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90_HB2591
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Creates a deduction
for taxpayers with an adjusted gross income of less than
$100,000 equal to the contributions made by the taxpayer
during the taxable year to a Roth IRA under Section 408A of
the Internal Revenue Code. Provides that the deduction is
available for tax years beginning on or after January 1,
1998. Exempts the deduction from the sunset provisions.
Effective immediately.
LRB9009158KDks
LRB9009158KDks
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 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) For taxable years beginning on or after
31 January 1, 1998, for a taxpayer with an adjusted
32 gross income of less than $100,000, all amounts
33 contributed in the taxable year to a Roth IRA under
34 Section 408A of the Internal Revenue Code. This
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1 paragraph is exempt from the provisions of Section
2 250.
3 (b) Corporations.
4 (1) In general. In the case of a corporation, base
5 income means an amount equal to the taxpayer's taxable
6 income for the taxable year as modified by paragraph (2).
7 (2) Modifications. The taxable income referred to
8 in paragraph (1) shall be modified by adding thereto the
9 sum of the following amounts:
10 (A) An amount equal to all amounts paid or
11 accrued to the taxpayer as interest and all
12 distributions received from regulated investment
13 companies during the taxable year to the extent
14 excluded from gross income in the computation of
15 taxable income;
16 (B) An amount equal to the amount of tax
17 imposed by this Act to the extent deducted from
18 gross income in the computation of taxable income
19 for the taxable year;
20 (C) In the case of a regulated investment
21 company, an amount equal to the excess of (i) the
22 net long-term capital gain for the taxable year,
23 over (ii) the amount of the capital gain dividends
24 designated as such in accordance with Section
25 852(b)(3)(C) of the Internal Revenue Code and any
26 amount designated under Section 852(b)(3)(D) of the
27 Internal Revenue Code, attributable to the taxable
28 year.
29 This amendatory Act of 1995 is declarative of existing
30 law and is not a new enactment.
31 (D) The amount of any net operating loss
32 deduction taken in arriving at taxable income, other
33 than a net operating loss carried forward from a
34 taxable year ending prior to December 31, 1986; and
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1 (E) For taxable years in which a net operating
2 loss carryback or carryforward from a taxable year
3 ending prior to December 31, 1986 is an element of
4 taxable income under paragraph (1) of subsection (e)
5 or subparagraph (E) of paragraph (2) of subsection
6 (e), the amount by which addition modifications
7 other than those provided by this subparagraph (E)
8 exceeded subtraction modifications in such earlier
9 taxable year, with the following limitations applied
10 in the order that they are listed:
11 (i) the addition modification relating to
12 the net operating loss carried back or forward
13 to the taxable year from any taxable year
14 ending prior to December 31, 1986 shall be
15 reduced by the amount of addition modification
16 under this subparagraph (E) which related to
17 that net operating loss and which was taken
18 into account in calculating the base income of
19 an earlier taxable year, and
20 (ii) the addition modification relating
21 to the net operating loss carried back or
22 forward to the taxable year from any taxable
23 year ending prior to December 31, 1986 shall
24 not exceed the amount of such carryback or
25 carryforward;
26 For taxable years in which there is a net
27 operating loss carryback or carryforward from more
28 than one other taxable year ending prior to December
29 31, 1986, the addition modification provided in this
30 subparagraph (E) shall be the sum of the amounts
31 computed independently under the preceding
32 provisions of this subparagraph (E) for each such
33 taxable year,
34 and by deducting from the total so obtained the sum of
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1 the following amounts:
2 (F) An amount equal to the amount of any tax
3 imposed by this Act which was refunded to the
4 taxpayer and included in such total for the taxable
5 year;
6 (G) An amount equal to any amount included in
7 such total under Section 78 of the Internal Revenue
8 Code;
9 (H) In the case of a regulated investment
10 company, an amount equal to the amount of exempt
11 interest dividends as defined in subsection (b) (5)
12 of Section 852 of the Internal Revenue Code, paid to
13 shareholders for the taxable year;
14 (I) With the exception of any amounts
15 subtracted under subparagraph (J), an amount equal
16 to the sum of all amounts disallowed as deductions
17 by Sections 171(a) (2), and 265(a)(2) and amounts
18 disallowed as interest expense by Section 291(a)(3)
19 of the Internal Revenue Code, as now or hereafter
20 amended, and all amounts of expenses allocable to
21 interest and disallowed as deductions by Section
22 265(a)(1) of the Internal Revenue Code, as now or
23 hereafter amended;
24 (J) An amount equal to all amounts included in
25 such total which are exempt from taxation by this
26 State either by reason of its statutes or
27 Constitution or by reason of the Constitution,
28 treaties or statutes of the United States; provided
29 that, in the case of any statute of this State that
