Revenue Committee

Filed: 5/19/2004

 

 


 

 


 
09300SB2211ham001 LRB093 15834 RCE 51234 a

1
AMENDMENT TO SENATE BILL 2211

2     AMENDMENT NO. ______. Amend Senate Bill 2211 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Income Tax Act is amended by
5 changing Section 203 as follows:
 
6     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7     Sec. 203. Base income defined.
8     (a) Individuals.
9         (1) In general. In the case of an individual, base
10     income means an amount equal to the taxpayer's adjusted
11     gross income for the taxable year as modified by paragraph
12     (2).
13         (2) Modifications. The adjusted gross income referred
14     to in paragraph (1) shall be modified by adding thereto the
15     sum of the following amounts:
16             (A) An amount equal to all amounts paid or accrued
17         to the taxpayer as interest or dividends during the
18         taxable year to the extent excluded from gross income
19         in the computation of adjusted gross income, except
20         stock dividends of qualified public utilities
21         described in Section 305(e) of the Internal Revenue
22         Code;
23             (B) An amount equal to the amount of tax imposed by
24         this Act to the extent deducted from gross income in

 

 

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1         the computation of adjusted gross income for the
2         taxable year;
3             (C) An amount equal to the amount received during
4         the taxable year as a recovery or refund of real
5         property taxes paid with respect to the taxpayer's
6         principal residence under the Revenue Act of 1939 and
7         for which a deduction was previously taken under
8         subparagraph (L) of this paragraph (2) prior to July 1,
9         1991, the retrospective application date of Article 4
10         of Public Act 87-17. In the case of multi-unit or
11         multi-use structures and farm dwellings, the taxes on
12         the taxpayer's principal residence shall be that
13         portion of the total taxes for the entire property
14         which is attributable to such principal residence;
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 adjusted gross income;
19             (D-5) An amount, to the extent not included in
20         adjusted gross income, equal to the amount of money
21         withdrawn by the taxpayer in the taxable year from a
22         medical care savings account and the interest earned on
23         the account in the taxable year of a withdrawal
24         pursuant to subsection (b) of Section 20 of the Medical
25         Care Savings Account Act or subsection (b) of Section
26         20 of the Medical Care Savings Account Act of 2000;
27             (D-10) For taxable years ending after December 31,
28         1997, an amount equal to any eligible remediation costs
29         that the individual deducted in computing adjusted
30         gross income and for which the individual claims a
31         credit under subsection (l) of Section 201;
32             (D-15) For taxable years ending on or after
33         December 31, 2000 and before December 31, 2004 2001 and
34         thereafter, an amount equal to the bonus depreciation

 

 

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1         deduction (30% of the adjusted basis of the qualified
2         property) taken on the taxpayer's federal income tax
3         return for the taxable year under subsection (k) of
4         Section 168 of the Internal Revenue Code; and
5             (D-16) 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-15), then an amount equal to the
11         aggregate amount of the deductions taken in all taxable
12         years under subparagraph (Z) with respect to that
13         property. ;
14             The taxpayer is required to make the addition
15         modification under this subparagraph only once with
16         respect to any one piece of property; . and
17             (D-20) (D-15) For taxable years beginning on or
18         after January 1, 2002, in the case of a distribution
19         from a qualified tuition program under Section 529 of
20         the Internal Revenue Code, other than (i) a
21         distribution from a College Savings Pool created under
22         Section 16.5 of the State Treasurer Act or (ii) a
23         distribution from the Illinois Prepaid Tuition Trust
24         Fund, an amount equal to the amount excluded from gross
25         income under Section 529(c)(3)(B);
26     and by deducting from the total so obtained the sum of the
27     following amounts:
28             (E) For taxable years ending before December 31,
29         2001, any amount included in such total in respect of
30         any compensation (including but not limited to any
31         compensation paid or accrued to a serviceman while a
32         prisoner of war or missing in action) paid to a
33         resident by reason of being on active duty in the Armed
34         Forces of the United States and in respect of any

 

 

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

 

 

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

 

 

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

 

 

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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

 

 

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

 

 

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

 

 

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1             the adjusted basis of the qualified property) was
2             taken in any year under subsection (k) of Section
3             168 of the Internal Revenue Code (for this purpose,
4             the depreciation deduction taken for the taxable
5             year on the taxpayer's federal income tax return is
6             deemed to take into account any depreciation
7             adjustment required under Section 203(e)(2)(I)),
8             but not including the bonus depreciation
9             deduction; and
10                 (2) for property on which a bonus depreciation
11             deduction of 30% of the adjusted basis was taken,
12             "x" equals "y" multiplied by 30 and then divided by
13             70 (or "y" multiplied by 0.429), and for property
14             on which a bonus depreciation deduction of 50% of
15             the adjusted basis was taken, "x" equals "y"
16             multiplied by 1.0.
17             The aggregate amount deducted under this
18         subparagraph in all taxable years for any one piece of
19         property may not exceed the amount of the bonus
20         depreciation deduction (30% of the adjusted basis of
21         the qualified property) taken on that property on the
22         taxpayer's federal income tax return under subsection
23         (k) of Section 168 of the Internal Revenue Code; and
24             (AA) If the taxpayer reports a capital gain or loss
25         on the taxpayer's federal income tax return for the
26         taxable year based on a sale or transfer of property
27         for which the taxpayer was required in any taxable year
28         to make an addition modification under subparagraph
29         (D-15), then an amount equal to that addition
30         modification.
31             The taxpayer is allowed to take the deduction under
32         this subparagraph only once with respect to any one
33         piece of property; and
34             (BB) (Z) Any amount included in adjusted gross

 

 

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1         income, other than salary, received by a driver in a
2         ridesharing arrangement using a motor vehicle.
 
