093_HB2304

 
                                     LRB093 10868 SJM 11363 b

 1        AN ACT concerning taxes.

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

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

 6        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 7        Sec. 203.  Base income defined.
 8        (a)  Individuals.
 9             (1)  In general.  In the case of an individual, base
10        income  means  an amount equal to the taxpayer's adjusted
11        gross  income  for  the  taxable  year  as  modified   by
12        paragraph (2).
13             (2)  Modifications.    The   adjusted  gross  income
14        referred to in paragraph (1) shall be modified by  adding
15        thereto the sum of the following amounts:
16                  (A)  An  amount  equal  to  all amounts paid or
17             accrued to the taxpayer  as  interest  or  dividends
18             during  the taxable year to the extent excluded from
19             gross income in the computation  of  adjusted  gross
20             income,  except  stock dividends of qualified public
21             utilities  described  in  Section  305(e)   of   the
22             Internal Revenue Code;
23                  (B)  An  amount  equal  to  the  amount  of tax
24             imposed by this Act  to  the  extent  deducted  from
25             gross  income  in  the computation of adjusted gross
26             income for the taxable year;
27                  (C)  An amount equal  to  the  amount  received
28             during  the  taxable year as a recovery or refund of
29             real  property  taxes  paid  with  respect  to   the
30             taxpayer's principal residence under the Revenue Act
31             of  1939  and  for  which a deduction was previously
 
                            -2-      LRB093 10868 SJM 11363 b
 1             taken under subparagraph (L) of this  paragraph  (2)
 2             prior to July 1, 1991, the retrospective application
 3             date  of Article 4 of Public Act 87-17.  In the case
 4             of  multi-unit  or  multi-use  structures  and  farm
 5             dwellings, the taxes  on  the  taxpayer's  principal
 6             residence  shall  be that portion of the total taxes
 7             for the entire property  which  is  attributable  to
 8             such principal residence;
 9                  (D)  An  amount  equal  to  the  amount  of the
10             capital gain deduction allowable under the  Internal
11             Revenue  Code,  to  the  extent  deducted from gross
12             income in the computation of adjusted gross income;
13                  (D-5)  An amount, to the extent not included in
14             adjusted gross income, equal to the amount of  money
15             withdrawn by the taxpayer in the taxable year from a
16             medical care savings account and the interest earned
17             on  the  account in the taxable year of a withdrawal
18             pursuant to subsection (b)  of  Section  20  of  the
19             Medical  Care  Savings Account Act or subsection (b)
20             of Section 20 of the Medical  Care  Savings  Account
21             Act of 2000;
22                  (D-10)  For taxable years ending after December
23             31,   1997,   an   amount   equal  to  any  eligible
24             remediation costs that the  individual  deducted  in
25             computing  adjusted  gross  income and for which the
26             individual claims a credit under subsection  (l)  of
27             Section 201;
28                  (D-15)  For  taxable years 2001 and thereafter,
29             an amount equal to the bonus depreciation  deduction
30             (30%   of   the  adjusted  basis  of  the  qualified
31             property) taken on the taxpayer's federal income tax
32             return for the taxable year under subsection (k)  of
33             Section 168 of the Internal Revenue Code; and
34                  (D-16)  If  the taxpayer reports a capital gain
 
                            -3-      LRB093 10868 SJM 11363 b
 1             or loss on the taxpayer's federal income tax  return
 2             for  the taxable year based on a sale or transfer of
 3             property for which the taxpayer was required in  any
 4             taxable  year to make an addition modification under
 5             subparagraph (D-15), then an  amount  equal  to  the
 6             aggregate  amount  of  the  deductions  taken in all
 7             taxable years under subparagraph (Z) with respect to
 8             that property.;
 9                  The taxpayer is required to make  the  addition
10             modification  under this subparagraph only once with
11             respect to any one piece of property;. and
12                  (D-20) (D-15)  For taxable years  beginning  on
13             or   after  January  1,  2002,  in  the  case  of  a
14             distribution from a qualified tuition program  under
15             Section 529 of the Internal Revenue Code, other than
16             (i)  a  distribution  from  a  College  Savings Pool
17             created under Section 16.5 of  the  State  Treasurer
18             Act or (ii) a distribution from the Illinois Prepaid
19             Tuition  Trust  Fund,  an amount equal to the amount
20             excluded   from   gross   income    under    Section
21             529(c)(3)(B);
22        and  by  deducting  from the total so obtained the sum of
23        the following amounts:
24                  (E)  For taxable years ending  before  December
25             31,  2001,  any  amount  included  in  such total in
26             respect  of  any  compensation  (including  but  not
27             limited to any compensation paid  or  accrued  to  a
28             serviceman  while  a  prisoner  of war or missing in
29             action) paid to a resident by  reason  of  being  on
30             active duty in the Armed Forces of the United States
31             and  in  respect of any compensation paid or accrued
32             to a resident who as a governmental employee  was  a
33             prisoner of war or missing in action, and in respect
34             of  any  compensation  paid to a resident in 1971 or
 
                            -4-      LRB093 10868 SJM 11363 b
 1             thereafter for annual training performed pursuant to
 2             Sections 502 and 503, Title 32, United  States  Code
 3             as  a  member  of  the  Illinois National Guard. For
 4             taxable years ending on or after December 31,  2001,
 5             any  amount included in such total in respect of any
 6             compensation  (including  but  not  limited  to  any
 7             compensation paid or accrued to a serviceman while a
 8             prisoner of war or missing  in  action)  paid  to  a
 9             resident   by  reason  of  being  a  member  of  any
10             component of the Armed Forces of the  United  States
11             and  in  respect of any compensation paid or accrued
12             to a resident who as a governmental employee  was  a
13             prisoner of war or missing in action, and in respect
14             of  any  compensation  paid to a resident in 2001 or
15             thereafter by  reason  of  being  a  member  of  the
16             Illinois  National  Guard.  The  provisions  of this
17             amendatory Act of  the  92nd  General  Assembly  are
18             exempt from the provisions of Section 250;
19                  (F)  An amount equal to all amounts included in
20             such  total  pursuant  to the provisions of Sections
21             402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
22             408  of  the  Internal  Revenue Code, or included in
23             such total as distributions under the provisions  of
24             any  retirement  or disability plan for employees of
25             any  governmental  agency  or  unit,  or  retirement
26             payments to retired  partners,  which  payments  are
27             excluded   in   computing  net  earnings  from  self
28             employment by Section 1402 of the  Internal  Revenue
29             Code and regulations adopted pursuant thereto;
30                  (G)  The valuation limitation amount;
31                  (H)  An  amount  equal to the amount of any tax
32             imposed by  this  Act  which  was  refunded  to  the
33             taxpayer  and included in such total for the taxable
34             year;
 
                            -5-      LRB093 10868 SJM 11363 b
 1                  (I)  An amount equal to all amounts included in
 2             such total pursuant to the provisions of Section 111
 3             of the Internal Revenue Code as a recovery of  items
 4             previously  deducted  from  adjusted gross income in
 5             the computation of taxable income;
 6                  (J)  An  amount  equal   to   those   dividends
 7             included   in  such  total  which  were  paid  by  a
 8             corporation which conducts business operations in an
 9             Enterprise Zone or zones created under the  Illinois
10             Enterprise  Zone Act, and conducts substantially all
11             of its operations in an Enterprise Zone or zones;
12                  (K)  An  amount  equal   to   those   dividends
13             included   in   such  total  that  were  paid  by  a
14             corporation that conducts business operations  in  a
15             federally  designated Foreign Trade Zone or Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located  in  Illinois;   provided   that   dividends
18             eligible  for the deduction provided in subparagraph
19             (J) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (K);
22                  (L)  For taxable years  ending  after  December
23             31,  1983,  an  amount  equal to all social security
24             benefits and railroad retirement  benefits  included
25             in  such  total pursuant to Sections 72(r) and 86 of
26             the Internal Revenue Code;
27                  (M)  With  the   exception   of   any   amounts
28             subtracted  under  subparagraph (N), an amount equal
29             to the sum of all amounts disallowed  as  deductions
30             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
31             Internal Revenue Code of 1954, as now  or  hereafter
32             amended,  and  all  amounts of expenses allocable to
33             interest and  disallowed as  deductions  by  Section
34             265(1)  of the Internal Revenue Code of 1954, as now
 
