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90_HB1324
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/215 new
Amends the Illinois Income Tax Act. Allows individual
taxpayers who are 20 years of age or younger a deduction in
an amount, not to exceed $1,000, equal to the amount
deposited in and the interest earned on a college savings
plan account. Provides that a taxpayer shall not be required
to deposit more than $500 into an account to begin a college
savings plan. Requires the moneys deposited into and the
interest earned on an account designated as a college savings
plan to be used only by the account holder and only for
college or university expenses. Provides that if a taxpayer
uses moneys deposited in the college savings plan account for
a purpose other than college or university expenses, the
moneys shall be subject to taxation under this Act and the
account holder shall incur a penalty equal to 10% of that
principal or income used for purposes other than college or
university expenses. States that the Department of Revenue
shall promulgate rules to implement and enforce this Section.
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1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203 and adding Section 215.
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 and adding Section 215 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 and
15 (D-5) An amount, to the extent not included in
16 adjusted gross income, equal to the amount of money
17 withdrawn by the taxpayer in the taxable year from a
18 medical care savings account and the interest earned
19 on the account in the taxable year of a withdrawal
20 pursuant to subsection (b) of Section 20 of the
21 Medical Care Savings Account Act;
22 and by deducting from the total so obtained the sum of
23 the following amounts:
24 (E) Any amount included in such total in
25 respect of any compensation (including but not
26 limited to any compensation paid or accrued to a
27 serviceman while a prisoner of war or missing in
28 action) paid to a resident by reason of being on
29 active duty in the Armed Forces of the United States
30 and in respect of any compensation paid or accrued
31 to a resident who as a governmental employee was a
32 prisoner of war or missing in action, and in respect
33 of any compensation paid to a resident in 1971 or
34 thereafter for annual training performed pursuant to
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1 Sections 502 and 503, Title 32, United States Code
2 as a member of the Illinois National Guard;
3 (F) 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
7 such total as distributions under the provisions of
8 any retirement or disability plan for employees of
9 any governmental agency or unit, or retirement
10 payments to retired partners, which payments are
11 excluded in computing net earnings from self
12 employment by Section 1402 of the Internal Revenue
13 Code and regulations adopted pursuant thereto;
14 (G) The valuation limitation amount;
15 (H) 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 (I) An amount equal to all amounts included in
20 such total pursuant to the provisions of Section 111
21 of the Internal Revenue Code as a recovery of items
22 previously deducted from adjusted gross income in
23 the computation of taxable income;
24 (J) An amount equal to those dividends
25 included in such total which were paid by a
26 corporation which conducts business operations in an
27 Enterprise Zone or zones created under the Illinois
28 Enterprise Zone Act, and conducts substantially all
29 of its operations in an Enterprise Zone or zones;
30 (K) An amount equal to those dividends
31 included in such total that were paid by a
32 corporation that conducts business operations in a
33 federally designated Foreign Trade Zone or Sub-Zone
34 and that is designated a High Impact Business
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1 located in Illinois; provided that dividends
2 eligible for the deduction provided in subparagraph
3 (J) of paragraph (2) of this subsection shall not be
4 eligible for the deduction provided under this
5 subparagraph (K);
6 (L) For taxable years ending after December
7 31, 1983, an amount equal to all social security
8 benefits and railroad retirement benefits included
9 in such total pursuant to Sections 72(r) and 86 of
10 the Internal Revenue Code;
11 (M) With the exception of any amounts
12 subtracted under subparagraph (N), an amount equal
13 to the sum of all amounts disallowed as deductions
14 by Sections 171(a) (2), and 265(2) of the Internal
15 Revenue Code of 1954, as now or hereafter amended,
16 and all amounts of expenses allocable to interest
17 and disallowed as deductions by Section 265(1) of
18 the Internal Revenue Code of 1954, as now or
19 hereafter amended;
20 (N) An amount equal to all amounts included in
21 such total which are exempt from taxation by this
