093_HB3054

 
                                     LRB093 11102 SJM 11852 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 11102 SJM 11852 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 11102 SJM 11852 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 and ending on or before
14             December 31, 2002, in the  case  of  a  distribution
15             from  a  qualified tuition program under Section 529
16             of the Internal  Revenue  Code,  other  than  (i)  a
17             distribution  from  a  College  Savings Pool created
18             under Section 16.5 of the  State  Treasurer  Act  or
19             (ii)   a  distribution  from  the  Illinois  Prepaid
20             Tuition Trust Fund, an amount equal  to  the  amount
21             excluded    from    gross   income   under   Section
22             529(c)(3)(B).  For taxable  years  beginning  on  or
23             after January 1, 2003, in the case of a distribution
24             from  a  qualified tuition program under Section 529
25             of the Internal  Revenue  Code,  other  than  (i)  a
26             distribution  from  a  College  Savings Pool created
27             under Section 16.5 of the State Treasurer Act,  (ii)
28             a  distribution  from  the  Illinois Prepaid Tuition
29             Trust Fund, or (iii) a distribution from a qualified
30             tuition program under Section 529  of  the  Internal
31             Revenue  Code  that  is administered by a state that
32             has passed a law that provides  an  unlimited  state
33             tax   deduction   for   moneys  distributed  from  a
34             qualified tuition program administered by the  State
 
                            -4-      LRB093 11102 SJM 11852 b
 1             of  Illinois, an amount equal to the amount excluded
 2             from gross income under Section 529(c)(3)(B);
 3        and by deducting from the total so obtained  the  sum  of
 4        the following amounts:
 5                  (E)  For  taxable  years ending before December
 6             31, 2001, any  amount  included  in  such  total  in
 7             respect  of  any  compensation  (including  but  not
 8             limited  to  any  compensation  paid or accrued to a
 9             serviceman while a prisoner of  war  or  missing  in
10             action)  paid  to  a  resident by reason of being on
11             active duty in the Armed Forces of the United States
12             and in respect of any compensation paid  or  accrued
13             to  a  resident who as a governmental employee was a
14             prisoner of war or missing in action, and in respect
15             of any compensation paid to a resident  in  1971  or
16             thereafter for annual training performed pursuant to
17             Sections  502  and 503, Title 32, United States Code
18             as a member of  the  Illinois  National  Guard.  For
19             taxable  years ending on or after December 31, 2001,
20             any amount included in such total in respect of  any
21             compensation  (including  but  not  limited  to  any
22             compensation paid or accrued to a serviceman while a
23             prisoner  of  war  or  missing  in action) paid to a
24             resident  by  reason  of  being  a  member  of   any
25             component  of  the Armed Forces of the United States
26             and in respect of any compensation paid  or  accrued
27             to  a  resident who as a governmental employee was a
28             prisoner of war or missing in action, and in respect
29             of any compensation paid to a resident  in  2001  or
30             thereafter  by  reason  of  being  a  member  of the
31             Illinois National  Guard.  The  provisions  of  this
32             amendatory  Act  of  the  92nd  General Assembly are
33             exempt from the provisions of Section 250;
34                  (F)  An amount equal to all amounts included in
 
                            -5-      LRB093 11102 SJM 11852 b
 1             such total pursuant to the  provisions  of  Sections
 2             402(a),  402(c), 403(a), 403(b), 406(a), 407(a), and
 3             408 of the Internal Revenue  Code,  or  included  in
 4             such  total as distributions under the provisions of
 5             any retirement or disability plan for  employees  of
 6             any  governmental  agency  or  unit,  or  retirement
 7             payments  to  retired  partners,  which payments are
 8             excluded  in  computing  net  earnings   from   self
 9             employment  by  Section 1402 of the Internal Revenue
10             Code and regulations adopted pursuant thereto;
11                  (G)  The valuation limitation amount;
12                  (H)  An amount equal to the amount of  any  tax
13             imposed  by  this  Act  which  was  refunded  to the
14             taxpayer and included in such total for the  taxable
15             year;
16                  (I)  An amount equal to all amounts included in
17             such total pursuant to the provisions of Section 111
18             of  the Internal Revenue Code as a recovery of items
19             previously deducted from adjusted  gross  income  in
20             the computation of taxable income;
21                  (J)  An   amount   equal   to  those  dividends
22             included  in  such  total  which  were  paid  by   a
23             corporation which conducts business operations in an
24             Enterprise  Zone or zones created under the Illinois
25             Enterprise Zone Act, and conducts substantially  all
26             of its operations in an Enterprise Zone or zones;
27                  (K)  An   amount   equal   to  those  dividends
28             included  in  such  total  that  were  paid   by   a
29             corporation  that  conducts business operations in a
30             federally designated Foreign Trade Zone or  Sub-Zone
31             and  that  is  designated  a  High  Impact  Business
32             located   in   Illinois;   provided  that  dividends
33             eligible for the deduction provided in  subparagraph
34             (J) of paragraph (2) of this subsection shall not be
 
                            -6-      LRB093 11102 SJM 11852 b
 1             eligible  for  the  deduction  provided  under  this
 2             subparagraph (K);
 3                  (L)  For  taxable  years  ending after December
 4             31, 1983, an amount equal  to  all  social  security
 5             benefits  and  railroad retirement benefits included
 6             in such total pursuant to Sections 72(r) and  86  of
 7             the Internal Revenue Code;
 8                  (M)  With   the   exception   of   any  amounts
 9             subtracted under subparagraph (N), an  amount  equal
10             to  the  sum of all amounts disallowed as deductions
11             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
12             Internal  Revenue  Code of 1954, as now or hereafter
13             amended, and all amounts of  expenses  allocable  to
14             interest  and   disallowed  as deductions by Section
15             265(1) of the Internal Revenue Code of 1954, as  now
16             or  hereafter  amended;  and  (ii) for taxable years
17             ending  on  or  after  August  13,  1999,   Sections
18             171(a)(2),  265,  280C,  and  832(b)(5)(B)(i) of the
19             Internal  Revenue  Code;  the  provisions  of   this
20             subparagraph  are  exempt  from  the  provisions  of
21             Section 250;
22                  (N)  An amount equal to all amounts included in
23             such  total  which  are exempt from taxation by this
24             State  either  by  reason   of   its   statutes   or
25             Constitution  or  by  reason  of  the  Constitution,
26             treaties  or statutes of the United States; provided
27             that, in the case of any statute of this State  that
28             exempts   income   derived   from   bonds  or  other
29             obligations from the tax imposed under this Act, the
30             amount exempted shall be the interest  net  of  bond
31             premium amortization;
32                  (O)  An  amount  equal to any contribution made
33             to a job training project  established  pursuant  to
34             the Tax Increment Allocation Redevelopment Act;
 
