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| [ Introduced ] | [ Enrolled ] | [ House Amendment 001 ] |
92_HB4187eng HB4187 Engrossed LRB9214971JMmb 1 AN ACT concerning college savings. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The State Treasurer Act is amended by 5 changing Section 16.5 as follows: 6 (15 ILCS 505/16.5) 7 Sec. 16.5. College Savings Pool. The State Treasurer may 8 establish and administer a College Savings Pool to supplement 9 and enhance the investment opportunities otherwise available 10 to persons seeking to finance the costs of higher education. 11 The State Treasurer, in administering the College Savings 12 Pool, may receive moneys paid into the pool by a participant 13 and may serve as the fiscal agent of that participant for the 14 purpose of holding and investing those moneys. 15 "Participant", as used in this Section, means any person 16 who makes investments in the pool. "Designated beneficiary", 17 as used in this Section, means any person on whose behalf an 18 account is established in the College Savings Pool by a 19 participant. Both in-state and out-of-state persons may be 20 participants and designated beneficiaries in the College 21 Savings Pool. 22 New accounts in the College Savings Pool shall be 23 processed through participating financial institutions. 24 "Participating financial institution", as used in this 25 Section, means any financial institution insured by the 26 Federal Deposit Insurance Corporation and lawfully doing 27 business in the State of Illinois and any credit union 28 approved by the State Treasurer and lawfully doing business 29 in the State of Illinois that agrees to process new accounts 30 in the College Savings Pool. Participating financial 31 institutions may charge a processing fee to participants to HB4187 Engrossed -2- LRB9214971JMmb 1 open an account in the pool that shall not exceed $30 until 2 the year 2001. Beginning in 2001 and every year thereafter, 3 the maximum fee limit shall be adjusted by the Treasurer 4 based on the Consumer Price Index for the North Central 5 Region as published by the United States Department of Labor, 6 Bureau of Labor Statistics for the immediately preceding 7 calendar year. Every contribution received by a financial 8 institution for investment in the College Savings Pool shall 9 be transferred from the financial institution to a location 10 selected by the State Treasurer within one business day 11 following the day that the funds must be made available in 12 accordance with federal law. All communications from the 13 State Treasurer to participants shall reference the 14 participating financial institution at which the account was 15 processed. 16 The Treasurer may invest the moneys in the College 17 Savings Pool in the same manner, in the same types of 18 investments, and subject to the same limitations provided for 19 the investment of moneys by the Illinois State Board of 20 Investment. To enhance the safety and liquidity of the 21 College Savings Pool, to ensure the diversification of the 22 investment portfolio of the pool, and in an effort to keep 23 investment dollars in the State of Illinois, the State 24 Treasurer shall make a percentage of each account available 25 for investment in participating financial institutions doing 26 business in the State. The State Treasurer shall deposit 27 with the participating financial institution at which the 28 account was processed the following percentage of each 29 account at a prevailing rate offered by the institution, 30 provided that the deposit is federally insured or fully 31 collateralized and the institution accepts the deposit: 10% 32 of the total amount of each account for which the current age 33 of the beneficiary is less than 7 years of age, 20% of the 34 total amount of each account for which the beneficiary is at HB4187 Engrossed -3- LRB9214971JMmb 1 least 7 years of age and less than 12 years of age, and 50% 2 of the total amount of each account for which the current age 3 of the beneficiary is at least 12 years of age. The State 4 Treasurer shall adjust each account at least annually to 5 ensure compliance with this Section. The Treasurer shall 6 develop, publish, and implement an investment policy covering 7 the investment of the moneys in the College Savings Pool. 8 The policy shall be published (i) at least once each year in 9 at least one newspaper of general circulation in both 10 Springfield and Chicago and (ii) each year as part of the 11 audit of the College Savings Pool by the Auditor General, 12 which shall be distributed to all participants. The 13 Treasurer shall notify all participants in writing, and the 14 Treasurer shall publish in a newspaper of general circulation 15 in both Chicago and Springfield, any changes to the 16 previously published investment policy at least 30 calendar 17 days before implementing the policy. Any investment policy 18 adopted by the Treasurer shall be reviewed and updated if 19 necessary within 90 days following the date that the State 20 Treasurer takes office. 21 Participants shall be required to use moneys distributed 22 from the College Savings Pool for qualified expenses at 23 eligible educational institutions. "Qualified expenses", as 24 used in this Section, means the following: (i) tuition, fees, 25 and the costs of books, supplies, and equipment required for 26 enrollment or attendance at an eligible educational 27 institution and (ii) certain room and board expenses incurred 28 while attending an eligible educational institution at least 29 half-time. "Eligible educational institutions", as used in 30 this Section, means public and private colleges, junior 31 colleges, graduate schools, and certain vocational 32 institutions that are described in Section 481 of the Higher 33 Education Act of 1965 (20 U.S.C. 1088) and that are eligible 34 to participate in Department of Education student aid HB4187 Engrossed -4- LRB9214971JMmb 1 programs. A student shall be considered to be enrolled at 2 least half-time if the student is enrolled for at least half 3 the full-time academic work load for the course of study the 4 student is pursuing as determined under the standards of the 5 institution at which the student is enrolled. Distributions 6 made from the pool for qualified expenses shall be made 7 directly to the eligible educational institution, directly to 8 a vendor, or in the form of a check payable to both the 9 beneficiary and the institution or vendor. Any moneys that 10 are distributed in any other manner or that are used for 11 expenses other than qualified expenses at an eligible 12 educational institution shall be subject to a penalty of 10% 13 of the earnings unless the beneficiary dies, becomes 14 disabled, or receives a scholarship that equals or exceeds 15 the distribution. Penalties shall be withheld at the time 16 the distribution is made. 17 The Treasurer shall limit the contributions that may be 18 made on behalf of a designated beneficiary based on an 19 actuarial estimate of what is required to pay tuition, fees, 20 and room and board for 5 undergraduate years at the highest 21 cost eligible educational institution. The contributions made 22 on behalf of a beneficiary who is also a beneficiary under 23 the Illinois Prepaid Tuition Program shall be further 24 restricted to ensure that the contributions in both programs 25 combined do not exceed the limit established for the College 26 Savings Pool. The Treasurer shall provide the Illinois 27 Student Assistance Commission each year at a time designated 28 by the Commission, an electronic report of all participant 29 