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| [ Introduced ] | [ Engrossed ] | [ Senate Amendment 001 ] |
92_SB0729ham001
LRB9205003SMksam01
1 AMENDMENT TO SENATE BILL 729
2 AMENDMENT NO. . Amend Senate Bill 729 by replacing
3 the title with the following:
4 "AN ACT concerning college savings."; and
5 by replacing everything after the enacting clause with the
6 following:
7 "Section 5. The State Treasurer Act is amended by
8 changing Section 16.5 as follows:
9 (15 ILCS 505/16.5)
10 Sec. 16.5. College Savings Pool. The State Treasurer may
11 establish and administer a College Savings Pool to supplement
12 and enhance the investment opportunities otherwise available
13 to persons seeking to finance the costs of higher education.
14 The State Treasurer, in administering the College Savings
15 Pool, may receive moneys paid into the pool by a participant
16 and may serve as the fiscal agent of that participant for the
17 purpose of holding and investing those moneys.
18 "Participant", as used in this Section, means any person
19 who makes investments in the pool. "Designated beneficiary",
20 as used in this Section, means any person on whose behalf an
21 account is established in the College Savings Pool by a
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1 participant. Both in-state and out-of-state persons may be
2 participants and designated beneficiaries in the College
3 Savings Pool.
4 New accounts in the College Savings Pool shall be
5 processed through participating financial institutions.
6 "Participating financial institution", as used in this
7 Section, means any financial institution insured by the
8 Federal Deposit Insurance Corporation and lawfully doing
9 business in the State of Illinois and any credit union
10 approved by the State Treasurer and lawfully doing business
11 in the State of Illinois that agrees to process new accounts
12 in the College Savings Pool. Participating financial
13 institutions may charge a processing fee to participants to
14 open an account in the pool that shall not exceed $30 until
15 the year 2001. Beginning in 2001 and every year thereafter,
16 the maximum fee limit shall be adjusted by the Treasurer
17 based on the Consumer Price Index for the North Central
18 Region as published by the United States Department of Labor,
19 Bureau of Labor Statistics for the immediately preceding
20 calendar year. Every contribution received by a financial
21 institution for investment in the College Savings Pool shall
22 be transferred from the financial institution to a location
23 selected by the State Treasurer within one business day
24 following the day that the funds must be made available in
25 accordance with federal law. All communications from the
26 State Treasurer to participants shall reference the
27 participating financial institution at which the account was
28 processed.
29 The Treasurer may invest the moneys in the College
30 Savings Pool in the same manner, in the same types of
31 investments, and subject to the same limitations provided for
32 the investment of moneys by the Illinois State Board of
33 Investment. To enhance the safety and liquidity of the
34 College Savings Pool, to ensure the diversification of the
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1 investment portfolio of the pool, and in an effort to keep
2 investment dollars in the State of Illinois, the State
3 Treasurer shall make a percentage of each account available
4 for investment in participating financial institutions doing
5 business in the State. The State Treasurer shall deposit
6 with the participating financial institution at which the
7 account was processed the following percentage of each
8 account at a prevailing rate offered by the institution,
9 provided that the deposit is federally insured or fully
10 collateralized and the institution accepts the deposit: 10%
11 of the total amount of each account for which the current age
12 of the beneficiary is less than 7 years of age, 20% of the
13 total amount of each account for which the beneficiary is at
14 least 7 years of age and less than 12 years of age, and 50%
15 of the total amount of each account for which the current age
16 of the beneficiary is at least 12 years of age. The State
17 Treasurer shall adjust each account at least annually to
18 ensure compliance with this Section. The Treasurer shall
19 develop, publish, and implement an investment policy covering
20 the investment of the moneys in the College Savings Pool.
21 The policy shall be published (i) at least once each year in
22 at least one newspaper of general circulation in both
23 Springfield and Chicago and (ii) each year as part of the
24 audit of the College Savings Pool by the Auditor General,
25 which shall be distributed to all participants. The
26 Treasurer shall notify all participants in writing, and the
27 Treasurer shall publish in a newspaper of general circulation
28 in both Chicago and Springfield, any changes to the
29 previously published investment policy at least 30 calendar
30 days before implementing the policy. Any investment policy
31 adopted by the Treasurer shall be reviewed and updated if
32 necessary within 90 days following the date that the State
33 Treasurer takes office.
34 Participants shall be required to use moneys distributed
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1 from the College Savings Pool for qualified expenses at
2 eligible educational institutions. "Qualified expenses", as
3 used in this Section, means the following: (i) tuition, fees,
4 and the costs of books, supplies, and equipment required for
5 enrollment or attendance at an eligible educational
6 institution and (ii) certain room and board expenses incurred
7 while attending an eligible educational institution at least
8 half-time. "Eligible educational institutions", as used in
9 this Section, means public and private colleges, junior
10 colleges, graduate schools, and certain vocational
11 institutions that are described in Section 481 of the Higher
12 Education Act of 1965 (20 U.S.C. 1088) and that are eligible
13 to participate in Department of Education student aid
14 programs. A student shall be considered to be enrolled at
15 least half-time if the student is enrolled for at least half
16 the full-time academic work load for the course of study the
17 student is pursuing as determined under the standards of the
18 institution at which the student is enrolled. Distributions
19 made from the pool for qualified expenses shall be made
20 directly to the eligible educational institution, directly to
21 a vendor, or in the form of a check payable to both the
22 beneficiary and the institution or vendor. Any moneys that
23 are distributed in any other manner or that are used for
24 expenses other than qualified expenses at an eligible
25 educational institution shall be subject to a penalty of 10%
26 of the earnings unless the beneficiary dies, becomes
27 disabled, or receives a scholarship that equals or exceeds
28 the distribution. Penalties shall be withheld at the time
29 the distribution is made.
30 The Treasurer shall limit the contributions that may be
31 made on behalf of a designated beneficiary based on an
32 actuarial estimate of what is required to pay tuition, fees,
33 and room and board for 5 undergraduate years at the highest
34 cost eligible educational institution. The contributions made
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1 on behalf of a beneficiary who is also a beneficiary under
2 the Illinois Prepaid Tuition Program shall be further
3 restricted to ensure that the contributions in both programs
4 combined do not exceed the limit established for the College
5 Savings Pool. The Treasurer shall provide the Illinois
6 Student Assistance Commission each year at a time designated
7 by the Commission, an electronic report of all participant
8 accounts in the Treasurer's College Savings Pool, listing
9 total contributions and disbursements from each individual
10 account during the previous calendar year. As soon
11 thereafter as is possible following receipt of the
12 Treasurer's report, the Illinois Student Assistance
13 Commission shall, in turn, provide the Treasurer with an
14 electronic report listing those College Savings Pool
15 participants who also participate in the State's prepaid
16 tuition program, administered by the Commission. The
17 Commission shall be responsible for filing any combined tax
18 reports regarding State qualified savings programs required
19 by the United States Internal Revenue Service. The Treasurer
20 shall work with the Illinois Student Assistance Commission to
21 coordinate the marketing of the College Savings Pool and the
22 Illinois Prepaid Tuition Program when considered beneficial
23 by the Treasurer and the Director of the Illinois Student
24 Assistance Commission. The Treasurer's office shall not
25 publicize or otherwise market the College Savings Pool or
26 accept any moneys into the College Savings Pool prior to
27 March 1, 2000. The Treasurer shall provide a separate
28 accounting for each designated beneficiary to each
29 participant, the Illinois Student Assistance Commission, and
30 the participating financial institution at which the account
31 was processed. No interest in the program may be pledged as
32 security for a loan.
