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90_HB3082
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act to allow individual
taxpayers, 65 years of age or older, a deduction for
unreimbursed amounts spent on home health care services.
Applicable to taxable years ending on or after December 31,
1998. Provides that this deduction may not reduce the
taxpayer's liability to less than zero. Exempts the
deduction from the sunset provisions. Effective immediately.
LRB9009570KDcd
LRB9009570KDcd
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.
30 (W) For taxable years ending on or after
31 December 31, 1998, all unreimbursed amounts, but not
32 more than a total amount that would result in a tax
33 liability of less than zero for the taxpayer,
34 expended by persons 65 years of age or older for
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1 home health services, as defined by Section 2.05 of
2 the Home Health Agency Licensing Act, if provided by
3 a public or private organization licensed under that
4 Act, or for services provided to a person at that
5 person's residence by a licensed practical nurse or
6 registered nurse in accordance with a plan of
7 treatment for illness or infirmity prescribed by a
8 physician. This subparagraph is exempt from the
9 provisions of Section 250.
10 (b) Corporations.
11 (1) In general. In the case of a corporation, base
12 income means an amount equal to the taxpayer's taxable
13 income for the taxable year as modified by paragraph (2).
14 (2) Modifications. The taxable income referred to
15 in paragraph (1) shall be modified by adding thereto the
16 sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest and all
19 distributions received from regulated investment
20 companies during the taxable year to the extent
21 excluded from gross income in the computation of
22 taxable income;
23 (B) An amount equal to the amount of tax
24 imposed by this Act to the extent deducted from
25 gross income in the computation of taxable income
26 for the taxable year;
27 (C) In the case of a regulated investment
28 company, an amount equal to the excess of (i) the
29 net long-term capital gain for the taxable year,
30 over (ii) the amount of the capital gain dividends
31 designated as such in accordance with Section
32 852(b)(3)(C) of the Internal Revenue Code and any
33 amount designated under Section 852(b)(3)(D) of the
34 Internal Revenue Code, attributable to the taxable
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1 year.
2 This amendatory Act of 1995 is declarative of existing
3 law and is not a new enactment.
4 (D) The amount of any net operating loss
5 deduction taken in arriving at taxable income, other
6 than a net operating loss carried forward from a
7 taxable year ending prior to December 31, 1986; and
8 (E) For taxable years in which a net operating
9 loss carryback or carryforward from a taxable year
10 ending prior to December 31, 1986 is an element of
11 taxable income under paragraph (1) of subsection (e)
12 or subparagraph (E) of paragraph (2) of subsection
13 (e), the amount by which addition modifications
14 other than those provided by this subparagraph (E)
15 exceeded subtraction modifications in such earlier
16 taxable year, with the following limitations applied
17 in the order that they are listed:
18 (i) the addition modification relating to
19 the net operating loss carried back or forward
20 to the taxable year from any taxable year
21 ending prior to December 31, 1986 shall be
22 reduced by the amount of addition modification
23 under this subparagraph (E) which related to
24 that net operating loss and which was taken
25 into account in calculating the base income of
26 an earlier taxable year, and
27 (ii) the addition modification relating
28 to the net operating loss carried back or
29 forward to the taxable year from any taxable
30 year ending prior to December 31, 1986 shall
31 not exceed the amount of such carryback or
32 carryforward;
33 For taxable years in which there is a net
34 operating loss carryback or carryforward from more
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1 than one other taxable year ending prior to December
2 31, 1986, the addition modification provided in this
3 subparagraph (E) shall be the sum of the amounts
4 computed independently under the preceding
5 provisions of this subparagraph (E) for each such
6 taxable year,
7 and by deducting from the total so obtained the sum of
8 the following amounts:
9 (F) An amount equal to the amount of any tax
10 imposed by this Act which was refunded to the