                            -6-      LRB093 10868 SJM 11363 b
 1             or hereafter amended; and  (ii)  for  taxable  years
 2             ending   on  or  after  August  13,  1999,  Sections
 3             171(a)(2), 265, 280C,  and  832(b)(5)(B)(i)  of  the
 4             Internal   Revenue  Code;  the  provisions  of  this
 5             subparagraph  are  exempt  from  the  provisions  of
 6             Section 250;
 7                  (N)  An amount equal to all amounts included in
 8             such total which are exempt from  taxation  by  this
 9             State   either   by   reason   of  its  statutes  or
10             Constitution  or  by  reason  of  the  Constitution,
11             treaties or statutes of the United States;  provided
12             that,  in the case of any statute of this State that
13             exempts  income  derived   from   bonds   or   other
14             obligations from the tax imposed under this Act, the
15             amount  exempted  shall  be the interest net of bond
16             premium amortization;
17                  (O)  An amount equal to any  contribution  made
18             to  a  job  training project established pursuant to
19             the Tax Increment Allocation Redevelopment Act;
20                  (P)  An amount  equal  to  the  amount  of  the
21             deduction  used  to  compute  the federal income tax
22             credit for restoration of substantial  amounts  held
23             under  claim  of right for the taxable year pursuant
24             to Section 1341 of  the  Internal  Revenue  Code  of
25             1986;
26                  (Q)  An amount equal to any amounts included in
27             such   total,   received   by  the  taxpayer  as  an
28             acceleration in the payment of  life,  endowment  or
29             annuity  benefits  in advance of the time they would
30             otherwise be payable as an indemnity for a  terminal
31             illness;
32                  (R)  An  amount  equal  to  the  amount  of any
33             federal or State  bonus  paid  to  veterans  of  the
34             Persian Gulf War;
 
                            -7-      LRB093 10868 SJM 11363 b
 1                  (S)  An  amount,  to  the  extent  included  in
 2             adjusted  gross  income,  equal  to  the amount of a
 3             contribution made in the taxable year on  behalf  of
 4             the  taxpayer  to  a  medical  care  savings account
 5             established under the Medical Care  Savings  Account
 6             Act  or the Medical Care Savings Account Act of 2000
 7             to the extent the contribution is  accepted  by  the
 8             account administrator as provided in that Act;
 9                  (T)  An  amount,  to  the  extent  included  in
10             adjusted  gross  income,  equal  to  the  amount  of
11             interest  earned  in  the  taxable year on a medical
12             care savings account established under  the  Medical
13             Care Savings Account Act or the Medical Care Savings
14             Account Act of 2000 on behalf of the taxpayer, other
15             than  interest  added pursuant to item (D-5) of this
16             paragraph (2);
17                  (U)  For one taxable year beginning on or after
18             January 1, 1994, an amount equal to the total amount
19             of tax imposed and paid under  subsections  (a)  and
20             (b)  of  Section  201  of  this Act on grant amounts
21             received by the  taxpayer  under  the  Nursing  Home
22             Grant  Assistance  Act during the taxpayer's taxable
23             years 1992 and 1993;
24                  (V)  Beginning with  tax  years  ending  on  or
25             after  December  31,  1995 and ending with tax years
26             ending on or before December  31,  2004,  an  amount
27             equal  to  the  amount  paid  by a taxpayer who is a
28             self-employed taxpayer, a partner of a  partnership,
29             or  a  shareholder in a Subchapter S corporation for
30             health insurance or  long-term  care  insurance  for
31             that   taxpayer   or   that   taxpayer's  spouse  or
32             dependents, to the extent that the amount  paid  for
33             that  health  insurance  or long-term care insurance
34             may be deducted under Section 213  of  the  Internal
 
                            -8-      LRB093 10868 SJM 11363 b
 1             Revenue  Code  of 1986, has not been deducted on the
 2             federal income tax return of the taxpayer, and  does
 3             not  exceed  the taxable income attributable to that
 4             taxpayer's  income,   self-employment   income,   or
 5             Subchapter  S  corporation  income;  except  that no
 6             deduction shall be allowed under this  item  (V)  if
 7             the  taxpayer  is  eligible  to  participate  in any
 8             health insurance or long-term care insurance plan of
 9             an  employer  of  the  taxpayer  or  the  taxpayer's
10             spouse.  The amount  of  the  health  insurance  and
11             long-term  care insurance subtracted under this item
12             (V) shall be determined by multiplying total  health
13             insurance and long-term care insurance premiums paid
14             by  the  taxpayer times a number that represents the
15             fractional percentage of eligible  medical  expenses
16             under  Section  213  of the Internal Revenue Code of
17             1986 not actually deducted on the taxpayer's federal
18             income tax return;
19                  (W)  For taxable years beginning  on  or  after
20             January   1,  1998,  all  amounts  included  in  the
21             taxpayer's federal gross income in the taxable  year
22             from  amounts converted from a regular IRA to a Roth
23             IRA. This paragraph is exempt from the provisions of
24             Section 250;
25                  (X)  For taxable year 1999 and  thereafter,  an
26             amount equal to the amount of any (i) distributions,
27             to the extent includible in gross income for federal
28             income tax purposes, made to the taxpayer because of
29             his  or  her  status  as a victim of persecution for
30             racial or religious reasons by Nazi Germany  or  any
31             other  Axis  regime  or as an heir of the victim and
32             (ii) items of income, to the  extent  includible  in
33             gross   income  for  federal  income  tax  purposes,
34             attributable to, derived from or in any way  related
 
                            -9-      LRB093 10868 SJM 11363 b
 1             to  assets  stolen  from,  hidden from, or otherwise
 2             lost to  a  victim  of  persecution  for  racial  or
 3             religious  reasons by Nazi Germany or any other Axis
 4             regime immediately prior to, during, and immediately
 5             after World War II, including, but not  limited  to,
 6             interest  on  the  proceeds  receivable as insurance
 7             under policies issued to a victim of persecution for
 8             racial or religious reasons by Nazi Germany  or  any
 9             other  Axis  regime  by European insurance companies
10             immediately  prior  to  and  during  World  War  II;
11             provided, however,  this  subtraction  from  federal
12             adjusted  gross  income  does  not  apply  to assets
13             acquired with such assets or with the proceeds  from
14             the  sale  of  such  assets; provided, further, this
15             paragraph shall only apply to a taxpayer who was the
16             first recipient of such assets after their  recovery
17             and  who  is  a  victim of persecution for racial or
18             religious reasons by Nazi Germany or any other  Axis
19             regime  or  as an heir of the victim.  The amount of
20             and  the  eligibility  for  any  public  assistance,
21             benefit, or similar entitlement is not  affected  by
22             the   inclusion  of  items  (i)  and  (ii)  of  this
23             paragraph in gross income  for  federal  income  tax
24             purposes.   This   paragraph   is  exempt  from  the
25             provisions of Section 250;
26                  (Y)  For taxable years beginning  on  or  after
27             January  1,  2002, moneys contributed in the taxable
28             year to a College Savings Pool account under Section
29             16.5 of the State Treasurer Act, except that amounts
30             excluded   from   gross   income    under    Section
31             529(c)(3)(C)(i)  of  the Internal Revenue Code shall
32             not be  considered  moneys  contributed  under  this
33             subparagraph  (Y).   This subparagraph (Y) is exempt
34             from the provisions of Section 250;
 
