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91st General Assembly
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Public Act 91-0676

HB1120 Enrolled                               LRB9100524PTpkA

    AN ACT concerning victims of Nazi persecution.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  5.   The  Illinois  Income Tax Act is amended by
changing Section 203 as follows:

    (35 ILCS 5/203) (from Ch. 120, par. 2-203)
    Sec. 203.  Base income defined.
    (a)  Individuals.
         (1)  In general.  In the case of an individual, base
    income means an amount equal to the  taxpayer's  adjusted
    gross   income  for  the  taxable  year  as  modified  by
    paragraph (2).
         (2)  Modifications.   The  adjusted   gross   income
    referred  to in paragraph (1) shall be modified by adding
    thereto the sum of the following amounts:
              (A)  An amount equal to  all  amounts  paid  or
         accrued  to  the  taxpayer  as interest or dividends
         during the taxable year to the extent excluded  from
         gross  income  in  the computation of adjusted gross
         income, except stock dividends of  qualified  public
         utilities   described   in  Section  305(e)  of  the
         Internal Revenue Code;
              (B)  An amount  equal  to  the  amount  of  tax
         imposed  by  this  Act  to  the extent deducted from
         gross income in the computation  of  adjusted  gross
         income for the taxable year;
              (C)  An  amount  equal  to  the amount received
         during the taxable year as a recovery or  refund  of
         real   property  taxes  paid  with  respect  to  the
         taxpayer's principal residence under the Revenue Act
         of 1939 and for which  a  deduction  was  previously
         taken  under  subparagraph (L) of this paragraph (2)
         prior to July 1, 1991, the retrospective application
         date of Article 4 of Public Act 87-17.  In the  case
         of  multi-unit  or  multi-use  structures  and  farm
         dwellings,  the  taxes  on  the taxpayer's principal
         residence shall be that portion of the  total  taxes
         for  the  entire  property  which is attributable to
         such principal residence;
              (D)  An amount  equal  to  the  amount  of  the
         capital  gain deduction allowable under the Internal
         Revenue Code, to  the  extent  deducted  from  gross
         income in the computation of adjusted gross income;
              (D-5)  An amount, to the extent not included in
         adjusted  gross income, equal to the amount of money
         withdrawn by the taxpayer in the taxable year from a
         medical care savings account and the interest earned
         on the account in the taxable year of  a  withdrawal
         pursuant  to  subsection  (b)  of  Section 20 of the
         Medical Care Savings Account Act; and
              (D-10) For taxable years ending after  December
         31,   1997,   an   amount   equal  to  any  eligible
         remediation costs that the  individual  deducted  in
         computing  adjusted  gross  income and for which the
         individual claims a credit under subsection  (l)  of
         Section 201;
    and  by  deducting  from the total so obtained the sum of
    the following amounts:
              (E)  Any  amount  included  in  such  total  in
         respect  of  any  compensation  (including  but  not
         limited to any compensation paid  or  accrued  to  a
         serviceman  while  a  prisoner  of war or missing in
         action) paid to a resident by  reason  of  being  on
         active duty in the Armed Forces of the United States
         and  in  respect of any compensation paid or accrued
         to a resident who as a governmental employee  was  a
         prisoner of war or missing in action, and in respect
         of  any  compensation  paid to a resident in 1971 or
         thereafter for annual training performed pursuant to
         Sections 502 and 503, Title 32, United  States  Code
         as a member of the Illinois National Guard;
              (F)  An amount equal to all amounts included in
         such  total  pursuant  to the provisions of Sections
         402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
         408  of  the  Internal  Revenue Code, or included in
         such total as distributions under the provisions  of
         any  retirement  or disability plan for employees of
         any  governmental  agency  or  unit,  or  retirement
         payments to retired  partners,  which  payments  are
         excluded   in   computing  net  earnings  from  self
         employment by Section 1402 of the  Internal  Revenue
         Code and regulations adopted pursuant thereto;
              (G)  The valuation limitation amount;
              (H)  An  amount  equal to the amount of any tax
         imposed by  this  Act  which  was  refunded  to  the
         taxpayer  and included in such total for the taxable
         year;
              (I)  An amount equal to all amounts included in
         such total pursuant to the provisions of Section 111
         of the Internal Revenue Code as a recovery of  items
         previously  deducted  from  adjusted gross income in
         the computation of taxable income;
              (J)  An  amount  equal   to   those   dividends
         included   in  such  total  which  were  paid  by  a
         corporation which conducts business operations in an
         Enterprise Zone or zones created under the  Illinois
         Enterprise  Zone Act, and conducts substantially all
         of its operations in an Enterprise Zone or zones;
              (K)  An  amount  equal   to   those   dividends
         included   in   such  total  that  were  paid  by  a
         corporation that conducts business operations  in  a
         federally  designated Foreign Trade Zone or Sub-Zone
         and  that  is  designated  a  High  Impact  Business
         located  in  Illinois;   provided   that   dividends
         eligible  for the deduction provided in subparagraph
         (J) of paragraph (2) of this subsection shall not be
         eligible  for  the  deduction  provided  under  this
         subparagraph (K);
              (L)  For taxable years  ending  after  December
         31,  1983,  an  amount  equal to all social security
         benefits and railroad retirement  benefits  included
         in  such  total pursuant to Sections 72(r) and 86 of
         the Internal Revenue Code;
              (M)  With  the   exception   of   any   amounts
         subtracted  under  subparagraph (N), an amount equal
         to the sum of all amounts disallowed  as  deductions
         by  Sections  171(a) (2), and 265(2) of the Internal
         Revenue Code of 1954, as now or  hereafter  amended,
         and  all  amounts  of expenses allocable to interest
         and  disallowed as deductions by Section  265(1)  of
         the  Internal  Revenue  Code  of  1954,  as  now  or
         hereafter amended;
              (N)  An amount equal to all amounts included in
         such  total  which  are exempt from taxation by this
         State  either  by  reason   of   its   statutes   or
         Constitution  or  by  reason  of  the  Constitution,
         treaties  or statutes of the United States; provided
         that, in the case of any statute of this State  that
         exempts   income   derived   from   bonds  or  other
         obligations from the tax imposed under this Act, the
         amount exempted shall be the interest  net  of  bond
         premium amortization;
              (O)  An  amount  equal to any contribution made
         to a job training project  established  pursuant  to
         the Tax Increment Allocation Redevelopment Act;
              (P)  An  amount  equal  to  the  amount  of the
         deduction used to compute  the  federal  income  tax
         credit  for  restoration of substantial amounts held
         under claim of right for the taxable  year  pursuant
         to  Section  1341  of  the  Internal Revenue Code of
         1986;
              (Q)  An amount equal to any amounts included in
         such  total,  received  by  the   taxpayer   as   an
         acceleration  in  the  payment of life, endowment or
         annuity benefits in advance of the time  they  would
         otherwise  be payable as an indemnity for a terminal
         illness;
              (R)  An amount  equal  to  the  amount  of  any
         federal  or  State  bonus  paid  to  veterans of the
         Persian Gulf War;
              (S)  An  amount,  to  the  extent  included  in
         adjusted gross income, equal  to  the  amount  of  a
         contribution  made  in the taxable year on behalf of
         the taxpayer  to  a  medical  care  savings  account
         established  under  the Medical Care Savings Account
         Act to the extent the contribution  is  accepted  by
         the account administrator as provided in that Act;
              (T)  An  amount,  to  the  extent  included  in
         adjusted  gross  income,  equal  to  the  amount  of
         interest  earned  in  the  taxable year on a medical
         care savings account established under  the  Medical
         Care  Savings Account Act on behalf of the taxpayer,
         other than interest added pursuant to item (D-5)  of
         this paragraph (2);
              (U)  For one taxable year beginning on or after
         January 1, 1994, an amount equal to the total amount
         of  tax  imposed  and paid under subsections (a) and
         (b) of Section 201 of  this  Act  on  grant  amounts
         received  by  the  taxpayer  under  the Nursing Home
         Grant Assistance Act during the  taxpayer's  taxable
         years 1992 and 1993;
              (V)  Beginning  with  tax  years  ending  on or
         after December 31, 1995 and ending  with  tax  years
         ending  on  or  before  December 31, 1999, an amount
         equal to the amount paid by  a  taxpayer  who  is  a
         self-employed  taxpayer, a partner of a partnership,
         or a shareholder in a Subchapter S  corporation  for
         health  insurance  or  long-term  care insurance for
         that  taxpayer  or   that   taxpayer's   spouse   or
         dependents,  to  the extent that the amount paid for
         that health insurance or  long-term  care  insurance
         may  be  deducted  under Section 213 of the Internal
         Revenue Code of 1986, has not been deducted  on  the
         federal  income tax return of the taxpayer, and does
         not exceed the taxable income attributable  to  that
         taxpayer's   income,   self-employment   income,  or
         Subchapter S  corporation  income;  except  that  no
         deduction  shall  be  allowed under this item (V) if
         the taxpayer  is  eligible  to  participate  in  any
         health insurance or long-term care insurance plan of
         an  employer  of  the  taxpayer  or  the  taxpayer's
         spouse.   The  amount  of  the  health insurance and
         long-term care insurance subtracted under this  item
         (V)  shall be determined by multiplying total health
         insurance and long-term care insurance premiums paid
         by the taxpayer times a number that  represents  the
         fractional  percentage  of eligible medical expenses
         under Section 213 of the Internal  Revenue  Code  of
         1986 not actually deducted on the taxpayer's federal
         income tax return; and
              (W)  For  taxable  years  beginning on or after
         January  1,  1998,  all  amounts  included  in   the
         taxpayer's  federal gross income in the taxable year
         from amounts converted from a regular IRA to a  Roth
         IRA. This paragraph is exempt from the provisions of
         Section 250; and.
              (X)  For  taxable  year 1999 and thereafter, an
         amount equal to the amount of any (i) distributions,
         to the extent includible in gross income for federal
         income tax purposes, made to the taxpayer because of
         his or her status as a  victim  of  persecution  for
         racial  or  religious reasons by Nazi Germany or any
         other Axis regime or as an heir of  the  victim  and
         (ii)  items  of  income, to the extent includible in
         gross  income  for  federal  income  tax   purposes,
         attributable  to, derived from or in any way related
         to assets stolen from,  hidden  from,  or  otherwise
         lost  to  a  victim  of  persecution  for  racial or
         religious reasons by Nazi Germany or any other  Axis
         regime immediately prior to, during, and immediately
         after  World  War II, including, but not limited to,
         interest on the  proceeds  receivable  as  insurance
         under policies issued to a victim of persecution for
         racial  or  religious reasons by Nazi Germany or any
         other Axis regime by  European  insurance  companies
         immediately  prior  to  and  during  World  War  II;
         provided,  however,  this  subtraction  from federal
         adjusted gross  income  does  not  apply  to  assets
         acquired  with such assets or with the proceeds from
         the sale of such  assets;  provided,  further,  this
         paragraph shall only apply to a taxpayer who was the
         first  recipient of such assets after their recovery
         and who is a victim of  persecution  for  racial  or
         religious  reasons by Nazi Germany or any other Axis
         regime or as an heir of the victim.  The  amount  of
         and  the  eligibility  for  any  public  assistance,
         benefit,  or  similar entitlement is not affected by
         the  inclusion  of  items  (i)  and  (ii)  of   this
         paragraph  in  gross  income  for federal income tax
         purposes.    This  paragraph  is  exempt  from   the
         provisions of Section 250.