30 exempts income derived from bonds or other
31 obligations from the tax imposed under this Act, the
32 amount exempted shall be the interest net of bond
33 premium amortization;
34 (K) An amount equal to those dividends
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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 (L) An amount equal to those dividends
7 included in such total that were paid by a
8 corporation that conducts business operations in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 and that is designated a High Impact Business
11 located in Illinois; provided that dividends
12 eligible for the deduction provided in subparagraph
13 (K) of paragraph 2 of this subsection shall not be
14 eligible for the deduction provided under this
15 subparagraph (L);
16 (M) 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 Enterprise Zone Investment Credit. To determine
23 the portion of a loan or loans that is secured by
24 property eligible for a Section 201(h) investment
25 credit to the borrower, the entire principal amount
26 of the loan or loans between the taxpayer and the
27 borrower should be divided into the basis of the
28 Section 201(h) investment credit property which
29 secures the loan or loans, using for this purpose
30 the original basis of such property on the date that
31 it was placed in service in the Enterprise Zone.
32 The subtraction modification available to taxpayer
33 in any year under this subsection shall be that
34 portion of the total interest paid by the borrower
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1 with respect to such loan attributable to the
2 eligible property as calculated under the previous
3 sentence;
4 (M-1) For any taxpayer that is a financial
5 organization within the meaning of Section 304(c) of
6 this Act, an amount included in such total as
7 interest income from a loan or loans made by such
8 taxpayer to a borrower, to the extent that such a
9 loan is secured by property which is eligible for
10 the High Impact Business Investment Credit. To
11 determine the portion of a loan or loans that is
12 secured by property eligible for a Section 201(i)
13 investment credit to the borrower, the entire
14 principal amount of the loan or loans between the
15 taxpayer and the borrower should be divided into the
16 basis of the Section 201(i) investment credit
17 property which secures the loan or loans, using for
18 this purpose the original basis of such property on
19 the date that it was placed in service in a
20 federally designated Foreign Trade Zone or Sub-Zone
21 located in Illinois. No taxpayer that is eligible
22 for the deduction provided in subparagraph (M) of
23 paragraph (2) of this subsection shall be eligible
24 for the deduction provided under this subparagraph
25 (M-1). The subtraction modification available to
26 taxpayers in any year under this subsection shall be
27 that portion of the total interest paid by the
28 borrower with respect to such loan attributable to
29 the eligible property as calculated under the
30 previous sentence;
31 (N) Two times any contribution made during the
32 taxable year to a designated zone organization to
33 the extent that the contribution (i) qualifies as a
34 charitable contribution under subsection (c) of
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1 Section 170 of the Internal Revenue Code and (ii)
2 must, by its terms, be used for a project approved
3 by the Department of Commerce and Community Affairs
4 under Section 11 of the Illinois Enterprise Zone
5 Act;
6 (O) An amount equal to: (i) 85% for taxable
7 years ending on or before December 31, 1992, or, a
8 percentage equal to the percentage allowable under
9 Section 243(a)(1) of the Internal Revenue Code of
10 1986 for taxable years ending after December 31,
11 1992, of the amount by which dividends included in
12 taxable income and received from a corporation that
13 is not created or organized under the laws of the
14 United States or any state or political subdivision
15 thereof, including, for taxable years ending on or
16 after December 31, 1988, dividends received or
17 deemed received or paid or deemed paid under
18 Sections 951 through 964 of the Internal Revenue
19 Code, exceed the amount of the modification provided
20 under subparagraph (G) of paragraph (2) of this
21 subsection (b) which is related to such dividends;
22 plus (ii) 100% of the amount by which dividends,
23 included in taxable income and received, including,
24 for taxable years ending on or after December 31,
25 1988, dividends received or deemed received or paid
26 or deemed paid under Sections 951 through 964 of the
27 Internal Revenue Code, from any such corporation
28 specified in clause (i) that would but for the
29 provisions of Section 1504 (b) (3) of the Internal
30 Revenue Code be treated as a member of the
31 affiliated group which includes the dividend
32 recipient, exceed the amount of the modification
33 provided under subparagraph (G) of paragraph (2) of
34 this subsection (b) which is related to such
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1 dividends;
2 (P) An amount equal to any contribution made
3 to a job training project established pursuant to
4 the Tax Increment Allocation Redevelopment Act; and
5 (Q) An amount equal to the amount of the
6 deduction used to compute the federal income tax
7 credit for restoration of substantial amounts held
8 under claim of right for the taxable year pursuant
9 to Section 1341 of the Internal Revenue Code of
10 1986.
