93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4914

 

Introduced 02/04/04, by Kevin Joyce

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5
35 ILCS 5/203   from Ch. 120, par. 2-203
110 ILCS 920/9 rep.   from Ch. 144, par. 2409
110 ILCS 979/70 rep.

    Amends the Illinois Income Tax Act. Authorizes a deduction of up to $10,000 per taxable year for amounts contributed in the taxable year to a College Savings Pool Account or the Illinois Prepaid Tuition Trust Fund, excluding amounts rolled over into the account (now, unlimited deductions authorized only for contributions to the College Savings Pool, excluding rollovers). Amends the State Treasurer Act, the Baccalaureate Savings Act, and the Illinois Prepaid Tuition Act to remove language providing that (i) contributions to the Bright Start Program; (ii) contributions toward the purchase of the first $25,000 of College Savings Bonds; and (iii) contributions toward the purchase of an Illinois Prepaid Tuition Contract, respectively, shall not be counted against the financial aid awarded by the Illinois Student Assistance Commission, the State, or any agency thereof. Effective immediately, except that the changes to the State Treasurer Act, the Baccalaureate Savings Act, and the Illinois Prepaid Tuition Act take effect on January 1, 2005.


LRB093 15099 SJM 40689 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4914 LRB093 15099 SJM 40689 b

1     AN ACT concerning college savings.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The State Treasurer Act is amended by changing
5 Section 16.5 as follows:
 
6     (15 ILCS 505/16.5)
7     Sec. 16.5. College Savings Pool. The State Treasurer may
8 establish and administer a College Savings Pool to supplement
9 and enhance the investment opportunities otherwise available
10 to persons seeking to finance the costs of higher education.
11 The State Treasurer, in administering the College Savings Pool,
12 may receive moneys paid into the pool by a participant and may
13 serve as the fiscal agent of that participant for the purpose
14 of holding and investing those moneys.
15     "Participant", as used in this Section, means any person
16 who makes investments in the pool. "Designated beneficiary", as
17 used in this Section, means any person on whose behalf an
18 account is established in the College Savings Pool by a
19 participant. Both in-state and out-of-state persons may be
20 participants and designated beneficiaries in the College
21 Savings Pool.
22     New accounts in the College Savings Pool shall be processed
23 through participating financial institutions. "Participating
24 financial institution", as used in this Section, means any
25 financial institution insured by the Federal Deposit Insurance
26 Corporation and lawfully doing business in the State of
27 Illinois and any credit union approved by the State Treasurer
28 and lawfully doing business in the State of Illinois that
29 agrees to process new accounts in the College Savings Pool.
30 Participating financial institutions may charge a processing
31 fee to participants to open an account in the pool that shall
32 not exceed $30 until the year 2001. Beginning in 2001 and every

 

 

HB4914 - 2 - LRB093 15099 SJM 40689 b

1 year thereafter, the maximum fee limit shall be adjusted by the
2 Treasurer based on the Consumer Price Index for the North
3 Central Region as published by the United States Department of
4 Labor, Bureau of Labor Statistics for the immediately preceding
5 calendar year. Every contribution received by a financial
6 institution for investment in the College Savings Pool shall be
7 transferred from the financial institution to a location
8 selected by the State Treasurer within one business day
9 following the day that the funds must be made available in
10 accordance with federal law. All communications from the State
11 Treasurer to participants shall reference the participating
12 financial institution at which the account was processed.
13     The Treasurer may invest the moneys in the College Savings
14 Pool in the same manner, in the same types of investments, and
15 subject to the same limitations provided for the investment of
16 moneys by the Illinois State Board of Investment. To enhance
17 the safety and liquidity of the College Savings Pool, to ensure
18 the diversification of the investment portfolio of the pool,
19 and in an effort to keep investment dollars in the State of
20 Illinois, the State Treasurer shall make a percentage of each
21 account available for investment in participating financial
22 institutions doing business in the State. The State Treasurer
23 shall deposit with the participating financial institution at
24 which the account was processed the following percentage of
25 each account at a prevailing rate offered by the institution,
26 provided that the deposit is federally insured or fully
27 collateralized and the institution accepts the deposit: 10% of
28 the total amount of each account for which the current age of
29 the beneficiary is less than 7 years of age, 20% of the total
30 amount of each account for which the beneficiary is at least 7
31 years of age and less than 12 years of age, and 50% of the total
32 amount of each account for which the current age of the
33 beneficiary is at least 12 years of age. The State Treasurer
34 shall adjust each account at least annually to ensure
35 compliance with this Section. The Treasurer shall develop,
36 publish, and implement an investment policy covering the

 

 

HB4914 - 3 - LRB093 15099 SJM 40689 b

1 investment of the moneys in the College Savings Pool. The
2 policy shall be published (i) at least once each year in at
3 least one newspaper of general circulation in both Springfield
4 and Chicago and (ii) each year as part of the audit of the
5 College Savings Pool by the Auditor General, which shall be
6 distributed to all participants. The Treasurer shall notify all
7 participants in writing, and the Treasurer shall publish in a
8 newspaper of general circulation in both Chicago and
9 Springfield, any changes to the previously published
10 investment policy at least 30 calendar days before implementing
11 the policy. Any investment policy adopted by the Treasurer
12 shall be reviewed and updated if necessary within 90 days
13 following the date that the State Treasurer takes office.
14     Participants shall be required to use moneys distributed
15 from the College Savings Pool for qualified expenses at
16 eligible educational institutions. "Qualified expenses", as
17 used in this Section, means the following: (i) tuition, fees,
18 and the costs of books, supplies, and equipment required for
19 enrollment or attendance at an eligible educational
20 institution and (ii) certain room and board expenses incurred
21 while attending an eligible educational institution at least
22 half-time. "Eligible educational institutions", as used in
23 this Section, means public and private colleges, junior
24 colleges, graduate schools, and certain vocational
25 institutions that are described in Section 481 of the Higher
26 Education Act of 1965 (20 U.S.C. 1088) and that are eligible to
27 participate in Department of Education student aid programs. A
28 student shall be considered to be enrolled at least half-time
29 if the student is enrolled for at least half the full-time
30 academic work load for the course of study the student is
31 pursuing as determined under the standards of the institution
32 at which the student is enrolled. Distributions made from the
33 pool for qualified expenses shall be made directly to the
34 eligible educational institution, directly to a vendor, or in
35 the form of a check payable to both the beneficiary and the
36 institution or vendor. Any moneys that are distributed in any

 

 