    (b)  Corporations.
         (1)  In general.  In the case of a corporation, base
    income  means  an  amount equal to the taxpayer's taxable
    income for the taxable year as modified by paragraph (2).
         (2)  Modifications.  The taxable income referred  to
    in  paragraph (1) shall be modified by adding thereto the
    sum of the following amounts:
              (A)  An amount equal to  all  amounts  paid  or
         accrued   to   the  taxpayer  as  interest  and  all
         distributions  received  from  regulated  investment
         companies during the  taxable  year  to  the  extent
         excluded  from  gross  income  in the computation of
         taxable income;
              (B)  An amount  equal  to  the  amount  of  tax
         imposed  by  this  Act  to  the extent deducted from
         gross income in the computation  of  taxable  income
         for the taxable year;
              (C)  In  the  case  of  a  regulated investment
         company, an amount equal to the excess  of  (i)  the
         net  long-term  capital  gain  for the taxable year,
         over (ii) the amount of the capital  gain  dividends
         designated   as  such  in  accordance  with  Section
         852(b)(3)(C) of the Internal Revenue  Code  and  any
         amount  designated under Section 852(b)(3)(D) of the
         Internal Revenue Code, attributable to  the  taxable
         year.  (this  amendatory  Act  of  1995  (Public Act
         89-89) is declarative of existing law and is  not  a
         new enactment);.
              (D)  The  amount  of  any  net  operating  loss
         deduction taken in arriving at taxable income, other
         than  a  net  operating  loss carried forward from a
         taxable year ending prior to December 31, 1986; and
              (E)  For taxable years in which a net operating
         loss carryback or carryforward from a  taxable  year
         ending  prior  to December 31, 1986 is an element of
         taxable income under paragraph (1) of subsection (e)
         or subparagraph (E) of paragraph (2)  of  subsection
         (e),  the  amount  by  which  addition modifications
         other than those provided by this  subparagraph  (E)
         exceeded  subtraction  modifications in such earlier
         taxable year, with the following limitations applied
         in the order that they are listed:
                   (i)  the addition modification relating to
              the net operating loss carried back or  forward
              to  the  taxable  year  from  any  taxable year
              ending prior to  December  31,  1986  shall  be
              reduced  by the amount of addition modification
              under this subparagraph (E)  which  related  to
              that  net  operating  loss  and which was taken
              into account in calculating the base income  of
              an earlier taxable year, and
                   (ii)  the  addition  modification relating
              to the  net  operating  loss  carried  back  or
              forward  to  the  taxable year from any taxable
              year ending prior to December  31,  1986  shall
              not  exceed  the  amount  of  such carryback or
              carryforward;
              For taxable years  in  which  there  is  a  net
         operating  loss  carryback or carryforward from more
         than one other taxable year ending prior to December
         31, 1986, the addition modification provided in this
         subparagraph (E) shall be the  sum  of  the  amounts
         computed    independently    under   the   preceding
         provisions of this subparagraph (E)  for  each  such
         taxable year;, and
              (E-5)  For  taxable years ending after December
         31,  1997,  an  amount   equal   to   any   eligible
         remediation  costs  that the corporation deducted in
         computing adjusted gross income and  for  which  the
         corporation  claims a credit under subsection (l) of
         Section 201;
    and by deducting from the total so obtained  the  sum  of
    the following amounts:
              (F)  An  amount  equal to the amount of any tax
         imposed by  this  Act  which  was  refunded  to  the
         taxpayer  and included in such total for the taxable
         year;
              (G)  An amount equal to any amount included  in
         such  total under Section 78 of the Internal Revenue
         Code;
              (H)  In the  case  of  a  regulated  investment
         company,  an  amount  equal  to the amount of exempt
         interest dividends as defined in subsection (b)  (5)
         of Section 852 of the Internal Revenue Code, paid to
         shareholders for the taxable year;
              (I)  With   the   exception   of   any  amounts
         subtracted under subparagraph (J), an  amount  equal
         to  the  sum of all amounts disallowed as deductions
         by Sections 171(a) (2), and  265(a)(2)  and  amounts
         disallowed  as interest expense by Section 291(a)(3)
         of the Internal Revenue Code, as  now  or  hereafter
         amended,  and  all  amounts of expenses allocable to
         interest and disallowed  as  deductions  by  Section
         265(a)(1)  of  the  Internal Revenue Code, as now or
         hereafter amended;
              (J)  An amount equal to all amounts included in
         such total which are exempt from  taxation  by  this
         State   either   by   reason   of  its  statutes  or
         Constitution  or  by  reason  of  the  Constitution,
         treaties or statutes of the United States;  provided
         that,  in the case of any statute of this State that
         exempts  income  derived   from   bonds   or   other
         obligations from the tax imposed under this Act, the
         amount  exempted  shall  be the interest net of bond
         premium amortization;
              (K)  An  amount  equal   to   those   dividends
         included   in  such  total  which  were  paid  by  a
         corporation which conducts business operations in an
         Enterprise Zone or zones created under the  Illinois
         Enterprise  Zone  Act and conducts substantially all
         of its operations in an Enterprise Zone or zones;
              (L)  An  amount  equal   to   those   dividends
         included   in   such  total  that  were  paid  by  a
         corporation that conducts business operations  in  a
         federally  designated Foreign Trade Zone or Sub-Zone
         and  that  is  designated  a  High  Impact  Business
         located  in  Illinois;   provided   that   dividends
         eligible  for the deduction provided in subparagraph
         (K) of paragraph 2 of this subsection shall  not  be
         eligible  for  the  deduction  provided  under  this
         subparagraph (L);
              (M)  For  any  taxpayer  that  is  a  financial
         organization within the meaning of Section 304(c) of
         this  Act,  an  amount  included  in  such  total as
         interest income from a loan or loans  made  by  such
         taxpayer  to  a  borrower, to the extent that such a
         loan is secured by property which  is  eligible  for
         the  Enterprise Zone Investment Credit. To determine
         the portion of a loan or loans that  is  secured  by
         property  eligible  for  a Section 201(h) investment
         credit to the borrower, the entire principal  amount
         of  the  loan  or loans between the taxpayer and the
         borrower should be divided into  the  basis  of  the
         Section  201(h)  investment  credit  property  which
         secures  the  loan  or loans, using for this purpose
         the original basis of such property on the date that
         it was placed in service  in  the  Enterprise  Zone.
         The  subtraction  modification available to taxpayer
         in any year under  this  subsection  shall  be  that
         portion  of  the total interest paid by the borrower
         with  respect  to  such  loan  attributable  to  the
         eligible property as calculated under  the  previous
         sentence;
              (M-1)  For  any  taxpayer  that  is a financial
         organization within the meaning of Section 304(c) of
         this Act,  an  amount  included  in  such  total  as
         interest  income  from  a loan or loans made by such
         taxpayer to a borrower, to the extent  that  such  a
         loan  is  secured  by property which is eligible for
         the High  Impact  Business  Investment  Credit.   To
         determine  the  portion  of  a loan or loans that is
         secured by property eligible for  a  Section  201(i)
         investment   credit  to  the  borrower,  the  entire
         principal amount of the loan or  loans  between  the
         taxpayer and the borrower should be divided into the
         basis   of  the  Section  201(i)  investment  credit
         property which secures the loan or loans, using  for
         this  purpose the original basis of such property on
         the  date  that  it  was  placed  in  service  in  a
         federally designated Foreign Trade Zone or  Sub-Zone
         located  in  Illinois.  No taxpayer that is eligible
         for the deduction provided in  subparagraph  (M)  of
         paragraph  (2)  of this subsection shall be eligible
         for the deduction provided under  this  subparagraph
         (M-1).   The  subtraction  modification available to
         taxpayers in any year under this subsection shall be
         that portion of  the  total  interest  paid  by  the
         borrower  with  respect to such loan attributable to
         the  eligible  property  as  calculated  under   the
         previous sentence;
              (N)  Two times any contribution made during the
         taxable  year  to  a designated zone organization to
         the extent that the contribution (i) qualifies as  a
         charitable  contribution  under  subsection  (c)  of
         Section  170  of  the Internal Revenue Code and (ii)
         must, by its terms, be used for a  project  approved
         by  the Department of Commerce and Community Affairs
         under Section 11 of  the  Illinois  Enterprise  Zone
         Act;
              (O)  An  amount  equal  to: (i) 85% for taxable
         years ending on or before December 31, 1992,  or,  a
         percentage  equal  to the percentage allowable under
         Section 243(a)(1) of the Internal  Revenue  Code  of
         1986  for  taxable  years  ending after December 31,
         1992, of the amount by which dividends  included  in
         taxable  income and received from a corporation that
         is not created or organized under the  laws  of  the
         United  States or any state or political subdivision
         thereof, including, for taxable years ending  on  or
         after  December  31,  1988,  dividends  received  or
         deemed   received  or  paid  or  deemed  paid  under
         Sections 951 through 964  of  the  Internal  Revenue
         Code, exceed the amount of the modification provided
         under  subparagraph  (G)  of  paragraph  (2) of this
         subsection (b) which is related to  such  dividends;
         plus  (ii)  100%  of  the amount by which dividends,
         included in taxable income and received,  including,
         for  taxable  years  ending on or after December 31,
         1988, dividends received or deemed received or  paid
         or deemed paid under Sections 951 through 964 of the
         Internal  Revenue  Code,  from  any such corporation
         specified in clause  (i)  that  would  but  for  the
         provisions  of  Section 1504 (b) (3) of the Internal
         Revenue  Code  be  treated  as  a  member   of   the
         affiliated   group   which   includes  the  dividend
         recipient, exceed the  amount  of  the  modification
         provided  under subparagraph (G) of paragraph (2) of
         this  subsection  (b)  which  is  related  to   such
         dividends;
              (P)  An  amount  equal to any contribution made
         to a job training project  established  pursuant  to
         the Tax Increment Allocation Redevelopment Act; and
              (Q)  An  amount  equal  to  the  amount  of the
         deduction used to compute  the  federal  income  tax
         credit  for  restoration of substantial amounts held
         under claim of right for the taxable  year  pursuant
         to  Section  1341  of  the  Internal Revenue Code of
         1986.
         (3)  Special rule.  For purposes  of  paragraph  (2)
    (A),  "gross  income"  in  the  case  of a life insurance
    company, for tax years ending on and after  December  31,
    1994,  shall  mean  the  gross  investment income for the
    taxable year.