                            -7-      LRB093 11102 SJM 11852 b
 1                  (P)  An  amount  equal  to  the  amount  of the
 2             deduction used to compute  the  federal  income  tax
 3             credit  for  restoration of substantial amounts held
 4             under claim of right for the taxable  year  pursuant
 5             to  Section  1341  of  the  Internal Revenue Code of
 6             1986;
 7                  (Q)  An amount equal to any amounts included in
 8             such  total,  received  by  the   taxpayer   as   an
 9             acceleration  in  the  payment of life, endowment or
10             annuity benefits in advance of the time  they  would
11             otherwise  be payable as an indemnity for a terminal
12             illness;
13                  (R)  An amount  equal  to  the  amount  of  any
14             federal  or  State  bonus  paid  to  veterans of the
15             Persian Gulf War;
16                  (S)  An  amount,  to  the  extent  included  in
17             adjusted gross income, equal  to  the  amount  of  a
18             contribution  made  in the taxable year on behalf of
19             the taxpayer  to  a  medical  care  savings  account
20             established  under  the Medical Care Savings Account
21             Act or the Medical Care Savings Account Act of  2000
22             to  the  extent  the contribution is accepted by the
23             account administrator as provided in that Act;
24                  (T)  An  amount,  to  the  extent  included  in
25             adjusted  gross  income,  equal  to  the  amount  of
26             interest earned in the taxable  year  on  a  medical
27             care  savings  account established under the Medical
28             Care Savings Account Act or the Medical Care Savings
29             Account Act of 2000 on behalf of the taxpayer, other
30             than interest added pursuant to item (D-5)  of  this
31             paragraph (2);
32                  (U)  For one taxable year beginning on or after
33             January 1, 1994, an amount equal to the total amount
34             of  tax  imposed  and paid under subsections (a) and
 
                            -8-      LRB093 11102 SJM 11852 b
 1             (b) of Section 201 of  this  Act  on  grant  amounts
 2             received  by  the  taxpayer  under  the Nursing Home
 3             Grant Assistance Act during the  taxpayer's  taxable
 4             years 1992 and 1993;
 5                  (V)  Beginning  with  tax  years  ending  on or
 6             after December 31, 1995 and ending  with  tax  years
 7             ending  on  or  before  December 31, 2004, an amount
 8             equal to the amount paid by  a  taxpayer  who  is  a
 9             self-employed  taxpayer, a partner of a partnership,
10             or a shareholder in a Subchapter S  corporation  for
11             health  insurance  or  long-term  care insurance for
12             that  taxpayer  or   that   taxpayer's   spouse   or
13             dependents,  to  the extent that the amount paid for
14             that health insurance or  long-term  care  insurance
15             may  be  deducted  under Section 213 of the Internal
16             Revenue Code of 1986, has not been deducted  on  the
17             federal  income tax return of the taxpayer, and does
18             not exceed the taxable income attributable  to  that
19             taxpayer's   income,   self-employment   income,  or
20             Subchapter S  corporation  income;  except  that  no
21             deduction  shall  be  allowed under this item (V) if
22             the taxpayer  is  eligible  to  participate  in  any
23             health insurance or long-term care insurance plan of
24             an  employer  of  the  taxpayer  or  the  taxpayer's
25             spouse.   The  amount  of  the  health insurance and
26             long-term care insurance subtracted under this  item
27             (V)  shall be determined by multiplying total health
28             insurance and long-term care insurance premiums paid
29             by the taxpayer times a number that  represents  the
30             fractional  percentage  of eligible medical expenses
31             under Section 213 of the Internal  Revenue  Code  of
32             1986 not actually deducted on the taxpayer's federal
33             income tax return;
34                  (W)  For  taxable  years  beginning on or after
 
                            -9-      LRB093 11102 SJM 11852 b
 1             January  1,  1998,  all  amounts  included  in   the
 2             taxpayer's  federal gross income in the taxable year
 3             from amounts converted from a regular IRA to a  Roth
 4             IRA. This paragraph is exempt from the provisions of
 5             Section 250;
 6                  (X)  For  taxable  year 1999 and thereafter, an
 7             amount equal to the amount of any (i) distributions,
 8             to the extent includible in gross income for federal
 9             income tax purposes, made to the taxpayer because of
10             his or her status as a  victim  of  persecution  for
11             racial  or  religious reasons by Nazi Germany or any
12             other Axis regime or as an heir of  the  victim  and
13             (ii)  items  of  income, to the extent includible in
14             gross  income  for  federal  income  tax   purposes,
15             attributable  to, derived from or in any way related
16             to assets stolen from,  hidden  from,  or  otherwise
17             lost  to  a  victim  of  persecution  for  racial or
18             religious reasons by Nazi Germany or any other  Axis
19             regime immediately prior to, during, and immediately
20             after  World  War II, including, but not limited to,
21             interest on the  proceeds  receivable  as  insurance
22             under policies issued to a victim of persecution for
23             racial  or  religious reasons by Nazi Germany or any
24             other Axis regime by  European  insurance  companies
25             immediately  prior  to  and  during  World  War  II;
26             provided,  however,  this  subtraction  from federal
27             adjusted gross  income  does  not  apply  to  assets
28             acquired  with such assets or with the proceeds from
29             the sale of such  assets;  provided,  further,  this
30             paragraph shall only apply to a taxpayer who was the
31             first  recipient of such assets after their recovery
32             and who is a victim of  persecution  for  racial  or
33             religious  reasons by Nazi Germany or any other Axis
34             regime or as an heir of the victim.  The  amount  of
 
                            -10-     LRB093 11102 SJM 11852 b
 1             and  the  eligibility  for  any  public  assistance,
 2             benefit,  or  similar entitlement is not affected by
 3             the  inclusion  of  items  (i)  and  (ii)  of   this
 4             paragraph  in  gross  income  for federal income tax
 5             purposes.  This  paragraph  is   exempt   from   the
 6             provisions of Section 250;
 7                  (Y)  For  taxable  years  beginning on or after
 8             January 1, 2002 and ending on or before December 31,
 9             2002, moneys contributed in the taxable  year  to  a
10             College  Savings  Pool account under Section 16.5 of
11             the  State  Treasurer  Act,  except   that   amounts
12             excluded    from    gross   income   under   Section
13             529(c)(3)(C)(i) of the Internal Revenue  Code  shall
14             not  be  considered  moneys  contributed  under this
15             subparagraph (Y). For taxable years beginning on  or
16             after  January  1,  2003,  moneys contributed in the
17             taxable year to (i) a College Savings  Pool  account
18             under  Section  16.5  of  the State Treasurer Act or
19             (ii) the Illinois Prepaid Tuition Trust Fund, except
20             that  amounts  excluded  from  gross  income   under
21             Section 529(c)(3)(C)(i) of the Internal Revenue Code
22             shall  not  be  considered  moneys contributed under
23             this subparagraph  (Y).  This  subparagraph  (Y)  is
24             exempt from the provisions of Section 250;
25                  (Z)  For taxable years 2001 and thereafter, for
26             the  taxable  year  in  which the bonus depreciation
27             deduction  (30%  of  the  adjusted  basis   of   the
28             qualified  property)  is  taken  on  the  taxpayer's
29             federal  income  tax  return under subsection (k) of
30             Section 168 of the Internal  Revenue  Code  and  for
31             each  applicable  taxable year thereafter, an amount
32             equal to "x", where:
33                       (1)  "y"  equals   the   amount   of   the
34                  depreciation  deduction  taken  for the taxable
 
                            -11-     LRB093 11102 SJM 11852 b
 1                  year  on  the  taxpayer's  federal  income  tax
 2                  return  on  property  for   which   the   bonus
 3                  depreciation  deduction  (30%  of  the adjusted
 4                  basis of the qualified property) was  taken  in
 5                  any year under subsection (k) of Section 168 of
 6                  the  Internal  Revenue  Code, but not including
 7                  the bonus depreciation deduction; and
 8                       (2)  "x" equals "y" multiplied by  30  and
 9                  then  divided  by  70  (or  "y"  multiplied  by
10                  0.429).
11                  The   aggregate   amount  deducted  under  this
12             subparagraph in all taxable years for any one  piece
13             of  property  may not exceed the amount of the bonus
14             depreciation deduction (30% of the adjusted basis of
15             the qualified property) taken on  that  property  on
16             the  taxpayer's  federal  income  tax  return  under
17             subsection  (k)  of  Section  168  of  the  Internal
18             Revenue Code; and
19                  (AA)  If the taxpayer reports a capital gain or
20             loss on the taxpayer's federal income tax return for
21             the  taxable  year  based  on  a sale or transfer of
22             property for which the taxpayer was required in  any
23             taxable  year to make an addition modification under
24             subparagraph (D-15), then an amount  equal  to  that
25             addition modification.
26                  The  taxpayer  is allowed to take the deduction
27             under this subparagraph only once  with  respect  to
28             any one piece of property; and
29                  (BB) (Z)  Any amount included in adjusted gross
30             income, other than salary, received by a driver in a
31             ridesharing arrangement using a motor vehicle.

