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91_HB2980enr HB2980 Enrolled LRB9107003WHdv 1 AN ACT in relation to medical care savings accounts. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 1. Short title. This Act may be cited as the 5 Medical Care Savings Account Act of 2000. 6 Section 3. Programs under prior Act. Programs 7 established under the Medical Care Savings Account Act are 8 subject to and shall be governed by this Act. 9 Section 5. Definitions. In this Act: 10 "Account administrator" means any of the following: 11 (1) A national or state chartered bank, a federal 12 or state chartered savings and loan association, a 13 federal or state chartered savings bank, or a federal or 14 state chartered credit union. 15 (2) A trust company authorized to act as a 16 fiduciary. 17 (3) An insurance company authorized to do business 18 in this State under the Illinois Insurance Code or a 19 health maintenance organization authorized to do business 20 in this State under the Health Maintenance Organization 21 Act. 22 (4) A dealer, salesperson, or investment adviser 23 registered under the Illinois Securities Law of 1953. 24 (5) An administrator as defined in Section 511.101 25 of the Illinois Insurance Code who is licensed under 26 Article XXXI 1/4 of that Code. 27 (6) A certified public accountant registered under 28 the Illinois Public Accounting Act. 29 (7) An attorney licensed to practice in this State. 30 (8) An employer, if the employer has a self-insured HB2980 Enrolled -2- LRB9107003WHdv 1 health plan under the federal Employee Retirement Income 2 Security Act of 1974 (ERISA). 3 (9) An employer that participates in the medical 4 care savings account program. 5 "Deductible" means the total deductible for an employee 6 and all the dependents of that employee for a calendar year. 7 "Dependent" means the spouse of the employee or a child 8 of the employee if the child is any of the following: 9 (1) Under 19 years of age, or under 23 years of age 10 and enrolled as a full-time student at an accredited 11 college or university. 12 (2) Legally entitled to the provision of proper or 13 necessary subsistence, education, medical care, or other 14 care necessary for his or her health, guidance, or 15 well-being and not otherwise emancipated, 16 self-supporting, married, or a member of the armed forces 17 of the United States. 18 (3) Mentally or physically incapacitated to the 19 extent that he or she is not self-sufficient. 20 "Domicile" means a place where an individual has his or 21 her true, fixed, and permanent home and principal 22 establishment, to which, whenever absent, he or she intends 23 to return. Domicile continues until another permanent home 24 or principal establishment is established. 25 "Eligible medical expense" means an expense paid by the 26 taxpayer for medical care described in Section 213(d) of the 27 Internal Revenue Code. 28 "Employee" means the individual for whose benefit or for 29 the benefit of whose dependents a medical care savings 30 account is established. Employee includes a self-employed 31 individual. 32 "Higher deductible" means a deductible subject to a 33 minimum and maximum established for 1999 by the Department of 34 Revenue under the Medical Care Savings Account Act. The HB2980 Enrolled -3- LRB9107003WHdv 1 minimum and maximum shall be adjusted for 2000 and annually 2 thereafter by the Department of Revenue to reflect increases 3 in the consumer price index for the United States as defined 4 and officially reported by the United States Department of 5 Labor. 6 "Medical care savings account" or "account" means an 7 account established in this State pursuant to a medical care 8 savings account program to pay the eligible medical expenses 9 of an employee and his or her dependents. 10 "Medical care savings account program" or "program" means 11 a program that includes all of the following: 12 (1) The purchase by an employer of a qualified 13 higher deductible health plan for the benefit of an 14 employee and his or her dependents. 15 (2) The contribution on behalf of an employee into 16 a medical care savings account by his or her employer of 17 all or part of the premium differential realized by the 18 employer based on the purchase of a qualified higher 19 deductible health plan for the benefit of the employee. 20 An employer that did not previously provide a health 21 coverage policy, certificate, or contract for his or her 22 employees may contribute all or part of the deductible of 23 the plan purchased pursuant to paragraph (1). A 24 contribution under this paragraph may not exceed the 25 maximum amounts established for 1999 by the Department of 26 Revenue for 2 taxpayers filing a joint return, if each 27 taxpayer has a medical care savings account but neither 28 is covered by the other's health coverage, and for all 29 other cases. The maximum amounts shall be adjusted for 30 2000 and annually thereafter by the Department of Revenue 31 to reflect increases in the consumer price index for the 32 United States as defined and officially reported by the 33 United States Department of Labor. 34 (3) An account administrator to administer the HB2980 Enrolled -4- LRB9107003WHdv 1 medical care savings account from which payment of claims 2 is made. Not more than 30 days after an account 3 administrator begins to administer an account, the 4 administrator shall notify in writing each employee on 5 whose behalf the administrator administers an account of 6 the date of the last business day of the administrator's 7 business year. 8 "Qualified higher deductible health plan" means a health 9 coverage policy, certificate, or contract that provides for 10 payments for covered benefits that exceed the higher 11 deductible and that is purchased by an employer for the 12 benefit of an employee for whom the employer makes deposits 13 into a medical care savings account. 14 Section 10. Program offer; tax treatment. 15 (a) For tax years ending on or after December 31, 2000, 16 an employer, except as otherwise provided by statute, 17 contract, or a collective bargaining agreement, may offer a 18 medical care savings account program to the employer's 19 employees. 20 (b) Before making any contribution to an account, an 21 employer that offers a medical care savings account program 22 shall inform all its employees in writing of the federal tax 23 status of contributions made pursuant to this Act. 24 (c) Except as provided in Section 20, principal 25 contributed to and interest earned on a medical care savings 26 account and money reimbursed to an employee for eligible 27 medical expenses are exempt from taxation under the 28 Illinois Income Tax Act as provided in that Act. 29 Section 15. Use of account moneys. 30 (a) The account administrator shall utilize the moneys 31 held in a medical care savings account solely for the purpose 32 of paying the medical expenses of the employee or his or her HB2980 Enrolled -5- LRB9107003WHdv 1 dependents or to purchase a health coverage policy, 2 certificate, or contract if the employee does not otherwise 3 have health insurance coverage. Moneys held in a medical care 4 savings account may not be used to cover medical expenses of 5 the employee or his or her dependents that are otherwise 6 covered, including but not limited to medical expenses 7 covered pursuant to an automobile insurance policy, workers' 8 compensation insurance policy or self-insured plan, or 9 another health coverage policy, certificate, or contract. 