22 State either by reason of its statutes or
23 Constitution or by reason of the Constitution,
24 treaties or statutes of the United States; provided
25 that, in the case of any statute of this State that
26 exempts income derived from bonds or other
27 obligations from the tax imposed under this Act, the
28 amount exempted shall be the interest net of bond
29 premium amortization;
30 (O) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (P) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986;
5 (Q) An amount equal to any amounts included in
6 such total, received by the taxpayer as an
7 acceleration in the payment of life, endowment or
8 annuity benefits in advance of the time they would
9 otherwise be payable as an indemnity for a terminal
10 illness;
11 (R) An amount equal to the amount of any
12 federal or State bonus paid to veterans of the
13 Persian Gulf War;
14 (S) An amount, to the extent included in
15 adjusted gross income, equal to the amount of a
16 contribution made in the taxable year on behalf of
17 the taxpayer to a medical care savings account
18 established under the Medical Care Savings Account
19 Act to the extent the contribution is accepted by
20 the account administrator as provided in that Act;
21 (T) An amount, to the extent included in
22 adjusted gross income, equal to the amount of
23 interest earned in the taxable year on a medical
24 care savings account established under the Medical
25 Care Savings Account Act on behalf of the taxpayer,
26 other than interest added pursuant to item (D-5) of
27 this paragraph (2);
28 (U) For one taxable year beginning on or after
29 January 1, 1994, an amount equal to the total amount
30 of tax imposed and paid under subsections (a) and
31 (b) of Section 201 of this Act on grant amounts
32 received by the taxpayer under the Nursing Home
33 Grant Assistance Act during the taxpayer's taxable
34 years 1992 and 1993; and
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1 (V) Beginning with tax years ending on or
2 after December 31, 1995 and ending with tax years
3 ending on or before December 31, 1999, an amount
4 equal to the amount paid by a taxpayer who is a
5 self-employed taxpayer, a partner of a partnership,
6 or a shareholder in a Subchapter S corporation for
7 health insurance or long-term care insurance for
8 that taxpayer or that taxpayer's spouse or
9 dependents, to the extent that the amount paid for
10 that health insurance or long-term care insurance
11 may be deducted under Section 213 of the Internal
12 Revenue Code of 1986, has not been deducted on the
13 federal income tax return of the taxpayer, and does
14 not exceed the taxable income attributable to that
15 taxpayer's income, self-employment income, or
16 Subchapter S corporation income; except that no
17 deduction shall be allowed under this item (V) if
18 the taxpayer is eligible to participate in any
19 health insurance or long-term care insurance plan of
20 an employer of the taxpayer or the taxpayer's
21 spouse. The amount of the health insurance and
22 long-term care insurance subtracted under this item
23 (V) shall be determined by multiplying total health
24 insurance and long-term care insurance premiums paid
25 by the taxpayer times a number that represents the
26 fractional percentage of eligible medical expenses
27 under Section 213 of the Internal Revenue Code of
28 1986 not actually deducted on the taxpayer's federal
29 income tax return; and.
30 (W) Beginning with taxable years ending on or
31 after December 31, 1997 and ending with taxable
32 years ending on or before December 31, 2001, an
33 amount, not to exceed $1,000, equal to the amount
34 deposited in and the interest earned on a college
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1 savings plan, by a taxpayer who is 20 years of age
2 or younger, subject to the restrictions and
3 penalties in Section 215.
4 (b) Corporations.
5 (1) In general. In the case of a corporation, 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 and all
13 distributions received from regulated investment
14 companies during the taxable year to the extent
15 excluded from gross income in the computation of
16 taxable income;
17 (B) An amount equal to the amount of tax
18 imposed by this Act to the extent deducted from
19 gross income in the computation of taxable income
20 for the taxable year;
21 (C) In the case of a regulated investment
22 company or real estate investment trust, an amount
23 equal to the excess of (i) the net long-term capital
24 gain for the taxable year, over (ii) the amount of
25 the capital gain dividends designated as such in
26 accordance with Section 852(b)(3)(C) or Section
27 857(b)(3)(C) of the Internal Revenue Code and any
28 amount designated under Section 852(b)(3)(D) of the
29 Internal Revenue Code, attributable to the taxable
30 year.
31 This amendatory Act of 1995 is declarative of existing
32 law and is not a new enactment.