                            -10-     LRB093 10868 SJM 11363 b
 1                  (Z)  For taxable years 2001 and thereafter, for
 2             the taxable year in  which  the  bonus  depreciation
 3             deduction   (30%   of  the  adjusted  basis  of  the
 4             qualified  property)  is  taken  on  the  taxpayer's
 5             federal income tax return under  subsection  (k)  of
 6             Section  168  of  the  Internal Revenue Code and for
 7             each applicable taxable year thereafter,  an  amount
 8             equal to "x", where:
 9                       (1)  "y"   equals   the   amount   of  the
10                  depreciation deduction taken  for  the  taxable
11                  year  on  the  taxpayer's  federal  income  tax
12                  return   on   property   for  which  the  bonus
13                  depreciation deduction  (30%  of  the  adjusted
14                  basis  of  the qualified property) was taken in
15                  any year under subsection (k) of Section 168 of
16                  the Internal Revenue Code,  but  not  including
17                  the bonus depreciation deduction; and
18                       (2)  "x"  equals  "y" multiplied by 30 and
19                  then  divided  by  70  (or  "y"  multiplied  by
20                  0.429).
21                  The  aggregate  amount  deducted   under   this
22             subparagraph  in all taxable years for any one piece
23             of property may not exceed the amount of  the  bonus
24             depreciation deduction (30% of the adjusted basis of
25             the  qualified  property)  taken on that property on
26             the  taxpayer's  federal  income  tax  return  under
27             subsection  (k)  of  Section  168  of  the  Internal
28             Revenue Code; and
29                  (AA)  If the taxpayer reports a capital gain or
30             loss on the taxpayer's federal income tax return for
31             the taxable year based on  a  sale  or  transfer  of
32             property  for which the taxpayer was required in any
33             taxable year to make an addition modification  under
34             subparagraph  (D-15),  then  an amount equal to that
 
                            -11-     LRB093 10868 SJM 11363 b
 1             addition modification.
 2                  The taxpayer is allowed to take  the  deduction
 3             under  this  subparagraph  only once with respect to
 4             any one piece of property; and
 5                  (BB) (Z)  Any amount included in adjusted gross
 6             income, other than salary, received by a driver in a
 7             ridesharing arrangement using a motor vehicle; and
 8                  (CC)  For taxable years beginning on  or  after
 9             January  1,  2003,  moneys  contributed  during  the
10             taxable  year by the taxpayer for the purchase of an
11             Illinois prepaid tuition contract, as defined in the
12             Illinois Prepaid Tuition Act,  except  that  amounts
13             excluded    from    gross   income   under   Section
14             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
15             not  be  considered  moneys  contributed  under this
16             subparagraph (CC). This subparagraph is exempt  from
17             the provisions of Section 250 of this Act.

18        (b)  Corporations.
19             (1)  In general.  In the case of a corporation, base
20        income  means  an  amount equal to the taxpayer's taxable
21        income for the taxable year as modified by paragraph (2).
22             (2)  Modifications.  The taxable income referred  to
23        in  paragraph (1) shall be modified by adding thereto the
24        sum of the following amounts:
25                  (A)  An amount equal to  all  amounts  paid  or
26             accrued   to   the  taxpayer  as  interest  and  all
27             distributions  received  from  regulated  investment
28             companies during the  taxable  year  to  the  extent
29             excluded  from  gross  income  in the computation of
30             taxable income;
31                  (B)  An amount  equal  to  the  amount  of  tax
32             imposed  by  this  Act  to  the extent deducted from
33             gross income in the computation  of  taxable  income
34             for the taxable year;
 
                            -12-     LRB093 10868 SJM 11363 b
 1                  (C)  In  the  case  of  a  regulated investment
 2             company, an amount equal to the excess  of  (i)  the
 3             net  long-term  capital  gain  for the taxable year,
 4             over (ii) the amount of the capital  gain  dividends
 5             designated   as  such  in  accordance  with  Section
 6             852(b)(3)(C) of the Internal Revenue  Code  and  any
 7             amount  designated under Section 852(b)(3)(D) of the
 8             Internal Revenue Code, attributable to  the  taxable
 9             year (this amendatory Act of 1995 (Public Act 89-89)
10             is  declarative  of  existing  law  and is not a new
11             enactment);
12                  (D)  The  amount  of  any  net  operating  loss
13             deduction taken in arriving at taxable income, other
14             than a net operating loss  carried  forward  from  a
15             taxable year ending prior to December 31, 1986;
16                  (E)  For taxable years in which a net operating
17             loss  carryback  or carryforward from a taxable year
18             ending prior to December 31, 1986 is an  element  of
19             taxable income under paragraph (1) of subsection (e)
20             or  subparagraph  (E) of paragraph (2) of subsection
21             (e), the  amount  by  which  addition  modifications
22             other  than  those provided by this subparagraph (E)
23             exceeded subtraction modifications in  such  earlier
24             taxable year, with the following limitations applied
25             in the order that they are listed:
26                       (i)  the addition modification relating to
27                  the  net operating loss carried back or forward
28                  to the  taxable  year  from  any  taxable  year
29                  ending  prior  to  December  31,  1986 shall be
30                  reduced by the amount of addition  modification
31                  under  this  subparagraph  (E) which related to
32                  that net operating loss  and  which  was  taken
33                  into  account in calculating the base income of
34                  an earlier taxable year, and
 
                            -13-     LRB093 10868 SJM 11363 b
 1                       (ii)  the addition  modification  relating
 2                  to  the  net  operating  loss  carried  back or
 3                  forward to the taxable year  from  any  taxable
 4                  year  ending  prior  to December 31, 1986 shall
 5                  not exceed the  amount  of  such  carryback  or
 6                  carryforward;
 7                  For  taxable  years  in  which  there  is a net
 8             operating loss carryback or carryforward  from  more
 9             than one other taxable year ending prior to December
10             31, 1986, the addition modification provided in this
11             subparagraph  (E)  shall  be  the sum of the amounts
12             computed   independently   under    the    preceding
13             provisions  of  this  subparagraph (E) for each such
14             taxable year;
15                  (E-5)  For taxable years ending after  December
16             31,   1997,   an   amount   equal  to  any  eligible
17             remediation costs that the corporation  deducted  in
18             computing  adjusted  gross  income and for which the
19             corporation claims a credit under subsection (l)  of
20             Section 201;
21                  (E-10)  For  taxable years 2001 and thereafter,
22             an amount equal to the bonus depreciation  deduction
23             (30%   of   the  adjusted  basis  of  the  qualified
24             property) taken on the taxpayer's federal income tax
25             return for the taxable year under subsection (k)  of
26             Section 168 of the Internal Revenue Code; and
27                  (E-11)  If  the taxpayer reports a capital gain
28             or loss on the taxpayer's federal income tax  return
29             for  the taxable year based on a sale or transfer of
30             property for which the taxpayer was required in  any
31             taxable  year to make an addition modification under
32             subparagraph (E-10), then an  amount  equal  to  the
33             aggregate  amount  of  the  deductions  taken in all
34             taxable years under subparagraph (T) with respect to
 
                            -14-     LRB093 10868 SJM 11363 b
 1             that property.;
 2                  The taxpayer is required to make  the  addition
 3             modification  under this subparagraph only once with
 4             respect to any one piece of property;
 5        and by deducting from the total so obtained  the  sum  of
 6        the following amounts:
 7                  (F)  An  amount  equal to the amount of any tax
 8             imposed by  this  Act  which  was  refunded  to  the
 9             taxpayer  and included in such total for the taxable
10             year;
11                  (G)  An amount equal to any amount included  in
12             such  total under Section 78 of the Internal Revenue
13             Code;
14                  (H)  In the  case  of  a  regulated  investment
15             company,  an  amount  equal  to the amount of exempt
16             interest dividends as defined in subsection (b)  (5)
17             of Section 852 of the Internal Revenue Code, paid to
18             shareholders for the taxable year;
19                  (I)  With   the   exception   of   any  amounts
20             subtracted under subparagraph (J), an  amount  equal
21             to  the  sum of all amounts disallowed as deductions
22             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
23             amounts disallowed as interest  expense  by  Section
24             291(a)(3)  of  the  Internal Revenue Code, as now or
25             hereafter  amended,  and  all  amounts  of  expenses
26             allocable to interest and disallowed  as  deductions
27             by  Section  265(a)(1) of the Internal Revenue Code,
28             as now or hereafter amended; and  (ii)  for  taxable
29             years  ending  on or after August 13, 1999, Sections
30             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
31             of the Internal Revenue Code; the provisions of this
32             subparagraph  are  exempt  from  the  provisions  of
33             Section 250;
34                  (J)  An amount equal to all amounts included in
 