accounts in the Treasurer's College Savings Pool, listing 30 total contributions and disbursements from each individual 31 account during the previous calendar year. As soon 32 thereafter as is possible following receipt of the 33 Treasurer's report, the Illinois Student Assistance 34 Commission shall, in turn, provide the Treasurer with an HB4187 Engrossed -5- LRB9214971JMmb 1 electronic report listing those College Savings Pool 2 participants who also participate in the State's prepaid 3 tuition program, administered by the Commission. The 4 Commission shall be responsible for filing any combined tax 5 reports regarding State qualified savings programs required 6 by the United States Internal Revenue Service. The Treasurer 7 shall work with the Illinois Student Assistance Commission to 8 coordinate the marketing of the College Savings Pool and the 9 Illinois Prepaid Tuition Program when considered beneficial 10 by the Treasurer and the Director of the Illinois Student 11 Assistance Commission. The Treasurer's office shall not 12 publicize or otherwise market the College Savings Pool or 13 accept any moneys into the College Savings Pool prior to 14 March 1, 2000. The Treasurer shall provide a separate 15 accounting for each designated beneficiary to each 16 participant, the Illinois Student Assistance Commission, and 17 the participating financial institution at which the account 18 was processed. No interest in the program may be pledged as 19 security for a loan. 20 The assets of the College Savings Pool and its income and 21 operation shall be exempt from all taxation by the State of 22 Illinois and any of its subdivisions. The accrued earnings 23 on investments in the Pool once disbursed on behalf of a 24 designated beneficiary shall be similarly exempt from all 25 taxation by the State of Illinois and its subdivisions, so 26 long as they are used for qualified expenses. Contributions 27 to a College Savings Pool account during the taxable year may 28 be deducted from adjusted gross income as provided in Section 29 203 of the Illinois Income Tax Act. The provisions of this 30 paragraph are exempt from Section 250 of the Illinois Income 31 Tax Act. 32 The Treasurer shall adopt rules he or she considers 33 necessary for the efficient administration of the College 34 Savings Pool. The rules shall provide whatever additional HB4187 Engrossed -6- LRB9214971JMmb 1 parameters and restrictions are necessary to ensure that the 2 College Savings Pool meets all of the requirements for a 3 qualified state tuition program under Section 529 of the 4 Internal Revenue Code (26 U.S.C. 529). The rules shall 5 provide for the administration expenses of the pool to be 6 paid from its earnings and for the investment earnings in 7 excess of the expenses and all moneys collected as penalties 8 to be credited or paid monthly to the several participants in 9 the pool in a manner which equitably reflects the differing 10 amounts of their respective investments in the pool and the 11 differing periods of time for which those amounts were in the 12 custody of the pool. Also, the rules shall require the 13 maintenance of records that enable the Treasurer's office to 14 produce a report for each account in the pool at least 15 annually that documents the account balance and investment 16 earnings. Notice of any proposed amendments to the rules and 17 regulations shall be provided to all participants prior to 18 adoption. Amendments to rules and regulations shall apply 19 only to contributions made after the adoption of the 20 amendment. 21 Upon creating the College Savings Pool, the State 22 Treasurer shall give bond with 2 or more sufficient sureties, 23 payable to and for the benefit of the participants in the 24 College Savings Pool, in the penal sum of $1,000,000, 25 conditioned upon the faithful discharge of his or her duties 26 in relation to the College Savings Pool. 27 No contributions to the College Savings Pool authorized 28 by this Section shall be considered in evaluating the 29 financial situation of the designated beneficiary or be 30 deemed a financial resource of or a form of financial aid or 31 assistance to the designated beneficiary, for purposes of 32 determining eligibility for any scholarship, grant, or 33 monetary assistance awarded by the Illinois Student 34 Assistance Commission, the State, or any agency thereof; nor HB4187 Engrossed -7- LRB9214971JMmb 1 shall contributions to the College Savings Pool reduce the 2 amount of any scholarship, grant, or monetary assistance that 3 the designated beneficiary is eligible to be awarded by the 4 Illinois Student Assistance Commission, the State, or any 5 agency thereof in accordance with the provisions of any State 6 law. 7 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 8 92-16, eff. 6-28-01; 92-439, eff. 8-17-01.) 9 Section 10. The Illinois Income Tax Act is amended by 10 changing Section 203 as follows: 11 (35 ILCS 5/203) (from Ch. 120, par. 2-203) 12 Sec. 203. Base income defined. 13 (a) Individuals. 14 (1) In general. In the case of an individual, base 15 income means an amount equal to the taxpayer's adjusted 16 gross income for the taxable year as modified by 17 paragraph (2). 18 (2) Modifications. The adjusted gross income 19 referred to in paragraph (1) shall be modified by adding 20 thereto the sum of the following amounts: 21 (A) An amount equal to all amounts paid or 22 accrued to the taxpayer as interest or dividends 23 during the taxable year to the extent excluded from 24 gross income in the computation of adjusted gross 25 income, except stock dividends of qualified public 26 utilities described in Section 305(e) of the 27 Internal Revenue Code; 28 (B) An amount equal to the amount of tax 29 imposed by this Act to the extent deducted from 30 gross income in the computation of adjusted gross 31 income for the taxable year; 32 (C) An amount equal to the amount received HB4187 Engrossed -8- LRB9214971JMmb 1 during the taxable year as a recovery or refund of 2 real property taxes paid with respect to the 3 taxpayer's principal residence under the Revenue Act 4 of 1939 and for which a deduction was previously 5 taken under subparagraph (L) of this paragraph (2) 6 prior to July 1, 1991, the retrospective application 7 date of Article 4 of Public Act 87-17. In the case 8 of multi-unit or multi-use structures and farm 9 dwellings, the taxes on the taxpayer's principal 10 residence shall be that portion of the total taxes 11 for the entire property which is attributable to 12 such principal residence; 13 (D) An amount equal to the amount of the 14 capital gain deduction allowable under the Internal 15 Revenue Code, to the extent deducted from gross 16 income in the computation of adjusted gross income; 17 (D-5) An amount, to the extent not included in 18 adjusted gross income, equal to the amount of money 19 withdrawn by the taxpayer in the taxable year from a 20 medical care savings account and the interest earned 21 on the account in the taxable year of a withdrawal 22 pursuant to subsection (b) of Section 20 of the 23 Medical Care Savings Account Act or subsection (b) 24 of Section 20 of the Medical Care Savings Account 25 Act of 2000;and26 (D-10) For taxable years ending after December 27 31, 1997, an amount equal to any eligible 28 remediation costs that the individual deducted in 29 computing adjusted gross income and for which the 30 individual claims a credit under subsection (l) of 31 Section 201; and 32 (D-15) For taxable years beginning on or after 33 January 1, 2002, in the case of a distribution from 34 a qualified tuition program under Section 529 of