxable year from any taxable year ending prior to
7            December 31, 1986 shall not exceed the amount of
8            such carryback or carryforward;
9            For taxable years in which there is a net operating
10        loss carryback or carryforward from more than one other
11        taxable year ending prior to December 31, 1986, the
12        addition modification provided in this subparagraph
13        (E) shall be the sum of the amounts computed
14        independently under the preceding provisions of this
15        subparagraph (E) for each such taxable year;
16            (F) For taxable years ending on or after January 1,
17        1989, an amount equal to the tax deducted pursuant to
18        Section 164 of the Internal Revenue Code if the trust
19        or estate is claiming the same tax for purposes of the
20        Illinois foreign tax credit under Section 601 of this
21        Act;
22            (G) An amount equal to the amount of the capital
23        gain deduction allowable under the Internal Revenue
24        Code, to the extent deducted from gross income in the
25        computation of taxable income;
26            (G-5) For taxable years ending after December 31,

 

 

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1        1997, an amount equal to any eligible remediation costs
2        that the trust or estate deducted in computing adjusted
3        gross income and for which the trust or estate claims a
4        credit under subsection (l) of Section 201;
5            (G-10) For taxable years 2001 and thereafter, an
6        amount equal to the bonus depreciation deduction 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            (G-11) If the taxpayer sells, transfers, abandons,
11        or otherwise disposes of property for which the
12        taxpayer was required in any taxable year to make an
13        addition modification under subparagraph (G-10), then
14        an amount equal to the aggregate amount of the
15        deductions taken in all taxable years under
16        subparagraph (R) with respect to that property.
17            If the taxpayer continues to own property through
18        the last day of the last tax year for which the
19        taxpayer may claim a depreciation deduction for
20        federal income tax purposes and for which the taxpayer
21        was allowed in any taxable year to make a subtraction
22        modification under subparagraph (R), then an amount
23        equal to that subtraction modification.
24            The taxpayer is required to make the addition
25        modification under this subparagraph only once with
26        respect to any one piece of property;

 

 

SB1932- 63 -LRB097 09917 NHT 50080 b

1            (G-12) An amount equal to the amount otherwise
2        allowed as a deduction in computing base income for
3        interest paid, accrued, or incurred, directly or
4        indirectly, (i) for taxable years ending on or after
5        December 31, 2004, to a foreign person who would be a
6        member of the same unitary business group but for the
7        fact that the foreign person's business activity
8        outside the United States is 80% or more of the foreign
9        person's total business activity and (ii) for taxable
10        years ending on or after December 31, 2008, to a person
11        who would be a member of the same unitary business
12        group but for the fact that the person is prohibited
13        under Section 1501(a)(27) from being included in the
14        unitary business group because he or she is ordinarily
15        required to apportion business income under different
16        subsections of Section 304. The addition modification
17        required by this subparagraph shall be reduced to the
18        extent that dividends were included in base income of
19        the unitary group for the same taxable year and
20        received by the taxpayer or by a member of the
21        taxpayer's unitary business group (including amounts
22        included in gross income pursuant to Sections 951
23        through 964 of the Internal Revenue Code and amounts
24        included in gross income under Section 78 of the
25        Internal Revenue Code) with respect to the stock of the
26        same person to whom the interest was paid, accrued, or

 

 

SB1932- 64 -LRB097 09917 NHT 50080 b

1        incurred.
2            This paragraph shall not apply to the following:
3                (i) an item of interest paid, accrued, or
4            incurred, directly or indirectly, to a person who
5            is subject in a foreign country or state, other
6            than a state which requires mandatory unitary
7            reporting, to a tax on or measured by net income
8            with respect to such interest; or
9                (ii) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person if
11            the taxpayer can establish, based on a
12            preponderance of the evidence, both of the
13            following:
14                    (a) the person, during the same taxable
15                year, paid, accrued, or incurred, the interest
16                to a person that is not a related member, and
17                    (b) the transaction giving rise to the
18                interest expense between the taxpayer and the
19                person did not have as a principal purpose the
20                avoidance of Illinois income tax, and is paid
21                pursuant to a contract or agreement that
22                reflects an arm's-length interest rate and
23                terms; or
24                (iii) the taxpayer can establish, based on
25            clear and convincing evidence, that the interest
26            paid, accrued, or incurred relates to a contract or

 

 

SB1932- 65 -LRB097 09917 NHT 50080 b

1            agreement entered into at arm's-length rates and
2            terms and the principal purpose for the payment is
3            not federal or Illinois tax avoidance; or
4                (iv) an item of interest paid, accrued, or
5            incurred, directly or indirectly, to a person if
6            the taxpayer establishes by clear and convincing
7            evidence that the adjustments are unreasonable; or
8            if the taxpayer and the Director agree in writing
9            to the application or use of an alternative method
10            of apportionment under Section 304(f).
11                Nothing in this subsection shall preclude the
12            Director from making any other adjustment
13            otherwise allowed under Section 404 of this Act for
14            any tax year beginning after the effective date of
15            this amendment provided such adjustment is made
16            pursuant to regulation adopted by the Department
17            and such regulations provide methods and standards
18            by which the Department will utilize its authority
19            under Section 404 of this Act;
20            (G-13) An amount equal to the amount of intangible
21        expenses and costs otherwise allowed as a deduction in
22        computing base income, and that were paid, accrued, or
23        incurred, directly or indirectly, (i) for taxable
24        years ending on or after December 31, 2004, to a
25        foreign person who would be a member of the same
26        unitary business group but for the fact that the

 

 

SB1932- 66 -LRB097 09917 NHT 50080 b

1        foreign person's business activity outside the United
2        States is 80% or more of that person's total business
3        activity and (ii) for taxable years ending on or after
4        December 31, 2008, to a person who would be a member of
5        the same unitary business group but for the fact that
6        the person is prohibited under Section 1501(a)(27)
7        from being included in the unitary business group
8        because he or she is ordinarily required to apportion
9        business income under different subsections of Section
10        304. The addition modification required by this
11        subparagraph shall be reduced to the extent that
12        dividends were included in base income of the unitary
13        group for the same taxable year and received by the
14        taxpayer or by a member of the taxpayer's unitary
15        business group (including amounts included in gross
16        income pursuant to Sections 951 through 964 of the
17        Internal Revenue Code and amounts included in gross
18        income under Section 78 of the Internal Revenue Code)
19        with respect to the stock of the same person to whom
20        the intangible expenses and costs were directly or
21        indirectly paid, incurred, or accrued. The preceding
22        sentence shall not apply to the extent that the same
23        dividends caused a reduction to the addition
24        modification required under Section 203(c)(2)(G-12) of
25        this Act. As used in this subparagraph, the term
26        "intangible expenses and costs" includes: (1)

 

 

SB1932- 67 -LRB097 09917 NHT 50080 b

1        expenses, losses, and costs for or related to the
2        direct or indirect acquisition, use, maintenance or
3        management, ownership, sale, exchange, or any other
4        disposition of intangible property; (2) losses
5        incurred, directly or indirectly, from factoring
6        transactions or discounting transactions; (3) royalty,
7        patent, technical, and copyright fees; (4) licensing
8        fees; and (5) other similar expenses and costs. For
9        purposes of this subparagraph, "intangible property"
10        includes patents, patent applications, trade names,
11        trademarks, service marks, copyrights, mask works,
12        trade secrets, and similar types of intangible assets.
13            This paragraph shall not apply to the following:
14                (i) any item of intangible expenses or costs
15            paid, accrued, or incurred, directly or
16            indirectly, from a transaction with a person who is
17            subject in a foreign country or state, other than a
18            state which requires mandatory unitary reporting,
19            to a tax on or measured by net income with respect
20            to such item; or
21                (ii) any item of intangible expense or cost
22            paid, accrued, or incurred, directly or
23            indirectly, if the taxpayer can establish, based
24            on a preponderance of the evidence, both of the
25            following:
26                    (a) the person during the same taxable

 

 

SB1932- 68 -LRB097 09917 NHT 50080 b

1                year paid, accrued, or incurred, the
2                intangible expense or cost to a person that is
3                not a related member, and
4                    (b) the transaction giving rise to the
5                intangible expense or cost between the
6                taxpayer and the person did not have as a
7                principal purpose the avoidance of Illinois
8                income tax, and is paid pursuant to a contract
9                or agreement that reflects arm's-length terms;
10                or
11                (iii) any item of intangible expense or cost
12            paid, accrued, or incurred, directly or
13            indirectly, from a transaction with a person if the
14            taxpayer establishes by clear and convincing
15            evidence, that the adjustments are unreasonable;
16            or if the taxpayer and the Director agree in
17            writing to the application or use of an alternative
18            method of apportionment under Section 304(f);
19                Nothing in this subsection shall preclude the
20            Director from making any other adjustment
21            otherwise allowed under Section 404 of this Act for
22            any tax year beginning after the effective date of
23            this amendment provided such adjustment is made
24            pursuant to regulation adopted by the Department
25            and such regulations provide methods and standards
26            by which the Department will utilize its authority

 

 

SB1932- 69 -LRB097 09917 NHT 50080 b

1            under Section 404 of this Act;
2            (G-14) For taxable years ending on or after
3        December 31, 2008, an amount equal to the amount of
4        insurance premium expenses and costs otherwise allowed
5        as a deduction in computing base income, and that were
6        paid, accrued, or incurred, directly or indirectly, to
7        a person who would be a member of the same unitary
8        business group but for the fact that the person is
9        prohibited under Section 1501(a)(27) from being
10        included in the unitary business group because he or
11        she is ordinarily required to apportion business
12        income under different subsections of Section 304. The
13        addition modification required by this subparagraph
14        shall be reduced to the extent that dividends were
15        included in base income of the unitary group for the
16        same taxable year and received by the taxpayer or by a
17        member of the taxpayer's unitary business group
18        (including amounts included in gross income under
19        Sections 951 through 964 of the Internal Revenue Code
20        and amounts included in gross income under Section 78
21        of the Internal Revenue Code) with respect to the stock
22        of the same person to whom the premiums and costs were
23        directly or indirectly paid, incurred, or accrued. The
24        preceding sentence does not apply to the extent that
25        the same dividends caused a reduction to the addition
26        modification required under Section 203(c)(2)(G-12) or

 

 

SB1932- 70 -LRB097 09917 NHT 50080 b

1        Section 203(c)(2)(G-13) of this Act;
2            (G-15) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6    and by deducting from the total so obtained the sum of the
7    following amounts:
8            (H) 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            (I) The valuation limitation amount;
20            (J) 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            (K) An amount equal to all amounts included in
24        taxable income as modified by subparagraphs (A), (B),
25        (C), (D), (E), (F) and (G) which are exempt from
26        taxation by this State either by reason of its statutes

 

 

SB1932- 71 -LRB097 09917 NHT 50080 b

1        or Constitution or by reason of the Constitution,
2        treaties or statutes of the United States; provided
3        that, in the case of any statute of this State that
4        exempts income derived from bonds or other obligations
5        from the tax imposed under this Act, the amount
6        exempted shall be the interest net of bond premium
7        amortization;
8            (L) With the exception of any amounts subtracted
9        under subparagraph (K), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
12        as now or hereafter amended, and all amounts of
13        expenses allocable to interest and disallowed as
14        deductions by Section 265(1) of the Internal Revenue
15        Code of 1954, as now or hereafter amended; and (ii) for
16        taxable years ending on or after August 13, 1999,
17        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
18        the Internal Revenue Code; the provisions of this
19        subparagraph are exempt from the provisions of Section
20        250;
21            (M) 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 or
25        a River Edge Redevelopment Zone or zones created under
26        the River Edge Redevelopment Zone Act and conducts

 

 

