[ Search ] [ Legislation ] [ Bill Summary ]
[ Home ] [ Back ] [ Bottom ]
90_HB1516
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Creates a deduction
for individuals with an adjusted gross income of less than
$100,000 for eligible expenses of the taxpayer and his or her
dependents engaged in full-time or part-time undergraduate,
graduate, or professional studies at any public or private
college, university, community college, or degree granting
proprietary institution. Provides that the deduction shall
not exceed $10,000. Effective immediately.
LRB9003558KDks
LRB9003558KDks
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
-2- LRB9003558KDks
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
-3- LRB9003558KDks
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
-4- LRB9003558KDks
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
-5- LRB9003558KDks
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
-6- LRB9003558KDks
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.
30 (W) Beginning with tax years ending on or
31 after December 31, 1997 and ending with tax years
32 ending on or before December 31, 2006, an amount
33 equal to the amount paid during the tax year by a
34 taxpayer with an adjusted gross income of less than
-7- LRB9003558KDks
1 $100,000 for eligible expenses of the taxpayer and
2 any dependent of the taxpayer engaged in full-time
3 or part-time undergraduate, graduate, or
4 professional studies at any public or private
5 college, university, community college, or degree
6 granting proprietary institution. In no event shall
7 the amount of this deduction exceed $10,000. For
8 purposes of this deduction, "eligible expenses"
9 shall include all higher education expenses
10 associated with obtaining any schooling that
11 requires a high school degree or successful
12 completion of the high school level test of General
13 Education Development as a prerequesite.
14 (b) Corporations.
15 (1) In general. In the case of a corporation, base
16 income means an amount equal to the taxpayer's taxable
17 income for the taxable year as modified by paragraph (2).
18 (2) Modifications. The taxable income referred to
19 in paragraph (1) shall be modified by adding thereto the
20 sum of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest and all
23 distributions received from regulated investment
24 companies during the taxable year to the extent
25 excluded from gross income in the computation of
26 taxable income;
27 (B) An amount equal to the amount of tax
28 imposed by this Act to the extent deducted from
29 gross income in the computation of taxable income
30 for the taxable year;
31 (C) In the case of a regulated investment
32 company or real estate investment trust, an amount
33 equal to the excess of (i) the net long-term capital
34 gain for the taxable year, over (ii) the amount of
-8- LRB9003558KDks
1 the capital gain dividends designated as such in
2 accordance with Section 852(b)(3)(C) or Section
3 857(b)(3)(C) of the Internal Revenue Code and any
4 amount designated under Section 852(b)(3)(D) of the
5 Internal Revenue Code, attributable to the taxable
6 year.
7 This amendatory Act of 1995 is declarative of existing
8 law and is not a new enactment.
9 (D) The amount of any net operating loss
10 deduction taken in arriving at taxable income, other
11 than a net operating loss carried forward from a
12 taxable year ending prior to December 31, 1986; and
13 (E) For taxable years in which a net operating
14 loss carryback or carryforward from a taxable year
15 ending prior to December 31, 1986 is an element of
16 taxable income under paragraph (1) of subsection (e)
17 or subparagraph (E) of paragraph (2) of subsection
18 (e), the amount by which addition modifications
19 other than those provided by this subparagraph (E)
20 exceeded subtraction modifications in such earlier
21 taxable year, with the following limitations applied
22 in the order that they are listed:
