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| [ Introduced ] | [ Enrolled ] | [ House Amendment 001 ] |
| [ Senate Amendment 001 ] |
92_SB0902eng SB902 Engrossed LRB9205921SMdv 1 AN ACT concerning finance. 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 whothatmakes investments in the pool. "Designated 17 beneficiary", as used in this Section, means any person on 18 whose behalf an account is established in the College Savings 19 Pool by a participant. Both in-state and out-of-state persons 20 may be participants and designated beneficiaries in the 21 College 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 SB902 Engrossed -2- LRB9205921SMdv 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 SB902 Engrossed -3- LRB9205921SMdv 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. The 8 policy shall be published (i) at least once each year in at 9 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 Treasurer 13 shall notify all participants in writing, and the Treasurer 14 shall publish in a newspaper of general circulation in both 15 Chicago and Springfield, any changes to the previously 16 published investment policy at least 30 calendar days before 17 implementing the policy. Any investment policy adopted by the 18 Treasurer shall be reviewed and updated if necessary within 19 90 days following the date that the State Treasurer takes 20 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 SB902 Engrossed -4- LRB9205921SMdv 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 the 16 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 SB902 Engrossed -5- LRB9205921SMdv 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 SB902 Engrossed -6- LRB9205921SMdv 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. 52952). 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 (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 28 revised 7-3-00.) 29 Section 10. The Illinois Income Tax Act is amended by 30 changing Section 203 as follows: 31 (35 ILCS 5/203) (from Ch. 120, par. 2-203) 32 Sec. 203. Base income defined. SB902 Engrossed -7- LRB9205921SMdv 1 (a) Individuals. 2 (1) In general. In the case of an individual, base 3 income means an amount equal to the taxpayer's adjusted 4 gross income for the taxable year as modified by 5 paragraph (2). 6 (2) Modifications. The adjusted gross income 7 referred to in paragraph (1) shall be modified by adding 8 thereto the sum of the following amounts: 9 (A) An amount equal to all amounts paid or 10 accrued to the taxpayer as interest or dividends 11 during the taxable year to the extent excluded from 12 gross income in the computation of adjusted gross 13 income, except stock dividends of qualified public 14 utilities described in Section 305(e) of the 15 Internal Revenue Code; 16 (B) An amount equal to the amount of tax 17 imposed by this Act to the extent deducted from 18 gross income in the computation of adjusted gross 19 income for the taxable year; 20 (C) An amount equal to the amount received 21 during the taxable year as a recovery or refund of 22 real property taxes paid with respect to the 23 taxpayer's principal residence under the Revenue Act 24 of 1939 and for which a deduction was previously 25 taken under subparagraph (L) of this paragraph (2) 26 prior to July 1, 1991, the retrospective application 27 date of Article 4 of Public Act 87-17. In the case 28 of multi-unit or multi-use structures and farm 29 dwellings, the taxes on the taxpayer's principal 30 residence shall be that portion of the total taxes 31 for the entire property which is attributable to 32 such principal residence; 33 (D) An amount equal to the amount of the 34 capital gain deduction allowable under the Internal SB902 Engrossed -8- LRB9205921SMdv 1 Revenue Code, to the extent deducted from gross 2 income in the computation of adjusted gross income; 3 (D-5) An amount, to the extent not included in 4 adjusted gross income, equal to the amount of money 5 withdrawn by the taxpayer in the taxable year from a 6 medical care savings account and the interest earned 7 on the account in the taxable year of a withdrawal 8 pursuant to subsection (b) of Section 20 of the 9 Medical Care Savings Account Act or subsection (b) 10 of Section 20 of the Medical Care Savings Account 11 Act of 2000; and 12 (D-10) For taxable years ending after December 13 31, 1997, an amount equal to any eligible 14 remediation costs that the individual deducted in 15 computing adjusted gross income and for which the 16 individual claims a credit under subsection (l) of 17 Section 201; 18 and by deducting from the total so obtained the sum of 19 the following amounts: 20 (E) Any amount included in such total in 21 respect of any compensation (including but not 22 limited to any compensation paid or accrued to a 23 serviceman while a prisoner of war or missing in 24 action) paid to a resident by reason of being on 25 active duty in the Armed Forces of the United States 26 and in respect of any compensation paid or accrued 27 to a resident who as a governmental employee was a 28 prisoner of war or missing in action, and in respect 29 of any compensation paid to a resident in 1971 or 30 thereafter for annual training performed pursuant to 31 Sections 502 and 503, Title 32, United States Code 32 as a member of the Illinois National Guard; 33 (F) An amount equal to all amounts included in 34 such total pursuant to the provisions of Sections SB902 Engrossed -9- LRB9205921SMdv 1 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 2 408 of the Internal Revenue Code, or included in 3 such total as distributions under the provisions of 4 any retirement or disability plan for employees of 5 any governmental agency or unit, or retirement 6 payments to retired partners, which payments are 7 excluded in computing net earnings from self 8 employment by Section 1402 of the Internal Revenue 9 Code and regulations adopted pursuant thereto; 10 (G) The valuation limitation amount; 11 (H) 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 (I) An amount equal to all amounts included in 16 such total pursuant to the provisions of Section 111 17 of the Internal Revenue Code as a recovery of items 18 previously deducted from adjusted gross income in 19 the computation of taxable income; 20 (J) An amount equal to those dividends 21 included in such total which were paid by a 22 corporation which conducts business operations in an 23 Enterprise Zone or zones created under the Illinois 24 Enterprise Zone Act, and conducts substantially all 25 of its operations in an Enterprise Zone or zones; 26 (K) An amount equal to those dividends 27 included in such total that were paid by a 28 corporation that conducts business operations in a 29 federally designated Foreign Trade Zone or Sub-Zone 30 and that is designated a High Impact Business 31 located in Illinois; provided that dividends 32 eligible for the deduction provided in subparagraph 33 (J) of paragraph (2) of this subsection shall not be 34 eligible for the deduction provided under this SB902 Engrossed -10- LRB9205921SMdv 1 subparagraph (K); 2 (L) For taxable years ending after December 3 31, 1983, an amount equal to all social security 4 benefits and railroad retirement benefits included 5 in such total pursuant to Sections 72(r) and 86 of 6 the Internal Revenue Code; 7 (M) With the exception of any amounts 8 subtracted under subparagraph (N), an amount equal 9 to the sum of all amounts disallowed as deductions 10 by (i) Sections 171(a) (2), and 265(2) of the 11 Internal Revenue Code of 1954, as now or hereafter 12 amended, and all amounts of expenses allocable to 13 interest and disallowed as deductions by Section 14 265(1) of the Internal Revenue Code of 1954, as now 15 or hereafter amended; and (ii) for taxable years 16 ending on or after August 13, 1999, Sections 17 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the 18 Internal Revenue Code; the provisions of this 19 subparagraph are exempt from the provisions of 20 Section 250; 21 (N) 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 (O) An amount equal to any contribution made 32 to a job training project established pursuant to 33 the Tax Increment Allocation Redevelopment Act; 34 (P) An amount equal to the amount of the SB902 Engrossed -11- LRB9205921SMdv 1 deduction used to compute the federal income tax 2 credit for restoration of substantial amounts held 3 under claim of right for the taxable year pursuant 4 to Section 1341 of the Internal Revenue Code of 5 1986; 6 (Q) An amount equal to any amounts included in 7 such total, received by the taxpayer as an 8 acceleration in the payment of life, endowment or 9 annuity benefits in advance of the time they would 10 otherwise be payable as an indemnity for a terminal 11 illness; 12 (R) An amount equal to the amount of any 13 federal or State bonus paid to veterans of the 14 Persian Gulf War; 15 (S) An amount, to the extent included in 16 adjusted gross income, equal to the amount of a 17 contribution made in the taxable year on behalf of 18 the taxpayer to a medical care savings account 19 established under the Medical Care Savings Account 20 Act or the Medical Care Savings Account Act of 2000 21 to the extent the contribution is accepted by the 22 account administrator as provided in that Act; 23 (T) An amount, to the extent included in 24 adjusted gross income, equal to the amount of 25 interest earned in the taxable year on a medical 26 care savings account established under the Medical 27 Care Savings Account Act or the Medical Care Savings 28 Account Act of 2000 on behalf of the taxpayer, other 29 than interest added pursuant to item (D-5) of this 30 paragraph (2); 31 (U) For one taxable year beginning on or after 32 January 1, 1994, an amount equal to the total amount 33 of tax imposed and paid under subsections (a) and 34 (b) of Section 201 of this Act on grant amounts SB902 Engrossed -12- LRB9205921SMdv 1 received by the taxpayer under the Nursing Home 2 Grant Assistance Act during the taxpayer's taxable 3 years 1992 and 1993; 4 (V) Beginning with tax years ending on or 5 after December 31, 1995 and ending with tax years 6 ending on or before December 31, 2004, an amount 7 equal to the amount paid by a taxpayer who is a 8 self-employed taxpayer, a partner of a partnership, 9 or a shareholder in a Subchapter S corporation for 10 health insurance or long-term care insurance for 11 that taxpayer or that taxpayer's spouse or 12 dependents, to the extent that the amount paid for 13 that health insurance or long-term care insurance 14 may be deducted under Section 213 of the Internal 15 Revenue Code of 1986, has not been deducted on the 16 federal income tax return of the taxpayer, and does 17 not exceed the taxable income attributable to that 18 taxpayer's income, self-employment income, or 19 Subchapter S corporation income; except that no 20 deduction shall be allowed under this item (V) if 21 the taxpayer is eligible to participate in any 22 health insurance or long-term care insurance plan of 23 an employer of the taxpayer or the taxpayer's 24 spouse. The amount of the health insurance and 25 long-term care insurance subtracted under this item 26 (V) shall be determined by multiplying total health 27 insurance and long-term care insurance premiums paid 28 by the taxpayer times a number that represents the 29 fractional percentage of eligible medical expenses 30 under Section 213 of the Internal Revenue Code of 31 1986 not actually deducted on the taxpayer's federal 32 income tax return; 33 (W) For taxable years beginning on or after 34 January 1, 1998, all amounts included in the SB902 Engrossed -13- LRB9205921SMdv 1 taxpayer's federal gross income in the taxable year 2 from amounts converted from a regular IRA to a Roth 3 IRA. This paragraph is exempt from the provisions of 4 Section 250;and5 (X) 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, SB902 Engrossed -14- LRB9205921SMdv 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 (Y) For taxable years beginning on or after 7 January 1, 2002, moneys contributed in the taxable 8 year to a College Savings Pool account under Section 9 16.5 of the State Treasurer Act. This subparagraph 10 (Y) is exempt from the provisions of Section 250; 11 and 12 (Z) For taxable years ending on or after 13 December 31, 2001, an amount equal to the amount 14 spent by the taxpayer during the taxable year for 15 the purchase of an Illinois prepaid tuition 16 contract, as defined in the Illinois Prepaid Tuition 17 Act. This subparagraph (Z) is exempt from the 18 provisions of Section 250 of this Act. 19 (b) Corporations. 