SB1932- 72 -LRB097 09917 NHT 50080 b

1        substantially all of its operations in an Enterprise
2        Zone or Zones or a River Edge Redevelopment Zone or
3        zones. This subparagraph (M) is exempt from the
4        provisions of Section 250;
5            (N) An amount equal to any contribution made to a
6        job training project established pursuant to the Tax
7        Increment Allocation Redevelopment Act;
8            (O) An amount equal to those dividends included in
9        such total that were paid by a corporation that
10        conducts business operations in a federally designated
11        Foreign Trade Zone or Sub-Zone and that is designated a
12        High Impact Business located in Illinois; provided
13        that dividends eligible for the deduction provided in
14        subparagraph (M) of paragraph (2) of this subsection
15        shall not be eligible for the deduction provided under
16        this subparagraph (O);
17            (P) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code of 1986;
22            (Q) For taxable year 1999 and thereafter, an amount
23        equal to the amount of any (i) distributions, to the
24        extent includible in gross income for federal income
25        tax purposes, made to the taxpayer because of his or
26        her status as a victim of persecution for racial or

 

 

SB1932- 73 -LRB097 09917 NHT 50080 b

1        religious reasons by Nazi Germany or any other Axis
2        regime or as an heir of the victim and (ii) items of
3        income, to the extent includible in gross income for
4        federal income tax purposes, attributable to, derived
5        from or in any way related to assets stolen from,
6        hidden from, or otherwise lost to a victim of
7        persecution for racial or religious reasons by Nazi
8        Germany or any other Axis regime immediately prior to,
9        during, and immediately after World War II, including,
10        but not limited to, interest on the proceeds receivable
11        as insurance under policies issued to a victim of
12        persecution for racial or religious reasons by Nazi
13        Germany or any other Axis regime by European insurance
14        companies immediately prior to and during World War II;
15        provided, however, this subtraction from federal
16        adjusted gross income does not apply to assets acquired
17        with such assets or with the proceeds from the sale of
18        such assets; provided, further, this paragraph shall
19        only apply to a taxpayer who was the first recipient of
20        such assets after their recovery and who is a victim of
21        persecution for racial or religious reasons by Nazi
22        Germany or any other Axis regime or as an heir of the
23        victim. The amount of and the eligibility for any
24        public assistance, benefit, or similar entitlement is
25        not affected by the inclusion of items (i) and (ii) of
26        this paragraph in gross income for federal income tax

 

 

SB1932- 74 -LRB097 09917 NHT 50080 b

1        purposes. This paragraph is exempt from the provisions
2        of Section 250;
3            (R) For taxable years 2001 and thereafter, for the
4        taxable year in which the bonus depreciation deduction
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 was
13            taken in any year under subsection (k) of Section
14            168 of the Internal Revenue Code, but not including
15            the bonus depreciation deduction;
16                (2) for taxable years ending on or before
17            December 31, 2005, "x" equals "y" multiplied by 30
18            and then divided by 70 (or "y" multiplied by
19            0.429); and
20                (3) for taxable years ending after December
21            31, 2005:
22                    (i) for property on which a bonus
23                depreciation deduction of 30% of the adjusted
24                basis was taken, "x" equals "y" multiplied by
25                30 and then divided by 70 (or "y" multiplied by
26                0.429); and

 

 

SB1932- 75 -LRB097 09917 NHT 50080 b

1                    (ii) for property on which a bonus
2                depreciation deduction of 50% of the adjusted
3                basis was taken, "x" equals "y" multiplied by
4                1.0.
5            The aggregate amount deducted under this
6        subparagraph in all taxable years for any one piece of
7        property may not exceed the amount of the bonus
8        depreciation deduction taken on that property on the
9        taxpayer's federal income tax return under subsection
10        (k) of Section 168 of the Internal Revenue Code. This
11        subparagraph (R) is exempt from the provisions of
12        Section 250;
13            (S) If the taxpayer sells, transfers, abandons, or
14        otherwise disposes of property for which the taxpayer
15        was required in any taxable year to make an addition
16        modification under subparagraph (G-10), then an amount
17        equal to that addition modification.
18            If the taxpayer continues to own property through
19        the last day of the last tax year for which the
20        taxpayer may claim a depreciation deduction for
21        federal income tax purposes and for which the taxpayer
22        was required in any taxable year to make an addition
23        modification under subparagraph (G-10), then an amount
24        equal to that addition modification.
25            The taxpayer is allowed to take the deduction under
26        this subparagraph only once with respect to any one

 

 

SB1932- 76 -LRB097 09917 NHT 50080 b

1        piece of property.
2            This subparagraph (S) is exempt from the
3        provisions of Section 250;
4            (T) The amount of (i) any interest income (net of
5        the deductions allocable thereto) taken into account
6        for the taxable year with respect to a transaction with
7        a taxpayer that is required to make an addition
8        modification with respect to such transaction under
9        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
10        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
11        the amount of such addition modification and (ii) any
12        income from intangible property (net of the deductions
13        allocable thereto) taken into account for the taxable
14        year with respect to a transaction with a taxpayer that
15        is required to make an addition modification with
16        respect to such transaction under Section
17        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
18        203(d)(2)(D-8), but not to exceed the amount of such
19        addition modification. This subparagraph (T) is exempt
20        from the provisions of Section 250;
21            (U) An amount equal to the interest income taken
22        into account for the taxable year (net of the
23        deductions allocable thereto) with respect to
24        transactions with (i) a foreign person who would be a
25        member of the taxpayer's unitary business group but for
26        the fact the foreign person's business activity

 

 

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1        outside the United States is 80% or more of that
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304, but not to exceed the
10        addition modification required to be made for the same
11        taxable year under Section 203(c)(2)(G-12) for
12        interest paid, accrued, or incurred, directly or
13        indirectly, to the same person. This subparagraph (U)
14        is exempt from the provisions of Section 250; and
15            (V) An amount equal to the income from intangible
16        property taken into account for the taxable year (net
17        of the deductions allocable thereto) with respect to
18        transactions with (i) a foreign person who would be a
19        member of the taxpayer's unitary business group but for
20        the fact that the foreign person's business activity
21        outside the United States is 80% or more of that
22        person's total business activity and (ii) for taxable
23        years ending on or after December 31, 2008, to a person
24        who would be a member of the same unitary business
25        group but for the fact that the person is prohibited
26        under Section 1501(a)(27) from being included in the

 

 

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1        unitary business group because he or she is ordinarily
2        required to apportion business income under different
3        subsections of Section 304, but not to exceed the
4        addition modification required to be made for the same
5        taxable year under Section 203(c)(2)(G-13) for
6        intangible expenses and costs paid, accrued, or
7        incurred, directly or indirectly, to the same foreign
8        person. This subparagraph (V) is exempt from the
9        provisions of Section 250.
10        (3) Limitation. The amount of any modification
11    otherwise required under this subsection shall, under
12    regulations prescribed by the Department, be adjusted by
13    any amounts included therein which were properly paid,
14    credited, or required to be distributed, or permanently set
15    aside for charitable purposes pursuant to Internal Revenue
16    Code Section 642(c) during the taxable year.
 
17    (d) Partnerships.
18        (1) In general. In the case of a partnership, base
19    income means an amount equal to the taxpayer's taxable
20    income for the taxable year as modified by paragraph (2).
21        (2) Modifications. The taxable income referred to in
22    paragraph (1) shall be modified by adding thereto the sum
23    of the following amounts:
24            (A) An amount equal to all amounts paid or accrued
25        to the taxpayer as interest or dividends during the

 

 

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1        taxable year to the extent excluded from gross income
2        in the computation of taxable income;
3            (B) An amount equal to the amount of tax imposed by
4        this Act to the extent deducted from gross income for
5        the taxable year;
6            (C) The amount of deductions allowed to the
7        partnership pursuant to Section 707 (c) of the Internal
8        Revenue Code in calculating its taxable income;
9            (D) An amount equal to the amount of the capital
10        gain deduction allowable under the Internal Revenue
11        Code, to the extent deducted from gross income in the
12        computation of taxable income;
13            (D-5) For taxable years 2001 and thereafter, an
14        amount equal to the bonus depreciation deduction taken
15        on the taxpayer's federal income tax return for the
16        taxable year under subsection (k) of Section 168 of the
17        Internal Revenue Code;
18            (D-6) If the taxpayer sells, transfers, abandons,
19        or otherwise disposes of property for which the
20        taxpayer was required in any taxable year to make an
21        addition modification under subparagraph (D-5), then
22        an amount equal to the aggregate amount of the
23        deductions taken in all taxable years under
24        subparagraph (O) with respect to that property.
25            If the taxpayer continues to own property through
26        the last day of the last tax year for which the

 

 

SB1932- 80 -LRB097 09917 NHT 50080 b

1        taxpayer may claim a depreciation deduction for
2        federal income tax purposes and for which the taxpayer
3        was allowed in any taxable year to make a subtraction
4        modification under subparagraph (O), then an amount
5        equal to that subtraction modification.
6            The taxpayer is required to make the addition
7        modification under this subparagraph only once with
8        respect to any one piece of property;
9            (D-7) An amount equal to the amount otherwise
10        allowed as a deduction in computing base income for
11        interest paid, accrued, or incurred, directly or
12        indirectly, (i) for taxable years ending on or after
13        December 31, 2004, to a foreign person who would be a
14        member of the same unitary business group but for the
15        fact the foreign person's business activity outside
16        the United States is 80% or more of the foreign
17        person's total business activity and (ii) for taxable
18        years ending on or after December 31, 2008, to a person
19        who would be a member of the same unitary business
20        group but for the fact that the person is prohibited
21        under Section 1501(a)(27) from being included in the
22        unitary business group because he or she is ordinarily
23        required to apportion business income under different
24        subsections of Section 304. The addition modification
25        required by this subparagraph shall be reduced to the
26        extent that dividends were included in base income of

 

 

SB1932- 81 -LRB097 09917 NHT 50080 b

1        the unitary group for the same taxable year and
2        received by the taxpayer or by a member of the
3        taxpayer's unitary business group (including amounts
4        included in gross income pursuant to Sections 951
5        through 964 of the Internal Revenue Code and amounts
6        included in gross income under Section 78 of the
7        Internal Revenue Code) with respect to the stock of the
8        same person to whom the interest was paid, accrued, or
9        incurred.
10            This paragraph shall not apply to the following:
11                (i) an item of interest paid, accrued, or
12            incurred, directly or indirectly, to a person who
13            is subject in a foreign country or state, other
14            than a state which requires mandatory unitary
15            reporting, to a tax on or measured by net income
16            with respect to such interest; or
17                (ii) an item of interest paid, accrued, or
18            incurred, directly or indirectly, to a person if
19            the taxpayer can establish, based on a
20            preponderance of the evidence, both of the
21            following:
22                    (a) the person, during the same taxable
23                year, paid, accrued, or incurred, the interest
24                to a person that is not a related member, and
25                    (b) the transaction giving rise to the
26                interest expense between the taxpayer and the

 

 

SB1932- 82 -LRB097 09917 NHT 50080 b

1                person did not have as a principal purpose the
2                avoidance of Illinois income tax, and is paid
3                pursuant to a contract or agreement that
4                reflects an arm's-length interest rate and
5                terms; or
6                (iii) the taxpayer can establish, based on
7            clear and convincing evidence, that the interest
8            paid, accrued, or incurred relates to a contract or
9            agreement entered into at arm's-length rates and
10            terms and the principal purpose for the payment is
11            not federal or Illinois tax avoidance; or
12                (iv) an item of interest paid, accrued, or
13            incurred, directly or indirectly, to a person if
14            the taxpayer establishes by clear and convincing
15            evidence that the adjustments are unreasonable; or
16            if the taxpayer and the Director agree in writing
17            to the application or use of an alternative method
18            of apportionment under Section 304(f).
19                Nothing in this subsection shall preclude the
20            Director from making any other adjustment
21            otherwise allowed under Section 404 of this Act for
22            any tax year beginning after the effective date of
23            this amendment provided such adjustment is made
24            pursuant to regulation adopted by the Department
25            and such regulations provide methods and standards
26            by which the Department will utilize its authority

 

 