HB4914 - 4 - LRB093 15099 SJM 40689 b

1 other manner or that are used for expenses other than qualified
2 expenses at an eligible educational institution shall be
3 subject to a penalty of 10% of the earnings unless the
4 beneficiary dies, becomes disabled, or receives a scholarship
5 that equals or exceeds the distribution. Penalties shall be
6 withheld at the time the distribution is made.
7     The Treasurer shall limit the contributions that may be
8 made on behalf of a designated beneficiary based on an
9 actuarial estimate of what is required to pay tuition, fees,
10 and room and board for 5 undergraduate years at the highest
11 cost eligible educational institution. The contributions made
12 on behalf of a beneficiary who is also a beneficiary under the
13 Illinois Prepaid Tuition Program shall be further restricted to
14 ensure that the contributions in both programs combined do not
15 exceed the limit established for the College Savings Pool. The
16 Treasurer shall provide the Illinois Student Assistance
17 Commission each year at a time designated by the Commission, an
18 electronic report of all participant accounts in the
19 Treasurer's College Savings Pool, listing total contributions
20 and disbursements from each individual account during the
21 previous calendar year. As soon thereafter as is possible
22 following receipt of the Treasurer's report, the Illinois
23 Student Assistance Commission shall, in turn, provide the
24 Treasurer with an electronic report listing those College
25 Savings Pool participants who also participate in the State's
26 prepaid tuition program, administered by the Commission. The
27 Commission shall be responsible for filing any combined tax
28 reports regarding State qualified savings programs required by
29 the United States Internal Revenue Service. The Treasurer shall
30 work with the Illinois Student Assistance Commission to
31 coordinate the marketing of the College Savings Pool and the
32 Illinois Prepaid Tuition Program when considered beneficial by
33 the Treasurer and the Director of the Illinois Student
34 Assistance Commission. The Treasurer's office shall not
35 publicize or otherwise market the College Savings Pool or
36 accept any moneys into the College Savings Pool prior to March

 

 

HB4914 - 5 - LRB093 15099 SJM 40689 b

1 1, 2000. The Treasurer shall provide a separate accounting for
2 each designated beneficiary to each participant, the Illinois
3 Student Assistance Commission, and the participating financial
4 institution at which the account was processed. No interest in
5 the program may be pledged as security for a loan.
6     The assets of the College Savings Pool and its income and
7 operation shall be exempt from all taxation by the State of
8 Illinois and any of its subdivisions. The accrued earnings on
9 investments in the Pool once disbursed on behalf of a
10 designated beneficiary shall be similarly exempt from all
11 taxation by the State of Illinois and its subdivisions, so long
12 as they are used for qualified expenses. Contributions to a
13 College Savings Pool account during the taxable year may be
14 deducted from adjusted gross income as provided in Section 203
15 of the Illinois Income Tax Act. The provisions of this
16 paragraph are exempt from Section 250 of the Illinois Income
17 Tax Act.
18     The Treasurer shall adopt rules he or she considers
19 necessary for the efficient administration of the College
20 Savings Pool. The rules shall provide whatever additional
21 parameters and restrictions are necessary to ensure that the
22 College Savings Pool meets all of the requirements for a
23 qualified state tuition program under Section 529 of the
24 Internal Revenue Code (26 U.S.C. 529). The rules shall provide
25 for the administration expenses of the pool to be paid from its
26 earnings and for the investment earnings in excess of the
27 expenses and all moneys collected as penalties to be credited
28 or paid monthly to the several participants in the pool in a
29 manner which equitably reflects the differing amounts of their
30 respective investments in the pool and the differing periods of
31 time for which those amounts were in the custody of the pool.
32 Also, the rules shall require the maintenance of records that
33 enable the Treasurer's office to produce a report for each
34 account in the pool at least annually that documents the
35 account balance and investment earnings. Notice of any proposed
36 amendments to the rules and regulations shall be provided to

 

 

HB4914 - 6 - LRB093 15099 SJM 40689 b

1 all participants prior to adoption. Amendments to rules and
2 regulations shall apply only to contributions made after the
3 adoption of the amendment.
4     Upon creating the College Savings Pool, the State Treasurer
5 shall give bond with 2 or more sufficient sureties, payable to
6 and for the benefit of the participants in the College Savings
7 Pool, in the penal sum of $1,000,000, conditioned upon the
8 faithful discharge of his or her duties in relation to the
9 College Savings Pool.
10     No contributions to the College Savings Pool authorized by
11 this Section shall be considered in evaluating the financial
12 situation of the designated beneficiary or be deemed a
13 financial resource of or a form of financial aid or assistance
14 to the designated beneficiary, for purposes of determining
15 eligibility for any scholarship, grant, or monetary assistance
16 awarded by the Illinois Student Assistance Commission, the
17 State, or any agency thereof; nor shall contributions to the
18 College Savings Pool reduce the amount of any scholarship,
19 grant, or monetary assistance that the designated beneficiary
20 is eligible to be awarded by the Illinois Student Assistance
21 Commission, the State, or any agency thereof in accordance with
22 the provisions of any State law.
23 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 92-16,
24 eff. 6-28-01; 92-439, eff. 8-17-01; 92-626, eff. 7-11-02.)
 
25     Section 10. The Illinois Income Tax Act is amended by
26 changing Section 203 as follows:
 
27     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
28     Sec. 203. Base income defined.
29     (a) Individuals.
30         (1) In general. In the case of an individual, base
31     income means an amount equal to the taxpayer's adjusted
32     gross income for the taxable year as modified by paragraph
33     (2).
34         (2) Modifications. The adjusted gross income referred

 

 

HB4914 - 7 - LRB093 15099 SJM 40689 b

1     to in paragraph (1) shall be modified by adding thereto the
2     sum of the following amounts:
3             (A) An amount equal to all amounts paid or accrued
4         to the taxpayer as interest or dividends during the
5         taxable year to the extent excluded from gross income
6         in the computation of adjusted gross income, except
7         stock dividends of qualified public utilities
8         described in Section 305(e) of the Internal Revenue
9         Code;
10             (B) An amount equal to the amount of tax imposed by
11         this Act to the extent deducted from gross income in
12         the computation of adjusted gross income for the
13         taxable year;
14             (C) An amount equal to the amount received during
15         the taxable year as a recovery or refund of real
16         property taxes paid with respect to the taxpayer's
17         principal residence under the Revenue Act of 1939 and
18         for which a deduction was previously taken under
19         subparagraph (L) of this paragraph (2) prior to July 1,
20         1991, the retrospective application date of Article 4
21         of Public Act 87-17. In the case of multi-unit or
22         multi-use structures and farm dwellings, the taxes on
23         the taxpayer's principal residence shall be that
24         portion of the total taxes for the entire property
25         which is attributable to such principal residence;
26             (D) An amount equal to the amount of the capital
27         gain deduction allowable under the Internal Revenue
28         Code, to the extent deducted from gross income in the
29         computation of adjusted gross income;
30             (D-5) An amount, to the extent not included in
31         adjusted gross income, equal to the amount of money
32         withdrawn by the taxpayer in the taxable year from a
33         medical care savings account and the interest earned on
34         the account in the taxable year of a withdrawal
35         pursuant to subsection (b) of Section 20 of the Medical
36         Care Savings Account Act or subsection (b) of Section

 

 