    (c)  Trusts and estates.
         (1)  In general.  In the case of a trust or  estate,
    base  income  means  an  amount  equal  to the taxpayer's
    taxable income  for  the  taxable  year  as  modified  by
    paragraph (2).
         (2)  Modifications.   Subject  to  the provisions of
    paragraph  (3),  the  taxable  income  referred   to   in
    paragraph (1) shall be modified by adding thereto the sum
    of the following amounts:
              (A)  An  amount  equal  to  all amounts paid or
         accrued to the taxpayer  as  interest  or  dividends
         during  the taxable year to the extent excluded from
         gross income in the computation of taxable income;
              (B)  In the case of (i) an estate, $600; (ii) a
         trust which,  under  its  governing  instrument,  is
         required  to distribute all of its income currently,
         $300; and (iii) any other trust, $100, but  in  each
         such  case,  only  to  the  extent  such  amount was
         deducted in the computation of taxable income;
              (C)  An amount  equal  to  the  amount  of  tax
         imposed  by  this  Act  to  the extent deducted from
         gross income in the computation  of  taxable  income
         for the taxable year;
              (D)  The  amount  of  any  net  operating  loss
         deduction taken in arriving at taxable income, other
         than  a  net  operating  loss carried forward from a
         taxable year ending prior to December 31, 1986;
              (E)  For taxable years in which a net operating
         loss carryback or carryforward from a  taxable  year
         ending  prior  to December 31, 1986 is an element of
         taxable income under paragraph (1) of subsection (e)
         or subparagraph (E) of paragraph (2)  of  subsection
         (e),  the  amount  by  which  addition modifications
         other than those provided by this  subparagraph  (E)
         exceeded  subtraction  modifications in such taxable
         year, with the following limitations applied in  the
         order that they are listed:
                   (i)  the addition modification relating to
              the  net operating loss carried back or forward
              to the  taxable  year  from  any  taxable  year
              ending  prior  to  December  31,  1986 shall be
              reduced by the amount of addition  modification
              under  this  subparagraph  (E) which related to
              that net operating loss  and  which  was  taken
              into  account in calculating the base income of
              an earlier taxable year, and
                   (ii)  the addition  modification  relating
              to  the  net  operating  loss  carried  back or
              forward to the taxable year  from  any  taxable
              year  ending  prior  to December 31, 1986 shall
              not exceed the  amount  of  such  carryback  or
              carryforward;
              For  taxable  years  in  which  there  is a net
         operating loss carryback or carryforward  from  more
         than one other taxable year ending prior to December
         31, 1986, the addition modification provided in this
         subparagraph  (E)  shall  be  the sum of the amounts
         computed   independently   under    the    preceding
         provisions  of  this  subparagraph (E) for each such
         taxable year;
              (F)  For  taxable  years  ending  on  or  after
         January 1, 1989, an amount equal to the tax deducted
         pursuant to Section 164 of the Internal Revenue Code
         if the trust or estate is claiming the same tax  for
         purposes  of  the  Illinois foreign tax credit under
         Section 601 of this Act;
              (G)  An amount  equal  to  the  amount  of  the
         capital  gain deduction allowable under the Internal
         Revenue Code, to  the  extent  deducted  from  gross
         income in the computation of taxable income; and
              (G-5)  For  taxable years ending after December
         31,  1997,  an  amount   equal   to   any   eligible
         remediation  costs that the trust or estate deducted
         in computing adjusted gross income and for which the
         trust or estate claims a credit under subsection (l)
         of Section 201;
    and by deducting from the total so obtained  the  sum  of
    the following amounts:
              (H)  An amount equal to all amounts included in
         such  total  pursuant  to the provisions of Sections
         402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
         408 of the Internal Revenue Code or included in such
         total  as  distributions under the provisions of any
         retirement or disability plan for employees  of  any
         governmental  agency or unit, or retirement payments
         to retired partners, which payments are excluded  in
         computing  net  earnings  from  self  employment  by
         Section  1402  of  the  Internal  Revenue  Code  and
         regulations adopted pursuant thereto;
              (I)  The valuation limitation amount;
              (J)  An  amount  equal to the amount of any tax
         imposed by  this  Act  which  was  refunded  to  the
         taxpayer  and included in such total for the taxable
         year;
              (K)  An amount equal to all amounts included in
         taxable income as  modified  by  subparagraphs  (A),
         (B),  (C),  (D),  (E),  (F) and (G) which are exempt
         from taxation by this State either by reason of  its
         statutes   or  Constitution  or  by  reason  of  the
         Constitution, treaties or  statutes  of  the  United
         States; provided that, in the case of any statute of
         this State that exempts income derived from bonds or
         other  obligations  from  the tax imposed under this
         Act, the amount exempted shall be the  interest  net
         of bond premium amortization;
              (L)  With   the   exception   of   any  amounts
         subtracted under subparagraph (K), an  amount  equal
         to  the  sum of all amounts disallowed as deductions
         by Sections 171(a) (2) and 265(a)(2) of the Internal
         Revenue Code, as now or hereafter amended,  and  all
         amounts   of  expenses  allocable  to  interest  and
         disallowed as deductions by Section  265(1)  of  the
         Internal  Revenue  Code of 1954, as now or hereafter
         amended;
              (M)  An  amount  equal   to   those   dividends
         included   in  such  total  which  were  paid  by  a
         corporation which conducts business operations in an
         Enterprise Zone or zones created under the  Illinois
         Enterprise  Zone  Act and conducts substantially all
         of its operations in an Enterprise Zone or Zones;
              (N)  An amount equal to any  contribution  made
         to  a  job  training project established pursuant to
         the Tax Increment Allocation Redevelopment Act;
              (O)  An  amount  equal   to   those   dividends
         included   in   such  total  that  were  paid  by  a
         corporation that conducts business operations  in  a
         federally  designated Foreign Trade Zone or Sub-Zone
         and  that  is  designated  a  High  Impact  Business
         located  in  Illinois;   provided   that   dividends
         eligible  for the deduction provided in subparagraph
         (M) of paragraph (2) of this subsection shall not be
         eligible  for  the  deduction  provided  under  this
         subparagraph (O); and
              (P)  An amount  equal  to  the  amount  of  the
         deduction  used  to  compute  the federal income tax
         credit for restoration of substantial  amounts  held
         under  claim  of right for the taxable year pursuant
         to Section 1341 of  the  Internal  Revenue  Code  of
         1986; and.
              (Q)  For  taxable  year 1999 and thereafter, an
         amount equal to the amount of any (i) distributions,
         to the extent includible in gross income for federal
         income tax purposes, made to the taxpayer because of
         his or her status as a  victim  of  persecution  for
         racial  or  religious reasons by Nazi Germany or any
         other Axis regime or as an heir of  the  victim  and
         (ii)  items  of  income, to the extent includible in
         gross  income  for  federal  income  tax   purposes,
         attributable  to, derived from or in any way related
         to assets stolen from,  hidden  from,  or  otherwise
         lost  to  a  victim  of  persecution  for  racial or
         religious reasons by Nazi Germany or any other  Axis
         regime immediately prior to, during, and immediately
         after  World  War II, including, but not limited to,
         interest on the  proceeds  receivable  as  insurance
         under policies issued to a victim of persecution for
         racial  or  religious reasons by Nazi Germany or any
         other Axis regime by  European  insurance  companies
         immediately  prior  to  and  during  World  War  II;
         provided,  however,  this  subtraction  from federal
         adjusted gross  income  does  not  apply  to  assets
         acquired  with such assets or with the proceeds from
         the sale of such  assets;  provided,  further,  this
         paragraph shall only apply to a taxpayer who was the
         first  recipient of such assets after their recovery
         and who is a victim of  persecution  for  racial  or
         religious  reasons by Nazi Germany or any other Axis
         regime or as an heir of the victim.  The  amount  of
         and  the  eligibility  for  any  public  assistance,
         benefit,  or  similar entitlement is not affected by
         the  inclusion  of  items  (i)  and  (ii)  of   this
         paragraph  in  gross  income  for federal income tax
         purposes.  This  paragraph  is   exempt   from   the
         provisions of Section 250.
         (3)  Limitation.   The  amount  of  any modification
    otherwise required under  this  subsection  shall,  under
    regulations  prescribed by the Department, be adjusted by
    any amounts included therein which  were  properly  paid,
    credited,  or  required to be distributed, or permanently
    set aside for charitable purposes pursuant   to  Internal
    Revenue Code Section 642(c) during the taxable year.