3     (b) Corporations.
4         (1) In general. In the case of a corporation, base
5     income means an amount equal to the taxpayer's taxable
6     income for the taxable year as modified by paragraph (2).
7         (2) Modifications. The taxable income referred to in
8     paragraph (1) shall be modified by adding thereto the sum
9     of the following amounts:
10             (A) An amount equal to all amounts paid or accrued
11         to the taxpayer as interest and all distributions
12         received from regulated investment companies during
13         the taxable year to the extent excluded from gross
14         income in the computation of taxable income;
15             (B) An amount equal to the amount of tax imposed by
16         this Act to the extent deducted from gross income in
17         the computation of taxable income for the taxable year;
18             (C) In the case of a regulated investment company,
19         an amount equal to the excess of (i) the net long-term
20         capital gain for the taxable year, over (ii) the amount
21         of the capital gain dividends designated as such in
22         accordance with Section 852(b)(3)(C) of the Internal
23         Revenue Code and any amount designated under Section
24         852(b)(3)(D) of the Internal Revenue Code,
25         attributable to the taxable year (this amendatory Act
26         of 1995 (Public Act 89-89) is declarative of existing
27         law and is not a new enactment);
28             (D) The amount of any net operating loss deduction
29         taken in arriving at taxable income, other than a net
30         operating loss carried forward from a taxable year
31         ending prior to December 31, 1986;
32             (E) For taxable years in which a net operating loss
33         carryback or carryforward from a taxable year ending

 

 

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1         prior to December 31, 1986 is an element of taxable
2         income under paragraph (1) of subsection (e) or
3         subparagraph (E) of paragraph (2) of subsection (e),
4         the amount by which addition modifications other than
5         those provided by this subparagraph (E) exceeded
6         subtraction modifications in such earlier taxable
7         year, with the following limitations applied in the
8         order that they are listed:
9                 (i) the addition modification relating to the
10             net operating loss carried back or forward to the
11             taxable year from any taxable year ending prior to
12             December 31, 1986 shall be reduced by the amount of
13             addition modification under this subparagraph (E)
14             which related to that net operating loss and which
15             was taken into account in calculating the base
16             income of an earlier taxable year, and
17                 (ii) the addition modification relating to the
18             net operating loss carried back or forward to the
19             taxable year from any taxable year ending prior to
20             December 31, 1986 shall not exceed the amount of
21             such carryback or carryforward;
22             For taxable years in which there is a net operating
23         loss carryback or carryforward from more than one other
24         taxable year ending prior to December 31, 1986, the
25         addition modification provided in this subparagraph
26         (E) shall be the sum of the amounts computed
27         independently under the preceding provisions of this
28         subparagraph (E) for each such taxable year;
29             (E-5) For taxable years ending after December 31,
30         1997, an amount equal to any eligible remediation costs
31         that the corporation deducted in computing adjusted
32         gross income and for which the corporation claims a
33         credit under subsection (l) of Section 201;
34             (E-10) For taxable years ending on or after

 

 

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1         December 31, 2000 and before December 31, 2004 2001 and
2         thereafter, an amount equal to the bonus depreciation
3         deduction (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 or
8         loss on the taxpayer's federal income tax return for
9         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 taxable
14         years under subparagraph (T) with respect to that
15         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 the
20     following amounts:
21             (F) An amount equal to the amount of any tax
22         imposed by this Act which was refunded to the taxpayer
23         and included in such total for the taxable year;
24             (G) An amount equal to any amount included in such
25         total under Section 78 of the Internal Revenue Code;
26             (H) In the case of a regulated investment company,
27         an amount equal to the amount of exempt interest
28         dividends as defined in subsection (b) (5) of Section
29         852 of the Internal Revenue Code, paid to shareholders
30         for the taxable year;
31             (I) With the exception of any amounts subtracted
32         under subparagraph (J), an amount equal to the sum of
33         all amounts disallowed as deductions by (i) Sections
34         171(a) (2), and 265(a)(2) and amounts disallowed as

 

 

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

 

 

09300SB2211ham001 - 15 - LRB093 15834 RCE 51234 a

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

 

 