                            -15-     LRB093 10868 SJM 11363 b
 1             such total which are exempt from  taxation  by  this
 2             State   either   by   reason   of  its  statutes  or
 3             Constitution  or  by  reason  of  the  Constitution,
 4             treaties or statutes of the United States;  provided
 5             that,  in the case of any statute of this State that
 6             exempts  income  derived   from   bonds   or   other
 7             obligations from the tax imposed under this Act, the
 8             amount  exempted  shall  be the interest net of bond
 9             premium amortization;
10                  (K)  An  amount  equal   to   those   dividends
11             included   in  such  total  which  were  paid  by  a
12             corporation which conducts business operations in an
13             Enterprise Zone or zones created under the  Illinois
14             Enterprise  Zone  Act and conducts substantially all
15             of its operations in an Enterprise Zone or zones;
16                  (L)  An  amount  equal   to   those   dividends
17             included   in   such  total  that  were  paid  by  a
18             corporation that conducts business operations  in  a
19             federally  designated Foreign Trade Zone or Sub-Zone
20             and  that  is  designated  a  High  Impact  Business
21             located  in  Illinois;   provided   that   dividends
22             eligible  for the deduction provided in subparagraph
23             (K) of paragraph 2 of this subsection shall  not  be
24             eligible  for  the  deduction  provided  under  this
25             subparagraph (L);
26                  (M)  For  any  taxpayer  that  is  a  financial
27             organization within the meaning of Section 304(c) of
28             this  Act,  an  amount  included  in  such  total as
29             interest income from a loan or loans  made  by  such
30             taxpayer  to  a  borrower, to the extent that such a
31             loan is secured by property which  is  eligible  for
32             the Enterprise Zone Investment Credit.  To determine
33             the  portion  of  a loan or loans that is secured by
34             property eligible for a  Section  201(f)  investment
 
                            -16-     LRB093 10868 SJM 11363 b
 1             credit  to the borrower, the entire principal amount
 2             of the loan or loans between the  taxpayer  and  the
 3             borrower  should  be  divided  into the basis of the
 4             Section  201(f)  investment  credit  property  which
 5             secures the loan or loans, using  for  this  purpose
 6             the original basis of such property on the date that
 7             it  was  placed  in  service in the Enterprise Zone.
 8             The subtraction modification available  to  taxpayer
 9             in  any  year  under  this  subsection shall be that
10             portion of the total interest paid by  the  borrower
11             with  respect  to  such  loan  attributable  to  the
12             eligible  property  as calculated under the previous
13             sentence;
14                  (M-1)  For any taxpayer  that  is  a  financial
15             organization within the meaning of Section 304(c) of
16             this  Act,  an  amount  included  in  such  total as
17             interest income from a loan or loans  made  by  such
18             taxpayer  to  a  borrower, to the extent that such a
19             loan is secured by property which  is  eligible  for
20             the  High  Impact  Business  Investment  Credit.  To
21             determine the portion of a loan  or  loans  that  is
22             secured  by  property  eligible for a Section 201(h)
23             investment  credit  to  the  borrower,  the   entire
24             principal  amount  of  the loan or loans between the
25             taxpayer and the borrower should be divided into the
26             basis  of  the  Section  201(h)  investment   credit
27             property  which secures the loan or loans, using for
28             this purpose the original basis of such property  on
29             the  date  that  it  was  placed  in  service  in  a
30             federally  designated Foreign Trade Zone or Sub-Zone
31             located in Illinois.  No taxpayer that  is  eligible
32             for  the  deduction  provided in subparagraph (M) of
33             paragraph (2) of this subsection shall  be  eligible
34             for  the  deduction provided under this subparagraph
 
                            -17-     LRB093 10868 SJM 11363 b
 1             (M-1).  The subtraction  modification  available  to
 2             taxpayers in any year under this subsection shall be
 3             that  portion  of  the  total  interest  paid by the
 4             borrower with respect to such loan  attributable  to
 5             the   eligible  property  as  calculated  under  the
 6             previous sentence;
 7                  (N)  Two times any contribution made during the
 8             taxable year to a designated  zone  organization  to
 9             the  extent that the contribution (i) qualifies as a
10             charitable  contribution  under  subsection  (c)  of
11             Section 170 of the Internal Revenue  Code  and  (ii)
12             must,  by  its terms, be used for a project approved
13             by the Department of Commerce and Community  Affairs
14             under  Section  11  of  the Illinois Enterprise Zone
15             Act;
16                  (O)  An amount equal to: (i)  85%  for  taxable
17             years  ending  on or before December 31, 1992, or, a
18             percentage equal to the percentage  allowable  under
19             Section  243(a)(1)  of  the Internal Revenue Code of
20             1986 for taxable years  ending  after  December  31,
21             1992,  of  the amount by which dividends included in
22             taxable income and received from a corporation  that
23             is  not  created  or organized under the laws of the
24             United States or any state or political  subdivision
25             thereof,  including,  for taxable years ending on or
26             after  December  31,  1988,  dividends  received  or
27             deemed  received  or  paid  or  deemed  paid   under
28             Sections  951  through  964  of the Internal Revenue
29             Code, exceed the amount of the modification provided
30             under subparagraph (G)  of  paragraph  (2)  of  this
31             subsection  (b)  which is related to such dividends;
32             plus (ii) 100% of the  amount  by  which  dividends,
33             included  in taxable income and received, including,
34             for taxable years ending on or  after  December  31,
 
                            -18-     LRB093 10868 SJM 11363 b
 1             1988,  dividends received or deemed received or paid
 2             or deemed paid under Sections 951 through 964 of the
 3             Internal Revenue Code,  from  any  such  corporation
 4             specified  in  clause  (i)  that  would  but for the
 5             provisions of Section 1504 (b) (3) of  the  Internal
 6             Revenue   Code   be  treated  as  a  member  of  the
 7             affiliated  group  which   includes   the   dividend
 8             recipient,  exceed  the  amount  of the modification
 9             provided under subparagraph (G) of paragraph (2)  of
10             this   subsection  (b)  which  is  related  to  such
11             dividends;
12                  (P)  An amount equal to any  contribution  made
13             to  a  job  training project established pursuant to
14             the Tax Increment Allocation Redevelopment Act;
15                  (Q)  An amount  equal  to  the  amount  of  the
16             deduction  used  to  compute  the federal income tax
17             credit for restoration of substantial  amounts  held
18             under  claim  of right for the taxable year pursuant
19             to Section 1341 of  the  Internal  Revenue  Code  of
20             1986;
21                  (R)  In  the  case  of an attorney-in-fact with
22             respect to whom  an  interinsurer  or  a  reciprocal
23             insurer  has  made the election under Section 835 of
24             the Internal Revenue Code, 26 U.S.C. 835, an  amount
25             equal  to the excess, if any, of the amounts paid or
26             incurred by that interinsurer or reciprocal  insurer
27             in the taxable year to the attorney-in-fact over the
28             deduction allowed to that interinsurer or reciprocal
29             insurer  with  respect to the attorney-in-fact under
30             Section 835(b) of the Internal Revenue Code for  the
31             taxable year;
32                  (S)  For  taxable  years  ending  on  or  after
33             December  31,  1997,  in  the case of a Subchapter S
34             corporation, an  amount  equal  to  all  amounts  of
 
                            -19-     LRB093 10868 SJM 11363 b
 1             income  allocable  to  a  shareholder subject to the
 2             Personal Property Tax Replacement Income Tax imposed
 3             by subsections (c) and (d) of Section  201  of  this
 4             Act,  including  amounts  allocable to organizations
 5             exempt from federal income tax by reason of  Section
 6             501(a)   of   the   Internal   Revenue  Code.   This
 7             subparagraph (S) is exempt from  the  provisions  of
 8             Section 250;
 9                  (T)  For taxable years 2001 and thereafter, for
10             the  taxable  year  in  which the bonus depreciation
11             deduction  (30%  of  the  adjusted  basis   of   the
12             qualified  property)  is  taken  on  the  taxpayer's
13             federal  income  tax  return under subsection (k) of
14             Section 168 of the Internal  Revenue  Code  and  for
15             each  applicable  taxable year thereafter, an amount
16             equal to "x", where:
17                       (1)  "y"  equals   the   amount   of   the
18                  depreciation  deduction  taken  for the taxable
19                  year  on  the  taxpayer's  federal  income  tax
20                  return  on  property  for   which   the   bonus
21                  depreciation  deduction  (30%  of  the adjusted
22                  basis of the qualified property) was  taken  in
23                  any year under subsection (k) of Section 168 of
24                  the  Internal  Revenue  Code, but not including
25                  the bonus depreciation deduction; and
26                       (2)  "x" equals "y" multiplied by  30  and
27                  then  divided  by  70  (or  "y"  multiplied  by
28                  0.429).
29                  The   aggregate   amount  deducted  under  this
30             subparagraph in all taxable years for any one  piece
31             of  property  may not exceed the amount of the bonus
32             depreciation deduction (30% of the adjusted basis of
33             the qualified property) taken on  that  property  on
34             the  taxpayer's  federal  income  tax  return  under
 