20 (1) In general. In the case of a corporation, base 21 income means an amount equal to the taxpayer's taxable 22 income for the taxable year as modified by paragraph (2). 23 (2) Modifications. The taxable income referred to 24 in paragraph (1) shall be modified by adding thereto the 25 sum of the following amounts: 26 (A) An amount equal to all amounts paid or 27 accrued to the taxpayer as interest and all 28 distributions received from regulated investment 29 companies during the taxable year to the extent 30 excluded from gross income in the computation of 31 taxable income; 32 (B) An amount equal to the amount of tax 33 imposed by this Act to the extent deducted from 34 gross income in the computation of taxable income SB902 Engrossed -15- LRB9205921SMdv 1 for the taxable year; 2 (C) In the case of a regulated investment 3 company, an amount equal to the excess of (i) the 4 net long-term capital gain for the taxable year, 5 over (ii) the amount of the capital gain dividends 6 designated as such in accordance with Section 7 852(b)(3)(C) of the Internal Revenue Code and any 8 amount designated under Section 852(b)(3)(D) of the 9 Internal Revenue Code, attributable to the taxable 10 year (this amendatory Act of 1995 (Public Act 89-89) 11 is declarative of existing law and is not a new 12 enactment); 13 (D) The amount of any net operating loss 14 deduction taken in arriving at taxable income, other 15 than a net operating loss carried forward from a 16 taxable year ending prior to December 31, 1986; 17 (E) For taxable years in which a net operating 18 loss carryback or carryforward from a taxable year 19 ending prior to December 31, 1986 is an element of 20 taxable income under paragraph (1) of subsection (e) 21 or subparagraph (E) of paragraph (2) of subsection 22 (e), the amount by which addition modifications 23 other than those provided by this subparagraph (E) 24 exceeded subtraction modifications in such earlier 25 taxable year, with the following limitations applied 26 in the order that they are listed: 27 (i) the addition modification relating to 28 the net operating loss carried back or forward 29 to the taxable year from any taxable year 30 ending prior to December 31, 1986 shall be 31 reduced by the amount of addition modification 32 under this subparagraph (E) which related to 33 that net operating loss and which was taken 34 into account in calculating the base income of SB902 Engrossed -16- LRB9205921SMdv 1 an earlier taxable year, and 2 (ii) the addition modification relating 3 to the net operating loss carried back or 4 forward to the taxable year from any taxable 5 year ending prior to December 31, 1986 shall 6 not exceed the amount of such carryback or 7 carryforward; 8 For taxable years in which there is a net 9 operating loss carryback or carryforward from more 10 than one other taxable year ending prior to December 11 31, 1986, the addition modification provided in this 12 subparagraph (E) shall be the sum of the amounts 13 computed independently under the preceding 14 provisions of this subparagraph (E) for each such 15 taxable year; and 16 (E-5) For taxable years ending after December 17 31, 1997, an amount equal to any eligible 18 remediation costs that the corporation deducted in 19 computing adjusted gross income and for which the 20 corporation claims a credit under subsection (l) of 21 Section 201; 22 and by deducting from the total so obtained the sum of 23 the following amounts: 24 (F) An amount equal to the amount of any tax 25 imposed by this Act which was refunded to the 26 taxpayer and included in such total for the taxable 27 year; 28 (G) An amount equal to any amount included in 29 such total under Section 78 of the Internal Revenue 30 Code; 31 (H) In the case of a regulated investment 32 company, an amount equal to the amount of exempt 33 interest dividends as defined in subsection (b) (5) 34 of Section 852 of the Internal Revenue Code, paid to SB902 Engrossed -17- LRB9205921SMdv 1 shareholders for the taxable year; 2 (I) With the exception of any amounts 3 subtracted under subparagraph (J), an amount equal 4 to the sum of all amounts disallowed as deductions 5 by (i) Sections 171(a) (2), and 265(a)(2) and 6 amounts disallowed as interest expense by Section 7 291(a)(3) of the Internal Revenue Code, as now or 8 hereafter amended, and all amounts of expenses 9 allocable to interest and disallowed as deductions 10 by Section 265(a)(1) of the Internal Revenue Code, 11 as now or hereafter amended; and (ii) for taxable 12 years ending on or after August 13, 1999, Sections 13 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i) 14 of the Internal Revenue Code; the provisions of this 15 subparagraph are exempt from the provisions of 16 Section 250; 17 (J) An amount equal to all amounts included in 18 such total which are exempt from taxation by this 19 State either by reason of its statutes or 20 Constitution or by reason of the Constitution, 21 treaties or statutes of the United States; provided 22 that, in the case of any statute of this State that 23 exempts income derived from bonds or other 24 obligations from the tax imposed under this Act, the 25 amount exempted shall be the interest net of bond 26 premium amortization; 27 (K) An amount equal to those dividends 28 included in such total which were paid by a 29 corporation which conducts business operations in an 30 Enterprise Zone or zones created under the Illinois 