23 (i) the addition modification relating to
24 the net operating loss carried back or forward
25 to the taxable year from any taxable year
26 ending prior to December 31, 1986 shall be
27 reduced by the amount of addition modification
28 under this subparagraph (E) which related to
29 that net operating loss and which was taken
30 into account in calculating the base income of
31 an earlier taxable year, and
32 (ii) the addition modification relating
33 to the net operating loss carried back or
34 forward to the taxable year from any taxable
-9- LRB9003558KDks
1 year ending prior to December 31, 1986 shall
2 not exceed the amount of such carryback or
3 carryforward;
4 For taxable years in which there is a net
5 operating loss carryback or carryforward from more
6 than one other taxable year ending prior to December
7 31, 1986, the addition modification provided in this
8 subparagraph (E) shall be the sum of the amounts
9 computed independently under the preceding
10 provisions of this subparagraph (E) for each such
11 taxable year,
12 and by deducting from the total so obtained the sum of
13 the following amounts:
14 (F) An amount equal to the amount of any tax
15 imposed by this Act which was refunded to the
16 taxpayer and included in such total for the taxable
17 year;
18 (G) An amount equal to any amount included in
19 such total under Section 78 of the Internal Revenue
20 Code;
21 (H) In the case of a regulated investment
22 company, an amount equal to the amount of exempt
23 interest dividends as defined in subsection (b) (5)
24 of Section 852 of the Internal Revenue Code, paid to
25 shareholders for the taxable year;
26 (I) With the exception of any amounts
27 subtracted under subparagraph (J), an amount equal
28 to the sum of all amounts disallowed as deductions
29 by Sections 171(a) (2), and 265(a)(2) and amounts
30 disallowed as interest expense by Section 291(a)(3)
31 of the Internal Revenue Code, as now or hereafter
32 amended, and all amounts of expenses allocable to
33 interest and disallowed as deductions by Section
34 265(a)(1) of the Internal Revenue Code, as now or
-10- LRB9003558KDks
1 hereafter amended;
2 (J) An amount equal to all amounts included in
3 such total which are exempt from taxation by this
4 State either by reason of its statutes or
5 Constitution or by reason of the Constitution,
6 treaties or statutes of the United States; provided
7 that, in the case of any statute of this State that
8 exempts income derived from bonds or other
9 obligations from the tax imposed under this Act, the
10 amount exempted shall be the interest net of bond
11 premium amortization;
12 (K) An amount equal to those dividends
13 included in such total which were paid by a
14 corporation which conducts business operations in an
15 Enterprise Zone or zones created under the Illinois
16 Enterprise Zone Act and conducts substantially all
17 of its operations in an Enterprise Zone or zones;
18 (L) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (K) of paragraph 2 of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (L);
28 (M) For any taxpayer that is a financial
29 organization within the meaning of Section 304(c) of
30 this Act, an amount included in such total as
31 interest income from a loan or loans made by such
32 taxpayer to a borrower, to the extent that such a
33 loan is secured by property which is eligible for
34 the Enterprise Zone Investment Credit. To determine
-11- LRB9003558KDks
1 the portion of a loan or loans that is secured by
2 property eligible for a Section 201(h) investment
3 credit to the borrower, the entire principal amount
4 of the loan or loans between the taxpayer and the
5 borrower should be divided into the basis of the
6 Section 201(h) investment credit property which
7 secures the loan or loans, using for this purpose
8 the original basis of such property on the date that
9 it was placed in service in the Enterprise Zone.