11 taxpayer and included in such total for the taxable
12 year;
13 (G) An amount equal to any amount included in
14 such total under Section 78 of the Internal Revenue
15 Code;
16 (H) In the case of a regulated investment
17 company, an amount equal to the amount of exempt
18 interest dividends as defined in subsection (b) (5)
19 of Section 852 of the Internal Revenue Code, paid to
20 shareholders for the taxable year;
21 (I) With the exception of any amounts
22 subtracted under subparagraph (J), an amount equal
23 to the sum of all amounts disallowed as deductions
24 by Sections 171(a) (2), and 265(a)(2) and amounts
25 disallowed as interest expense by Section 291(a)(3)
26 of the Internal Revenue Code, as now or hereafter
27 amended, and all amounts of expenses allocable to
28 interest and disallowed as deductions by Section
29 265(a)(1) of the Internal Revenue Code, as now or
30 hereafter amended;
31 (J) An amount equal to all amounts included in
32 such total which are exempt from taxation by this
33 State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
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1 treaties or statutes of the United States; provided
2 that, in the case of any statute of this State that
3 exempts income derived from bonds or other
4 obligations from the tax imposed under this Act, the
5 amount exempted shall be the interest net of bond
6 premium amortization;
7 (K) An amount equal to those dividends
8 included in such total which were paid by a
9 corporation which conducts business operations in an
10 Enterprise Zone or zones created under the Illinois
11 Enterprise Zone Act and conducts substantially all
12 of its operations in an Enterprise Zone or zones;
13 (L) An amount equal to those dividends
14 included in such total that were paid by a
15 corporation that conducts business operations in a
16 federally designated Foreign Trade Zone or Sub-Zone
17 and that is designated a High Impact Business
18 located in Illinois; provided that dividends
19 eligible for the deduction provided in subparagraph
20 (K) of paragraph 2 of this subsection shall not be
21 eligible for the deduction provided under this
22 subparagraph (L);
23 (M) For any taxpayer that is a financial
24 organization within the meaning of Section 304(c) of
25 this Act, an amount included in such total as
26 interest income from a loan or loans made by such
27 taxpayer to a borrower, to the extent that such a
28 loan is secured by property which is eligible for
29 the Enterprise Zone Investment Credit. To determine
30 the portion of a loan or loans that is secured by
31 property eligible for a Section 201(h) investment
32 credit to the borrower, the entire principal amount
33 of the loan or loans between the taxpayer and the
34 borrower should be divided into the basis of the
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1 Section 201(h) investment credit property which
2 secures the loan or loans, using for this purpose
3 the original basis of such property on the date that
4 it was placed in service in the Enterprise Zone.
5 The subtraction modification available to taxpayer
6 in any year under this subsection shall be that
7 portion of the total interest paid by the borrower
8 with respect to such loan attributable to the
9 eligible property as calculated under the previous
10 sentence;
11 (M-1) For any taxpayer that is a financial
12 organization within the meaning of Section 304(c) of
13 this Act, an amount included in such total as
14 interest income from a loan or loans made by such
15 taxpayer to a borrower, to the extent that such a
16 loan is secured by property which is eligible for
17 the High Impact Business Investment Credit. To
18 determine the portion of a loan or loans that is
19 secured by property eligible for a Section 201(i)
20 investment credit to the borrower, the entire
21 principal amount of the loan or loans between the
22 taxpayer and the borrower should be divided into the
23 basis of the Section 201(i) investment credit
24 property which secures the loan or loans, using for
25 this purpose the original basis of such property on
26 the date that it was placed in service in a
27 federally designated Foreign Trade Zone or Sub-Zone
28 located in Illinois. No taxpayer that is eligible
29 for the deduction provided in subparagraph (M) of
30 paragraph (2) of this subsection shall be eligible
31 for the deduction provided under this subparagraph
32 (M-1). The subtraction modification available to
33 taxpayers in any year under this subsection shall be
34 that portion of the total interest paid by the