HB4914 - 8 - LRB093 15099 SJM 40689 b

1         20 of the Medical Care Savings Account Act of 2000;
2             (D-10) For taxable years ending after December 31,
3         1997, an amount equal to any eligible remediation costs
4         that the individual deducted in computing adjusted
5         gross income and for which the individual claims a
6         credit under subsection (l) of Section 201;
7             (D-15) For taxable years 2001 and thereafter, an
8         amount equal to the bonus depreciation deduction (30%
9         of the adjusted basis of the qualified property) taken
10         on the taxpayer's federal income tax return for the
11         taxable year under subsection (k) of Section 168 of the
12         Internal Revenue Code; and
13             (D-16) If the taxpayer reports a capital gain or
14         loss on the taxpayer's federal income tax return for
15         the taxable year based on a sale or transfer of
16         property for which the taxpayer was required in any
17         taxable year to make an addition modification under
18         subparagraph (D-15), then an amount equal to the
19         aggregate amount of the deductions taken in all taxable
20         years under subparagraph (Z) with respect to that
21         property. ;
22             The taxpayer is required to make the addition
23         modification under this subparagraph only once with
24         respect to any one piece of property; . and
25             (D-20) (D-15) For taxable years beginning on or
26         after January 1, 2002, in the case of a distribution
27         from a qualified tuition program under Section 529 of
28         the Internal Revenue Code, other than (i) a
29         distribution from a College Savings Pool created under
30         Section 16.5 of the State Treasurer Act or (ii) a
31         distribution from the Illinois Prepaid Tuition Trust
32         Fund, an amount equal to the amount excluded from gross
33         income under Section 529(c)(3)(B);
34     and by deducting from the total so obtained the sum of the
35     following amounts:
36             (E) For taxable years ending before December 31,

 

 

HB4914 - 9 - LRB093 15099 SJM 40689 b

1         2001, any amount included in such total in respect of
2         any compensation (including but not limited to any
3         compensation paid or accrued to a serviceman while a
4         prisoner of war or missing in action) paid to a
5         resident by reason of being on active duty in the Armed
6         Forces of the United States and in respect of any
7         compensation paid or accrued to a resident who as a
8         governmental employee was a prisoner of war or missing
9         in action, and in respect of any compensation paid to a
10         resident in 1971 or thereafter for annual training
11         performed pursuant to Sections 502 and 503, Title 32,
12         United States Code as a member of the Illinois National
13         Guard. For taxable years ending on or after December
14         31, 2001, any amount included in such total in respect
15         of any compensation (including but not limited to any
16         compensation paid or accrued to a serviceman while a
17         prisoner of war or missing in action) paid to a
18         resident by reason of being a member of any component
19         of the Armed Forces of the United States and in respect
20         of any compensation paid or accrued to a resident who
21         as a governmental employee was a prisoner of war or
22         missing in action, and in respect of any compensation
23         paid to a resident in 2001 or thereafter by reason of
24         being a member of the Illinois National Guard. The
25         provisions of this amendatory Act of the 92nd General
26         Assembly are exempt from the provisions of Section 250;
27             (F) An amount equal to all amounts included in such
28         total pursuant to the provisions of Sections 402(a),
29         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
30         Internal Revenue Code, or included in such total as
31         distributions under the provisions of any retirement
32         or disability plan for employees of any governmental
33         agency or unit, or retirement payments to retired
34         partners, which payments are excluded in computing net
35         earnings from self employment by Section 1402 of the
36         Internal Revenue Code and regulations adopted pursuant

 

 

HB4914 - 10 - LRB093 15099 SJM 40689 b

1         thereto;
2             (G) The valuation limitation amount;
3             (H) An amount equal to the amount of any tax
4         imposed by this Act which was refunded to the taxpayer
5         and included in such total for the taxable year;
6             (I) An amount equal to all amounts included in such
7         total pursuant to the provisions of Section 111 of the
8         Internal Revenue Code as a recovery of items previously
9         deducted from adjusted gross income in the computation
10         of taxable income;
11             (J) An amount equal to those dividends included in
12         such total which were paid by a corporation which
13         conducts business operations in an Enterprise Zone or
14         zones created under the Illinois Enterprise Zone Act,
15         and conducts substantially all of its operations in an
16         Enterprise Zone or zones;
17             (K) An amount equal to those dividends included in
18         such total that were paid by a corporation that
19         conducts business operations in a federally designated
20         Foreign Trade Zone or Sub-Zone and that is designated a
21         High Impact Business located in Illinois; provided
22         that dividends eligible for the deduction provided in
23         subparagraph (J) of paragraph (2) of this subsection
24         shall not be eligible for the deduction provided under
25         this subparagraph (K);
26             (L) For taxable years ending after December 31,
27         1983, an amount equal to all social security benefits
28         and railroad retirement benefits included in such
29         total pursuant to Sections 72(r) and 86 of the Internal
30         Revenue Code;
31             (M) With the exception of any amounts subtracted
32         under subparagraph (N), an amount equal to the sum of
33         all amounts disallowed as deductions by (i) Sections
34         171(a) (2), and 265(2) of the Internal Revenue Code of
35         1954, as now or hereafter amended, and all amounts of
36         expenses allocable to interest and disallowed as

 

 

HB4914 - 11 - LRB093 15099 SJM 40689 b

1         deductions by Section 265(1) of the Internal Revenue
2         Code of 1954, as now or hereafter amended; and (ii) for
3         taxable years ending on or after August 13, 1999,
4         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
5         the Internal Revenue Code; the provisions of this
6         subparagraph are exempt from the provisions of Section
7         250;
8             (N) An amount equal to all amounts included in such
9         total which are exempt from taxation by this State
10         either by reason of its statutes or Constitution or by
11         reason of the Constitution, treaties or statutes of the
12         United States; provided that, in the case of any
13         statute of this State that exempts income derived from
14         bonds or other obligations from the tax imposed under
15         this Act, the amount exempted shall be the interest net
16         of bond premium amortization;
17             (O) An amount equal to any contribution made to a
18         job training project established pursuant to the Tax
19         Increment Allocation Redevelopment Act;
20             (P) An amount equal to the amount of the deduction
21         used to compute the federal income tax credit for
22         restoration of substantial amounts held under claim of
23         right for the taxable year pursuant to Section 1341 of
24         the Internal Revenue Code of 1986;
25             (Q) An amount equal to any amounts included in such
26         total, received by the taxpayer as an acceleration in
27         the payment of life, endowment or annuity benefits in
28         advance of the time they would otherwise be payable as
29         an indemnity for a terminal illness;
30             (R) An amount equal to the amount of any federal or
31         State bonus paid to veterans of the Persian Gulf War;
32             (S) An amount, to the extent included in adjusted
33         gross income, equal to the amount of a contribution
34         made in the taxable year on behalf of the taxpayer to a
35         medical care savings account established under the
36         Medical Care Savings Account Act or the Medical Care

 

 

HB4914 - 12 - LRB093 15099 SJM 40689 b

1         Savings Account Act of 2000 to the extent the
2         contribution is accepted by the account administrator
3         as provided in that Act;
4             (T) An amount, to the extent included in adjusted
5         gross income, equal to the amount of interest earned in
6         the taxable year on a medical care savings account
7         established under the Medical Care Savings Account Act
8         or the Medical Care Savings Account Act of 2000 on
9         behalf of the taxpayer, other than interest added
10         pursuant to item (D-5) of this paragraph (2);
11             (U) For one taxable year beginning on or after
12         January 1, 1994, an amount equal to the total amount of
13         tax imposed and paid under subsections (a) and (b) of
14         Section 201 of this Act on grant amounts received by
15         the taxpayer under the Nursing Home Grant Assistance
16         Act during the taxpayer's taxable years 1992 and 1993;
17             (V) Beginning with tax years ending on or after
18         December 31, 1995 and ending with tax years ending on
19         or before December 31, 2004, an amount equal to the
20         amount paid by a taxpayer who is a self-employed
21         taxpayer, a partner of a partnership, or a shareholder
22         in a Subchapter S corporation for health insurance or
23         long-term care insurance for that taxpayer or that
24         taxpayer's spouse or dependents, to the extent that the
25         amount paid for that health insurance or long-term care
26         insurance may be deducted under Section 213 of the
27         Internal Revenue Code of 1986, has not been deducted on
28         the federal income tax return of the taxpayer, and does
29         not exceed the taxable income attributable to that
30         taxpayer's income, self-employment income, or
31         Subchapter S corporation income; except that no
32         deduction shall be allowed under this item (V) if the
33         taxpayer is eligible to participate in any health
34         insurance or long-term care insurance plan of an
35         employer of the taxpayer or the taxpayer's spouse. The
36         amount of the health insurance and long-term care