SB1932- 83 -LRB097 09917 NHT 50080 b

1            under Section 404 of this Act; and
2            (D-8) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income pursuant to Sections 951 through 964 of the
25        Internal Revenue Code and amounts included in gross
26        income under Section 78 of the Internal Revenue Code)

 

 

SB1932- 84 -LRB097 09917 NHT 50080 b

1        with respect to the stock of the same person to whom
2        the intangible expenses and costs were directly or
3        indirectly paid, incurred or accrued. The preceding
4        sentence shall not apply to the extent that the same
5        dividends caused a reduction to the addition
6        modification required under Section 203(d)(2)(D-7) of
7        this Act. As used in this subparagraph, the term
8        "intangible expenses and costs" includes (1) expenses,
9        losses, and costs for, or related to, the direct or
10        indirect acquisition, use, maintenance or management,
11        ownership, sale, exchange, or any other disposition of
12        intangible property; (2) losses incurred, directly or
13        indirectly, from factoring transactions or discounting
14        transactions; (3) royalty, patent, technical, and
15        copyright fees; (4) licensing fees; and (5) other
16        similar expenses and costs. For purposes of this
17        subparagraph, "intangible property" includes patents,
18        patent applications, trade names, trademarks, service
19        marks, copyrights, mask works, trade secrets, and
20        similar types of intangible assets;
21            This paragraph shall not apply to the following:
22                (i) any item of intangible expenses or costs
23            paid, accrued, or incurred, directly or
24            indirectly, from a transaction with a person who is
25            subject in a foreign country or state, other than a
26            state which requires mandatory unitary reporting,

 

 

SB1932- 85 -LRB097 09917 NHT 50080 b

1            to a tax on or measured by net income with respect
2            to such item; or
3                (ii) any item of intangible expense or cost
4            paid, accrued, or incurred, directly or
5            indirectly, if the taxpayer can establish, based
6            on a preponderance of the evidence, both of the
7            following:
8                    (a) the person during the same taxable
9                year paid, accrued, or incurred, the
10                intangible expense or cost to a person that is
11                not a related member, and
12                    (b) the transaction giving rise to the
13                intangible expense or cost between the
14                taxpayer and the person did not have as a
15                principal purpose the avoidance of Illinois
16                income tax, and is paid pursuant to a contract
17                or agreement that reflects arm's-length terms;
18                or
19                (iii) any item of intangible expense or cost
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person if the
22            taxpayer establishes by clear and convincing
23            evidence, that the adjustments are unreasonable;
24            or if the taxpayer and the Director agree in
25            writing to the application or use of an alternative
26            method of apportionment under Section 304(f);

 

 

SB1932- 86 -LRB097 09917 NHT 50080 b

1                Nothing in this subsection shall preclude the
2            Director from making any other adjustment
3            otherwise allowed under Section 404 of this Act for
4            any tax year beginning after the effective date of
5            this amendment provided such adjustment is made
6            pursuant to regulation adopted by the Department
7            and such regulations provide methods and standards
8            by which the Department will utilize its authority
9            under Section 404 of this Act;
10            (D-9) For taxable years ending on or after December
11        31, 2008, an amount equal to the amount of insurance
12        premium expenses and costs otherwise allowed as a
13        deduction in computing base income, and that were paid,
14        accrued, or incurred, directly or indirectly, to a
15        person who would be a member of the same unitary
16        business group but for the fact that the person is
17        prohibited under Section 1501(a)(27) from being
18        included in the unitary business group because he or
19        she is ordinarily required to apportion business
20        income under different subsections of Section 304. The
21        addition modification required by this subparagraph
22        shall be reduced to the extent that dividends were
23        included in base income of the unitary group for the
24        same taxable year and received by the taxpayer or by a
25        member of the taxpayer's unitary business group
26        (including amounts included in gross income under

 

 

SB1932- 87 -LRB097 09917 NHT 50080 b

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the stock
4        of the same person to whom the premiums and costs were
5        directly or indirectly paid, incurred, or accrued. The
6        preceding sentence does not apply to the extent that
7        the same dividends caused a reduction to the addition
8        modification required under Section 203(d)(2)(D-7) or
9        Section 203(d)(2)(D-8) of this Act;
10            (D-10) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14    and by deducting from the total so obtained the following
15    amounts:
16            (E) The valuation limitation amount;
17            (F) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (G) An amount equal to all amounts included in
21        taxable income as modified by subparagraphs (A), (B),
22        (C) and (D) which are exempt from taxation by this
23        State either by reason of its statutes or Constitution
24        or by reason of the Constitution, treaties or statutes
25        of the United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

SB1932- 88 -LRB097 09917 NHT 50080 b

1        bonds or other obligations from the tax imposed under
2        this Act, the amount exempted shall be the interest net
3        of bond premium amortization;
4            (H) Any income of the partnership which
5        constitutes personal service income as defined in
6        Section 1348 (b) (1) of the Internal Revenue Code (as
7        in effect December 31, 1981) or a reasonable allowance
8        for compensation paid or accrued for services rendered
9        by partners to the partnership, whichever is greater;
10            (I) An amount equal to all amounts of income
11        distributable to an entity subject to the Personal
12        Property Tax Replacement Income Tax imposed by
13        subsections (c) and (d) of Section 201 of this Act
14        including amounts distributable to organizations
15        exempt from federal income tax by reason of Section
16        501(a) of the Internal Revenue Code;
17            (J) With the exception of any amounts subtracted
18        under subparagraph (G), an amount equal to the sum of
19        all amounts disallowed as deductions by (i) Sections
20        171(a) (2), and 265(2) of the Internal Revenue Code of
21        1954, as now or hereafter amended, and all amounts of
22        expenses allocable to interest and disallowed as
23        deductions by Section 265(1) of the Internal Revenue
24        Code, as now or hereafter amended; and (ii) for taxable
25        years ending on or after August 13, 1999, Sections
26        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

 

 

SB1932- 89 -LRB097 09917 NHT 50080 b

1        Internal Revenue Code; the provisions of this
2        subparagraph are exempt from the provisions of Section
3        250;
4            (K) An amount equal to those dividends included in
5        such total which were paid by a corporation which
6        conducts business operations in an Enterprise Zone or
7        zones created under the Illinois Enterprise Zone Act,
8        enacted by the 82nd General Assembly, or a River Edge
9        Redevelopment Zone or zones created under the River
10        Edge Redevelopment Zone Act and conducts substantially
11        all of its operations in an Enterprise Zone or Zones or
12        from a River Edge Redevelopment Zone or zones. This
13        subparagraph (K) is exempt from the provisions of
14        Section 250;
15            (L) An amount equal to any contribution made to a
16        job training project established pursuant to the Real
17        Property Tax Increment Allocation Redevelopment Act;
18            (M) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated a
22        High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (K) of paragraph (2) of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (M);

 

 

SB1932- 90 -LRB097 09917 NHT 50080 b

1            (N) 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            (O) For taxable years 2001 and thereafter, for the
7        taxable year in which the bonus depreciation deduction
8        is taken on the taxpayer's federal income tax return
9        under subsection (k) of Section 168 of the Internal
10        Revenue Code and for each applicable taxable year
11        thereafter, an amount equal to "x", where:
12                (1) "y" equals the amount of the depreciation
13            deduction taken for the taxable year on the
14            taxpayer's federal income tax return on property
15            for which the bonus depreciation deduction was
16            taken in any year under subsection (k) of Section
17            168 of the Internal Revenue Code, but not including
18            the bonus depreciation deduction;
19                (2) for taxable years ending on or before
20            December 31, 2005, "x" equals "y" multiplied by 30
21            and then divided by 70 (or "y" multiplied by
22            0.429); and
23                (3) for taxable years ending after December
24            31, 2005:
25                    (i) for property on which a bonus
26                depreciation deduction of 30% of the adjusted

 

 

SB1932- 91 -LRB097 09917 NHT 50080 b

1                basis was taken, "x" equals "y" multiplied by
2                30 and then divided by 70 (or "y" multiplied by
3                0.429); and
4                    (ii) for property on which a bonus
5                depreciation deduction of 50% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                1.0.
8            The aggregate amount deducted under this
9        subparagraph in all taxable years for any one piece of
10        property may not exceed the amount of the bonus
11        depreciation deduction taken on that property on the
12        taxpayer's federal income tax return under subsection
13        (k) of Section 168 of the Internal Revenue Code. This
14        subparagraph (O) is exempt from the provisions of
15        Section 250;
16            (P) If the taxpayer sells, transfers, abandons, or
17        otherwise disposes of property for which the taxpayer
18        was required in any taxable year to make an addition
19        modification under subparagraph (D-5), then an amount
20        equal to that addition modification.
21            If the taxpayer continues to own property through
22        the last day of the last tax year for which the
23        taxpayer may claim a depreciation deduction for
24        federal income tax purposes and for which the taxpayer
25        was required in any taxable year to make an addition
26        modification under subparagraph (D-5), then an amount

 

 

SB1932- 92 -LRB097 09917 NHT 50080 b

1        equal to that addition modification.
2            The taxpayer is allowed to take the deduction under
3        this subparagraph only once with respect to any one
4        piece of property.
5            This subparagraph (P) is exempt from the
6        provisions of Section 250;
7            (Q) The amount of (i) any interest income (net of
8        the deductions allocable thereto) taken into account
9        for the taxable year with respect to a transaction with
10        a taxpayer that is required to make an addition
11        modification with respect to such transaction under
12        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
13        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
14        the amount of such addition modification and (ii) any
15        income from intangible property (net of the deductions
16        allocable thereto) taken into account for the taxable
17        year with respect to a transaction with a taxpayer that
18        is required to make an addition modification with
19        respect to such transaction under Section
20        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
21        203(d)(2)(D-8), but not to exceed the amount of such
22        addition modification. This subparagraph (Q) is exempt
23        from Section 250;
24            (R) An amount equal to the interest income taken
25        into account for the taxable year (net of the
26        deductions allocable thereto) with respect to

 

 

SB1932- 93 -LRB097 09917 NHT 50080 b

1        transactions with (i) a foreign person who would be a
2        member of the taxpayer's unitary business group but for
3        the fact that the foreign person's business activity
4        outside the United States is 80% or more of that
5        person's total business activity and (ii) for taxable
6        years ending on or after December 31, 2008, to a person
7        who would be a member of the same unitary business
8        group but for the fact that the person is prohibited
9        under Section 1501(a)(27) from being included in the
10        unitary business group because he or she is ordinarily
11        required to apportion business income under different
12        subsections of Section 304, but not to exceed the
13        addition modification required to be made for the same
14        taxable year under Section 203(d)(2)(D-7) for interest
15        paid, accrued, or incurred, directly or indirectly, to
16        the same person. This subparagraph (R) is exempt from
17        Section 250; and
18            (S) An amount equal to the income from intangible
19        property taken into account for the taxable year (net
20        of the deductions allocable thereto) with respect to
21        transactions with (i) a foreign person who would be a
22        member of the taxpayer's unitary business group but for
23        the fact that the foreign person's business activity
24        outside the United States is 80% or more of that
25        person's total business activity and (ii) for taxable
26        years ending on or after December 31, 2008, to a person

 

 

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1        who would be a member of the same unitary business
2        group but for the fact that the person is prohibited
3        under Section 1501(a)(27) from being included in the
4        unitary business group because he or she is ordinarily
5        required to apportion business income under different
6        subsections of Section 304, but not to exceed the
7        addition modification required to be made for the same
8        taxable year under Section 203(d)(2)(D-8) for
9        intangible expenses and costs paid, accrued, or
10        incurred, directly or indirectly, to the same person.
11        This subparagraph (S) is exempt from Section 250.
 
