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91_HB1120eng
HB1120 Engrossed LRB9100524PTpkA
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
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1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
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1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
HB1120 Engrossed -7- LRB9100524PTpkA
1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and.
7 (X) For taxable year 1999 and thereafter, an
8 amount equal to the amount of any (i) distributions,
9 to the extent includible in gross income for federal
10 income tax purposes, made to the taxpayer because of
11 his or her status as a victim of persecution for
12 racial or religious reasons by Nazi Germany or any
13 other Axis regime or as an heir of the victim and
14 (ii) items of income, to the extent includible in
15 gross income for federal income tax purposes,
16 attributable to, derived from or in any way related
17 to assets stolen from, hidden from, or otherwise
18 lost to a victim of persecution for racial or
19 religious reasons by Nazi Germany or any other Axis
20 regime immediately prior to, during, and immediately
21 after World War II, including, but not limited to,
22 interest on the proceeds receivable as insurance
23 under policies issued to a victim of persecution for
24 racial or religious reasons by Nazi Germany or any
25 other Axis regime by European insurance companies
26 immediately prior to and during World War II;
27 provided, however, this subtraction from federal
28 adjusted gross income does not apply to assets
29 acquired with such assets or with the proceeds from
30 the sale of such assets; provided, further, this
31 paragraph shall only apply to a taxpayer who was the
32 first recipient of such assets after their recovery
33 and who is a victim of persecution for racial or
34 religious reasons by Nazi Germany or any other Axis
HB1120 Engrossed -8- LRB9100524PTpkA
1 regime or as an heir of the victim. The amount of
2 and the eligibility for any public assistance,
3 benefit, or similar entitlement is not affected by
4 the inclusion of items (i) and (ii) of this
5 paragraph in gross income for federal income tax
6 purposes. This paragraph is exempt from the
7 provisions of Section 250.
8 (b) Corporations.
9 (1) In general. In the case of a corporation, base
10 income means an amount equal to the taxpayer's taxable
11 income for the taxable year as modified by paragraph (2).
12 (2) Modifications. The taxable income referred to
13 in paragraph (1) shall be modified by adding thereto the
14 sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest and all
17 distributions received from regulated investment
18 companies during the taxable year to the extent
19 excluded from gross income in the computation of
20 taxable income;
21 (B) An amount equal to the amount of tax
22 imposed by this Act to the extent deducted from
23 gross income in the computation of taxable income
24 for the taxable year;
25 (C) In the case of a regulated investment
26 company, an amount equal to the excess of (i) the
27 net long-term capital gain for the taxable year,
28 over (ii) the amount of the capital gain dividends
29 designated as such in accordance with Section
30 852(b)(3)(C) of the Internal Revenue Code and any
31 amount designated under Section 852(b)(3)(D) of the
32 Internal Revenue Code, attributable to the taxable
33 year. (this amendatory Act of 1995 (Public Act
34 89-89) is declarative of existing law and is not a
HB1120 Engrossed -9- LRB9100524PTpkA
1 new enactment);.
2 (D) The amount of any net operating loss
3 deduction taken in arriving at taxable income, other
4 than a net operating loss carried forward from a
5 taxable year ending prior to December 31, 1986; and
6 (E) For taxable years in which a net operating
7 loss carryback or carryforward from a taxable year
8 ending prior to December 31, 1986 is an element of
9 taxable income under paragraph (1) of subsection (e)
10 or subparagraph (E) of paragraph (2) of subsection
11 (e), the amount by which addition modifications
12 other than those provided by this subparagraph (E)
13 exceeded subtraction modifications in such earlier
14 taxable year, with the following limitations applied
15 in the order that they are listed:
16 (i) the addition modification relating to
17 the net operating loss carried back or forward
18 to the taxable year from any taxable year