 

 

HB4914 - 13 - LRB093 15099 SJM 40689 b

1         insurance subtracted under this item (V) shall be
2         determined by multiplying total health insurance and
3         long-term care insurance premiums paid by the taxpayer
4         times a number that represents the fractional
5         percentage of eligible medical expenses under Section
6         213 of the Internal Revenue Code of 1986 not actually
7         deducted on the taxpayer's federal income tax return;
8             (W) For taxable years beginning on or after January
9         1, 1998, all amounts included in the taxpayer's federal
10         gross income in the taxable year from amounts converted
11         from a regular IRA to a Roth IRA. This paragraph is
12         exempt from the provisions of Section 250;
13             (X) For taxable year 1999 and thereafter, an amount
14         equal to the amount of any (i) distributions, to the
15         extent includible in gross income for federal income
16         tax purposes, made to the taxpayer because of his or
17         her status as 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 and (ii) items of
20         income, to the extent includible in gross income for
21         federal income tax purposes, attributable to, derived
22         from or in any way related to assets stolen from,
23         hidden from, or otherwise lost to a victim of
24         persecution for racial or religious reasons by Nazi
25         Germany or any other Axis regime immediately prior to,
26         during, and immediately after World War II, including,
27         but not limited to, interest on the proceeds receivable
28         as insurance under policies issued to a victim of
29         persecution for racial or religious reasons by Nazi
30         Germany or any other Axis regime by European insurance
31         companies immediately prior to and during World War II;
32         provided, however, this subtraction from federal
33         adjusted gross income does not apply to assets acquired
34         with such assets or with the proceeds from the sale of
35         such assets; provided, further, this paragraph shall
36         only apply to a taxpayer who was the first recipient of

 

 

HB4914 - 14 - LRB093 15099 SJM 40689 b

1         such assets after their recovery and who is a victim of
2         persecution for racial or religious reasons by Nazi
3         Germany or any other Axis regime or as an heir of the
4         victim. The amount of and the eligibility for any
5         public assistance, benefit, or similar entitlement is
6         not affected by the inclusion of items (i) and (ii) of
7         this paragraph in gross income for federal income tax
8         purposes. This paragraph is exempt from the provisions
9         of Section 250;
10             (Y) For taxable years beginning on or after January
11         1, 2002 and ending on or before December 31, 2003,
12         moneys contributed in the taxable year to a College
13         Savings Pool account under Section 16.5 of the State
14         Treasurer Act, except that amounts excluded from gross
15         income under Section 529(c)(3)(C)(i) of the Internal
16         Revenue Code shall not be considered moneys
17         contributed under this subparagraph (Y). For taxable
18         years beginning on or after January 1, 2004, a maximum
19         of $10,000 contributed in the taxable year to (i) a
20         College Savings Pool account under Section 16.5 of the
21         State Treasurer Act or (ii) the Illinois Prepaid
22         Tuition Trust Fund, except that amounts excluded from
23         gross income under Section 529(c)(3)(C)(i) of the
24         Internal Revenue Code shall not be considered moneys
25         contributed under this subparagraph (Y). This
26         subparagraph (Y) is exempt from the provisions of
27         Section 250;
28             (Z) For taxable years 2001 and thereafter, for the
29         taxable year in which the bonus depreciation deduction
30         (30% of the adjusted basis of the qualified property)
31         is taken on the taxpayer's federal income tax return
32         under subsection (k) of Section 168 of the Internal
33         Revenue Code and for each applicable taxable year
34         thereafter, an amount equal to "x", where:
35                 (1) "y" equals the amount of the depreciation
36             deduction taken for the taxable year on the

 

 

HB4914 - 15 - LRB093 15099 SJM 40689 b

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

 

 

HB4914 - 16 - LRB093 15099 SJM 40689 b

1             (A) An amount equal to all amounts paid or accrued
2         to the taxpayer as interest and all distributions
3         received from regulated investment companies during
4         the taxable year to the extent excluded from gross
5         income in the computation of taxable income;
6             (B) An amount equal to the amount of tax imposed by
7         this Act to the extent deducted from gross income in
8         the computation of taxable income for the taxable year;
9             (C) In the case of a regulated investment company,
10         an amount equal to the excess of (i) the net long-term
11         capital gain for the taxable year, over (ii) the amount
12         of the capital gain dividends designated as such in
13         accordance with Section 852(b)(3)(C) of the Internal
14         Revenue Code and any amount designated under Section
15         852(b)(3)(D) of the Internal Revenue Code,
16         attributable to the taxable year (this amendatory Act
17         of 1995 (Public Act 89-89) is declarative of existing
18         law and is not a new enactment);
19             (D) The amount of any net operating loss deduction
20         taken in arriving at taxable income, other than a net
21         operating loss carried forward from a taxable year
22         ending prior to December 31, 1986;
23             (E) For taxable years in which a net operating loss
24         carryback or carryforward from a taxable year ending
25         prior to December 31, 1986 is an element of taxable
26         income under paragraph (1) of subsection (e) or
27         subparagraph (E) of paragraph (2) of subsection (e),
28         the amount by which addition modifications other than
29         those provided by this subparagraph (E) exceeded
30         subtraction modifications in such earlier taxable
31         year, with the following limitations applied in the
32         order that they are listed:
33                 (i) the addition modification relating to the
34             net operating loss carried back or forward to the
35             taxable year from any taxable year ending prior to
36             December 31, 1986 shall be reduced by the amount of

 

 

HB4914 - 17 - LRB093 15099 SJM 40689 b

1             addition modification under this subparagraph (E)
2             which related to that net operating loss and which
3             was taken into account in calculating the base
4             income of an earlier taxable year, and
5                 (ii) the addition modification relating to the
6             net operating loss carried back or forward to the
7             taxable year from any taxable year ending prior to
8             December 31, 1986 shall not exceed the amount of
9             such carryback or carryforward;
10             For taxable years in which there is a net operating
11         loss carryback or carryforward from more than one other
12         taxable year ending prior to December 31, 1986, the
13         addition modification provided in this subparagraph
14         (E) shall be the sum of the amounts computed
15         independently under the preceding provisions of this
16         subparagraph (E) for each such taxable year;
17             (E-5) For taxable years ending after December 31,
18         1997, an amount equal to any eligible remediation costs
19         that the corporation deducted in computing adjusted
20         gross income and for which the corporation claims a
21         credit under subsection (l) of Section 201;
22             (E-10) For taxable years 2001 and thereafter, an
23         amount equal to the bonus depreciation deduction (30%
24         of the adjusted basis of the qualified property) taken
25         on the taxpayer's federal income tax return for the
26         taxable year under subsection (k) of Section 168 of the
27         Internal Revenue Code; and
28             (E-11) If the taxpayer reports a capital gain or
29         loss on the taxpayer's federal income tax return for
30         the taxable year based on a sale or transfer of
31         property for which the taxpayer was required in any
32         taxable year to make an addition modification under
33         subparagraph (E-10), then an amount equal to the
34         aggregate amount of the deductions taken in all taxable
35         years under subparagraph (T) with respect to that
36         property. ;