33 The assets of the College Savings Pool and its income and
34 operation shall be exempt from all taxation by the State of
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1 Illinois and any of its subdivisions. The accrued earnings
2 on investments in the Pool once disbursed on behalf of a
3 designated beneficiary shall be similarly exempt from all
4 taxation by the State of Illinois and its subdivisions, so
5 long as they are used for qualified expenses. Contributions
6 during the taxable year to a College Savings Pool account or
7 other qualified tuition program under Section 529 of the
8 Internal Revenue Code (26 U.S.C. 529) during the taxable year
9 may be deducted from adjusted gross income as provided in
10 Section 203 of the Illinois Income Tax Act. The provisions
11 of this paragraph are exempt from Section 250 of the Illinois
12 Income Tax Act.
13 The Treasurer shall adopt rules he or she considers
14 necessary for the efficient administration of the College
15 Savings Pool. The rules shall provide whatever additional
16 parameters and restrictions are necessary to ensure that the
17 College Savings Pool meets all of the requirements for a
18 qualified state tuition program under Section 529 of the
19 Internal Revenue Code (26 U.S.C. 529). The rules shall
20 provide for the administration expenses of the pool to be
21 paid from its earnings and for the investment earnings in
22 excess of the expenses and all moneys collected as penalties
23 to be credited or paid monthly to the several participants in
24 the pool in a manner which equitably reflects the differing
25 amounts of their respective investments in the pool and the
26 differing periods of time for which those amounts were in the
27 custody of the pool. Also, the rules shall require the
28 maintenance of records that enable the Treasurer's office to
29 produce a report for each account in the pool at least
30 annually that documents the account balance and investment
31 earnings. Notice of any proposed amendments to the rules and
32 regulations shall be provided to all participants prior to
33 adoption. Amendments to rules and regulations shall apply
34 only to contributions made after the adoption of the
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1 amendment.
2 Upon creating the College Savings Pool, the State
3 Treasurer shall give bond with 2 or more sufficient sureties,
4 payable to and for the benefit of the participants in the
5 College Savings Pool, in the penal sum of $1,000,000,
6 conditioned upon the faithful discharge of his or her duties
7 in relation to the College Savings Pool.
8 No contributions to the College Savings Pool authorized
9 by this Section shall be considered in evaluating the
10 financial situation of the designated beneficiary or be
11 deemed a financial resource of or a form of financial aid or
12 assistance to the designated beneficiary, for purposes of
13 determining eligibility for any scholarship, grant, or
14 monetary assistance awarded by the Illinois Student
15 Assistance Commission, the State, or any agency thereof; nor
16 shall contributions to the College Savings Pool reduce the
17 amount of any scholarship, grant, or monetary assistance that
18 the designated beneficiary is eligible to be awarded by the
19 Illinois Student Assistance Commission, the State, or any
20 agency thereof in accordance with the provisions of any State
21 law.
22 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01;
23 92-16, eff. 6-28-01; 92-439, eff. 8-17-01; 92-626, eff.
24 7-11-02.)
25 Section 10. The Illinois Income Tax Act is amended by
26 changing Section 203 as follows:
27 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
28 Sec. 203. Base income defined.
29 (a) Individuals.
30 (1) In general. In the case of an individual, base
31 income means an amount equal to the taxpayer's adjusted
32 gross income for the taxable year as modified by
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1 paragraph (2).
2 (2) Modifications. The adjusted gross income
3 referred to in paragraph (1) shall be modified by adding
4 thereto the sum of the following amounts:
5 (A) An amount equal to all amounts paid or
6 accrued to the taxpayer as interest or dividends
7 during the taxable year to the extent excluded from
8 gross income in the computation of adjusted gross
9 income, except stock dividends of qualified public
10 utilities described in Section 305(e) of the
11 Internal Revenue Code;
12 (B) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of adjusted gross
15 income for the taxable year;
16 (C) An amount equal to the amount received
17 during the taxable year as a recovery or refund of
18 real property taxes paid with respect to the
19 taxpayer's principal residence under the Revenue Act
20 of 1939 and for which a deduction was previously
21 taken under subparagraph (L) of this paragraph (2)
22 prior to July 1, 1991, the retrospective application
23 date of Article 4 of Public Act 87-17. In the case
24 of multi-unit or multi-use structures and farm
25 dwellings, the taxes on the taxpayer's principal
26 residence shall be that portion of the total taxes
27 for the entire property which is attributable to
28 such principal residence;
29 (D) An amount equal to the amount of the
30 capital gain deduction allowable under the Internal
31 Revenue Code, to the extent deducted from gross
32 income in the computation of adjusted gross income;
33 (D-5) An amount, to the extent not included in
34 adjusted gross income, equal to the amount of money
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1 withdrawn by the taxpayer in the taxable year from a
2 medical care savings account and the interest earned
3 on the account in the taxable year of a withdrawal
4 pursuant to subsection (b) of Section 20 of the
5 Medical Care Savings Account Act or subsection (b)
6 of Section 20 of the Medical Care Savings Account
7 Act of 2000;
8 (D-10) For taxable years ending after December
9 31, 1997, an amount equal to any eligible
10 remediation costs that the individual deducted in
11 computing adjusted gross income and for which the
12 individual claims a credit under subsection (l) of
13 Section 201;
14 (D-15) For taxable years 2001 and thereafter,
15 an amount equal to the bonus depreciation deduction
16 (30% of the adjusted basis of the qualified
17 property) taken on the taxpayer's federal income tax
18 return for the taxable year under subsection (k) of
19 Section 168 of the Internal Revenue Code; and
20 (D-16) If the taxpayer reports a capital gain
21 or loss on the taxpayer's federal income tax return
22 for the taxable year based on a sale or transfer of
23 property for which the taxpayer was required in any
24 taxable year to make an addition modification under
25 subparagraph (D-15), then an amount equal to the
26 aggregate amount of the deductions taken in all
27 taxable years under subparagraph (Z) with respect to
28 that property.;
29 The taxpayer is required to make the addition
30 modification under this subparagraph only once with
31 respect to any one piece of property;. and
32 (D-20) (Blank) (D-15) For taxable years
33 beginning on or after January 1, 2002, in the case
34 of a distribution from a qualified tuition program
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1 under Section 529 of the Internal Revenue Code,
2 other than (i) a distribution from a College Savings
3 Pool created under Section 16.5 of the State
4 Treasurer Act or (ii) a distribution from the
5 Illinois Prepaid Tuition Trust Fund, an amount equal
6 to the amount excluded from gross income under
7 Section 529(c)(3)(B);
8 and by deducting from the total so obtained the sum of
9 the following amounts:
10 (E) For taxable years ending before December
11 31, 2001, any amount included in such total in
12 respect of any compensation (including but not
13 limited to any compensation paid or accrued to a
14 serviceman while a prisoner of war or missing in
15 action) paid to a resident by reason of being on
16 active duty in the Armed Forces of the United States
17 and in respect of any compensation paid or accrued
18 to a resident who as a governmental employee was a
19 prisoner of war or missing in action, and in respect
20 of any compensation paid to a resident in 1971 or
21 thereafter for annual training performed pursuant to
22 Sections 502 and 503, Title 32, United States Code
23 as a member of the Illinois National Guard. For
24 taxable years ending on or after December 31, 2001,
25 any amount included in such total in respect of any
26 compensation (including but not limited to any
27 compensation paid or accrued to a serviceman while a
28 prisoner of war or missing in action) paid to a
29 resident by reason of being a member of any
30 component of the Armed Forces of the United States
31 and in respect of any compensation paid or accrued
32 to a resident who as a governmental employee was a
33 prisoner of war or missing in action, and in respect
34 of any compensation paid to a resident in 2001 or
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1 thereafter by reason of being a member of the
2 Illinois National Guard. The provisions of this
3 amendatory Act of the 92nd General Assembly are
4 exempt from the provisions of Section 250;
5 (F) An amount equal to all amounts included in
6 such total pursuant to the provisions of Sections
7 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
8 408 of the Internal Revenue Code, or included in
9 such total as distributions under the provisions of
10 any retirement or disability plan for employees of
11 any governmental agency or unit, or retirement
12 payments to retired partners, which payments are
13 excluded in computing net earnings from self
14 employment by Section 1402 of the Internal Revenue
15 Code and regulations adopted pursuant thereto;
16 (G) The valuation limitation amount;
17 (H) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the