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1 borrower with respect to such loan attributable to
2 the eligible property as calculated under the
3 previous sentence;
4 (N) Two times any contribution made during the
5 taxable year to a designated zone organization to
6 the extent that the contribution (i) qualifies as a
7 charitable contribution under subsection (c) of
8 Section 170 of the Internal Revenue Code and (ii)
9 must, by its terms, be used for a project approved
10 by the Department of Commerce and Community Affairs
11 under Section 11 of the Illinois Enterprise Zone
12 Act;
13 (O) An amount equal to: (i) 85% for taxable
14 years ending on or before December 31, 1992, or, a
15 percentage equal to the percentage allowable under
16 Section 243(a)(1) of the Internal Revenue Code of
17 1986 for taxable years ending after December 31,
18 1992, of the amount by which dividends included in
19 taxable income and received from a corporation that
20 is not created or organized under the laws of the
21 United States or any state or political subdivision
22 thereof, including, for taxable years ending on or
23 after December 31, 1988, dividends received or
24 deemed received or paid or deemed paid under
25 Sections 951 through 964 of the Internal Revenue
26 Code, exceed the amount of the modification provided
27 under subparagraph (G) of paragraph (2) of this
28 subsection (b) which is related to such dividends;
29 plus (ii) 100% of the amount by which dividends,
30 included in taxable income and received, including,
31 for taxable years ending on or after December 31,
32 1988, dividends received or deemed received or paid
33 or deemed paid under Sections 951 through 964 of the
34 Internal Revenue Code, from any such corporation
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1 specified in clause (i) that would but for the
2 provisions of Section 1504 (b) (3) of the Internal
3 Revenue Code be treated as a member of the
4 affiliated group which includes the dividend
5 recipient, exceed the amount of the modification
6 provided under subparagraph (G) of paragraph (2) of
7 this subsection (b) which is related to such
8 dividends;
9 (P) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Tax Increment Allocation Redevelopment Act; and
12 (Q) An amount equal to the amount of the
13 deduction used to compute the federal income tax
14 credit for restoration of substantial amounts held
15 under claim of right for the taxable year pursuant
16 to Section 1341 of the Internal Revenue Code of
17 1986.
18 (3) Special rule. For purposes of paragraph (2)
19 (A), "gross income" in the case of a life insurance
20 company, for tax years ending on and after December 31,
21 1994, shall mean the gross investment income for the
22 taxable year.
23 (c) Trusts and estates.
24 (1) In general. In the case of a trust or estate,
25 base income means an amount equal to the taxpayer's
26 taxable income for the taxable year as modified by
27 paragraph (2).
28 (2) Modifications. Subject to the provisions of
29 paragraph (3), the taxable income referred to in
30 paragraph (1) shall be modified by adding thereto the sum
31 of the following amounts:
32 (A) An amount equal to all amounts paid or
33 accrued to the taxpayer as interest or dividends
34 during the taxable year to the extent excluded from
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1 gross income in the computation of taxable income;
2 (B) In the case of (i) an estate, $600; (ii) a
3 trust which, under its governing instrument, is
4 required to distribute all of its income currently,
5 $300; and (iii) any other trust, $100, but in each
6 such case, only to the extent such amount was
7 deducted in the computation of taxable income;
8 (C) An amount equal to the amount of tax
9 imposed by this Act to the extent deducted from
10 gross income in the computation of taxable income
11 for the taxable year;
12 (D) The amount of any net operating loss
13 deduction taken in arriving at taxable income, other
14 than a net operating loss carried forward from a
15 taxable year ending prior to December 31, 1986;
16 (E) For taxable years in which a net operating
17 loss carryback or carryforward from a taxable year
18 ending prior to December 31, 1986 is an element of
19 taxable income under paragraph (1) of subsection (e)
20 or subparagraph (E) of paragraph (2) of subsection
21 (e), the amount by which addition modifications
22 other than those provided by this subparagraph (E)
23 exceeded subtraction modifications in such taxable
24 year, with the following limitations applied in the