33 (D) The amount of any net operating loss
34 deduction taken in arriving at taxable income, other
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1 than a net operating loss carried forward from a
2 taxable year ending prior to December 31, 1986; and
3 (E) For taxable years in which a net operating
4 loss carryback or carryforward from a taxable year
5 ending prior to December 31, 1986 is an element of
6 taxable income under paragraph (1) of subsection (e)
7 or subparagraph (E) of paragraph (2) of subsection
8 (e), the amount by which addition modifications
9 other than those provided by this subparagraph (E)
10 exceeded subtraction modifications in such earlier
11 taxable year, with the following limitations applied
12 in the order that they are listed:
13 (i) the addition modification relating to
14 the net operating loss carried back or forward
15 to the taxable year from any taxable year
16 ending prior to December 31, 1986 shall be
17 reduced by the amount of addition modification
18 under this subparagraph (E) which related to
19 that net operating loss and which was taken
20 into account in calculating the base income of
21 an earlier taxable year, and
22 (ii) the addition modification relating
23 to the net operating loss carried back or
24 forward to the taxable year from any taxable
25 year ending prior to December 31, 1986 shall
26 not exceed the amount of such carryback or
27 carryforward;
28 For taxable years in which there is a net
29 operating loss carryback or carryforward from more
30 than one other taxable year ending prior to December
31 31, 1986, the addition modification provided in this
32 subparagraph (E) shall be the sum of the amounts
33 computed independently under the preceding
34 provisions of this subparagraph (E) for each such
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1 taxable year,
2 and by deducting from the total so obtained the sum of
3 the following amounts:
4 (F) An amount equal to the amount of any tax
5 imposed by this Act which was refunded to the
6 taxpayer and included in such total for the taxable
7 year;
8 (G) An amount equal to any amount included in
9 such total under Section 78 of the Internal Revenue
10 Code;
11 (H) In the case of a regulated investment
12 company, an amount equal to the amount of exempt
13 interest dividends as defined in subsection (b) (5)
14 of Section 852 of the Internal Revenue Code, paid to
15 shareholders for the taxable year;
16 (I) With the exception of any amounts
17 subtracted under subparagraph (J), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(a)(2) and amounts
20 disallowed as interest expense by Section 291(a)(3)
21 of the Internal Revenue Code, as now or hereafter
22 amended, and all amounts of expenses allocable to
23 interest and disallowed as deductions by Section
24 265(a)(1) of the Internal Revenue Code, as now or
25 hereafter amended;
26 (J) An amount equal to all amounts included in
27 such total which are exempt from taxation by this
28 State either by reason of its statutes or
29 Constitution or by reason of the Constitution,
30 treaties or statutes of the United States; provided
31 that, in the case of any statute of this State that
32 exempts income derived from bonds or other
33 obligations from the tax imposed under this Act, the
34 amount exempted shall be the interest net of bond
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1 premium amortization;
2 (K) An amount equal to those dividends
3 included in such total which were paid by a
4 corporation which conducts business operations in an
5 Enterprise Zone or zones created under the Illinois
6 Enterprise Zone Act and conducts substantially all
7 of its operations in an Enterprise Zone or zones;
8 (L) An amount equal to those dividends
9 included in such total that were paid by a
10 corporation that conducts business operations in a
11 federally designated Foreign Trade Zone or Sub-Zone
12 and that is designated a High Impact Business
13 located in Illinois; provided that dividends
14 eligible for the deduction provided in subparagraph
15 (K) of paragraph 2 of this subsection shall not be
16 eligible for the deduction provided under this
17 subparagraph (L);
18 (M) For any taxpayer that is a financial
19 organization within the meaning of Section 304(c) of
20 this Act, an amount included in such total as
21 interest income from a loan or loans made by such
22 taxpayer to a borrower, to the extent that such a
23 loan is secured by property which is eligible for
24 the Enterprise Zone Investment Credit. To determine
25 the portion of a loan or loans that is secured by
26 property eligible for a Section 201(h) investment
27 credit to the borrower, the entire principal amount
28 of the loan or loans between the taxpayer and the
29 borrower should be divided into the basis of the
30 Section 201(h) investment credit property which
31 secures the loan or loans, using for this purpose
32 the original basis of such property on the date that
33 it was placed in service in the Enterprise Zone.