32        (b)  Corporations.
33             (1)  In general.  In the case of a corporation, base
34        income  means  an  amount equal to the taxpayer's taxable
 
                            -12-     LRB093 11102 SJM 11852 b
 1        income for the taxable year as modified by paragraph (2).
 2             (2)  Modifications.  The taxable income referred  to
 3        in  paragraph (1) shall be modified by adding thereto the
 4        sum of the following amounts:
 5                  (A)  An amount equal to  all  amounts  paid  or
 6             accrued   to   the  taxpayer  as  interest  and  all
 7             distributions  received  from  regulated  investment
 8             companies during the  taxable  year  to  the  extent
 9             excluded  from  gross  income  in the computation of
10             taxable income;
11                  (B)  An amount  equal  to  the  amount  of  tax
12             imposed  by  this  Act  to  the extent deducted from
13             gross income in the computation  of  taxable  income
14             for the taxable year;
15                  (C)  In  the  case  of  a  regulated investment
16             company, an amount equal to the excess  of  (i)  the
17             net  long-term  capital  gain  for the taxable year,
18             over (ii) the amount of the capital  gain  dividends
19             designated   as  such  in  accordance  with  Section
20             852(b)(3)(C) of the Internal Revenue  Code  and  any
21             amount  designated under Section 852(b)(3)(D) of the
22             Internal Revenue Code, attributable to  the  taxable
23             year (this amendatory Act of 1995 (Public Act 89-89)
24             is  declarative  of  existing  law  and is not a new
25             enactment);
26                  (D)  The  amount  of  any  net  operating  loss
27             deduction taken in arriving at taxable income, other
28             than a net operating loss  carried  forward  from  a
29             taxable year ending prior to December 31, 1986;
30                  (E)  For taxable years in which a net operating
31             loss  carryback  or carryforward from a taxable year
32             ending prior to December 31, 1986 is an  element  of
33             taxable income under paragraph (1) of subsection (e)
34             or  subparagraph  (E) of paragraph (2) of subsection
 
                            -13-     LRB093 11102 SJM 11852 b
 1             (e), the  amount  by  which  addition  modifications
 2             other  than  those provided by this subparagraph (E)
 3             exceeded subtraction modifications in  such  earlier
 4             taxable year, with the following limitations applied
 5             in the order that they are listed:
 6                       (i)  the addition modification relating to
 7                  the  net operating loss carried back or forward
 8                  to the  taxable  year  from  any  taxable  year
 9                  ending  prior  to  December  31,  1986 shall be
10                  reduced by the amount of addition  modification
11                  under  this  subparagraph  (E) which related to
12                  that net operating loss  and  which  was  taken
13                  into  account in calculating the base income of
14                  an earlier taxable year, and
15                       (ii)  the addition  modification  relating
16                  to  the  net  operating  loss  carried  back or
17                  forward to the taxable year  from  any  taxable
18                  year  ending  prior  to December 31, 1986 shall
19                  not exceed the  amount  of  such  carryback  or
20                  carryforward;
21                  For  taxable  years  in  which  there  is a net
22             operating loss carryback or carryforward  from  more
23             than one other taxable year ending prior to December
24             31, 1986, the addition modification provided in this
25             subparagraph  (E)  shall  be  the sum of the amounts
26             computed   independently   under    the    preceding
27             provisions  of  this  subparagraph (E) for each such
28             taxable year;
29                  (E-5)  For taxable years ending after  December
30             31,   1997,   an   amount   equal  to  any  eligible
31             remediation costs that the corporation  deducted  in
32             computing  adjusted  gross  income and for which the
33             corporation claims a credit under subsection (l)  of
34             Section 201;
 
                            -14-     LRB093 11102 SJM 11852 b
 1                  (E-10)  For  taxable years 2001 and thereafter,
 2             an amount equal to the bonus depreciation  deduction
 3             (30%   of   the  adjusted  basis  of  the  qualified
 4             property) taken on the taxpayer's federal income tax
 5             return for the taxable year under subsection (k)  of
 6             Section 168 of the Internal Revenue Code; and
 7                  (E-11)  If  the taxpayer reports a capital gain
 8             or loss on the taxpayer's federal income tax  return
 9             for  the taxable year based on a sale or transfer of
10             property for which the taxpayer was required in  any
11             taxable  year to make an addition modification under
12             subparagraph (E-10), then an  amount  equal  to  the
13             aggregate  amount  of  the  deductions  taken in all
14             taxable years under subparagraph (T) with respect to
15             that property.;
16                  The taxpayer is required to make  the  addition
17             modification  under this subparagraph only once with
18             respect to any one piece of property;
19        and by deducting from the total so obtained  the  sum  of
20        the following amounts:
21                  (F)  An  amount  equal to the amount of any tax
22             imposed by  this  Act  which  was  refunded  to  the
23             taxpayer  and included in such total for the taxable
24             year;
25                  (G)  An amount equal to any amount included  in
26             such  total under Section 78 of the Internal Revenue
27             Code;
28                  (H)  In the  case  of  a  regulated  investment
29             company,  an  amount  equal  to the amount of exempt
30             interest dividends as defined in subsection (b)  (5)
31             of Section 852 of the Internal Revenue Code, paid to
32             shareholders for the taxable year;
33                  (I)  With   the   exception   of   any  amounts
34             subtracted under subparagraph (J), an  amount  equal
 
                            -15-     LRB093 11102 SJM 11852 b
 1             to  the  sum of all amounts disallowed as deductions
 2             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
 3             amounts disallowed as interest  expense  by  Section
 4             291(a)(3)  of  the  Internal Revenue Code, as now or
 5             hereafter  amended,  and  all  amounts  of  expenses
 6             allocable to interest and disallowed  as  deductions
 7             by  Section  265(a)(1) of the Internal Revenue Code,
 8             as now or hereafter amended; and  (ii)  for  taxable
 9             years  ending  on or after August 13, 1999, Sections
10             171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
11             of the Internal Revenue Code; the provisions of this
12             subparagraph  are  exempt  from  the  provisions  of
13             Section 250;
14                  (J)  An amount equal to all amounts included in
15             such total which are exempt from  taxation  by  this
16             State   either   by   reason   of  its  statutes  or
17             Constitution  or  by  reason  of  the  Constitution,
18             treaties or statutes of the United States;  provided
19             that,  in the case of any statute of this State that
20             exempts  income  derived   from   bonds   or   other
21             obligations from the tax imposed under this Act, the
22             amount  exempted  shall  be the interest net of bond
23             premium amortization;
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 and conducts substantially all
29             of its operations in an Enterprise Zone or zones;
30                  (L)  An  amount  equal   to   those   dividends
31             included   in   such  total  that  were  paid  by  a
32             corporation that conducts business operations  in  a
33             federally  designated Foreign Trade Zone or Sub-Zone
34             and  that  is  designated  a  High  Impact  Business
 