12    (e) Gross income; adjusted gross income; taxable income.
13        (1) In general. Subject to the provisions of paragraph
14    (2) and subsection (b) (3), for purposes of this Section
15    and Section 803(e), a taxpayer's gross income, adjusted
16    gross income, or taxable income for the taxable year shall
17    mean the amount of gross income, adjusted gross income or
18    taxable income properly reportable for federal income tax
19    purposes for the taxable year under the provisions of the
20    Internal Revenue Code. Taxable income may be less than
21    zero. However, for taxable years ending on or after
22    December 31, 1986, net operating loss carryforwards from
23    taxable years ending prior to December 31, 1986, may not
24    exceed the sum of federal taxable income for the taxable
25    year before net operating loss deduction, plus the excess

 

 

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1    of addition modifications over subtraction modifications
2    for the taxable year. For taxable years ending prior to
3    December 31, 1986, taxable income may never be an amount in
4    excess of the net operating loss for the taxable year as
5    defined in subsections (c) and (d) of Section 172 of the
6    Internal Revenue Code, provided that when taxable income of
7    a corporation (other than a Subchapter S corporation),
8    trust, or estate is less than zero and addition
9    modifications, other than those provided by subparagraph
10    (E) of paragraph (2) of subsection (b) for corporations or
11    subparagraph (E) of paragraph (2) of subsection (c) for
12    trusts and estates, exceed subtraction modifications, an
13    addition modification must be made under those
14    subparagraphs for any other taxable year to which the
15    taxable income less than zero (net operating loss) is
16    applied under Section 172 of the Internal Revenue Code or
17    under subparagraph (E) of paragraph (2) of this subsection
18    (e) applied in conjunction with Section 172 of the Internal
19    Revenue Code.
20        (2) Special rule. For purposes of paragraph (1) of this
21    subsection, the taxable income properly reportable for
22    federal income tax purposes shall mean:
23            (A) Certain life insurance companies. In the case
24        of a life insurance company subject to the tax imposed
25        by Section 801 of the Internal Revenue Code, life
26        insurance company taxable income, plus the amount of

 

 

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1        distribution from pre-1984 policyholder surplus
2        accounts as calculated under Section 815a of the
3        Internal Revenue Code;
4            (B) Certain other insurance companies. In the case
5        of mutual insurance companies subject to the tax
6        imposed by Section 831 of the Internal Revenue Code,
7        insurance company taxable income;
8            (C) Regulated investment companies. In the case of
9        a regulated investment company subject to the tax
10        imposed by Section 852 of the Internal Revenue Code,
11        investment company taxable income;
12            (D) Real estate investment trusts. In the case of a
13        real estate investment trust subject to the tax imposed
14        by Section 857 of the Internal Revenue Code, real
15        estate investment trust taxable income;
16            (E) Consolidated corporations. In the case of a
17        corporation which is a member of an affiliated group of
18        corporations filing a consolidated income tax return
19        for the taxable year for federal income tax purposes,
20        taxable income determined as if such corporation had
21        filed a separate return for federal income tax purposes
22        for the taxable year and each preceding taxable year
23        for which it was a member of an affiliated group. For
24        purposes of this subparagraph, the taxpayer's separate
25        taxable income shall be determined as if the election
26        provided by Section 243(b) (2) of the Internal Revenue

 

 

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1        Code had been in effect for all such years;
2            (F) Cooperatives. In the case of a cooperative
3        corporation or association, the taxable income of such
4        organization determined in accordance with the
5        provisions of Section 1381 through 1388 of the Internal
6        Revenue Code, but without regard to the prohibition
7        against offsetting losses from patronage activities
8        against income from nonpatronage activities; except
9        that a cooperative corporation or association may make
10        an election to follow its federal income tax treatment
11        of patronage losses and nonpatronage losses. In the
12        event such election is made, such losses shall be
13        computed and carried over in a manner consistent with
14        subsection (a) of Section 207 of this Act and
15        apportioned by the apportionment factor reported by
16        the cooperative on its Illinois income tax return filed
17        for the taxable year in which the losses are incurred.
18        The election shall be effective for all taxable years
19        with original returns due on or after the date of the
20        election. In addition, the cooperative may file an
21        amended return or returns, as allowed under this Act,
22        to provide that the election shall be effective for
23        losses incurred or carried forward for taxable years
24        occurring prior to the date of the election. Once made,
25        the election may only be revoked upon approval of the
26        Director. The Department shall adopt rules setting

 

 

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1        forth requirements for documenting the elections and
2        any resulting Illinois net loss and the standards to be
3        used by the Director in evaluating requests to revoke
4        elections. Public Act 96-932 This amendatory Act of the
5        96th General Assembly is declaratory of existing law;
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

 

 

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1        but which would be taken into account by an individual
2        in calculating his taxable income.
3        (3) Recapture of business expenses on disposition of
4    asset or business. Notwithstanding any other law to the
5    contrary, if in prior years income from an asset or
6    business has been classified as business income and in a
7    later year is demonstrated to be non-business income, then
8    all expenses, without limitation, deducted in such later
9    year and in the 2 immediately preceding taxable years
10    related to that asset or business that generated the
11    non-business income shall be added back and recaptured as
12    business income in the year of the disposition of the asset
13    or business. Such amount shall be apportioned to Illinois
14    using the greater of the apportionment fraction computed
15    for the business under Section 304 of this Act for the
16    taxable year or the average of the apportionment fractions
17    computed for the business under Section 304 of this Act for
18    the taxable year and for the 2 immediately preceding
19    taxable years.
 
20    (f) Valuation limitation amount.
21        (1) In general. The valuation limitation amount
22    referred to in subsections (a) (2) (G), (c) (2) (I) and
23    (d)(2) (E) is an amount equal to:
24            (A) The sum of the pre-August 1, 1969 appreciation
25        amounts (to the extent consisting of gain reportable

 

 

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1        under the provisions of Section 1245 or 1250 of the
2        Internal Revenue Code) for all property in respect of
3        which such gain was reported for the taxable year; plus
4            (B) The lesser of (i) the sum of the pre-August 1,
5        1969 appreciation amounts (to the extent consisting of
6        capital gain) for all property in respect of which such
7        gain was reported for federal income tax purposes for
8        the taxable year, or (ii) the net capital gain for the
9        taxable year, reduced in either case by any amount of
10        such gain included in the amount determined under
11        subsection (a) (2) (F) or (c) (2) (H).
12        (2) Pre-August 1, 1969 appreciation amount.
13            (A) If the fair market value of property referred
14        to in paragraph (1) was readily ascertainable on August
15        1, 1969, the pre-August 1, 1969 appreciation amount for
16        such property is the lesser of (i) the excess of such
17        fair market value over the taxpayer's basis (for
18        determining gain) for such property on that date
19        (determined under the Internal Revenue Code as in
20        effect on that date), or (ii) the total gain realized
21        and reportable for federal income tax purposes in
22        respect of the sale, exchange or other disposition of
23        such property.
24            (B) If the fair market value of property referred
25        to in paragraph (1) was not readily ascertainable on
26        August 1, 1969, the pre-August 1, 1969 appreciation

 

 

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1        amount for such property is that amount which bears the
2        same ratio to the total gain reported in respect of the
3        property for federal income tax purposes for the
4        taxable year, as the number of full calendar months in
5        that part of the taxpayer's holding period for the
6        property ending July 31, 1969 bears to the number of
7        full calendar months in the taxpayer's entire holding
8        period for the property.
9            (C) The Department shall prescribe such
10        regulations as may be necessary to carry out the
11        purposes of this paragraph.
 
12    (g) Double deductions. Unless specifically provided
13otherwise, nothing in this Section shall permit the same item
14to be deducted more than once.
 
15    (h) Legislative intention. Except as expressly provided by
16this Section there shall be no modifications or limitations on
17the amounts of income, gain, loss or deduction taken into
18account in determining gross income, adjusted gross income or
19taxable income for federal income tax purposes for the taxable
20year, or in the amount of such items entering into the
21computation of base income and net income under this Act for
22such taxable year, whether in respect of property values as of
23August 1, 1969 or otherwise.
24(Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286,

 

 

SB1932- 102 -LRB097 09917 NHT 50080 b

1eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08;
295-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09;
396-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff.
48-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935,
5eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)
 
6    Section 905. The School Code is amended by changing Section
718-8.05 as follows:
 
8    (105 ILCS 5/18-8.05)
9    Sec. 18-8.05. Basis for apportionment of general State
10financial aid and supplemental general State aid to the common
11schools for the 1998-1999 and subsequent school years.
 
12(A) General Provisions.
13    (1) The provisions of this Section apply to the 1998-1999
14and subsequent school years. The system of general State
15financial aid provided for in this Section is designed to
16assure that, through a combination of State financial aid and
17required local resources, the financial support provided each
18pupil in Average Daily Attendance equals or exceeds a
19prescribed per pupil Foundation Level. This formula approach
20imputes a level of per pupil Available Local Resources and
21provides for the basis to calculate a per pupil level of
22general State financial aid that, when added to Available Local
23Resources, equals or exceeds the Foundation Level. The amount

 

 

SB1932- 103 -LRB097 09917 NHT 50080 b

1of per pupil general State financial aid for school districts,
2in general, varies in inverse relation to Available Local
3Resources. Per pupil amounts are based upon each school
4district's Average Daily Attendance as that term is defined in
5this Section.
6    (2) In addition to general State financial aid, school
7districts with specified levels or concentrations of pupils
8from low income households are eligible to receive supplemental
9general State financial aid grants as provided pursuant to
10subsection (H). The supplemental State aid grants provided for
11school districts under subsection (H) shall be appropriated for
12distribution to school districts as part of the same line item
13in which the general State financial aid of school districts is
14appropriated under this Section.
15    (3) To receive financial assistance under this Section,
16school districts are required to file claims with the State
17Board of Education, subject to the following requirements:
18        (a) Any school district which fails for any given
19    school year to maintain school as required by law, or to
20    maintain a recognized school is not eligible to file for
21    such school year any claim upon the Common School Fund. In
22    case of nonrecognition of one or more attendance centers in
23    a school district otherwise operating recognized schools,
24    the claim of the district shall be reduced in the
25    proportion which the Average Daily Attendance in the
26    attendance center or centers bear to the Average Daily

 

 

SB1932- 104 -LRB097 09917 NHT 50080 b

1    Attendance in the school district. A "recognized school"
2    means any public school which meets the standards as
3    established for recognition by the State Board of
4    Education. A school district or attendance center not
5    having recognition status at the end of a school term is
6    entitled to receive State aid payments due upon a legal
7    claim which was filed while it was recognized.
8        (b) School district claims filed under this Section are
9    subject to Sections 18-9 and 18-12, except as otherwise
10    provided in this Section.
11        (c) If a school district operates a full year school
12    under Section 10-19.1, the general State aid to the school
13    district shall be determined by the State Board of
14    Education in accordance with this Section as near as may be
15    applicable.
16        (d) (Blank).
17    (4) Except as provided in subsections (H) and (L), the
18board of any district receiving any of the grants provided for
19in this Section may apply those funds to any fund so received
20for which that board is authorized to make expenditures by law.
21    School districts are not required to exert a minimum
22Operating Tax Rate in order to qualify for assistance under
23this Section.
24    (5) As used in this Section the following terms, when
25capitalized, shall have the meaning ascribed herein:
26        (a) "Average Daily Attendance": A count of pupil

 

 

SB1932- 105 -LRB097 09917 NHT 50080 b

1    attendance in school, averaged as provided for in
2    subsection (C) and utilized in deriving per pupil financial
3    support levels.
4        (b) "Available Local Resources": A computation of
5    local financial support, calculated on the basis of Average
6    Daily Attendance and derived as provided pursuant to
7    subsection (D).
8        (c) "Corporate Personal Property Replacement Taxes":
9    Funds paid to local school districts pursuant to "An Act in
10    relation to the abolition of ad valorem personal property
11    tax and the replacement of revenues lost thereby, and
12    amending and repealing certain Acts and parts of Acts in
13    connection therewith", certified August 14, 1979, as
14    amended (Public Act 81-1st S.S.-1).
15        (d) "Foundation Level": A prescribed level of per pupil
16    financial support as provided for in subsection (B).
17        (e) "Operating Tax Rate": All school district property
18    taxes extended for all purposes, except Bond and Interest,
19    Summer School, Rent, Capital Improvement, and Vocational
20    Education Building purposes.
 