                            -20-     LRB093 10868 SJM 11363 b
 1             subsection  (k)  of  Section  168  of  the  Internal
 2             Revenue Code; and
 3                  (U)  If  the taxpayer reports a capital gain or
 4             loss on the taxpayer's federal income tax return for
 5             the taxable year based on  a  sale  or  transfer  of
 6             property  for which the taxpayer was required in any
 7             taxable year to make an addition modification  under
 8             subparagraph  (E-10),  then  an amount equal to that
 9             addition modification.
10                  The taxpayer is allowed to take  the  deduction
11             under  this  subparagraph  only once with respect to
12             any one piece of property; and
13                  (V)  For taxable years beginning  on  or  after
14             January  1,  2003,  moneys  contributed  during  the
15             taxable  year by the taxpayer for the purchase of an
16             Illinois prepaid tuition contract, as defined in the
17             Illinois Prepaid Tuition Act,  except  that  amounts
18             excluded    from    gross   income   under   Section
19             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
20             not  be  considered  moneys  contributed  under this
21             subparagraph (V). This subparagraph is  exempt  from
22             the provisions of Section 250 of this Act.
23             (3)  Special  rule.   For  purposes of paragraph (2)
24        (A), "gross income" in  the  case  of  a  life  insurance
25        company,  for  tax years ending on and after December 31,
26        1994, shall mean the  gross  investment  income  for  the
27        taxable year.

28        (c)  Trusts and estates.
29             (1)  In  general.  In the case of a trust or estate,
30        base income means  an  amount  equal  to  the  taxpayer's
31        taxable  income  for  the  taxable  year  as  modified by
32        paragraph (2).
33             (2)  Modifications.  Subject to  the  provisions  of
34        paragraph   (3),   the  taxable  income  referred  to  in
 
                            -21-     LRB093 10868 SJM 11363 b
 1        paragraph (1) shall be modified by adding thereto the sum
 2        of the following amounts:
 3                  (A)  An amount equal to  all  amounts  paid  or
 4             accrued  to  the  taxpayer  as interest or dividends
 5             during the taxable year to the extent excluded  from
 6             gross income in the computation of taxable income;
 7                  (B)  In the case of (i) an estate, $600; (ii) a
 8             trust  which,  under  its  governing  instrument, is
 9             required to distribute all of its income  currently,
10             $300;  and  (iii) any other trust, $100, but in each
11             such case,  only  to  the  extent  such  amount  was
12             deducted in the computation of taxable income;
13                  (C)  An  amount  equal  to  the  amount  of tax
14             imposed by this Act  to  the  extent  deducted  from
15             gross  income  in  the computation of taxable income
16             for the taxable year;
17                  (D)  The  amount  of  any  net  operating  loss
18             deduction taken in arriving at taxable income, other
19             than a net operating loss  carried  forward  from  a
20             taxable year ending prior to December 31, 1986;
21                  (E)  For taxable years in which a net operating
22             loss  carryback  or carryforward from a taxable year
23             ending prior to December 31, 1986 is an  element  of
24             taxable income under paragraph (1) of subsection (e)
25             or  subparagraph  (E) of paragraph (2) of subsection
26             (e), the  amount  by  which  addition  modifications
27             other  than  those provided by this subparagraph (E)
28             exceeded subtraction modifications in  such  taxable
29             year,  with the following limitations applied in the
30             order that they are listed:
31                       (i)  the addition modification relating to
32                  the net operating loss carried back or  forward
33                  to  the  taxable  year  from  any  taxable year
34                  ending prior to  December  31,  1986  shall  be
 
                            -22-     LRB093 10868 SJM 11363 b
 1                  reduced  by the amount of addition modification
 2                  under this subparagraph (E)  which  related  to
 3                  that  net  operating  loss  and which was taken
 4                  into account in calculating the base income  of
 5                  an earlier taxable year, and
 6                       (ii)  the  addition  modification relating
 7                  to the  net  operating  loss  carried  back  or
 8                  forward  to  the  taxable year from any taxable
 9                  year ending prior to December  31,  1986  shall
10                  not  exceed  the  amount  of  such carryback or
11                  carryforward;
12                  For taxable years  in  which  there  is  a  net
13             operating  loss  carryback or carryforward from more
14             than one other taxable year ending prior to December
15             31, 1986, the addition modification provided in this
16             subparagraph (E) shall be the  sum  of  the  amounts
17             computed    independently    under   the   preceding
18             provisions of this subparagraph (E)  for  each  such
19             taxable year;
20                  (F)  For  taxable  years  ending  on  or  after
21             January 1, 1989, an amount equal to the tax deducted
22             pursuant to Section 164 of the Internal Revenue Code
23             if  the trust or estate is claiming the same tax for
24             purposes of the Illinois foreign  tax  credit  under
25             Section 601 of this Act;
26                  (G)  An  amount  equal  to  the  amount  of the
27             capital gain deduction allowable under the  Internal
28             Revenue  Code,  to  the  extent  deducted from gross
29             income in the computation of taxable income;
30                  (G-5)  For taxable years ending after  December
31             31,   1997,   an   amount   equal  to  any  eligible
32             remediation costs that the trust or estate  deducted
33             in computing adjusted gross income and for which the
34             trust or estate claims a credit under subsection (l)
 
                            -23-     LRB093 10868 SJM 11363 b
 1             of Section 201;
 2                  (G-10)  For  taxable years 2001 and thereafter,
 3             an amount equal to the bonus depreciation  deduction
 4             (30%   of   the  adjusted  basis  of  the  qualified
 5             property) taken on the taxpayer's federal income tax
 6             return for the taxable year under subsection (k)  of
 7             Section 168 of the Internal Revenue Code; and
 8                  (G-11)  If  the taxpayer reports a capital gain
 9             or loss on the taxpayer's federal income tax  return
10             for  the taxable year based on a sale or transfer of
11             property for which the taxpayer was required in  any
12             taxable  year to make an addition modification under
13             subparagraph (G-10), then an  amount  equal  to  the
14             aggregate  amount  of  the  deductions  taken in all
15             taxable years under subparagraph (R) with respect to
16             that property.;
17                  The taxpayer is required to make  the  addition
18             modification  under this subparagraph only once with
19             respect to any one piece of property;
20        and by deducting from the total so obtained  the  sum  of
21        the following amounts:
22                  (H)  An amount equal to all amounts included in
23             such  total  pursuant  to the provisions of Sections
24             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
25             408 of the Internal Revenue Code or included in such
26             total  as  distributions under the provisions of any
27             retirement or disability plan for employees  of  any
28             governmental  agency or unit, or retirement payments
29             to retired partners, which payments are excluded  in
30             computing  net  earnings  from  self  employment  by
31             Section  1402  of  the  Internal  Revenue  Code  and
32             regulations adopted pursuant thereto;
33                  (I)  The valuation limitation amount;
34                  (J)  An  amount  equal to the amount of any tax
 