                            -16-     LRB093 11102 SJM 11852 b
 1             located  in  Illinois;   provided   that   dividends
 2             eligible  for the deduction provided in subparagraph
 3             (K) of paragraph 2 of this subsection shall  not  be
 4             eligible  for  the  deduction  provided  under  this
 5             subparagraph (L);
 6                  (M)  For  any  taxpayer  that  is  a  financial
 7             organization within the meaning of Section 304(c) of
 8             this  Act,  an  amount  included  in  such  total as
 9             interest income from a loan or loans  made  by  such
10             taxpayer  to  a  borrower, to the extent that such a
11             loan is secured by property which  is  eligible  for
12             the Enterprise Zone Investment Credit.  To determine
13             the  portion  of  a loan or loans that is secured by
14             property eligible for a  Section  201(f)  investment
15             credit  to the borrower, the entire principal amount
16             of the loan or loans between the  taxpayer  and  the
17             borrower  should  be  divided  into the basis of the
18             Section  201(f)  investment  credit  property  which
19             secures the loan or loans, using  for  this  purpose
20             the original basis of such property on the date that
21             it  was  placed  in  service in the Enterprise Zone.
22             The subtraction modification available  to  taxpayer
23             in  any  year  under  this  subsection shall be that
24             portion of the total interest paid by  the  borrower
25             with  respect  to  such  loan  attributable  to  the
26             eligible  property  as calculated under the previous
27             sentence;
28                  (M-1)  For any taxpayer  that  is  a  financial
29             organization within the meaning of Section 304(c) of
30             this  Act,  an  amount  included  in  such  total as
31             interest income from a loan or loans  made  by  such
32             taxpayer  to  a  borrower, to the extent that such a
33             loan is secured by property which  is  eligible  for
34             the  High  Impact  Business  Investment  Credit.  To
 
                            -17-     LRB093 11102 SJM 11852 b
 1             determine the portion of a loan  or  loans  that  is
 2             secured  by  property  eligible for a Section 201(h)
 3             investment  credit  to  the  borrower,  the   entire
 4             principal  amount  of  the loan or loans between the
 5             taxpayer and the borrower should be divided into the
 6             basis  of  the  Section  201(h)  investment   credit
 7             property  which secures the loan or loans, using for
 8             this purpose the original basis of such property  on
 9             the  date  that  it  was  placed  in  service  in  a
10             federally  designated Foreign Trade Zone or Sub-Zone
11             located in Illinois.  No taxpayer that  is  eligible
12             for  the  deduction  provided in subparagraph (M) of
13             paragraph (2) of this subsection shall  be  eligible
14             for  the  deduction provided under this subparagraph
15             (M-1).  The subtraction  modification  available  to
16             taxpayers in any year under this subsection shall be
17             that  portion  of  the  total  interest  paid by the
18             borrower with respect to such loan  attributable  to
19             the   eligible  property  as  calculated  under  the
20             previous sentence;
21                  (N)  Two times any contribution made during the
22             taxable year to a designated  zone  organization  to
23             the  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)
26             must,  by  its terms, be used for a project approved
27             by the Department of Commerce and Community  Affairs
28             under  Section  11  of  the Illinois Enterprise Zone
29             Act;
30                  (O)  An amount equal to: (i)  85%  for  taxable
31             years  ending  on or before December 31, 1992, or, a
32             percentage equal to the percentage  allowable  under
33             Section  243(a)(1)  of  the Internal Revenue Code of
34             1986 for taxable years  ending  after  December  31,
 
                            -18-     LRB093 11102 SJM 11852 b
 1             1992,  of  the amount by which dividends included in
 2             taxable income and received from a corporation  that
 3             is  not  created  or organized under the laws of the
 4             United States or any state or political  subdivision
 5             thereof,  including,  for taxable years ending on or
 6             after  December  31,  1988,  dividends  received  or
 7             deemed  received  or  paid  or  deemed  paid   under
 8             Sections  951  through  964  of the Internal Revenue
 9             Code, exceed the amount of the modification provided
10             under subparagraph (G)  of  paragraph  (2)  of  this
11             subsection  (b)  which is related to such dividends;
12             plus (ii) 100% of the  amount  by  which  dividends,
13             included  in taxable income and received, including,
14             for taxable years ending on or  after  December  31,
15             1988,  dividends received or deemed received or paid
16             or deemed paid under Sections 951 through 964 of the
17             Internal Revenue Code,  from  any  such  corporation
18             specified  in  clause  (i)  that  would  but for the
19             provisions of Section 1504 (b) (3) of  the  Internal
20             Revenue   Code   be  treated  as  a  member  of  the
21             affiliated  group  which   includes   the   dividend
22             recipient,  exceed  the  amount  of the modification
23             provided under subparagraph (G) of paragraph (2)  of
24             this   subsection  (b)  which  is  related  to  such
25             dividends;
26                  (P)  An amount equal to any  contribution  made
27             to  a  job  training project established pursuant to
28             the Tax Increment Allocation Redevelopment Act;
29                  (Q)  An amount  equal  to  the  amount  of  the
30             deduction  used  to  compute  the federal income tax
31             credit for restoration of substantial  amounts  held
32             under  claim  of right for the taxable year pursuant
33             to Section 1341 of  the  Internal  Revenue  Code  of
34             1986;
 
                            -19-     LRB093 11102 SJM 11852 b
 1                  (R)  In  the  case  of an attorney-in-fact with
 2             respect to whom  an  interinsurer  or  a  reciprocal
 3             insurer  has  made the election under Section 835 of
 4             the Internal Revenue Code, 26 U.S.C. 835, an  amount
 5             equal  to the excess, if any, of the amounts paid or
 6             incurred by that interinsurer or reciprocal  insurer
 7             in the taxable year to the attorney-in-fact over the
 8             deduction allowed to that interinsurer or reciprocal
 9             insurer  with  respect to the attorney-in-fact under
10             Section 835(b) of the Internal Revenue Code for  the
11             taxable year;
12                  (S)  For  taxable  years  ending  on  or  after
13             December  31,  1997,  in  the case of a Subchapter S
14             corporation, an  amount  equal  to  all  amounts  of
15             income  allocable  to  a  shareholder subject to the
16             Personal Property Tax Replacement Income Tax imposed
17             by subsections (c) and (d) of Section  201  of  this
18             Act,  including  amounts  allocable to organizations
19             exempt from federal income tax by reason of  Section
20             501(a)   of   the   Internal   Revenue  Code.   This
21             subparagraph (S) is exempt from  the  provisions  of
22             Section 250;
23                  (T)  For taxable years 2001 and thereafter, for
24             the  taxable  year  in  which the bonus depreciation
25             deduction  (30%  of  the  adjusted  basis   of   the
26             qualified  property)  is  taken  on  the  taxpayer's
27             federal  income  tax  return under subsection (k) of
28             Section 168 of the Internal  Revenue  Code  and  for
29             each  applicable  taxable year thereafter, an amount
30             equal to "x", where:
31                       (1)  "y"  equals   the   amount   of   the
32                  depreciation  deduction  taken  for the taxable
33                  year  on  the  taxpayer's  federal  income  tax
34                  return  on  property  for   which   the   bonus
 
                            -20-     LRB093 11102 SJM 11852 b
 1                  depreciation  deduction  (30%  of  the adjusted
 2                  basis of the qualified property) was  taken  in
 3                  any year under subsection (k) of Section 168 of
 4                  the  Internal  Revenue  Code, but not including
 5                  the bonus depreciation deduction; and
 6                       (2)  "x" equals "y" multiplied by  30  and
 7                  then  divided  by  70  (or  "y"  multiplied  by
 8                  0.429).
 9                  The   aggregate   amount  deducted  under  this
10             subparagraph in all taxable years for any one  piece
11             of  property  may not exceed the amount of the bonus
12             depreciation deduction (30% of the adjusted basis of
13             the qualified property) taken on  that  property  on
14             the  taxpayer's  federal  income  tax  return  under
15             subsection  (k)  of  Section  168  of  the  Internal
16             Revenue Code; and
17                  (U)  If  the taxpayer reports a capital gain or
18             loss on the taxpayer's federal income tax return for
19             the taxable year based on  a  sale  or  transfer  of
20             property  for which the taxpayer was required in any
21             taxable year to make an addition modification  under
22             subparagraph  (E-10),  then  an amount equal to that
23             addition modification.
24                  The taxpayer is allowed to take  the  deduction
25             under  this  subparagraph  only once with respect to
26             any one piece of property.
27             (3)  Special rule.  For purposes  of  paragraph  (2)
28        (A),  "gross  income"  in  the  case  of a life insurance
29        company, for tax years ending on and after  December  31,
30        1994,  shall  mean  the  gross  investment income for the
31        taxable year.