19 taxpayer and included in such total for the taxable
20 year;
21 (I) An amount equal to all amounts included in
22 such total pursuant to the provisions of Section 111
23 of the Internal Revenue Code as a recovery of items
24 previously deducted from adjusted gross income in
25 the computation of taxable income;
26 (J) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act, and conducts substantially all
31 of its operations in an Enterprise Zone or zones;
32 (K) An amount equal to those dividends
33 included in such total that were paid by a
34 corporation that conducts business operations in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 and that is designated a High Impact Business
3 located in Illinois; provided that dividends
4 eligible for the deduction provided in subparagraph
5 (J) of paragraph (2) of this subsection shall not be
6 eligible for the deduction provided under this
7 subparagraph (K);
8 (L) For taxable years ending after December
9 31, 1983, an amount equal to all social security
10 benefits and railroad retirement benefits included
11 in such total pursuant to Sections 72(r) and 86 of
12 the Internal Revenue Code;
13 (M) With the exception of any amounts
14 subtracted under subparagraph (N), an amount equal
15 to the sum of all amounts disallowed as deductions
16 by (i) Sections 171(a) (2), and 265(2) of the
17 Internal Revenue Code of 1954, as now or hereafter
18 amended, and all amounts of expenses allocable to
19 interest and disallowed as deductions by Section
20 265(1) of the Internal Revenue Code of 1954, as now
21 or hereafter amended; and (ii) for taxable years
22 ending on or after August 13, 1999, Sections
23 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
24 Internal Revenue Code; the provisions of this
25 subparagraph are exempt from the provisions of
26 Section 250;
27 (N) An amount equal to all amounts included in
28 such total which are exempt from taxation by this
29 State either by reason of its statutes or
30 Constitution or by reason of the Constitution,
31 treaties or statutes of the United States; provided
32 that, in the case of any statute of this State that
33 exempts income derived from bonds or other
34 obligations from the tax imposed under this Act, the
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1 amount exempted shall be the interest net of bond
2 premium amortization;
3 (O) An amount equal to any contribution made
4 to a job training project established pursuant to
5 the Tax Increment Allocation Redevelopment Act;
6 (P) An amount equal to the amount of the
7 deduction used to compute the federal income tax
8 credit for restoration of substantial amounts held
9 under claim of right for the taxable year pursuant
10 to Section 1341 of the Internal Revenue Code of
11 1986;
12 (Q) An amount equal to any amounts included in
13 such total, received by the taxpayer as an
14 acceleration in the payment of life, endowment or
15 annuity benefits in advance of the time they would
16 otherwise be payable as an indemnity for a terminal
17 illness;
18 (R) An amount equal to the amount of any
19 federal or State bonus paid to veterans of the
20 Persian Gulf War;
21 (S) An amount, to the extent included in
22 adjusted gross income, equal to the amount of a
23 contribution made in the taxable year on behalf of
24 the taxpayer to a medical care savings account
25 established under the Medical Care Savings Account
26 Act or the Medical Care Savings Account Act of 2000
27 to the extent the contribution is accepted by the
28 account administrator as provided in that Act;
29 (T) An amount, to the extent included in
30 adjusted gross income, equal to the amount of
31 interest earned in the taxable year on a medical
32 care savings account established under the Medical
33 Care Savings Account Act or the Medical Care Savings
34 Account Act of 2000 on behalf of the taxpayer, other
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1 than interest added pursuant to item (D-5) of this
2 paragraph (2);
3 (U) For one taxable year beginning on or after
4 January 1, 1994, an amount equal to the total amount
5 of tax imposed and paid under subsections (a) and
6 (b) of Section 201 of this Act on grant amounts
7 received by the taxpayer under the Nursing Home
8 Grant Assistance Act during the taxpayer's taxable
9 years 1992 and 1993;
10 (V) Beginning with tax years ending on or
11 after December 31, 1995 and ending with tax years
12 ending on or before December 31, 2004, an amount
13 equal to the amount paid by a taxpayer who is a
14 self-employed taxpayer, a partner of a partnership,
15 or a shareholder in a Subchapter S corporation for
16 health insurance or long-term care insurance for
17 that taxpayer or that taxpayer's spouse or
18 dependents, to the extent that the amount paid for
19 that health insurance or long-term care insurance
20 may be deducted under Section 213 of the Internal
21 Revenue Code of 1986, has not been deducted on the
22 federal income tax return of the taxpayer, and does
23 not exceed the taxable income attributable to that
24 taxpayer's income, self-employment income, or
25 Subchapter S corporation income; except that no
26 deduction shall be allowed under this item (V) if
27 the taxpayer is eligible to participate in any
28 health insurance or long-term care insurance plan of
29 an employer of the taxpayer or the taxpayer's
30 spouse. The amount of the health insurance and
31 long-term care insurance subtracted under this item
32 (V) shall be determined by multiplying total health
33 insurance and long-term care insurance premiums paid
34 by the taxpayer times a number that represents the
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1 fractional percentage of eligible medical expenses
2 under Section 213 of the Internal Revenue Code of
3 1986 not actually deducted on the taxpayer's federal
4 income tax return;
5 (W) For taxable years beginning on or after
6 January 1, 1998, all amounts included in the
7 taxpayer's federal gross income in the taxable year
8 from amounts converted from a regular IRA to a Roth
9 IRA. This paragraph is exempt from the provisions of
10 Section 250;
11 (X) For taxable year 1999 and thereafter, an
12 amount equal to the amount of any (i) distributions,
13 to the extent includible in gross income for federal
14 income tax purposes, made to the taxpayer because of
15 his or her status as a victim of persecution for
16 racial or religious reasons by Nazi Germany or any
17 other Axis regime or as an heir of the victim and
18 (ii) items of income, to the extent includible in
19 gross income for federal income tax purposes,
20 attributable to, derived from or in any way related
21 to assets stolen from, hidden from, or otherwise
22 lost to a victim of persecution for racial or
23 religious reasons by Nazi Germany or any other Axis
24 regime immediately prior to, during, and immediately
25 after World War II, including, but not limited to,
26 interest on the proceeds receivable as insurance
27 under policies issued to a victim of persecution for
28 racial or religious reasons by Nazi Germany or any
29 other Axis regime by European insurance companies
30 immediately prior to and during World War II;
31 provided, however, this subtraction from federal
32 adjusted gross income does not apply to assets
33 acquired with such assets or with the proceeds from
34 the sale of such assets; provided, further, this
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1 paragraph shall only apply to a taxpayer who was the
2 first recipient of such assets after their recovery
3 and who is a victim of persecution for racial or
4 religious reasons by Nazi Germany or any other Axis
5 regime or as an heir of the victim. The amount of
6 and the eligibility for any public assistance,
7 benefit, or similar entitlement is not affected by
8 the inclusion of items (i) and (ii) of this
9 paragraph in gross income for federal income tax
10 purposes. This paragraph is exempt from the
11 provisions of Section 250;
12 (Y) For taxable years beginning on or after
13 January 1, 2002 and ending on or before December 31,
14 2002, moneys contributed in the taxable year to a
15 College Savings Pool account under Section 16.5 of
16 the State Treasurer Act, except that amounts
17 excluded from gross income under Section
18 529(c)(3)(C)(i) of the Internal Revenue Code shall
19 not be considered moneys contributed under this
20 subparagraph (Y). For taxable years ending after
21 December 31, 2002, moneys contributed to a College
22 Savings Pool account under Section 16.5 of the State
23 Treasurer Act, to the Illinois Prepaid Tuition Trust
24 Fund under the Illinois Prepaid Tuition Act, or to
25 any other qualified tuition program under Section
26 529 of the Internal Revenue Code, except that
27 amounts rolled over into a program under Section
28 529(c)(3)(C)(i) of the Internal Revenue Code shall
29 not be considered moneys contributed under this
30 subparagraph (Y). This subparagraph (Y) is exempt
31 from the provisions of Section 250;
32 (Z) For taxable years 2001 and thereafter, for
33 the taxable year in which the bonus depreciation
34 deduction (30% of the adjusted basis of the
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1 qualified property) is taken on the taxpayer's
2 federal income tax return under subsection (k) of
3 Section 168 of the Internal Revenue Code and for
4 each applicable taxable year thereafter, an amount
5 equal to "x", where:
6 (1) "y" equals the amount of the
7 depreciation deduction taken for the taxable
8 year on the taxpayer's federal income tax
9 return on property for which the bonus
10 depreciation deduction (30% of the adjusted
11 basis of the qualified property) was taken in
12 any year under subsection (k) of Section 168 of
13 the Internal Revenue Code, but not including
14 the bonus depreciation deduction; and
15 (2) "x" equals "y" multiplied by 30 and
16 then divided by 70 (or "y" multiplied by
17 0.429).