34 The subtraction modification available to taxpayer
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1 in any year under this subsection shall be that
2 portion of the total interest paid by the borrower
3 with respect to such loan attributable to the
4 eligible property as calculated under the previous
5 sentence;
6 (M-1) For any taxpayer that is a financial
7 organization within the meaning of Section 304(c) of
8 this Act, an amount included in such total as
9 interest income from a loan or loans made by such
10 taxpayer to a borrower, to the extent that such a
11 loan is secured by property which is eligible for
12 the High Impact Business Investment Credit. To
13 determine the portion of a loan or loans that is
14 secured by property eligible for a Section 201(i)
15 investment credit to the borrower, the entire
16 principal amount of the loan or loans between the
17 taxpayer and the borrower should be divided into the
18 basis of the Section 201(i) investment credit
19 property which secures the loan or loans, using for
20 this purpose the original basis of such property on
21 the date that it was placed in service in a
22 federally designated Foreign Trade Zone or Sub-Zone
23 located in Illinois. No taxpayer that is eligible
24 for the deduction provided in subparagraph (M) of
25 paragraph (2) of this subsection shall be eligible
26 for the deduction provided under this subparagraph
27 (M-1). The subtraction modification available to
28 taxpayers in any year under this subsection shall be
29 that portion of the total interest paid by the
30 borrower with respect to such loan attributable to
31 the eligible property as calculated under the
32 previous sentence;
33 (N) Two times any contribution made during the
34 taxable year to a designated zone organization to
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1 the extent that the contribution (i) qualifies as a
2 charitable contribution under subsection (c) of
3 Section 170 of the Internal Revenue Code and (ii)
4 must, by its terms, be used for a project approved
5 by the Department of Commerce and Community Affairs
6 under Section 11 of the Illinois Enterprise Zone
7 Act;
8 (O) An amount equal to: (i) 85% for taxable
9 years ending on or before December 31, 1992, or, a
10 percentage equal to the percentage allowable under
11 Section 243(a)(1) of the Internal Revenue Code of
12 1986 for taxable years ending after December 31,
13 1992, of the amount by which dividends included in
14 taxable income and received from a corporation that
15 is not created or organized under the laws of the
16 United States or any state or political subdivision
17 thereof, including, for taxable years ending on or
18 after December 31, 1988, dividends received or
19 deemed received or paid or deemed paid under
20 Sections 951 through 964 of the Internal Revenue
21 Code, exceed the amount of the modification provided
22 under subparagraph (G) of paragraph (2) of this
23 subsection (b) which is related to such dividends;
24 plus (ii) 100% of the amount by which dividends,
25 included in taxable income and received, including,
26 for taxable years ending on or after December 31,
27 1988, dividends received or deemed received or paid
28 or deemed paid under Sections 951 through 964 of the
29 Internal Revenue Code, from any such corporation
30 specified in clause (i) that would but for the
31 provisions of Section 1504 (b) (3) of the Internal
32 Revenue Code be treated as a member of the
33 affiliated group which includes the dividend
34 recipient, exceed the amount of the modification
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1 provided under subparagraph (G) of paragraph (2) of
2 this subsection (b) which is related to such
3 dividends;
4 (P) An amount equal to any contribution made
5 to a job training project established pursuant to
6 the Tax Increment Allocation Redevelopment Act; and
7 (Q) An amount equal to the amount of the
8 deduction used to compute the federal income tax
9 credit for restoration of substantial amounts held
10 under claim of right for the taxable year pursuant
11 to Section 1341 of the Internal Revenue Code of
12 1986.
13 (3) Special rule. For purposes of paragraph (2)
14 (A), "gross income" in the case of a life insurance
15 company, for tax years ending on and after December 31,
16 1994, shall mean the gross investment income for the
17 taxable year.
18 (c) Trusts and estates.
19 (1) In general. In the case of a trust or estate,
20 base income means an amount equal to the taxpayer's
21 taxable income for the taxable year as modified by
22 paragraph (2).