25 order that they are listed:
26 (i) the addition modification relating to
27 the net operating loss carried back or forward
28 to the taxable year from any taxable year
29 ending prior to December 31, 1986 shall be
30 reduced by the amount of addition modification
31 under this subparagraph (E) which related to
32 that net operating loss and which was taken
33 into account in calculating the base income of
34 an earlier taxable year, and
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1 (ii) the addition modification relating
2 to the net operating loss carried back or
3 forward to the taxable year from any taxable
4 year ending prior to December 31, 1986 shall
5 not exceed the amount of such carryback or
6 carryforward;
7 For taxable years in which there is a net
8 operating loss carryback or carryforward from more
9 than one other taxable year ending prior to December
10 31, 1986, the addition modification provided in this
11 subparagraph (E) shall be the sum of the amounts
12 computed independently under the preceding
13 provisions of this subparagraph (E) for each such
14 taxable year;
15 (F) For taxable years ending on or after
16 January 1, 1989, an amount equal to the tax deducted
17 pursuant to Section 164 of the Internal Revenue Code
18 if the trust or estate is claiming the same tax for
19 purposes of the Illinois foreign tax credit under
20 Section 601 of this Act; and
21 (G) An amount equal to the amount of the
22 capital gain deduction allowable under the Internal
23 Revenue Code, to the extent deducted from gross
24 income in the computation of taxable income;
25 and by deducting from the total so obtained the sum of
26 the following amounts:
27 (H) An amount equal to all amounts included in
28 such total pursuant to the provisions of Sections
29 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
30 408 of the Internal Revenue Code or included in such
31 total as distributions under the provisions of any
32 retirement or disability plan for employees of any
33 governmental agency or unit, or retirement payments
34 to retired partners, which payments are excluded in
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1 computing net earnings from self employment by
2 Section 1402 of the Internal Revenue Code and
3 regulations adopted pursuant thereto;
4 (I) The valuation limitation amount;
5 (J) An amount equal to the amount of any tax
6 imposed by this Act which was refunded to the
7 taxpayer and included in such total for the taxable
8 year;
9 (K) An amount equal to all amounts included in
10 taxable income as modified by subparagraphs (A),
11 (B), (C), (D), (E), (F) and (G) which are exempt
12 from taxation by this State either by reason of its
13 statutes or Constitution or by reason of the
14 Constitution, treaties or statutes of the United
15 States; provided that, in the case of any statute of
16 this State that exempts income derived from bonds or
17 other obligations from the tax imposed under this
18 Act, the amount exempted shall be the interest net
19 of bond premium amortization;
20 (L) With the exception of any amounts
21 subtracted under subparagraph (K), an amount equal
22 to the sum of all amounts disallowed as deductions
23 by Sections 171(a) (2) and 265(a)(2) of the Internal
24 Revenue Code, as now or hereafter amended, and all
25 amounts of expenses allocable to interest and
26 disallowed as deductions by Section 265(1) of the
27 Internal Revenue Code of 1954, as now or hereafter
28 amended;
29 (M) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act and conducts substantially all
34 of its operations in an Enterprise Zone or Zones;
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1 (N) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (O) 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 (M) of paragraph (2) of this subsection shall not be
12 eligible for the deduction provided under this
13 subparagraph (O); and
14 (P) 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 (3) Limitation. The amount of any modification
21 otherwise required under this subsection shall, under
22 regulations prescribed by the Department, be adjusted by
23 any amounts included therein which were properly paid,
24 credited, or required to be distributed, or permanently
25 set aside for charitable purposes pursuant to Internal
26 Revenue Code Section 642(c) during the taxable year.
27 (d) Partnerships.
28 (1) In general. In the case of a partnership, base
29 income means an amount equal to the taxpayer's taxable
30 income for the taxable year as modified by paragraph (2).