31 Enterprise Zone Act and conducts substantially all 32 of its operations in an Enterprise Zone or zones; 33 (L) An amount equal to those dividends 34 included in such total that were paid by a SB902 Engrossed -18- LRB9205921SMdv 1 corporation that conducts business operations in a 2 federally designated Foreign Trade Zone or Sub-Zone 3 and that is designated a High Impact Business 4 located in Illinois; provided that dividends 5 eligible for the deduction provided in subparagraph 6 (K) of paragraph 2 of this subsection shall not be 7 eligible for the deduction provided under this 8 subparagraph (L); 9 (M) For any taxpayer that is a financial 10 organization within the meaning of Section 304(c) of 11 this Act, an amount included in such total as 12 interest income from a loan or loans made by such 13 taxpayer to a borrower, to the extent that such a 14 loan is secured by property which is eligible for 15 the Enterprise Zone Investment Credit. To determine 16 the portion of a loan or loans that is secured by 17 property eligible for a Section 201(f)201(h)18 investment credit to the borrower, the entire 19 principal amount of the loan or loans between the 20 taxpayer and the borrower should be divided into the 21 basis of the Section 201(f)201(h)investment credit 22 property which secures the loan or loans, using for 23 this purpose the original basis of such property on 24 the date that it was placed in service in the 25 Enterprise Zone. The subtraction modification 26 available to taxpayer in any year under this 27 subsection shall be that portion of the total 28 interest paid by the borrower with respect to such 29 loan attributable to the eligible property as 30 calculated under the previous sentence; 31 (M-1) For any taxpayer that is a financial 32 organization within the meaning of Section 304(c) of 33 this Act, an amount included in such total as 34 interest income from a loan or loans made by such SB902 Engrossed -19- LRB9205921SMdv 1 taxpayer to a borrower, to the extent that such a 2 loan is secured by property which is eligible for 3 the High Impact Business Investment Credit. To 4 determine the portion of a loan or loans that is 5 secured by property eligible for a Section 201(h) 6201(i)investment credit to the borrower, the entire 7 principal amount of the loan or loans between the 8 taxpayer and the borrower should be divided into the 9 basis of the Section 201(h)201(i)investment credit 10 property which secures the loan or loans, using for 11 this purpose the original basis of such property on 12 the date that it was placed in service in a 13 federally designated Foreign Trade Zone or Sub-Zone 14 located in Illinois. No taxpayer that is eligible 15 for the deduction provided in subparagraph (M) of 16 paragraph (2) of this subsection shall be eligible 17 for the deduction provided under this subparagraph 18 (M-1). The subtraction modification available to 19 taxpayers in any year under this subsection shall be 20 that portion of the total interest paid by the 21 borrower with respect to such loan attributable to 22 the eligible property as calculated under the 23 previous sentence; 24 (N) Two times any contribution made during the 25 taxable year to a designated zone organization to 26 the extent that the contribution (i) qualifies as a 27 charitable contribution under subsection (c) of 28 Section 170 of the Internal Revenue Code and (ii) 29 must, by its terms, be used for a project approved 30 by the Department of Commerce and Community Affairs 31 under Section 11 of the Illinois Enterprise Zone 32 Act; 33 (O) An amount equal to: (i) 85% for taxable 34 years ending on or before December 31, 1992, or, a SB902 Engrossed -20- LRB9205921SMdv 1 percentage equal to the percentage allowable under 2 Section 243(a)(1) of the Internal Revenue Code of 3 1986 for taxable years ending after December 31, 4 1992, of the amount by which dividends included in 5 taxable income and received from a corporation that 6 is not created or organized under the laws of the 7 United States or any state or political subdivision 8 thereof, including, for taxable years ending on or 9 after December 31, 1988, dividends received or 10 deemed received or paid or deemed paid under 11 Sections 951 through 964 of the Internal Revenue 12 Code, exceed the amount of the modification provided 13 under subparagraph (G) of paragraph (2) of this 14 subsection (b) which is related to such dividends; 15 plus (ii) 100% of the amount by which dividends, 16 included in taxable income and received, including, 17 for taxable years ending on or after December 31, 18 1988, dividends received or deemed received or paid 19 or deemed paid under Sections 951 through 964 of the 20 Internal Revenue Code, from any such corporation 21 specified in clause (i) that would but for the 22 provisions of Section 1504 (b) (3) of the Internal 23 Revenue Code be treated as a member of the 24 affiliated group which includes the dividend 25 recipient, exceed the amount of the modification 26 provided under subparagraph (G) of paragraph (2) of 27 this subsection (b) which is related to such 28 dividends; 29 (P) An amount equal to any contribution made 30 to a job training project established pursuant to 31 the Tax Increment Allocation Redevelopment Act; 32 (Q) An amount equal to the amount of the 33 deduction used to compute the federal income tax 34 credit for restoration of substantial amounts held SB902 Engrossed -21- LRB9205921SMdv 1 under claim of right for the taxable year pursuant 2 to Section 1341 of the Internal Revenue Code of 3 1986; 4 (R) In the case of an attorney-in-fact with 5 respect to whom an interinsurer or a reciprocal 6 insurer has made the election under Section 835 of 7 the Internal Revenue Code, 26 U.S.C. 835, an amount 8 equal to the excess, if any, of the amounts paid or 9 incurred by that interinsurer or reciprocal insurer 10 in the taxable year to the attorney-in-fact over the 11 deduction allowed to that interinsurer or reciprocal 12 insurer with respect to the attorney-in-fact under 13 Section 835(b) of the Internal Revenue Code for the 14 taxable year; and 15 (S) For taxable years ending on or after 16 December 31, 1997, in the case of a Subchapter S 17 corporation, an amount equal to all amounts of 18 income allocable to a shareholder subject to the 19 Personal Property Tax Replacement Income Tax imposed 20 by subsections (c) and (d) of Section 201 of this 21 Act, including amounts allocable to organizations 22 exempt from federal income tax by reason of Section 23 501(a) of the Internal Revenue Code. This 24 subparagraph (S) is exempt from the provisions of 25 Section 250. 