19 ending prior to December 31, 1986 shall be
20 reduced by the amount of addition modification
21 under this subparagraph (E) which related to
22 that net operating loss and which was taken
23 into account in calculating the base income of
24 an earlier taxable year, and
25 (ii) the addition modification relating
26 to the net operating loss carried back or
27 forward to the taxable year from any taxable
28 year ending prior to December 31, 1986 shall
29 not exceed the amount of such carryback or
30 carryforward;
31 For taxable years in which there is a net
32 operating loss carryback or carryforward from more
33 than one other taxable year ending prior to December
34 31, 1986, the addition modification provided in this
HB1120 Engrossed -10- LRB9100524PTpkA
1 subparagraph (E) shall be the sum of the amounts
2 computed independently under the preceding
3 provisions of this subparagraph (E) for each such
4 taxable year;, and
5 (E-5) For taxable years ending after December
6 31, 1997, an amount equal to any eligible
7 remediation costs that the corporation deducted in
8 computing adjusted gross income and for which the
9 corporation claims a credit under subsection (l) of
10 Section 201;
11 and by deducting from the total so obtained the sum of
12 the following amounts:
13 (F) An amount equal to the amount of any tax
14 imposed by this Act which was refunded to the
15 taxpayer and included in such total for the taxable
16 year;
17 (G) An amount equal to any amount included in
18 such total under Section 78 of the Internal Revenue
19 Code;
20 (H) In the case of a regulated investment
21 company, an amount equal to the amount of exempt
22 interest dividends as defined in subsection (b) (5)
23 of Section 852 of the Internal Revenue Code, paid to
24 shareholders for the taxable year;
25 (I) With the exception of any amounts
26 subtracted under subparagraph (J), an amount equal
27 to the sum of all amounts disallowed as deductions
28 by Sections 171(a) (2), and 265(a)(2) and amounts
29 disallowed as interest expense by Section 291(a)(3)
30 of the Internal Revenue Code, as now or hereafter
31 amended, and all amounts of expenses allocable to
32 interest and disallowed as deductions by Section
33 265(a)(1) of the Internal Revenue Code, as now or
34 hereafter amended;
HB1120 Engrossed -11- LRB9100524PTpkA
1 (J) An amount equal to all amounts included in
2 such total which are exempt from taxation by this
3 State either by reason of its statutes or
4 Constitution or by reason of the Constitution,
5 treaties or statutes of the United States; provided
6 that, in the case of any statute of this State that
7 exempts income derived from bonds or other
8 obligations from the tax imposed under this Act, the
9 amount exempted shall be the interest net of bond
10 premium amortization;
11 (K) An amount equal to those dividends
12 included in such total which were paid by a
13 corporation which conducts business operations in an
14 Enterprise Zone or zones created under the Illinois
15 Enterprise Zone Act and conducts substantially all
16 of its operations in an Enterprise Zone or zones;
17 (L) An amount equal to those dividends
18 included in such total that were paid by a
19 corporation that conducts business operations in a
20 federally designated Foreign Trade Zone or Sub-Zone
21 and that is designated a High Impact Business
22 located in Illinois; provided that dividends
23 eligible for the deduction provided in subparagraph
24 (K) of paragraph 2 of this subsection shall not be
25 eligible for the deduction provided under this
26 subparagraph (L);
27 (M) For any taxpayer that is a financial
28 organization within the meaning of Section 304(c) of
29 this Act, an amount included in such total as
30 interest income from a loan or loans made by such
31 taxpayer to a borrower, to the extent that such a
32 loan is secured by property which is eligible for
33 the Enterprise Zone Investment Credit. To determine
34 the portion of a loan or loans that is secured by
HB1120 Engrossed -12- LRB9100524PTpkA
1 property eligible for a Section 201(h) investment
2 credit to the borrower, the entire principal amount
3 of the loan or loans between the taxpayer and the
4 borrower should be divided into the basis of the
5 Section 201(h) investment credit property which
6 secures the loan or loans, using for this purpose
7 the original basis of such property on the date that
8 it was placed in service in the Enterprise Zone.