11 (3) Special rule. For purposes of paragraph (2)
12 (A), "gross income" in the case of a life insurance
13 company, for tax years ending on and after December 31,
14 1994, shall mean the gross investment income for the
15 taxable year.
16 (c) Trusts and estates.
17 (1) In general. In the case of a trust or estate,
18 base income means an amount equal to the taxpayer's
19 taxable income for the taxable year as modified by
20 paragraph (2).
21 (2) Modifications. Subject to the provisions of
22 paragraph (3), the taxable income referred to in
23 paragraph (1) shall be modified by adding thereto the sum
24 of the following amounts:
25 (A) An amount equal to all amounts paid or
26 accrued to the taxpayer as interest or dividends
27 during the taxable year to the extent excluded from
28 gross income in the computation of taxable income;
29 (B) In the case of (i) an estate, $600; (ii) a
30 trust which, under its governing instrument, is
31 required to distribute all of its income currently,
32 $300; and (iii) any other trust, $100, but in each
33 such case, only to the extent such amount was
34 deducted in the computation of taxable income;
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1 (C) An amount equal to the amount of tax
2 imposed by this Act to the extent deducted from
3 gross income in the computation of taxable income
4 for the taxable year;
5 (D) The amount of any net operating loss
6 deduction taken in arriving at taxable income, other
7 than a net operating loss carried forward from a
8 taxable year ending prior to December 31, 1986;
9 (E) For taxable years in which a net operating
10 loss carryback or carryforward from a taxable year
11 ending prior to December 31, 1986 is an element of
12 taxable income under paragraph (1) of subsection (e)
13 or subparagraph (E) of paragraph (2) of subsection
14 (e), the amount by which addition modifications
15 other than those provided by this subparagraph (E)
16 exceeded subtraction modifications in such taxable
17 year, with the following limitations applied in the
18 order that they are listed:
19 (i) the addition modification relating to
20 the net operating loss carried back or forward
21 to the taxable year from any taxable year
22 ending prior to December 31, 1986 shall be
23 reduced by the amount of addition modification
24 under this subparagraph (E) which related to
25 that net operating loss and which was taken
26 into account in calculating the base income of
27 an earlier taxable year, and
28 (ii) the addition modification relating
29 to the net operating loss carried back or
30 forward to the taxable year from any taxable
31 year ending prior to December 31, 1986 shall
32 not exceed the amount of such carryback or
33 carryforward;
34 For taxable years in which there is a net
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1 operating loss carryback or carryforward from more
2 than one other taxable year ending prior to December
3 31, 1986, the addition modification provided in this
4 subparagraph (E) shall be the sum of the amounts
5 computed independently under the preceding
6 provisions of this subparagraph (E) for each such
7 taxable year;
8 (F) For taxable years ending on or after
9 January 1, 1989, an amount equal to the tax deducted
10 pursuant to Section 164 of the Internal Revenue Code
11 if the trust or estate is claiming the same tax for
12 purposes of the Illinois foreign tax credit under
13 Section 601 of this Act; and
14 (G) An amount equal to the amount of the
15 capital gain deduction allowable under the Internal
16 Revenue Code, to the extent deducted from gross
17 income in the computation of taxable income;
18 and by deducting from the total so obtained the sum of
19 the following amounts:
20 (H) An amount equal to all amounts included in
21 such total pursuant to the provisions of Sections
22 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
23 408 of the Internal Revenue Code or included in such
24 total as distributions under the provisions of any
25 retirement or disability plan for employees of any
26 governmental agency or unit, or retirement payments
27 to retired partners, which payments are excluded in
28 computing net earnings from self employment by
29 Section 1402 of the Internal Revenue Code and
30 regulations adopted pursuant thereto;
31 (I) The valuation limitation amount;