the HB4187 Engrossed -9- LRB9214971JMmb 1 Internal Revenue Code, other than (i) a distribution 2 from a College Savings Pool created under Section 3 16.5 of the State Treasurer Act or (ii) a 4 distribution from the Illinois Prepaid Tuition Trust 5 Fund, an amount equal to the amount excluded from 6 gross income under Section 529(c)(3)(B); 7 and by deducting from the total so obtained the sum of 8 the following amounts: 9 (E) For taxable years ending before December 10 31, 2001, any amount included in such total in 11 respect of any compensation (including but not 12 limited to any compensation paid or accrued to a 13 serviceman while a prisoner of war or missing in 14 action) paid to a resident by reason of being on 15 active duty in the Armed Forces of the United States 16 and in respect of any compensation paid or accrued 17 to a resident who as a governmental employee was a 18 prisoner of war or missing in action, and in respect 19 of any compensation paid to a resident in 1971 or 20 thereafter for annual training performed pursuant to 21 Sections 502 and 503, Title 32, United States Code 22 as a member of the Illinois National Guard. For 23 taxable years ending on or after December 31, 2001, 24 any amount included in such total in respect of any 25 compensation (including but not limited to any 26 compensation paid or accrued to a serviceman while a 27 prisoner of war or missing in action) paid to a 28 resident by reason of being a member of any 29 component of the Armed Forces of the United States 30 and in respect of any compensation paid or accrued 31 to a resident who as a governmental employee was a 32 prisoner of war or missing in action, and in respect 33 of any compensation paid to a resident in 2001 or 34 thereafter by reason of being a member of the HB4187 Engrossed -10- LRB9214971JMmb 1 Illinois National Guard. The provisions of this 2 amendatory Act of the 92nd General Assembly are 3 exempt from the provisions of Section 250; 4 (F) An amount equal to all amounts included in 5 such total pursuant to the provisions of Sections 6 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 7 408 of the Internal Revenue Code, or included in 8 such total as distributions under the provisions of 9 any retirement or disability plan for employees of 10 any governmental agency or unit, or retirement 11 payments to retired partners, which payments are 12 excluded in computing net earnings from self 13 employment by Section 1402 of the Internal Revenue 14 Code and regulations adopted pursuant thereto; 15 (G) The valuation limitation amount; 16 (H) An amount equal to the amount of any tax 17 imposed by this Act which was refunded to the 18 taxpayer and included in such total for the taxable 19 year; 20 (I) An amount equal to all amounts included in 21 such total pursuant to the provisions of Section 111 22 of the Internal Revenue Code as a recovery of items 23 previously deducted from adjusted gross income in 24 the computation of taxable income; 25 (J) An amount equal to those dividends 26 included in such total which were paid by a 27 corporation which conducts business operations in an 28 Enterprise Zone or zones created under the Illinois 29 Enterprise Zone Act, and conducts substantially all 30 of its operations in an Enterprise Zone or zones; 31 (K) 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 HB4187 Engrossed -11- LRB9214971JMmb 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 (J) of paragraph (2) of this subsection shall not be 5 eligible for the deduction provided under this 6 subparagraph (K); 7 (L) For taxable years ending after December 8 31, 1983, an amount equal to all social security 9 benefits and railroad retirement benefits included 10 in such total pursuant to Sections 72(r) and 86 of 11 the Internal Revenue Code; 12 (M) With the exception of any amounts 13 subtracted under subparagraph (N), an amount equal 14 to the sum of all amounts disallowed as deductions 15 by (i) Sections 171(a) (2), and 265(2) of the 16 Internal Revenue Code of 1954, as now or hereafter 17 amended, and all amounts of expenses allocable to 18 interest and disallowed as deductions by Section 19 265(1) of the Internal Revenue Code of 1954, as now 20 or hereafter amended; and (ii) for taxable years 21 ending on or after August 13, 1999, Sections 22 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the 23 Internal Revenue Code; the provisions of this 24 subparagraph are exempt from the provisions of 25 Section 250; 26 (N) An amount equal to all amounts included in 27 such total which are exempt from taxation by this 28 State either by reason of its statutes or 29 Constitution or by reason of the Constitution, 30 treaties or statutes of the United States; provided 31 that, in the case of any statute of this State that 32 exempts income derived from bonds or other 33 obligations from the tax imposed under this Act, the 34 amount exempted shall be the interest net of bond HB4187 Engrossed -12- LRB9214971JMmb 1 premium amortization; 2 (O) An amount equal to any contribution made 3 to a job training project established pursuant to 4 the Tax Increment Allocation Redevelopment Act; 5 (P) An amount equal to the amount of the 6 deduction used to compute the federal income tax 7 credit for restoration of substantial amounts held 8 under claim of right for the taxable year pursuant 9 to Section 1341 of the Internal Revenue Code of 10 1986; 11 (Q) An amount equal to any amounts included in 12 such total, received by the taxpayer as an 13 acceleration in the payment of life, endowment or 14 annuity benefits in advance of the time they would 15 otherwise be payable as an indemnity for a terminal 16 illness; 17 (R) An amount equal to the amount of any 18 federal or State bonus paid to veterans of the 19 Persian Gulf War; 20 (S) An amount, to the extent included in 21 adjusted gross income, equal to the amount of a 22 contribution made in the taxable year on behalf of 23 the taxpayer to a medical care savings account 24 established under the Medical Care Savings Account 25 Act or the Medical Care Savings Account Act of 2000 26 to the extent the contribution is accepted by the 27 account administrator as provided in that Act; 28 (T) An amount, to the extent included in 29 adjusted gross income, equal to the amount of 30 interest earned in the taxable year on a medical 31 care savings account established under the Medical 32 Care Savings Account Act or the Medical Care Savings 33 Account Act of 2000 on behalf of the taxpayer, other 34 than interest added pursuant to item (D-5) of this HB4187 Engrossed -13- LRB9214971JMmb 1 paragraph (2); 2 (U) For one taxable year beginning on or after 3 January 1, 1994, an amount equal to the total amount 4 of tax imposed and paid under subsections (a) and 5 (b) of Section 201 of this Act on grant amounts 6 received by the taxpayer under the Nursing Home 7 Grant Assistance Act during the taxpayer's taxable 8 years 1992 and 1993; 9 (V) Beginning with tax years ending on or 10 after December 31, 1995 and ending with tax years 11 ending on or before December 31, 2004, an amount 12 equal to the amount paid by a taxpayer who is a 13 self-employed taxpayer, a partner of a partnership, 14 or a shareholder in a Subchapter S corporation for 15 health insurance or long-term care insurance for 16 that taxpayer or that taxpayer's spouse or 17 dependents, to the extent that the amount paid for 18 that health insurance or long-term care insurance 19 may be deducted under Section 213 of the Internal 20 Revenue Code of 1986, has not been deducted on the 21 federal income tax return of the taxpayer, and does 22 