                            -24-     LRB093 10868 SJM 11363 b
 1             imposed by  this  Act  which  was  refunded  to  the
 2             taxpayer  and included in such total for the taxable
 3             year;
 4                  (K)  An amount equal to all amounts included in
 5             taxable income as  modified  by  subparagraphs  (A),
 6             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
 7             from taxation by this State either by reason of  its
 8             statutes   or  Constitution  or  by  reason  of  the
 9             Constitution, treaties or  statutes  of  the  United
10             States; provided that, in the case of any statute of
11             this State that exempts income derived from bonds or
12             other  obligations  from  the tax imposed under this
13             Act, the amount exempted shall be the  interest  net
14             of bond premium amortization;
15                  (L)  With   the   exception   of   any  amounts
16             subtracted under subparagraph (K), an  amount  equal
17             to  the  sum of all amounts disallowed as deductions
18             by (i) Sections 171(a)  (2)  and  265(a)(2)  of  the
19             Internal  Revenue Code, as now or hereafter amended,
20             and all amounts of expenses  allocable  to  interest
21             and  disallowed  as  deductions by Section 265(1) of
22             the  Internal  Revenue  Code  of  1954,  as  now  or
23             hereafter amended; and (ii) for taxable years ending
24             on or after August  13,  1999,  Sections  171(a)(2),
25             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
26             Revenue  Code;  the  provisions of this subparagraph
27             are exempt from the provisions of Section 250;
28                  (M)  An  amount  equal   to   those   dividends
29             included   in  such  total  which  were  paid  by  a
30             corporation which conducts business operations in an
31             Enterprise Zone or zones created under the  Illinois
32             Enterprise  Zone  Act and conducts substantially all
33             of its operations in an Enterprise Zone or Zones;
34                  (N)  An amount equal to any  contribution  made
 
                            -25-     LRB093 10868 SJM 11363 b
 1             to  a  job  training project established pursuant to
 2             the Tax Increment Allocation Redevelopment Act;
 3                  (O)  An  amount  equal   to   those   dividends
 4             included   in   such  total  that  were  paid  by  a
 5             corporation that conducts business operations  in  a
 6             federally  designated Foreign Trade Zone or Sub-Zone
 7             and  that  is  designated  a  High  Impact  Business
 8             located  in  Illinois;   provided   that   dividends
 9             eligible  for the deduction provided in subparagraph
10             (M) of paragraph (2) of this subsection shall not be
11             eligible  for  the  deduction  provided  under  this
12             subparagraph (O);
13                  (P)  An amount  equal  to  the  amount  of  the
14             deduction  used  to  compute  the federal income tax
15             credit for restoration of substantial  amounts  held
16             under  claim  of right for the taxable year pursuant
17             to Section 1341 of  the  Internal  Revenue  Code  of
18             1986;
19                  (Q)  For  taxable  year 1999 and thereafter, an
20             amount equal to the amount of any (i) distributions,
21             to the extent includible in gross income for federal
22             income tax purposes, made to the taxpayer because of
23             his or her status as a  victim  of  persecution  for
24             racial  or  religious reasons by Nazi Germany or any
25             other Axis regime or as an heir of  the  victim  and
26             (ii)  items  of  income, to the extent includible in
27             gross  income  for  federal  income  tax   purposes,
28             attributable  to, derived from or in any way related
29             to assets stolen from,  hidden  from,  or  otherwise
30             lost  to  a  victim  of  persecution  for  racial or
31             religious reasons by Nazi Germany or any other  Axis
32             regime immediately prior to, during, and immediately
33             after  World  War II, including, but not limited to,
34             interest on the  proceeds  receivable  as  insurance
 
                            -26-     LRB093 10868 SJM 11363 b
 1             under policies issued to a victim of persecution for
 2             racial  or  religious reasons by Nazi Germany or any
 3             other Axis regime by  European  insurance  companies
 4             immediately  prior  to  and  during  World  War  II;
 5             provided,  however,  this  subtraction  from federal
 6             adjusted gross  income  does  not  apply  to  assets
 7             acquired  with such assets or with the proceeds from
 8             the sale of such  assets;  provided,  further,  this
 9             paragraph shall only apply to a taxpayer who was the
10             first  recipient of such assets after their recovery
11             and who is a victim of  persecution  for  racial  or
12             religious  reasons by Nazi Germany or any other Axis
13             regime or as an heir of the victim.  The  amount  of
14             and  the  eligibility  for  any  public  assistance,
15             benefit,  or  similar entitlement is not affected by
16             the  inclusion  of  items  (i)  and  (ii)  of   this
17             paragraph  in  gross  income  for federal income tax
18             purposes.  This  paragraph  is   exempt   from   the
19             provisions of Section 250;
20                  (R)  For taxable years 2001 and thereafter, for
21             the  taxable  year  in  which the bonus depreciation
22             deduction  (30%  of  the  adjusted  basis   of   the
23             qualified  property)  is  taken  on  the  taxpayer's
24             federal  income  tax  return under subsection (k) of
25             Section 168 of the Internal  Revenue  Code  and  for
26             each  applicable  taxable year thereafter, an amount
27             equal to "x", where:
28                       (1)  "y"  equals   the   amount   of   the
29                  depreciation  deduction  taken  for the taxable
30                  year  on  the  taxpayer's  federal  income  tax
31                  return  on  property  for   which   the   bonus
32                  depreciation  deduction  (30%  of  the adjusted
33                  basis of the qualified property) was  taken  in
34                  any year under subsection (k) of Section 168 of
 
                            -27-     LRB093 10868 SJM 11363 b
 1                  the  Internal  Revenue  Code, but not including
 2                  the bonus depreciation deduction; and
 3                       (2)  "x" equals "y" multiplied by  30  and
 4                  then  divided  by  70  (or  "y"  multiplied  by
 5                  0.429).
 6                  The   aggregate   amount  deducted  under  this
 7             subparagraph in all taxable years for any one  piece
 8             of  property  may not exceed the amount of the bonus
 9             depreciation deduction (30% of the adjusted basis of
10             the qualified property) taken on  that  property  on
11             the  taxpayer's  federal  income  tax  return  under
12             subsection  (k)  of  Section  168  of  the  Internal
13             Revenue Code; and
14                  (S)  If  the taxpayer reports a capital gain or
15             loss on the taxpayer's federal income tax return for
16             the taxable year based on  a  sale  or  transfer  of
17             property  for which the taxpayer was required in any
18             taxable year to make an addition modification  under
19             subparagraph  (G-10),  then  an amount equal to that
20             addition modification.
21                  The taxpayer is allowed to take  the  deduction
22             under  this  subparagraph  only once with respect to
23             any one piece of property; and
24                  (T)  For taxable years beginning  on  or  after
25             January  1,  2003,  moneys  contributed  during  the
26             taxable  year by the taxpayer for the purchase of an
27             Illinois prepaid tuition contract, as defined in the
28             Illinois Prepaid Tuition Act,  except  that  amounts
29             excluded    from    gross   income   under   Section
30             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
31             not  be  considered  moneys  contributed  under this
32             subparagraph (T). This subparagraph is  exempt  from
33             the provisions of Section 250 of this Act.
34             (3)  Limitation.   The  amount  of  any modification
 
                            -28-     LRB093 10868 SJM 11363 b
 1        otherwise required under  this  subsection  shall,  under
 2        regulations  prescribed by the Department, be adjusted by
 3        any amounts included therein which  were  properly  paid,
 4        credited,  or  required to be distributed, or permanently
 5        set aside for charitable purposes pursuant   to  Internal
 6        Revenue Code Section 642(c) during the taxable year.

 7        (d)  Partnerships.
 8             (1)  In  general. In the case of a partnership, base
 9        income means an amount equal to  the  taxpayer's  taxable
10        income for the taxable year as modified by paragraph (2).
11             (2)  Modifications.  The  taxable income referred to
12        in paragraph (1) shall be modified by adding thereto  the
13        sum of the following amounts:
14                  (A)  An  amount  equal  to  all amounts paid or
15             accrued to the taxpayer  as  interest  or  dividends
16             during  the taxable year to the extent excluded from
17             gross income in the computation of taxable income;
18                  (B)  An amount  equal  to  the  amount  of  tax
19             imposed  by  this  Act  to  the extent deducted from
20             gross income for the taxable year;
21                  (C)  The amount of deductions  allowed  to  the
22             partnership  pursuant  to  Section  707  (c)  of the
23             Internal Revenue Code  in  calculating  its  taxable
24             income;
25                  (D)  An  amount  equal  to  the  amount  of the
26             capital gain deduction allowable under the  Internal
27             Revenue  Code,  to  the  extent  deducted from gross
28             income in the computation of taxable income;
29                  (D-5)  For taxable years 2001  and  thereafter,
30             an  amount equal to the bonus depreciation deduction
31             (30%  of  the  adjusted  basis  of   the   qualified
32             property) taken on the taxpayer's federal income tax
33             return  for the taxable year under subsection (k) of
34             Section 168 of the Internal Revenue Code; and
 