09300SB2211ham001 - 16 - LRB093 15834 RCE 51234 a

1         date that it was placed in service in a federally
2         designated Foreign Trade Zone or Sub-Zone located in
3         Illinois. No taxpayer that is eligible for the
4         deduction provided in subparagraph (M) of paragraph
5         (2) of this subsection shall be eligible for the
6         deduction provided under this subparagraph (M-1). The
7         subtraction modification available to taxpayers in any
8         year under this subsection shall be that portion of the
9         total interest paid by the borrower with respect to
10         such loan attributable to the eligible property as
11         calculated under the previous sentence;
12             (N) Two times any contribution made during the
13         taxable year to a designated zone organization to the
14         extent that the contribution (i) qualifies as a
15         charitable contribution under subsection (c) of
16         Section 170 of the Internal Revenue Code and (ii) must,
17         by its terms, be used for a project approved by the
18         Department of Commerce and Economic Opportunity
19         Community Affairs under Section 11 of the Illinois
20         Enterprise Zone Act;
21             (O) An amount equal to: (i) 85% for taxable years
22         ending on or before December 31, 1992, or, a percentage
23         equal to the percentage allowable under Section
24         243(a)(1) of the Internal Revenue Code of 1986 for
25         taxable years ending after December 31, 1992, of the
26         amount by which dividends included in taxable income
27         and received from a corporation that is not created or
28         organized under the laws of the United States or any
29         state or political subdivision thereof, including, for
30         taxable years ending on or after December 31, 1988,
31         dividends received or deemed received or paid or deemed
32         paid under Sections 951 through 964 of the Internal
33         Revenue Code, exceed the amount of the modification
34         provided under subparagraph (G) of paragraph (2) of

 

 

09300SB2211ham001 - 17 - LRB093 15834 RCE 51234 a

1         this subsection (b) which is related to such dividends;
2         plus (ii) 100% of the amount by which dividends,
3         included in taxable income and received, including,
4         for taxable years ending on or after December 31, 1988,
5         dividends received or deemed received or paid or deemed
6         paid under Sections 951 through 964 of the Internal
7         Revenue Code, from any such corporation specified in
8         clause (i) that would but for the provisions of Section
9         1504 (b) (3) of the Internal Revenue Code be treated as
10         a member of the affiliated group which includes the
11         dividend recipient, exceed the amount of the
12         modification provided under subparagraph (G) of
13         paragraph (2) of this subsection (b) which is related
14         to such dividends;
15             (P) An amount equal to any contribution made to a
16         job training project established pursuant to the Tax
17         Increment Allocation Redevelopment Act;
18             (Q) An amount equal to the amount of the deduction
19         used to compute the federal income tax credit for
20         restoration of substantial amounts held under claim of
21         right for the taxable year pursuant to Section 1341 of
22         the Internal Revenue Code of 1986;
23             (R) In the case of an attorney-in-fact with respect
24         to whom an interinsurer or a reciprocal insurer has
25         made the election under Section 835 of the Internal
26         Revenue Code, 26 U.S.C. 835, an amount equal to the
27         excess, if any, of the amounts paid or incurred by that
28         interinsurer or reciprocal insurer in the taxable year
29         to the attorney-in-fact over the deduction allowed to
30         that interinsurer or reciprocal insurer with respect
31         to the attorney-in-fact under Section 835(b) of the
32         Internal Revenue Code for the taxable year;
33             (S) For taxable years ending on or after December
34         31, 1997, in the case of a Subchapter S corporation, an

 

 

09300SB2211ham001 - 18 - LRB093 15834 RCE 51234 a

1         amount equal to all amounts of income allocable to a
2         shareholder subject to the Personal Property Tax
3         Replacement Income Tax imposed by subsections (c) and
4         (d) of Section 201 of this Act, including amounts
5         allocable to organizations exempt from federal income
6         tax by reason of Section 501(a) of the Internal Revenue
7         Code. This subparagraph (S) is exempt from the
8         provisions of Section 250;
9             (T) For each taxable year ending before December
10         31, 2004 years 2001 and thereafter, for the taxable
11         year in which the bonus depreciation deduction (30% of
12         the adjusted basis of the qualified property) is taken
13         on the taxpayer's federal income tax return under
14         subsection (k) of Section 168 of the Internal Revenue
15         Code and for each applicable taxable year thereafter,
16         an amount equal to "x", where:
17                 (1) "y" equals the amount of the depreciation
18             deduction taken for the taxable year on the
19             taxpayer's federal income tax return on property
20             for which the bonus depreciation deduction (30% of
21             the adjusted basis of the qualified property) was
22             taken in any year under subsection (k) of Section
23             168 of the Internal Revenue Code (for this purpose,
24             the depreciation deduction taken for the taxable
25             year on the taxpayer's federal income tax return is
26             deemed to take into account any depreciation
27             adjustment required under Section 203(e)(2)(I)),
28             but not including the bonus depreciation
29             deduction; and
30                 (2) for property on which a bonus depreciation
31             deduction of 30% of the adjusted basis was taken,
32             "x" equals "y" multiplied by 30 and then divided by
33             70 (or "y" multiplied by 0.429), and for property
34             on which a bonus depreciation deduction of 50% of

 

 

09300SB2211ham001 - 19 - LRB093 15834 RCE 51234 a

1             the adjusted basis was taken, "x" equals "y"
2             multiplied by 1.0.
3             The aggregate amount deducted under this
4         subparagraph in all taxable years for any one piece of
5         property may not exceed the amount of the bonus
6         depreciation deduction (30% of the adjusted basis of
7         the qualified property) taken on that property on the
8         taxpayer's federal income tax return under subsection
9         (k) of Section 168 of the Internal Revenue Code; and
10             (U) If the taxpayer reports a capital gain or loss
11         on the taxpayer's federal income tax return for the
12         taxable year based on a sale or transfer of property
13         for which the taxpayer was required in any taxable year
14         to make an addition modification under subparagraph
15         (E-10), then an amount equal to that addition
16         modification.
17             The taxpayer is allowed to take the deduction under
18         this subparagraph only once with respect to any one
19         piece of property.
20         (3) Special rule. For purposes of paragraph (2) (A),
21     "gross income" in the case of a life insurance company, for
22     tax years ending on and after December 31, 1994, shall mean
23     the gross investment income for the taxable year.
 