9 The subtraction modification available to taxpayer
10 in any year under this subsection shall be that
11 portion of the total interest paid by the borrower
12 with respect to such loan attributable to the
13 eligible property as calculated under the previous
14 sentence;
15 (M-1) For any taxpayer that is a financial
16 organization within the meaning of Section 304(c) of
17 this Act, an amount included in such total as
18 interest income from a loan or loans made by such
19 taxpayer to a borrower, to the extent that such a
20 loan is secured by property which is eligible for
21 the High Impact Business Investment Credit. To
22 determine the portion of a loan or loans that is
23 secured by property eligible for a Section 201(i)
24 investment credit to the borrower, the entire
25 principal amount of the loan or loans between the
26 taxpayer and the borrower should be divided into the
27 basis of the Section 201(i) investment credit
28 property which secures the loan or loans, using for
29 this purpose the original basis of such property on
30 the date that it was placed in service in a
31 federally designated Foreign Trade Zone or Sub-Zone
32 located in Illinois. No taxpayer that is eligible
33 for the deduction provided in subparagraph (M) of
34 paragraph (2) of this subsection shall be eligible
HB1120 Engrossed -13- LRB9100524PTpkA
1 for the deduction provided under this subparagraph
2 (M-1). The subtraction modification available to
3 taxpayers in any year under this subsection shall be
4 that portion of the total interest paid by the
5 borrower with respect to such loan attributable to
6 the eligible property as calculated under the
7 previous sentence;
8 (N) Two times any contribution made during the
9 taxable year to a designated zone organization to
10 the extent that the contribution (i) qualifies as a
11 charitable contribution under subsection (c) of
12 Section 170 of the Internal Revenue Code and (ii)
13 must, by its terms, be used for a project approved
14 by the Department of Commerce and Community Affairs
15 under Section 11 of the Illinois Enterprise Zone
16 Act;
17 (O) An amount equal to: (i) 85% for taxable
18 years ending on or before December 31, 1992, or, a
19 percentage equal to the percentage allowable under
20 Section 243(a)(1) of the Internal Revenue Code of
21 1986 for taxable years ending after December 31,
22 1992, of the amount by which dividends included in
23 taxable income and received from a corporation that
24 is not created or organized under the laws of the
25 United States or any state or political subdivision
26 thereof, including, for taxable years ending on or
27 after December 31, 1988, dividends received or
28 deemed received or paid or deemed paid under
29 Sections 951 through 964 of the Internal Revenue
30 Code, exceed the amount of the modification provided
31 under subparagraph (G) of paragraph (2) of this
32 subsection (b) which is related to such dividends;
33 plus (ii) 100% of the amount by which dividends,
34 included in taxable income and received, including,
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1 for taxable years ending on or after December 31,
2 1988, dividends received or deemed received or paid
3 or deemed paid under Sections 951 through 964 of the
4 Internal Revenue Code, from any such corporation
5 specified in clause (i) that would but for the
6 provisions of Section 1504 (b) (3) of the Internal
7 Revenue Code be treated as a member of the
8 affiliated group which includes the dividend
9 recipient, exceed the amount of the modification
10 provided under subparagraph (G) of paragraph (2) of
11 this subsection (b) which is related to such
12 dividends;
13 (P) An amount equal to any contribution made
14 to a job training project established pursuant to
15 the Tax Increment Allocation Redevelopment Act; and
16 (Q) An amount equal to the amount of the
17 deduction used to compute the federal income tax
18 credit for restoration of substantial amounts held
19 under claim of right for the taxable year pursuant
20 to Section 1341 of the Internal Revenue Code of
21 1986.
22 (3) Special rule. For purposes of paragraph (2)
23 (A), "gross income" in the case of a life insurance
24 company, for tax years ending on and after December 31,
25 1994, shall mean the gross investment income for the
26 taxable year.
27 (c) Trusts and estates.
28 (1) In general. In the case of a trust or estate,
29 base income means an amount equal to the taxpayer's
30 taxable income for the taxable year as modified by
31 paragraph (2).