                            -29-     LRB093 10868 SJM 11363 b
 1                  (D-6)  If the taxpayer reports a  capital  gain
 2             or  loss on the taxpayer's federal income tax return
 3             for the taxable year based on a sale or transfer  of
 4             property  for which the taxpayer was required in any
 5             taxable year to make an addition modification  under
 6             subparagraph  (D-5),  then  an  amount  equal to the
 7             aggregate amount of  the  deductions  taken  in  all
 8             taxable years under subparagraph (O) with respect to
 9             that property.;
10                  The  taxpayer  is required to make the addition
11             modification under this subparagraph only once  with
12             respect to any one piece of property;
13        and by deducting from the total so obtained the following
14        amounts:
15                  (E)  The valuation limitation amount;
16                  (F)  An  amount  equal to the amount of any tax
17             imposed by  this  Act  which  was  refunded  to  the
18             taxpayer  and included in such total for the taxable
19             year;
20                  (G)  An amount equal to all amounts included in
21             taxable income as  modified  by  subparagraphs  (A),
22             (B),  (C)  and (D) which are exempt from taxation by
23             this State either  by  reason  of  its  statutes  or
24             Constitution  or  by  reason  of  the  Constitution,
25             treaties  or statutes of the United States; provided
26             that, in the case of any statute of this State  that
27             exempts   income   derived   from   bonds  or  other
28             obligations from the tax imposed under this Act, the
29             amount exempted shall be the interest  net  of  bond
30             premium amortization;
31                  (H)  Any   income   of  the  partnership  which
32             constitutes personal service income  as  defined  in
33             Section  1348  (b)  (1) of the Internal Revenue Code
34             (as in effect December 31,  1981)  or  a  reasonable
 
                            -30-     LRB093 10868 SJM 11363 b
 1             allowance  for  compensation  paid  or  accrued  for
 2             services  rendered  by  partners to the partnership,
 3             whichever is greater;
 4                  (I)  An amount equal to all amounts  of  income
 5             distributable  to  an entity subject to the Personal
 6             Property  Tax  Replacement  Income  Tax  imposed  by
 7             subsections (c) and (d) of Section 201 of  this  Act
 8             including  amounts  distributable  to  organizations
 9             exempt  from federal income tax by reason of Section
10             501(a) of the Internal Revenue Code;
11                  (J)  With  the   exception   of   any   amounts
12             subtracted  under  subparagraph (G), an amount equal
13             to the sum of all amounts disallowed  as  deductions
14             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
15             Internal Revenue Code of 1954, as now  or  hereafter
16             amended,  and  all  amounts of expenses allocable to
17             interest and disallowed  as  deductions  by  Section
18             265(1)  of  the  Internal  Revenue  Code,  as now or
19             hereafter amended; and (ii) for taxable years ending
20             on or after August  13,  1999,  Sections  171(a)(2),
21             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
22             Revenue  Code;  the  provisions of this subparagraph
23             are exempt from the provisions of Section 250;
24                  (K)  An  amount  equal   to   those   dividends
25             included   in  such  total  which  were  paid  by  a
26             corporation which conducts business operations in an
27             Enterprise Zone or zones created under the  Illinois
28             Enterprise  Zone  Act,  enacted  by the 82nd General
29             Assembly, and  conducts  substantially  all  of  its
30             operations in an Enterprise Zone or Zones;
31                  (L)  An  amount  equal to any contribution made
32             to a job training project  established  pursuant  to
33             the   Real   Property   Tax   Increment   Allocation
34             Redevelopment Act;
 
                            -31-     LRB093 10868 SJM 11363 b
 1                  (M)  An   amount   equal   to  those  dividends
 2             included  in  such  total  that  were  paid   by   a
 3             corporation  that  conducts business operations in a
 4             federally designated Foreign Trade Zone or  Sub-Zone
 5             and  that  is  designated  a  High  Impact  Business
 6             located   in   Illinois;   provided  that  dividends
 7             eligible for the deduction provided in  subparagraph
 8             (K) of paragraph (2) of this subsection shall not be
 9             eligible  for  the  deduction  provided  under  this
10             subparagraph (M);
11                  (N)  An  amount  equal  to  the  amount  of the
12             deduction used to compute  the  federal  income  tax
13             credit  for  restoration of substantial amounts held
14             under claim of right for the taxable  year  pursuant
15             to  Section  1341  of  the  Internal Revenue Code of
16             1986;
17                  (O)  For taxable years 2001 and thereafter, for
18             the taxable year in  which  the  bonus  depreciation
19             deduction   (30%   of  the  adjusted  basis  of  the
20             qualified  property)  is  taken  on  the  taxpayer's
21             federal income tax return under  subsection  (k)  of
22             Section  168  of  the  Internal Revenue Code and for
23             each applicable taxable year thereafter,  an  amount
24             equal to "x", where:
25                       (1)  "y"   equals   the   amount   of  the
26                  depreciation deduction taken  for  the  taxable
27                  year  on  the  taxpayer's  federal  income  tax
28                  return   on   property   for  which  the  bonus
29                  depreciation deduction  (30%  of  the  adjusted
30                  basis  of  the qualified property) was taken in
31                  any year under subsection (k) of Section 168 of
32                  the Internal Revenue Code,  but  not  including
33                  the bonus depreciation deduction; and
34                       (2)  "x"  equals  "y" multiplied by 30 and
 
                            -32-     LRB093 10868 SJM 11363 b
 1                  then  divided  by  70  (or  "y"  multiplied  by
 2                  0.429).
 3                  The  aggregate  amount  deducted   under   this
 4             subparagraph  in all taxable years for any one piece
 5             of property may not exceed the amount of  the  bonus
 6             depreciation deduction (30% of the adjusted basis of
 7             the  qualified  property)  taken on that property on
 8             the  taxpayer's  federal  income  tax  return  under
 9             subsection  (k)  of  Section  168  of  the  Internal
10             Revenue Code; and
11                  (P)  If the taxpayer reports a capital gain  or
12             loss on the taxpayer's federal income tax return for
13             the  taxable  year  based  on  a sale or transfer of
14             property for which the taxpayer was required in  any
15             taxable  year to make an addition modification under
16             subparagraph (D-5), then an  amount  equal  to  that
17             addition modification.
18                  The  taxpayer  is allowed to take the deduction
19             under this subparagraph only once  with  respect  to
20             any one piece of property.
21                  (Q)  For  taxable  years  beginning on or after
22             January  1,  2003,  moneys  contributed  during  the
23             taxable year by the taxpayer for the purchase of  an
24             Illinois prepaid tuition contract, as defined in the
25             Illinois  Prepaid  Tuition  Act, except that amounts
26             excluded   from   gross   income    under    Section
27             529(c)(3)(C)(i)  of  the Internal Revenue Code shall
28             not be  considered  moneys  contributed  under  this
29             subparagraph  (Q).  This subparagraph is exempt from
30             the provisions of Section 250 of this Act.

31        (e)  Gross income; adjusted gross income; taxable income.
32             (1)  In  general.   Subject  to  the  provisions  of
33        paragraph (2) and subsection (b)  (3),  for  purposes  of
34        this  Section  and  Section  803(e),  a  taxpayer's gross
 
                            -33-     LRB093 10868 SJM 11363 b
 1        income, adjusted gross income, or taxable income for  the
 2        taxable  year  shall  mean  the  amount  of gross income,
 3        adjusted  gross  income  or   taxable   income   properly
 4        reportable  for  federal  income  tax  purposes  for  the
 5        taxable year under the provisions of the Internal Revenue
 6        Code.  Taxable income may be less than zero. However, for
 7        taxable years ending on or after December 31,  1986,  net
 8        operating  loss  carryforwards  from taxable years ending
 9        prior to December 31, 1986, may not  exceed  the  sum  of
10        federal  taxable  income  for the taxable year before net
11        operating loss deduction, plus  the  excess  of  addition
12        modifications  over  subtraction  modifications  for  the
13        taxable year.  For taxable years ending prior to December
14        31, 1986, taxable income may never be an amount in excess
15        of the net operating loss for the taxable year as defined
16        in subsections (c) and (d) of Section 172 of the Internal
17        Revenue  Code,  provided  that  when  taxable income of a
18        corporation (other  than  a  Subchapter  S  corporation),
19        trust,   or   estate  is  less  than  zero  and  addition
20        modifications, other than those provided by  subparagraph
21        (E)  of  paragraph (2) of subsection (b) for corporations
22        or subparagraph (E) of paragraph (2)  of  subsection  (c)
23        for trusts and estates, exceed subtraction modifications,
24        an   addition  modification  must  be  made  under  those
25        subparagraphs for any other taxable  year  to  which  the
26        taxable  income  less  than  zero (net operating loss) is
27        applied under Section 172 of the Internal Revenue Code or
28        under  subparagraph  (E)  of  paragraph   (2)   of   this
29        subsection (e) applied in conjunction with Section 172 of
30        the Internal Revenue Code.
31             (2)  Special rule.  For purposes of paragraph (1) of
32        this  subsection,  the taxable income properly reportable
33        for federal income tax purposes shall mean:
34                  (A)  Certain life insurance companies.  In  the
 