not exceed the taxable income attributable to that 23 taxpayer's income, self-employment income, or 24 Subchapter S corporation income; except that no 25 deduction shall be allowed under this item (V) if 26 the taxpayer is eligible to participate in any 27 health insurance or long-term care insurance plan of 28 an employer of the taxpayer or the taxpayer's 29 spouse. The amount of the health insurance and 30 long-term care insurance subtracted under this item 31 (V) shall be determined by multiplying total health 32 insurance and long-term care insurance premiums paid 33 by the taxpayer times a number that represents the 34 fractional percentage of eligible medical expenses HB4187 Engrossed -14- LRB9214971JMmb 1 under Section 213 of the Internal Revenue Code of 2 1986 not actually deducted on the taxpayer's federal 3 income tax return; 4 (W) For taxable years beginning on or after 5 January 1, 1998, all amounts included in the 6 taxpayer's federal gross income in the taxable year 7 from amounts converted from a regular IRA to a Roth 8 IRA. This paragraph is exempt from the provisions of 9 Section 250; 10 (X) For taxable year 1999 and thereafter, an 11 amount equal to the amount of any (i) distributions, 12 to the extent includible in gross income for federal 13 income tax purposes, made to the taxpayer because of 14 his or her status as a victim of persecution for 15 racial or religious reasons by Nazi Germany or any 16 other Axis regime or as an heir of the victim and 17 (ii) items of income, to the extent includible in 18 gross income for federal income tax purposes, 19 attributable to, derived from or in any way related 20 to assets stolen from, hidden from, or otherwise 21 lost to a victim of persecution for racial or 22 religious reasons by Nazi Germany or any other Axis 23 regime immediately prior to, during, and immediately 24 after World War II, including, but not limited to, 25 interest on the proceeds receivable as insurance 26 under policies issued to a victim of persecution for 27 racial or religious reasons by Nazi Germany or any 28 other Axis regime by European insurance companies 29 immediately prior to and during World War II; 30 provided, however, this subtraction from federal 31 adjusted gross income does not apply to assets 32 acquired with such assets or with the proceeds from 33 the sale of such assets; provided, further, this 34 paragraph shall only apply to a taxpayer who was the HB4187 Engrossed -15- LRB9214971JMmb 1 first recipient of such assets after their recovery 2 and who is a victim of persecution for racial or 3 religious reasons by Nazi Germany or any other Axis 4 regime or as an heir of the victim. The amount of 5 and the eligibility for any public assistance, 6 benefit, or similar entitlement is not affected by 7 the inclusion of items (i) and (ii) of this 8 paragraph in gross income for federal income tax 9 purposes. This paragraph is exempt from the 10 provisions of Section 250; and 11 (Y) For taxable years beginning on or after 12 January 1, 2002, moneys contributed in the taxable 13 year to a College Savings Pool account under Section 14 16.5 of the State Treasurer Act, except that amounts 15 excluded from gross income under Section 16 529(c)(3)(i) of the Internal Revenue Code shall not 17 be considered moneys contributed under this 18 subparagraph (Y). This subparagraph (Y) is exempt 19 from the provisions of Section 250. 20 (b) Corporations. 21 (1) In general. In the case of a corporation, base 22 income means an amount equal to the taxpayer's taxable 23 income for the taxable year as modified by paragraph (2). 24 (2) Modifications. The taxable income referred to 25 in paragraph (1) shall be modified by adding thereto the 26 sum of the following amounts: 27 (A) An amount equal to all amounts paid or 28 accrued to the taxpayer as interest and all 29 distributions received from regulated investment 30 companies during the taxable year to the extent 31 excluded from gross income in the computation of 32 taxable income; 33 (B) An amount equal to the amount of tax 34 imposed by this Act to the extent deducted from HB4187 Engrossed -16- LRB9214971JMmb 1 gross income in the computation of taxable income 2 for the taxable year; 3 (C) In the case of a regulated investment 4 company, an amount equal to the excess of (i) the 5 net long-term capital gain for the taxable year, 6 over (ii) the amount of the capital gain dividends 7 designated as such in accordance with Section 8 852(b)(3)(C) of the Internal Revenue Code and any 9 amount designated under Section 852(b)(3)(D) of the 10 Internal Revenue Code, attributable to the taxable 11 year (this amendatory Act of 1995 (Public Act 89-89) 12 is declarative of existing law and is not a new 13 enactment); 14 (D) The amount of any net operating loss 15 deduction taken in arriving at taxable income, other 16 than a net operating loss carried forward from a 17 taxable year ending prior to December 31, 1986; 18 (E) For taxable years in which a net operating 19 loss carryback or carryforward from a taxable year 20 ending prior to December 31, 1986 is an element of 21 taxable income under paragraph (1) of subsection (e) 22 or subparagraph (E) of paragraph (2) of subsection 23 (e), the amount by which addition modifications 24 other than those provided by this subparagraph (E) 25 exceeded subtraction modifications in such earlier 26 taxable year, with the following limitations applied 27 in the order that they are listed: 28 (i) the addition modification relating to 29 the net operating loss carried back or forward 30 to the taxable year from any taxable year 31 ending prior to December 31, 1986 shall be 32 reduced by the amount of addition modification 33 under this subparagraph (E) which related to 34 that net operating loss and which was taken HB4187 Engrossed -17- LRB9214971JMmb 1 into account in calculating the base income of 2 an earlier taxable year, and 3 (ii) the addition modification relating 4 to the net operating loss carried back or 5 forward to the taxable year from any taxable 6 year ending prior to December 31, 1986 shall 7 not exceed the amount of such carryback or 8 carryforward; 9 For taxable years in which there is a net 10 operating loss carryback or carryforward from more 11 than one other taxable year ending prior to December 12 31, 1986, the addition modification provided in this 13 subparagraph (E) shall be the sum of the amounts 14 computed independently under the preceding 15 provisions of this subparagraph (E) for each such 16 taxable year; and 17 (E-5) For taxable years ending after December 18 31, 1997, an amount equal to any eligible 19 remediation costs that the corporation deducted in 20 computing adjusted gross income and for which the 21 corporation claims a credit under subsection (l) of 22 Section 201; 23 and by deducting from the total so obtained the sum of 24 the following amounts: 25 (F) An amount equal to the amount of any tax 26 imposed by this Act which was refunded to the 27 taxpayer and included in such total for the taxable 28 year; 29 (G) An amount equal to any amount included in 30 such total under Section 78 of the Internal Revenue 31 Code; 32 (H) In the case of a regulated investment 33 company, an amount equal to the amount of exempt 34 interest dividends as defined in subsection (b) (5) HB4187 Engrossed -18- LRB9214971JMmb 1 of Section 852 of the Internal Revenue Code, paid to 2 shareholders for the taxable year; 3 (I) With the exception of any amounts 4 subtracted under subparagraph (J), an amount equal 5 to the sum of all amounts disallowed as deductions 6 by (i) Sections 171(a) (2), and 