26 (3) Special rule. For purposes of paragraph (2) 27 (A), "gross income" in the case of a life insurance 28 company, for tax years ending on and after December 31, 29 1994, shall mean the gross investment income for the 30 taxable year. 31 (c) Trusts and estates. 32 (1) In general. In the case of a trust or estate, 33 base income means an amount equal to the taxpayer's 34 taxable income for the taxable year as modified by SB902 Engrossed -22- LRB9205921SMdv 1 paragraph (2). 2 (2) Modifications. Subject to the provisions of 3 paragraph (3), the taxable income referred to in 4 paragraph (1) shall be modified by adding thereto the sum 5 of the following amounts: 6 (A) An amount equal to all amounts paid or 7 accrued to the taxpayer as interest or dividends 8 during the taxable year to the extent excluded from 9 gross income in the computation of taxable income; 10 (B) In the case of (i) an estate, $600; (ii) a 11 trust which, under its governing instrument, is 12 required to distribute all of its income currently, 13 $300; and (iii) any other trust, $100, but in each 14 such case, only to the extent such amount was 15 deducted in the computation of taxable income; 16 (C) An amount equal to the amount of tax 17 imposed by this Act to the extent deducted from 18 gross income in the computation of taxable income 19 for the taxable year; 20 (D) The amount of any net operating loss 21 deduction taken in arriving at taxable income, other 22 than a net operating loss carried forward from a 23 taxable year ending prior to December 31, 1986; 24 (E) For taxable years in which a net operating 25 loss carryback or carryforward from a taxable year 26 ending prior to December 31, 1986 is an element of 27 taxable income under paragraph (1) of subsection (e) 28 or subparagraph (E) of paragraph (2) of subsection 29 (e), the amount by which addition modifications 30 other than those provided by this subparagraph (E) 31 exceeded subtraction modifications in such taxable 32 year, with the following limitations applied in the 33 order that they are listed: 34 (i) the addition modification relating to SB902 Engrossed -23- LRB9205921SMdv 1 the net operating loss carried back or forward 2 to the taxable year from any taxable year 3 ending prior to December 31, 1986 shall be 4 reduced by the amount of addition modification 5 under this subparagraph (E) which related to 6 that net operating loss and which was taken 7 into account in calculating the base income of 8 an earlier taxable year, and 9 (ii) the addition modification relating 10 to the net operating loss carried back or 11 forward to the taxable year from any taxable 12 year ending prior to December 31, 1986 shall 13 not exceed the amount of such carryback or 14 carryforward; 15 For taxable years in which there is a net 16 operating loss carryback or carryforward from more 17 than one other taxable year ending prior to December 18 31, 1986, the addition modification provided in this 19 subparagraph (E) shall be the sum of the amounts 20 computed independently under the preceding 21 provisions of this subparagraph (E) for each such 22 taxable year; 23 (F) For taxable years ending on or after 24 January 1, 1989, an amount equal to the tax deducted 25 pursuant to Section 164 of the Internal Revenue Code 26 if the trust or estate is claiming the same tax for 27 purposes of the Illinois foreign tax credit under 28 Section 601 of this Act; 29 (G) 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 taxable income; and 33 (G-5) For taxable years ending after December 34 31, 1997, an amount equal to any eligible SB902 Engrossed -24- LRB9205921SMdv 1 remediation costs that the trust or estate deducted 2 in computing adjusted gross income and for which the 3 trust or estate claims a credit under subsection (l) 4 of Section 201; 5 and by deducting from the total so obtained the sum of 6 the following amounts: 7 (H) An amount equal to all amounts included in 8 such total pursuant to the provisions of Sections 9 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 10 408 of the Internal Revenue Code or included in such 11 total as distributions under the provisions of any 12 retirement or disability plan for employees of any 13 governmental agency or unit, or retirement payments 14 to retired partners, which payments are excluded in 15 computing net earnings from self employment by 16 Section 1402 of the Internal Revenue Code and 17 regulations adopted pursuant thereto; 18 (I) The valuation limitation amount; 19 (J) An amount equal to the amount of any tax 20 imposed by this Act which was refunded to the 21 taxpayer and included in such total for the taxable 22 year; 23 (K) An amount equal to all amounts included in 24 taxable income as modified by subparagraphs (A), 25 (B), (C), (D), (E), (F) and (G) which are exempt 26 from taxation by this State either by reason of its 27 statutes or Constitution or by reason of the 28 Constitution, treaties or statutes of the United 29 States; provided that, in the case of any statute of 30 this State that exempts income derived from bonds or 31 other obligations from the tax imposed under this 32 Act, the amount exempted shall be the interest net 33 of bond premium amortization; 34 (L) With the exception of any amounts SB902 Engrossed -25- LRB9205921SMdv 1 subtracted under subparagraph (K), an amount equal 2 to the sum of all amounts disallowed