32        (c)  Trusts and estates.
33             (1)  In general.  In the case of a trust or  estate,
34        base  income  means  an  amount  equal  to the taxpayer's
 
                            -21-     LRB093 11102 SJM 11852 b
 1        taxable income  for  the  taxable  year  as  modified  by
 2        paragraph (2).
 3             (2)  Modifications.   Subject  to  the provisions of
 4        paragraph  (3),  the  taxable  income  referred   to   in
 5        paragraph (1) shall be modified by adding thereto the sum
 6        of the following amounts:
 7                  (A)  An  amount  equal  to  all amounts paid or
 8             accrued to the taxpayer  as  interest  or  dividends
 9             during  the taxable year to the extent excluded from
10             gross income in the computation of taxable income;
11                  (B)  In the case of (i) an estate, $600; (ii) a
12             trust which,  under  its  governing  instrument,  is
13             required  to distribute all of its income currently,
14             $300; and (iii) any other trust, $100, but  in  each
15             such  case,  only  to  the  extent  such  amount was
16             deducted in the computation of taxable income;
17                  (C)  An amount  equal  to  the  amount  of  tax
18             imposed  by  this  Act  to  the extent deducted from
19             gross income in the computation  of  taxable  income
20             for the taxable year;
21                  (D)  The  amount  of  any  net  operating  loss
22             deduction taken in arriving at taxable income, other
23             than  a  net  operating  loss carried forward from a
24             taxable year ending prior to December 31, 1986;
25                  (E)  For taxable years in which a net operating
26             loss carryback or carryforward from a  taxable  year
27             ending  prior  to December 31, 1986 is an element of
28             taxable income under paragraph (1) of subsection (e)
29             or subparagraph (E) of paragraph (2)  of  subsection
30             (e),  the  amount  by  which  addition modifications
31             other than those provided by this  subparagraph  (E)
32             exceeded  subtraction  modifications in such taxable
33             year, with the following limitations applied in  the
34             order that they are listed:
 
                            -22-     LRB093 11102 SJM 11852 b
 1                       (i)  the addition modification relating to
 2                  the  net operating loss carried back or forward
 3                  to the  taxable  year  from  any  taxable  year
 4                  ending  prior  to  December  31,  1986 shall be
 5                  reduced by the amount of addition  modification
 6                  under  this  subparagraph  (E) which related to
 7                  that net operating loss  and  which  was  taken
 8                  into  account in calculating the base income of
 9                  an earlier taxable year, and
10                       (ii)  the addition  modification  relating
11                  to  the  net  operating  loss  carried  back or
12                  forward to the taxable year  from  any  taxable
13                  year  ending  prior  to December 31, 1986 shall
14                  not exceed the  amount  of  such  carryback  or
15                  carryforward;
16                  For  taxable  years  in  which  there  is a net
17             operating loss carryback or carryforward  from  more
18             than one other taxable year ending prior to December
19             31, 1986, the addition modification provided in this
20             subparagraph  (E)  shall  be  the sum of the amounts
21             computed   independently   under    the    preceding
22             provisions  of  this  subparagraph (E) for each such
23             taxable year;
24                  (F)  For  taxable  years  ending  on  or  after
25             January 1, 1989, an amount equal to the tax deducted
26             pursuant to Section 164 of the Internal Revenue Code
27             if the trust or estate is claiming the same tax  for
28             purposes  of  the  Illinois foreign tax credit under
29             Section 601 of this Act;
30                  (G)  An amount  equal  to  the  amount  of  the
31             capital  gain deduction allowable under the Internal
32             Revenue Code, to  the  extent  deducted  from  gross
33             income in the computation of taxable income;
34                  (G-5)  For  taxable years ending after December
 
                            -23-     LRB093 11102 SJM 11852 b
 1             31,  1997,  an  amount   equal   to   any   eligible
 2             remediation  costs that the trust or estate deducted
 3             in computing adjusted gross income and for which the
 4             trust or estate claims a credit under subsection (l)
 5             of Section 201;
 6                  (G-10)  For taxable years 2001 and  thereafter,
 7             an  amount equal to the bonus depreciation deduction
 8             (30%  of  the  adjusted  basis  of   the   qualified
 9             property) taken on the taxpayer's federal income tax
10             return  for the taxable year under subsection (k) of
11             Section 168 of the Internal Revenue Code; and
12                  (G-11)  If the taxpayer reports a capital  gain
13             or  loss on the taxpayer's federal income tax return
14             for the taxable year based on a sale or transfer  of
15             property  for which the taxpayer was required in any
16             taxable year to make an addition modification  under
17             subparagraph  (G-10),  then  an  amount equal to the
18             aggregate amount of  the  deductions  taken  in  all
19             taxable years under subparagraph (R) with respect to
20             that property.;
21                  The  taxpayer  is required to make the addition
22             modification under this subparagraph only once  with
23             respect to any one piece of property;
24        and  by  deducting  from the total so obtained the sum of
25        the following amounts:
26                  (H)  An amount equal to all amounts included in
27             such total pursuant to the  provisions  of  Sections
28             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
29             408 of the Internal Revenue Code or included in such
30             total as distributions under the provisions  of  any
31             retirement  or  disability plan for employees of any
32             governmental agency or unit, or retirement  payments
33             to  retired partners, which payments are excluded in
34             computing  net  earnings  from  self  employment  by
 
                            -24-     LRB093 11102 SJM 11852 b
 1             Section  1402  of  the  Internal  Revenue  Code  and
 2             regulations adopted pursuant thereto;
 3                  (I)  The valuation limitation amount;
 4                  (J)  An amount equal to the amount of  any  tax
 5             imposed  by  this  Act  which  was  refunded  to the
 6             taxpayer and included in such total for the  taxable
 7             year;
 8                  (K)  An amount equal to all amounts included in
 9             taxable  income  as  modified  by subparagraphs (A),
10             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
11             from  taxation by this State either by reason of its
12             statutes  or  Constitution  or  by  reason  of   the
13             Constitution,  treaties  or  statutes  of the United
14             States; provided that, in the case of any statute of
15             this State that exempts income derived from bonds or
16             other obligations from the tax  imposed  under  this
17             Act,  the  amount exempted shall be the interest net
18             of bond premium amortization;
19                  (L)  With  the   exception   of   any   amounts
20             subtracted  under  subparagraph (K), an amount equal
21             to the sum of all amounts disallowed  as  deductions
22             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
23             Internal Revenue Code, as now or hereafter  amended,
24             and  all  amounts  of expenses allocable to interest
25             and disallowed as deductions by  Section  265(1)  of
26             the  Internal  Revenue  Code  of  1954,  as  now  or
27             hereafter amended; and (ii) for taxable years ending
28             on  or  after  August  13, 1999, Sections 171(a)(2),
29             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
30             Revenue Code; the provisions  of  this  subparagraph
31             are exempt from the provisions of Section 250;
32                  (M)  An   amount   equal   to  those  dividends
33             included  in  such  total  which  were  paid  by   a
34             corporation which conducts business operations in an
 