32 (J) An amount equal to the amount of any tax
33 imposed by this Act which was refunded to the
34 taxpayer and included in such total for the taxable
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1 year;
2 (K) An amount equal to all amounts included in
3 taxable income as modified by subparagraphs (A),
4 (B), (C), (D), (E), (F) and (G) which are exempt
5 from taxation by this State either by reason of its
6 statutes or Constitution or by reason of the
7 Constitution, treaties or statutes of the United
8 States; provided that, in the case of any statute of
9 this State that exempts income derived from bonds or
10 other obligations from the tax imposed under this
11 Act, the amount exempted shall be the interest net
12 of bond premium amortization;
13 (L) With the exception of any amounts
14 subtracted under subparagraph (K), an amount equal
15 to the sum of all amounts disallowed as deductions
16 by Sections 171(a) (2) and 265(a)(2) of the Internal
17 Revenue Code, as now or hereafter amended, and all
18 amounts of expenses allocable to interest and
19 disallowed as deductions by Section 265(1) of the
20 Internal Revenue Code of 1954, as now or hereafter
21 amended;
22 (M) An amount equal to those dividends
23 included in such total which were paid by a
24 corporation which conducts business operations in an
25 Enterprise Zone or zones created under the Illinois
26 Enterprise Zone Act and conducts substantially all
27 of its operations in an Enterprise Zone or Zones;
28 (N) An amount equal to any contribution made
29 to a job training project established pursuant to
30 the Tax Increment Allocation Redevelopment Act;
31 (O) An amount equal to those dividends
32 included in such total that were paid by a
33 corporation that conducts business operations in a
34 federally designated Foreign Trade Zone or Sub-Zone
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1 and that is designated a High Impact Business
2 located in Illinois; provided that dividends
3 eligible for the deduction provided in subparagraph
4 (M) of paragraph (2) of this subsection shall not be
5 eligible for the deduction provided under this
6 subparagraph (O); and
7 (P) 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) Limitation. The amount of any modification
14 otherwise required under this subsection shall, under
15 regulations prescribed by the Department, be adjusted by
16 any amounts included therein which were properly paid,
17 credited, or required to be distributed, or permanently
18 set aside for charitable purposes pursuant to Internal
19 Revenue Code Section 642(c) during the taxable year.
20 (d) Partnerships.
21 (1) In general. In the case of a partnership, base
22 income means an amount equal to the taxpayer's taxable
23 income for the taxable year as modified by paragraph (2).
24 (2) Modifications. The taxable income referred to
25 in paragraph (1) shall be modified by adding thereto the
26 sum 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) An amount equal to the amount of tax
32 imposed by this Act to the extent deducted from
33 gross income for the taxable year; and
34 (C) The amount of deductions allowed to the
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1 partnership pursuant to Section 707 (c) of the
2 Internal Revenue Code in calculating its taxable
3 income;
4 (D) An amount equal to the amount of the
5 capital gain deduction allowable under the Internal
6 Revenue Code, to the extent deducted from gross
7 income in the computation of taxable income;
8 and by deducting from the total so obtained the following
9 amounts:
10 (E) The valuation limitation amount;
11 (F) An amount equal to the amount of any tax
12 imposed by this Act which was refunded to the
13 taxpayer and included in such total for the taxable
14 year;
15 (G) An amount equal to all amounts included in
16 taxable income as modified by subparagraphs (A),
17 (B), (C) and (D) which are exempt from taxation by
18 this State either by reason of its statutes or
19 Constitution or by reason of the Constitution,
20 treaties or statutes of the United States; provided
21 that, in the case of any statute of this State that
22 exempts income derived from bonds or other
23 obligations from the tax imposed under this Act, the
24 amount exempted shall be the interest net of bond
25 premium amortization;
26 (H) Any income of the partnership which