18 The aggregate amount deducted under this
19 subparagraph in all taxable years for any one piece
20 of property may not exceed the amount of the bonus
21 depreciation deduction (30% of the adjusted basis of
22 the qualified property) taken on that property on
23 the taxpayer's federal income tax return under
24 subsection (k) of Section 168 of the Internal
25 Revenue Code; and
26 (AA) If the taxpayer reports a capital gain or
27 loss on the taxpayer's federal income tax return for
28 the taxable year based on a sale or transfer of
29 property for which the taxpayer was required in any
30 taxable year to make an addition modification under
31 subparagraph (D-15), then an amount equal to that
32 addition modification.
33 The taxpayer is allowed to take the deduction
34 under this subparagraph only once with respect to
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1 any one piece of property; and
2 (BB) (Z) Any amount included in adjusted gross
3 income, other than salary, received by a driver in a
4 ridesharing arrangement using a motor vehicle.
5 (b) Corporations.
6 (1) In general. In the case of a corporation, base
7 income means an amount equal to the taxpayer's taxable
8 income for the taxable year as modified by paragraph (2).
9 (2) Modifications. The taxable income referred to
10 in paragraph (1) shall be modified by adding thereto the
11 sum of the following amounts:
12 (A) An amount equal to all amounts paid or
13 accrued to the taxpayer as interest and all
14 distributions received from regulated investment
15 companies during the taxable year to the extent
16 excluded from gross income in the computation of
17 taxable income;
18 (B) An amount equal to the amount of tax
19 imposed by this Act to the extent deducted from
20 gross income in the computation of taxable income
21 for the taxable year;
22 (C) In the case of a regulated investment
23 company, an amount equal to the excess of (i) the
24 net long-term capital gain for the taxable year,
25 over (ii) the amount of the capital gain dividends
26 designated as such in accordance with Section
27 852(b)(3)(C) of the Internal Revenue Code and any
28 amount designated under Section 852(b)(3)(D) of the
29 Internal Revenue Code, attributable to the taxable
30 year (this amendatory Act of 1995 (Public Act 89-89)
31 is declarative of existing law and is not a new
32 enactment);
33 (D) The amount of any net operating loss
34 deduction taken in arriving at taxable income, other
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1 than a net operating loss carried forward from a
2 taxable year ending prior to December 31, 1986;
3 (E) For taxable years in which a net operating
4 loss carryback or carryforward from a taxable year
5 ending prior to December 31, 1986 is an element of
6 taxable income under paragraph (1) of subsection (e)
7 or subparagraph (E) of paragraph (2) of subsection
8 (e), the amount by which addition modifications
9 other than those provided by this subparagraph (E)
10 exceeded subtraction modifications in such earlier
11 taxable year, with the following limitations applied
12 in the order that they are listed:
13 (i) the addition modification relating to
14 the net operating loss carried back or forward
15 to the taxable year from any taxable year
16 ending prior to December 31, 1986 shall be
17 reduced by the amount of addition modification
18 under this subparagraph (E) which related to
19 that net operating loss and which was taken
20 into account in calculating the base income of
21 an earlier taxable year, and
22 (ii) the addition modification relating
23 to the net operating loss carried back or
24 forward to the taxable year from any taxable
25 year ending prior to December 31, 1986 shall
26 not exceed the amount of such carryback or
27 carryforward;
28 For taxable years in which there is a net
29 operating loss carryback or carryforward from more
30 than one other taxable year ending prior to December
31 31, 1986, the addition modification provided in this
32 subparagraph (E) shall be the sum of the amounts
33 computed independently under the preceding
34 provisions of this subparagraph (E) for each such
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1 taxable year;
2 (E-5) For taxable years ending after December
3 31, 1997, an amount equal to any eligible
4 remediation costs that the corporation deducted in
5 computing adjusted gross income and for which the
6 corporation claims a credit under subsection (l) of
7 Section 201;
8 (E-10) For taxable years 2001 and thereafter,
9 an amount equal to the bonus depreciation deduction
10 (30% of the adjusted basis of the qualified
11 property) taken on the taxpayer's federal income tax
12 return for the taxable year under subsection (k) of
13 Section 168 of the Internal Revenue Code; and
14 (E-11) If the taxpayer reports a capital gain
15 or loss on the taxpayer's federal income tax return
16 for the taxable year based on a sale or transfer of
17 property for which the taxpayer was required in any
18 taxable year to make an addition modification under
19 subparagraph (E-10), then an amount equal to the
20 aggregate amount of the deductions taken in all
21 taxable years under subparagraph (T) with respect to
22 that property.;
23 The taxpayer is required to make the addition
24 modification under this subparagraph only once with
25 respect to any one piece of property;
26 and by deducting from the total so obtained the sum of
27 the following amounts:
28 (F) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (G) An amount equal to any amount included in
33 such total under Section 78 of the Internal Revenue
34 Code;
-21- LRB9205003SMksam01
1 (H) In the case of a regulated investment
2 company, an amount equal to the amount of exempt
3 interest dividends as defined in subsection (b) (5)
4 of Section 852 of the Internal Revenue Code, paid to
5 shareholders for the taxable year;
6 (I) With the exception of any amounts
7 subtracted under subparagraph (J), an amount equal
8 to the sum of all amounts disallowed as deductions
9 by (i) Sections 171(a) (2), and 265(a)(2) and
10 amounts disallowed as interest expense by Section
11 291(a)(3) of the Internal Revenue Code, as now or
12 hereafter amended, and all amounts of expenses
13 allocable to interest and disallowed as deductions
14 by Section 265(a)(1) of the Internal Revenue Code,
15 as now or hereafter amended; and (ii) for taxable
16 years ending on or after August 13, 1999, Sections
17 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
18 of the Internal Revenue Code; the provisions of this
19 subparagraph are exempt from the provisions of
20 Section 250;
21 (J) An amount equal to all amounts included in
22 such total which are exempt from taxation by this
23 State either by reason of its statutes or
24 Constitution or by reason of the Constitution,
25 treaties or statutes of the United States; provided
26 that, in the case of any statute of this State that
27 exempts income derived from bonds or other
28 obligations from the tax imposed under this Act, the
29 amount exempted shall be the interest net of bond
30 premium amortization;
31 (K) An amount equal to those dividends
32 included in such total which were paid by a
33 corporation which conducts business operations in an
34 Enterprise Zone or zones created under the Illinois
-22- LRB9205003SMksam01
1 Enterprise Zone Act and conducts substantially all
2 of its operations in an Enterprise Zone or zones;
3 (L) An amount equal to those dividends
4 included in such total that were paid by a
5 corporation that conducts business operations in a
6 federally designated Foreign Trade Zone or Sub-Zone
7 and that is designated a High Impact Business
8 located in Illinois; provided that dividends
9 eligible for the deduction provided in subparagraph
10 (K) of paragraph 2 of this subsection shall not be
11 eligible for the deduction provided under this
12 subparagraph (L);
13 (M) For any taxpayer that is a financial
14 organization within the meaning of Section 304(c) of
15 this Act, an amount included in such total as
16 interest income from a loan or loans made by such
17 taxpayer to a borrower, to the extent that such a
18 loan is secured by property which is eligible for
19 the Enterprise Zone Investment Credit. To determine
20 the portion of a loan or loans that is secured by
21 property eligible for a Section 201(f) investment
22 credit to the borrower, the entire principal amount
23 of the loan or loans between the taxpayer and the
24 borrower should be divided into the basis of the
25 Section 201(f) investment credit property which
26 secures the loan or loans, using for this purpose
27 the original basis of such property on the date that
28 it was placed in service in the Enterprise Zone.