                            -25-     LRB093 11102 SJM 11852 b
 1             Enterprise  Zone or zones created under the Illinois
 2             Enterprise Zone Act and conducts  substantially  all
 3             of its operations in an Enterprise Zone or Zones;
 4                  (N)  An  amount  equal to any contribution made
 5             to a job training project  established  pursuant  to
 6             the Tax Increment Allocation Redevelopment Act;
 7                  (O)  An   amount   equal   to  those  dividends
 8             included  in  such  total  that  were  paid   by   a
 9             corporation  that  conducts business operations in a
10             federally designated Foreign Trade Zone or  Sub-Zone
11             and  that  is  designated  a  High  Impact  Business
12             located   in   Illinois;   provided  that  dividends
13             eligible for the deduction provided in  subparagraph
14             (M) of paragraph (2) of this subsection shall not be
15             eligible  for  the  deduction  provided  under  this
16             subparagraph (O);
17                  (P)  An  amount  equal  to  the  amount  of the
18             deduction used to compute  the  federal  income  tax
19             credit  for  restoration of substantial amounts held
20             under claim of right for the taxable  year  pursuant
21             to  Section  1341  of  the  Internal Revenue Code of
22             1986;
23                  (Q)  For taxable year 1999 and  thereafter,  an
24             amount equal to the amount of any (i) distributions,
25             to the extent includible in gross income for federal
26             income tax purposes, made to the taxpayer because of
27             his  or  her  status  as a victim of persecution for
28             racial or religious reasons by Nazi Germany  or  any
29             other  Axis  regime  or as an heir of the victim and
30             (ii) items of income, to the  extent  includible  in
31             gross   income  for  federal  income  tax  purposes,
32             attributable to, derived from or in any way  related
33             to  assets  stolen  from,  hidden from, or otherwise
34             lost to  a  victim  of  persecution  for  racial  or
 
                            -26-     LRB093 11102 SJM 11852 b
 1             religious  reasons by Nazi Germany or any other Axis
 2             regime immediately prior to, during, and immediately
 3             after World War II, including, but not  limited  to,
 4             interest  on  the  proceeds  receivable as insurance
 5             under policies issued to a victim of persecution for
 6             racial or religious reasons by Nazi Germany  or  any
 7             other  Axis  regime  by European insurance companies
 8             immediately  prior  to  and  during  World  War  II;
 9             provided, however,  this  subtraction  from  federal
10             adjusted  gross  income  does  not  apply  to assets
11             acquired with such assets or with the proceeds  from
12             the  sale  of  such  assets; provided, further, this
13             paragraph shall only apply to a taxpayer who was the
14             first recipient of such assets after their  recovery
15             and  who  is  a victim of  persecution for racial or
16             religious reasons by Nazi Germany or any other  Axis
17             regime  or  as an heir of the victim.  The amount of
18             and  the  eligibility  for  any  public  assistance,
19             benefit, or similar entitlement is not  affected  by
20             the   inclusion  of  items  (i)  and  (ii)  of  this
21             paragraph in gross income  for  federal  income  tax
22             purposes.   This   paragraph   is  exempt  from  the
23             provisions of Section 250;
24                  (R)  For taxable years 2001 and thereafter, for
25             the taxable year in  which  the  bonus  depreciation
26             deduction   (30%   of  the  adjusted  basis  of  the
27             qualified  property)  is  taken  on  the  taxpayer's
28             federal income tax return under  subsection  (k)  of
29             Section  168  of  the  Internal Revenue Code and for
30             each applicable taxable year thereafter,  an  amount
31             equal to "x", where:
32                       (1)  "y"   equals   the   amount   of  the
33                  depreciation deduction taken  for  the  taxable
34                  year  on  the  taxpayer's  federal  income  tax
 
                            -27-     LRB093 11102 SJM 11852 b
 1                  return   on   property   for  which  the  bonus
 2                  depreciation deduction  (30%  of  the  adjusted
 3                  basis  of  the qualified property) was taken in
 4                  any year under subsection (k) of Section 168 of
 5                  the Internal Revenue Code,  but  not  including
 6                  the bonus depreciation deduction; and
 7                       (2)  "x"  equals  "y" multiplied by 30 and
 8                  then  divided  by  70  (or  "y"  multiplied  by
 9                  0.429).
10                  The  aggregate  amount  deducted   under   this
11             subparagraph  in all taxable years for any one piece
12             of property may not exceed the amount of  the  bonus
13             depreciation deduction (30% of the adjusted basis of
14             the  qualified  property)  taken on that property on
15             the  taxpayer's  federal  income  tax  return  under
16             subsection  (k)  of  Section  168  of  the  Internal
17             Revenue Code; and
18                  (S)  If the taxpayer reports a capital gain  or
19             loss on the taxpayer's federal income tax return for
20             the  taxable  year  based  on  a sale or transfer of
21             property for which the taxpayer was required in  any
22             taxable  year to make an addition modification under
23             subparagraph (G-10), then an amount  equal  to  that
24             addition modification.
25                  The  taxpayer  is allowed to take the deduction
26             under this subparagraph only once  with  respect  to
27             any one piece of property.
28             (3)  Limitation.   The  amount  of  any modification
29        otherwise required under  this  subsection  shall,  under
30        regulations  prescribed by the Department, be adjusted by
31        any amounts included therein which  were  properly  paid,
32        credited,  or  required to be distributed, or permanently
33        set aside for charitable purposes pursuant   to  Internal
34        Revenue Code Section 642(c) during the taxable year.
 
                            -28-     LRB093 11102 SJM 11852 b
 1        (d)  Partnerships.
 2             (1)  In  general. In the case of a partnership, base
 3        income means an amount equal to  the  taxpayer's  taxable
 4        income for the taxable year as modified by paragraph (2).
 5             (2)  Modifications.  The  taxable income referred to
 6        in paragraph (1) shall be modified by adding thereto  the
 7        sum of the following amounts:
 8                  (A)  An  amount  equal  to  all amounts paid or
 9             accrued to the taxpayer  as  interest  or  dividends
10             during  the taxable year to the extent excluded from
11             gross income in the computation of taxable income;
12                  (B)  An amount  equal  to  the  amount  of  tax
13             imposed  by  this  Act  to  the extent deducted from
14             gross income for the taxable year;
15                  (C)  The amount of deductions  allowed  to  the
16             partnership  pursuant  to  Section  707  (c)  of the
17             Internal Revenue Code  in  calculating  its  taxable
18             income;
19                  (D)  An  amount  equal  to  the  amount  of the
20             capital gain deduction allowable under the  Internal
21             Revenue  Code,  to  the  extent  deducted from gross
22             income in the computation of taxable income;
23                  (D-5)  For taxable years 2001  and  thereafter,
24             an  amount equal to the bonus depreciation deduction
25             (30%  of  the  adjusted  basis  of   the   qualified
26             property) taken on the taxpayer's federal income tax
27             return  for the taxable year under subsection (k) of
28             Section 168 of the Internal Revenue Code; and
29                  (D-6)  If the taxpayer reports a  capital  gain
30             or  loss on the taxpayer's federal income tax return
31             for the taxable year based on a sale or transfer  of
32             property  for which the taxpayer was required in any
33             taxable year to make an addition modification  under
34             subparagraph  (D-5),  then  an  amount  equal to the
 