265(a)(2) and 7 amounts disallowed as interest expense by Section 8 291(a)(3) of the Internal Revenue Code, as now or 9 hereafter amended, and all amounts of expenses 10 allocable to interest and disallowed as deductions 11 by Section 265(a)(1) of the Internal Revenue Code, 12 as now or hereafter amended; and (ii) for taxable 13 years ending on or after August 13, 1999, Sections 14 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i) 15 of the Internal Revenue Code; the provisions of this 16 subparagraph are exempt from the provisions of 17 Section 250; 18 (J) An amount equal to all amounts included in 19 such total which are exempt from taxation by this 20 State either by reason of its statutes or 21 Constitution or by reason of the Constitution, 22 treaties or statutes of the United States; provided 23 that, in the case of any statute of this State that 24 exempts income derived from bonds or other 25 obligations from the tax imposed under this Act, the 26 amount exempted shall be the interest net of bond 27 premium amortization; 28 (K) An amount equal to those dividends 29 included in such total which were paid by a 30 corporation which conducts business operations in an 31 Enterprise Zone or zones created under the Illinois 32 Enterprise Zone Act and conducts substantially all 33 of its operations in an Enterprise Zone or zones; 34 (L) An amount equal to those dividends HB4187 Engrossed -19- LRB9214971JMmb 1 included in such total that were paid by a 2 corporation that conducts business operations in a 3 federally designated Foreign Trade Zone or Sub-Zone 4 and that is designated a High Impact Business 5 located in Illinois; provided that dividends 6 eligible for the deduction provided in subparagraph 7 (K) of paragraph 2 of this subsection shall not be 8 eligible for the deduction provided under this 9 subparagraph (L); 10 (M) For any taxpayer that is a financial 11 organization within the meaning of Section 304(c) of 12 this Act, an amount included in such total as 13 interest income from a loan or loans made by such 14 taxpayer to a borrower, to the extent that such a 15 loan is secured by property which is eligible for 16 the Enterprise Zone Investment Credit. To determine 17 the portion of a loan or loans that is secured by 18 property eligible for a Section 201(f) investment 19 credit to the borrower, the entire principal amount 20 of the loan or loans between the taxpayer and the 21 borrower should be divided into the basis of the 22 Section 201(f) investment credit property which 23 secures the loan or loans, using for this purpose 24 the original basis of such property on the date that 25 it was placed in service in the Enterprise Zone. 26 The subtraction modification available to taxpayer 27 in any year under this subsection shall be that 28 portion of the total interest paid by the borrower 29 with respect to such loan attributable to the 30 eligible property as calculated under the previous 31 sentence; 32 (M-1) For any taxpayer that is a financial 33 organization within the meaning of Section 304(c) of 34 this Act, an amount included in such total as HB4187 Engrossed -20- LRB9214971JMmb 1 interest income from a loan or loans made by such 2 taxpayer to a borrower, to the extent that such a 3 loan is secured by property which is eligible for 4 the High Impact Business Investment Credit. To 5 determine the portion of a loan or loans that is 6 secured by property eligible for a Section 201(h) 7 investment credit to the borrower, the entire 8 principal amount of the loan or loans between the 9 taxpayer and the borrower should be divided into the 10 basis of the Section 201(h) investment credit 11 property which secures the loan or loans, using for 12 this purpose the original basis of such property on 13 the date that it was placed in service in a 14 federally designated Foreign Trade Zone or Sub-Zone 15 located in Illinois. No taxpayer that is eligible 16 for the deduction provided in subparagraph (M) of 17 paragraph (2) of this subsection shall be eligible 18 for the deduction provided under this subparagraph 19 (M-1). The subtraction modification available to 20 taxpayers in any year under this subsection shall be 21 that portion of the total interest paid by the 22 borrower with respect to such loan attributable to 23 the eligible property as calculated under the 24 previous sentence; 25 (N) Two times any contribution made during the 26 taxable year to a designated zone organization to 27 the extent that the contribution (i) qualifies as a 28 charitable contribution under subsection (c) of 29 Section 170 of the Internal Revenue Code and (ii) 30 must, by its terms, be used for a project approved 31 by the Department of Commerce and Community Affairs 32 under Section 11 of the Illinois Enterprise Zone 33 Act; 34 (O) An amount equal to: (i) 85% for taxable HB4187 Engrossed -21- LRB9214971JMmb 1 years ending on or before December 31, 1992, or, a 2 percentage equal to the percentage allowable under 3 Section 243(a)(1) of the Internal Revenue Code of 4 1986 for taxable years ending after December 31, 5 1992, of the amount by which dividends included in 6 taxable income and received from a corporation that 7 is not created or organized under the laws of the 8 United States or any state or political subdivision 9 thereof, including, for taxable years ending on or 10 after December 31, 1988, dividends received or 11 deemed received or paid or deemed paid under 12 Sections 951 through 964 of the Internal Revenue 13 Code, exceed the amount of the modification provided 14 under subparagraph (G) of paragraph (2) of this 15 subsection (b) which is related to such dividends; 16 plus (ii) 100% of the amount by which dividends, 17 included in taxable income and received, including, 18 for taxable years ending on or after December 31, 19 1988, dividends received or deemed received or paid 20 or deemed paid under Sections 951 through 964 of the 21 Internal Revenue Code, from any such corporation 22 specified in clause (i) that would but for the 23 provisions of Section 1504 (b) (3) of the Internal 24 Revenue Code be treated as a member of the 25 affiliated group which includes the dividend 26 recipient, exceed the amount of the modification 27 provided under subparagraph (G) of paragraph (2) of 28 this subsection (b) which is related to such 29 dividends; 30 (P) An amount equal to any contribution made 31 to a job training project established pursuant to 32 the Tax Increment Allocation Redevelopment Act; 33 (Q) An amount equal to the amount of the 34 deduction used to compute the federal income tax HB4187 Engrossed -22- LRB9214971JMmb 1 credit for restoration of substantial amounts held 2 under claim of right for the taxable year pursuant 3 to Section 1341 of the Internal Revenue Code of 4 1986; 5 (R) In the case of an attorney-in-fact with 6 respect to whom an interinsurer or a reciprocal 7 insurer has made the election under Section 835 of 8 the Internal Revenue Code, 26 U.S.C. 835, an amount 9 equal to the excess, if any, of the amounts paid or 10 incurred by that interinsurer or reciprocal insurer 11 in the taxable year to the attorney-in-fact over the 12 deduction allowed to that interinsurer or reciprocal 13 insurer with respect to the attorney-in-fact under 14 Section 835(b) of the Internal Revenue Code for the 15 taxable year; and 16 (S) For taxable years ending on or after 17 December 31, 1997, in the case of a Subchapter S 18 corporation, an amount equal to all amounts of 19 income allocable to a shareholder subject to the 20 Personal Property Tax Replacement Income Tax imposed 21 by subsections (c) and (d) of Section 201 of this 22 Act, including amounts allocable to organizations 23 exempt from federal income tax by reason of Section 24 501(a) of the Internal Revenue Code. This 25 subparagraph (S) is exempt from the provisions of 26 Section 250. 