29 The subtraction modification available to taxpayer
30 in any year under this subsection shall be that
31 portion of the total interest paid by the borrower
32 with respect to such loan attributable to the
33 eligible property as calculated under the previous
34 sentence;
-23- LRB9205003SMksam01
1 (M-1) For any taxpayer that is a financial
2 organization within the meaning of Section 304(c) of
3 this Act, an amount included in such total as
4 interest income from a loan or loans made by such
5 taxpayer to a borrower, to the extent that such a
6 loan is secured by property which is eligible for
7 the High Impact Business Investment Credit. To
8 determine the portion of a loan or loans that is
9 secured by property eligible for a Section 201(h)
10 investment credit to the borrower, the entire
11 principal amount of the loan or loans between the
12 taxpayer and the borrower should be divided into the
13 basis of the Section 201(h) investment credit
14 property which secures the loan or loans, using for
15 this purpose the original basis of such property on
16 the date that it was placed in service in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 located in Illinois. No taxpayer that is eligible
19 for the deduction provided in subparagraph (M) of
20 paragraph (2) of this subsection shall be eligible
21 for the deduction provided under this subparagraph
22 (M-1). The subtraction modification available to
23 taxpayers in any year under this subsection shall be
24 that portion of the total interest paid by the
25 borrower with respect to such loan attributable to
26 the eligible property as calculated under the
27 previous sentence;
28 (N) Two times any contribution made during the
29 taxable year to a designated zone organization to
30 the extent that the contribution (i) qualifies as a
31 charitable contribution under subsection (c) of
32 Section 170 of the Internal Revenue Code and (ii)
33 must, by its terms, be used for a project approved
34 by the Department of Commerce and Community Affairs
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1 under Section 11 of the Illinois Enterprise Zone
2 Act;
3 (O) An amount equal to: (i) 85% for taxable
4 years ending on or before December 31, 1992, or, a
5 percentage equal to the percentage allowable under
6 Section 243(a)(1) of the Internal Revenue Code of
7 1986 for taxable years ending after December 31,
8 1992, of the amount by which dividends included in
9 taxable income and received from a corporation that
10 is not created or organized under the laws of the
11 United States or any state or political subdivision
12 thereof, including, for taxable years ending on or
13 after December 31, 1988, dividends received or
14 deemed received or paid or deemed paid under
15 Sections 951 through 964 of the Internal Revenue
16 Code, exceed the amount of the modification provided
17 under subparagraph (G) of paragraph (2) of this
18 subsection (b) which is related to such dividends;
19 plus (ii) 100% of the amount by which dividends,
20 included in taxable income and received, including,
21 for taxable years ending on or after December 31,
22 1988, dividends received or deemed received or paid
23 or deemed paid under Sections 951 through 964 of the
24 Internal Revenue Code, from any such corporation
25 specified in clause (i) that would but for the
26 provisions of Section 1504 (b) (3) of the Internal
27 Revenue Code be treated as a member of the
28 affiliated group which includes the dividend
29 recipient, exceed the amount of the modification
30 provided under subparagraph (G) of paragraph (2) of
31 this subsection (b) which is related to such
32 dividends;
33 (P) An amount equal to any contribution made
34 to a job training project established pursuant to
-25- LRB9205003SMksam01
1 the Tax Increment Allocation Redevelopment Act;
2 (Q) An amount equal to the amount of the
3 deduction used to compute the federal income tax
4 credit for restoration of substantial amounts held
5 under claim of right for the taxable year pursuant
6 to Section 1341 of the Internal Revenue Code of
7 1986;
8 (R) In the case of an attorney-in-fact with
9 respect to whom an interinsurer or a reciprocal
10 insurer has made the election under Section 835 of
11 the Internal Revenue Code, 26 U.S.C. 835, an amount
12 equal to the excess, if any, of the amounts paid or
13 incurred by that interinsurer or reciprocal insurer
14 in the taxable year to the attorney-in-fact over the
15 deduction allowed to that interinsurer or reciprocal
16 insurer with respect to the attorney-in-fact under
17 Section 835(b) of the Internal Revenue Code for the
18 taxable year;
19 (S) For taxable years ending on or after
20 December 31, 1997, in the case of a Subchapter S
21 corporation, an amount equal to all amounts of
22 income allocable to a shareholder subject to the
23 Personal Property Tax Replacement Income Tax imposed
24 by subsections (c) and (d) of Section 201 of this
25 Act, including amounts allocable to organizations
26 exempt from federal income tax by reason of Section
27 501(a) of the Internal Revenue Code. This
28 subparagraph (S) is exempt from the provisions of
29 Section 250;
30 (T) For taxable years 2001 and thereafter, for
31 the taxable year in which the bonus depreciation
32 deduction (30% of the adjusted basis of the
33 qualified property) is taken on the taxpayer's
34 federal income tax return under subsection (k) of
-26- LRB9205003SMksam01
1 Section 168 of the Internal Revenue Code and for
2 each applicable taxable year thereafter, an amount
3 equal to "x", where:
4 (1) "y" equals the amount of the
5 depreciation deduction taken for the taxable
6 year on the taxpayer's federal income tax
7 return on property for which the bonus
8 depreciation deduction (30% of the adjusted
9 basis of the qualified property) was taken in
10 any year under subsection (k) of Section 168 of
11 the Internal Revenue Code, but not including
12 the bonus depreciation deduction; and
13 (2) "x" equals "y" multiplied by 30 and
14 then divided by 70 (or "y" multiplied by
15 0.429).
16 The aggregate amount deducted under this
17 subparagraph in all taxable years for any one piece
18 of property may not exceed the amount of the bonus
19 depreciation deduction (30% of the adjusted basis of
20 the qualified property) taken on that property on
21 the taxpayer's federal income tax return under
22 subsection (k) of Section 168 of the Internal
23 Revenue Code; and
24 (U) If the taxpayer reports a capital gain or
25 loss on the taxpayer's federal income tax return for
26 the taxable year based on a sale or transfer of
27 property for which the taxpayer was required in any
28 taxable year to make an addition modification under
29 subparagraph (E-10), then an amount equal to that
30 addition modification.
31 The taxpayer is allowed to take the deduction
32 under this subparagraph only once with respect to
33 any one piece of property.
34 (3) Special rule. For purposes of paragraph (2)
-27- LRB9205003SMksam01
1 (A), "gross income" in the case of a life insurance
2 company, for tax years ending on and after December 31,
3 1994, shall mean the gross investment income for the
4 taxable year.