21(B) Foundation Level.
22    (1) The Foundation Level is a figure established by the
23State representing the minimum level of per pupil financial
24support that should be available to provide for the basic
25education of each pupil in Average Daily Attendance. As set

 

 

SB1932- 106 -LRB097 09917 NHT 50080 b

1forth in this Section, each school district is assumed to exert
2a sufficient local taxing effort such that, in combination with
3the aggregate of general State financial aid provided the
4district, an aggregate of State and local resources are
5available to meet the basic education needs of pupils in the
6district.
7    (2) For the 1998-1999 school year, the Foundation Level of
8support is $4,225. For the 1999-2000 school year, the
9Foundation Level of support is $4,325. For the 2000-2001 school
10year, the Foundation Level of support is $4,425. For the
112001-2002 school year and 2002-2003 school year, the Foundation
12Level of support is $4,560. For the 2003-2004 school year, the
13Foundation Level of support is $4,810. For the 2004-2005 school
14year, the Foundation Level of support is $4,964. For the
152005-2006 school year, the Foundation Level of support is
16$5,164. For the 2006-2007 school year, the Foundation Level of
17support is $5,334. For the 2007-2008 school year, the
18Foundation Level of support is $5,734. For the 2008-2009 school
19year, the Foundation Level of support is $5,959.
20    (3) For the 2009-2010 school year and each school year
21thereafter, the Foundation Level of support is $6,119 or such
22greater amount as may be established by law by the General
23Assembly.
 
24(C) Average Daily Attendance.
25    (1) For purposes of calculating general State aid pursuant

 

 

SB1932- 107 -LRB097 09917 NHT 50080 b

1to subsection (E), an Average Daily Attendance figure shall be
2utilized. The Average Daily Attendance figure for formula
3calculation purposes shall be the monthly average of the actual
4number of pupils in attendance of each school district, as
5further averaged for the best 3 months of pupil attendance for
6each school district. In compiling the figures for the number
7of pupils in attendance, school districts and the State Board
8of Education shall, for purposes of general State aid funding,
9conform attendance figures to the requirements of subsection
10(F).
11    (2) The Average Daily Attendance figures utilized in
12subsection (E) shall be the requisite attendance data for the
13school year immediately preceding the school year for which
14general State aid is being calculated or the average of the
15attendance data for the 3 preceding school years, whichever is
16greater. The Average Daily Attendance figures utilized in
17subsection (H) shall be the requisite attendance data for the
18school year immediately preceding the school year for which
19general State aid is being calculated.
 
20(D) Available Local Resources.
21    (1) For purposes of calculating general State aid pursuant
22to subsection (E), a representation of Available Local
23Resources per pupil, as that term is defined and determined in
24this subsection, shall be utilized. Available Local Resources
25per pupil shall include a calculated dollar amount representing

 

 

SB1932- 108 -LRB097 09917 NHT 50080 b

1local school district revenues from local property taxes and
2from Corporate Personal Property Replacement Taxes, expressed
3on the basis of pupils in Average Daily Attendance. Calculation
4of Available Local Resources shall exclude any tax amnesty
5funds received as a result of Public Act 93-26.
6    (2) In determining a school district's revenue from local
7property taxes, the State Board of Education shall utilize the
8equalized assessed valuation of all taxable property of each
9school district as of September 30 of the previous year. The
10equalized assessed valuation utilized shall be obtained and
11determined as provided in subsection (G).
12    (3) For school districts maintaining grades kindergarten
13through 12, local property tax revenues per pupil shall be
14calculated as the product of the applicable equalized assessed
15valuation for the district multiplied by 3.00%, and divided by
16the district's Average Daily Attendance figure. For school
17districts maintaining grades kindergarten through 8, local
18property tax revenues per pupil shall be calculated as the
19product of the applicable equalized assessed valuation for the
20district multiplied by 2.30%, and divided by the district's
21Average Daily Attendance figure. For school districts
22maintaining grades 9 through 12, local property tax revenues
23per pupil shall be the applicable equalized assessed valuation
24of the district multiplied by 1.05%, and divided by the
25district's Average Daily Attendance figure.
26    For partial elementary unit districts created pursuant to

 

 

SB1932- 109 -LRB097 09917 NHT 50080 b

1Article 11E of this Code, local property tax revenues per pupil
2shall be calculated as the product of the equalized assessed
3valuation for property within the partial elementary unit
4district for elementary purposes, as defined in Article 11E of
5this Code, multiplied by 2.06% and divided by the district's
6Average Daily Attendance figure, plus the product of the
7equalized assessed valuation for property within the partial
8elementary unit district for high school purposes, as defined
9in Article 11E of this Code, multiplied by 0.94% and divided by
10the district's Average Daily Attendance figure.
11    (4) The Corporate Personal Property Replacement Taxes paid
12to each school district during the calendar year one year
13before the calendar year in which a school year begins, divided
14by the Average Daily Attendance figure for that district, shall
15be added to the local property tax revenues per pupil as
16derived by the application of the immediately preceding
17paragraph (3). The sum of these per pupil figures for each
18school district shall constitute Available Local Resources as
19that term is utilized in subsection (E) in the calculation of
20general State aid.
 
21(E) Computation of General State Aid.
22    (1) For each school year, the amount of general State aid
23allotted to a school district shall be computed by the State
24Board of Education as provided in this subsection.
25    (2) For any school district for which Available Local

 

 

SB1932- 110 -LRB097 09917 NHT 50080 b

1Resources per pupil is less than the product of 0.93 times the
2Foundation Level, general State aid for that district shall be
3calculated as an amount equal to the Foundation Level minus
4Available Local Resources, multiplied by the Average Daily
5Attendance of the school district.
6    (3) For any school district for which Available Local
7Resources per pupil is equal to or greater than the product of
80.93 times the Foundation Level and less than the product of
91.75 times the Foundation Level, the general State aid per
10pupil shall be a decimal proportion of the Foundation Level
11derived using a linear algorithm. Under this linear algorithm,
12the calculated general State aid per pupil shall decline in
13direct linear fashion from 0.07 times the Foundation Level for
14a school district with Available Local Resources equal to the
15product of 0.93 times the Foundation Level, to 0.05 times the
16Foundation Level for a school district with Available Local
17Resources equal to the product of 1.75 times the Foundation
18Level. The allocation of general State aid for school districts
19subject to this paragraph 3 shall be the calculated general
20State aid per pupil figure multiplied by the Average Daily
21Attendance of the school district.
22    (4) For any school district for which Available Local
23Resources per pupil equals or exceeds the product of 1.75 times
24the Foundation Level, the general State aid for the school
25district shall be calculated as the product of $218 multiplied
26by the Average Daily Attendance of the school district.

 

 

SB1932- 111 -LRB097 09917 NHT 50080 b

1    (5) The amount of general State aid allocated to a school
2district for the 1999-2000 school year meeting the requirements
3set forth in paragraph (4) of subsection (G) shall be increased
4by an amount equal to the general State aid that would have
5been received by the district for the 1998-1999 school year by
6utilizing the Extension Limitation Equalized Assessed
7Valuation as calculated in paragraph (4) of subsection (G) less
8the general State aid allotted for the 1998-1999 school year.
9This amount shall be deemed a one time increase, and shall not
10affect any future general State aid allocations.
 
11(F) Compilation of Average Daily Attendance.
12    (1) Each school district shall, by July 1 of each year,
13submit to the State Board of Education, on forms prescribed by
14the State Board of Education, attendance figures for the school
15year that began in the preceding calendar year. The attendance
16information so transmitted shall identify the average daily
17attendance figures for each month of the school year. Beginning
18with the general State aid claim form for the 2002-2003 school
19year, districts shall calculate Average Daily Attendance as
20provided in subdivisions (a), (b), and (c) of this paragraph
21(1).
22        (a) In districts that do not hold year-round classes,
23    days of attendance in August shall be added to the month of
24    September and any days of attendance in June shall be added
25    to the month of May.

 

 

SB1932- 112 -LRB097 09917 NHT 50080 b

1        (b) In districts in which all buildings hold year-round
2    classes, days of attendance in July and August shall be
3    added to the month of September and any days of attendance
4    in June shall be added to the month of May.
5        (c) In districts in which some buildings, but not all,
6    hold year-round classes, for the non-year-round buildings,
7    days of attendance in August shall be added to the month of
8    September and any days of attendance in June shall be added
9    to the month of May. The average daily attendance for the
10    year-round buildings shall be computed as provided in
11    subdivision (b) of this paragraph (1). To calculate the
12    Average Daily Attendance for the district, the average
13    daily attendance for the year-round buildings shall be
14    multiplied by the days in session for the non-year-round
15    buildings for each month and added to the monthly
16    attendance of the non-year-round buildings.
17    Except as otherwise provided in this Section, days of
18attendance by pupils shall be counted only for sessions of not
19less than 5 clock hours of school work per day under direct
20supervision of: (i) teachers, or (ii) non-teaching personnel or
21volunteer personnel when engaging in non-teaching duties and
22supervising in those instances specified in subsection (a) of
23Section 10-22.34 and paragraph 10 of Section 34-18, with pupils
24of legal school age and in kindergarten and grades 1 through
2512.
26    Days of attendance by tuition pupils shall be accredited

 

 

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1only to the districts that pay the tuition to a recognized
2school.
3    (2) Days of attendance by pupils of less than 5 clock hours
4of school shall be subject to the following provisions in the
5compilation of Average Daily Attendance.
6        (a) Pupils regularly enrolled in a public school for
7    only a part of the school day may be counted on the basis
8    of 1/6 day for every class hour of instruction of 40
9    minutes or more attended pursuant to such enrollment,
10    unless a pupil is enrolled in a block-schedule format of 80
11    minutes or more of instruction, in which case the pupil may
12    be counted on the basis of the proportion of minutes of
13    school work completed each day to the minimum number of
14    minutes that school work is required to be held that day.
15        (b) Days of attendance may be less than 5 clock hours
16    on the opening and closing of the school term, and upon the
17    first day of pupil attendance, if preceded by a day or days
18    utilized as an institute or teachers' workshop.
19        (c) A session of 4 or more clock hours may be counted
20    as a day of attendance upon certification by the regional
21    superintendent, and approved by the State Superintendent
22    of Education to the extent that the district has been
23    forced to use daily multiple sessions.
24        (d) A session of 3 or more clock hours may be counted
25    as a day of attendance (1) when the remainder of the school
26    day or at least 2 hours in the evening of that day is

 

 

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1    utilized for an in-service training program for teachers,
2    up to a maximum of 5 days per school year, provided a
3    district conducts an in-service training program for
4    teachers in accordance with Section 10-22.39 of this Code;
5    or, in lieu of 4 such days, 2 full days may be used, in
6    which event each such day may be counted as a day required
7    for a legal school calendar pursuant to Section 10-19 of
8    this Code; (1.5) when, of the 5 days allowed under item
9    (1), a maximum of 4 days are used for parent-teacher
10    conferences, or, in lieu of 4 such days, 2 full days are
11    used, in which case each such day may be counted as a
12    calendar day required under Section 10-19 of this Code,
13    provided that the full-day, parent-teacher conference
14    consists of (i) a minimum of 5 clock hours of
15    parent-teacher conferences, (ii) both a minimum of 2 clock
16    hours of parent-teacher conferences held in the evening
17    following a full day of student attendance, as specified in
18    subsection (F)(1)(c), and a minimum of 3 clock hours of
19    parent-teacher conferences held on the day immediately
20    following evening parent-teacher conferences, or (iii)
21    multiple parent-teacher conferences held in the evenings
22    following full days of student attendance, as specified in
23    subsection (F)(1)(c), in which the time used for the
24    parent-teacher conferences is equivalent to a minimum of 5
25    clock hours; and (2) when days in addition to those
26    provided in items (1) and (1.5) are scheduled by a school

 

 