32 (2) Modifications. Subject to the provisions of
33 paragraph (3), the taxable income referred to in
34 paragraph (1) shall be modified by adding thereto the sum
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1 of the following amounts:
2 (A) An amount equal to all amounts paid or
3 accrued to the taxpayer as interest or dividends
4 during the taxable year to the extent excluded from
5 gross income in the computation of taxable income;
6 (B) In the case of (i) an estate, $600; (ii) a
7 trust which, under its governing instrument, is
8 required to distribute all of its income currently,
9 $300; and (iii) any other trust, $100, but in each
10 such case, only to the extent such amount was
11 deducted in the computation of taxable income;
12 (C) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of taxable income
15 for the taxable year;
16 (D) The amount of any net operating loss
17 deduction taken in arriving at taxable income, other
18 than a net operating loss carried forward from a
19 taxable year ending prior to December 31, 1986;
20 (E) For taxable years in which a net operating
21 loss carryback or carryforward from a taxable year
22 ending prior to December 31, 1986 is an element of
23 taxable income under paragraph (1) of subsection (e)
24 or subparagraph (E) of paragraph (2) of subsection
25 (e), the amount by which addition modifications
26 other than those provided by this subparagraph (E)
27 exceeded subtraction modifications in such taxable
28 year, with the following limitations applied in the
29 order that they are listed:
30 (i) the addition modification relating to
31 the net operating loss carried back or forward
32 to the taxable year from any taxable year
33 ending prior to December 31, 1986 shall be
34 reduced by the amount of addition modification
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1 under this subparagraph (E) which related to
2 that net operating loss and which was taken
3 into account in calculating the base income of
4 an earlier taxable year, and
5 (ii) the addition modification relating
6 to the net operating loss carried back or
7 forward to the taxable year from any taxable
8 year ending prior to December 31, 1986 shall
9 not exceed the amount of such carryback or
10 carryforward;
11 For taxable years in which there is a net
12 operating loss carryback or carryforward from more
13 than one other taxable year ending prior to December
14 31, 1986, the addition modification provided in this
15 subparagraph (E) shall be the sum of the amounts
16 computed independently under the preceding
17 provisions of this subparagraph (E) for each such
18 taxable year;
19 (F) For taxable years ending on or after
20 January 1, 1989, an amount equal to the tax deducted
21 pursuant to Section 164 of the Internal Revenue Code
22 if the trust or estate is claiming the same tax for
23 purposes of the Illinois foreign tax credit under
24 Section 601 of this Act;
25 (G) An amount equal to the amount of the
26 capital gain deduction allowable under the Internal
27 Revenue Code, to the extent deducted from gross
28 income in the computation of taxable income; and
29 (G-5) For taxable years ending after December
30 31, 1997, an amount equal to any eligible
31 remediation costs that the trust or estate deducted
32 in computing adjusted gross income and for which the
33 trust or estate claims a credit under subsection (l)
34 of Section 201;
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1 and by deducting from the total so obtained the sum of
2 the following amounts:
3 (H) An amount equal to all amounts included in
4 such total pursuant to the provisions of Sections
5 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
6 408 of the Internal Revenue Code or included in such
7 total as distributions under the provisions of any
8 retirement or disability plan for employees of any
9 governmental agency or unit, or retirement payments
10 to retired partners, which payments are excluded in
11 computing net earnings from self employment by
12 Section 1402 of the Internal Revenue Code and
13 regulations adopted pursuant thereto;
14 (I) The valuation limitation amount;
15 (J) An amount equal to the amount of any tax
16 imposed by this Act which was refunded to the
17 taxpayer and included in such total for the taxable
18 year;
19 (K) An amount equal to all amounts included in
20 taxable income as modified by subparagraphs (A),
21 (B), (C), (D), (E), (F) and (G) which are exempt
22 from taxation by this State either by reason of its
23 statutes or Constitution or by reason of the
24 Constitution, treaties or statutes of the United
25 States; provided that, in the case of any statute of
26 this State that exempts income derived from bonds or
27 other obligations from the tax imposed under this
28 Act, the amount exempted shall be the interest net
29 of bond premium amortization;
30 (L) With the exception of any amounts
31 subtracted under subparagraph (K), an amount equal
32 to the sum of all amounts disallowed as deductions
33 by Sections 171(a) (2) and 265(a)(2) of the Internal
34 Revenue Code, as now or hereafter amended, and all
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1 amounts of expenses allocable to interest and
2 disallowed as deductions by Section 265(1) of the
3 Internal Revenue Code of 1954, as now or hereafter
4 amended;
5 (M) An amount equal to those dividends
6 included in such total which were paid by a
7 corporation which conducts business operations in an
8 Enterprise Zone or zones created under the Illinois
9 Enterprise Zone Act and conducts substantially all
10 of its operations in an Enterprise Zone or Zones;
11 (N) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Tax Increment Allocation Redevelopment Act;
14 (O) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (M) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (O); and
24 (P) An amount equal to the amount of the
25 deduction used to compute the federal income tax
26 credit for restoration of substantial amounts held
27 under claim of right for the taxable year pursuant
28 to Section 1341 of the Internal Revenue Code of
29 1986; and.