 

 

HB4914 - 18 - LRB093 15099 SJM 40689 b

1             The taxpayer is required to make the addition
2         modification under this subparagraph only once with
3         respect to any one piece of property;
4     and by deducting from the total so obtained the sum of the
5     following amounts:
6             (F) An amount equal to the amount of any tax
7         imposed by this Act which was refunded to the taxpayer
8         and included in such total for the taxable year;
9             (G) An amount equal to any amount included in such
10         total under Section 78 of the Internal Revenue Code;
11             (H) In the case of a regulated investment company,
12         an amount equal to the amount of exempt interest
13         dividends as defined in subsection (b) (5) of Section
14         852 of the Internal Revenue Code, paid to shareholders
15         for the taxable year;
16             (I) With the exception of any amounts subtracted
17         under subparagraph (J), an amount equal to the sum of
18         all amounts disallowed as deductions by (i) Sections
19         171(a) (2), and 265(a)(2) and amounts disallowed as
20         interest expense by Section 291(a)(3) of the Internal
21         Revenue Code, as now or hereafter amended, and all
22         amounts of expenses allocable to interest and
23         disallowed as deductions by Section 265(a)(1) of the
24         Internal Revenue Code, as now or hereafter amended; and
25         (ii) for taxable years ending on or after August 13,
26         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
27         832(b)(5)(B)(i) of the Internal Revenue Code; the
28         provisions of this subparagraph are exempt from the
29         provisions of Section 250;
30             (J) An amount equal to all amounts included in such
31         total which are exempt from taxation by this State
32         either by reason of its statutes or Constitution or by
33         reason of the Constitution, treaties or statutes of the
34         United States; provided that, in the case of any
35         statute of this State that exempts income derived from
36         bonds or other obligations from the tax imposed under

 

 

HB4914 - 19 - LRB093 15099 SJM 40689 b

1         this Act, the amount exempted shall be the interest net
2         of bond premium amortization;
3             (K) An amount equal to those dividends included in
4         such total which were paid by a corporation which
5         conducts business operations in an Enterprise Zone or
6         zones created under the Illinois Enterprise Zone Act
7         and conducts substantially all of its operations in an
8         Enterprise Zone or zones;
9             (L) An amount equal to those dividends included in
10         such total that were paid by a corporation that
11         conducts business operations in a federally designated
12         Foreign Trade Zone or Sub-Zone and that is designated a
13         High Impact Business located in Illinois; provided
14         that dividends eligible for the deduction provided in
15         subparagraph (K) of paragraph 2 of this subsection
16         shall not be eligible for the deduction provided under
17         this subparagraph (L);
18             (M) For any taxpayer that is a financial
19         organization within the meaning of Section 304(c) of
20         this Act, an amount included in such total as interest
21         income from a loan or loans made by such taxpayer to a
22         borrower, to the extent that such a loan is secured by
23         property which is eligible for the Enterprise Zone
24         Investment Credit. To determine the portion of a loan
25         or loans that is secured by property eligible for a
26         Section 201(f) investment credit to the borrower, the
27         entire principal amount of the loan or loans between
28         the taxpayer and the borrower should be divided into
29         the basis of the Section 201(f) investment credit
30         property which secures the loan or loans, using for
31         this purpose the original basis of such property on the
32         date that it was placed in service in the Enterprise
33         Zone. The subtraction modification available to
34         taxpayer in any year under this subsection shall be
35         that portion of the total interest paid by the borrower
36         with respect to such loan attributable to the eligible

 

 

HB4914 - 20 - LRB093 15099 SJM 40689 b

1         property as calculated under the previous sentence;
2             (M-1) For any taxpayer that is a financial
3         organization within the meaning of Section 304(c) of
4         this Act, an amount included in such total as interest
5         income from a loan or loans made by such taxpayer to a
6         borrower, to the extent that such a loan is secured by
7         property which is eligible for the High Impact Business
8         Investment Credit. To determine the portion of a loan
9         or loans that is secured by property eligible for a
10         Section 201(h) investment credit to the borrower, the
11         entire principal amount of the loan or loans between
12         the taxpayer and the borrower should be divided into
13         the basis of the Section 201(h) investment credit
14         property which secures the loan or loans, using for
15         this purpose the original basis of such property on the
16         date that it was placed in service in a federally
17         designated Foreign Trade Zone or Sub-Zone located in
18         Illinois. No taxpayer that is eligible for the
19         deduction provided in subparagraph (M) of paragraph
20         (2) of this subsection shall be eligible for the
21         deduction provided under this subparagraph (M-1). The
22         subtraction modification available to taxpayers in any
23         year under this subsection shall be that portion of the
24         total interest paid by the borrower with respect to
25         such loan attributable to the eligible property as
26         calculated under the previous sentence;
27             (N) Two times any contribution made during the
28         taxable year to a designated zone organization to the
29         extent that the contribution (i) qualifies as a
30         charitable contribution under subsection (c) of
31         Section 170 of the Internal Revenue Code and (ii) must,
32         by its terms, be used for a project approved by the
33         Department of Commerce and Economic Opportunity
34         Community Affairs under Section 11 of the Illinois
35         Enterprise Zone Act;
36             (O) An amount equal to: (i) 85% for taxable years

 

 

HB4914 - 21 - LRB093 15099 SJM 40689 b

1         ending on or before December 31, 1992, or, a percentage
2         equal to the percentage allowable under Section
3         243(a)(1) of the Internal Revenue Code of 1986 for
4         taxable years ending after December 31, 1992, of the
5         amount by which dividends included in taxable income
6         and received from a corporation that is not created or
7         organized under the laws of the United States or any
8         state or political subdivision thereof, including, for
9         taxable years ending on or after December 31, 1988,
10         dividends received or deemed received or paid or deemed
11         paid under Sections 951 through 964 of the Internal
12         Revenue Code, exceed the amount of the modification
13         provided under subparagraph (G) of paragraph (2) of
14         this subsection (b) which is related to such dividends;
15         plus (ii) 100% of the amount by which dividends,
16         included in taxable income and received, including,
17         for taxable years ending on or after December 31, 1988,
18         dividends received or deemed received or paid or deemed
19         paid under Sections 951 through 964 of the Internal
20         Revenue Code, from any such corporation specified in
21         clause (i) that would but for the provisions of Section
22         1504 (b) (3) of the Internal Revenue Code be treated as
23         a member of the affiliated group which includes the
24         dividend recipient, exceed the amount of the
25         modification provided under subparagraph (G) of
26         paragraph (2) of this subsection (b) which is related
27         to such dividends;
28             (P) An amount equal to any contribution made to a
29         job training project established pursuant to the Tax
30         Increment Allocation Redevelopment Act;
31             (Q) An amount equal to the amount of the deduction
32         used to compute the federal income tax credit for
33         restoration of substantial amounts held under claim of
34         right for the taxable year pursuant to Section 1341 of
35         the Internal Revenue Code of 1986;
36             (R) In the case of an attorney-in-fact with respect