24     (c) Trusts and estates.
25         (1) In general. In the case of a trust or estate, base
26     income means an amount equal to the taxpayer's taxable
27     income for the taxable year as modified by paragraph (2).
28         (2) Modifications. Subject to the provisions of
29     paragraph (3), the taxable income referred to in paragraph
30     (1) shall be modified by adding thereto the sum of the
31     following amounts:
32             (A) An amount equal to all amounts paid or accrued
33         to the taxpayer as interest or dividends during the

 

 

09300SB2211ham001 - 20 - LRB093 15834 RCE 51234 a

1         taxable year to the extent excluded from gross income
2         in the computation of taxable income;
3             (B) In the case of (i) an estate, $600; (ii) a
4         trust which, under its governing instrument, is
5         required to distribute all of its income currently,
6         $300; and (iii) any other trust, $100, but in each such
7         case, only to the extent such amount was deducted in
8         the computation of taxable income;
9             (C) An amount equal to the amount of tax imposed by
10         this Act to the extent deducted from gross income in
11         the computation of taxable income for the taxable year;
12             (D) The amount of any net operating loss deduction
13         taken in arriving at taxable income, other than a net
14         operating loss carried forward from a taxable year
15         ending prior to December 31, 1986;
16             (E) For taxable years in which a net operating loss
17         carryback or carryforward from a taxable year ending
18         prior to December 31, 1986 is an element of taxable
19         income under paragraph (1) of subsection (e) or
20         subparagraph (E) of paragraph (2) of subsection (e),
21         the amount by which addition modifications other than
22         those provided by this subparagraph (E) exceeded
23         subtraction modifications in such taxable year, with
24         the following limitations applied in the order that
25         they are listed:
26                 (i) the addition modification relating to the
27             net operating loss carried back or forward to the
28             taxable year from any taxable year ending prior to
29             December 31, 1986 shall be reduced by the amount of
30             addition modification under this subparagraph (E)
31             which related to that net operating loss and which
32             was taken into account in calculating the base
33             income of an earlier taxable year, and
34                 (ii) the addition modification relating to the

 

 

09300SB2211ham001 - 21 - LRB093 15834 RCE 51234 a

1             net operating loss carried back or forward to the
2             taxable year from any taxable year ending prior to
3             December 31, 1986 shall not exceed the amount of
4             such carryback or carryforward;
5             For taxable years in which there is a net operating
6         loss carryback or carryforward from more than one other
7         taxable year ending prior to December 31, 1986, the
8         addition modification provided in this subparagraph
9         (E) shall be the sum of the amounts computed
10         independently under the preceding provisions of this
11         subparagraph (E) for each such taxable year;
12             (F) For taxable years ending on or after January 1,
13         1989, an amount equal to the tax deducted pursuant to
14         Section 164 of the Internal Revenue Code if the trust
15         or estate is claiming the same tax for purposes of the
16         Illinois foreign tax credit under Section 601 of this
17         Act;
18             (G) An amount equal to the amount of the capital
19         gain deduction allowable under the Internal Revenue
20         Code, to the extent deducted from gross income in the
21         computation of taxable income;
22             (G-5) For taxable years ending after December 31,
23         1997, an amount equal to any eligible remediation costs
24         that the trust or estate deducted in computing adjusted
25         gross income and for which the trust or estate claims a
26         credit under subsection (l) of Section 201;
27             (G-10) For taxable years ending on or after
28         December 31, 2000 and before December 31, 2004, 2001
29         and thereafter, an amount equal to the bonus
30         depreciation deduction (30% of the adjusted basis of
31         the qualified property) taken on the taxpayer's
32         federal income tax return for the taxable year under
33         subsection (k) of Section 168 of the Internal Revenue
34         Code; and

 

 

09300SB2211ham001 - 22 - LRB093 15834 RCE 51234 a

1             (G-11) If the taxpayer reports a capital gain or
2         loss on the taxpayer's federal income tax return for
3         the taxable year based on a sale or transfer of
4         property for which the taxpayer was required in any
5         taxable year to make an addition modification under
6         subparagraph (G-10), then an amount equal to the
7         aggregate amount of the deductions taken in all taxable
8         years under subparagraph (R) with respect to that
9         property. ;
10             The taxpayer is required to make the addition
11         modification under this subparagraph only once with
12         respect to any one piece of property;
13     and by deducting from the total so obtained the sum of the
14     following amounts:
15             (H) An amount equal to all amounts included in such
16         total pursuant to the provisions of Sections 402(a),
17         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
18         Internal Revenue Code or included in such total as
19         distributions under the provisions of any retirement
20         or disability plan for employees of any governmental
21         agency or unit, or retirement payments to retired
22         partners, which payments are excluded in computing net
23         earnings from self employment by Section 1402 of the
24         Internal Revenue Code and regulations adopted pursuant
25         thereto;
26             (I) The valuation limitation amount;
27             (J) An amount equal to the amount of any tax
28         imposed by this Act which was refunded to the taxpayer
29         and included in such total for the taxable year;
30             (K) An amount equal to all amounts included in
31         taxable income as modified by subparagraphs (A), (B),
32         (C), (D), (E), (F) and (G) which are exempt from
33         taxation by this State either by reason of its statutes
34         or Constitution or by reason of the Constitution,