    (d)  Partnerships.
         (1)  In  general. In the case of a partnership, base
    income means an amount equal to  the  taxpayer's  taxable
    income for the taxable year as modified by paragraph (2).
         (2)  Modifications.  The  taxable income referred to
    in paragraph (1) shall be modified by adding thereto  the
    sum of the following amounts:
              (A)  An  amount  equal  to  all amounts paid or
         accrued to the taxpayer  as  interest  or  dividends
         during  the taxable year to the extent excluded from
         gross income in the computation of taxable income;
              (B)  An amount  equal  to  the  amount  of  tax
         imposed  by  this  Act  to  the extent deducted from
         gross income for the taxable year; and
              (C)  The amount of deductions  allowed  to  the
         partnership  pursuant  to  Section  707  (c)  of the
         Internal Revenue Code  in  calculating  its  taxable
         income; and
              (D)  An  amount  equal  to  the  amount  of the
         capital gain deduction allowable under the  Internal
         Revenue  Code,  to  the  extent  deducted from gross
         income in the computation of taxable income;
    and by deducting from the total so obtained the following
    amounts:
              (E)  The valuation limitation amount;
              (F)  An amount equal to the amount of  any  tax
         imposed  by  this  Act  which  was  refunded  to the
         taxpayer and included in such total for the  taxable
         year;
              (G)  An amount equal to all amounts included in
         taxable  income  as  modified  by subparagraphs (A),
         (B), (C) and (D) which are exempt from  taxation  by
         this  State  either  by  reason  of  its statutes or
         Constitution  or  by  reason  of  the  Constitution,
         treaties or statutes of the United States;  provided
         that,  in the case of any statute of this State that
         exempts  income  derived   from   bonds   or   other
         obligations from the tax imposed under this Act, the
         amount  exempted  shall  be the interest net of bond
         premium amortization;
              (H)  Any  income  of  the   partnership   which
         constitutes  personal  service  income as defined in
         Section 1348 (b) (1) of the  Internal  Revenue  Code
         (as  in  effect  December  31, 1981) or a reasonable
         allowance  for  compensation  paid  or  accrued  for
         services rendered by partners  to  the  partnership,
         whichever is greater;
              (I)  An  amount  equal to all amounts of income
         distributable to an entity subject to  the  Personal
         Property  Tax  Replacement  Income  Tax  imposed  by
         subsections  (c)  and (d) of Section 201 of this Act
         including  amounts  distributable  to  organizations
         exempt from federal income tax by reason of  Section
         501(a) of the Internal Revenue Code;
              (J)  With   the   exception   of   any  amounts
         subtracted under subparagraph (G), an  amount  equal
         to  the  sum of all amounts disallowed as deductions
         by Sections 171(a) (2), and 265(2) of  the  Internal
         Revenue  Code  of 1954, as now or hereafter amended,
         and all amounts of expenses  allocable  to  interest
         and  disallowed  as  deductions by Section 265(1) of
         the Internal  Revenue  Code,  as  now  or  hereafter
         amended;
              (K)  An   amount   equal   to  those  dividends
         included  in  such  total  which  were  paid  by   a
         corporation which conducts business operations in an
         Enterprise  Zone or zones created under the Illinois
         Enterprise Zone Act, enacted  by  the  82nd  General
         Assembly, and which does not conduct such operations
         other than in an Enterprise Zone or Zones;
              (L)  An  amount  equal to any contribution made
         to a job training project  established  pursuant  to
         the   Real   Property   Tax   Increment   Allocation
         Redevelopment Act;
              (M)  An   amount   equal   to  those  dividends
         included  in  such  total  that  were  paid   by   a
         corporation  that  conducts business operations in a
         federally designated Foreign Trade Zone or  Sub-Zone
         and  that  is  designated  a  High  Impact  Business
         located   in   Illinois;   provided  that  dividends
         eligible for the deduction provided in  subparagraph
         (K) of paragraph (2) of this subsection shall not be
         eligible  for  the  deduction  provided  under  this
         subparagraph (M); and
              (N)  An  amount  equal  to  the  amount  of the
         deduction used to compute  the  federal  income  tax
         credit  for  restoration of substantial amounts held
         under claim of right for the taxable  year  pursuant
         to  Section  1341  of  the  Internal Revenue Code of
         1986.