 

 

HB4914 - 22 - LRB093 15099 SJM 40689 b

1         to whom an interinsurer or a reciprocal insurer has
2         made the election under Section 835 of the Internal
3         Revenue Code, 26 U.S.C. 835, an amount equal to the
4         excess, if any, of the amounts paid or incurred by that
5         interinsurer or reciprocal insurer in the taxable year
6         to the attorney-in-fact over the deduction allowed to
7         that interinsurer or reciprocal insurer with respect
8         to the attorney-in-fact under Section 835(b) of the
9         Internal Revenue Code for the taxable year;
10             (S) For taxable years ending on or after December
11         31, 1997, in the case of a Subchapter S corporation, an
12         amount equal to all amounts of income allocable to a
13         shareholder subject to the Personal Property Tax
14         Replacement Income Tax imposed by subsections (c) and
15         (d) of Section 201 of this Act, including amounts
16         allocable to organizations exempt from federal income
17         tax by reason of Section 501(a) of the Internal Revenue
18         Code. This subparagraph (S) is exempt from the
19         provisions of Section 250;
20             (T) For taxable years 2001 and thereafter, for the
21         taxable year in which the bonus depreciation deduction
22         (30% of the adjusted basis of the qualified property)
23         is taken on the taxpayer's federal income tax return
24         under subsection (k) of Section 168 of the Internal
25         Revenue Code and for each applicable taxable year
26         thereafter, an amount equal to "x", where:
27                 (1) "y" equals the amount of the depreciation
28             deduction taken for the taxable year on the
29             taxpayer's federal income tax return on property
30             for which the bonus depreciation deduction (30% of
31             the adjusted basis of the qualified property) was
32             taken in any year under subsection (k) of Section
33             168 of the Internal Revenue Code, but not including
34             the bonus depreciation deduction; and
35                 (2) "x" equals "y" multiplied by 30 and then
36             divided by 70 (or "y" multiplied by 0.429).

 

 

HB4914 - 23 - LRB093 15099 SJM 40689 b

1             The aggregate amount deducted under this
2         subparagraph in all taxable years for any one piece of
3         property may not exceed the amount of the bonus
4         depreciation deduction (30% of the adjusted basis of
5         the qualified property) taken on that property on the
6         taxpayer's federal income tax return under subsection
7         (k) of Section 168 of the Internal Revenue Code; and
8             (U) If the taxpayer reports a capital gain or loss
9         on the taxpayer's federal income tax return for the
10         taxable year based on a sale or transfer of property
11         for which the taxpayer was required in any taxable year
12         to make an addition modification under subparagraph
13         (E-10), then an amount equal to that addition
14         modification.
15             The taxpayer is allowed to take the deduction under
16         this subparagraph only once with respect to any one
17         piece of property.
18         (3) Special rule. For purposes of paragraph (2) (A),
19     "gross income" in the case of a life insurance company, for
20     tax years ending on and after December 31, 1994, shall mean
21     the gross investment income for the taxable year.
 
22     (c) Trusts and estates.
23         (1) In general. In the case of a trust or estate, base
24     income means an amount equal to the taxpayer's taxable
25     income for the taxable year as modified by paragraph (2).
26         (2) Modifications. Subject to the provisions of
27     paragraph (3), the taxable income referred to in paragraph
28     (1) shall be modified by adding thereto the sum of the
29     following amounts:
30             (A) An amount equal to all amounts paid or accrued
31         to the taxpayer as interest or dividends during the
32         taxable year to the extent excluded from gross income
33         in the computation of taxable income;
34             (B) In the case of (i) an estate, $600; (ii) a
35         trust which, under its governing instrument, is

 

 

HB4914 - 24 - LRB093 15099 SJM 40689 b

1         required to distribute all of its income currently,
2         $300; and (iii) any other trust, $100, but in each such
3         case, only to the extent such amount was deducted in
4         the computation of taxable income;
5             (C) An amount equal to the amount of tax imposed by
6         this Act to the extent deducted from gross income in
7         the computation of taxable income for the taxable year;
8             (D) The amount of any net operating loss deduction
9         taken in arriving at taxable income, other than a net
10         operating loss carried forward from a taxable year
11         ending prior to December 31, 1986;
12             (E) For taxable years in which a net operating loss
13         carryback or carryforward from a taxable year ending
14         prior to December 31, 1986 is an element of taxable
15         income under paragraph (1) of subsection (e) or
16         subparagraph (E) of paragraph (2) of subsection (e),
17         the amount by which addition modifications other than
18         those provided by this subparagraph (E) exceeded
19         subtraction modifications in such taxable year, with
20         the following limitations applied in the order that
21         they are listed:
22                 (i) the addition modification relating to the
23             net operating loss carried back or forward to the
24             taxable year from any taxable year ending prior to
25             December 31, 1986 shall be reduced by the amount of
26             addition modification under this subparagraph (E)
27             which related to that net operating loss and which
28             was taken into account in calculating the base
29             income of an earlier taxable year, and
30                 (ii) the addition modification relating to the
31             net operating loss carried back or forward to the
32             taxable year from any taxable year ending prior to
33             December 31, 1986 shall not exceed the amount of
34             such carryback or carryforward;
35             For taxable years in which there is a net operating
36         loss carryback or carryforward from more than one other

 

 

HB4914 - 25 - LRB093 15099 SJM 40689 b

1         taxable year ending prior to December 31, 1986, the
2         addition modification provided in this subparagraph
3         (E) shall be the sum of the amounts computed
4         independently under the preceding provisions of this
5         subparagraph (E) for each such taxable year;
6             (F) For taxable years ending on or after January 1,
7         1989, an amount equal to the tax deducted pursuant to
8         Section 164 of the Internal Revenue Code if the trust
9         or estate is claiming the same tax for purposes of the
10         Illinois foreign tax credit under Section 601 of this
11         Act;
12             (G) An amount equal to the amount of the capital
13         gain deduction allowable under the Internal Revenue
14         Code, to the extent deducted from gross income in the
15         computation of taxable income;
16             (G-5) For taxable years ending after December 31,
17         1997, an amount equal to any eligible remediation costs
18         that the trust or estate deducted in computing adjusted
19         gross income and for which the trust or estate claims a
20         credit under subsection (l) of Section 201;
21             (G-10) For taxable years 2001 and thereafter, an
22         amount equal to the bonus depreciation deduction (30%
23         of the adjusted basis of the qualified property) taken
24         on the taxpayer's federal income tax return for the
25         taxable year under subsection (k) of Section 168 of the
26         Internal Revenue Code; and
27             (G-11) If the taxpayer reports a capital gain or
28         loss on the taxpayer's federal income tax return for
29         the taxable year based on a sale or transfer of
30         property for which the taxpayer was required in any
31         taxable year to make an addition modification under
32         subparagraph (G-10), then an amount equal to the
33         aggregate amount of the deductions taken in all taxable
34         years under subparagraph (R) with respect to that
35         property. ;
36             The taxpayer is required to make the addition