as deductions 3 by (i) Sections 171(a) (2) and 265(a)(2) of the 4 Internal Revenue Code, as now or hereafter amended, 5 and all amounts of expenses allocable to interest 6 and disallowed as deductions by Section 265(1) of 7 the Internal Revenue Code of 1954, as now or 8 hereafter amended; and (ii) for taxable years ending 9 on or after August 13, 1999, Sections 171(a)(2), 10 265, 280C, and 832(b)(5)(B)(i) of the Internal 11 Revenue Code; the provisions of this subparagraph 12 are exempt from the provisions of Section 250; 13 (M) An amount equal to those dividends 14 included in such total which were paid by a 15 corporation which conducts business operations in an 16 Enterprise Zone or zones created under the Illinois 17 Enterprise Zone Act and conducts substantially all 18 of its operations in an Enterprise Zone or Zones; 19 (N) An amount equal to any contribution made 20 to a job training project established pursuant to 21 the Tax Increment Allocation Redevelopment Act; 22 (O) An amount equal to those dividends 23 included in such total that were paid by a 24 corporation that conducts business operations in a 25 federally designated Foreign Trade Zone or Sub-Zone 26 and that is designated a High Impact Business 27 located in Illinois; provided that dividends 28 eligible for the deduction provided in subparagraph 29 (M) of paragraph (2) of this subsection shall not be 30 eligible for the deduction provided under this 31 subparagraph (O); 32 (P) An amount equal to the amount of the 33 deduction used to compute the federal income tax 34 credit for restoration of substantial amounts held SB902 Engrossed -26- LRB9205921SMdv 1 under claim of right for the taxable year pursuant 2 to Section 1341 of the Internal Revenue Code of 3 1986; and 4 (Q) For taxable year 1999 and thereafter, an 5 amount equal to the amount of any (i) distributions, 6 to the extent includible in gross income for federal 7 income tax purposes, made to the taxpayer because of 8 his or her status as a victim of persecution for 9 racial or religious reasons by Nazi Germany or any 10 other Axis regime or as an heir of the victim and 11 (ii) items of income, to the extent includible in 12 gross income for federal income tax purposes, 13 attributable to, derived from or in any way related 14 to assets stolen from, hidden from, or otherwise 15 lost to a victim of persecution for racial or 16 religious reasons by Nazi Germany or any other Axis 17 regime immediately prior to, during, and immediately 18 after World War II, including, but not limited to, 19 interest on the proceeds receivable as insurance 20 under policies issued to a victim of persecution for 21 racial or religious reasons by Nazi Germany or any 22 other Axis regime by European insurance companies 23 immediately prior to and during World War II; 24 provided, however, this subtraction from federal 25 adjusted gross income does not apply to assets 26 acquired with such assets or with the proceeds from 27 the sale of such assets; provided, further, this 28 paragraph shall only apply to a taxpayer who was the 29 first recipient of such assets after their recovery 30 and who is a victim of persecution for racial or 31 religious reasons by Nazi Germany or any other Axis 32 regime or as an heir of the victim. The amount of 33 and the eligibility for any public assistance, 34 benefit, or similar entitlement is not affected by SB902 Engrossed -27- LRB9205921SMdv 1 the inclusion of items (i) and (ii) of this 2 paragraph in gross income for federal income tax 3 purposes. This paragraph is exempt from the 4 provisions of Section 250. 5 (3) Limitation. The amount of any modification 6 otherwise required under this subsection shall, under 7 regulations prescribed by the Department, be adjusted by 8 any amounts included therein which were properly paid, 9 credited, or required to be distributed, or permanently 10 set aside for charitable purposes pursuant to Internal 11 Revenue Code Section 642(c) during the taxable year. 12 (d) Partnerships. 13 (1) In general. In the case of a partnership, base 14 income means an amount equal to the taxpayer's taxable 15 income for the taxable year as modified by paragraph (2). 16 (2) Modifications. The taxable income referred to 17 in paragraph (1) shall be modified by adding thereto the 18 sum of the following amounts: 19 (A) An amount equal to all amounts paid or 20 accrued to the taxpayer as interest or dividends 21 during the taxable year to the extent excluded from 22 gross income in the computation of taxable income; 23 (B) An amount equal to the amount of tax 24 imposed by this Act to the extent deducted from 25 gross income for the taxable year; 26 (C) The amount of deductions allowed to the 27 partnership pursuant to Section 707 (c) of the 28 Internal Revenue Code in calculating its taxable 29 income; and 30 (D) 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; 34 and by deducting from the total so obtained the following SB902 Engrossed -28- LRB9205921SMdv 1 amounts: 2 (E) The valuation limitation amount; 3 (F) An amount equal to the amount of any tax 4 imposed by this Act which was refunded to the 5 taxpayer and included in such total for the taxable 6 year; 7 (G) An amount equal to all amounts included in 8 taxable income as modified by subparagraphs (A), 9 (B), (C) and (D) which are exempt from taxation by 10 this State either by reason of its statutes or 11 Constitution or by reason of the Constitution, 12 treaties or statutes of the United States; provided 13 that, in the case of any statute of this State that 14 exempts income derived from bonds or other 15 obligations from the tax imposed under this Act, the 16 amount exempted shall be the interest net of bond 17 premium amortization; 18 (H) Any income of the partnership which 19 constitutes personal service income as defined in 20 Section 1348 (b) (1) of the Internal Revenue Code 21 (as in effect December 31, 1981) or a reasonable 22 allowance for compensation paid or accrued for 23 services rendered by