23 (2) Modifications. Subject to the provisions of
24 paragraph (3), the taxable income referred to in
25 paragraph (1) shall be modified by adding thereto the sum
26 of the following amounts:
27 (A) An amount equal to all amounts paid or
28 accrued to the taxpayer as interest or dividends
29 during the taxable year to the extent excluded from
30 gross income in the computation of taxable income;
31 (B) In the case of (i) an estate, $600; (ii) a
32 trust which, under its governing instrument, is
33 required to distribute all of its income currently,
34 $300; and (iii) any other trust, $100, but in each
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1 such case, only to the extent such amount was
2 deducted in the computation of taxable income;
3 (C) An amount equal to the amount of tax
4 imposed by this Act to the extent deducted from
5 gross income in the computation of taxable income
6 for the taxable year;
7 (D) The amount of any net operating loss
8 deduction taken in arriving at taxable income, other
9 than a net operating loss carried forward from a
10 taxable year ending prior to December 31, 1986;
11 (E) For taxable years in which a net operating
12 loss carryback or carryforward from a taxable year
13 ending prior to December 31, 1986 is an element of
14 taxable income under paragraph (1) of subsection (e)
15 or subparagraph (E) of paragraph (2) of subsection
16 (e), the amount by which addition modifications
17 other than those provided by this subparagraph (E)
18 exceeded subtraction modifications in such taxable
19 year, with the following limitations applied in the
20 order that they are listed:
21 (i) the addition modification relating to
22 the net operating loss carried back or forward
23 to the taxable year from any taxable year
24 ending prior to December 31, 1986 shall be
25 reduced by the amount of addition modification
26 under this subparagraph (E) which related to
27 that net operating loss and which was taken
28 into account in calculating the base income of
29 an earlier taxable year, and
30 (ii) the addition modification relating
31 to the net operating loss carried back or
32 forward to the taxable year from any taxable
33 year ending prior to December 31, 1986 shall
34 not exceed the amount of such carryback or
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1 carryforward;
2 For taxable years in which there is a net
3 operating loss carryback or carryforward from more
4 than one other taxable year ending prior to December
5 31, 1986, the addition modification provided in this
6 subparagraph (E) shall be the sum of the amounts
7 computed independently under the preceding
8 provisions of this subparagraph (E) for each such
9 taxable year;
10 (F) For taxable years ending on or after
11 January 1, 1989, an amount equal to the tax deducted
12 pursuant to Section 164 of the Internal Revenue Code
13 if the trust or estate is claiming the same tax for
14 purposes of the Illinois foreign tax credit under
15 Section 601 of this Act; and
16 (G) An amount equal to the amount of the
17 capital gain deduction allowable under the Internal
18 Revenue Code, to the extent deducted from gross
19 income in the computation of taxable income;
20 and by deducting from the total so obtained the sum of
21 the following amounts:
22 (H) An amount equal to all amounts included in
23 such total pursuant to the provisions of Sections
24 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
25 408 of the Internal Revenue Code or included in such
26 total as distributions under the provisions of any
27 retirement or disability plan for employees of any
28 governmental agency or unit, or retirement payments
29 to retired partners, which payments are excluded in
30 computing net earnings from self employment by
31 Section 1402 of the Internal Revenue Code and
32 regulations adopted pursuant thereto;
33 (I) The valuation limitation amount;
34 (J) An amount equal to the amount of any tax
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1 imposed by this Act which was refunded to the
2 taxpayer and included in such total for the taxable
3 year;
4 (K) An amount equal to all amounts included in
5 taxable income as modified by subparagraphs (A),
6 (B), (C), (D), (E), (F) and (G) which are exempt
7 from taxation by this State either by reason of its
8 statutes or Constitution or by reason of the
9 Constitution, treaties or statutes of the United
10 States; provided that, in the case of any statute of
11 this State that exempts income derived from bonds or
12 other obligations from the tax imposed under this
13 Act, the amount exempted shall be the interest net
14 of bond premium amortization;
15 (L) With the exception of any amounts
16 subtracted under subparagraph (K), an amount equal
17 to the sum of all amounts disallowed as deductions
18 by Sections 171(a) (2) and 265(a)(2) of the Internal
19 Revenue Code, as now or hereafter amended, and all
20 amounts of expenses allocable to interest and
21 disallowed as deductions by Section 265(1) of the
22 Internal Revenue Code of 1954, as now or hereafter
23 amended;
24 (M) An amount equal to those dividends
25 included in such total which were paid by a
26 corporation which conducts business operations in an
27 Enterprise Zone or zones created under the Illinois
28 Enterprise Zone Act and conducts substantially all
29 of its operations in an Enterprise Zone or Zones;
30 (N) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (O) An amount equal to those dividends
34 included in such total that were paid by a
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1 corporation that conducts business operations in a
2 federally designated Foreign Trade Zone or Sub-Zone
3 and that is designated a High Impact Business
4 located in Illinois; provided that dividends
5 eligible for the deduction provided in subparagraph
6 (M) of paragraph (2) of this subsection shall not be
7 eligible for the deduction provided under this
8 subparagraph (O); and
9 (P) An amount equal to the amount of the
10 deduction used to compute the federal income tax
11 credit for restoration of substantial amounts held
12 under claim of right for the taxable year pursuant
13 to Section 1341 of the Internal Revenue Code of
14 1986.