 

 

09300SB2211ham001 - 23 - LRB093 15834 RCE 51234 a

1         treaties or statutes of the United States; provided
2         that, in the case of any statute of this State that
3         exempts income derived from bonds or other obligations
4         from the tax imposed under this Act, the amount
5         exempted shall be the interest net of bond premium
6         amortization;
7             (L) With the exception of any amounts subtracted
8         under subparagraph (K), an amount equal to the sum of
9         all amounts disallowed as deductions by (i) Sections
10         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
11         as now or hereafter amended, and all amounts of
12         expenses allocable to interest and disallowed as
13         deductions by Section 265(1) of the Internal Revenue
14         Code of 1954, as now or hereafter amended; and (ii) for
15         taxable years ending on or after August 13, 1999,
16         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
17         the Internal Revenue Code; the provisions of this
18         subparagraph are exempt from the provisions of Section
19         250;
20             (M) An amount equal to those dividends included in
21         such total which were paid by a corporation which
22         conducts business operations in an Enterprise Zone or
23         zones created under the Illinois Enterprise Zone Act
24         and conducts substantially all of its operations in an
25         Enterprise Zone or Zones;
26             (N) An amount equal to any contribution made to a
27         job training project established pursuant to the Tax
28         Increment Allocation Redevelopment Act;
29             (O) An amount equal to those dividends included in
30         such total that were paid by a corporation that
31         conducts business operations in a federally designated
32         Foreign Trade Zone or Sub-Zone and that is designated a
33         High Impact Business located in Illinois; provided
34         that dividends eligible for the deduction provided in

 

 

09300SB2211ham001 - 24 - LRB093 15834 RCE 51234 a

1         subparagraph (M) of paragraph (2) of this subsection
2         shall not be eligible for the deduction provided under
3         this subparagraph (O);
4             (P) An amount equal to the amount of the deduction
5         used to compute the federal income tax credit for
6         restoration of substantial amounts held under claim of
7         right for the taxable year pursuant to Section 1341 of
8         the Internal Revenue Code of 1986;
9             (Q) For taxable year 1999 and thereafter, an amount
10         equal to the amount of any (i) distributions, to the
11         extent includible in gross income for federal income
12         tax purposes, made to the taxpayer because of his or
13         her status as a victim of persecution for racial or
14         religious reasons by Nazi Germany or any other Axis
15         regime or as an heir of the victim and (ii) items of
16         income, to the extent includible in gross income for
17         federal income tax purposes, attributable to, derived
18         from or in any way related to assets stolen from,
19         hidden from, or otherwise lost to a victim of
20         persecution for racial or religious reasons by Nazi
21         Germany or any other Axis regime immediately prior to,
22         during, and immediately after World War II, including,
23         but not limited to, interest on the proceeds receivable
24         as insurance under policies issued to a victim of
25         persecution for racial or religious reasons by Nazi
26         Germany or any other Axis regime by European insurance
27         companies immediately prior to and during World War II;
28         provided, however, this subtraction from federal
29         adjusted gross income does not apply to assets acquired
30         with such assets or with the proceeds from the sale of
31         such assets; provided, further, this paragraph shall
32         only apply to a taxpayer who was the first recipient of
33         such assets after their recovery and who is a victim of
34         persecution for racial or religious reasons by Nazi

 

 

09300SB2211ham001 - 25 - LRB093 15834 RCE 51234 a

1         Germany or any other Axis regime or as an heir of the
2         victim. The amount of and the eligibility for any
3         public assistance, benefit, or similar entitlement is
4         not affected by the inclusion of items (i) and (ii) of
5         this paragraph in gross income for federal income tax
6         purposes. This paragraph is exempt from the provisions
7         of Section 250;
8             (R) For each taxable year ending before December
9         31, 2004 years 2001 and thereafter, for the taxable
10         year in which the bonus depreciation deduction (30% of
11         the adjusted basis of the qualified property) is taken
12         on the taxpayer's federal income tax return under
13         subsection (k) of Section 168 of the Internal Revenue
14         Code and for each applicable taxable year thereafter,
15         an amount equal to "x", where:
16                 (1) "y" equals the amount of the depreciation
17             deduction taken for the taxable year on the
18             taxpayer's federal income tax return on property
19             for which the bonus depreciation deduction (30% of
20             the adjusted basis of the qualified property) was
21             taken in any year under subsection (k) of Section
22             168 of the Internal Revenue Code (for this purpose,
23             the depreciation deduction taken for the taxable
24             year on the taxpayer's federal income tax return is
25             deemed to take into account any depreciation
26             adjustment required under Section 203(e)(2)(I)),
27             but not including the bonus depreciation
28             deduction; and
29                 (2) for property on which a bonus depreciation
30             deduction of 30% of the adjusted basis was taken,
31             "x" equals "y" multiplied by 30 and then divided by
32             70 (or "y" multiplied by 0.429), and for property
33             on which a bonus depreciation deduction of 50% of
34             the adjusted basis was taken, "x" equals "y"