10 (b) The employee may submit documentation of medical 11 expenses paid by the employee in the tax year to the account 12 administrator, and the account administrator shall 13 reimburse the employee from the employee's account for 14 eligible medical expenses. 15 (c) If an employer makes contributions to a medical 16 care savings account program on a periodic installment 17 basis, the employer may advance to an employee, interest 18 free, an amount necessary to cover medical expenses incurred 19 that exceed the amount in the employee's medical care savings 20 account when the expense is incurred if the employee agrees 21 to repay the advance from future installments or when he or 22 she ceases to be an employee of the employer. 23 Section 20. Withdrawals from account. 24 (a) Notwithstanding subsection (b) and subject to 25 subsection (c), an employee may withdraw money from his or 26 her medical care savings account for any purpose other than a 27 purpose described in subsection (a) of Section 15 only on the 28 last business day of the account administrator's business 29 year. Money withdrawn pursuant to this subsection is income 30 for purposes of the Illinois Income Tax Act in the taxable 31 year of the withdrawal, as provided in that Act. 32 (b) Subject to subsection (c), if the employee withdraws 33 money for any purpose other than a purpose described in HB2980 Enrolled -6- LRB9107003WHdv 1 subsection (a) of Section 15 at any other time, all of the 2 following apply: 3 (1) The amount of the withdrawal is income for 4 purposes of the Illinois Income Tax Act in the taxable 5 year of the withdrawal, as provided in that Act. 6 (2) The administrator shall withhold and on behalf 7 of the employee shall pay a penalty to the Department of 8 Revenue equal to 10% of the amount of the withdrawal. 9 (3) Interest earned on the account during the 10 taxable year in which a withdrawal under this subsection 11 is made is income for purposes of the Illinois Income Tax 12 Act, as provided in that Act. 13 (c) The amount of a disbursement of any assets of a 14 medical care savings account pursuant to a filing for 15 protection under Title 11 of the United States Code, 11 16 U.S.C. 101 to 1330, by an employee or person for whose 17 benefit the account was established is not considered a 18 withdrawal for purposes of this Section. The amount of a 19 disbursement is not subject to taxation under the Illinois 20 Income Tax Act, and subsection (b) does not apply. 21 (d) Upon the death of the employee, the account 22 administrator shall distribute the principal and accumulated 23 interest of the medical care savings account to the estate 24 of the employee. 25 (e) If (i) an employee is no longer employed by an 26 employer that participates in a medical care savings account 27 program, (ii) the employee, not more than 60 days after his 28 or her final day of employment, transfers the account to a 29 new account administrator or requests in writing to the 30 former employer's account administrator that the account 31 remain with that administrator, and (iii) that account 32 administrator agrees to retain the account, then the money in 33 the medical care savings account may be utilized for the 34 benefit of the employee or his or her dependents subject to HB2980 Enrolled -7- LRB9107003WHdv 1 this Act and remains exempt from taxation pursuant to this 2 Act. Not more than 30 days after the expiration of the 60 3 days, if an account administrator has not accepted the 4 former employee's account, the employer shall mail a check to 5 the former employee, at the employee's last known address, 6 for an amount equal to the amount in the account on that day, 7 and that amount is subject to taxation pursuant to subsection 8 (a) of this Section but is not subject to the penalty 9 under paragraph (2) of subsection (b) of this Section. If an 10 employee becomes employed with a different employer that 11 participates in a medical care savings account program, the 12 employee may transfer his or her medical care savings 13 account to that new employer's account administrator. 14 Section 30. Administrator; fiduciary duty. An account 15 administrator shall discharge his or her duties as a 16 fiduciary in a manner consistent with the fiduciary standards 17 required by 29 U.S.C 1104 and shall not engage in any 18 self-dealing transactions in the investment of account 19 assets. 20 Section 85. Repealer. This Act is repealed on January 21 1, 2010. 22 Section 90. The Illinois Income Tax Act is amended by 23 changing Section 203 as follows: 24 (35 ILCS 5/203) (from Ch. 120, par. 2-203) 25 Sec. 203. Base income defined. 26 (a) Individuals. 27 (1) In general. In the case of an individual, base 28 income means an amount equal to the taxpayer's adjusted 29 gross income for the taxable year as modified by 30 paragraph (2). HB2980 Enrolled -8- LRB9107003WHdv 1 (2) Modifications. The adjusted gross income 2 referred to in paragraph (1) shall be modified by adding 3 thereto the sum of the following amounts: 4 (A) An amount equal to all amounts paid or 5 accrued to the taxpayer as interest or dividends 6 during the taxable year to the extent excluded from 7 gross income in the computation of adjusted gross 8 income, except stock dividends of qualified public 9 utilities described in Section 305(e) of the 10 Internal Revenue Code; 11 (B) An amount equal to the amount of tax 12 imposed by this Act to the extent deducted from 13 gross income in the computation of adjusted gross 14 income for the taxable year; 15 (C) An amount equal to the amount received 16 during the taxable year as a recovery or refund of 17 real property taxes paid with respect to the 18 taxpayer's principal residence under the Revenue Act 19 of 1939 and for which a deduction was previously 20 taken under subparagraph (L) of this paragraph (2) 21 prior to July 1, 1991, the retrospective application 22 date of Article 4 of Public Act 87-17. In the case 23 of multi-unit or multi-use structures and farm 24 dwellings, the taxes on the taxpayer's principal 25 residence shall be that portion of the total taxes 26 for the entire property which is attributable to 27 such principal residence; 28 (D) An amount equal to the amount of the 29 capital gain deduction allowable under the Internal 30 Revenue Code, to the extent deducted from gross 31 income in the computation of adjusted gross income; 32 (D-5) An amount, to the extent not included in 33 adjusted gross income, equal to the amount of money 34 withdrawn by the taxpayer in the taxable year from a HB2980 Enrolled -9- LRB9107003WHdv 1 medical care savings account and the interest earned 2 on the account in the taxable year of a withdrawal 3 pursuant to subsection (b) of Section 20 of the 4 Medical Care Savings Account Act or subsection (b) 5 of Section 20 of the Medical Care Savings Account 6 Act of 2000; and 7 (D-10) For taxable years ending after December 8 31, 1997, an amount equal to any eligible 9 remediation costs that the individual deducted in 10 computing adjusted gross income and for which the 11 individual claims a credit under subsection (l) of 12 Section 201; 13 and by deducting from