27 (3) Special rule. For purposes of paragraph (2) 28 (A), "gross income" in the case of a life insurance 29 company, for tax years ending on and after December 31, 30 1994, shall mean the gross investment income for the 31 taxable year. 32 (c) Trusts and estates. 33 (1) In general. In the case of a trust or estate, 34 base income means an amount equal to the taxpayer's HB4187 Engrossed -23- LRB9214971JMmb 1 taxable income for the taxable year as modified by 2 paragraph (2). 3 (2) Modifications. Subject to the provisions of 4 paragraph (3), the taxable income referred to in 5 paragraph (1) shall be modified by adding thereto the sum 6 of the following amounts: 7 (A) An amount equal to all amounts paid or 8 accrued to the taxpayer as interest or dividends 9 during the taxable year to the extent excluded from 10 gross income in the computation of taxable income; 11 (B) In the case of (i) an estate, $600; (ii) a 12 trust which, under its governing instrument, is 13 required to distribute all of its income currently, 14 $300; and (iii) any other trust, $100, but in each 15 such case, only to the extent such amount was 16 deducted in the computation of taxable income; 17 (C) An amount equal to the amount of tax 18 imposed by this Act to the extent deducted from 19 gross income in the computation of taxable income 20 for the taxable year; 21 (D) The amount of any net operating loss 22 deduction taken in arriving at taxable income, other 23 than a net operating loss carried forward from a 24 taxable year ending prior to December 31, 1986; 25 (E) For taxable years in which a net operating 26 loss carryback or carryforward from a taxable year 27 ending prior to December 31, 1986 is an element of 28 taxable income under paragraph (1) of subsection (e) 29 or subparagraph (E) of paragraph (2) of subsection 30 (e), the amount by which addition modifications 31 other than those provided by this subparagraph (E) 32 exceeded subtraction modifications in such taxable 33 year, with the following limitations applied in the 34 order that they are listed: HB4187 Engrossed -24- LRB9214971JMmb 1 (i) the addition modification relating to 2 the net operating loss carried back or forward 3 to the taxable year from any taxable year 4 ending prior to December 31, 1986 shall be 5 reduced by the amount of addition modification 6 under this subparagraph (E) which related to 7 that net operating loss and which was taken 8 into account in calculating the base income of 9 an earlier taxable year, and 10 (ii) the addition modification relating 11 to the net operating loss carried back or 12 forward to the taxable year from any taxable 13 year ending prior to December 31, 1986 shall 14 not exceed the amount of such carryback or 15 carryforward; 16 For taxable years in which there is a net 17 operating loss carryback or carryforward from more 18 than one other taxable year ending prior to December 19 31, 1986, the addition modification provided in this 20 subparagraph (E) shall be the sum of the amounts 21 computed independently under the preceding 22 provisions of this subparagraph (E) for each such 23 taxable year; 24 (F) For taxable years ending on or after 25 January 1, 1989, an amount equal to the tax deducted 26 pursuant to Section 164 of the Internal Revenue Code 27 if the trust or estate is claiming the same tax for 28 purposes of the Illinois foreign tax credit under 29 Section 601 of this Act; 30 (G) An amount equal to the amount of the 31 capital gain deduction allowable under the Internal 32 Revenue Code, to the extent deducted from gross 33 income in the computation of taxable income; and 34 (G-5) For taxable years ending after December HB4187 Engrossed -25- LRB9214971JMmb 1 31, 1997, an amount equal to any eligible 2 remediation costs that the trust or estate deducted 3 in computing adjusted gross income and for which the 4 trust or estate claims a credit under subsection (l) 5 of Section 201; 6 and by deducting from the total so obtained the sum of 7 the following amounts: 8 (H) An amount equal to all amounts included in 9 such total pursuant to the provisions of Sections 10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 11 408 of the Internal Revenue Code or included in such 12 total as distributions under the provisions of any 13 retirement or disability plan for employees of any 14 governmental agency or unit, or retirement payments 15 to retired partners, which payments are excluded in 16 computing net earnings from self employment by 17 Section 1402 of the Internal Revenue Code and 18 regulations adopted pursuant thereto; 19 (I) The valuation limitation amount; 20 (J) An amount equal to the amount of any tax 21 imposed by this Act which was refunded to the 22 taxpayer and included in such total for the taxable 23 year; 24 (K) An amount equal to all amounts included in 25 taxable income as modified by subparagraphs (A), 26 (B), (C), (D), (E), (F) and (G) which are exempt 27 from taxation by this State either by reason of its 28 statutes or Constitution or by reason of the 29 Constitution, treaties or statutes of the United 30 States; provided that, in the case of any statute of 31 this State that exempts income derived from bonds or 32 other obligations from the tax imposed under this 33 Act, the amount exempted shall be the interest net 34 of bond premium amortization; HB4187 Engrossed -26- LRB9214971JMmb 1 (L) With the exception of any amounts 2 subtracted under subparagraph (K), an amount equal 3 to the sum of all amounts disallowed as deductions 4 by (i) Sections 171(a) (2) and 265(a)(2) of the 5 Internal Revenue Code, as now or hereafter amended, 6 and all amounts of expenses allocable to interest 7 and disallowed as deductions by Section 265(1) of 8 the Internal Revenue Code of 1954, as now or 9 hereafter amended; and (ii) for taxable years ending 10 on or after August 13, 1999, Sections 171(a)(2), 11 265, 280C, and 832(b)(5)(B)(i) of the Internal 12 Revenue Code; the provisions of this subparagraph 13 are exempt from the provisions of Section 250; 14 (M) An amount equal to those dividends 15 included in such total which were paid by a 16 corporation which conducts business operations in an 17 Enterprise Zone or zones created under the Illinois 18 Enterprise Zone Act and conducts substantially all 19 of its operations in an Enterprise Zone or Zones; 20 (N) An amount equal to any contribution made 21 to a job training project established pursuant to 22 the Tax Increment Allocation Redevelopment Act; 23 (O) An amount equal to those dividends 24 included in such total that were paid by a 25 corporation that conducts business operations in a 26 federally designated Foreign Trade Zone or Sub-Zone 27 and that is designated a High Impact Business 28 located in Illinois; provided that dividends 29 eligible for the deduction provided in subparagraph 30 (M) of paragraph (2) of this subsection shall not be 31 eligible for the deduction provided under this 32 subparagraph (O); 33 (P) An amount equal to the amount of the 34 deduction used to compute the federal income tax HB4187 Engrossed -27- LRB9214971JMmb 1 credit for restoration of substantial amounts held 2 under claim of right for the taxable year pursuant 3 to Section 1341 of the Internal Revenue Code of 4 1986; and 5 (Q) For taxable year 1999 and thereafter, an 6 amount equal to the amount of any (i) distributions, 7 to the extent includible