 

 

09300SB2211ham001 - 26 - LRB093 15834 RCE 51234 a

1             multiplied by 1.0.
2             The aggregate amount deducted under this
3         subparagraph in all taxable years for any one piece of
4         property may not exceed the amount of the bonus
5         depreciation deduction (30% of the adjusted basis of
6         the qualified property) taken on that property on the
7         taxpayer's federal income tax return under subsection
8         (k) of Section 168 of the Internal Revenue Code; and
9             (S) If the taxpayer reports a capital gain or loss
10         on the taxpayer's federal income tax return for the
11         taxable year based on a sale or transfer of property
12         for which the taxpayer was required in any taxable year
13         to make an addition modification under subparagraph
14         (G-10), then an amount equal to that addition
15         modification.
16             The taxpayer is allowed to take the deduction under
17         this subparagraph only once with respect to any one
18         piece of property.
19         (3) Limitation. The amount of any modification
20     otherwise required under this subsection shall, under
21     regulations prescribed by the Department, be adjusted by
22     any amounts included therein which were properly paid,
23     credited, or required to be distributed, or permanently set
24     aside for charitable purposes pursuant to Internal Revenue
25     Code Section 642(c) during the taxable year.
 
26     (d) Partnerships.
27         (1) In general. In the case of a partnership, base
28     income means an amount equal to the taxpayer's taxable
29     income for the taxable year as modified by paragraph (2).
30         (2) Modifications. The taxable income referred to in
31     paragraph (1) shall be modified by adding thereto the sum
32     of the following amounts:
33             (A) An amount equal to all amounts paid or accrued

 

 

09300SB2211ham001 - 27 - LRB093 15834 RCE 51234 a

1         to the taxpayer as interest or dividends during the
2         taxable year to the extent excluded from gross income
3         in the computation of taxable income;
4             (B) An amount equal to the amount of tax imposed by
5         this Act to the extent deducted from gross income for
6         the taxable year;
7             (C) The amount of deductions allowed to the
8         partnership pursuant to Section 707 (c) of the Internal
9         Revenue Code in calculating its taxable income;
10             (D) An amount equal to the amount of the capital
11         gain deduction allowable under the Internal Revenue
12         Code, to the extent deducted from gross income in the
13         computation of taxable income;
14             (D-5) For taxable years ending on or after December
15         31, 2000 and before December 31, 2004, 2001 and
16         thereafter, an amount equal to the bonus depreciation
17         deduction (30% of the adjusted basis of the qualified
18         property) taken on the taxpayer's federal income tax
19         return for the taxable year under subsection (k) of
20         Section 168 of the Internal Revenue Code; and
21             (D-6) If the taxpayer reports a capital gain or
22         loss on the taxpayer's federal income tax return for
23         the taxable year based on a sale or transfer of
24         property for which the taxpayer was required in any
25         taxable year to make an addition modification under
26         subparagraph (D-5), then an amount equal to the
27         aggregate amount of the deductions taken in all taxable
28         years under subparagraph (O) with respect to that
29         property. ;
30             The taxpayer is required to make the addition
31         modification under this subparagraph only once with
32         respect to any one piece of property;
33     and by deducting from the total so obtained the following
34     amounts:

 

 

09300SB2211ham001 - 28 - LRB093 15834 RCE 51234 a

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

 

 

09300SB2211ham001 - 29 - LRB093 15834 RCE 51234 a

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 each taxable year ending before December
32         31, 2004 years 2001 and thereafter, for the taxable
33         year in which the bonus depreciation deduction (30% of
34         the adjusted basis of the qualified property) is taken

 

 

09300SB2211ham001 - 30 - LRB093 15834 RCE 51234 a

1         on the taxpayer's federal income tax return under
2         subsection (k) of Section 168 of the Internal Revenue
3         Code and for each applicable taxable year thereafter,
4         an amount equal to "x", where:
5                 (1) "y" equals the amount of the depreciation
6             deduction taken for the taxable year on the
7             taxpayer's federal income tax return on property
8             for which the bonus depreciation deduction (30% of
9             the adjusted basis of the qualified property) was
10             taken in any year under subsection (k) of Section
11             168 of the Internal Revenue Code (for this purpose,
12             the depreciation deduction taken for the taxable
13             year on the taxpayer's federal income tax return is
14             deemed to take into account any depreciation
15             adjustment required under Section 203(e)(2)(I)),
16             but not including the bonus depreciation
17             deduction; and
18                 (2) for property on which a bonus depreciation
19             deduction of 30% of the adjusted basis was taken,
20             "x" equals "y" multiplied by 30 and then divided by
21             70 (or "y" multiplied by 0.429), and for property
22             on which a bonus depreciation deduction of 50% of
23             the adjusted basis was taken, "x" equals "y"
24             multiplied by 1.0.
25             The aggregate amount deducted under this
26         subparagraph in all taxable years for any one piece of
27         property may not exceed the amount of the bonus
28         depreciation deduction (30% of the adjusted basis of
29         the qualified property) taken on that property on the
30         taxpayer's federal income tax return under subsection
31         (k) of Section 168 of the Internal Revenue Code; and
32             (P) If the taxpayer reports a capital gain or loss
33         on the taxpayer's federal income tax return for the
34         taxable year based on a sale or transfer of property

 

 

09300SB2211ham001 - 31 - LRB093 15834 RCE 51234 a

1         for which the taxpayer was required in any taxable year
2         to make an addition modification under subparagraph
3         (D-5), then an amount equal to that addition
4         modification.
5             The taxpayer is allowed to take the deduction under
6         this subparagraph only once with respect to any one
7         piece of property.
 