partners to the partnership, 24 whichever is greater; 25 (I) An amount equal to all amounts of income 26 distributable to an entity subject to the Personal 27 Property Tax Replacement Income Tax imposed by 28 subsections (c) and (d) of Section 201 of this Act 29 including amounts distributable to organizations 30 exempt from federal income tax by reason of Section 31 501(a) of the Internal Revenue Code; 32 (J) With the exception of any amounts 33 subtracted under subparagraph (G), an amount equal 34 to the sum of all amounts disallowed as deductions SB902 Engrossed -29- LRB9205921SMdv 1 by (i) Sections 171(a) (2), and 265(2) of the 2 Internal Revenue Code of 1954, as now or hereafter 3 amended, and all amounts of expenses allocable to 4 interest and disallowed as deductions by Section 5 265(1) of the Internal Revenue Code, as now or 6 hereafter amended; and (ii) for taxable years ending 7 on or after August 13, 1999, Sections 171(a)(2), 8 265, 280C, and 832(b)(5)(B)(i) of the Internal 9 Revenue Code; the provisions of this subparagraph 10 are exempt from the provisions of Section 250; 11 (K) An amount equal to those dividends 12 included in such total which were paid by a 13 corporation which conducts business operations in an 14 Enterprise Zone or zones created under the Illinois 15 Enterprise Zone Act, enacted by the 82nd General 16 Assembly, and which does not conduct such operations 17 other than in an Enterprise Zone or Zones; 18 (L) An amount equal to any contribution made 19 to a job training project established pursuant to 20 the Real Property Tax Increment Allocation 21 Redevelopment Act; 22 (M) An amount equal to those dividends 23 included in such total that were paid by a 24 corporation that conducts business operations in a 25 federally designated Foreign Trade Zone or Sub-Zone 26 and that is designated a High Impact Business 27 located in Illinois; provided that dividends 28 eligible for the deduction provided in subparagraph 29 (K) of paragraph (2) of this subsection shall not be 30 eligible for the deduction provided under this 31 subparagraph (M); and 32 (N) An amount equal to the amount of the 33 deduction used to compute the federal income tax 34 credit for restoration of substantial amounts held SB902 Engrossed -30- LRB9205921SMdv 1 under claim of right for the taxable year pursuant 2 to Section 1341 of the Internal Revenue Code of 3 1986. 4 (e) Gross income; adjusted gross income; taxable income. 5 (1) In general. Subject to the provisions of 6 paragraph (2) and subsection (b) (3), for purposes of 7 this Section and Section 803(e), a taxpayer's gross 8 income, adjusted gross income, or taxable income for the 9 taxable year shall mean the amount of gross income, 10 adjusted gross income or taxable income properly 11 reportable for federal income tax purposes for the 12 taxable year under the provisions of the Internal Revenue 13 Code. Taxable income may be less than zero. However, for 14 taxable years ending on or after December 31, 1986, net 15 operating loss carryforwards from taxable years ending 16 prior to December 31, 1986, may not exceed the sum of 17 federal taxable income for the taxable year before net 18 operating loss deduction, plus the excess of addition 19 modifications over subtraction modifications for the 20 taxable year. For taxable years ending prior to December 21 31, 1986, taxable income may never be an amount in excess 22 of the net operating loss for the taxable year as defined 23 in subsections (c) and (d) of Section 172 of the Internal 24 Revenue Code, provided that when taxable income of a 25 corporation (other than a Subchapter S corporation), 26 trust, or estate is less than zero and addition 27 modifications, other than those provided by subparagraph 28 (E) of paragraph (2) of subsection (b) for corporations 29 or subparagraph (E) of paragraph (2) of subsection (c) 30 for trusts and estates, exceed subtraction modifications, 31 an addition modification must be made under those 32 subparagraphs for any other taxable year to which the 33 taxable income less than zero (net operating loss) is 34 applied under Section 172 of the Internal Revenue Code or SB902 Engrossed -31- LRB9205921SMdv 1 under subparagraph (E) of paragraph (2) of this 2 subsection (e) applied in conjunction with Section 172 of 3 the Internal Revenue Code. 4 (2) Special rule. For purposes of paragraph (1) of 5 this subsection, the taxable income properly reportable 6 for federal income tax purposes shall mean: 7 (A) Certain life insurance companies. In the 8 case of a life insurance company subject to the tax 9 imposed by Section 801 of the Internal Revenue Code, 10 life insurance company taxable income, plus the 11 amount of distribution from pre-1984 policyholder 12 surplus accounts as calculated under Section 815a of 13 the Internal Revenue Code; 14 (B) Certain other insurance companies. In the 15 case of mutual insurance companies subject to the 16 tax imposed by Section 831 of the Internal Revenue 17 Code, insurance company taxable income; 18 (C) Regulated investment companies. In the 19 case of a regulated investment company subject to 20 the tax imposed by Section 852 of the Internal 21 Revenue Code, investment company taxable income; 22 (D) Real estate investment trusts. In the 23 case of a real estate investment trust subject to 24 the tax imposed by Section 857 of the Internal 25 Revenue Code, real estate investment trust taxable 26 income; 27 (E) Consolidated corporations. In the case of 28 a corporation which is a member of an affiliated 29 group of corporations filing a consolidated income 30 tax return for the taxable year for federal income 31 tax purposes, taxable income determined as if such 32 corporation had filed a separate return for federal 33 income tax purposes for the taxable year and each 34 preceding taxable year for which it was a member of SB902 Engrossed -32- LRB9205921SMdv 1 an affiliated group. For purposes of this 2 subparagraph, the taxpayer's separate taxable income 3 shall be