    (e)  Gross income; adjusted gross income; taxable income.
         (1)  In  general.   Subject  to  the  provisions  of
    paragraph (2) and subsection (b)  (3),  for  purposes  of
    this  Section  and  Section  803(e),  a  taxpayer's gross
    income, adjusted gross income, or taxable income for  the
    taxable  year  shall  mean  the  amount  of gross income,
    adjusted  gross  income  or   taxable   income   properly
    reportable  for  federal  income  tax  purposes  for  the
    taxable year under the provisions of the Internal Revenue
    Code.  Taxable income may be less than zero. However, for
    taxable years ending on or after December 31,  1986,  net
    operating  loss  carryforwards  from taxable years ending
    prior to December 31, 1986, may not  exceed  the  sum  of
    federal  taxable  income  for the taxable year before net
    operating loss deduction, plus  the  excess  of  addition
    modifications  over  subtraction  modifications  for  the
    taxable year.  For taxable years ending prior to December
    31, 1986, taxable income may never be an amount in excess
    of the net operating loss for the taxable year as defined
    in subsections (c) and (d) of Section 172 of the Internal
    Revenue  Code,  provided  that  when  taxable income of a
    corporation (other  than  a  Subchapter  S  corporation),
    trust,   or   estate  is  less  than  zero  and  addition
    modifications, other than those provided by  subparagraph
    (E)  of  paragraph (2) of subsection (b) for corporations
    or subparagraph (E) of paragraph (2)  of  subsection  (c)
    for trusts and estates, exceed subtraction modifications,
    an   addition  modification  must  be  made  under  those
    subparagraphs for any other taxable  year  to  which  the
    taxable  income  less  than  zero (net operating loss) is
    applied under Section 172 of the Internal Revenue Code or
    under  subparagraph  (E)  of  paragraph   (2)   of   this
    subsection (e) applied in conjunction with Section 172 of
    the Internal Revenue Code.
         (2)  Special rule.  For purposes of paragraph (1) of
    this  subsection,  the taxable income properly reportable
    for federal income tax purposes shall mean:
              (A)  Certain life insurance companies.  In  the
         case  of a life insurance company subject to the tax
         imposed by Section 801 of the Internal Revenue Code,
         life insurance  company  taxable  income,  plus  the
         amount  of  distribution  from pre-1984 policyholder
         surplus accounts as calculated under Section 815a of
         the Internal Revenue Code;
              (B)  Certain other insurance companies.  In the
         case of mutual insurance companies  subject  to  the
         tax  imposed  by Section 831 of the Internal Revenue
         Code, insurance company taxable income;
              (C)  Regulated investment  companies.   In  the
         case  of  a  regulated investment company subject to
         the tax imposed  by  Section  852  of  the  Internal
         Revenue Code, investment company taxable income;
              (D)  Real  estate  investment  trusts.   In the
         case of a real estate investment  trust  subject  to
         the  tax  imposed  by  Section  857  of the Internal
         Revenue Code, real estate investment  trust  taxable
         income;
              (E)  Consolidated corporations.  In the case of
         a  corporation  which  is  a member of an affiliated
         group of corporations filing a  consolidated  income
         tax  return  for the taxable year for federal income
         tax purposes, taxable income determined as  if  such
         corporation  had filed a separate return for federal
         income tax purposes for the taxable  year  and  each
         preceding  taxable year for which it was a member of
         an  affiliated   group.   For   purposes   of   this
         subparagraph, the taxpayer's separate taxable income
         shall  be  determined as if the election provided by
         Section 243(b) (2) of the Internal Revenue Code  had
         been in effect for all such years;
              (F)  Cooperatives.     In   the   case   of   a
         cooperative corporation or association, the  taxable
         income of such organization determined in accordance
         with  the provisions of Section 1381 through 1388 of
         the Internal Revenue Code;
              (G)  Subchapter S corporations.   In  the  case
         of:  (i)  a Subchapter S corporation for which there
         is in effect an election for the taxable year  under
         Section  1362  of  the  Internal  Revenue  Code, the
         taxable income of  such  corporation  determined  in
         accordance  with  Section  1363(b)  of  the Internal
         Revenue Code, except that taxable income shall  take
         into  account  those  items  which  are  required by
         Section 1363(b)(1) of the Internal Revenue  Code  to
         be  separately  stated;  and  (ii)  a  Subchapter  S
         corporation  for  which there is in effect a federal
         election  to  opt  out  of  the  provisions  of  the
         Subchapter S Revision Act of 1982 and  have  applied
         instead  the  prior federal Subchapter S rules as in
         effect on July 1, 1982, the taxable income  of  such
         corporation   determined   in  accordance  with  the
         federal Subchapter S rules as in effect on  July  1,
         1982; and
              (H)  Partnerships.     In   the   case   of   a
         partnership, taxable income determined in accordance
         with Section  703  of  the  Internal  Revenue  Code,
         except  that  taxable income shall take into account
         those items which are required by Section  703(a)(1)
         to  be  separately  stated  but which would be taken
         into account by an  individual  in  calculating  his
         taxable income.

    (f)  Valuation limitation amount.
         (1)  In  general.   The  valuation limitation amount
    referred to in subsections (a) (2) (G), (c) (2)  (I)  and
    (d)(2) (E) is an amount equal to:
              (A)  The   sum   of   the  pre-August  1,  1969
         appreciation amounts (to the  extent  consisting  of
         gain reportable under the provisions of Section 1245
         or  1250  of  the  Internal  Revenue  Code)  for all
         property in respect of which such gain was  reported
         for the taxable year; plus
              (B)  The   lesser   of   (i)  the  sum  of  the
         pre-August 1,  1969  appreciation  amounts  (to  the
         extent  consisting of capital gain) for all property
         in respect of  which  such  gain  was  reported  for
         federal income tax purposes for the taxable year, or
         (ii)  the  net  capital  gain  for the taxable year,
         reduced in either case by any amount  of  such  gain
         included  in  the amount determined under subsection
         (a) (2) (F) or (c) (2) (H).
    (2)  Pre-August 1, 1969 appreciation amount.
              (A)  If  the  fair  market  value  of  property
         referred   to   in   paragraph   (1)   was   readily
         ascertainable on August 1, 1969, the  pre-August  1,
         1969  appreciation  amount  for such property is the
         lesser of (i) the excess of such fair  market  value
         over the taxpayer's basis (for determining gain) for
         such  property  on  that  date (determined under the
         Internal Revenue Code as in effect on that date), or
         (ii) the total  gain  realized  and  reportable  for
         federal  income tax purposes in respect of the sale,
         exchange or other disposition of such property.
              (B)  If  the  fair  market  value  of  property
         referred  to  in  paragraph  (1)  was  not   readily
         ascertainable  on  August 1, 1969, the pre-August 1,
         1969 appreciation amount for such property  is  that
         amount  which bears the same ratio to the total gain
         reported in respect  of  the  property  for  federal
         income  tax  purposes  for  the taxable year, as the
         number of full calendar months in that part  of  the
         taxpayer's  holding  period  for the property ending
         July 31, 1969 bears to the number of  full  calendar
         months  in  the taxpayer's entire holding period for
         the property.
              (C)  The  Department   shall   prescribe   such
         regulations  as  may  be  necessary to carry out the
         purposes of this paragraph.

    (g)  Double  deductions.   Unless  specifically  provided
otherwise, nothing in this Section shall permit the same item
to be deducted more than once.

    (h)  Legislative intention.  Except as expressly provided
by  this  Section  there  shall  be   no   modifications   or
limitations on the amounts of income, gain, loss or deduction
taken  into  account  in  determining  gross income, adjusted
gross  income  or  taxable  income  for  federal  income  tax
purposes for the taxable year, or in the amount of such items
entering into the computation of base income and  net  income
under  this  Act for such taxable year, whether in respect of
property values as of August 1, 1969 or otherwise.
(Source: P.A.  89-89,  eff.  6-30-95;  89-235,  eff.  8-4-95;
89-418,  eff.  11-15-95;  89-460,  eff. 5-24-96; 89-626, eff.
8-9-96; 90-491, eff. 1-1-98;  90-717,  eff.  8-7-98;  90-770,
eff. 8-14-98; revised 9-21-98.)

    Section  10.   The Illinois Public Aid Code is amended by
changing Sections 3-1.2, 3-5, 4-1.6, 4-2,  5-2,  5-4,  6-1.2,
and 6-2 as follows:

    (305 ILCS 5/3-1.2) (from Ch. 23, par. 3-1.2)
    Sec.  3-1.2.  Need.  Income available to the person, when
added to contributions in money, substance, or services  from
other   sources,   including   contributions   from   legally
responsible  relatives,  must  be  insufficient  to equal the
grant amount established by Department  regulation  for  such
person.
    In  determining  earned  income to be taken into account,
consideration shall  be  given  to  any  expenses  reasonably
attributable to the earning of such income. If federal law or
regulations  permit  or  require exemption of earned or other
income and resources, the Illinois Department  shall  provide
by  rule  and  regulation  that  the  amount  of income to be
disregarded  be  increased  (1)  to  the  maximum  extent  so
required and (2) to the maximum extent permitted  by  federal
law  or  regulation  in effect as of the date this Amendatory
Act becomes law. The Illinois Department may also provide  by
rule  and  regulation  that  the  amount  of  resources to be
disregarded be increased to the maximum extent  so  permitted
or required.
    In  determining  the  resources  of  an individual or any
dependents, the Department shall exclude  from  consideration
the  value  of  funeral  and burial spaces, grave markers and
other funeral and  burial  merchandise,  funeral  and  burial
insurance  the  proceeds of which can only be used to pay the
funeral  and  burial  expenses  of  the  insured  and   funds
specifically   set   aside   for   the   funeral  and  burial
arrangements of the individual  or  his  or  her  dependents,
including  prepaid  funeral  and  burial  plans,  to the same
extent that such items are excluded from consideration  under
the federal Supplemental Security Income program.
    The  homestead  shall be exempt from consideration except
to the extent that it meets the income and shelter  needs  of
the   person.   "Homestead"  means  the  dwelling  house  and
contiguous real estate owned  and  occupied  by  the  person,
regardless of its value.
    Occasional  or irregular gifts in cash, goods or services
from persons who are not legally responsible relatives  which
are  of nominal value or which do not have significant effect
in meeting essential requirements shall be disregarded.   The
eligibility  of  any applicant for or recipient of public aid
under this Article is not affected  by  the  payment  of  any
grant   under  the  "Senior  Citizens  and  Disabled  Persons
Property Tax Relief and Pharmaceutical Assistance Act" or any
distributions or items of income described under subparagraph
(X) of paragraph (2) of subsection (a) of Section 203 of  the
Illinois Income Tax Act.
    The    Illinois   Department   may,   after   appropriate
investigation,  establish  and   implement   a   consolidated
standard  to determine need and eligibility for and amount of
benefits under this Article or a uniform cash  supplement  to
the  federal  Supplemental Security Income program for all or
any part of the then current recipients under  this  Article;
provided,  however,  that the establishment or implementation
of  such  a  standard  or  supplement  shall  not  result  in
reductions in  benefits  under  this  Article  for  the  then
current recipients of such benefits.
(Source: P.A. 84-1308.)