15 (3) Limitation. The amount of any modification
16 otherwise required under this subsection shall, under
17 regulations prescribed by the Department, be adjusted by
18 any amounts included therein which were properly paid,
19 credited, or required to be distributed, or permanently
20 set aside for charitable purposes pursuant to Internal
21 Revenue Code Section 642(c) during the taxable year.
22 (d) Partnerships.
23 (1) In general. In the case of a partnership, base
24 income means an amount equal to the taxpayer's taxable
25 income for the taxable year as modified by paragraph (2).
26 (2) Modifications. The taxable income referred to
27 in paragraph (1) shall be modified by adding thereto the
28 sum of the following amounts:
29 (A) An amount equal to all amounts paid or
30 accrued to the taxpayer as interest or dividends
31 during the taxable year to the extent excluded from
32 gross income in the computation of taxable income;
33 (B) An amount equal to the amount of tax
34 imposed by this Act to the extent deducted from
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1 gross income for the taxable year; and
2 (C) The amount of deductions allowed to the
3 partnership pursuant to Section 707 (c) of the
4 Internal Revenue Code in calculating its taxable
5 income;
6 (D) An amount equal to the amount of the
7 capital gain deduction allowable under the Internal
8 Revenue Code, to the extent deducted from gross
9 income in the computation of taxable income;
10 and by deducting from the total so obtained the following
11 amounts:
12 (E) The valuation limitation amount;
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 all amounts included in
18 taxable income as modified by subparagraphs (A),
19 (B), (C) and (D) which are exempt from taxation by
20 this State either by reason of its statutes or
21 Constitution or by reason of the Constitution,
22 treaties or statutes of the United States; provided
23 that, in the case of any statute of this State that
24 exempts income derived from bonds or other
25 obligations from the tax imposed under this Act, the
26 amount exempted shall be the interest net of bond
27 premium amortization;
28 (H) Any income of the partnership which
29 constitutes personal service income as defined in
30 Section 1348 (b) (1) of the Internal Revenue Code
31 (as in effect December 31, 1981) or a reasonable
32 allowance for compensation paid or accrued for
33 services rendered by partners to the partnership,
34 whichever is greater;
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1 (I) An amount equal to all amounts of income
2 distributable to an entity subject to the Personal
3 Property Tax Replacement Income Tax imposed by
4 subsections (c) and (d) of Section 201 of this Act
5 including amounts distributable to organizations
6 exempt from federal income tax by reason of Section
7 501(a) of the Internal Revenue Code;
8 (J) With the exception of any amounts
9 subtracted under subparagraph (G), an amount equal
10 to the sum of all amounts disallowed as deductions
11 by Sections 171(a) (2), and 265(2) of the Internal
12 Revenue Code of 1954, as now or hereafter amended,
13 and all amounts of expenses allocable to interest
14 and disallowed as deductions by Section 265(1) of
15 the Internal Revenue Code, as now or hereafter
16 amended;
17 (K) An amount equal to those dividends
18 included in such total which were paid by a
19 corporation which conducts business operations in an
20 Enterprise Zone or zones created under the Illinois
21 Enterprise Zone Act, enacted by the 82nd General
22 Assembly, and which does not conduct such operations
23 other than in an Enterprise Zone or Zones;
24 (L) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Real Property Tax Increment Allocation
27 Redevelopment Act;
28 (M) An amount equal to those dividends
29 included in such total that were paid by a
30 corporation that conducts business operations in a
31 federally designated Foreign Trade Zone or Sub-Zone
32 and that is designated a High Impact Business
33 located in Illinois; provided that dividends
34 eligible for the deduction provided in subparagraph
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1 (K) of paragraph (2) of this subsection shall not be
2 eligible for the deduction provided under this
3 subparagraph (M); and
4 (N) 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 (e) Gross income; adjusted gross income; taxable income.