 

 

HB4914 - 26 - LRB093 15099 SJM 40689 b

1         modification under this subparagraph only once with
2         respect to any one piece of property;
3     and by deducting from the total so obtained the sum of the
4     following amounts:
5             (H) An amount equal to all amounts included in such
6         total pursuant to the provisions of Sections 402(a),
7         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
8         Internal Revenue Code or included in such total as
9         distributions under the provisions of any retirement
10         or disability plan for employees of any governmental
11         agency or unit, or retirement payments to retired
12         partners, which payments are excluded in computing net
13         earnings from self employment by Section 1402 of the
14         Internal Revenue Code and regulations adopted pursuant
15         thereto;
16             (I) The valuation limitation amount;
17             (J) An amount equal to the amount of any tax
18         imposed by this Act which was refunded to the taxpayer
19         and included in such total for the taxable year;
20             (K) An amount equal to all amounts included in
21         taxable income as modified by subparagraphs (A), (B),
22         (C), (D), (E), (F) and (G) which are exempt from
23         taxation by this State either by reason of its statutes
24         or 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 obligations
28         from the tax imposed under this Act, the amount
29         exempted shall be the interest net of bond premium
30         amortization;
31             (L) With the exception of any amounts subtracted
32         under subparagraph (K), an amount equal to the sum of
33         all amounts disallowed as deductions by (i) Sections
34         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
35         as now or hereafter amended, and all amounts of
36         expenses allocable to interest and disallowed as

 

 

HB4914 - 27 - LRB093 15099 SJM 40689 b

1         deductions by Section 265(1) of the Internal Revenue
2         Code of 1954, as now or hereafter amended; and (ii) for
3         taxable years ending on or after August 13, 1999,
4         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
5         the Internal Revenue Code; the provisions of this
6         subparagraph are exempt from the provisions of Section
7         250;
8             (M) An amount equal to those dividends included in
9         such total which were paid by a corporation which
10         conducts business operations in an Enterprise Zone or
11         zones created under the Illinois Enterprise Zone Act
12         and conducts substantially all of its operations in an
13         Enterprise Zone or Zones;
14             (N) An amount equal to any contribution made to a
15         job training project established pursuant to the Tax
16         Increment Allocation Redevelopment Act;
17             (O) An amount equal to those dividends included in
18         such total that were paid by a corporation that
19         conducts business operations in a federally designated
20         Foreign Trade Zone or Sub-Zone and that is designated a
21         High Impact Business located in Illinois; provided
22         that dividends eligible for the deduction provided in
23         subparagraph (M) of paragraph (2) of this subsection
24         shall not be eligible for the deduction provided under
25         this subparagraph (O);
26             (P) An amount equal to the amount of the deduction
27         used to compute the federal income tax credit for
28         restoration of substantial amounts held under claim of
29         right for the taxable year pursuant to Section 1341 of
30         the Internal Revenue Code of 1986;
31             (Q) For taxable year 1999 and thereafter, an amount
32         equal to the amount of any (i) distributions, to the
33         extent includible in gross income for federal income
34         tax purposes, made to the taxpayer because of his or
35         her status as a victim of persecution for racial or
36         religious reasons by Nazi Germany or any other Axis

 

 

HB4914 - 28 - LRB093 15099 SJM 40689 b

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

 

 

HB4914 - 29 - LRB093 15099 SJM 40689 b

1             taxpayer's federal income tax return on property
2             for which the bonus depreciation deduction (30% of
3             the adjusted basis of the qualified property) was
4             taken in any year under subsection (k) of Section
5             168 of the Internal Revenue Code, but not including
6             the bonus depreciation deduction; and
7                 (2) "x" equals "y" multiplied by 30 and then
8             divided by 70 (or "y" multiplied by 0.429).
9             The aggregate amount deducted under this
10         subparagraph in all taxable years for any one piece of
11         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 the
14         taxpayer's federal income tax return under subsection
15         (k) of Section 168 of the Internal Revenue Code; and
16             (S) If the taxpayer reports a capital gain or loss
17         on the taxpayer's federal income tax return for the
18         taxable year based on a sale or transfer of property
19         for which the taxpayer was required in any taxable year
20         to make an addition modification under subparagraph
21         (G-10), then an amount equal to that addition
22         modification.
23             The taxpayer is allowed to take the deduction under
24         this subparagraph only once with respect to any one
25         piece of property.
26         (3) Limitation. The amount of any modification
27     otherwise required under this subsection shall, under
28     regulations prescribed by the Department, be adjusted by
29     any amounts included therein which were properly paid,
30     credited, or required to be distributed, or permanently set
31     aside for charitable purposes pursuant to Internal Revenue
32     Code Section 642(c) during the taxable year.
 
33     (d) Partnerships.
34         (1) In general. In the case of a partnership, base
35     income means an amount equal to the taxpayer's taxable

 

 

HB4914 - 30 - LRB093 15099 SJM 40689 b

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

 

 

HB4914 - 31 - LRB093 15099 SJM 40689 b

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

 

 

HB4914 - 32 - LRB093 15099 SJM 40689 b

1         Code, as now or hereafter amended; and (ii) for taxable
2         years 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 Section
6         250;
7             (K) An amount equal to those dividends included in
8         such total which were paid by a corporation which
9         conducts business operations in an Enterprise Zone or
10         zones created under the Illinois Enterprise Zone Act,
11         enacted by the 82nd General Assembly, and conducts
12         substantially all of its operations in an Enterprise
13         Zone or Zones;
14             (L) An amount equal to any contribution made to a
15         job training project established pursuant to the Real
16         Property Tax Increment Allocation Redevelopment Act;
17             (M) An amount equal to those dividends included in
18         such total that were paid by a corporation that
19         conducts business operations in a federally designated
20         Foreign Trade Zone or Sub-Zone and that is designated a
21         High Impact Business located in Illinois; provided
22         that dividends eligible for the deduction provided in
23         subparagraph (K) of paragraph (2) of this subsection
24         shall not be eligible for the deduction provided under
25         this subparagraph (M);
26             (N) An amount equal to the amount of the deduction
27         used to compute the federal income tax credit for
28         restoration of substantial amounts held under claim of
29         right for the taxable year pursuant to Section 1341 of
30         the Internal Revenue Code of 1986;
31             (O) For taxable years 2001 and thereafter, for the
32         taxable year in which the bonus depreciation deduction
33         (30% of the adjusted basis of the qualified property)
34         is taken on the taxpayer's federal income tax return
35         under subsection (k) of Section 168 of the Internal
36         Revenue Code and for each applicable taxable year

 

 

HB4914 - 33 - LRB093 15099 SJM 40689 b

1         thereafter, an amount equal to "x", where:
2                 (1) "y" equals the amount of the depreciation
3             deduction taken for the taxable year on the
4             taxpayer's federal income tax return on property
5             for which the bonus depreciation deduction (30% of
6             the adjusted basis of the qualified property) was
7             taken in any year under subsection (k) of Section
8             168 of the Internal Revenue Code, but not including
9             the bonus depreciation deduction; and
10                 (2) "x" equals "y" multiplied by 30 and then
11             divided by 70 (or "y" multiplied by 0.429).
12             The aggregate amount deducted under this
13         subparagraph in all taxable years for any one piece of
14         property may not exceed the amount of the bonus
15         depreciation deduction (30% of the adjusted basis of
16         the qualified property) taken on that property on the
17         taxpayer's federal income tax return under subsection
18         (k) of Section 168 of the Internal Revenue Code; and
19             (P) If the taxpayer reports a capital gain or loss
20         on the taxpayer's federal income tax return for the
21         taxable year based on a sale or transfer of property
22         for which the taxpayer was required in any taxable year
23         to make an addition modification under subparagraph
24         (D-5), then an amount equal to that addition
25         modification.
26             The taxpayer is allowed to take the deduction under
27         this subparagraph only once with respect to any one
28         piece of property.
 