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1    pursuant to its school improvement plan adopted under
2    Article 34 or its revised or amended school improvement
3    plan adopted under Article 2, provided that (i) such
4    sessions of 3 or more clock hours are scheduled to occur at
5    regular intervals, (ii) the remainder of the school days in
6    which such sessions occur are utilized for in-service
7    training programs or other staff development activities
8    for teachers, and (iii) a sufficient number of minutes of
9    school work under the direct supervision of teachers are
10    added to the school days between such regularly scheduled
11    sessions to accumulate not less than the number of minutes
12    by which such sessions of 3 or more clock hours fall short
13    of 5 clock hours. Any full days used for the purposes of
14    this paragraph shall not be considered for computing
15    average daily attendance. Days scheduled for in-service
16    training programs, staff development activities, or
17    parent-teacher conferences may be scheduled separately for
18    different grade levels and different attendance centers of
19    the district.
20        (e) A session of not less than one clock hour of
21    teaching hospitalized or homebound pupils on-site or by
22    telephone to the classroom may be counted as 1/2 day of
23    attendance, however these pupils must receive 4 or more
24    clock hours of instruction to be counted for a full day of
25    attendance.
26        (f) A session of at least 4 clock hours may be counted

 

 

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1    as a day of attendance for first grade pupils, and pupils
2    in full day kindergartens, and a session of 2 or more hours
3    may be counted as 1/2 day of attendance by pupils in
4    kindergartens which provide only 1/2 day of attendance.
5        (g) For children with disabilities who are below the
6    age of 6 years and who cannot attend 2 or more clock hours
7    because of their disability or immaturity, a session of not
8    less than one clock hour may be counted as 1/2 day of
9    attendance; however for such children whose educational
10    needs so require a session of 4 or more clock hours may be
11    counted as a full day of attendance.
12        (h) A recognized kindergarten which provides for only
13    1/2 day of attendance by each pupil shall not have more
14    than 1/2 day of attendance counted in any one day. However,
15    kindergartens may count 2 1/2 days of attendance in any 5
16    consecutive school days. When a pupil attends such a
17    kindergarten for 2 half days on any one school day, the
18    pupil shall have the following day as a day absent from
19    school, unless the school district obtains permission in
20    writing from the State Superintendent of Education.
21    Attendance at kindergartens which provide for a full day of
22    attendance by each pupil shall be counted the same as
23    attendance by first grade pupils. Only the first year of
24    attendance in one kindergarten shall be counted, except in
25    case of children who entered the kindergarten in their
26    fifth year whose educational development requires a second

 

 

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1    year of kindergarten as determined under the rules and
2    regulations of the State Board of Education.
3        (i) On the days when the Prairie State Achievement
4    Examination is administered under subsection (c) of
5    Section 2-3.64 of this Code, the day of attendance for a
6    pupil whose school day must be shortened to accommodate
7    required testing procedures may be less than 5 clock hours
8    and shall be counted towards the 176 days of actual pupil
9    attendance required under Section 10-19 of this Code,
10    provided that a sufficient number of minutes of school work
11    in excess of 5 clock hours are first completed on other
12    school days to compensate for the loss of school work on
13    the examination days.
 
14(G) Equalized Assessed Valuation Data.
15    (1) For purposes of the calculation of Available Local
16Resources required pursuant to subsection (D), the State Board
17of Education shall secure from the Department of Revenue the
18value as equalized or assessed by the Department of Revenue of
19all taxable property of every school district, together with
20(i) the applicable tax rate used in extending taxes for the
21funds of the district as of September 30 of the previous year
22and (ii) the limiting rate for all school districts subject to
23property tax extension limitations as imposed under the
24Property Tax Extension Limitation Law.
25    The Department of Revenue shall add to the equalized

 

 

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1assessed value of all taxable property of each school district
2situated entirely or partially within a county that is or was
3subject to the provisions of Section 15-176 or 15-177 of the
4Property Tax Code (a) an amount equal to the total amount by
5which the homestead exemption allowed under Section 15-176 or
615-177 of the Property Tax Code for real property situated in
7that school district exceeds the total amount that would have
8been allowed in that school district if the maximum reduction
9under Section 15-176 was (i) $4,500 in Cook County or $3,500 in
10all other counties in tax year 2003 or (ii) $5,000 in all
11counties in tax year 2004 and thereafter and (b) an amount
12equal to the aggregate amount for the taxable year of all
13additional exemptions under Section 15-175 of the Property Tax
14Code for owners with a household income of $30,000 or less. The
15county clerk of any county that is or was subject to the
16provisions of Section 15-176 or 15-177 of the Property Tax Code
17shall annually calculate and certify to the Department of
18Revenue for each school district all homestead exemption
19amounts under Section 15-176 or 15-177 of the Property Tax Code
20and all amounts of additional exemptions under Section 15-175
21of the Property Tax Code for owners with a household income of
22$30,000 or less. It is the intent of this paragraph that if the
23general homestead exemption for a parcel of property is
24determined under Section 15-176 or 15-177 of the Property Tax
25Code rather than Section 15-175, then the calculation of
26Available Local Resources shall not be affected by the

 

 

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1difference, if any, between the amount of the general homestead
2exemption allowed for that parcel of property under Section
315-176 or 15-177 of the Property Tax Code and the amount that
4would have been allowed had the general homestead exemption for
5that parcel of property been determined under Section 15-175 of
6the Property Tax Code. It is further the intent of this
7paragraph that if additional exemptions are allowed under
8Section 15-175 of the Property Tax Code for owners with a
9household income of less than $30,000, then the calculation of
10Available Local Resources shall not be affected by the
11difference, if any, because of those additional exemptions.
12    This equalized assessed valuation, as adjusted further by
13the requirements of this subsection, shall be utilized in the
14calculation of Available Local Resources.
15    (2) The equalized assessed valuation in paragraph (1) shall
16be adjusted, as applicable, in the following manner:
17        (a) For the purposes of calculating State aid under
18    this Section, with respect to any part of a school district
19    within a redevelopment project area in respect to which a
20    municipality has adopted tax increment allocation
21    financing pursuant to the Tax Increment Allocation
22    Redevelopment Act, Sections 11-74.4-1 through 11-74.4-11
23    of the Illinois Municipal Code or the Industrial Jobs
24    Recovery Law, Sections 11-74.6-1 through 11-74.6-50 of the
25    Illinois Municipal Code, no part of the current equalized
26    assessed valuation of real property located in any such

 

 

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1    project area which is attributable to an increase above the
2    total initial equalized assessed valuation of such
3    property shall be used as part of the equalized assessed
4    valuation of the district, until such time as all
5    redevelopment project costs have been paid, as provided in
6    Section 11-74.4-8 of the Tax Increment Allocation
7    Redevelopment Act or in Section 11-74.6-35 of the
8    Industrial Jobs Recovery Law. For the purpose of the
9    equalized assessed valuation of the district, the total
10    initial equalized assessed valuation or the current
11    equalized assessed valuation, whichever is lower, shall be
12    used until such time as all redevelopment project costs
13    have been paid.
14        (b) The real property equalized assessed valuation for
15    a school district shall be adjusted by subtracting from the
16    real property value as equalized or assessed by the
17    Department of Revenue for the district an amount computed
18    by dividing the amount of any abatement of taxes under
19    Section 18-170 of the Property Tax Code by 3.00% for a
20    district maintaining grades kindergarten through 12, by
21    2.30% for a district maintaining grades kindergarten
22    through 8, or by 1.05% for a district maintaining grades 9
23    through 12 and adjusted by an amount computed by dividing
24    the amount of any abatement of taxes under subsection (a)
25    of Section 18-165 of the Property Tax Code by the same
26    percentage rates for district type as specified in this

 

 

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1    subparagraph (b).
2    (3) For the 1999-2000 school year and each school year
3thereafter, if a school district meets all of the criteria of
4this subsection (G)(3), the school district's Available Local
5Resources shall be calculated under subsection (D) using the
6district's Extension Limitation Equalized Assessed Valuation
7as calculated under this subsection (G)(3).
8    For purposes of this subsection (G)(3) the following terms
9shall have the following meanings:
10        "Budget Year": The school year for which general State
11    aid is calculated and awarded under subsection (E).
12        "Base Tax Year": The property tax levy year used to
13    calculate the Budget Year allocation of general State aid.
14        "Preceding Tax Year": The property tax levy year
15    immediately preceding the Base Tax Year.
16        "Base Tax Year's Tax Extension": The product of the
17    equalized assessed valuation utilized by the County Clerk
18    in the Base Tax Year multiplied by the limiting rate as
19    calculated by the County Clerk and defined in the Property
20    Tax Extension Limitation Law.
21        "Preceding Tax Year's Tax Extension": The product of
22    the equalized assessed valuation utilized by the County
23    Clerk in the Preceding Tax Year multiplied by the Operating
24    Tax Rate as defined in subsection (A).
25        "Extension Limitation Ratio": A numerical ratio,
26    certified by the County Clerk, in which the numerator is

 

 

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1    the Base Tax Year's Tax Extension and the denominator is
2    the Preceding Tax Year's Tax Extension.
3        "Operating Tax Rate": The operating tax rate as defined
4    in subsection (A).
5    If a school district is subject to property tax extension
6limitations as imposed under the Property Tax Extension
7Limitation Law, the State Board of Education shall calculate
8the Extension Limitation Equalized Assessed Valuation of that
9district. For the 1999-2000 school year, the Extension
10Limitation Equalized Assessed Valuation of a school district as
11calculated by the State Board of Education shall be equal to
12the product of the district's 1996 Equalized Assessed Valuation
13and the district's Extension Limitation Ratio. Except as
14otherwise provided in this paragraph for a school district that
15has approved or does approve an increase in its limiting rate,
16for the 2000-2001 school year and each school year thereafter,
17the Extension Limitation Equalized Assessed Valuation of a
18school district as calculated by the State Board of Education
19shall be equal to the product of the Equalized Assessed
20Valuation last used in the calculation of general State aid and
21the district's Extension Limitation Ratio. If the Extension
22Limitation Equalized Assessed Valuation of a school district as
23calculated under this subsection (G)(3) is less than the
24district's equalized assessed valuation as calculated pursuant
25to subsections (G)(1) and (G)(2), then for purposes of
26calculating the district's general State aid for the Budget

 

 

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1Year pursuant to subsection (E), that Extension Limitation
2Equalized Assessed Valuation shall be utilized to calculate the
3district's Available Local Resources under subsection (D). For
4the 2009-2010 school year and each school year thereafter, if a
5school district has approved or does approve an increase in its
6limiting rate, pursuant to Section 18-190 of the Property Tax
7Code, affecting the Base Tax Year, the Extension Limitation
8Equalized Assessed Valuation of the school district, as
9calculated by the State Board of Education, shall be equal to
10the product of the Equalized Assessed Valuation last used in
11the calculation of general State aid times an amount equal to
12one plus the percentage increase, if any, in the Consumer Price
13Index for all Urban Consumers for all items published by the
14United States Department of Labor for the 12-month calendar
15year preceding the Base Tax Year, plus the Equalized Assessed
16Valuation of new property, annexed property, and recovered tax
17increment value and minus the Equalized Assessed Valuation of
18disconnected property. New property and recovered tax
19increment value shall have the meanings set forth in the
20Property Tax Extension Limitation Law.
21    Partial elementary unit districts created in accordance
22with Article 11E of this Code shall not be eligible for the
23adjustment in this subsection (G)(3) until the fifth year
24following the effective date of the reorganization.
25    (3.5) For the 2010-2011 school year and each school year
26thereafter, if a school district's boundaries span multiple

 

 

SB1932- 124 -LRB097 09917 NHT 50080 b

1counties, then the Department of Revenue shall send to the
2State Board of Education, for the purpose of calculating
3general State aid, the limiting rate and individual rates by
4purpose for the county that contains the majority of the school
5district's Equalized Assessed Valuation.
6    (4) For the purposes of calculating general State aid for
7the 1999-2000 school year only, if a school district
8experienced a triennial reassessment on the equalized assessed
9valuation used in calculating its general State financial aid
10apportionment for the 1998-1999 school year, the State Board of
11Education shall calculate the Extension Limitation Equalized
12Assessed Valuation that would have been used to calculate the
13district's 1998-1999 general State aid. This amount shall equal
14the product of the equalized assessed valuation used to
15calculate general State aid for the 1997-1998 school year and
16the district's Extension Limitation Ratio. If the Extension
17Limitation Equalized Assessed Valuation of the school district
18as calculated under this paragraph (4) is less than the
19district's equalized assessed valuation utilized in
20calculating the district's 1998-1999 general State aid
21allocation, then for purposes of calculating the district's
22general State aid pursuant to paragraph (5) of subsection (E),
23that Extension Limitation Equalized Assessed Valuation shall
24be utilized to calculate the district's Available Local
25Resources.
26    (5) For school districts having a majority of their

 

 

SB1932- 125 -LRB097 09917 NHT 50080 b

1equalized assessed valuation in any county except Cook, DuPage,
2Kane, Lake, McHenry, or Will, if the amount of general State
3aid allocated to the school district for the 1999-2000 school
4year under the provisions of subsection (E), (H), and (J) of
5this Section is less than the amount of general State aid
6allocated to the district for the 1998-1999 school year under
7these subsections, then the general State aid of the district
8for the 1999-2000 school year only shall be increased by the
9difference between these amounts. The total payments made under
10this paragraph (5) shall not exceed $14,000,000. Claims shall
11be prorated if they exceed $14,000,000.
 