11 (1) In general. Subject to the provisions of
12 paragraph (2) and subsection (b) (3), for purposes of
13 this Section and Section 803(e), a taxpayer's gross
14 income, adjusted gross income, or taxable income for the
15 taxable year shall mean the amount of gross income,
16 adjusted gross income or taxable income properly
17 reportable for federal income tax purposes for the
18 taxable year under the provisions of the Internal Revenue
19 Code. Taxable income may be less than zero. However, for
20 taxable years ending on or after December 31, 1986, net
21 operating loss carryforwards from taxable years ending
22 prior to December 31, 1986, may not exceed the sum of
23 federal taxable income for the taxable year before net
24 operating loss deduction, plus the excess of addition
25 modifications over subtraction modifications for the
26 taxable year. For taxable years ending prior to December
27 31, 1986, taxable income may never be an amount in excess
28 of the net operating loss for the taxable year as defined
29 in subsections (c) and (d) of Section 172 of the Internal
30 Revenue Code, provided that when taxable income of a
31 corporation (other than a Subchapter S corporation),
32 trust, or estate is less than zero and addition
33 modifications, other than those provided by subparagraph
34 (E) of paragraph (2) of subsection (b) for corporations
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1 or subparagraph (E) of paragraph (2) of subsection (c)
2 for trusts and estates, exceed subtraction modifications,
3 an addition modification must be made under those
4 subparagraphs for any other taxable year to which the
5 taxable income less than zero (net operating loss) is
6 applied under Section 172 of the Internal Revenue Code or
7 under subparagraph (E) of paragraph (2) of this
8 subsection (e) applied in conjunction with Section 172 of
9 the Internal Revenue Code.
10 (2) Special rule. For purposes of paragraph (1) of
11 this subsection, the taxable income properly reportable
12 for federal income tax purposes shall mean:
13 (A) Certain life insurance companies. In the
14 case of a life insurance company subject to the tax
15 imposed by Section 801 of the Internal Revenue Code,
16 life insurance company taxable income, plus the
17 amount of distribution from pre-1984 policyholder
18 surplus accounts as calculated under Section 815a of
19 the Internal Revenue Code;
20 (B) Certain other insurance companies. In the
21 case of mutual insurance companies subject to the
22 tax imposed by Section 831 of the Internal Revenue
23 Code, insurance company taxable income;
24 (C) Regulated investment companies. In the
25 case of a regulated investment company subject to
26 the tax imposed by Section 852 of the Internal
27 Revenue Code, investment company taxable income;
28 (D) Real estate investment trusts. In the
29 case of a real estate investment trust subject to
30 the tax imposed by Section 857 of the Internal
31 Revenue Code, real estate investment trust taxable
32 income;
33 (E) Consolidated corporations. In the case of
34 a corporation which is a member of an affiliated
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1 group of corporations filing a consolidated income
2 tax return for the taxable year for federal income
3 tax purposes, taxable income determined as if such
4 corporation had filed a separate return for federal
5 income tax purposes for the taxable year and each
6 preceding taxable year for which it was a member of
7 an affiliated group. For purposes of this
8 subparagraph, the taxpayer's separate taxable income
9 shall be determined as if the election provided by
10 Section 243(b) (2) of the Internal Revenue Code had
11 been in effect for all such years;
12 (F) Cooperatives. In the case of a
13 cooperative corporation or association, the taxable
14 income of such organization determined in accordance
15 with the provisions of Section 1381 through 1388 of
16 the Internal Revenue Code;
17 (G) Subchapter S corporations. In the case
18 of: (i) a Subchapter S corporation for which there
19 is in effect an election for the taxable year under
20 Section 1362 of the Internal Revenue Code, the
21 taxable income of such corporation determined in
22 accordance with Section 1363(b) of the Internal
23 Revenue Code, except that taxable income shall take
24 into account those items which are required by
25 Section 1363(b)(1) of the Internal Revenue Code to
26 be separately stated; and (ii) a Subchapter S
27 corporation for which there is in effect a federal
28 election to opt out of the provisions of the
29 Subchapter S Revision Act of 1982 and have applied
30 instead the prior federal Subchapter S rules as in
31 effect on July 1, 1982, the taxable income of such
32 corporation determined in accordance with the
33 federal Subchapter S rules as in effect on July 1,
34 1982; and
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1 (H) Partnerships. In the case of a
2 partnership, taxable income determined in accordance
3 with Section 703 of the Internal Revenue Code,
4 except that taxable income shall take into account
5 those items which are required by Section 703(a)(1)
6 to be separately stated but which would be taken
7 into account by an individual in calculating his
8 taxable income.