27 constitutes personal service income as defined in
28 Section 1348 (b) (1) of the Internal Revenue Code
29 (as in effect December 31, 1981) or a reasonable
30 allowance for compensation paid or accrued for
31 services rendered by partners to the partnership,
32 whichever is greater;
33 (I) An amount equal to all amounts of income
34 distributable to an entity subject to the Personal
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1 Property Tax Replacement Income Tax imposed by
2 subsections (c) and (d) of Section 201 of this Act
3 including amounts distributable to organizations
4 exempt from federal income tax by reason of Section
5 501(a) of the Internal Revenue Code;
6 (J) With the exception of any amounts
7 subtracted under subparagraph (G), an amount equal
8 to the sum of all amounts disallowed as deductions
9 by Sections 171(a) (2), and 265(2) of the Internal
10 Revenue Code of 1954, as now or hereafter amended,
11 and all amounts of expenses allocable to interest
12 and disallowed as deductions by Section 265(1) of
13 the Internal Revenue Code, as now or hereafter
14 amended;
15 (K) An amount equal to those dividends
16 included in such total which were paid by a
17 corporation which conducts business operations in an
18 Enterprise Zone or zones created under the Illinois
19 Enterprise Zone Act, enacted by the 82nd General
20 Assembly, and which does not conduct such operations
21 other than in an Enterprise Zone or Zones;
22 (L) An amount equal to any contribution made
23 to a job training project established pursuant to
24 the Real Property Tax Increment Allocation
25 Redevelopment Act;
26 (M) An amount equal to those dividends
27 included in such total that were paid by a
28 corporation that conducts business operations in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 and that is designated a High Impact Business
31 located in Illinois; provided that dividends
32 eligible for the deduction provided in subparagraph
33 (K) of paragraph (2) of this subsection shall not be
34 eligible for the deduction provided under this
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1 subparagraph (M); and
2 (N) An amount equal to the amount of the
3 deduction used to compute the federal income tax
4 credit for restoration of substantial amounts held
5 under claim of right for the taxable year pursuant
6 to Section 1341 of the Internal Revenue Code of
7 1986.
8 (e) Gross income; adjusted gross income; taxable income.
9 (1) In general. Subject to the provisions of
10 paragraph (2) and subsection (b) (3), for purposes of
11 this Section and Section 803(e), a taxpayer's gross
12 income, adjusted gross income, or taxable income for the
13 taxable year shall mean the amount of gross income,
14 adjusted gross income or taxable income properly
15 reportable for federal income tax purposes for the
16 taxable year under the provisions of the Internal Revenue
17 Code. Taxable income may be less than zero. However, for
18 taxable years ending on or after December 31, 1986, net
19 operating loss carryforwards from taxable years ending
20 prior to December 31, 1986, may not exceed the sum of
21 federal taxable income for the taxable year before net
22 operating loss deduction, plus the excess of addition
23 modifications over subtraction modifications for the
24 taxable year. For taxable years ending prior to December
25 31, 1986, taxable income may never be an amount in excess
26 of the net operating loss for the taxable year as defined
27 in subsections (c) and (d) of Section 172 of the Internal
28 Revenue Code, provided that when taxable income of a
29 corporation (other than a Subchapter S corporation),
30 trust, or estate is less than zero and addition
31 modifications, other than those provided by subparagraph
32 (E) of paragraph (2) of subsection (b) for corporations
33 or subparagraph (E) of paragraph (2) of subsection (c)
34 for trusts and estates, exceed subtraction modifications,
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1 an addition modification must be made under those
2 subparagraphs for any other taxable year to which the
3 taxable income less than zero (net operating loss) is
4 applied under Section 172 of the Internal Revenue Code or
5 under subparagraph (E) of paragraph (2) of this
6 subsection (e) applied in conjunction with Section 172 of
7 the Internal Revenue Code.