12(H) Supplemental General State Aid.
13    (1) In addition to the general State aid a school district
14is allotted pursuant to subsection (E), qualifying school
15districts shall receive a grant, paid in conjunction with a
16district's payments of general State aid, for supplemental
17general State aid based upon the concentration level of
18children from low-income households within the school
19district. Supplemental State aid grants provided for school
20districts under this subsection shall be appropriated for
21distribution to school districts as part of the same line item
22in which the general State financial aid of school districts is
23appropriated under this Section.
24    (1.5) This paragraph (1.5) applies only to those school
25years preceding the 2003-2004 school year. For purposes of this

 

 

SB1932- 126 -LRB097 09917 NHT 50080 b

1subsection (H), the term "Low-Income Concentration Level"
2shall be the low-income eligible pupil count from the most
3recently available federal census divided by the Average Daily
4Attendance of the school district. If, however, (i) the
5percentage decrease from the 2 most recent federal censuses in
6the low-income eligible pupil count of a high school district
7with fewer than 400 students exceeds by 75% or more the
8percentage change in the total low-income eligible pupil count
9of contiguous elementary school districts, whose boundaries
10are coterminous with the high school district, or (ii) a high
11school district within 2 counties and serving 5 elementary
12school districts, whose boundaries are coterminous with the
13high school district, has a percentage decrease from the 2 most
14recent federal censuses in the low-income eligible pupil count
15and there is a percentage increase in the total low-income
16eligible pupil count of a majority of the elementary school
17districts in excess of 50% from the 2 most recent federal
18censuses, then the high school district's low-income eligible
19pupil count from the earlier federal census shall be the number
20used as the low-income eligible pupil count for the high school
21district, for purposes of this subsection (H). The changes made
22to this paragraph (1) by Public Act 92-28 shall apply to
23supplemental general State aid grants for school years
24preceding the 2003-2004 school year that are paid in fiscal
25year 1999 or thereafter and to any State aid payments made in
26fiscal year 1994 through fiscal year 1998 pursuant to

 

 

SB1932- 127 -LRB097 09917 NHT 50080 b

1subsection 1(n) of Section 18-8 of this Code (which was
2repealed on July 1, 1998), and any high school district that is
3affected by Public Act 92-28 is entitled to a recomputation of
4its supplemental general State aid grant or State aid paid in
5any of those fiscal years. This recomputation shall not be
6affected by any other funding.
7    (1.10) This paragraph (1.10) applies to the 2003-2004
8school year and each school year thereafter. For purposes of
9this subsection (H), the term "Low-Income Concentration Level"
10shall, for each fiscal year, be the low-income eligible pupil
11count as of July 1 of the immediately preceding fiscal year (as
12determined by the Department of Human Services based on the
13number of pupils who are eligible for at least one of the
14following low income programs: Medicaid, the Children's Health
15Insurance Program, TANF, or Food Stamps, excluding pupils who
16are eligible for services provided by the Department of
17Children and Family Services, averaged over the 2 immediately
18preceding fiscal years for fiscal year 2004 and over the 3
19immediately preceding fiscal years for each fiscal year
20thereafter) divided by the Average Daily Attendance of the
21school district.
22    (2) Supplemental general State aid pursuant to this
23subsection (H) shall be provided as follows for the 1998-1999,
241999-2000, and 2000-2001 school years only:
25        (a) For any school district with a Low Income
26    Concentration Level of at least 20% and less than 35%, the

 

 

SB1932- 128 -LRB097 09917 NHT 50080 b

1    grant for any school year shall be $800 multiplied by the
2    low income eligible pupil count.
3        (b) For any school district with a Low Income
4    Concentration Level of at least 35% and less than 50%, the
5    grant for the 1998-1999 school year shall be $1,100
6    multiplied by the low income eligible pupil count.
7        (c) For any school district with a Low Income
8    Concentration Level of at least 50% and less than 60%, the
9    grant for the 1998-99 school year shall be $1,500
10    multiplied by the low income eligible pupil count.
11        (d) For any school district with a Low Income
12    Concentration Level of 60% or more, the grant for the
13    1998-99 school year shall be $1,900 multiplied by the low
14    income eligible pupil count.
15        (e) For the 1999-2000 school year, the per pupil amount
16    specified in subparagraphs (b), (c), and (d) immediately
17    above shall be increased to $1,243, $1,600, and $2,000,
18    respectively.
19        (f) For the 2000-2001 school year, the per pupil
20    amounts specified in subparagraphs (b), (c), and (d)
21    immediately above shall be $1,273, $1,640, and $2,050,
22    respectively.
23    (2.5) Supplemental general State aid pursuant to this
24subsection (H) shall be provided as follows for the 2002-2003
25school year:
26        (a) For any school district with a Low Income

 

 

SB1932- 129 -LRB097 09917 NHT 50080 b

1    Concentration Level of less than 10%, the grant for each
2    school year shall be $355 multiplied by the low income
3    eligible pupil count.
4        (b) For any school district with a Low Income
5    Concentration Level of at least 10% and less than 20%, the
6    grant for each school year shall be $675 multiplied by the
7    low income eligible pupil count.
8        (c) For any school district with a Low Income
9    Concentration Level of at least 20% and less than 35%, the
10    grant for each school year shall be $1,330 multiplied by
11    the low income eligible pupil count.
12        (d) For any school district with a Low Income
13    Concentration Level of at least 35% and less than 50%, the
14    grant for each school year shall be $1,362 multiplied by
15    the low income eligible pupil count.
16        (e) For any school district with a Low Income
17    Concentration Level of at least 50% and less than 60%, the
18    grant for each school year shall be $1,680 multiplied by
19    the low income eligible pupil count.
20        (f) For any school district with a Low Income
21    Concentration Level of 60% or more, the grant for each
22    school year shall be $2,080 multiplied by the low income
23    eligible pupil count.
24    (2.10) Except as otherwise provided, supplemental general
25State aid pursuant to this subsection (H) shall be provided as
26follows for the 2003-2004 school year and each school year

 

 

SB1932- 130 -LRB097 09917 NHT 50080 b

1thereafter:
2        (a) For any school district with a Low Income
3    Concentration Level of 15% or less, the grant for each
4    school year shall be $355 multiplied by the low income
5    eligible pupil count.
6        (b) For any school district with a Low Income
7    Concentration Level greater than 15%, the grant for each
8    school year shall be $294.25 added to the product of $2,700
9    and the square of the Low Income Concentration Level, all
10    multiplied by the low income eligible pupil count.
11    For the 2003-2004 school year and each school year
12thereafter through the 2008-2009 school year only, the grant
13shall be no less than the grant for the 2002-2003 school year.
14For the 2009-2010 school year only, the grant shall be no less
15than the grant for the 2002-2003 school year multiplied by
160.66. For the 2010-2011 school year only, the grant shall be no
17less than the grant for the 2002-2003 school year multiplied by
180.33. Notwithstanding the provisions of this paragraph to the
19contrary, if for any school year supplemental general State aid
20grants are prorated as provided in paragraph (1) of this
21subsection (H), then the grants under this paragraph shall be
22prorated.
23    For the 2003-2004 school year only, the grant shall be no
24greater than the grant received during the 2002-2003 school
25year added to the product of 0.25 multiplied by the difference
26between the grant amount calculated under subsection (a) or (b)

 

 

SB1932- 131 -LRB097 09917 NHT 50080 b

1of this paragraph (2.10), whichever is applicable, and the
2grant received during the 2002-2003 school year. For the
32004-2005 school year only, the grant shall be no greater than
4the grant received during the 2002-2003 school year added to
5the product of 0.50 multiplied by the difference between the
6grant amount calculated under subsection (a) or (b) of this
7paragraph (2.10), whichever is applicable, and the grant
8received during the 2002-2003 school year. For the 2005-2006
9school year only, the grant shall be no greater than the grant
10received during the 2002-2003 school year added to the product
11of 0.75 multiplied by the difference between the grant amount
12calculated under subsection (a) or (b) of this paragraph
13(2.10), whichever is applicable, and the grant received during
14the 2002-2003 school year.
15    (3) School districts with an Average Daily Attendance of
16more than 1,000 and less than 50,000 that qualify for
17supplemental general State aid pursuant to this subsection
18shall submit a plan to the State Board of Education prior to
19October 30 of each year for the use of the funds resulting from
20this grant of supplemental general State aid for the
21improvement of instruction in which priority is given to
22meeting the education needs of disadvantaged children. Such
23plan shall be submitted in accordance with rules and
24regulations promulgated by the State Board of Education.
25    (4) School districts with an Average Daily Attendance of
2650,000 or more that qualify for supplemental general State aid

 

 

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1pursuant to this subsection shall be required to distribute
2from funds available pursuant to this Section, no less than
3$261,000,000 in accordance with the following requirements:
4        (a) The required amounts shall be distributed to the
5    attendance centers within the district in proportion to the
6    number of pupils enrolled at each attendance center who are
7    eligible to receive free or reduced-price lunches or
8    breakfasts under the federal Child Nutrition Act of 1966
9    and under the National School Lunch Act during the
10    immediately preceding school year.
11        (b) The distribution of these portions of supplemental
12    and general State aid among attendance centers according to
13    these requirements shall not be compensated for or
14    contravened by adjustments of the total of other funds
15    appropriated to any attendance centers, and the Board of
16    Education shall utilize funding from one or several sources
17    in order to fully implement this provision annually prior
18    to the opening of school.
19        (c) Each attendance center shall be provided by the
20    school district a distribution of noncategorical funds and
21    other categorical funds to which an attendance center is
22    entitled under law in order that the general State aid and
23    supplemental general State aid provided by application of
24    this subsection supplements rather than supplants the
25    noncategorical funds and other categorical funds provided
26    by the school district to the attendance centers.