5 (c) Trusts and estates.
6 (1) In general. In the case of a trust or estate,
7 base income means an amount equal to the taxpayer's
8 taxable income for the taxable year as modified by
9 paragraph (2).
10 (2) Modifications. Subject to the provisions of
11 paragraph (3), the taxable income referred to in
12 paragraph (1) shall be modified by adding thereto the sum
13 of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest or dividends
16 during the taxable year to the extent excluded from
17 gross income in the computation of taxable income;
18 (B) In the case of (i) an estate, $600; (ii) a
19 trust which, under its governing instrument, is
20 required to distribute all of its income currently,
21 $300; and (iii) any other trust, $100, but in each
22 such case, only to the extent such amount was
23 deducted in the computation of taxable income;
24 (C) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of taxable income
27 for the taxable year;
28 (D) The amount of any net operating loss
29 deduction taken in arriving at taxable income, other
30 than a net operating loss carried forward from a
31 taxable year ending prior to December 31, 1986;
32 (E) For taxable years in which a net operating
33 loss carryback or carryforward from a taxable year
34 ending prior to December 31, 1986 is an element of
-28- LRB9205003SMksam01
1 taxable income under paragraph (1) of subsection (e)
2 or subparagraph (E) of paragraph (2) of subsection
3 (e), the amount by which addition modifications
4 other than those provided by this subparagraph (E)
5 exceeded subtraction modifications in such taxable
6 year, with the following limitations applied in the
7 order that they are listed:
8 (i) the addition modification relating to
9 the net operating loss carried back or forward
10 to the taxable year from any taxable year
11 ending prior to December 31, 1986 shall be
12 reduced by the amount of addition modification
13 under this subparagraph (E) which related to
14 that net operating loss and which was taken
15 into account in calculating the base income of
16 an earlier taxable year, and
17 (ii) the addition modification relating
18 to the net operating loss carried back or
19 forward to the taxable year from any taxable
20 year ending prior to December 31, 1986 shall
21 not exceed the amount of such carryback or
22 carryforward;
23 For taxable years in which there is a net
24 operating loss carryback or carryforward from more
25 than one other taxable year ending prior to December
26 31, 1986, the addition modification provided in this
27 subparagraph (E) shall be the sum of the amounts
28 computed independently under the preceding
29 provisions of this subparagraph (E) for each such
30 taxable year;
31 (F) For taxable years ending on or after
32 January 1, 1989, an amount equal to the tax deducted
33 pursuant to Section 164 of the Internal Revenue Code
34 if the trust or estate is claiming the same tax for
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1 purposes of the Illinois foreign tax credit under
2 Section 601 of this Act;
3 (G) An amount equal to the amount of the
4 capital gain deduction allowable under the Internal
5 Revenue Code, to the extent deducted from gross
6 income in the computation of taxable income;
7 (G-5) For taxable years ending after December
8 31, 1997, an amount equal to any eligible
9 remediation costs that the trust or estate deducted
10 in computing adjusted gross income and for which the
11 trust or estate claims a credit under subsection (l)
12 of Section 201;
13 (G-10) For taxable years 2001 and thereafter,
14 an amount equal to the bonus depreciation deduction
15 (30% of the adjusted basis of the qualified
16 property) taken on the taxpayer's federal income tax
17 return for the taxable year under subsection (k) of
18 Section 168 of the Internal Revenue Code; and
19 (G-11) If the taxpayer reports a capital gain
20 or loss on the taxpayer's federal income tax return
21 for the taxable year based on a sale or transfer of
22 property for which the taxpayer was required in any
23 taxable year to make an addition modification under
24 subparagraph (G-10), then an amount equal to the
25 aggregate amount of the deductions taken in all
26 taxable years under subparagraph (R) with respect to
27 that property.;
28 The taxpayer is required to make the addition
29 modification under this subparagraph only once with
30 respect to any one piece of property;
31 and by deducting from the total so obtained the sum of
32 the following amounts:
33 (H) An amount equal to all amounts included in
34 such total pursuant to the provisions of Sections
-30- LRB9205003SMksam01
1 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
2 408 of the Internal Revenue Code or included in such
3 total as distributions under the provisions of any
4 retirement or disability plan for employees of any
5 governmental agency or unit, or retirement payments
6 to retired partners, which payments are excluded in
7 computing net earnings from self employment by
8 Section 1402 of the Internal Revenue Code and
9 regulations adopted pursuant thereto;
10 (I) The valuation limitation amount;
11 (J) An amount equal to the amount of any tax
12 imposed by this Act which was refunded to the
13 taxpayer and included in such total for the taxable
14 year;
15 (K) An amount equal to all amounts included in
16 taxable income as modified by subparagraphs (A),
17 (B), (C), (D), (E), (F) and (G) which are exempt
18 from taxation by this State either by reason of its
19 statutes or Constitution or by reason of the
20 Constitution, treaties or statutes of the United
21 States; provided that, in the case of any statute of
22 this State that exempts income derived from bonds or
23 other obligations from the tax imposed under this
24 Act, the amount exempted shall be the interest net
25 of bond premium amortization;
26 (L) With the exception of any amounts
27 subtracted under subparagraph (K), an amount equal
28 to the sum of all amounts disallowed as deductions
29 by (i) Sections 171(a) (2) and 265(a)(2) of the
30 Internal Revenue Code, as now or hereafter amended,
31 and all amounts of expenses allocable to interest
32 and disallowed as deductions by Section 265(1) of
33 the Internal Revenue Code of 1954, as now or
34 hereafter amended; and (ii) for taxable years ending
-31- LRB9205003SMksam01
1 on or after August 13, 1999, Sections 171(a)(2),
2 265, 280C, and 832(b)(5)(B)(i) of the Internal
3 Revenue Code; the provisions of this subparagraph
4 are exempt from the provisions of Section 250;
5 (M) An amount equal to those dividends
6 included in such total which were paid by a
7 corporation which conducts business operations in an
8 Enterprise Zone or zones created under the Illinois
9 Enterprise Zone Act and conducts substantially all
10 of its operations in an Enterprise Zone or Zones;
11 (N) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Tax Increment Allocation Redevelopment Act;
14 (O) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (M) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (O);
24 (P) An amount equal to the amount of the
25 deduction used to compute the federal income tax
26 credit for restoration of substantial amounts held
27 under claim of right for the taxable year pursuant
28 to Section 1341 of the Internal Revenue Code of
29 1986;
30 (Q) For taxable year 1999 and thereafter, an
31 amount equal to the amount of any (i) distributions,
32 to the extent includible in gross income for federal
33 income tax purposes, made to the taxpayer because of
34 his or her status as a victim of persecution for
-32- LRB9205003SMksam01
1 racial or religious reasons by Nazi Germany or any
2 other Axis regime or as an heir of the victim and
3 (ii) items of income, to the extent includible in
4 gross income for federal income tax purposes,
5 attributable to, derived from or in any way related
6 to assets stolen from, hidden from, or otherwise
7 lost to a victim of persecution for racial or
8 religious reasons by Nazi Germany or any other Axis
9 regime immediately prior to, during, and immediately
10 after World War II, including, but not limited to,
11 interest on the proceeds receivable as insurance
12 under policies issued to a victim of persecution for
13 racial or religious reasons by Nazi Germany or any
14 other Axis regime by European insurance companies
15 immediately prior to and during World War II;
16 provided, however, this subtraction from federal
17 adjusted gross income does not apply to assets
18 acquired with such assets or with the proceeds from
19 the sale of such assets; provided, further, this
20 paragraph shall only apply to a taxpayer who was the
21 first recipient of such assets after their recovery
22 and who is a victim of persecution for racial or
23 religious reasons by Nazi Germany or any other Axis
24 regime or as an heir of the victim. The amount of
25 and the eligibility for any public assistance,
26 benefit, or similar entitlement is not affected by
27 the inclusion of items (i) and (ii) of this
28 paragraph in gross income for federal income tax
29 purposes. This paragraph is exempt from the
30 provisions of Section 250;
31 (R) For taxable years 2001 and thereafter, for
32 the taxable year in which the bonus depreciation
33 deduction (30% of the adjusted basis of the
34 qualified property) is taken on the taxpayer's
-33- LRB9205003SMksam01
1 federal income tax return under subsection (k) of
2 Section 168 of the Internal Revenue Code and for
3 each applicable taxable year thereafter, an amount
4 equal to "x", where:
5 (1) "y" equals the amount of the
6 depreciation deduction taken for the taxable
7 year on the taxpayer's federal income tax
8 return on property for which the bonus
9 depreciation deduction (30% of the adjusted
10 basis of the qualified property) was taken in
11 any year under subsection (k) of Section 168 of
12 the Internal Revenue Code, but not including
13 the bonus depreciation deduction; and
14 (2) "x" equals "y" multiplied by 30 and
15 then divided by 70 (or "y" multiplied by
16 0.429).