                            -29-     LRB093 11102 SJM 11852 b
 1             aggregate amount of  the  deductions  taken  in  all
 2             taxable years under subparagraph (O) with respect to
 3             that property.;
 4                  The  taxpayer  is required to make the addition
 5             modification under this subparagraph only once  with
 6             respect to any one piece of property;
 7        and by deducting from the total so obtained the following
 8        amounts:
 9                  (E)  The valuation limitation amount;
10                  (F)  An  amount  equal to the amount of any tax
11             imposed by  this  Act  which  was  refunded  to  the
12             taxpayer  and included in such total for the taxable
13             year;
14                  (G)  An amount equal to all amounts included in
15             taxable income as  modified  by  subparagraphs  (A),
16             (B),  (C)  and (D) which are exempt from taxation by
17             this State either  by  reason  of  its  statutes  or
18             Constitution  or  by  reason  of  the  Constitution,
19             treaties  or statutes of the United States; provided
20             that, in the case of any statute of this State  that
21             exempts   income   derived   from   bonds  or  other
22             obligations from the tax imposed under this Act, the
23             amount exempted shall be the interest  net  of  bond
24             premium amortization;
25                  (H)  Any   income   of  the  partnership  which
26             constitutes personal service income  as  defined  in
27             Section  1348  (b)  (1) of the Internal Revenue Code
28             (as in effect December 31,  1981)  or  a  reasonable
29             allowance  for  compensation  paid  or  accrued  for
30             services  rendered  by  partners to the partnership,
31             whichever is greater;
32                  (I)  An amount equal to all amounts  of  income
33             distributable  to  an entity subject to the Personal
34             Property  Tax  Replacement  Income  Tax  imposed  by
 
                            -30-     LRB093 11102 SJM 11852 b
 1             subsections (c) and (d) of Section 201 of  this  Act
 2             including  amounts  distributable  to  organizations
 3             exempt  from federal income tax by reason of Section
 4             501(a) of the Internal Revenue Code;
 5                  (J)  With  the   exception   of   any   amounts
 6             subtracted  under  subparagraph (G), an amount equal
 7             to the sum of all amounts disallowed  as  deductions
 8             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
 9             Internal Revenue Code of 1954, as now  or  hereafter
10             amended,  and  all  amounts of expenses allocable to
11             interest and disallowed  as  deductions  by  Section
12             265(1)  of  the  Internal  Revenue  Code,  as now or
13             hereafter amended; and (ii) for taxable years ending
14             on or after August  13,  1999,  Sections  171(a)(2),
15             265,  280C,  and  832(b)(5)(B)(i)  of  the  Internal
16             Revenue  Code;  the  provisions of this subparagraph
17             are exempt from the provisions of Section 250;
18                  (K)  An  amount  equal   to   those   dividends
19             included   in  such  total  which  were  paid  by  a
20             corporation which conducts business operations in an
21             Enterprise Zone or zones created under the  Illinois
22             Enterprise  Zone  Act,  enacted  by the 82nd General
23             Assembly, and  conducts  substantially  all  of  its
24             operations in an Enterprise Zone or Zones;
25                  (L)  An  amount  equal to any contribution made
26             to a job training project  established  pursuant  to
27             the   Real   Property   Tax   Increment   Allocation
28             Redevelopment Act;
29                  (M)  An   amount   equal   to  those  dividends
30             included  in  such  total  that  were  paid   by   a
31             corporation  that  conducts business operations in a
32             federally designated Foreign Trade Zone or  Sub-Zone
33             and  that  is  designated  a  High  Impact  Business
34             located   in   Illinois;   provided  that  dividends
 
                            -31-     LRB093 11102 SJM 11852 b
 1             eligible for the deduction provided in  subparagraph
 2             (K) of paragraph (2) of this subsection shall not be
 3             eligible  for  the  deduction  provided  under  this
 4             subparagraph (M);
 5                  (N)  An  amount  equal  to  the  amount  of the
 6             deduction used to compute  the  federal  income  tax
 7             credit  for  restoration of substantial amounts held
 8             under claim of right for the taxable  year  pursuant
 9             to  Section  1341  of  the  Internal Revenue Code of
10             1986;
11                  (O)  For taxable years 2001 and thereafter, for
12             the taxable year in  which  the  bonus  depreciation
13             deduction   (30%   of  the  adjusted  basis  of  the
14             qualified  property)  is  taken  on  the  taxpayer's
15             federal income tax return under  subsection  (k)  of
16             Section  168  of  the  Internal Revenue Code and for
17             each applicable taxable year thereafter,  an  amount
18             equal to "x", where:
19                       (1)  "y"   equals   the   amount   of  the
20                  depreciation deduction taken  for  the  taxable
21                  year  on  the  taxpayer's  federal  income  tax
22                  return   on   property   for  which  the  bonus
23                  depreciation deduction  (30%  of  the  adjusted
24                  basis  of  the qualified property) was taken in
25                  any year under subsection (k) of Section 168 of
26                  the Internal Revenue Code,  but  not  including
27                  the bonus depreciation deduction; and
28                       (2)  "x"  equals  "y" multiplied by 30 and
29                  then  divided  by  70  (or  "y"  multiplied  by
30                  0.429).
31                  The  aggregate  amount  deducted   under   this
32             subparagraph  in all taxable years for any one piece
33             of property may not exceed the amount of  the  bonus
34             depreciation deduction (30% of the adjusted basis of
 
                            -32-     LRB093 11102 SJM 11852 b
 1             the  qualified  property)  taken on that property on
 2             the  taxpayer's  federal  income  tax  return  under
 3             subsection  (k)  of  Section  168  of  the  Internal
 4             Revenue Code; and
 5                  (P)  If the taxpayer reports a capital gain  or
 6             loss on the taxpayer's federal income tax return for
 7             the  taxable  year  based  on  a sale or transfer of
 8             property for which the taxpayer was required in  any
 9             taxable  year to make an addition modification under
10             subparagraph (D-5), then an  amount  equal  to  that
11             addition modification.
12                  The  taxpayer  is allowed to take the deduction
13             under this subparagraph only once  with  respect  to
14             any one piece of property.

15        (e)  Gross income; adjusted gross income; taxable income.
16             (1)  In  general.   Subject  to  the  provisions  of
17        paragraph  (2)  and  subsection  (b) (3), for purposes of
18        this Section  and  Section  803(e),  a  taxpayer's  gross
19        income,  adjusted gross income, or taxable income for the
20        taxable year shall  mean  the  amount  of  gross  income,
21        adjusted   gross   income   or  taxable  income  properly
22        reportable  for  federal  income  tax  purposes  for  the
23        taxable year under the provisions of the Internal Revenue
24        Code. Taxable income may be less than zero. However,  for
25        taxable  years  ending on or after December 31, 1986, net
26        operating loss carryforwards from  taxable  years  ending
27        prior  to  December  31,  1986, may not exceed the sum of
28        federal taxable income for the taxable  year  before  net
29        operating  loss  deduction,  plus  the excess of addition
30        modifications  over  subtraction  modifications  for  the
31        taxable year.  For taxable years ending prior to December
32        31, 1986, taxable income may never be an amount in excess
33        of the net operating loss for the taxable year as defined
34        in subsections (c) and (d) of Section 172 of the Internal
 