the total so obtained the sum of 14 the following amounts: 15 (E) Any amount included in such total in 16 respect of any compensation (including but not 17 limited to any compensation paid or accrued to a 18 serviceman while a prisoner of war or missing in 19 action) paid to a resident by reason of being on 20 active duty in the Armed Forces of the United States 21 and in respect of any compensation paid or accrued 22 to a resident who as a governmental employee was a 23 prisoner of war or missing in action, and in respect 24 of any compensation paid to a resident in 1971 or 25 thereafter for annual training performed pursuant to 26 Sections 502 and 503, Title 32, United States Code 27 as a member of the Illinois National Guard; 28 (F) An amount equal to all amounts included in 29 such total pursuant to the provisions of Sections 30 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 31 408 of the Internal Revenue Code, or included in 32 such total as distributions under the provisions of 33 any retirement or disability plan for employees of 34 any governmental agency or unit, or retirement HB2980 Enrolled -10- LRB9107003WHdv 1 payments to retired partners, which payments are 2 excluded in computing net earnings from self 3 employment by Section 1402 of the Internal Revenue 4 Code and regulations adopted pursuant thereto; 5 (G) The valuation limitation amount; 6 (H) An amount equal to the amount of any tax 7 imposed by this Act which was refunded to the 8 taxpayer and included in such total for the taxable 9 year; 10 (I) An amount equal to all amounts included in 11 such total pursuant to the provisions of Section 111 12 of the Internal Revenue Code as a recovery of items 13 previously deducted from adjusted gross income in 14 the computation of taxable income; 15 (J) An amount equal to those dividends 16 included in such total which were paid by a 17 corporation which conducts business operations in an 18 Enterprise Zone or zones created under the Illinois 19 Enterprise Zone Act, and conducts substantially all 20 of its operations in an Enterprise Zone or zones; 21 (K) An amount equal to those dividends 22 included in such total that were paid by a 23 corporation that conducts business operations in a 24 federally designated Foreign Trade Zone or Sub-Zone 25 and that is designated a High Impact Business 26 located in Illinois; provided that dividends 27 eligible for the deduction provided in subparagraph 28 (J) of paragraph (2) of this subsection shall not be 29 eligible for the deduction provided under this 30 subparagraph (K); 31 (L) For taxable years ending after December 32 31, 1983, an amount equal to all social security 33 benefits and railroad retirement benefits included 34 in such total pursuant to Sections 72(r) and 86 of HB2980 Enrolled -11- LRB9107003WHdv 1 the Internal Revenue Code; 2 (M) With the exception of any amounts 3 subtracted under subparagraph (N), an amount equal 4 to the sum of all amounts disallowed as deductions 5 by (i) Sections 171(a) (2), and 265(2) of the 6 Internal Revenue Code of 1954, as now or hereafter 7 amended, and all amounts of expenses allocable to 8 interest and disallowed as deductions by Section 9 265(1) of the Internal Revenue Code of 1954, as now 10 or hereafter amended; and (ii) for taxable years 11 ending on or after August 13, 1999the effective12date of this amendatory Act of the 91st General13Assembly, Sections 171(a)(2), 265, 280C, and 14 832(b)(5)(B)(i) of the Internal Revenue Code; the 15 provisions of this subparagraph are exempt from the 16 provisions of Section 250; 17 (N) An amount equal to all amounts included in 18 such total which are exempt from taxation by this 19 State either by reason of its statutes or 20 Constitution or by reason of the Constitution, 21 treaties or statutes of the United States; provided 22 that, in the case of any statute of this State that 23 exempts income derived from bonds or other 24 obligations from the tax imposed under this Act, the 25 amount exempted shall be the interest net of bond 26 premium amortization; 27 (O) An amount equal to any contribution made 28 to a job training project established pursuant to 29 the Tax Increment Allocation Redevelopment Act; 30 (P) An amount equal to the amount of the 31 deduction used to compute the federal income tax 32 credit for restoration of substantial amounts held 33 under claim of right for the taxable year pursuant 34 to Section 1341 of the Internal Revenue Code of HB2980 Enrolled -12- LRB9107003WHdv 1 1986; 2 (Q) An amount equal to any amounts included in 3 such total, received by the taxpayer as an 4 acceleration in the payment of life, endowment or 5 annuity benefits in advance of the time they would 6 otherwise be payable as an indemnity for a terminal 7 illness; 8 (R) An amount equal to the amount of any 9 federal or State bonus paid to veterans of the 10 Persian Gulf War; 11 (S) An amount, to the extent included in 12 adjusted gross income, equal to the amount of a 13 contribution made in the taxable year on behalf of 14 the taxpayer to a medical care savings account 15 established under the Medical Care Savings Account 16 Act or the Medical Care Savings Account Act of 2000 17 to the extent the contribution is accepted by the 18 account administrator as provided in that Act; 19 (T) An amount, to the extent included in 20 adjusted gross income, equal to the amount of 21 interest earned in the taxable year on a medical 22 care savings account established under the Medical 23 Care Savings Account Act or the Medical Care Savings 24 Account Act of 2000 on behalf of the taxpayer, other 25 than interest added pursuant to item (D-5) of this 26 paragraph (2); 27 (U) For one taxable year beginning on or after 28 January 1, 1994, an amount equal to the total amount 29 of tax imposed and paid under subsections (a) and 30 (b) of Section 201 of this Act on grant amounts 31 received by the taxpayer under the Nursing Home 32 Grant Assistance Act during the taxpayer's taxable 33 years 1992 and 1993; 34 (V) Beginning with tax years ending on or HB2980 Enrolled -13- LRB9107003WHdv 1 after December 31, 1995 and ending with tax years 2 ending on or before December 31, 2004, an amount 3 equal to the amount paid by a taxpayer who is a 4 self-employed taxpayer, a partner of a partnership, 5 or a shareholder in a Subchapter S corporation for 6 health insurance or long-term care insurance for 7 that taxpayer or that taxpayer's spouse or 8 dependents, to the extent that the amount paid for 9 that health insurance or long-term care insurance 10 may be deducted under Section 213 of the Internal 11 Revenue Code of 1986, has not been deducted on the 12 federal income tax return of the taxpayer, and does 13 not exceed the taxable income attributable to that 14 taxpayer's income, self-employment income, or 15 Subchapter S corporation income; except that no 16 deduction shall be allowed under this item (V) if 17 the taxpayer is eligible to participate in any 18 health insurance or long-term care insurance plan of 19 an employer of the taxpayer or the taxpayer's 20 spouse. The amount of the health insurance and 21 long-term care insurance subtracted under this item 22 (V) shall be determined by multiplying total health 23 insurance and long-term care insurance premiums paid 24 by the taxpayer times a number that