17 The aggregate amount deducted under this
18 subparagraph in all taxable years for any one piece
19 of property may not exceed the amount of the bonus
20 depreciation deduction (30% of the adjusted basis of
21 the qualified property) taken on that property on
22 the taxpayer's federal income tax return under
23 subsection (k) of Section 168 of the Internal
24 Revenue Code; and
25 (S) If the taxpayer reports a capital gain or
26 loss on the taxpayer's federal income tax return for
27 the taxable year based on a sale or transfer of
28 property for which the taxpayer was required in any
29 taxable year to make an addition modification under
30 subparagraph (G-10), then an amount equal to that
31 addition modification.
32 The taxpayer is allowed to take the deduction
33 under this subparagraph only once with respect to
34 any one piece of property.
-34- LRB9205003SMksam01
1 (3) Limitation. The amount of any modification
2 otherwise required under this subsection shall, under
3 regulations prescribed by the Department, be adjusted by
4 any amounts included therein which were properly paid,
5 credited, or required to be distributed, or permanently
6 set aside for charitable purposes pursuant to Internal
7 Revenue Code Section 642(c) during the taxable year.
8 (d) Partnerships.
9 (1) In general. In the case of a partnership, base
10 income means an amount equal to the taxpayer's taxable
11 income for the taxable year as modified by paragraph (2).
12 (2) Modifications. The taxable income referred to
13 in paragraph (1) shall be modified by adding thereto the
14 sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income for the taxable year;
22 (C) The amount of deductions allowed to the
23 partnership pursuant to Section 707 (c) of the
24 Internal Revenue Code in calculating its taxable
25 income;
26 (D) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of taxable income;
30 (D-5) For taxable years 2001 and thereafter,
31 an amount equal to the bonus depreciation deduction
32 (30% of the adjusted basis of the qualified
33 property) taken on the taxpayer's federal income tax
34 return for the taxable year under subsection (k) of
-35- LRB9205003SMksam01
1 Section 168 of the Internal Revenue Code; and
2 (D-6) If the taxpayer reports a capital gain
3 or loss on the taxpayer's federal income tax return
4 for the taxable year based on a sale or transfer of
5 property for which the taxpayer was required in any
6 taxable year to make an addition modification under
7 subparagraph (D-5), then an amount equal to the
8 aggregate amount of the deductions taken in all
9 taxable years under subparagraph (O) with respect to
10 that property.;
11 The taxpayer is required to make the addition
12 modification under this subparagraph only once with
13 respect to any one piece of property;
14 and by deducting from the total so obtained the following
15 amounts:
16 (E) The valuation limitation amount;
17 (F) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the
19 taxpayer and included in such total for the taxable
20 year;
21 (G) An amount equal to all amounts included in
22 taxable income as modified by subparagraphs (A),
23 (B), (C) and (D) which are exempt from taxation by
24 this State either by reason of its statutes or
25 Constitution or by reason of the Constitution,
26 treaties or statutes of the United States; provided
27 that, in the case of any statute of this State that
28 exempts income derived from bonds or other
29 obligations from the tax imposed under this Act, the
30 amount exempted shall be the interest net of bond
31 premium amortization;
32 (H) Any income of the partnership which
33 constitutes personal service income as defined in
34 Section 1348 (b) (1) of the Internal Revenue Code
-36- LRB9205003SMksam01
1 (as in effect December 31, 1981) or a reasonable
2 allowance for compensation paid or accrued for
3 services rendered by partners to the partnership,
4 whichever is greater;
5 (I) An amount equal to all amounts of income
6 distributable to an entity subject to the Personal
7 Property Tax Replacement Income Tax imposed by
8 subsections (c) and (d) of Section 201 of this Act
9 including amounts distributable to organizations
10 exempt from federal income tax by reason of Section
11 501(a) of the Internal Revenue Code;
12 (J) With the exception of any amounts
13 subtracted under subparagraph (G), 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, as now or
20 hereafter amended; and (ii) for taxable years ending
21 on or after August 13, 1999, Sections 171(a)(2),
22 265, 280C, and 832(b)(5)(B)(i) of the Internal
23 Revenue Code; the provisions of this subparagraph
24 are exempt from the provisions of Section 250;
25 (K) 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, enacted by the 82nd General
30 Assembly, and conducts substantially all of its
31 operations in an Enterprise Zone or Zones;
32 (L) An amount equal to any contribution made
33 to a job training project established pursuant to
34 the Real Property Tax Increment Allocation
-37- LRB9205003SMksam01
1 Redevelopment Act;
2 (M) An amount equal to those dividends
3 included in such total that were paid by a
4 corporation that conducts business operations in a
5 federally designated Foreign Trade Zone or Sub-Zone
6 and that is designated a High Impact Business
7 located in Illinois; provided that dividends
8 eligible for the deduction provided in subparagraph
9 (K) of paragraph (2) of this subsection shall not be
10 eligible for the deduction provided under this
11 subparagraph (M);
12 (N) An amount equal to the amount of the
13 deduction used to compute the federal income tax
14 credit for restoration of substantial amounts held
15 under claim of right for the taxable year pursuant
16 to Section 1341 of the Internal Revenue Code of
17 1986;
18 (O) For taxable years 2001 and thereafter, for
19 the taxable year in which the bonus depreciation
20 deduction (30% of the adjusted basis of the
21 qualified property) is taken on the taxpayer's
22 federal income tax return under subsection (k) of
23 Section 168 of the Internal Revenue Code and for
24 each applicable taxable year thereafter, an amount
25 equal to "x", where:
26 (1) "y" equals the amount of the
27 depreciation deduction taken for the taxable
28 year on the taxpayer's federal income tax
29 return on property for which the bonus
30 depreciation deduction (30% of the adjusted
31 basis of the qualified property) was taken in
32 any year under subsection (k) of Section 168 of
33 the Internal Revenue Code, but not including
34 the bonus depreciation deduction; and
-38- LRB9205003SMksam01
1 (2) "x" equals "y" multiplied by 30 and
2 then divided by 70 (or "y" multiplied by
3 0.429).
4 The aggregate amount deducted under this
5 subparagraph in all taxable years for any one piece
6 of property may not exceed the amount of the bonus
7 depreciation deduction (30% of the adjusted basis of
8 the qualified property) taken on that property on
9 the taxpayer's federal income tax return under
10 subsection (k) of Section 168 of the Internal
11 Revenue Code; and
12 (P) If the taxpayer reports a capital gain or
13 loss on the taxpayer's federal income tax return for
14 the taxable year based on a sale or transfer of
15 property for which the taxpayer was required in any
16 taxable year to make an addition modification under
17 subparagraph (D-5), then an amount equal to that
18 addition modification.