determined as if the election provided by 4 Section 243(b) (2) of the Internal Revenue Code had 5 been in effect for all such years; 6 (F) Cooperatives. In the case of a 7 cooperative corporation or association, the taxable 8 income of such organization determined in accordance 9 with the provisions of Section 1381 through 1388 of 10 the Internal Revenue Code; 11 (G) Subchapter S corporations. In the case 12 of: (i) a Subchapter S corporation for which there 13 is in effect an election for the taxable year under 14 Section 1362 of the Internal Revenue Code, the 15 taxable income of such corporation determined in 16 accordance with Section 1363(b) of the Internal 17 Revenue Code, except that taxable income shall take 18 into account those items which are required by 19 Section 1363(b)(1) of the Internal Revenue Code to 20 be separately stated; and (ii) a Subchapter S 21 corporation for which there is in effect a federal 22 election to opt out of the provisions of the 23 Subchapter S Revision Act of 1982 and have applied 24 instead the prior federal Subchapter S rules as in 25 effect on July 1, 1982, the taxable income of such 26 corporation determined in accordance with the 27 federal Subchapter S rules as in effect on July 1, 28 1982; and 29 (H) Partnerships. In the case of a 30 partnership, taxable income determined in accordance 31 with Section 703 of the Internal Revenue Code, 32 except that taxable income shall take into account 33 those items which are required by Section 703(a)(1) 34 to be separately stated but which would be taken SB902 Engrossed -33- LRB9205921SMdv 1 into account by an individual in calculating his 2 taxable income. 3 (f) Valuation limitation amount. 4 (1) In general. The valuation limitation amount 5 referred to in subsections (a) (2) (G), (c) (2) (I) and 6 (d)(2) (E) is an amount equal to: 7 (A) The sum of the pre-August 1, 1969 8 appreciation amounts (to the extent consisting of 9 gain reportable under the provisions of Section 1245 10 or 1250 of the Internal Revenue Code) for all 11 property in respect of which such gain was reported 12 for the taxable year; plus 13 (B) The lesser of (i) the sum of the 14 pre-August 1, 1969 appreciation amounts (to the 15 extent consisting of capital gain) for all property 16 in respect of which such gain was reported for 17 federal income tax purposes for the taxable year, or 18 (ii) the net capital gain for the taxable year, 19 reduced in either case by any amount of such gain 20 included in the amount determined under subsection 21 (a) (2) (F) or (c) (2) (H). 22 (2) Pre-August 1, 1969 appreciation amount. 23 (A) If the fair market value of property 24 referred to in paragraph (1) was readily 25 ascertainable on August 1, 1969, the pre-August 1, 26 1969 appreciation amount for such property is the 27 lesser of (i) the excess of such fair market value 28 over the taxpayer's basis (for determining gain) for 29 such property on that date (determined under the 30 Internal Revenue Code as in effect on that date), or 31 (ii) the total gain realized and reportable for 32 federal income tax purposes in respect of the sale, 33 exchange or other disposition of such property. 34 (B) If the fair market value of property SB902 Engrossed -34- LRB9205921SMdv 1 referred to in paragraph (1) was not readily 2 ascertainable on August 1, 1969, the pre-August 1, 3 1969 appreciation amount for such property is that 4 amount which bears the same ratio to the total gain 5 reported in respect of the property for federal 6 income tax purposes for the taxable year, as the 7 number of full calendar months in that part of the 8 taxpayer's holding period for the property ending 9 July 31, 1969 bears to the number of full calendar 10 months in the taxpayer's entire holding period for 11 the property. 12 (C) The Department shall prescribe such 13 regulations as may be necessary to carry out the 14 purposes of this paragraph. 15 (g) Double deductions. Unless specifically provided 16 otherwise, nothing in this Section shall permit the same item 17 to be deducted more than once. 18 (h) Legislative intention. Except as expressly provided 19 by this Section there shall be no modifications or 20 limitations on the amounts of income, gain, loss or deduction 21 taken into account in determining gross income, adjusted 22 gross income or taxable income for federal income tax 23 purposes for the taxable year, or in the amount of such items 24 entering into the computation of base income and net income 25 under this Act for such taxable year, whether in respect of 26 property values as of August 1, 1969 or otherwise. 27 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 28 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff. 29 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, 30 eff. 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 31 revised 1-15-01.) 32 Section 15. The Illinois Prepaid Tuition Act is amended SB902 Engrossed -35- LRB9205921SMdv 1 by changing Section 55 as follows: 2 (110 ILCS 979/55) 3 Sec. 55. Tax exemption. The assets of the Illinois 4 Prepaid Tuition Trust Fund and its income and operation shall 5 be exempt from all taxation by the State of Illinois and any 6 of its subdivisions. The accrued earnings of Illinois 7 prepaid tuition contracts once disbursed on behalf of an 8 eligible beneficiary shall be similarly exempt from all 9 taxation by the State of Illinois and any of its 10 subdivisions, so long as they are used for educational 11 purposes in accordance with the provisions of an Illinois 12 prepaid tuition contract. The amount spent by a purchaser of 13 an Illinois prepaid tuition contract during the taxable year 14 may be deducted from adjusted gross income as provided in 15 Section 203 of the Illinois Income Tax Act. The provisions of 16 this Section are exempt from the provisions of Section 250 of 17 the Illinois Income Tax Act. 18 (Source: P.A. 90-546, eff. 12-1-97; 91-867, eff. 6-22-00.) 19 Section 99. Effective date. This Act takes effect upon 20 becoming law.