represents the 25 fractional percentage of eligible medical expenses 26 under Section 213 of the Internal Revenue Code of 27 1986 not actually deducted on the taxpayer's federal 28 income tax return; 29 (W) For taxable years beginning on or after 30 January 1, 1998, all amounts included in the 31 taxpayer's federal gross income in the taxable year 32 from amounts converted from a regular IRA to a Roth 33 IRA. This paragraph is exempt from the provisions of 34 Section 250; and HB2980 Enrolled -14- LRB9107003WHdv 1 (X) For taxable year 1999 and thereafter, an 2 amount equal to the amount of any (i) distributions, 3 to the extent includible in gross income for federal 4 income tax purposes, made to the taxpayer because of 5 his or her status as a victim of persecution for 6 racial or religious reasons by Nazi Germany or any 7 other Axis regime or as an heir of the victim and 8 (ii) items of income, to the extent includible in 9 gross income for federal income tax purposes, 10 attributable to, derived from or in any way related 11 to assets stolen from, hidden from, or otherwise 12 lost to a victim of persecution for racial or 13 religious reasons by Nazi Germany or any other Axis 14 regime immediately prior to, during, and immediately 15 after World War II, including, but not limited to, 16 interest on the proceeds receivable as insurance 17 under policies issued to a victim of persecution for 18 racial or religious reasons by Nazi Germany or any 19 other Axis regime by European insurance companies 20 immediately prior to and during World War II; 21 provided, however, this subtraction from federal 22 adjusted gross income does not apply to assets 23 acquired with such assets or with the proceeds from 24 the sale of such assets; provided, further, this 25 paragraph shall only apply to a taxpayer who was the 26 first recipient of such assets after their recovery 27 and who is a victim of persecution for racial or 28 religious reasons by Nazi Germany or any other Axis 29 regime or as an heir of the victim. The amount of 30 and the eligibility for any public assistance, 31 benefit, or similar entitlement is not affected by 32 the inclusion of items (i) and (ii) of this 33 paragraph in gross income for federal income tax 34 purposes. This paragraph is exempt from the HB2980 Enrolled -15- LRB9107003WHdv 1 provisions of Section 250. 2 (b) Corporations. 3 (1) In general. In the case of a corporation, base 4 income means an amount equal to the taxpayer's taxable 5 income for the taxable year as modified by paragraph (2). 6 (2) Modifications. The taxable income referred to 7 in paragraph (1) shall be modified by adding thereto the 8 sum of the following amounts: 9 (A) An amount equal to all amounts paid or 10 accrued to the taxpayer as interest and all 11 distributions received from regulated investment 12 companies during the taxable year to the extent 13 excluded from gross income in the computation of 14 taxable income; 15 (B) An amount equal to the amount of tax 16 imposed by this Act to the extent deducted from 17 gross income in the computation of taxable income 18 for the taxable year; 19 (C) In the case of a regulated investment 20 company, an amount equal to the excess of (i) the 21 net long-term capital gain for the taxable year, 22 over (ii) the amount of the capital gain dividends 23 designated as such in accordance with Section 24 852(b)(3)(C) of the Internal Revenue Code and any 25 amount designated under Section 852(b)(3)(D) of the 26 Internal Revenue Code, attributable to the taxable 27 year (this amendatory Act of 1995 (Public Act 89-89) 28 is declarative of existing law and is not a new 29 enactment); 30 (D) The amount of any net operating loss 31 deduction taken in arriving at taxable income, other 32 than a net operating loss carried forward from a 33 taxable year ending prior to December 31, 1986; 34 (E) For taxable years in which a net operating HB2980 Enrolled -16- LRB9107003WHdv 1 loss carryback or carryforward from a taxable year 2 ending prior to December 31, 1986 is an element of 3 taxable income under paragraph (1) of subsection (e) 4 or subparagraph (E) of paragraph (2) of subsection 5 (e), the amount by which addition modifications 6 other than those provided by this subparagraph (E) 7 exceeded subtraction modifications in such earlier 8 taxable year, with the following limitations applied 9 in the order that they are listed: 10 (i) the addition modification relating to 11 the net operating loss carried back or forward 12 to the taxable year from any taxable year 13 ending prior to December 31, 1986 shall be 14 reduced by the amount of addition modification 15 under this subparagraph (E) which related to 16 that net operating loss and which was taken 17 into account in calculating the base income of 18 an earlier taxable year, and 19 (ii) the addition modification relating 20 to the net operating loss carried back or 21 forward to the taxable year from any taxable 22 year ending prior to December 31, 1986 shall 23 not exceed the amount of such carryback or 24 carryforward; 25 For taxable years in which there is a net 26 operating loss carryback or carryforward from more 27 than one other taxable year ending prior to December 28 31, 1986, the addition modification provided in this 29 subparagraph (E) shall be the sum of the amounts 30 computed independently under the preceding 31 provisions of this subparagraph (E) for each such 32 taxable year; and 33 (E-5) For taxable years ending after December 34 31, 1997, an amount equal to any eligible HB2980 Enrolled -17- LRB9107003WHdv 1 remediation costs that the corporation deducted in 2 computing adjusted gross income and for which the 3 corporation claims a credit under subsection (l) of 4 Section 201; 5 and by deducting from the total so obtained the sum of 6 the following amounts: 7 (F) An amount equal to the amount of any tax 8 imposed by this Act which was refunded to the 9 taxpayer and included in such total for the taxable 10 year; 11 (G) An amount equal to any amount included in 12 such total under Section 78 of the Internal Revenue 13 Code; 14 (H) In the case of a regulated investment 15 company, an amount equal to the amount of exempt 16 interest dividends as defined in subsection (b) (5) 17 of Section 852 of the Internal Revenue Code, paid to 18 shareholders for the taxable year; 19 (I) With the exception of any amounts 20 subtracted under subparagraph (J), an amount equal 21 to the sum of all amounts disallowed as deductions 22 by (i) Sections 171(a) (2), and 265(a)(2) and 23 amounts disallowed as interest expense by Section 24 291(a)(3) of the Internal Revenue Code, as now or 25 hereafter amended, and all amounts of expenses 26 allocable to interest and disallowed as deductions 27 by Section 265(a)(1) of the Internal Revenue Code, 28 as now or hereafter amended; and (ii) for taxable 29 years ending on or after August 13, 1999the30effective date of this amendatory Act of the 91st31General Assembly, Sections 171(a)(2), 265, 280C, and 32 832(b)(5)(B)(i) of the Internal Revenue Code; the 33 provisions of this subparagraph are exempt from the 34 provisions of Section 250; HB2980 Enrolled -18- LRB9107003WHdv 1 (J) An amount equal to all amounts included in 2 such total which are exempt from taxation by this 3 State either by reason of its statutes or 4 