19 The taxpayer is allowed to take the deduction
20 under this subparagraph only once with respect to
21 any one piece of property.
22 (e) Gross income; adjusted gross income; taxable income.
23 (1) In general. Subject to the provisions of
24 paragraph (2) and subsection (b) (3), for purposes of
25 this Section and Section 803(e), a taxpayer's gross
26 income, adjusted gross income, or taxable income for the
27 taxable year shall mean the amount of gross income,
28 adjusted gross income or taxable income properly
29 reportable for federal income tax purposes for the
30 taxable year under the provisions of the Internal Revenue
31 Code. Taxable income may be less than zero. However, for
32 taxable years ending on or after December 31, 1986, net
33 operating loss carryforwards from taxable years ending
34 prior to December 31, 1986, may not exceed the sum of
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1 federal taxable income for the taxable year before net
2 operating loss deduction, plus the excess of addition
3 modifications over subtraction modifications for the
4 taxable year. For taxable years ending prior to December
5 31, 1986, taxable income may never be an amount in excess
6 of the net operating loss for the taxable year as defined
7 in subsections (c) and (d) of Section 172 of the Internal
8 Revenue Code, provided that when taxable income of a
9 corporation (other than a Subchapter S corporation),
10 trust, or estate is less than zero and addition
11 modifications, other than those provided by subparagraph
12 (E) of paragraph (2) of subsection (b) for corporations
13 or subparagraph (E) of paragraph (2) of subsection (c)
14 for trusts and estates, exceed subtraction modifications,
15 an addition modification must be made under those
16 subparagraphs for any other taxable year to which the
17 taxable income less than zero (net operating loss) is
18 applied under Section 172 of the Internal Revenue Code or
19 under subparagraph (E) of paragraph (2) of this
20 subsection (e) applied in conjunction with Section 172 of
21 the Internal Revenue Code.
22 (2) Special rule. For purposes of paragraph (1) of
23 this subsection, the taxable income properly reportable
24 for federal income tax purposes shall mean:
25 (A) Certain life insurance companies. In the
26 case of a life insurance company subject to the tax
27 imposed by Section 801 of the Internal Revenue Code,
28 life insurance company taxable income, plus the
29 amount of distribution from pre-1984 policyholder
30 surplus accounts as calculated under Section 815a of
31 the Internal Revenue Code;
32 (B) Certain other insurance companies. In the
33 case of mutual insurance companies subject to the
34 tax imposed by Section 831 of the Internal Revenue
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1 Code, insurance company taxable income;
2 (C) Regulated investment companies. In the
3 case of a regulated investment company subject to
4 the tax imposed by Section 852 of the Internal
5 Revenue Code, investment company taxable income;
6 (D) Real estate investment trusts. In the
7 case of a real estate investment trust subject to
8 the tax imposed by Section 857 of the Internal
9 Revenue Code, real estate investment trust taxable
10 income;
11 (E) Consolidated corporations. In the case of
12 a corporation which is a member of an affiliated
13 group of corporations filing a consolidated income
14 tax return for the taxable year for federal income
15 tax purposes, taxable income determined as if such
16 corporation had filed a separate return for federal
17 income tax purposes for the taxable year and each
18 preceding taxable year for which it was a member of
19 an affiliated group. For purposes of this
20 subparagraph, the taxpayer's separate taxable income
21 shall be determined as if the election provided by
22 Section 243(b) (2) of the Internal Revenue Code had
23 been in effect for all such years;
24 (F) Cooperatives. In the case of a
25 cooperative corporation or association, the taxable
26 income of such organization determined in accordance
27 with the provisions of Section 1381 through 1388 of
28 the Internal Revenue Code;
29 (G) Subchapter S corporations. In the case
30 of: (i) a Subchapter S corporation for which there
31 is in effect an election for the taxable year under
32 Section 1362 of the Internal Revenue Code, the
33 taxable income of such corporation determined in
34 accordance with Section 1363(b) of the Internal
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1 Revenue Code, except that taxable income shall take
2 into account those items which are required by
3 Section 1363(b)(1) of the Internal Revenue Code to
4 be separately stated; and (ii) a Subchapter S
5 corporation for which there is in effect a federal
6 election to opt out of the provisions of the
7 Subchapter S Revision Act of 1982 and have applied
8 instead the prior federal Subchapter S rules as in
9 effect on July 1, 1982, the taxable income of such
10 corporation determined in accordance with the
11 federal Subchapter S rules as in effect on July 1,
12 1982; and
13 (H) Partnerships. In the case of a
14 partnership, taxable income determined in accordance
15 with Section 703 of the Internal Revenue Code,
16 except that taxable income shall take into account
17 those items which are required by Section 703(a)(1)
18 to be separately stated but which would be taken
19 into account by an individual in calculating his
20 taxable income.
21 (f) Valuation limitation amount.
22 (1) In general. The valuation limitation amount
23 referred to in subsections (a) (2) (G), (c) (2) (I) and
24 (d)(2) (E) is an amount equal to:
25 (A) The sum of the pre-August 1, 1969
26 appreciation amounts (to the extent consisting of
27 gain reportable under the provisions of Section 1245
28 or 1250 of the Internal Revenue Code) for all
29 property in respect of which such gain was reported
30 for the taxable year; plus
31 (B) The lesser of (i) the sum of the
32 pre-August 1, 1969 appreciation amounts (to the
33 extent consisting of capital gain) for all property
34 in respect of which such gain was reported for
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1 federal income tax purposes for the taxable year, or
2 (ii) the net capital gain for the taxable year,
3 reduced in either case by any amount of such gain
4 included in the amount determined under subsection
5 (a) (2) (F) or (c) (2) (H).
6 (2) Pre-August 1, 1969 appreciation amount.
7 (A) If the fair market value of property
8 referred to in paragraph (1) was readily
9 ascertainable on August 1, 1969, the pre-August 1,
10 1969 appreciation amount for such property is the
11 lesser of (i) the excess of such fair market value
12 over the taxpayer's basis (for determining gain) for
13 such property on that date (determined under the
14 Internal Revenue Code as in effect on that date), or
15 (ii) the total gain realized and reportable for
16 federal income tax purposes in respect of the sale,
17 exchange or other disposition of such property.
18 (B) If the fair market value of property
19 referred to in paragraph (1) was not readily
20 ascertainable on August 1, 1969, the pre-August 1,
21 1969 appreciation amount for such property is that
22 amount which bears the same ratio to the total gain
23 reported in respect of the property for federal
24 income tax purposes for the taxable year, as the
25 number of full calendar months in that part of the
26 taxpayer's holding period for the property ending
27 July 31, 1969 bears to the number of full calendar
28 months in the taxpayer's entire holding period for
29 the property.
30 (C) The Department shall prescribe such
31 regulations as may be necessary to carry out the
32 purposes of this paragraph.
33 (g) Double deductions. Unless specifically provided
34 otherwise, nothing in this Section shall permit the same item
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1 to be deducted more than once.
2 (h) Legislative intention. Except as expressly provided
3 by this Section there shall be no modifications or
4 limitations on the amounts of income, gain, loss or deduction
5 taken into account in determining gross income, adjusted
6 gross income or taxable income for federal income tax
7 purposes for the taxable year, or in the amount of such items
8 entering into the computation of base income and net income
9 under this Act for such taxable year, whether in respect of
10 property values as of August 1, 1969 or otherwise.
11 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
12 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
13 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
14 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
15 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
16 7-11-02; 92-846, eff. 8-23-02; revised 11-15-02.)
17 Section 99. Effective date. This Act takes effect upon
18 becoming law.".