                            -34-     LRB093 10868 SJM 11363 b
 1             case  of a life insurance company subject to the tax
 2             imposed by Section 801 of the Internal Revenue Code,
 3             life insurance  company  taxable  income,  plus  the
 4             amount  of  distribution  from pre-1984 policyholder
 5             surplus accounts as calculated under Section 815a of
 6             the Internal Revenue Code;
 7                  (B)  Certain other insurance companies.  In the
 8             case of mutual insurance companies  subject  to  the
 9             tax  imposed  by Section 831 of the Internal Revenue
10             Code, insurance company taxable income;
11                  (C)  Regulated investment  companies.   In  the
12             case  of  a  regulated investment company subject to
13             the tax imposed  by  Section  852  of  the  Internal
14             Revenue Code, investment company taxable income;
15                  (D)  Real  estate  investment  trusts.   In the
16             case of a real estate investment  trust  subject  to
17             the  tax  imposed  by  Section  857  of the Internal
18             Revenue Code, real estate investment  trust  taxable
19             income;
20                  (E)  Consolidated corporations.  In the case of
21             a  corporation  which  is  a member of an affiliated
22             group of corporations filing a  consolidated  income
23             tax  return  for the taxable year for federal income
24             tax purposes, taxable income determined as  if  such
25             corporation  had filed a separate return for federal
26             income tax purposes for the taxable  year  and  each
27             preceding  taxable year for which it was a member of
28             an  affiliated   group.   For   purposes   of   this
29             subparagraph, the taxpayer's separate taxable income
30             shall  be  determined as if the election provided by
31             Section 243(b) (2) of the Internal Revenue Code  had
32             been in effect for all such years;
33                  (F)  Cooperatives.     In   the   case   of   a
34             cooperative corporation or association, the  taxable
 
                            -35-     LRB093 10868 SJM 11363 b
 1             income of such organization determined in accordance
 2             with  the provisions of Section 1381 through 1388 of
 3             the Internal Revenue Code;
 4                  (G)  Subchapter S corporations.   In  the  case
 5             of:  (i)  a Subchapter S corporation for which there
 6             is in effect an election for the taxable year  under
 7             Section  1362  of  the  Internal  Revenue  Code, the
 8             taxable income of  such  corporation  determined  in
 9             accordance  with  Section  1363(b)  of  the Internal
10             Revenue Code, except that taxable income shall  take
11             into  account  those  items  which  are  required by
12             Section 1363(b)(1) of the Internal Revenue  Code  to
13             be  separately  stated;  and  (ii)  a  Subchapter  S
14             corporation  for  which there is in effect a federal
15             election  to  opt  out  of  the  provisions  of  the
16             Subchapter S Revision Act of 1982 and  have  applied
17             instead  the  prior federal Subchapter S rules as in
18             effect on July 1, 1982, the taxable income  of  such
19             corporation   determined   in  accordance  with  the
20             federal Subchapter S rules as in effect on  July  1,
21             1982; and
22                  (H)  Partnerships.     In   the   case   of   a
23             partnership, taxable income determined in accordance
24             with Section  703  of  the  Internal  Revenue  Code,
25             except  that  taxable income shall take into account
26             those items which are required by Section  703(a)(1)
27             to  be  separately  stated  but which would be taken
28             into account by an  individual  in  calculating  his
29             taxable income.

30        (f)  Valuation limitation amount.
31             (1)  In  general.   The  valuation limitation amount
32        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
33        (d)(2) (E) is an amount equal to:
34                  (A)  The   sum   of   the  pre-August  1,  1969
 
                            -36-     LRB093 10868 SJM 11363 b
 1             appreciation amounts (to the  extent  consisting  of
 2             gain reportable under the provisions of Section 1245
 3             or  1250  of  the  Internal  Revenue  Code)  for all
 4             property in respect of which such gain was  reported
 5             for the taxable year; plus
 6                  (B)  The   lesser   of   (i)  the  sum  of  the
 7             pre-August 1,  1969  appreciation  amounts  (to  the
 8             extent  consisting of capital gain) for all property
 9             in respect of  which  such  gain  was  reported  for
10             federal income tax purposes for the taxable year, or
11             (ii)  the  net  capital  gain  for the taxable year,
12             reduced in either case by any amount  of  such  gain
13             included  in  the amount determined under subsection
14             (a) (2) (F) or (c) (2) (H).
15             (2)  Pre-August 1, 1969 appreciation amount.
16                  (A)  If  the  fair  market  value  of  property
17             referred   to   in   paragraph   (1)   was   readily
18             ascertainable on August 1, 1969, the  pre-August  1,
19             1969  appreciation  amount  for such property is the
20             lesser of (i) the excess of such fair  market  value
21             over the taxpayer's basis (for determining gain) for
22             such  property  on  that  date (determined under the
23             Internal Revenue Code as in effect on that date), or
24             (ii) the total  gain  realized  and  reportable  for
25             federal  income tax purposes in respect of the sale,
26             exchange or other disposition of such property.
27                  (B)  If  the  fair  market  value  of  property
28             referred  to  in  paragraph  (1)  was  not   readily
29             ascertainable  on  August 1, 1969, the pre-August 1,
30             1969 appreciation amount for such property  is  that
31             amount  which bears the same ratio to the total gain
32             reported in respect  of  the  property  for  federal
33             income  tax  purposes  for  the taxable year, as the
34             number of full calendar months in that part  of  the
 
                            -37-     LRB093 10868 SJM 11363 b
 1             taxpayer's  holding  period  for the property ending
 2             July 31, 1969 bears to the number of  full  calendar
 3             months  in  the taxpayer's entire holding period for
 4             the property.
 5                  (C)  The  Department   shall   prescribe   such
 6             regulations  as  may  be  necessary to carry out the
 7             purposes of this paragraph.

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

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

26        Section  10.  The Illinois Prepaid Tuition Act is amended
27    by changing Section 55 as follows:

28        (110 ILCS 979/55)
29        Sec. 55.  Tax exemption.   The  assets  of  the  Illinois
30    Prepaid Tuition Trust Fund and its income and operation shall
31    be  exempt from all taxation by the State of Illinois and any
 
                            -38-     LRB093 10868 SJM 11363 b
 1    of  its  subdivisions.   The  accrued  earnings  of  Illinois
 2    prepaid tuition contracts once  disbursed  on  behalf  of  an
 3    eligible  beneficiary  shall  be  similarly  exempt  from all
 4    taxation  by  the  State  of  Illinois   and   any   of   its
 5    subdivisions,  so  long  as  they  are  used  for educational
 6    purposes in accordance with the  provisions  of  an  Illinois
 7    prepaid  tuition  contract.  In  addition,  for taxable years
 8    beginning on or after January  1,  2003,  moneys  contributed
 9    during  the  taxable year by the taxpayer for the purchase of
10    an Illinois prepaid  tuition  contract,  except  for  amounts
11    excluded  from  gross income under Section 529(c)(3)(C)(i) of
12    the  Internal  Revenue  Code,  may  be  deducted   from   the
13    taxpayer's  adjusted  gross income as provided in Section 203
14    of the Illinois  Income  Tax  Act.  The  provisions  of  this
15    Section  are exempt from the provisions of Section 250 of the
16    Illinois Income Tax Act.
17    (Source: P.A. 90-546, eff. 12-1-97; 91-867, eff. 6-22-00.)

18        Section 99.  Effective date.  This Act takes effect  upon
19    becoming law.