Constitution or by reason of the Constitution, 5 treaties or statutes of the United States; provided 6 that, in the case of any statute of this State that 7 exempts income derived from bonds or other 8 obligations from the tax imposed under this Act, the 9 amount exempted shall be the interest net of bond 10 premium amortization; 11 (K) An amount equal to those dividends 12 included in such total which were paid by a 13 corporation which conducts business operations in an 14 Enterprise Zone or zones created under the Illinois 15 Enterprise Zone Act and conducts substantially all 16 of its operations in an Enterprise Zone or zones; 17 (L) An amount equal to those dividends 18 included in such total that were paid by a 19 corporation that conducts business operations in a 20 federally designated Foreign Trade Zone or Sub-Zone 21 and that is designated a High Impact Business 22 located in Illinois; provided that dividends 23 eligible for the deduction provided in subparagraph 24 (K) of paragraph 2 of this subsection shall not be 25 eligible for the deduction provided under this 26 subparagraph (L); 27 (M) For any taxpayer that is a financial 28 organization within the meaning of Section 304(c) of 29 this Act, an amount included in such total as 30 interest income from a loan or loans made by such 31 taxpayer to a borrower, to the extent that such a 32 loan is secured by property which is eligible for 33 the Enterprise Zone Investment Credit. To determine 34 the portion of a loan or loans that is secured by HB2980 Enrolled -19- LRB9107003WHdv 1 property eligible for a Section 201(h) investment 2 credit to the borrower, the entire principal amount 3 of the loan or loans between the taxpayer and the 4 borrower should be divided into the basis of the 5 Section 201(h) investment credit property which 6 secures the loan or loans, using for this purpose 7 the original basis of such property on the date that 8 it was placed in service in the Enterprise Zone. 9 The subtraction modification available to taxpayer 10 in any year under this subsection shall be that 11 portion of the total interest paid by the borrower 12 with respect to such loan attributable to the 13 eligible property as calculated under the previous 14 sentence; 15 (M-1) For any taxpayer that is a financial 16 organization within the meaning of Section 304(c) of 17 this Act, an amount included in such total as 18 interest income from a loan or loans made by such 19 taxpayer to a borrower, to the extent that such a 20 loan is secured by property which is eligible for 21 the High Impact Business Investment Credit. To 22 determine the portion of a loan or loans that is 23 secured by property eligible for a Section 201(i) 24 investment credit to the borrower, the entire 25 principal amount of the loan or loans between the 26 taxpayer and the borrower should be divided into the 27 basis of the Section 201(i) investment credit 28 property which secures the loan or loans, using for 29 this purpose the original basis of such property on 30 the date that it was placed in service in a 31 federally designated Foreign Trade Zone or Sub-Zone 32 located in Illinois. No taxpayer that is eligible 33 for the deduction provided in subparagraph (M) of 34 paragraph (2) of this subsection shall be eligible HB2980 Enrolled -20- LRB9107003WHdv 1 for the deduction provided under this subparagraph 2 (M-1). The subtraction modification available to 3 taxpayers in any year under this subsection shall be 4 that portion of the total interest paid by the 5 borrower with respect to such loan attributable to 6 the eligible property as calculated under the 7 previous sentence; 8 (N) Two times any contribution made during the 9 taxable year to a designated zone organization to 10 the extent that the contribution (i) qualifies as a 11 charitable contribution under subsection (c) of 12 Section 170 of the Internal Revenue Code and (ii) 13 must, by its terms, be used for a project approved 14 by the Department of Commerce and Community Affairs 15 under Section 11 of the Illinois Enterprise Zone 16 Act; 17 (O) An amount equal to: (i) 85% for taxable 18 years ending on or before December 31, 1992, or, a 19 percentage equal to the percentage allowable under 20 Section 243(a)(1) of the Internal Revenue Code of 21 1986 for taxable years ending after December 31, 22 1992, of the amount by which dividends included in 23 taxable income and received from a corporation that 24 is not created or organized under the laws of the 25 United States or any state or political subdivision 26 thereof, including, for taxable years ending on or 27 after December 31, 1988, dividends received or 28 deemed received or paid or deemed paid under 29 Sections 951 through 964 of the Internal Revenue 30 Code, exceed the amount of the modification provided 31 under subparagraph (G) of paragraph (2) of this 32 subsection (b) which is related to such dividends; 33 plus (ii) 100% of the amount by which dividends, 34 included in taxable income and received, including, HB2980 Enrolled -21- LRB9107003WHdv 1 for taxable years ending on or after December 31, 2 1988, dividends received or deemed received or paid 3 or deemed paid under Sections 951 through 964 of the 4 Internal Revenue Code, from any such corporation 5 specified in clause (i) that would but for the 6 provisions of Section 1504 (b) (3) of the Internal 7 Revenue Code be treated as a member of the 8 affiliated group which includes the dividend 9 recipient, exceed the amount of the modification 10 provided under subparagraph (G) of paragraph (2) of 11 this subsection (b) which is related to such 12 dividends; 13 (P) An amount equal to any contribution made 14 to a job training project established pursuant to 15 the Tax Increment Allocation Redevelopment Act; 16 (Q) An amount equal to the amount of the 17 deduction used to compute the federal income tax 18 credit for restoration of substantial amounts held 19 under claim of right for the taxable year pursuant 20 to Section 1341 of the Internal Revenue Code of 21 1986; and 22 (R) In the case of an attorney-in-fact with 23 respect to whom an interinsurer or a reciprocal 24 insurer has made the election under Section 835 of 25 the Internal Revenue Code, 26 U.S.C. 835, an amount 26 equal to the excess, if any, of the amounts paid or 27 incurred by that interinsurer or reciprocal insurer 28 in the taxable year to the attorney-in-fact over the 29 deduction allowed to that interinsurer or reciprocal 30 insurer with respect to the attorney-in-fact under 31 Section 835(b) of the Internal Revenue Code for the 32 taxable year. 33 (3) Special rule. For purposes of paragraph (2) 34 (A), "gross income" in the case of a life insurance HB2980 Enrolled -22- LRB9107003WHdv 1 company, for tax years ending on and after December 31, 2 1994, shall mean the gross investment income for the 3 taxable year. 4 (c) Trusts and estates. 5 (1) In general. In the case of a trust or estate, 6 base income means an amount equal to the taxpayer's 7 taxable income for the taxable year as modified by 8 paragraph (2). 