8     (e) Gross income; adjusted gross income; taxable income.
9         (1) In general. Subject to the provisions of paragraph
10     (2) and subsection (b) (3), for purposes of this Section
11     and Section 803(e), a taxpayer's gross income, adjusted
12     gross income, or taxable income for the taxable year shall
13     mean the amount of gross income, adjusted gross income or
14     taxable income properly reportable for federal income tax
15     purposes for the taxable year under the provisions of the
16     Internal Revenue Code. With respect to taxable years ending
17     on or after December 31, 2004, for purposes of determining
18     the amount of gross income, adjusted gross income, or
19     taxable income properly reportable for federal income tax
20     purposes: (i) there shall be taken into account the
21     depreciation adjustment and the basis adjustment required
22     by paragraph (2)(I) of this subsection; (ii) the provisions
23     of Section 179 of the Internal Revenue Code apply to the
24     extent that the Section is elected for federal income tax
25     purposes with respect to "Section 179 property", except
26     that the dollar limitation of Section 179(b)(1) shall be
27     deemed to be $25,000 for all taxable years and the
28     reduction in limitation under Section 179(b)(2) shall be
29     deemed to be $200,000 for all taxable years, without any
30     adjustment under Section 179(b)(5); and (iii) the gross
31     income, adjusted gross income, or taxable income shall be
32     determined as if the Internal Revenue Code required that,
33     with respect to property placed in service in taxable years

 

 

09300SB2211ham001 - 32 - LRB093 15834 RCE 51234 a

1     ending on or after December 31, 2004, the depreciation
2     deduction determined under Section 168 of the Internal
3     Revenue Code must be determined under Section 168(g)(2)
4     (including the straight-line method and without any
5     special allowance under Section 168(k)). Taxable income
6     may be less than zero. However, for taxable years ending on
7     or after December 31, 1986, net operating loss
8     carryforwards from taxable years ending prior to December
9     31, 1986, may not exceed the sum of federal taxable income
10     for the taxable year before net operating loss deduction,
11     plus the excess of addition modifications over subtraction
12     modifications for the taxable year. For taxable years
13     ending prior to December 31, 1986, taxable income may never
14     be an amount in excess of the net operating loss for the
15     taxable year as defined in subsections (c) and (d) of
16     Section 172 of the Internal Revenue Code, provided that
17     when taxable income of a corporation (other than a
18     Subchapter S corporation), trust, or estate is less than
19     zero and addition modifications, other than those provided
20     by subparagraph (E) of paragraph (2) of subsection (b) for
21     corporations or subparagraph (E) of paragraph (2) of
22     subsection (c) for trusts and estates, exceed subtraction
23     modifications, an addition modification must be made under
24     those subparagraphs for any other taxable year to which the
25     taxable income less than zero (net operating loss) is
26     applied under Section 172 of the Internal Revenue Code or
27     under subparagraph (E) of paragraph (2) of this subsection
28     (e) applied in conjunction with Section 172 of the Internal
29     Revenue Code.
30         (2) Special rule. For purposes of paragraph (1) of this
31     subsection, the taxable income properly reportable for
32     federal income tax purposes shall mean:
33             (A) Certain life insurance companies. In the case
34         of a life insurance company subject to the tax imposed

 

 

09300SB2211ham001 - 33 - LRB093 15834 RCE 51234 a

1         by Section 801 of the Internal Revenue Code, life
2         insurance company taxable income, plus the amount of
3         distribution from pre-1984 policyholder surplus
4         accounts as calculated under Section 815a of the
5         Internal Revenue Code;
6             (B) Certain other insurance companies. In the case
7         of mutual insurance companies subject to the tax
8         imposed by Section 831 of the Internal Revenue Code,
9         insurance company taxable income;
10             (C) Regulated investment companies. In the case of
11         a regulated investment company subject to the tax
12         imposed by Section 852 of the Internal Revenue Code,
13         investment company taxable income;
14             (D) Real estate investment trusts. In the case of a
15         real estate investment trust subject to the tax imposed
16         by Section 857 of the Internal Revenue Code, real
17         estate investment trust taxable income;
18             (E) Consolidated corporations. In the case of a
19         corporation which is a member of an affiliated group of
20         corporations filing a consolidated income tax return
21         for the taxable year for federal income tax purposes,
22         taxable income determined as if such corporation had
23         filed a separate return for federal income tax purposes
24         for the taxable year and each preceding taxable year
25         for which it was a member of an affiliated group. For
26         purposes of this subparagraph, the taxpayer's separate
27         taxable income shall be determined as if the election
28         provided by Section 243(b) (2) of the Internal Revenue
29         Code had been in effect for all such years;
30             (F) Cooperatives. In the case of a cooperative
31         corporation or association, the taxable income of such
32         organization determined in accordance with the
33         provisions of Section 1381 through 1388 of the Internal
34         Revenue Code;