8 (2) Special rule. For purposes of paragraph (1) of
9 this subsection, the taxable income properly reportable
10 for federal income tax purposes shall mean:
11 (A) Certain life insurance companies. In the
12 case of a life insurance company subject to the tax
13 imposed by Section 801 of the Internal Revenue Code,
14 life insurance company taxable income, plus the
15 amount of distribution from pre-1984 policyholder
16 surplus accounts as calculated under Section 815a of
17 the Internal Revenue Code;
18 (B) Certain other insurance companies. In the
19 case of mutual insurance companies subject to the
20 tax imposed by Section 831 of the Internal Revenue
21 Code, insurance company taxable income;
22 (C) Regulated investment companies. In the
23 case of a regulated investment company subject to
24 the tax imposed by Section 852 of the Internal
25 Revenue Code, investment company taxable income;
26 (D) Real estate investment trusts. In the
27 case of a real estate investment trust subject to
28 the tax imposed by Section 857 of the Internal
29 Revenue Code, real estate investment trust taxable
30 income;
31 (E) Consolidated corporations. In the case of
32 a corporation which is a member of an affiliated
33 group of corporations filing a consolidated income
34 tax return for the taxable year for federal income
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1 tax purposes, taxable income determined as if such
2 corporation had filed a separate return for federal
3 income tax purposes for the taxable year and each
4 preceding taxable year for which it was a member of
5 an affiliated group. For purposes of this
6 subparagraph, the taxpayer's separate taxable income
7 shall be determined as if the election provided by
8 Section 243(b) (2) of the Internal Revenue Code had
9 been in effect for all such years;
10 (F) Cooperatives. In the case of a
11 cooperative corporation or association, the taxable
12 income of such organization determined in accordance
13 with the provisions of Section 1381 through 1388 of
14 the Internal Revenue Code;
15 (G) Subchapter S corporations. In the case
16 of: (i) a Subchapter S corporation for which there
17 is in effect an election for the taxable year under
18 Section 1362 of the Internal Revenue Code, the
19 taxable income of such corporation determined in
20 accordance with Section 1363(b) of the Internal
21 Revenue Code, except that taxable income shall take
22 into account those items which are required by
23 Section 1363(b)(1) of the Internal Revenue Code to
24 be separately stated; and (ii) a Subchapter S
25 corporation for which there is in effect a federal
26 election to opt out of the provisions of the
27 Subchapter S Revision Act of 1982 and have applied
28 instead the prior federal Subchapter S rules as in
29 effect on July 1, 1982, the taxable income of such
30 corporation determined in accordance with the
31 federal Subchapter S rules as in effect on July 1,
32 1982; and
33 (H) Partnerships. In the case of a
34 partnership, taxable income determined in accordance
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1 with Section 703 of the Internal Revenue Code,
2 except that taxable income shall take into account
3 those items which are required by Section 703(a)(1)
4 to be separately stated but which would be taken
5 into account by an individual in calculating his
6 taxable income.
7 (f) Valuation limitation amount.
8 (1) In general. The valuation limitation amount
9 referred to in subsections (a) (2) (G), (c) (2) (I) and
10 (d)(2) (E) is an amount equal to:
11 (A) The sum of the pre-August 1, 1969
12 appreciation amounts (to the extent consisting of
13 gain reportable under the provisions of Section 1245
14 or 1250 of the Internal Revenue Code) for all
15 property in respect of which such gain was reported
16 for the taxable year; plus
17 (B) The lesser of (i) the sum of the
18 pre-August 1, 1969 appreciation amounts (to the
19 extent consisting of capital gain) for all property
20 in respect of which such gain was reported for
21 federal income tax purposes for the taxable year, or
22 (ii) the net capital gain for the taxable year,
23 reduced in either case by any amount of such gain
24 included in the amount determined under subsection
25 (a) (2) (F) or (c) (2) (H).
26 (2) Pre-August 1, 1969 appreciation amount.
27 (A) If the fair market value of property
28 referred to in paragraph (1) was readily
29 ascertainable on August 1, 1969, the pre-August 1,
30 1969 appreciation amount for such property is the
31 lesser of (i) the excess of such fair market value
32 over the taxpayer's basis (for determining gain) for
33 such property on that date (determined under the
34 Internal Revenue Code as in effect on that date), or
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1 (ii) the total gain realized and reportable for
2 federal income tax purposes in respect of the sale,
3 exchange or other disposition of such property.
4 (B) If the fair market value of property
5 referred to in paragraph (1) was not readily
6 ascertainable on August 1, 1969, the pre-August 1,
7 1969 appreciation amount for such property is that
8 amount which bears the same ratio to the total gain
9 reported in respect of the property for federal
10 income tax purposes for the taxable year, as the
11 number of full calendar months in that part of the
12 taxpayer's holding period for the property ending
13 July 31, 1969 bears to the number of full calendar
14 months in the taxpayer's entire holding period for
15 the property.
16 (C) The Department shall prescribe such
17 regulations as may be necessary to carry out the
18 purposes of this paragraph.
19 (g) Double deductions. Unless specifically provided
20 otherwise, nothing in this Section shall permit the same item
21 to be deducted more than once.
22 (h) Legislative intention. Except as expressly provided
23 by this Section there shall be no modifications or
24 limitations on the amounts of income, gain, loss or deduction
25 taken into account in determining gross income, adjusted
26 gross income or taxable income for federal income tax
27 purposes for the taxable year, or in the amount of such items
28 entering into the computation of base income and net income
29 under this Act for such taxable year, whether in respect of
30 property values as of August 1, 1969 or otherwise.
31 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
32 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
33 8-9-96; 90-491, eff. 1-1-98.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.