9 (2) Modifications. Subject to the provisions of 10 paragraph (3), the taxable income referred to in 11 paragraph (1) shall be modified by adding thereto the sum 12 of the following amounts: 13 (A) An amount equal to all amounts paid or 14 accrued to the taxpayer as interest or dividends 15 during the taxable year to the extent excluded from 16 gross income in the computation of taxable income; 17 (B) In the case of (i) an estate, $600; (ii) a 18 trust which, under its governing instrument, is 19 required to distribute all of its income currently, 20 $300; and (iii) any other trust, $100, but in each 21 such case, only to the extent such amount was 22 deducted in the computation of taxable income; 23 (C) An amount equal to the amount of tax 24 imposed by this Act to the extent deducted from 25 gross income in the computation of taxable income 26 for the taxable year; 27 (D) The amount of any net operating loss 28 deduction taken in arriving at taxable income, other 29 than a net operating loss carried forward from a 30 taxable year ending prior to December 31, 1986; 31 (E) For taxable years in which a net operating 32 loss carryback or carryforward from a taxable year 33 ending prior to December 31, 1986 is an element of 34 taxable income under paragraph (1) of subsection (e) HB2980 Enrolled -23- LRB9107003WHdv 1 or subparagraph (E) of paragraph (2) of subsection 2 (e), the amount by which addition modifications 3 other than those provided by this subparagraph (E) 4 exceeded subtraction modifications in such taxable 5 year, with the following limitations applied in the 6 order that they are listed: 7 (i) the addition modification relating to 8 the net operating loss carried back or forward 9 to the taxable year from any taxable year 10 ending prior to December 31, 1986 shall be 11 reduced by the amount of addition modification 12 under this subparagraph (E) which related to 13 that net operating loss and which was taken 14 into account in calculating the base income of 15 an earlier taxable year, and 16 (ii) the addition modification relating 17 to the net operating loss carried back or 18 forward to the taxable year from any taxable 19 year ending prior to December 31, 1986 shall 20 not exceed the amount of such carryback or 21 carryforward; 22 For taxable years in which there is a net 23 operating loss carryback or carryforward from more 24 than one other taxable year ending prior to December 25 31, 1986, the addition modification provided in this 26 subparagraph (E) shall be the sum of the amounts 27 computed independently under the preceding 28 provisions of this subparagraph (E) for each such 29 taxable year; 30 (F) For taxable years ending on or after 31 January 1, 1989, an amount equal to the tax deducted 32 pursuant to Section 164 of the Internal Revenue Code 33 if the trust or estate is claiming the same tax for 34 purposes of the Illinois foreign tax credit under HB2980 Enrolled -24- LRB9107003WHdv 1 Section 601 of this Act; 2 (G) An amount equal to the amount of the 3 capital gain deduction allowable under the Internal 4 Revenue Code, to the extent deducted from gross 5 income in the computation of taxable income; and 6 (G-5) For taxable years ending after December 7 31, 1997, an amount equal to any eligible 8 remediation costs that the trust or estate deducted 9 in computing adjusted gross income and for which the 10 trust or estate claims a credit under subsection (l) 11 of Section 201; 12 and by deducting from the total so obtained the sum of 13 the following amounts: 14 (H) An amount equal to all amounts included in 15 such total pursuant to the provisions of Sections 16 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 17 408 of the Internal Revenue Code or included in such 18 total as distributions under the provisions of any 19 retirement or disability plan for employees of any 20 governmental agency or unit, or retirement payments 21 to retired partners, which payments are excluded in 22 computing net earnings from self employment by 23 Section 1402 of the Internal Revenue Code and 24 regulations adopted pursuant thereto; 25 (I) The valuation limitation amount; 26 (J) An amount equal to the amount of any tax 27 imposed by this Act which was refunded to the 28 taxpayer and included in such total for the taxable 29 year; 30 (K) An amount equal to all amounts included in 31 taxable income as modified by subparagraphs (A), 32 (B), (C), (D), (E), (F) and (G) which are exempt 33 from taxation by this State either by reason of its 34 statutes or Constitution or by reason of the HB2980 Enrolled -25- LRB9107003WHdv 1 Constitution, treaties or statutes of the United 2 States; provided that, in the case of any statute of 3 this State that exempts income derived from bonds or 4 other obligations from the tax imposed under this 5 Act, the amount exempted shall be the interest net 6 of bond premium amortization; 7 (L) With the exception of any amounts 8 subtracted under subparagraph (K), an amount equal 9 to the sum of all amounts disallowed as deductions 10 by (i) Sections 171(a) (2) and 265(a)(2) of the 11 Internal Revenue Code, as now or hereafter amended, 12 and all amounts of expenses allocable to interest 13 and disallowed as deductions by Section 265(1) of 14 the Internal Revenue Code of 1954, as now or 15 hereafter amended; and (ii) for taxable years ending 16 on or after August 13, 1999the effective date of17this amendatory Act of the 91st General Assembly, 18 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) 19 of the Internal Revenue Code; the provisions of this 20 subparagraph are exempt from the provisions of 21 Section 250; 22 (M) An amount equal to those dividends 23 included in such total which were paid by a 24 corporation which conducts business operations in an 25 Enterprise Zone or zones created under the Illinois 26 Enterprise Zone Act and conducts substantially all 27 of its operations in an Enterprise Zone or Zones; 28 (N) An amount equal to any contribution made 29 to a job training project established pursuant to 30 the Tax Increment Allocation Redevelopment Act; 31 (O) An amount equal to those dividends 32 included in such total that were paid by a 33 corporation that conducts business operations in a 34 federally designated Foreign Trade Zone or Sub-Zone HB2980 Enrolled -26- LRB9107003WHdv 1 and that is designated a High Impact Business 2 located in Illinois; provided that dividends 3 eligible for the deduction provided in subparagraph 4 (M) of paragraph (2) of this subsection shall not be 5 eligible for the deduction provided under this 6 subparagraph (O); 7 (P) An amount equal to the amount of the 8 deduction used to compute the federal income tax 9 credit for restoration of substantial amounts held 10 under claim of right for the taxable year pursuant 11 to Section 1341 of the Internal Revenue Code of 12 1986; and 13 (Q) For taxable year 1999 and thereafter, an 14 amount equal to the amount of any (i) distributions, 15 to the extent includible in gross income for federal 16 income tax purposes, made to the taxpayer because of 17 his or her status as a victim of persecution for 18 racial or religious reasons by Nazi Germany or any 19 other Axis regime or as an heir of the victim and 20 (ii) items of income, to the extent includible in 21 gross income for federal income tax purposes, 22 attributable to, derived from or in any way related 23 to assets stolen from, hidden from, or otherwise 24 lost to a victim of persecution for racial or 25 religious reasons by Nazi Germany or any other Axis 26 regime immediately prior to, during, and immediately 