    (305 ILCS 5/3-5) (from Ch. 23, par. 3-5)
    Sec.  3-5.  Amount  of  aid.   The  amount  and nature of
financial aid granted to or in  behalf  of  aged,  blind,  or
disabled  persons  shall be determined in accordance with the
standards,  grant  amounts,  rules  and  regulations  of  the
Illinois  Department.  Due  regard  shall  be  given  to  the
requirements and conditions existing in each case, and to the
amount of property owned and the income, money contributions,
and other support, and resources received  or  obtainable  by
the  person,  from  whatever  source. However, the amount and
nature of any financial aid is not affected by the payment of
any grant under the "Senior  Citizens  and  Disabled  Persons
Property Tax Relief and Pharmaceutical Assistance Act" or any
distributions or items of income described under subparagraph
(X)  of paragraph (2) of subsection (a) of Section 203 of the
Illinois Income Tax Act. The aid shall  be  sufficient,  when
added  to  all other income, money contributions and support,
to provide the person with a grant in the amount  established
by  Department  regulation  for  such  a  person,  based upon
standards providing a livelihood compatible with  health  and
well-being.
(Source: P.A. 84-832.)

    (305 ILCS 5/4-1.6) (from Ch. 23, par. 4-1.6)
    Sec.  4-1.6.  Need.   Income  available  to the family as
defined by the Illinois Department by rule, or to  the  child
in  the  case  of  a child removed from his or her home, when
added to contributions in money, substance or  services  from
other sources, including income available from parents absent
from  the  home  or from a stepparent, contributions made for
the benefit of the  parent  or  other  persons  necessary  to
provide  care and supervision to the child, and contributions
from legally responsible relatives, must be  insufficient  to
equal  the  grant amount established by Department regulation
for such a person.
    In  considering  income  to  be   taken   into   account,
consideration  shall  be  given  to  any  expenses reasonably
attributable to the earning  of  such  income.  The  Illinois
Department  may  also,  subject to such limitations as may be
prescribed by federal law or regulation, permit  all  or  any
portion  of  earned  or  other income to be set aside for the
future identifiable needs of  a  child.  If  federal  law  or
regulations  permit  or  require exemption of other income of
recipients, the Illinois Department may provide by  rule  and
regulation  for  the  exemptions  thus permitted or required.
The eligibility of any applicant for or recipient  of  public
aid  under this Article is not affected by the payment of any
grant  under  the  "Senior  Citizens  and  Disabled   Persons
Property Tax Relief and Pharmaceutical Assistance Act" or any
distributions or items of income described under subparagraph
(X)  of paragraph (2) of subsection (a) of Section 203 of the
Illinois Income Tax Act.
    The Illinois Department may, by rule, set forth  criteria
under  which  an  assistance  unit  is  ineligible  for  cash
assistance  under  this  Article  for  a  specified number of
months due to the receipt of a lump sum payment.
(Source: P.A. 90-17, eff. 7-1-97.)

    (305 ILCS 5/4-2) (from Ch. 23, par. 4-2)
    Sec. 4-2.  Amount of aid.
    (a)  The amount and nature  of  financial  aid  shall  be
determined  in  accordance  with the grant amounts, rules and
regulations of the Illinois Department. Due regard  shall  be
given  to the self-sufficiency requirements of the family and
to the income, money  contributions  and  other  support  and
resources available, from whatever source.  Beginning July 1,
1992,  the  supplementary  grants  previously paid under this
Section shall no longer be paid.   However,  the  amount  and
nature of any financial aid is not affected by the payment of
any  grant  under  the  "Senior Citizens and Disabled Persons
Property Tax Relief and Pharmaceutical Assistance Act" or any
distributions or items of income described under subparagraph
(X) of paragraph (2) of subsection (a) of Section 203 of  the
Illinois  Income  Tax  Act. The aid shall be sufficient, when
added to all other income, money contributions and support to
provide the family with a grant in the amount established  by
Department regulation.
    (b)  The   Illinois   Department   may   conduct  special
projects, which may be known  as  Grant  Diversion  Projects,
under  which  recipients  of financial aid under this Article
are placed in jobs and  their  grants  are  diverted  to  the
employer  who in turn makes payments to the recipients in the
form of salary or other employment  benefits.   The  Illinois
Department  shall by rule specify the terms and conditions of
such Grant Diversion Projects.  Such projects shall take into
consideration  and   be   coordinated   with   the   programs
administered   under   the   Illinois   Emergency  Employment
Development Act.
    (c)  The amount and nature of the  financial  aid  for  a
child requiring care outside his own home shall be determined
in  accordance with the rules and regulations of the Illinois
Department, with due regard to the needs and requirements  of
the  child  in the foster home or institution in which he has
been placed.
    (d)  If the  Department  establishes  grants  for  family
units  consisting  exclusively  of  a  pregnant woman with no
dependent child or including her husband if living with  her,
the  grant amount for such a unit shall be equal to the grant
amount for an assistance unit consisting of one adult,  or  2
persons  if  the  husband  is included.  Other than as herein
described,  an  unborn  child  shall  not   be   counted   in
determining the size of an assistance unit or for calculating
grants.
    Payments for basic maintenance requirements of a child or
children and the relative with whom the child or children are
living   shall  be  prescribed,  by  rule,  by  the  Illinois
Department.
These grants may be increased in the following circumstances:
         1.  If the child is living with both parents or with
    persons standing in the relationship of parents,  and  if
    the  grant is necessitated because of the unemployment or
    insufficient  earnings  of  the  parent  or  parents  and
    neither  parent  is   receiving   benefits   under   "The
    Unemployment  Compensation  Act", approved June 30, 1937,
    as amended, the maximum may be increased by not more than
    $25.
         2.  If a child is age 13 or over, the maximum may be
    increased by not more than $15.
    The allowances provided under Article IX  for  recipients
participating  in  the  training  and rehabilitation programs
shall be in addition to the maximum payments  established  in
this Section.
    Grants  under  this  Article shall not be supplemented by
General Assistance provided under Article VI.
    (e)  Grants shall be paid to the parent or  other  person
with  whom  the child or children are living, except for such
amount as is paid in behalf of the child  or  his  parent  or
other  relative to other persons or agencies pursuant to this
Code or the rules and regulations of the Illinois Department.
    (f)  An assistance unit, receiving  financial  aid  under
this  Article  or temporarily ineligible to receive aid under
this  Article  under  a  penalty  imposed  by  the   Illinois
Department   for  failure  to  comply  with  the  eligibility
requirements or  that  voluntarily  requests  termination  of
financial   assistance   under   this   Article  and  becomes
subsequently eligible for assistance within 9  months,  shall
not  receive  any  increase  in  the  amount of aid solely on
account of the birth of a child; except that an  increase  is
not prohibited when the birth is (i) of a child of a pregnant
woman  who  became eligible for aid under this Article during
the pregnancy, or (ii) of a child born within 10 months after
the date of implementation of this subsection, or  (iii) of a
child  conceived  after  a  family  became   ineligible   for
assistance due to income or marriage and at least 3 months of
ineligibility    expired   before   any   reapplication   for
assistance.  This subsection does  not,  however,  prevent  a
unit  from  receiving a general increase in the amount of aid
that is provided to all recipients of aid under this Article.
    The Illinois Department is authorized to transfer  funds,
and  shall  use  any  budgetary  savings  attributable to not
increasing  the  grants  due  to  the  births  of  additional
children, to supplement existing funding for  employment  and
training  services  for  recipients of aid under this Article
IV.  The Illinois Department shall target, to the extent  the
supplemental funding allows, employment and training services
to the families who do not receive a grant increase after the
birth of a child.  In addition, the Illinois Department shall
provide,  to the extent the supplemental funding allows, such
families with up to 24  months  of  transitional  child  care
pursuant   to   Illinois  Department  rules.   All  remaining
supplemental funds shall be used for employment and  training
services or transitional child care support.
    In  making  the  transfers authorized by this subsection,
the Illinois Department shall first  determine,  pursuant  to
regulations  adopted  by  the  Illinois  Department for  this
purpose, the amount of savings attributable to not increasing
the  grants  due  to  the  births  of  additional   children.
Transfers   may   be   made   from   General   Revenue   Fund
appropriations   for   distributive  purposes  authorized  by
Article  IV  of  this  Code  only  to  General  Revenue  Fund
appropriations   for   employability   development   services
including operating  and  administrative  costs  and  related
distributive  purposes  under  Article  IXA of this Code. The
Director, with the approval of the  Governor,  shall  certify
the amount and affected line item appropriations to the State
Comptroller.
    The  Illinois  Department  shall apply for all waivers of
federal law  and  regulations  necessary  to  implement  this
subsection;  implementation  of this subsection is contingent
on the Illinois Department receiving  all  necessary  federal
waivers.    The   Illinois   Department  may  implement  this
subsection through the use of emergency rules  in  accordance
with  Section  5-45  of the Illinois Administrative Procedure
Act.  For purposes of the Illinois  Administrative  Procedure
Act, the adoption of rules to implement this subsection shall
be  considered  an  emergency  and  necessary  for the public
interest, safety, and welfare.
    Nothing in this subsection shall be construed to prohibit
the Illinois Department from using funds under  this  Article
IV  to provide assistance in the form of vouchers that may be
used to pay for goods and services  deemed  by  the  Illinois
Department,  by  rule,  as suitable for the care of the child
such as diapers, clothing, school supplies, and cribs.
    (g)  (Blank).
    (h)  Notwithstanding any other provision  of  this  Code,
the  Illinois  Department  is  authorized  to  reduce payment
levels used to determine cash grants under this Article after
December 31 of any fiscal year  if  the  Illinois  Department
determines  that  the  caseload upon which the appropriations
for the current fiscal year are based have increased by  more
than  5%  and  the  appropriation is not sufficient to ensure
that cash benefits under  this  Article  do  not  exceed  the
amounts  appropriated for those cash benefits.  Reductions in
payment levels may be accomplished by  emergency  rule  under
Section  5-45  of  the Illinois Administrative Procedure Act,
except that the limitation on the number of  emergency  rules
that  may be adopted in a 24-month period shall not apply and
the provisions of Sections 5-115 and 5-125  of  the  Illinois
Administrative  Procedure  Act  shall not apply. Increases in
payment levels shall be accomplished only in accordance  with
Section  5-40  of  the Illinois Administrative Procedure Act.
Before any rule to increase payment levels promulgated  under
this  Section  shall  become  effective,  a  joint resolution
approving the rule must be adopted by a roll call vote  by  a
majority  of  the  members  elected  to  each  chamber of the
General Assembly.
(Source:  P.A.  89-6,  eff.  3-6-95;  89-193,  eff.  7-21-95;
89-641, eff. 8-9-96; 90-17, eff. 7-1-97; 90-372, eff. 7-1-98;
90-655, eff. 7-30-98.)