10 The subtraction modification available to taxpayer
11 in any year under this subsection shall be that
12 portion of the total interest paid by the borrower
13 with respect to such loan attributable to the
14 eligible property as calculated under the previous
15 sentence;
16 (M-1) For any taxpayer that is a financial
17 organization within the meaning of Section 304(c) of
18 this Act, an amount included in such total as
19 interest income from a loan or loans made by such
20 taxpayer to a borrower, to the extent that such a
21 loan is secured by property which is eligible for
22 the High Impact Business Investment Credit. To
23 determine the portion of a loan or loans that is
24 secured by property eligible for a Section 201(i)
25 investment credit to the borrower, the entire
26 principal amount of the loan or loans between the
27 taxpayer and the borrower should be divided into the
28 basis of the Section 201(i) investment credit
29 property which secures the loan or loans, using for
30 this purpose the original basis of such property on
31 the date that it was placed in service in a
32 federally designated Foreign Trade Zone or Sub-Zone
33 located in Illinois. No taxpayer that is eligible
34 for the deduction provided in subparagraph (M) of
-12- LRB9003558KDks
1 paragraph (2) of this subsection shall be eligible
2 for the deduction provided under this subparagraph
3 (M-1). The subtraction modification available to
4 taxpayers in any year under this subsection shall be
5 that portion of the total interest paid by the
6 borrower with respect to such loan attributable to
7 the eligible property as calculated under the
8 previous sentence;
9 (N) Two times any contribution made during the
10 taxable year to a designated zone organization to
11 the extent that the contribution (i) qualifies as a
12 charitable contribution under subsection (c) of
13 Section 170 of the Internal Revenue Code and (ii)
14 must, by its terms, be used for a project approved
15 by the Department of Commerce and Community Affairs
16 under Section 11 of the Illinois Enterprise Zone
17 Act;
18 (O) An amount equal to: (i) 85% for taxable
19 years ending on or before December 31, 1992, or, a
20 percentage equal to the percentage allowable under
21 Section 243(a)(1) of the Internal Revenue Code of
22 1986 for taxable years ending after December 31,
23 1992, of the amount by which dividends included in
24 taxable income and received from a corporation that
25 is not created or organized under the laws of the
26 United States or any state or political subdivision
27 thereof, including, for taxable years ending on or
28 after December 31, 1988, dividends received or
29 deemed received or paid or deemed paid under
30 Sections 951 through 964 of the Internal Revenue
31 Code, exceed the amount of the modification provided
32 under subparagraph (G) of paragraph (2) of this
33 subsection (b) which is related to such dividends;
34 plus (ii) 100% of the amount by which dividends,
-13- LRB9003558KDks
1 included in taxable income and received, including,
2 for taxable years ending on or after December 31,
3 1988, dividends received or deemed received or paid
4 or deemed paid under Sections 951 through 964 of the
5 Internal Revenue Code, from any such corporation
6 specified in clause (i) that would but for the
7 provisions of Section 1504 (b) (3) of the Internal
8 Revenue Code be treated as a member of the
9 affiliated group which includes the dividend
10 recipient, exceed the amount of the modification
11 provided under subparagraph (G) of paragraph (2) of
12 this subsection (b) which is related to such
13 dividends;
14 (P) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Tax Increment Allocation Redevelopment Act; and
17 (Q) An amount equal to the amount of the
18 deduction used to compute the federal income tax
19 credit for restoration of substantial amounts held
20 under claim of right for the taxable year pursuant
21 to Section 1341 of the Internal Revenue Code of
22 1986.
23 (3) Special rule. For purposes of paragraph (2)
24 (A), "gross income" in the case of a life insurance
25 company, for tax years ending on and after December 31,
26 1994, shall mean the gross investment income for the
27 taxable year.
28 (c) Trusts and estates.
29 (1) In general. In the case of a trust or estate,
30 base income means an amount equal to the taxpayer's
31 taxable income for the taxable year as modified by
32 paragraph (2).