 

 

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1        (d) Any funds made available under this subsection that
2    by reason of the provisions of this subsection are not
3    required to be allocated and provided to attendance centers
4    may be used and appropriated by the board of the district
5    for any lawful school purpose.
6        (e) Funds received by an attendance center pursuant to
7    this subsection shall be used by the attendance center at
8    the discretion of the principal and local school council
9    for programs to improve educational opportunities at
10    qualifying schools through the following programs and
11    services: early childhood education, reduced class size or
12    improved adult to student classroom ratio, enrichment
13    programs, remedial assistance, attendance improvement, and
14    other educationally beneficial expenditures which
15    supplement the regular and basic programs as determined by
16    the State Board of Education. Funds provided shall not be
17    expended for any political or lobbying purposes as defined
18    by board rule.
19        (f) Each district subject to the provisions of this
20    subdivision (H)(4) shall submit an acceptable plan to meet
21    the educational needs of disadvantaged children, in
22    compliance with the requirements of this paragraph, to the
23    State Board of Education prior to July 15 of each year.
24    This plan shall be consistent with the decisions of local
25    school councils concerning the school expenditure plans
26    developed in accordance with part 4 of Section 34-2.3. The

 

 

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1    State Board shall approve or reject the plan within 60 days
2    after its submission. If the plan is rejected, the district
3    shall give written notice of intent to modify the plan
4    within 15 days of the notification of rejection and then
5    submit a modified plan within 30 days after the date of the
6    written notice of intent to modify. Districts may amend
7    approved plans pursuant to rules promulgated by the State
8    Board of Education.
9        Upon notification by the State Board of Education that
10    the district has not submitted a plan prior to July 15 or a
11    modified plan within the time period specified herein, the
12    State aid funds affected by that plan or modified plan
13    shall be withheld by the State Board of Education until a
14    plan or modified plan is submitted.
15        If the district fails to distribute State aid to
16    attendance centers in accordance with an approved plan, the
17    plan for the following year shall allocate funds, in
18    addition to the funds otherwise required by this
19    subsection, to those attendance centers which were
20    underfunded during the previous year in amounts equal to
21    such underfunding.
22        For purposes of determining compliance with this
23    subsection in relation to the requirements of attendance
24    center funding, each district subject to the provisions of
25    this subsection shall submit as a separate document by
26    December 1 of each year a report of expenditure data for

 

 

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1    the prior year in addition to any modification of its
2    current plan. If it is determined that there has been a
3    failure to comply with the expenditure provisions of this
4    subsection regarding contravention or supplanting, the
5    State Superintendent of Education shall, within 60 days of
6    receipt of the report, notify the district and any affected
7    local school council. The district shall within 45 days of
8    receipt of that notification inform the State
9    Superintendent of Education of the remedial or corrective
10    action to be taken, whether by amendment of the current
11    plan, if feasible, or by adjustment in the plan for the
12    following year. Failure to provide the expenditure report
13    or the notification of remedial or corrective action in a
14    timely manner shall result in a withholding of the affected
15    funds.
16        The State Board of Education shall promulgate rules and
17    regulations to implement the provisions of this
18    subsection. No funds shall be released under this
19    subdivision (H)(4) to any district that has not submitted a
20    plan that has been approved by the State Board of
21    Education.
22    (H-5) School Choice Voucher Program Adjustments.
23    (1) Funding for City of Chicago School District 299 shall
24be adjusted to account for the costs of the School Choice
25Voucher Program established under the School Choice Act.
26    (2) Beginning in Fiscal Year 2012 and thereafter, the total

 

 

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1cost of the School Choice Vouchers issued under the School
2Choice Act shall be deducted from the portion of general state
3aid City of Chicago School District 299 receives under this
4Section for that fiscal year.
5    (3) Beginning in Fiscal Year 2013, there will be an
6adjustment to the general state aid calculation for City of
7Chicago School District 299 to provide funding for the school
8choice voucher program. The adjustment shall be (a) the sum of
9the district's general state aid calculation pursuant to
10subsection (B) and the district's supplemental general state
11aid calculation pursuant to subsection (H) if the students
12enrolled in nonpublic schools under a school choice voucher had
13been enrolled in the district, less (b) the sum of the
14district's general state aid calculation pursuant to
15subsection (B) and the district's supplemental general state
16aid calculation pursuant to subsection (H) excluding students
17enrolled in non-public schools under a school choice voucher.
 
18(I) (Blank).
 
19(J) Supplementary Grants in Aid.
20    (1) Notwithstanding any other provisions of this Section,
21the amount of the aggregate general State aid in combination
22with supplemental general State aid under this Section for
23which each school district is eligible shall be no less than
24the amount of the aggregate general State aid entitlement that

 

 

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1was received by the district under Section 18-8 (exclusive of
2amounts received under subsections 5(p) and 5(p-5) of that
3Section) for the 1997-98 school year, pursuant to the
4provisions of that Section as it was then in effect. If a
5school district qualifies to receive a supplementary payment
6made under this subsection (J), the amount of the aggregate
7general State aid in combination with supplemental general
8State aid under this Section which that district is eligible to
9receive for each school year shall be no less than the amount
10of the aggregate general State aid entitlement that was
11received by the district under Section 18-8 (exclusive of
12amounts received under subsections 5(p) and 5(p-5) of that
13Section) for the 1997-1998 school year, pursuant to the
14provisions of that Section as it was then in effect.
15    (2) If, as provided in paragraph (1) of this subsection
16(J), a school district is to receive aggregate general State
17aid in combination with supplemental general State aid under
18this Section for the 1998-99 school year and any subsequent
19school year that in any such school year is less than the
20amount of the aggregate general State aid entitlement that the
21district received for the 1997-98 school year, the school
22district shall also receive, from a separate appropriation made
23for purposes of this subsection (J), a supplementary payment
24that is equal to the amount of the difference in the aggregate
25State aid figures as described in paragraph (1).
26    (3) (Blank).
 

 

 

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1(K) Grants to Laboratory and Alternative Schools.
2    In calculating the amount to be paid to the governing board
3of a public university that operates a laboratory school under
4this Section or to any alternative school that is operated by a
5regional superintendent of schools, the State Board of
6Education shall require by rule such reporting requirements as
7it deems necessary.
8    As used in this Section, "laboratory school" means a public
9school which is created and operated by a public university and
10approved by the State Board of Education. The governing board
11of a public university which receives funds from the State
12Board under this subsection (K) may not increase the number of
13students enrolled in its laboratory school from a single
14district, if that district is already sending 50 or more
15students, except under a mutual agreement between the school
16board of a student's district of residence and the university
17which operates the laboratory school. A laboratory school may
18not have more than 1,000 students, excluding students with
19disabilities in a special education program.
20    As used in this Section, "alternative school" means a
21public school which is created and operated by a Regional
22Superintendent of Schools and approved by the State Board of
23Education. Such alternative schools may offer courses of
24instruction for which credit is given in regular school
25programs, courses to prepare students for the high school

 

 

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1equivalency testing program or vocational and occupational
2training. A regional superintendent of schools may contract
3with a school district or a public community college district
4to operate an alternative school. An alternative school serving
5more than one educational service region may be established by
6the regional superintendents of schools of the affected
7educational service regions. An alternative school serving
8more than one educational service region may be operated under
9such terms as the regional superintendents of schools of those
10educational service regions may agree.
11    Each laboratory and alternative school shall file, on forms
12provided by the State Superintendent of Education, an annual
13State aid claim which states the Average Daily Attendance of
14the school's students by month. The best 3 months' Average
15Daily Attendance shall be computed for each school. The general
16State aid entitlement shall be computed by multiplying the
17applicable Average Daily Attendance by the Foundation Level as
18determined under this Section.
 
19(L) Payments, Additional Grants in Aid and Other Requirements.
20    (1) For a school district operating under the financial
21supervision of an Authority created under Article 34A, the
22general State aid otherwise payable to that district under this
23Section, but not the supplemental general State aid, shall be
24reduced by an amount equal to the budget for the operations of
25the Authority as certified by the Authority to the State Board

 

 

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1of Education, and an amount equal to such reduction shall be
2paid to the Authority created for such district for its
3operating expenses in the manner provided in Section 18-11. The
4remainder of general State school aid for any such district
5shall be paid in accordance with Article 34A when that Article
6provides for a disposition other than that provided by this
7Article.
8    (2) (Blank).
9    (3) Summer school. Summer school payments shall be made as
10provided in Section 18-4.3.
 
11(M) Education Funding Advisory Board.
12    The Education Funding Advisory Board, hereinafter in this
13subsection (M) referred to as the "Board", is hereby created.
14The Board shall consist of 5 members who are appointed by the
15Governor, by and with the advice and consent of the Senate. The
16members appointed shall include representatives of education,
17business, and the general public. One of the members so
18appointed shall be designated by the Governor at the time the
19appointment is made as the chairperson of the Board. The
20initial members of the Board may be appointed any time after
21the effective date of this amendatory Act of 1997. The regular
22term of each member of the Board shall be for 4 years from the
23third Monday of January of the year in which the term of the
24member's appointment is to commence, except that of the 5
25initial members appointed to serve on the Board, the member who

 

 

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1is appointed as the chairperson shall serve for a term that
2commences on the date of his or her appointment and expires on
3the third Monday of January, 2002, and the remaining 4 members,
4by lots drawn at the first meeting of the Board that is held
5after all 5 members are appointed, shall determine 2 of their
6number to serve for terms that commence on the date of their
7respective appointments and expire on the third Monday of
8January, 2001, and 2 of their number to serve for terms that
9commence on the date of their respective appointments and
10expire on the third Monday of January, 2000. All members
11appointed to serve on the Board shall serve until their
12respective successors are appointed and confirmed. Vacancies
13shall be filled in the same manner as original appointments. If
14a vacancy in membership occurs at a time when the Senate is not
15in session, the Governor shall make a temporary appointment
16until the next meeting of the Senate, when he or she shall
17appoint, by and with the advice and consent of the Senate, a
18person to fill that membership for the unexpired term. If the
19Senate is not in session when the initial appointments are
20made, those appointments shall be made as in the case of
21vacancies.
22    The Education Funding Advisory Board shall be deemed
23established, and the initial members appointed by the Governor
24to serve as members of the Board shall take office, on the date
25that the Governor makes his or her appointment of the fifth
26initial member of the Board, whether those initial members are

 

 

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1then serving pursuant to appointment and confirmation or
2pursuant to temporary appointments that are made by the
3Governor as in the case of vacancies.
4    The State Board of Education shall provide such staff
5assistance to the Education Funding Advisory Board as is
6reasonably required for the proper performance by the Board of
7its responsibilities.
8    For school years after the 2000-2001 school year, the
9Education Funding Advisory Board, in consultation with the
10State Board of Education, shall make recommendations as
11provided in this subsection (M) to the General Assembly for the
12foundation level under subdivision (B)(3) of this Section and
13for the supplemental general State aid grant level under
14subsection (H) of this Section for districts with high
15concentrations of children from poverty. The recommended
16foundation level shall be determined based on a methodology
17which incorporates the basic education expenditures of
18low-spending schools exhibiting high academic performance. The
19Education Funding Advisory Board shall make such
20recommendations to the General Assembly on January 1 of odd
21numbered years, beginning January 1, 2001.
 
22(N) (Blank).
 
23(O) References.
24    (1) References in other laws to the various subdivisions of

 

 

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1Section 18-8 as that Section existed before its repeal and
2replacement by this Section 18-8.05 shall be deemed to refer to
3the corresponding provisions of this Section 18-8.05, to the
4extent that those references remain applicable.
5    (2) References in other laws to State Chapter 1 funds shall
6be deemed to refer to the supplemental general State aid
7provided under subsection (H) of this Section.
 
8(P) Public Act 93-838 and Public Act 93-808 make inconsistent
9changes to this Section. Under Section 6 of the Statute on
10Statutes there is an irreconcilable conflict between Public Act
1193-808 and Public Act 93-838. Public Act 93-838, being the last
12acted upon, is controlling. The text of Public Act 93-838 is
13the law regardless of the text of Public Act 93-808.
14(Source: P.A. 95-331, eff. 8-21-07; 95-644, eff. 10-12-07;
1595-707, eff. 1-11-08; 95-744, eff. 7-18-08; 95-903, eff.
168-25-08; 96-45, eff. 7-15-09; 96-152, eff. 8-7-09; 96-300, eff.
178-11-09; 96-328, eff. 8-11-09; 96-640, eff. 8-24-09; 96-959,
18eff. 7-1-10; 96-1000, eff. 7-2-10; 96-1480, eff. 11-18-10;
19revised 11-24-10.)
 
20    Section 999. Effective date. This Act takes effect June 30,
212011.