29     (e) Gross income; adjusted gross income; taxable income.
30         (1) In general. Subject to the provisions of paragraph
31     (2) and subsection (b) (3), for purposes of this Section
32     and Section 803(e), a taxpayer's gross income, adjusted
33     gross income, or taxable income for the taxable year shall
34     mean the amount of gross income, adjusted gross income or
35     taxable income properly reportable for federal income tax

 

 

HB4914 - 34 - LRB093 15099 SJM 40689 b

1     purposes for the taxable year under the provisions of the
2     Internal Revenue Code. Taxable income may be less than
3     zero. However, for taxable years ending on or after
4     December 31, 1986, net operating loss carryforwards from
5     taxable years ending prior to December 31, 1986, may not
6     exceed the sum of federal taxable income for the taxable
7     year before net operating loss deduction, plus the excess
8     of addition modifications over subtraction modifications
9     for the taxable year. For taxable years ending prior to
10     December 31, 1986, taxable income may never be an amount in
11     excess of the net operating loss for the taxable year as
12     defined in subsections (c) and (d) of Section 172 of the
13     Internal Revenue Code, provided that when taxable income of
14     a corporation (other than a Subchapter S corporation),
15     trust, or estate is less than zero and addition
16     modifications, other than those provided by subparagraph
17     (E) of paragraph (2) of subsection (b) for corporations or
18     subparagraph (E) of paragraph (2) of subsection (c) for
19     trusts and estates, exceed subtraction modifications, an
20     addition modification must be made under those
21     subparagraphs for any other taxable year to which the
22     taxable income less than zero (net operating loss) is
23     applied under Section 172 of the Internal Revenue Code or
24     under subparagraph (E) of paragraph (2) of this subsection
25     (e) applied in conjunction with Section 172 of the Internal
26     Revenue Code.
27         (2) Special rule. For purposes of paragraph (1) of this
28     subsection, the taxable income properly reportable for
29     federal income tax purposes shall mean:
30             (A) Certain life insurance companies. In the case
31         of a life insurance company subject to the tax imposed
32         by Section 801 of the Internal Revenue Code, life
33         insurance company taxable income, plus the amount of
34         distribution from pre-1984 policyholder surplus
35         accounts as calculated under Section 815a of the
36         Internal Revenue Code;

 

 

HB4914 - 35 - LRB093 15099 SJM 40689 b

1             (B) Certain other insurance companies. In the case
2         of mutual insurance companies subject to the tax
3         imposed by Section 831 of the Internal Revenue Code,
4         insurance company taxable income;
5             (C) Regulated investment companies. In the case of
6         a regulated investment company subject to the tax
7         imposed by Section 852 of the Internal Revenue Code,
8         investment company taxable income;
9             (D) Real estate investment trusts. In the case of a
10         real estate investment trust subject to the tax imposed
11         by Section 857 of the Internal Revenue Code, real
12         estate investment trust taxable income;
13             (E) Consolidated corporations. In the case of a
14         corporation which is a member of an affiliated group of
15         corporations filing a consolidated income tax return
16         for the taxable year for federal income tax purposes,
17         taxable income determined as if such corporation had
18         filed a separate return for federal income tax purposes
19         for the taxable year and each preceding taxable year
20         for which it was a member of an affiliated group. For
21         purposes of this subparagraph, the taxpayer's separate
22         taxable income shall be determined as if the election
23         provided by Section 243(b) (2) of the Internal Revenue
24         Code had been in effect for all such years;
25             (F) Cooperatives. In the case of a cooperative
26         corporation or association, the taxable income of such
27         organization determined in accordance with the
28         provisions of Section 1381 through 1388 of the Internal
29         Revenue Code;
30             (G) Subchapter S corporations. In the case of: (i)
31         a Subchapter S corporation for which there is in effect
32         an election for the taxable year under Section 1362 of
33         the Internal Revenue Code, the taxable income of such
34         corporation determined in accordance with Section
35         1363(b) of the Internal Revenue Code, except that
36         taxable income shall take into account those items

 

 

HB4914 - 36 - LRB093 15099 SJM 40689 b

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

 

 

HB4914 - 37 - LRB093 15099 SJM 40689 b

1         to in paragraph (1) was readily ascertainable on August
2         1, 1969, the pre-August 1, 1969 appreciation amount for
3         such property is the lesser of (i) the excess of such
4         fair market value over the taxpayer's basis (for
5         determining gain) for such property on that date
6         (determined under the Internal Revenue Code as in
7         effect on that date), or (ii) the total gain realized
8         and reportable for federal income tax purposes in
9         respect of the sale, exchange or other disposition of
10         such property.
11             (B) If the fair market value of property referred
12         to in paragraph (1) was not readily ascertainable on
13         August 1, 1969, the pre-August 1, 1969 appreciation
14         amount for such property is that amount which bears the
15         same ratio to the total gain reported in respect of the
16         property for federal income tax purposes for the
17         taxable year, as the number of full calendar months in
18         that part of the taxpayer's holding period for the
19         property ending July 31, 1969 bears to the number of
20         full calendar months in the taxpayer's entire holding
21         period for the property.
22             (C) The Department shall prescribe such
23         regulations as may be necessary to carry out the
24         purposes of this paragraph.
 
25     (g) Double deductions. Unless specifically provided
26 otherwise, nothing in this Section shall permit the same item
27 to be deducted more than once.
 
28     (h) Legislative intention. Except as expressly provided by
29 this Section there shall be no modifications or limitations on
30 the amounts of income, gain, loss or deduction taken into
31 account in determining gross income, adjusted gross income or
32 taxable income for federal income tax purposes for the taxable
33 year, or in the amount of such items entering into the
34 computation of base income and net income under this Act for

 

 

HB4914 - 38 - LRB093 15099 SJM 40689 b

1 such taxable year, whether in respect of property values as of
2 August 1, 1969 or otherwise.
3 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
4 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
5 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
6 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
7 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
8 7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
 
9     (110 ILCS 920/9 rep.)  (from Ch. 144, par. 2409)
10     Section 15. The Baccalaureate Savings Act is amended by
11 repealing Section 9.
 
12     (110 ILCS 979/70 rep.)
13     Section 20. The Illinois Prepaid Tuition Act is amended by
14 repealing Section 70.
 
15     Section 99. Effective date. This Act takes effect upon
16 becoming law, except that Sections 5, 15, and 20 take effect on
17 January 1, 2005.