    (305 ILCS 5/5-2) (from Ch. 23, par. 5-2)
    Sec.  5-2.  Classes   of   Persons   Eligible.    Medical
assistance  under  this  Article shall be available to any of
the following classes of persons in respect to  whom  a  plan
for  coverage  has  been  submitted  to  the  Governor by the
Illinois Department and approved by him:
    1.  Recipients of basic maintenance grants under Articles
III and IV.
    2.  Persons  otherwise  eligible  for  basic  maintenance
under Articles III and IV but who fail to qualify  thereunder
on  the  basis  of need, and who have insufficient income and
resources to  meet  the  costs  of  necessary  medical  care,
including  but  not  limited  to,  all  persons  who would be
determined eligible for such basic maintenance under  Article
IV  by  disregarding  the  maximum earned income permitted by
federal law.
    3.  Persons who would otherwise qualify for  Aid  to  the
Medically Indigent under Article VII.
    4.  Persons  not  eligible  under  any  of  the preceding
paragraphs who fall sick, are injured,  or  die,  not  having
sufficient  money,  property  or  other resources to meet the
costs  of  necessary  medical  care  or  funeral  and  burial
expenses.
    5. (a)  Women  during  pregnancy,  after  the   fact   of
    pregnancy  has  been determined by medical diagnosis, and
    during the 60-day period beginning on the last day of the
    pregnancy, together with their infants and children  born
    after  September 30, 1983, whose income and resources are
    insufficient to meet the costs of necessary medical  care
    to  the  maximum  extent  possible under Title XIX of the
    Federal Social Security Act.
         (b)  The Illinois Department and the Governor  shall
    provide a plan for coverage of the persons eligible under
    paragraph 5(a) by April 1, 1990.  Such plan shall provide
    ambulatory  prenatal  care  to  pregnant  women  during a
    presumptive eligibility period and  establish  an  income
    eligibility standard that is equal to 133% of the nonfarm
    income  official  poverty line, as defined by the federal
    Office of Management and Budget and revised  annually  in
    accordance  with  Section  673(2)  of  the Omnibus Budget
    Reconciliation Act of 1981, applicable to families of the
    same size, provided that costs incurred for medical  care
    are  not  taken  into  account in determining such income
    eligibility.
         (c)  The   Illinois   Department   may   conduct   a
    demonstration in at least one county  that  will  provide
    medical assistance to pregnant women, together with their
    infants  and  children  up  to one year of age, where the
    income eligibility standard is set  up  to  185%  of  the
    nonfarm  income  official poverty line, as defined by the
    federal Office of Management and Budget.    The  Illinois
    Department  shall seek and obtain necessary authorization
    provided  under  federal  law   to   implement   such   a
    demonstration.  Such demonstration may establish resource
    standards  that  are  not  more  restrictive  than  those
    established under Article IV of this Code.
    6.  Persons  under  the  age of 18 who fail to qualify as
dependent under Article IV and who have  insufficient  income
and  resources to meet the costs of necessary medical care to
the maximum extent permitted under Title XIX of  the  Federal
Social Security Act.
    7.  Persons  who are 18 years of age or younger and would
qualify as disabled as defined under the Federal Supplemental
Security Income Program, provided medical  service  for  such
persons    would    be   eligible   for   Federal   Financial
Participation,   and   provided   the   Illinois   Department
determines that:
         (a)  the person requires a level of care provided by
    a hospital, skilled  nursing  facility,  or  intermediate
    care  facility,  as determined by a physician licensed to
    practice medicine in all its branches;
         (b)  it is appropriate to provide such care  outside
    of  an institution, as determined by a physician licensed
    to practice medicine in all its branches;
         (c)  the estimated amount which  would  be  expended
    for  care outside the institution is not greater than the
    estimated  amount  which  would   be   expended   in   an
    institution.
    8.  Persons  who  become ineligible for basic maintenance
assistance  under  Article  IV  of  this  Code  in   programs
administered  by  the  Illinois  Department due to employment
earnings and persons in assistance units comprised of  adults
and  children  who  become  ineligible  for basic maintenance
assistance under Article VI of this Code  due  to  employment
earnings.   The  plan  for coverage for this class of persons
shall:
         (a)  extend the medical assistance coverage  for  up
    to  12  months following termination of basic maintenance
    assistance; and
         (b)  offer persons who  have  initially  received  6
    months  of  the coverage provided in paragraph (a) above,
    the  option  of  receiving  an  additional  6  months  of
    coverage, subject to the following:
              (i)  such  coverage  shall   be   pursuant   to
         provisions of the federal Social Security Act;
              (ii)  such  coverage shall include all services
         covered while the  person  was  eligible  for  basic
         maintenance assistance;
              (iii)  no  premium  shall  be  charged for such
         coverage; and
              (iv)  such coverage shall be suspended  in  the
         event  of  a  person's failure without good cause to
         file in a timely fashion reports required  for  this
         coverage  under the Social Security Act and coverage
         shall be reinstated upon the filing of such  reports
         if the person remains otherwise eligible.
    9.  Persons   with   acquired  immunodeficiency  syndrome
(AIDS) or with AIDS-related conditions with respect  to  whom
there   has  been  a  determination  that  but  for  home  or
community-based services such individuals would  require  the
level  of  care  provided  in  an inpatient hospital, skilled
nursing facility or intermediate care facility  the  cost  of
which  is reimbursed under this Article.  Assistance shall be
provided to such persons  to  the  maximum  extent  permitted
under Title XIX of the Federal Social Security Act.
    10.  Participants   in   the   long-term  care  insurance
partnership program established  under  the  Partnership  for
Long-Term Care Act who meet the qualifications for protection
of resources described in Section 25 of that Act.
    The  Illinois Department and the Governor shall provide a
plan for coverage of the persons eligible under  paragraph  7
as soon as possible after July 1, 1984.
    The eligibility of any such person for medical assistance
under  this  Article  is  not  affected by the payment of any
grant under the Senior Citizens and Disabled Persons Property
Tax  Relief  and  Pharmaceutical  Assistance   Act   or   any
distributions or items of income described under subparagraph
(X)  of paragraph (2) of subsection (a) of Section 203 of the
Illinois Income  Tax  Act.   The  Department  shall  by  rule
establish   the  amounts  of  assets  to  be  disregarded  in
determining eligibility for medical assistance,  which  shall
at  a  minimum  equal the amounts to be disregarded under the
Federal Supplemental Security Income Program.  The amount  of
assets of a single person to be disregarded shall not be less
than  $2,000, and the amount of assets of a married couple to
be disregarded shall not be less than $3,000.
    To the extent permitted under  federal  law,  any  person
found  guilty of a second violation of Article VIIIA shall be
ineligible for medical  assistance  under  this  Article,  as
provided in Section 8A-8.
    The  eligibility  of  any  person  for medical assistance
under this Article shall not be affected by  the  receipt  by
the person of donations or benefits from fundraisers held for
the  person  in  cases of serious illness, as long as neither
the person nor members of the  person's  family  have  actual
control over the donations or benefits or the disbursement of
the donations or benefits.
(Source: P.A. 89-525, eff. 7-19-96.)