 

 

09300SB2211ham001 - 34 - LRB093 15834 RCE 51234 a

1             (G) Subchapter S corporations. In the case of: (i)
2         a Subchapter S corporation for which there is in effect
3         an election for the taxable year under Section 1362 of
4         the Internal Revenue Code, the taxable income of such
5         corporation determined in accordance with Section
6         1363(b) of the Internal Revenue Code, except that
7         taxable income shall take into account those items
8         which are required by Section 1363(b)(1) of the
9         Internal Revenue Code to be separately stated; and (ii)
10         a Subchapter S corporation for which there is in effect
11         a federal election to opt out of the provisions of the
12         Subchapter S Revision Act of 1982 and have applied
13         instead the prior federal Subchapter S rules as in
14         effect on July 1, 1982, the taxable income of such
15         corporation determined in accordance with the federal
16         Subchapter S rules as in effect on July 1, 1982; and
17             (H) Partnerships. In the case of a partnership,
18         taxable income determined in accordance with Section
19         703 of the Internal Revenue Code, except that taxable
20         income shall take into account those items which are
21         required by Section 703(a)(1) to be separately stated
22         but which would be taken into account by an individual
23         in calculating his taxable income.
24             (I) Depreciation and basis adjustments for all
25         taxpayers.
26                 (A) Depreciation adjustment. With respect to
27             property placed in service in taxable years ending
28             before December 31, 2004, the depreciation
29             deduction allowed under Section 167 of the
30             Internal Revenue Code, with respect to property as
31             to which the deduction is determined under Section
32             168 of the Code, shall be determined as if the
33             Internal Revenue Code required a switch to the
34             straight-line method beginning with that

 

 

09300SB2211ham001 - 35 - LRB093 15834 RCE 51234 a

1             property's adjusted basis for federal income tax
2             purposes as of the beginning of the last taxable
3             year beginning before December 31, 2004.
4                 (B) Basis adjustment. With respect to property
5             subject to subparagraph (A) of this paragraph, the
6             adjustment otherwise required under Section 1016
7             of the Internal Revenue Code shall take into
8             account the depreciation adjustment required under
9             subparagraph (A).
 
10     (f) Valuation limitation amount.
11         (1) In general. The valuation limitation amount
12     referred to in subsections (a) (2) (G), (c) (2) (I) and
13     (d)(2) (E) is an amount equal to:
14             (A) The sum of the pre-August 1, 1969 appreciation
15         amounts (to the extent consisting of gain reportable
16         under the provisions of Section 1245 or 1250 of the
17         Internal Revenue Code) for all property in respect of
18         which such gain was reported for the taxable year; plus
19             (B) The lesser of (i) the sum of the pre-August 1,
20         1969 appreciation amounts (to the extent consisting of
21         capital gain) for all property in respect of which such
22         gain was reported for federal income tax purposes for
23         the taxable year, or (ii) the net capital gain for the
24         taxable year, reduced in either case by any amount of
25         such gain included in the amount determined under
26         subsection (a) (2) (F) or (c) (2) (H).
27         (2) Pre-August 1, 1969 appreciation amount.
28             (A) If the fair market value of property referred
29         to in paragraph (1) was readily ascertainable on August
30         1, 1969, the pre-August 1, 1969 appreciation amount for
31         such property is the lesser of (i) the excess of such
32         fair market value over the taxpayer's basis (for
33         determining gain) for such property on that date

 

 

09300SB2211ham001 - 36 - LRB093 15834 RCE 51234 a

1         (determined under the Internal Revenue Code as in
2         effect on that date), or (ii) the total gain realized
3         and reportable for federal income tax purposes in
4         respect of the sale, exchange or other disposition of
5         such property.
6             (B) If the fair market value of property referred
7         to in paragraph (1) was not readily ascertainable on
8         August 1, 1969, the pre-August 1, 1969 appreciation
9         amount for such property is that amount which bears the
10         same ratio to the total gain reported in respect of the
11         property for federal income tax purposes for the
12         taxable year, as the number of full calendar months in
13         that part of the taxpayer's holding period for the
14         property ending July 31, 1969 bears to the number of
15         full calendar months in the taxpayer's entire holding
16         period for the property.
17             (C) The Department shall prescribe such
18         regulations as may be necessary to carry out the
19         purposes of this paragraph.
 
20     (g) Double deductions. Unless specifically provided
21 otherwise, nothing in this Section shall permit the same item
22 to be deducted more than once.
 
23     (h) Legislative intention. Except as expressly provided by
24 this Section there shall be no modifications or limitations on
25 the amounts of income, gain, loss or deduction taken into
26 account in determining gross income, adjusted gross income or
27 taxable income for federal income tax purposes for the taxable
28 year, or in the amount of such items entering into the
29 computation of base income and net income under this Act for
30 such taxable year, whether in respect of property values as of
31 August 1, 1969 or otherwise.
32 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;

 

 

09300SB2211ham001 - 37 - LRB093 15834 RCE 51234 a

1 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
2 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
3 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
4 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
5 7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)".