in gross income for federal 8 income tax purposes, made to the taxpayer because of 9 his or her status as a victim of persecution for 10 racial or religious reasons by Nazi Germany or any 11 other Axis regime or as an heir of the victim and 12 (ii) items of income, to the extent includible in 13 gross income for federal income tax purposes, 14 attributable to, derived from or in any way related 15 to assets stolen from, hidden from, or otherwise 16 lost to a victim of persecution for racial or 17 religious reasons by Nazi Germany or any other Axis 18 regime immediately prior to, during, and immediately 19 after World War II, including, but not limited to, 20 interest on the proceeds receivable as insurance 21 under policies issued to a victim of persecution for 22 racial or religious reasons by Nazi Germany or any 23 other Axis regime by European insurance companies 24 immediately prior to and during World War II; 25 provided, however, this subtraction from federal 26 adjusted gross income does not apply to assets 27 acquired with such assets or with the proceeds from 28 the sale of such assets; provided, further, this 29 paragraph shall only apply to a taxpayer who was the 30 first recipient of such assets after their recovery 31 and who is a victim of persecution for racial or 32 religious reasons by Nazi Germany or any other Axis 33 regime or as an heir of the victim. The amount of 34 and the eligibility for any public assistance, HB4187 Engrossed -28- LRB9214971JMmb 1 benefit, or similar entitlement is not affected by 2 the inclusion of items (i) and (ii) of this 3 paragraph in gross income for federal income tax 4 purposes. This paragraph is exempt from the 5 provisions of Section 250. 6 (3) Limitation. The amount of any modification 7 otherwise required under this subsection shall, under 8 regulations prescribed by the Department, be adjusted by 9 any amounts included therein which were properly paid, 10 credited, or required to be distributed, or permanently 11 set aside for charitable purposes pursuant to Internal 12 Revenue Code Section 642(c) during the taxable year. 13 (d) Partnerships. 14 (1) In general. In the case of a partnership, base 15 income means an amount equal to the taxpayer's taxable 16 income for the taxable year as modified by paragraph (2). 17 (2) Modifications. The taxable income referred to 18 in paragraph (1) shall be modified by adding thereto the 19 sum of the following amounts: 20 (A) An amount equal to all amounts paid or 21 accrued to the taxpayer as interest or dividends 22 during the taxable year to the extent excluded from 23 gross income in the computation of taxable income; 24 (B) An amount equal to the amount of tax 25 imposed by this Act to the extent deducted from 26 gross income for the taxable year; 27 (C) The amount of deductions allowed to the 28 partnership pursuant to Section 707 (c) of the 29 Internal Revenue Code in calculating its taxable 30 income; and 31 (D) An amount equal to the amount of the 32 capital gain deduction allowable under the Internal 33 Revenue Code, to the extent deducted from gross 34 income in the computation of taxable income; HB4187 Engrossed -29- LRB9214971JMmb 1 and by deducting from the total so obtained the following 2 amounts: 3 (E) The valuation limitation amount; 4 (F) An amount equal to the amount of any tax 5 imposed by this Act which was refunded to the 6 taxpayer and included in such total for the taxable 7 year; 8 (G) An amount equal to all amounts included in 9 taxable income as modified by subparagraphs (A), 10 (B), (C) and (D) which are exempt from taxation by 11 this State either by reason of its statutes or 12 Constitution or by reason of the Constitution, 13 treaties or statutes of the United States; provided 14 that, in the case of any statute of this State that 15 exempts income derived from bonds or other 16 obligations from the tax imposed under this Act, the 17 amount exempted shall be the interest net of bond 18 premium amortization; 19 (H) Any income of the partnership which 20 constitutes personal service income as defined in 21 Section 1348 (b) (1) of the Internal Revenue Code 22 (as in effect December 31, 1981) or a reasonable 23 allowance for compensation paid or accrued for 24 services rendered by partners to the partnership, 25 whichever is greater; 26 (I) An amount equal to all amounts of income 27 distributable to an entity subject to the Personal 28 Property Tax Replacement Income Tax imposed by 29 subsections (c) and (d) of Section 201 of this Act 30 including amounts distributable to organizations 31 exempt from federal income tax by reason of Section 32 501(a) of the Internal Revenue Code; 33 (J) With the exception of any amounts 34 subtracted under subparagraph (G), an amount equal HB4187 Engrossed -30- LRB9214971JMmb 1 to the sum of all amounts disallowed as deductions 2 by (i) Sections 171(a) (2), and 265(2) of the 3 Internal Revenue Code of 1954, as now or hereafter 4 amended, and all amounts of expenses allocable to 5 interest and disallowed as deductions by Section 6 265(1) of the Internal Revenue Code, as now or 7 hereafter amended; and (ii) for taxable years ending 8 on or after August 13, 1999, Sections 171(a)(2), 9 265, 280C, and 832(b)(5)(B)(i) of the Internal 10 Revenue Code; the provisions of this subparagraph 11 are exempt from the provisions of Section 250; 12 (K) An amount equal to those dividends 13 included in such total which were paid by a 14 corporation which conducts business operations in an 15 Enterprise Zone or zones created under the Illinois 16 Enterprise Zone Act, enacted by the 82nd General 17 Assembly, and which does not conduct such operations 18 other than in an Enterprise Zone or Zones; 19 (L) An amount equal to any contribution made 20 to a job training project established pursuant to 21 the Real Property Tax Increment Allocation 22 Redevelopment Act; 23 (M) An amount equal to those dividends 24 included in such total that were paid by a 25 corporation that conducts business operations in a 26 federally designated Foreign Trade Zone or Sub-Zone 27 and that is designated a High Impact Business 28 located in Illinois; provided that dividends 29 eligible for the deduction provided in subparagraph 30 (K) of paragraph (2) of this subsection shall not be 31 eligible for the deduction provided under this 32 subparagraph (M); and 33 (N) An amount equal to the amount of the 34 deduction used to compute the federal income tax HB4187 Engrossed -31- LRB9214971JMmb 1 credit for restoration of substantial amounts held 2 under claim of right for the taxable year pursuant 3 to Section 1341 of the Internal Revenue Code of 4 1986. 5 (e) Gross income; adjusted gross income; taxable income. 