33 (2) Modifications. Subject to the provisions of
34 paragraph (3), the taxable income referred to in
-14- LRB9003558KDks
1 paragraph (1) shall be modified by adding thereto the sum
2 of the following amounts:
3 (A) An amount equal to all amounts paid or
4 accrued to the taxpayer as interest or dividends
5 during the taxable year to the extent excluded from
6 gross income in the computation of taxable income;
7 (B) In the case of (i) an estate, $600; (ii) a
8 trust which, under its governing instrument, is
9 required to distribute all of its income currently,
10 $300; and (iii) any other trust, $100, but in each
11 such case, only to the extent such amount was
12 deducted in the computation of taxable income;
13 (C) An amount equal to the amount of tax
14 imposed by this Act to the extent deducted from
15 gross income in the computation of taxable income
16 for the taxable year;
17 (D) The amount of any net operating loss
18 deduction taken in arriving at taxable income, other
19 than a net operating loss carried forward from a
20 taxable year ending prior to December 31, 1986;
21 (E) For taxable years in which a net operating
22 loss carryback or carryforward from a taxable year
23 ending prior to December 31, 1986 is an element of
24 taxable income under paragraph (1) of subsection (e)
25 or subparagraph (E) of paragraph (2) of subsection
26 (e), the amount by which addition modifications
27 other than those provided by this subparagraph (E)
28 exceeded subtraction modifications in such taxable
29 year, with the following limitations applied in the
30 order that they are listed:
31 (i) the addition modification relating to
32 the net operating loss carried back or forward
33 to the taxable year from any taxable year
34 ending prior to December 31, 1986 shall be
-15- LRB9003558KDks
1 reduced by the amount of addition modification
2 under this subparagraph (E) which related to
3 that net operating loss and which was taken
4 into account in calculating the base income of
5 an earlier taxable year, and
6 (ii) the addition modification relating
7 to the net operating loss carried back or
8 forward to the taxable year from any taxable
9 year ending prior to December 31, 1986 shall
10 not exceed the amount of such carryback or
11 carryforward;
12 For taxable years in which there is a net
13 operating loss carryback or carryforward from more
14 than one other taxable year ending prior to December
15 31, 1986, the addition modification provided in this
16 subparagraph (E) shall be the sum of the amounts
17 computed independently under the preceding
18 provisions of this subparagraph (E) for each such
19 taxable year;
20 (F) For taxable years ending on or after
21 January 1, 1989, an amount equal to the tax deducted
22 pursuant to Section 164 of the Internal Revenue Code
23 if the trust or estate is claiming the same tax for
24 purposes of the Illinois foreign tax credit under
25 Section 601 of this Act; and
26 (G) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of taxable income;
30 and by deducting from the total so obtained the sum of
31 the following amounts:
32 (H) An amount equal to all amounts included in
33 such total pursuant to the provisions of Sections
34 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
-16- LRB9003558KDks
1 408 of the Internal Revenue Code or included in such
2 total as distributions under the provisions of any
3 retirement or disability plan for employees of any
4 governmental agency or unit, or retirement payments
5 to retired partners, which payments are excluded in
6 computing net earnings from self employment by
7 Section 1402 of the Internal Revenue Code and
8 regulations adopted pursuant thereto;
9 (I) The valuation limitation amount;
10 (J) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the
12 taxpayer and included in such total for the taxable
13 year;
14 (K) An amount equal to all amounts included in
15 taxable income as modified by subparagraphs (A),
16 (B), (C), (D), (E), (F) and (G) which are exempt
17 from taxation by this State either by reason of its
18 statutes or Constitution or by reason of the
19 Constitution, treaties or statutes of the United
20 States; provided that, in the case of any statute of
21 this State that exempts income derived from bonds or
22 other obligations from the tax imposed under this
23 Act, the amount exempted shall be the interest net
24 of bond premium amortization;
25 (L) With the exception of any amounts
26 subtracted under subparagraph (K), an amount equal
27 to the sum of all amounts disallowed as deductions
28 by Sections 171(a) (2) and 265(a)(2) of the Internal
29 Revenue Code, as now or hereafter amended, and all
30 amounts of expenses allocable to interest and
31 disallowed as deductions by Section 265(1) of the
32 Internal Revenue Code of 1954, as now or hereafter
33 amended;
34 (M) An amount equal to those dividends
-17- LRB9003558KDks
1 included in such total which were paid by a
2 corporation which conducts business operations in an
3 Enterprise Zone or zones created under the Illinois
4 Enterprise Zone Act and conducts substantially all
5 of its operations in an Enterprise Zone or Zones;
6 (N) An amount equal to any contribution made
7 to a job training project established pursuant to
8 the Tax Increment Allocation Redevelopment Act;
9 (O) An amount equal to those dividends
10 included in such total that were paid by a
11 corporation that conducts business operations in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 and that is designated a High Impact Business
14 located in Illinois; provided that dividends
15 eligible for the deduction provided in subparagraph
16 (M) of paragraph (2) of this subsection shall not be
17 eligible for the deduction provided under this
18 subparagraph (O); and
19 (P) An amount equal to the amount of the
20 deduction used to compute the federal income tax
21 credit for restoration of substantial amounts held
22 under claim of right for the taxable year pursuant
23 to Section 1341 of the Internal Revenue Code of
24 1986.