27 after World War II, including, but not limited to, 28 interest on the proceeds receivable as insurance 29 under policies issued to a victim of persecution for 30 racial or religious reasons by Nazi Germany or any 31 other Axis regime by European insurance companies 32 immediately prior to and during World War II; 33 provided, however, this subtraction from federal 34 adjusted gross income does not apply to assets HB2980 Enrolled -27- LRB9107003WHdv 1 acquired with such assets or with the proceeds from 2 the sale of such assets; provided, further, this 3 paragraph shall only apply to a taxpayer who was the 4 first recipient of such assets after their recovery 5 and who is a victim of persecution for racial or 6 religious reasons by Nazi Germany or any other Axis 7 regime or as an heir of the victim. The amount of 8 and the eligibility for any public assistance, 9 benefit, or similar entitlement is not affected by 10 the inclusion of items (i) and (ii) of this 11 paragraph in gross income for federal income tax 12 purposes. This paragraph is exempt from the 13 provisions of Section 250. 14 (3) Limitation. The amount of any modification 15 otherwise required under this subsection shall, under 16 regulations prescribed by the Department, be adjusted by 17 any amounts included therein which were properly paid, 18 credited, or required to be distributed, or permanently 19 set aside for charitable purposes pursuant to Internal 20 Revenue Code Section 642(c) during the taxable year. 21 (d) Partnerships. 22 (1) In general. In the case of a partnership, base 23 income means an amount equal to the taxpayer's taxable 24 income for the taxable year as modified by paragraph (2). 25 (2) Modifications. The taxable income referred to 26 in paragraph (1) shall be modified by adding thereto the 27 sum of the following amounts: 28 (A) An amount equal to all amounts paid or 29 accrued to the taxpayer as interest or dividends 30 during the taxable year to the extent excluded from 31 gross income in the computation of taxable income; 32 (B) An amount equal to the amount of tax 33 imposed by this Act to the extent deducted from 34 gross income for the taxable year; HB2980 Enrolled -28- LRB9107003WHdv 1 (C) The amount of deductions allowed to the 2 partnership pursuant to Section 707 (c) of the 3 Internal Revenue Code in calculating its taxable 4 income; and 5 (D) An amount equal to the amount of the 6 capital gain deduction allowable under the Internal 7 Revenue Code, to the extent deducted from gross 8 income in the computation of taxable income; 9 and by deducting from the total so obtained the following 10 amounts: 11 (E) The valuation limitation amount; 12 (F) An amount equal to the amount of any tax 13 imposed by this Act which was refunded to the 14 taxpayer and included in such total for the taxable 15 year; 16 (G) An amount equal to all amounts included in 17 taxable income as modified by subparagraphs (A), 18 (B), (C) and (D) which are exempt from taxation by 19 this State either by reason of its statutes or 20 Constitution or by reason of the Constitution, 21 treaties or statutes of the United States; provided 22 that, in the case of any statute of this State that 23 exempts income derived from bonds or other 24 obligations from the tax imposed under this Act, the 25 amount exempted shall be the interest net of bond 26 premium amortization; 27 (H) Any income of the partnership which 28 constitutes personal service income as defined in 29 Section 1348 (b) (1) of the Internal Revenue Code 30 (as in effect December 31, 1981) or a reasonable 31 allowance for compensation paid or accrued for 32 services rendered by partners to the partnership, 33 whichever is greater; 34 (I) An amount equal to all amounts of income HB2980 Enrolled -29- LRB9107003WHdv 1 distributable to an entity subject to the Personal 2 Property Tax Replacement Income Tax imposed by 3 subsections (c) and (d) of Section 201 of this Act 4 including amounts distributable to organizations 5 exempt from federal income tax by reason of Section 6 501(a) of the Internal Revenue Code; 7 (J) With the exception of any amounts 8 subtracted under subparagraph (G), an amount equal 9 to the sum of all amounts disallowed as deductions 10 by (i) Sections 171(a) (2), and 265(2) of the 11 Internal Revenue Code of 1954, as now or hereafter 12 amended, and all amounts of expenses allocable to 13 interest and disallowed as deductions by Section 14 265(1) of the Internal Revenue Code, as now or 15 hereafter amended; and (ii) for taxable years ending 16 on or after August 13, 1999the effective date of17this amendatory Act of the 91st General Assembly, 18 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) 19 of the Internal Revenue Code; the provisions of this 20 subparagraph are exempt from the provisions of 21 Section 250; 22 (K) An amount equal to those dividends 23 included in such total which were paid by a 24 corporation which conducts business operations in an 25 Enterprise Zone or zones created under the Illinois 26 Enterprise Zone Act, enacted by the 82nd General 27 Assembly, and which does not conduct such operations 28 other than in an Enterprise Zone or Zones; 29 (L) An amount equal to any contribution made 30 to a job training project established pursuant to 31 the Real Property Tax Increment Allocation 32 Redevelopment Act; 33 (M) An amount equal to those dividends 34 included in such total that were paid by a HB2980 Enrolled -30- LRB9107003WHdv 1 corporation that conducts business operations in a 2 federally designated Foreign Trade Zone or Sub-Zone 3 and that is designated a High Impact Business 4 located in Illinois; provided that dividends 5 eligible for the deduction provided in subparagraph 6 (K) of paragraph (2) of this subsection shall not be 7 eligible for the deduction provided under this 8 subparagraph (M); and 9 (N) An amount equal to the amount of the 10 deduction used to compute the federal income tax 11 credit for restoration of substantial amounts held 12 under claim of right for the taxable year pursuant 13 to Section 1341 of the Internal Revenue Code of 14 1986. 15 (e) Gross income; adjusted gross income; taxable income. 16 (1) In general. Subject to the provisions of 17 paragraph (2) and subsection (b) (3), for purposes of 18 this Section and Section 803(e), a taxpayer's gross 19 income, adjusted gross income, or taxable income for the 20 taxable year shall mean the amount of gross income, 21 adjusted gross income or taxable income properly 22 reportable for federal income tax purposes for the 23 taxable year under the provisions of the Internal Revenue 24 Code. Taxable income may be less than zero. However, for 25 taxable years ending on or after December 31, 1986, net 26 operating loss carryforwards from taxable years ending 27 prior to December 31, 1986, may not exceed the sum of 28 federal taxable income for the taxable year before net 29 operating loss deduction, plus the excess of addition 30 modifications over subtraction modifications for the 31 taxable year. For taxable years ending prior to December 32 31, 1986, taxable income may never be an amount in excess 33 of the net operating loss for the taxable year as defined 34 in subsections (c) and (d) of Section 172 of the Internal HB2980 Enrolled -31- LRB9107003WHdv 1 Revenue Code, provided that