9 (f) Valuation limitation amount.
10 (1) In general. The valuation limitation amount
11 referred to in subsections (a) (2) (G), (c) (2) (I) and
12 (d)(2) (E) is an amount equal to:
13 (A) The sum of the pre-August 1, 1969
14 appreciation amounts (to the extent consisting of
15 gain reportable under the provisions of Section 1245
16 or 1250 of the Internal Revenue Code) for all
17 property in respect of which such gain was reported
18 for the taxable year; plus
19 (B) The lesser of (i) the sum of the
20 pre-August 1, 1969 appreciation amounts (to the
21 extent consisting of capital gain) for all property
22 in respect of which such gain was reported for
23 federal income tax purposes for the taxable year, or
24 (ii) the net capital gain for the taxable year,
25 reduced in either case by any amount of such gain
26 included in the amount determined under subsection
27 (a) (2) (F) or (c) (2) (H).
28 (2) Pre-August 1, 1969 appreciation amount.
29 (A) If the fair market value of property
30 referred to in paragraph (1) was readily
31 ascertainable on August 1, 1969, the pre-August 1,
32 1969 appreciation amount for such property is the
33 lesser of (i) the excess of such fair market value
34 over the taxpayer's basis (for determining gain) for
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1 such property on that date (determined under the
2 Internal Revenue Code as in effect on that date), or
3 (ii) the total gain realized and reportable for
4 federal income tax purposes in respect of the sale,
5 exchange or other disposition of such property.
6 (B) If the fair market value of property
7 referred to in paragraph (1) was not readily
8 ascertainable on August 1, 1969, the pre-August 1,
9 1969 appreciation amount for such property is that
10 amount which bears the same ratio to the total gain
11 reported in respect of the property for federal
12 income tax purposes for the taxable year, as the
13 number of full calendar months in that part of the
14 taxpayer's holding period for the property ending
15 July 31, 1969 bears to the number of full calendar
16 months in the taxpayer's entire holding period for
17 the property.
18 (C) The Department shall prescribe such
19 regulations as may be necessary to carry out the
20 purposes of this paragraph.
21 (g) Double deductions. Unless specifically provided
22 otherwise, nothing in this Section shall permit the same item
23 to be deducted more than once.
24 (h) Legislative intention. Except as expressly provided
25 by this Section there shall be no modifications or
26 limitations on the amounts of income, gain, loss or deduction
27 taken into account in determining gross income, adjusted
28 gross income or taxable income for federal income tax
29 purposes for the taxable year, or in the amount of such items
30 entering into the computation of base income and net income
31 under this Act for such taxable year, whether in respect of
32 property values as of August 1, 1969 or otherwise.
33 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
34 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
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1 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
2 89-626, eff. 8-9-96.)
3 (35 ILCS 5/215 new)
4 Sec. 215. College savings plan deduction; restrictions
5 and penalties.
6 (a) For purposes of this Section:
7 "College or university" means a public or private
8 institution of higher learning, including community colleges
9 and vocational schools.
10 "College or university expenses" means tuition and books.
11 "College savings plan" means a plan established to save
12 for college or university expenses. The Department may
13 further define "college savings plan" by rule.
14 (b) A taxpayer shall not be required to deposit more
15 than $500 into an account to begin a college savings plan.
16 The moneys deposited into and the interest earned on an
17 account designated as a college savings plan shall be used
18 only by the account holder and only for college or university
19 expenses. If a taxpayer uses moneys deposited in the college
20 savings plan account for a purpose other than college or
21 university expenses, that principal or income shall be
22 subject to taxation under this Act; in addition, the account
23 holder shall incur a penalty in an amount equal to 10% of
24 that principal or income used for purposes other than college
25 or university expenses.
26 (c) The Department shall promulgate rules necessary to
27 implement and enforce the provisions of this Section.