                            -33-     LRB093 11102 SJM 11852 b
 1        Revenue Code, provided that  when  taxable  income  of  a
 2        corporation  (other  than  a  Subchapter  S corporation),
 3        trust,  or  estate  is  less  than  zero   and   addition
 4        modifications,  other than those provided by subparagraph
 5        (E) of paragraph (2) of subsection (b)  for  corporations
 6        or  subparagraph  (E)  of paragraph (2) of subsection (c)
 7        for trusts and estates, exceed subtraction modifications,
 8        an  addition  modification  must  be  made  under   those
 9        subparagraphs  for  any  other  taxable year to which the
10        taxable income less than zero  (net  operating  loss)  is
11        applied under Section 172 of the Internal Revenue Code or
12        under   subparagraph   (E)   of  paragraph  (2)  of  this
13        subsection (e) applied in conjunction with Section 172 of
14        the Internal Revenue Code.
15             (2)  Special rule.  For purposes of paragraph (1) of
16        this subsection, the taxable income  properly  reportable
17        for federal income tax purposes shall mean:
18                  (A)  Certain  life insurance companies.  In the
19             case of a life insurance company subject to the  tax
20             imposed by Section 801 of the Internal Revenue Code,
21             life  insurance  company  taxable  income,  plus the
22             amount of distribution  from  pre-1984  policyholder
23             surplus accounts as calculated under Section 815a of
24             the Internal Revenue Code;
25                  (B)  Certain other insurance companies.  In the
26             case  of  mutual  insurance companies subject to the
27             tax imposed by Section 831 of the  Internal  Revenue
28             Code, insurance company taxable income;
29                  (C)  Regulated  investment  companies.   In the
30             case of a regulated investment  company  subject  to
31             the  tax  imposed  by  Section  852  of the Internal
32             Revenue Code, investment company taxable income;
33                  (D)  Real estate  investment  trusts.   In  the
34             case  of  a  real estate investment trust subject to
 
                            -34-     LRB093 11102 SJM 11852 b
 1             the tax imposed  by  Section  857  of  the  Internal
 2             Revenue  Code,  real estate investment trust taxable
 3             income;
 4                  (E)  Consolidated corporations.  In the case of
 5             a corporation which is a  member  of  an  affiliated
 6             group  of  corporations filing a consolidated income
 7             tax return for the taxable year for  federal  income
 8             tax  purposes,  taxable income determined as if such
 9             corporation had filed a separate return for  federal
10             income  tax  purposes  for the taxable year and each
11             preceding taxable year for which it was a member  of
12             an   affiliated   group.   For   purposes   of  this
13             subparagraph, the taxpayer's separate taxable income
14             shall be determined as if the election  provided  by
15             Section  243(b) (2) of the Internal Revenue Code had
16             been in effect for all such years;
17                  (F)  Cooperatives.    In   the   case   of    a
18             cooperative  corporation or association, the taxable
19             income of such organization determined in accordance
20             with the provisions of Section 1381 through 1388  of
21             the Internal Revenue Code;
22                  (G)  Subchapter  S  corporations.   In the case
23             of: (i) a Subchapter S corporation for  which  there
24             is  in effect an election for the taxable year under
25             Section 1362  of  the  Internal  Revenue  Code,  the
26             taxable  income  of  such  corporation determined in
27             accordance with  Section  1363(b)  of  the  Internal
28             Revenue  Code, except that taxable income shall take
29             into account  those  items  which  are  required  by
30             Section  1363(b)(1)  of the Internal Revenue Code to
31             be  separately  stated;  and  (ii)  a  Subchapter  S
32             corporation for which there is in effect  a  federal
33             election  to  opt  out  of  the  provisions  of  the
34             Subchapter  S  Revision Act of 1982 and have applied
 
                            -35-     LRB093 11102 SJM 11852 b
 1             instead the prior federal Subchapter S rules  as  in
 2             effect  on  July 1, 1982, the taxable income of such
 3             corporation  determined  in  accordance   with   the
 4             federal  Subchapter  S rules as in effect on July 1,
 5             1982; and
 6                  (H)  Partnerships.    In   the   case   of    a
 7             partnership, taxable income determined in accordance
 8             with  Section  703  of  the  Internal  Revenue Code,
 9             except that taxable income shall take  into  account
10             those  items which are required by Section 703(a)(1)
11             to be separately stated but  which  would  be  taken
12             into  account  by  an  individual in calculating his
13             taxable income.

14        (f)  Valuation limitation amount.
15             (1)  In general.  The  valuation  limitation  amount
16        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
17        (d)(2) (E) is an amount equal to:
18                  (A)  The  sum  of  the   pre-August   1,   1969
19             appreciation  amounts  (to  the extent consisting of
20             gain reportable under the provisions of Section 1245
21             or 1250  of  the  Internal  Revenue  Code)  for  all
22             property  in respect of which such gain was reported
23             for the taxable year; plus
24                  (B)  The  lesser  of  (i)  the   sum   of   the
25             pre-August  1,  1969  appreciation  amounts  (to the
26             extent consisting of capital gain) for all  property
27             in  respect  of  which  such  gain  was reported for
28             federal income tax purposes for the taxable year, or
29             (ii) the net capital  gain  for  the  taxable  year,
30             reduced  in  either  case by any amount of such gain
31             included in the amount determined  under  subsection
32             (a) (2) (F) or (c) (2) (H).
33             (2)  Pre-August 1, 1969 appreciation amount.
34                  (A)  If  the  fair  market  value  of  property
 
                            -36-     LRB093 11102 SJM 11852 b
 1             referred   to   in   paragraph   (1)   was   readily
 2             ascertainable  on  August 1, 1969, the pre-August 1,
 3             1969 appreciation amount for such  property  is  the
 4             lesser  of  (i) the excess of such fair market value
 5             over the taxpayer's basis (for determining gain) for
 6             such property on that  date  (determined  under  the
 7             Internal Revenue Code as in effect on that date), or
 8             (ii)  the  total  gain  realized  and reportable for
 9             federal income tax purposes in respect of the  sale,
10             exchange or other disposition of such property.
11                  (B)  If  the  fair  market  value  of  property
12             referred   to  in  paragraph  (1)  was  not  readily
13             ascertainable on August 1, 1969, the  pre-August  1,
14             1969  appreciation  amount for such property is that
15             amount which bears the same ratio to the total  gain
16             reported  in  respect  of  the  property for federal
17             income tax purposes for the  taxable  year,  as  the
18             number  of  full calendar months in that part of the
19             taxpayer's holding period for  the  property  ending
20             July  31,  1969 bears to the number of full calendar
21             months in the taxpayer's entire holding  period  for
22             the property.
23                  (C)  The   Department   shall   prescribe  such
24             regulations as may be necessary  to  carry  out  the
25             purposes of this paragraph.

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

29        (h)  Legislative intention.  Except as expressly provided
30    by   this   Section   there  shall  be  no  modifications  or
31    limitations on the amounts of income, gain, loss or deduction
32    taken into account  in  determining  gross  income,  adjusted
33    gross  income  or  taxable  income  for  federal  income  tax
 
                            -37-     LRB093 11102 SJM 11852 b
 1    purposes for the taxable year, or in the amount of such items
 2    entering  into  the computation of base income and net income
 3    under this Act for such taxable year, whether in  respect  of
 4    property values as of August 1, 1969 or otherwise.
 5    (Source:  P.A.  91-192,  eff.  7-20-99; 91-205, eff. 7-20-99;
 6    91-357, eff. 7-29-99;  91-541,  eff.  8-13-99;  91-676,  eff.
 7    12-23-99;  91-845,  eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
 8    eff. 6-28-01; 92-244,  eff.  8-3-01;  92-439,  eff.  8-17-01;
 9    92-603,  eff.  6-28-02;  92-626,  eff.  7-11-02; 92-651, eff.
10    7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)

11        Section 99.  Effective date.  This Act takes effect  upon
12    becoming law.