when taxable income of a 2 corporation (other than a Subchapter S corporation), 3 trust, or estate is less than zero and addition 4 modifications, other than those provided by subparagraph 5 (E) of paragraph (2) of subsection (b) for corporations 6 or subparagraph (E) of paragraph (2) of subsection (c) 7 for trusts and estates, exceed subtraction modifications, 8 an addition modification must be made under those 9 subparagraphs for any other taxable year to which the 10 taxable income less than zero (net operating loss) is 11 applied under Section 172 of the Internal Revenue Code or 12 under subparagraph (E) of paragraph (2) of this 13 subsection (e) applied in conjunction with Section 172 of 14 the Internal Revenue Code. 15 (2) Special rule. For purposes of paragraph (1) of 16 this subsection, the taxable income properly reportable 17 for federal income tax purposes shall mean: 18 (A) Certain life insurance companies. In the 19 case of a life insurance company subject to the tax 20 imposed by Section 801 of the Internal Revenue Code, 21 life insurance company taxable income, plus the 22 amount of distribution from pre-1984 policyholder 23 surplus accounts as calculated under Section 815a of 24 the Internal Revenue Code; 25 (B) Certain other insurance companies. In the 26 case of mutual insurance companies subject to the 27 tax imposed by Section 831 of the Internal Revenue 28 Code, insurance company taxable income; 29 (C) Regulated investment companies. In the 30 case of a regulated investment company subject to 31 the tax imposed by Section 852 of the Internal 32 Revenue Code, investment company taxable income; 33 (D) Real estate investment trusts. In the 34 case of a real estate investment trust subject to HB2980 Enrolled -32- LRB9107003WHdv 1 the tax imposed by Section 857 of the Internal 2 Revenue Code, real estate investment trust taxable 3 income; 4 (E) Consolidated corporations. In the case of 5 a corporation which is a member of an affiliated 6 group of corporations filing a consolidated income 7 tax return for the taxable year for federal income 8 tax purposes, taxable income determined as if such 9 corporation had filed a separate return for federal 10 income tax purposes for the taxable year and each 11 preceding taxable year for which it was a member of 12 an affiliated group. For purposes of this 13 subparagraph, the taxpayer's separate taxable income 14 shall be determined as if the election provided by 15 Section 243(b) (2) of the Internal Revenue Code had 16 been in effect for all such years; 17 (F) Cooperatives. In the case of a 18 cooperative corporation or association, the taxable 19 income of such organization determined in accordance 20 with the provisions of Section 1381 through 1388 of 21 the Internal Revenue Code; 22 (G) Subchapter S corporations. In the case 23 of: (i) a Subchapter S corporation for which there 24 is in effect an election for the taxable year under 25 Section 1362 of the Internal Revenue Code, the 26 taxable income of such corporation determined in 27 accordance with Section 1363(b) of the Internal 28 Revenue Code, except that taxable income shall take 29 into account those items which are required by 30 Section 1363(b)(1) of the Internal Revenue Code to 31 be separately stated; and (ii) a Subchapter S 32 corporation for which there is in effect a federal 33 election to opt out of the provisions of the 34 Subchapter S Revision Act of 1982 and have applied HB2980 Enrolled -33- LRB9107003WHdv 1 instead the prior federal Subchapter S rules as in 2 effect on July 1, 1982, the taxable income of such 3 corporation determined in accordance with the 4 federal Subchapter S rules as in effect on July 1, 5 1982; and 6 (H) Partnerships. In the case of a 7 partnership, taxable income determined in accordance 8 with Section 703 of the Internal Revenue Code, 9 except that taxable income shall take into account 10 those items which are required by Section 703(a)(1) 11 to be separately stated but which would be taken 12 into account by an individual in calculating his 13 taxable income. 14 (f) Valuation limitation amount. 15 (1) In general. The valuation limitation amount 16 referred to in subsections (a) (2) (G), (c) (2) (I) and 17 (d)(2) (E) is an amount equal to: 18 (A) The sum of the pre-August 1, 1969 19 appreciation amounts (to the extent consisting of 20 gain reportable under the provisions of Section 1245 21 or 1250 of the Internal Revenue Code) for all 22 property in respect of which such gain was reported 23 for the taxable year; plus 24 (B) The lesser of (i) the sum of the 25 pre-August 1, 1969 appreciation amounts (to the 26 extent consisting of capital gain) for all property 27 in respect of which such gain was reported for 28 federal income tax purposes for the taxable year, or 29 (ii) the net capital gain for the taxable year, 30 reduced in either case by any amount of such gain 31 included in the amount determined under subsection 32 (a) (2) (F) or (c) (2) (H). 33 (2) Pre-August 1, 1969 appreciation amount. 34 (A) If the fair market value of property HB2980 Enrolled -34- LRB9107003WHdv 1 referred to in paragraph (1) was readily 2 ascertainable on August 1, 1969, the pre-August 1, 3 1969 appreciation amount for such property is the 4 lesser of (i) the excess of such fair market value 5 over the taxpayer's basis (for determining gain) for 6 such property on that date (determined under the 7 Internal Revenue Code as in effect on that date), or 8 (ii) the total gain realized and reportable for 9 federal income tax purposes in respect of the sale, 10 exchange or other disposition of such property. 11 (B) If the fair market value of property 12 referred to in paragraph (1) was not readily 13 ascertainable on August 1, 1969, the pre-August 1, 14 1969 appreciation amount for such property is that 15 amount which bears the same ratio to the total gain 16 reported in respect of the property for federal 17 income tax purposes for the taxable year, as the 18 number of full calendar months in that part of the 19 taxpayer's holding period for the property ending 20 July 31, 1969 bears to the number of full calendar 21 months in the taxpayer's entire holding period for 22 the property. 23 (C) The Department shall prescribe such 24 regulations as may be necessary to carry out the 25 purposes of this paragraph. 26 (g) Double deductions. Unless specifically provided 27 otherwise, nothing in this Section shall permit the same item 28 to be deducted more than once. 29 (h) Legislative intention. Except as expressly provided 30 by this Section there shall be no modifications or 31 limitations on the amounts of income, gain, loss or deduction 32 taken into account in determining gross income, adjusted 33 gross income or taxable income for federal income tax HB2980 Enrolled -35- LRB9107003WHdv 1 purposes for the taxable year, or in the amount of such items 2 entering into the computation of base income and net income 3 under this Act for such taxable year, whether in respect of 4 property values as of August 1, 1969 or otherwise. 5 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 6 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff. 7 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, 8 eff. 12-23-99; revised 1-5-00.) 9 Section 99. Effective date. This Act takes effect upon 10 becoming law.