25 (3) Limitation. The amount of any modification
26 otherwise required under this subsection shall, under
27 regulations prescribed by the Department, be adjusted by
28 any amounts included therein which were properly paid,
29 credited, or required to be distributed, or permanently
30 set aside for charitable purposes pursuant to Internal
31 Revenue Code Section 642(c) during the taxable year.
32 (d) Partnerships.
33 (1) In general. In the case of a partnership, base
34 income means an amount equal to the taxpayer's taxable
-18- LRB9003558KDks
1 income for the taxable year as modified by paragraph (2).
2 (2) Modifications. The taxable income referred to
3 in paragraph (1) shall be modified by adding thereto the
4 sum of the following amounts:
5 (A) An amount equal to all amounts paid or
6 accrued to the taxpayer as interest or dividends
7 during the taxable year to the extent excluded from
8 gross income in the computation of taxable income;
9 (B) An amount equal to the amount of tax
10 imposed by this Act to the extent deducted from
11 gross income for the taxable year; and
12 (C) The amount of deductions allowed to the
13 partnership pursuant to Section 707 (c) of the
14 Internal Revenue Code in calculating its taxable
15 income;
16 (D) 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 following
21 amounts:
22 (E) The valuation limitation amount;
23 (F) An amount equal to the amount of any tax
24 imposed by this Act which was refunded to the
25 taxpayer and included in such total for the taxable
26 year;
27 (G) An amount equal to all amounts included in
28 taxable income as modified by subparagraphs (A),
29 (B), (C) and (D) which are exempt from taxation by
30 this State either by reason of its statutes or
31 Constitution or by reason of the Constitution,
32 treaties or statutes of the United States; provided
33 that, in the case of any statute of this State that
34 exempts income derived from bonds or other
-19- LRB9003558KDks
1 obligations from the tax imposed under this Act, the
2 amount exempted shall be the interest net of bond
3 premium amortization;
4 (H) Any income of the partnership which
5 constitutes personal service income as defined in
6 Section 1348 (b) (1) of the Internal Revenue Code
7 (as in effect December 31, 1981) or a reasonable
8 allowance for compensation paid or accrued for
9 services rendered by partners to the partnership,
10 whichever is greater;
11 (I) An amount equal to all amounts of income
12 distributable to an entity subject to the Personal
13 Property Tax Replacement Income Tax imposed by
14 subsections (c) and (d) of Section 201 of this Act
15 including amounts distributable to organizations
16 exempt from federal income tax by reason of Section
17 501(a) of the Internal Revenue Code;
18 (J) With the exception of any amounts
19 subtracted under subparagraph (G), an amount equal
20 to the sum of all amounts disallowed as deductions
21 by Sections 171(a) (2), and 265(2) of the Internal
22 Revenue Code of 1954, as now or hereafter amended,
23 and all amounts of expenses allocable to interest
24 and disallowed as deductions by Section 265(1) of
25 the Internal Revenue Code, as now or hereafter
26 amended;
27 (K) An amount equal to those dividends
28 included in such total which were paid by a
29 corporation which conducts business operations in an
30 Enterprise Zone or zones created under the Illinois
31 Enterprise Zone Act, enacted by the 82nd General
32 Assembly, and which does not conduct such operations
33 other than in an Enterprise Zone or Zones;
34 (L) An amount equal to any contribution made
-20- LRB9003558KDks
1 to a job training project established pursuant to
2 the Real Property Tax Increment Allocation
3 Redevelopment Act;
4 (M) An amount equal to those dividends
5 included in such total that were paid by a
6 corporation that conducts business operations in a
7 federally designated Foreign Trade Zone or Sub-Zone
8 and that is designated a High Impact Business
9 located in Illinois; provided that dividends
10 eligible for the deduction provided in subparagraph
11 (K) of paragraph (2) of this subsection shall not be
12 eligible for the deduction provided under this
13 subparagraph (M); and
14 (N) An amount equal to the amount of the
15 deduction used to compute the federal income tax
16 credit for restoration of substantial amounts held
17 under claim of right for the taxable year pursuant
18 to Section 1341 of the Internal Revenue Code of
19 1986.