31 (2) Modifications. The taxable income referred to
32 in paragraph (1) shall be modified by adding thereto the
33 sum of the following amounts:
34 (A) An amount equal to all amounts paid or
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1 accrued to the taxpayer as interest or dividends
2 during the taxable year to the extent excluded from
3 gross income in the computation of taxable income;
4 (B) An amount equal to the amount of tax
5 imposed by this Act to the extent deducted from
6 gross income for the taxable year; and
7 (C) The amount of deductions allowed to the
8 partnership pursuant to Section 707 (c) of the
9 Internal Revenue Code in calculating its taxable
10 income;
11 (D) An amount equal to the amount of the
12 capital gain deduction allowable under the Internal
13 Revenue Code, to the extent deducted from gross
14 income in the computation of taxable income;
15 and by deducting from the total so obtained the following
16 amounts:
17 (E) The valuation limitation amount;
18 (F) An amount equal to the amount of any tax
19 imposed by this Act which was refunded to the
20 taxpayer and included in such total for the taxable
21 year;
22 (G) An amount equal to all amounts included in
23 taxable income as modified by subparagraphs (A),
24 (B), (C) and (D) which are exempt from taxation by
25 this State either by reason of its statutes or
26 Constitution or by reason of the Constitution,
27 treaties or statutes of the United States; provided
28 that, in the case of any statute of this State that
29 exempts income derived from bonds or other
30 obligations from the tax imposed under this Act, the
31 amount exempted shall be the interest net of bond
32 premium amortization;
33 (H) Any income of the partnership which
34 constitutes personal service income as defined in
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1 Section 1348 (b) (1) of the Internal Revenue Code
2 (as in effect December 31, 1981) or a reasonable
3 allowance for compensation paid or accrued for
4 services rendered by partners to the partnership,
5 whichever is greater;
6 (I) An amount equal to all amounts of income
7 distributable to an entity subject to the Personal
8 Property Tax Replacement Income Tax imposed by
9 subsections (c) and (d) of Section 201 of this Act
10 including amounts distributable to organizations
11 exempt from federal income tax by reason of Section
12 501(a) of the Internal Revenue Code;
13 (J) With the exception of any amounts
14 subtracted under subparagraph (G), an amount equal
15 to the sum of all amounts disallowed as deductions
16 by Sections 171(a) (2), and 265(2) of the Internal
17 Revenue Code of 1954, as now or hereafter amended,
18 and all amounts of expenses allocable to interest
19 and disallowed as deductions by Section 265(1) of
20 the Internal Revenue Code, as now or hereafter
21 amended;
22 (K) 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, enacted by the 82nd General
27 Assembly, and which does not conduct such operations
28 other than in an Enterprise Zone or Zones;
29 (L) An amount equal to any contribution made
30 to a job training project established pursuant to
31 the Real Property Tax Increment Allocation
32 Redevelopment Act;
33 (M) 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 (K) of paragraph (2) of this subsection shall not be
7 eligible for the deduction provided under this
8 subparagraph (M); and
9 (N) 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 (e) Gross income; adjusted gross income; taxable income.
16 (1) In general. Subject to the provisions of
17 paragraph (2) and subsection (b) (3), for purposes of
18 this Section and Section 803(e), a taxpayer's gross
19 income, adjusted gross income, or taxable income for the
20 taxable year shall mean the amount of gross income,
21 adjusted gross income or taxable income properly
22 reportable for federal income tax purposes for the
23 taxable year under the provisions of the Internal Revenue
24 Code. Taxable income may be less than zero. However, for
25 taxable years ending on or after December 31, 1986, net
26 operating loss carryforwards from taxable years ending
27 prior to December 31, 1986, may not exceed the sum of
28 federal taxable income for the taxable year before net
29 operating loss deduction, plus the excess of addition
30 modifications over subtraction modifications for the
31 taxable year. For taxable years ending prior to December
32 31, 1986, taxable income may never be an amount in excess
33 of the net operating loss for the taxable year as defined
34 in subsections (c) and (d) of Section 172 of the Internal
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1 Revenue Code, provided that when taxable income of a
2 corporation (other than a Subchapter S corporation),
3 trust, or estate is less than zero and addition
4 modifications, other than those provided by subparagraph
5 (E) of paragraph (2) of subsection (b) for corporations
6 or subparagraph (E) of paragraph (2) of subsection (c)
7 for trusts and estates, exceed subtraction modifications,
8 an addition modification must be made under those
9 subparagraphs for any other taxable year to which the
10 taxable income less than zero (net operating loss) is
11 applied under Section 172 of the Internal Revenue Code or
12 under subparagraph (E) of paragraph (2) of this
13 subsection (e) applied in conjunction with Section 172 of
14 the Internal Revenue Code.