30 (Q) For taxable year 1999 and thereafter, an
31 amount equal to the amount of any (i) distributions,
32 to the extent includible in gross income for federal
33 income tax purposes, made to the taxpayer because of
34 his or her status as a victim of persecution for
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1 racial or religious reasons by Nazi Germany or any
2 other Axis regime or as an heir of the victim and
3 (ii) items of income, to the extent includible in
4 gross income for federal income tax purposes,
5 attributable to, derived from or in any way related
6 to assets stolen from, hidden from, or otherwise
7 lost to a victim of persecution for racial or
8 religious reasons by Nazi Germany or any other Axis
9 regime immediately prior to, during, and immediately
10 after World War II, including, but not limited to,
11 interest on the proceeds receivable as insurance
12 under policies issued to a victim of persecution for
13 racial or religious reasons by Nazi Germany or any
14 other Axis regime by European insurance companies
15 immediately prior to and during World War II;
16 provided, however, this subtraction from federal
17 adjusted gross income does not apply to assets
18 acquired with such assets or with the proceeds from
19 the sale of such assets; provided, further, this
20 paragraph shall only apply to a taxpayer who was the
21 first recipient of such assets after their recovery
22 and who is a victim of persecution for racial or
23 religious reasons by Nazi Germany or any other Axis
24 regime or as an heir of the victim. The amount of
25 and the eligibility for any public assistance,
26 benefit, or similar entitlement is not affected by
27 the inclusion of items (i) and (ii) of this
28 paragraph in gross income for federal income tax
29 purposes. This paragraph is exempt from the
30 provisions of Section 250.
31 (3) Limitation. The amount of any modification
32 otherwise required under this subsection shall, under
33 regulations prescribed by the Department, be adjusted by
34 any amounts included therein which were properly paid,
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1 credited, or required to be distributed, or permanently
2 set aside for charitable purposes pursuant to Internal
3 Revenue Code Section 642(c) during the taxable year.
4 (d) Partnerships.
5 (1) In general. In the case of a partnership, base
6 income means an amount equal to the taxpayer's taxable
7 income for the taxable year as modified by paragraph (2).
8 (2) Modifications. The taxable income referred to
9 in paragraph (1) shall be modified by adding thereto the
10 sum of the following amounts:
11 (A) An amount equal to all amounts paid or
12 accrued to the taxpayer as interest or dividends
13 during the taxable year to the extent excluded from
14 gross income in the computation of taxable income;
15 (B) An amount equal to the amount of tax
16 imposed by this Act to the extent deducted from
17 gross income for the taxable year; and
18 (C) The amount of deductions allowed to the
19 partnership pursuant to Section 707 (c) of the
20 Internal Revenue Code in calculating its taxable
21 income; and
22 (D) An amount equal to the amount of the
23 capital gain deduction allowable under the Internal
24 Revenue Code, to the extent deducted from gross
25 income in the computation of taxable income;
26 and by deducting from the total so obtained the following
27 amounts:
28 (E) The valuation limitation amount;
29 (F) An amount equal to the amount of any tax
30 imposed by this Act which was refunded to the
31 taxpayer and included in such total for the taxable
32 year;
33 (G) An amount equal to all amounts included in
34 taxable income as modified by subparagraphs (A),
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1 (B), (C) and (D) which are exempt from taxation by
2 this State either by reason of its statutes or
3 Constitution or by reason of the Constitution,
4 treaties or statutes of the United States; provided
5 that, in the case of any statute of this State that
6 exempts income derived from bonds or other
7 obligations from the tax imposed under this Act, the
8 amount exempted shall be the interest net of bond
9 premium amortization;
10 (H) Any income of the partnership which
11 constitutes personal service income as defined in
12 Section 1348 (b) (1) of the Internal Revenue Code
13 (as in effect December 31, 1981) or a reasonable
14 allowance for compensation paid or accrued for
15 services rendered by partners to the partnership,
16 whichever is greater;
17 (I) An amount equal to all amounts of income
18 distributable to an entity subject to the Personal
19 Property Tax Replacement Income Tax imposed by
20 subsections (c) and (d) of Section 201 of this Act
21 including amounts distributable to organizations
22 exempt from federal income tax by reason of Section
23 501(a) of the Internal Revenue Code;
24 (J) With the exception of any amounts
25 subtracted under subparagraph (G), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by Sections 171(a) (2), and 265(2) of the Internal
28 Revenue Code of 1954, as now or hereafter amended,
29 and all amounts of expenses allocable to interest
30 and disallowed as deductions by Section 265(1) of
31 the Internal Revenue Code, as now or hereafter
32 amended;
33 (K) An amount equal to those dividends
34 included in such total which were paid by a
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1 corporation which conducts business operations in an
2 Enterprise Zone or zones created under the Illinois
3 Enterprise Zone Act, enacted by the 82nd General
4 Assembly, and which does not conduct such operations
5 other than in an Enterprise Zone or Zones;
6 (L) An amount equal to any contribution made
7 to a job training project established pursuant to
8 the Real Property Tax Increment Allocation
9 Redevelopment Act;
10 (M) An amount equal to those dividends
11 included in such total that were paid by a
12 corporation that conducts business operations in a
13 federally designated Foreign Trade Zone or Sub-Zone
14 and that is designated a High Impact Business
15 located in Illinois; provided that dividends
16 eligible for the deduction provided in subparagraph
17 (K) of paragraph (2) of this subsection shall not be
18 eligible for the deduction provided under this
19 subparagraph (M); and
20 (N) An amount equal to the amount of the
21 deduction used to compute the federal income tax
22 credit for restoration of substantial amounts held
23 under claim of right for the taxable year pursuant
24 to Section 1341 of the Internal Revenue Code of
25 1986.