20 (e) Gross income; adjusted gross income; taxable income.
21 (1) In general. Subject to the provisions of
22 paragraph (2) and subsection (b) (3), for purposes of
23 this Section and Section 803(e), a taxpayer's gross
24 income, adjusted gross income, or taxable income for the
25 taxable year shall mean the amount of gross income,
26 adjusted gross income or taxable income properly
27 reportable for federal income tax purposes for the
28 taxable year under the provisions of the Internal Revenue
29 Code. Taxable income may be less than zero. However, for
30 taxable years ending on or after December 31, 1986, net
31 operating loss carryforwards from taxable years ending
32 prior to December 31, 1986, may not exceed the sum of
33 federal taxable income for the taxable year before net
34 operating loss deduction, plus the excess of addition
-21- LRB9003558KDks
1 modifications over subtraction modifications for the
2 taxable year. For taxable years ending prior to December
3 31, 1986, taxable income may never be an amount in excess
4 of the net operating loss for the taxable year as defined
5 in subsections (c) and (d) of Section 172 of the Internal
6 Revenue Code, provided that when taxable income of a
7 corporation (other than a Subchapter S corporation),
8 trust, or estate is less than zero and addition
9 modifications, other than those provided by subparagraph
10 (E) of paragraph (2) of subsection (b) for corporations
11 or subparagraph (E) of paragraph (2) of subsection (c)
12 for trusts and estates, exceed subtraction modifications,
13 an addition modification must be made under those
14 subparagraphs for any other taxable year to which the
15 taxable income less than zero (net operating loss) is
16 applied under Section 172 of the Internal Revenue Code or
17 under subparagraph (E) of paragraph (2) of this
18 subsection (e) applied in conjunction with Section 172 of
19 the Internal Revenue Code.
20 (2) Special rule. For purposes of paragraph (1) of
21 this subsection, the taxable income properly reportable
22 for federal income tax purposes shall mean:
23 (A) Certain life insurance companies. In the
24 case of a life insurance company subject to the tax
25 imposed by Section 801 of the Internal Revenue Code,
26 life insurance company taxable income, plus the
27 amount of distribution from pre-1984 policyholder
28 surplus accounts as calculated under Section 815a of
29 the Internal Revenue Code;
30 (B) Certain other insurance companies. In the
31 case of mutual insurance companies subject to the
32 tax imposed by Section 831 of the Internal Revenue
33 Code, insurance company taxable income;
34 (C) Regulated investment companies. In the
-22- LRB9003558KDks
1 case of a regulated investment company subject to
2 the tax imposed by Section 852 of the Internal
3 Revenue Code, investment company taxable income;
4 (D) Real estate investment trusts. In the
5 case of a real estate investment trust subject to
6 the tax imposed by Section 857 of the Internal
7 Revenue Code, real estate investment trust taxable
8 income;
9 (E) Consolidated corporations. In the case of
10 a corporation which is a member of an affiliated
11 group of corporations filing a consolidated income
12 tax return for the taxable year for federal income
13 tax purposes, taxable income determined as if such
14 corporation had filed a separate return for federal
15 income tax purposes for the taxable year and each
16 preceding taxable year for which it was a member of
17 an affiliated group. For purposes of this
18 subparagraph, the taxpayer's separate taxable income
19 shall be determined as if the election provided by
20 Section 243(b) (2) of the Internal Revenue Code had
21 been in effect for all such years;
22 (F) Cooperatives. In the case of a
23 cooperative corporation or association, the taxable
24 income of such organization determined in accordance
25 with the provisions of Section 1381 through 1388 of
26 the Internal Revenue Code;
27 (G) Subchapter S corporations. In the case
28 of: (i) a Subchapter S corporation for which there
29 is in effect an election for the taxable year under
30 Section 1362 of the Internal Revenue Code, the
31 taxable income of such corporation determined in
32 accordance with Section 1363(b) of the Internal
33 Revenue Code, except that taxable income shall take
34 into account those items which are required by
-23- LRB9003558KDks
1 Section 1363(b)(1) of the Internal Revenue Code to
2 be separately stated; and (ii) a Subchapter S
3 corporation for which there is in effect a federal
4 election to opt out of the provisions of the
5 Subchapter S Revision Act of 1982 and have applied
6 instead the prior federal Subchapter S rules as in
7 effect on July 1, 1982, the taxable income of such
8 corporation determined in accordance with the
9 federal Subchapter S rules as in effect on July 1,
10 1982; and
11 (H) Partnerships. In the case of a
12 partnership, taxable income determined in accordance
13 with Section 703 of the Internal Revenue Code,
14 except that taxable income shall take into account
15 those items which are required by Section 703(a)(1)
16 to be separately stated but which would be taken
17 into account by an individual in calculating his
18 taxable income.