6 (1) In general. Subject to the provisions of 7 paragraph (2) and subsection (b) (3), for purposes of 8 this Section and Section 803(e), a taxpayer's gross 9 income, adjusted gross income, or taxable income for the 10 taxable year shall mean the amount of gross income, 11 adjusted gross income or taxable income properly 12 reportable for federal income tax purposes for the 13 taxable year under the provisions of the Internal Revenue 14 Code. Taxable income may be less than zero. However, for 15 taxable years ending on or after December 31, 1986, net 16 operating loss carryforwards from taxable years ending 17 prior to December 31, 1986, may not exceed the sum of 18 federal taxable income for the taxable year before net 19 operating loss deduction, plus the excess of addition 20 modifications over subtraction modifications for the 21 taxable year. For taxable years ending prior to December 22 31, 1986, taxable income may never be an amount in excess 23 of the net operating loss for the taxable year as defined 24 in subsections (c) and (d) of Section 172 of the Internal 25 Revenue Code, provided that when taxable income of a 26 corporation (other than a Subchapter S corporation), 27 trust, or estate is less than zero and addition 28 modifications, other than those provided by subparagraph 29 (E) of paragraph (2) of subsection (b) for corporations 30 or subparagraph (E) of paragraph (2) of subsection (c) 31 for trusts and estates, exceed subtraction modifications, 32 an addition modification must be made under those 33 subparagraphs for any other taxable year to which the 34 taxable income less than zero (net operating loss) is HB4187 Engrossed -32- LRB9214971JMmb 1 applied under Section 172 of the Internal Revenue Code or 2 under subparagraph (E) of paragraph (2) of this 3 subsection (e) applied in conjunction with Section 172 of 4 the Internal Revenue Code. 5 (2) Special rule. For purposes of paragraph (1) of 6 this subsection, the taxable income properly reportable 7 for federal income tax purposes shall mean: 8 (A) Certain life insurance companies. In the 9 case of a life insurance company subject to the tax 10 imposed by Section 801 of the Internal Revenue Code, 11 life insurance company taxable income, plus the 12 amount of distribution from pre-1984 policyholder 13 surplus accounts as calculated under Section 815a of 14 the Internal Revenue Code; 15 (B) Certain other insurance companies. In the 16 case of mutual insurance companies subject to the 17 tax imposed by Section 831 of the Internal Revenue 18 Code, insurance company taxable income; 19 (C) Regulated investment companies. In the 20 case of a regulated investment company subject to 21 the tax imposed by Section 852 of the Internal 22 Revenue Code, investment company taxable income; 23 (D) Real estate investment trusts. In the 24 case of a real estate investment trust subject to 25 the tax imposed by Section 857 of the Internal 26 Revenue Code, real estate investment trust taxable 27 income; 28 (E) Consolidated corporations. In the case of 29 a corporation which is a member of an affiliated 30 group of corporations filing a consolidated income 31 tax return for the taxable year for federal income 32 tax purposes, taxable income determined as if such 33 corporation had filed a separate return for federal 34 income tax purposes for the taxable year and each HB4187 Engrossed -33- LRB9214971JMmb 1 preceding taxable year for which it was a member of 2 an affiliated group. For purposes of this 3 subparagraph, the taxpayer's separate taxable income 4 shall be determined as if the election provided by 5 Section 243(b) (2) of the Internal Revenue Code had 6 been in effect for all such years; 7 (F) Cooperatives. In the case of a 8 cooperative corporation or association, the taxable 9 income of such organization determined in accordance 10 with the provisions of Section 1381 through 1388 of 11 the Internal Revenue Code; 12 (G) Subchapter S corporations. In the case 13 of: (i) a Subchapter S corporation for which there 14 is in effect an election for the taxable year under 15 Section 1362 of the Internal Revenue Code, the 16 taxable income of such corporation determined in 17 accordance with Section 1363(b) of the Internal 18 Revenue Code, except that taxable income shall take 19 into account those items which are required by 20 Section 1363(b)(1) of the Internal Revenue Code to 21 be separately stated; and (ii) a Subchapter S 22 corporation for which there is in effect a federal 23 election to opt out of the provisions of the 24 Subchapter S Revision Act of 1982 and have applied 25 instead the prior federal Subchapter S rules as in 26 effect on July 1, 1982, the taxable income of such 27 corporation determined in accordance with the 28 federal Subchapter S rules as in effect on July 1, 29 1982; and 30 (H) Partnerships. In the case of a 31 partnership, taxable income determined in accordance 32 with Section 703 of the Internal Revenue Code, 33 except that taxable income shall take into account 34 those items which are required by Section 703(a)(1) HB4187 Engrossed -34- LRB9214971JMmb 1 to be separately stated but which would be taken 2 into account by an individual in calculating his 3 taxable income. 4 (f) Valuation limitation amount. 5 (1) In general. The valuation limitation amount 6 referred to in subsections (a) (2) (G), (c) (2) (I) and 7 (d)(2) (E) is an amount equal to: 8 (A) The sum of the pre-August 1, 1969 9 appreciation amounts (to the extent consisting of 10 gain reportable under the provisions of Section 1245 11 or 1250 of the Internal Revenue Code) for all 12 property in respect of which such gain was reported 13 for the taxable year; plus 14 (B) The lesser of (i) the sum of the 15 pre-August 1, 1969 appreciation amounts (to the 16 extent consisting of capital gain) for all property 17 in respect of which such gain was reported for 18 federal income tax purposes for the taxable year, or 19 (ii) the net capital gain for the taxable year, 20 reduced in either case by any amount of such gain 21 included in the amount determined under subsection 22 (a) (2) (F) or (c) (2) (H). 23 (2) Pre-August 1, 1969 appreciation amount. 24 (A) If the fair market value of property 25 referred to in paragraph (1) was readily 26 ascertainable on August 1, 1969, the pre-August 1, 27 1969 appreciation amount for such property is the 28 lesser of (i) the excess of such fair market value 29 over the taxpayer's basis (for determining gain) for 30 such property on that date (determined under the 31 Internal Revenue Code as in effect on that date), or 32 (ii) the total gain realized and reportable for 33 federal income tax purposes in respect of the sale, 34 exchange or other disposition of such property. HB4187 Engrossed -35- LRB9214971JMmb 1 (B) If the fair market value of property 2 referred to in paragraph (1) was not readily 3 ascertainable on August 1, 1969, the pre-August 1, 4 1969 appreciation amount for such property is that 5 amount which bears the same ratio to the total gain 6 reported in respect of the property for federal 7 income tax purposes for the taxable year, as the 8 number of full calendar months in that part of the 9 taxpayer's holding period for the property ending 10 July 31, 1969 bears to the number of full calendar 11 months in the taxpayer's entire holding period for 12 the property. 13 (C) The Department shall prescribe such 14 regulations as may be necessary to carry out the 15 purposes of this paragraph. 16 (g) Double deductions. Unless specifically provided 17 otherwise, nothing in this Section shall permit the same item 18 to be deducted more than once. 19 (h) Legislative intention. Except as expressly provided 20 by this Section there shall be no modifications or 21 limitations on the amounts of income, gain, loss or deduction 22 taken into account in determining gross income, adjusted 23 gross income or taxable income for federal income tax 24 purposes for the taxable year, or in the amount of such items 25 entering into the computation of base income and net income 26 under this Act for such taxable year, whether in respect of 27 property values as of August 1, 1969 or otherwise. 28 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99; 29 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff. 30 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16, 31 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01; 32 revised 9-21-01.) HB4187 Engrossed -36- LRB9214971JMmb 1 Section 99. Effective date. This Act takes effect upon 2 becoming law.