26 (e) Gross income; adjusted gross income; taxable income.
27 (1) In general. Subject to the provisions of
28 paragraph (2) and subsection (b) (3), for purposes of
29 this Section and Section 803(e), a taxpayer's gross
30 income, adjusted gross income, or taxable income for the
31 taxable year shall mean the amount of gross income,
32 adjusted gross income or taxable income properly
33 reportable for federal income tax purposes for the
34 taxable year under the provisions of the Internal Revenue
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1 Code. Taxable income may be less than zero. However, for
2 taxable years ending on or after December 31, 1986, net
3 operating loss carryforwards from taxable years ending
4 prior to December 31, 1986, may not exceed the sum of
5 federal taxable income for the taxable year before net
6 operating loss deduction, plus the excess of addition
7 modifications over subtraction modifications for the
8 taxable year. For taxable years ending prior to December
9 31, 1986, taxable income may never be an amount in excess
10 of the net operating loss for the taxable year as defined
11 in subsections (c) and (d) of Section 172 of the Internal
12 Revenue Code, provided that when taxable income of a
13 corporation (other than a Subchapter S corporation),
14 trust, or estate is less than zero and addition
15 modifications, other than those provided by subparagraph
16 (E) of paragraph (2) of subsection (b) for corporations
17 or subparagraph (E) of paragraph (2) of subsection (c)
18 for trusts and estates, exceed subtraction modifications,
19 an addition modification must be made under those
20 subparagraphs for any other taxable year to which the
21 taxable income less than zero (net operating loss) is
22 applied under Section 172 of the Internal Revenue Code or
23 under subparagraph (E) of paragraph (2) of this
24 subsection (e) applied in conjunction with Section 172 of
25 the Internal Revenue Code.
26 (2) Special rule. For purposes of paragraph (1) of
27 this subsection, the taxable income properly reportable
28 for federal income tax purposes shall mean:
29 (A) Certain life insurance companies. In the
30 case of a life insurance company subject to the tax
31 imposed by Section 801 of the Internal Revenue Code,
32 life insurance company taxable income, plus the
33 amount of distribution from pre-1984 policyholder
34 surplus accounts as calculated under Section 815a of
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1 the Internal Revenue Code;
2 (B) Certain other insurance companies. In the
3 case of mutual insurance companies subject to the
4 tax imposed by Section 831 of the Internal Revenue
5 Code, insurance company taxable income;
6 (C) Regulated investment companies. In the
7 case of a regulated investment company subject to
8 the tax imposed by Section 852 of the Internal
9 Revenue Code, investment company taxable income;
10 (D) Real estate investment trusts. In the
11 case of a real estate investment trust subject to
12 the tax imposed by Section 857 of the Internal
13 Revenue Code, real estate investment trust taxable
14 income;
15 (E) Consolidated corporations. In the case of
16 a corporation which is a member of an affiliated
17 group of corporations filing a consolidated income
18 tax return for the taxable year for federal income
19 tax purposes, taxable income determined as if such
20 corporation had filed a separate return for federal
21 income tax purposes for the taxable year and each
22 preceding taxable year for which it was a member of
23 an affiliated group. For purposes of this
24 subparagraph, the taxpayer's separate taxable income
25 shall be determined as if the election provided by
26 Section 243(b) (2) of the Internal Revenue Code had
27 been in effect for all such years;
28 (F) Cooperatives. In the case of a
29 cooperative corporation or association, the taxable
30 income of such organization determined in accordance
31 with the provisions of Section 1381 through 1388 of
32 the Internal Revenue Code;
33 (G) Subchapter S corporations. In the case
34 of: (i) a Subchapter S corporation for which there
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1 is in effect an election for the taxable year under
2 Section 1362 of the Internal Revenue Code, the
3 taxable income of such corporation determined in