    (305 ILCS 5/5-4) (from Ch. 23, par. 5-4)
    Sec.  5-4.  Amount and nature of medical assistance.  The
amount and nature of medical assistance shall  be  determined
by  the  County Departments in accordance with the standards,
rules, and regulations of the Illinois Department  of  Public
Aid,  with  due  regard to the requirements and conditions in
each case, including  contributions  available  from  legally
responsible  relatives.   However,  the  amount and nature of
such medical assistance shall not be affected by the  payment
of  any  grant under the Senior Citizens and Disabled Persons
Property Tax Relief and Pharmaceutical Assistance Act or  any
distributions or items of income described under subparagraph
(X)  of paragraph (2) of subsection (a) of Section 203 of the
Illinois Income Tax Act.  The amount and  nature  of  medical
assistance  shall not be affected by the receipt of donations
or benefits from fundraisers in cases of serious illness,  as
long as neither the person nor members of the person's family
have  actual  control  over  the donations or benefits or the
disbursement of the donations or benefits.
    In determining the income and  assets  available  to  the
institutionalized  spouse  and  to  the community spouse, the
Illinois Department of Public Aid shall follow the procedures
established by federal law.  The  community  spouse  resource
allowance  shall be established and maintained at the maximum
level permitted pursuant to Section 1924(f)(2) of the  Social
Security  Act,  as now or hereafter amended, or an amount set
after a fair hearing,  whichever  is  greater.   The  monthly
maintenance  allowance  for  the  community  spouse  shall be
established and maintained at  the  maximum  level  permitted
pursuant to Section 1924(d)(3)(C) of the Social Security Act,
as  now or hereafter amended.  Subject to the approval of the
Secretary of the United States Department of Health and Human
Services, the provisions of this Section shall be extended to
persons who but for the provision of home or  community-based
services under Section 4.02 of the Illinois Act on the Aging,
would  require  the level of care provided in an institution,
as is provided for in federal law.
    The Department of Human Services shall notify in  writing
each  institutionalized  spouse who is a recipient of medical
assistance  under  this  Article,  and  each  such   person's
community  spouse,  of the changes in treatment of income and
resources, including provisions for protecting income  for  a
community  spouse and permitting the transfer of resources to
a community spouse, required  by  enactment  of  the  federal
Medicare  Catastrophic  Coverage  Act  of  1988  (Public  Law
100-360).  The notification shall be in language likely to be
easily  understood by those persons.  The Department of Human
Services also shall reassess the amount of medical assistance
for which each such recipient is eligible as a result of  the
enactment  of  that  federal  Act, whether or not a recipient
requests such a reassessment.
(Source: P.A. 89-507, eff. 7-1-97; 90-655, eff. 7-30-98.)

    (305 ILCS 5/6-1.2) (from Ch. 23, par. 6-1.2)
    Sec. 6-1.2.  Need. Income available to the  person,  when
added  to contributions in money, substance, or services from
other   sources,   including   contributions   from   legally
responsible relatives, must  be  insufficient  to  equal  the
grant  amount  established  by  Department  regulation (or by
local governmental unit in units which do not  receive  State
funds) for such a person.
    In determining income to be taken into account:
         (1)  The  first  $75  of  earned  income  in  income
    assistance  units  comprised  exclusively  of  one  adult
    person  shall  be  disregarded,  and  for not more than 3
    months in any  12  consecutive  months  that  portion  of
    earned income beyond the first $75 that is the difference
    between  the standard of assistance and the grant amount,
    shall be disregarded.
         (2)  For  income  assistance  units  not   comprised
    exclusively of one adult person, when authorized by rules
    and  regulations of the Illinois Department, a portion of
    earned income, not to exceed the first $25 a  month  plus
    50%  of  the next $75, may be disregarded for the purpose
    of  stimulating  and  aiding  rehabilitative  effort  and
    self-support activity.
    "Earned income" means money earned in self-employment  or
wages,  salary, or commission for personal services performed
as an employee. The  eligibility  of  any  applicant  for  or
recipient of public aid under this Article is not affected by
the  payment  of  any  grant  under  the "Senior Citizens and
Disabled  Persons  Property  Tax  Relief  and  Pharmaceutical
Assistance Act", or any refund  or  payment  of  the  federal
Earned  Income  Tax  Credit, or any distributions or items of
income described under subparagraph (X) of paragraph  (2)  of
subsection (a) of Section 203 of the Illinois Income Tax Act.
    If  federal  laws  or  regulations  applicable to persons
receiving assistance under Articles III or IV  of  this  Code
permit or require the exemption of earned income in excess of
the  foregoing  limitation  on  earned  income  exemptions or
permit or require the exemption of certain other  income  and
resources,  the  Illinois Department, may, by rule, authorize
comparable exemptions in determining need under this Section.
(Source: P.A. 90-457, eff. 1-1-98.)

    (305 ILCS 5/6-2) (from Ch. 23, par. 6-2)
    Sec. 6-2.  Amount of  aid.   The  amount  and  nature  of
General  Assistance  for basic maintenance requirements shall
be determined in accordance with local budget  standards  for
local  governmental  units  which do not receive State funds.
For local governmental units which do  receive  State  funds,
the  amount  and  nature  of  General  Assistance  for  basic
maintenance  requirements  shall  be determined in accordance
with the standards, rules and  regulations  of  the  Illinois
Department.  Beginning July 1, 1992, the supplementary grants
previously paid under this Section shall no longer  be  paid.
However,  the  amount  and nature of any financial aid is not
affected by  the  payment  of  any  grant  under  the  Senior
Citizens   and  Disabled  Persons  Property  Tax  Relief  and
Pharmaceutical Assistance Act or any distributions  or  items
of  income  described under subparagraph (X) of paragraph (2)
of subsection (a) of Section 203 of the Illinois  Income  Tax
Act.  Due  regard  shall be given to the requirements and the
conditions existing in each case, and to  the  income,  money
contributions and other support and resources available, from
whatever  source.  In  local  governmental units which do not
receive State funds, the grant shall be sufficient when added
to all other  income,  money  contributions  and  support  in
excess  of  any  excluded income or resources, to provide the
person with a grant in the  amount  established  for  such  a
person  by  the  local governmental unit based upon standards
meeting   basic   maintenance   requirements.     In    local
governmental  units  which  do receive State funds, the grant
shall be sufficient when added to  all  other  income,  money
contributions and support in excess of any excluded income or
resources,  to  provide the person with a grant in the amount
established for such a person by Department regulation  based
upon  standards providing a livelihood compatible with health
and well-being, as directed by Section 12-4.11 of this Code.
    The Illinois Department  may  conduct  special  projects,
which  may  be known as Grant Diversion Projects, under which
recipients of financial aid under this Article are placed  in
jobs  and  their  grants  are diverted to the employer who in
turn makes payments to the recipients in the form  of  salary
or  other employment benefits.  The Illinois Department shall
by rule specify  the  terms  and  conditions  of  such  Grant
Diversion   Projects.    Such   projects   shall   take  into
consideration  and   be   coordinated   with   the   programs
administered   under   the   Illinois   Emergency  Employment
Development Act.
    The allowances provided under Article IX  for  recipients
participating  in  the  training  and rehabilitation programs
shall be in addition to such maximum payment.
    Payments may also be made to  provide  persons  receiving
basic  maintenance support with necessary treatment, care and
supplies required because of illness or  disability  or  with
acute  medical  treatment,  care,  and supplies. Payments for
necessary or acute medical care under this paragraph  may  be
made  to or in behalf of the person. Obligations incurred for
such services but not paid for at the time of  a  recipient's
death  may  be  paid, subject to the rules and regulations of
the Illinois Department, after the death of the recipient.
(Source: P.A. 89-646, eff. 1-1-97; 90-372, eff. 7-1-98.)

    Section 15.  The Senior  Citizens  and  Disabled  Persons
Property  Tax  Relief  and  Pharmaceutical  Assistance Act is
amended by changing Section 3.07 as follows:

    (320 ILCS 25/3.07) (from Ch. 67 1/2, par. 403.07)
    Sec.  3.07.   "Income"  means  adjusted   gross   income,
properly reportable for federal income tax purposes under the
provisions  of  the Internal Revenue Code, modified by adding
thereto the sum  of  the  following  amounts  to  the  extent
deducted  or excluded from gross income in the computation of
adjusted gross income:
         (A)  An amount equal to all amounts paid or  accrued
    as interest or dividends during the taxable year;
         (B)  An amount equal to the amount of tax imposed by
    the Illinois Income Tax Act paid for the taxable year;
         (C)  An  amount equal to all amounts received during
    the  taxable  year  as  an  annuity  under  an   annuity,
    endowment  or  life insurance contract or under any other
    contract or agreement;
         (D)  An amount equal to the amount of benefits  paid
    under  the Federal Social Security Act during the taxable
    year;
         (E)  An amount equal to the amount of benefits  paid
    under  the  Railroad  Retirement  Act  during the taxable
    year;
         (F)  An amount equal to the  total  amount  of  cash
    public assistance payments received from any governmental
    agency  during  the  taxable  year  other  than  benefits
    received pursuant to this Act;
         (G)  An  amount  equal  to  any  net  operating loss
    carryover deduction or capital loss  carryover  deduction
    during the taxable year.
    "Income"  does  not include any grant assistance received
under  the  Nursing  Home  Grant  Assistance   Act   or   any
distributions or items of income described under subparagraph
(X)  of paragraph (2) of subsection (a) of Section 203 of the
Illinois Income Tax Act.
    This amendatory  Act  of  1987  shall  be  effective  for
purposes  of  this  Section  for tax years ending on or after
December 31, 1987.
(Source: P.A. 90-491, eff. 1-1-98.)
    Section 99.  Effective date.  This Act takes effect  upon
becoming law.

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