19 (f) Valuation limitation amount.
20 (1) In general. The valuation limitation amount
21 referred to in subsections (a) (2) (G), (c) (2) (I) and
22 (d)(2) (E) is an amount equal to:
23 (A) The sum of the pre-August 1, 1969
24 appreciation amounts (to the extent consisting of
25 gain reportable under the provisions of Section 1245
26 or 1250 of the Internal Revenue Code) for all
27 property in respect of which such gain was reported
28 for the taxable year; plus
29 (B) The lesser of (i) the sum of the
30 pre-August 1, 1969 appreciation amounts (to the
31 extent consisting of capital gain) for all property
32 in respect of which such gain was reported for
33 federal income tax purposes for the taxable year, or
34 (ii) the net capital gain for the taxable year,
-24- LRB9003558KDks
1 reduced in either case by any amount of such gain
2 included in the amount determined under subsection
3 (a) (2) (F) or (c) (2) (H).
4 (2) Pre-August 1, 1969 appreciation amount.
5 (A) If the fair market value of property
6 referred to in paragraph (1) was readily
7 ascertainable on August 1, 1969, the pre-August 1,
8 1969 appreciation amount for such property is the
9 lesser of (i) the excess of such fair market value
10 over the taxpayer's basis (for determining gain) for
11 such property on that date (determined under the
12 Internal Revenue Code as in effect on that date), or
13 (ii) the total gain realized and reportable for
14 federal income tax purposes in respect of the sale,
15 exchange or other disposition of such property.
16 (B) If the fair market value of property
17 referred to in paragraph (1) was not readily
18 ascertainable on August 1, 1969, the pre-August 1,
19 1969 appreciation amount for such property is that
20 amount which bears the same ratio to the total gain
21 reported in respect of the property for federal
22 income tax purposes for the taxable year, as the
23 number of full calendar months in that part of the
24 taxpayer's holding period for the property ending
25 July 31, 1969 bears to the number of full calendar
26 months in the taxpayer's entire holding period for
27 the property.
28 (C) The Department shall prescribe such
29 regulations as may be necessary to carry out the
30 purposes of this paragraph.
31 (g) Double deductions. Unless specifically provided
32 otherwise, nothing in this Section shall permit the same item
33 to be deducted more than once.
34 (h) Legislative intention. Except as expressly provided
-25- LRB9003558KDks
1 by this Section there shall be no modifications or
2 limitations on the amounts of income, gain, loss or deduction
3 taken into account in determining gross income, adjusted
4 gross income or taxable income for federal income tax
5 purposes for the taxable year, or in the amount of such items
6 entering into the computation of base income and net income
7 under this Act for such taxable year, whether in respect of
8 property values as of August 1, 1969 or otherwise.
9 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
10 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
11 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
12 89-626, eff. 8-9-96.)
13 Section 99. Effective date. This Act takes effect upon
14 becoming law.