4 accordance with Section 1363(b) of the Internal
5 Revenue Code, except that taxable income shall take
6 into account those items which are required by
7 Section 1363(b)(1) of the Internal Revenue Code to
8 be separately stated; and (ii) a Subchapter S
9 corporation for which there is in effect a federal
10 election to opt out of the provisions of the
11 Subchapter S Revision Act of 1982 and have applied
12 instead the prior federal Subchapter S rules as in
13 effect on July 1, 1982, the taxable income of such
14 corporation determined in accordance with the
15 federal Subchapter S rules as in effect on July 1,
16 1982; and
17 (H) Partnerships. In the case of a
18 partnership, taxable income determined in accordance
19 with Section 703 of the Internal Revenue Code,
20 except that taxable income shall take into account
21 those items which are required by Section 703(a)(1)
22 to be separately stated but which would be taken
23 into account by an individual in calculating his
24 taxable income.
25 (f) Valuation limitation amount.
26 (1) In general. The valuation limitation amount
27 referred to in subsections (a) (2) (G), (c) (2) (I) and
28 (d)(2) (E) is an amount equal to:
29 (A) The sum of the pre-August 1, 1969
30 appreciation amounts (to the extent consisting of
31 gain reportable under the provisions of Section 1245
32 or 1250 of the Internal Revenue Code) for all
33 property in respect of which such gain was reported
34 for the taxable year; plus
HB1120 Engrossed -26- LRB9100524PTpkA
1 (B) The lesser of (i) the sum of the
2 pre-August 1, 1969 appreciation amounts (to the
3 extent consisting of capital gain) for all property
4 in respect of which such gain was reported for
5 federal income tax purposes for the taxable year, or
6 (ii) the net capital gain for the taxable year,
7 reduced in either case by any amount of such gain
8 included in the amount determined under subsection
9 (a) (2) (F) or (c) (2) (H).
10 (2) Pre-August 1, 1969 appreciation amount.
11 (A) If the fair market value of property
12 referred to in paragraph (1) was readily
13 ascertainable on August 1, 1969, the pre-August 1,
14 1969 appreciation amount for such property is the
15 lesser of (i) the excess of such fair market value
16 over the taxpayer's basis (for determining gain) for
17 such property on that date (determined under the
18 Internal Revenue Code as in effect on that date), or
19 (ii) the total gain realized and reportable for
20 federal income tax purposes in respect of the sale,
21 exchange or other disposition of such property.
22 (B) If the fair market value of property
23 referred to in paragraph (1) was not readily
24 ascertainable on August 1, 1969, the pre-August 1,
25 1969 appreciation amount for such property is that
26 amount which bears the same ratio to the total gain
27 reported in respect of the property for federal
28 income tax purposes for the taxable year, as the
29 number of full calendar months in that part of the
30 taxpayer's holding period for the property ending
31 July 31, 1969 bears to the number of full calendar
32 months in the taxpayer's entire holding period for
33 the property.
34 (C) The Department shall prescribe such
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1 regulations as may be necessary to carry out the
2 purposes of this paragraph.
3 (g) Double deductions. Unless specifically provided
4 otherwise, nothing in this Section shall permit the same item
5 to be deducted more than once.
6 (h) Legislative intention. Except as expressly provided
7 by this Section there shall be no modifications or
8 limitations on the amounts of income, gain, loss or deduction
9 taken into account in determining gross income, adjusted
10 gross income or taxable income for federal income tax
11 purposes for the taxable year, or in the amount of such items
12 entering into the computation of base income and net income
13 under this Act for such taxable year, whether in respect of
14 property values as of August 1, 1969 or otherwise.
15 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
16 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
17 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
18 eff. 8-14-98; revised 9-21-98.)
19 Section 99. Effective date. This Act takes effect upon
20 becoming law.
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