15 (2) Special rule. For purposes of paragraph (1) of
16 this subsection, the taxable income properly reportable
17 for federal income tax purposes shall mean:
18 (A) Certain life insurance companies. In the
19 case of a life insurance company subject to the tax
20 imposed by Section 801 of the Internal Revenue Code,
21 life insurance company taxable income, plus the
22 amount of distribution from pre-1984 policyholder
23 surplus accounts as calculated under Section 815a of
24 the Internal Revenue Code;
25 (B) Certain other insurance companies. In the
26 case of mutual insurance companies subject to the
27 tax imposed by Section 831 of the Internal Revenue
28 Code, insurance company taxable income;
29 (C) Regulated investment companies. In the
30 case of a regulated investment company subject to
31 the tax imposed by Section 852 of the Internal
32 Revenue Code, investment company taxable income;
33 (D) Real estate investment trusts. In the
34 case of a real estate investment trust subject to
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1 the tax imposed by Section 857 of the Internal
2 Revenue Code, real estate investment trust taxable
3 income;
4 (E) Consolidated corporations. In the case of
5 a corporation which is a member of an affiliated
6 group of corporations filing a consolidated income
7 tax return for the taxable year for federal income
8 tax purposes, taxable income determined as if such
9 corporation had filed a separate return for federal
10 income tax purposes for the taxable year and each
11 preceding taxable year for which it was a member of
12 an affiliated group. For purposes of this
13 subparagraph, the taxpayer's separate taxable income
14 shall be determined as if the election provided by
15 Section 243(b) (2) of the Internal Revenue Code had
16 been in effect for all such years;
17 (F) Cooperatives. In the case of a
18 cooperative corporation or association, the taxable
19 income of such organization determined in accordance
20 with the provisions of Section 1381 through 1388 of
21 the Internal Revenue Code;
22 (G) Subchapter S corporations. In the case
23 of: (i) a Subchapter S corporation for which there
24 is in effect an election for the taxable year under
25 Section 1362 of the Internal Revenue Code, the
26 taxable income of such corporation determined in
27 accordance with Section 1363(b) of the Internal
28 Revenue Code, except that taxable income shall take
29 into account those items which are required by
30 Section 1363(b)(1) of the Internal Revenue Code to
31 be separately stated; and (ii) a Subchapter S
32 corporation for which there is in effect a federal
33 election to opt out of the provisions of the
34 Subchapter S Revision Act of 1982 and have applied
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1 instead the prior federal Subchapter S rules as in
2 effect on July 1, 1982, the taxable income of such
3 corporation determined in accordance with the
4 federal Subchapter S rules as in effect on July 1,
5 1982; and
6 (H) Partnerships. In the case of a
7 partnership, taxable income determined in accordance
8 with Section 703 of the Internal Revenue Code,
9 except that taxable income shall take into account
10 those items which are required by Section 703(a)(1)
11 to be separately stated but which would be taken
12 into account by an individual in calculating his
13 taxable income.
14 (f) Valuation limitation amount.
15 (1) In general. The valuation limitation amount
16 referred to in subsections (a) (2) (G), (c) (2) (I) and
17 (d)(2) (E) is an amount equal to:
18 (A) The sum of the pre-August 1, 1969
19 appreciation amounts (to the extent consisting of
20 gain reportable under the provisions of Section 1245
21 or 1250 of the Internal Revenue Code) for all
22 property in respect of which such gain was reported
23 for the taxable year; plus
24 (B) The lesser of (i) the sum of the
25 pre-August 1, 1969 appreciation amounts (to the
26 extent consisting of capital gain) for all property
27 in respect of which such gain was reported for
28 federal income tax purposes for the taxable year, or
29 (ii) the net capital gain for the taxable year,
30 reduced in either case by any amount of such gain
31 included in the amount determined under subsection
32 (a) (2) (F) or (c) (2) (H).
33 (2) Pre-August 1, 1969 appreciation amount.
34 (A) If the fair market value of property
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1 referred to in paragraph (1) was readily
2 ascertainable on August 1, 1969, the pre-August 1,
3 1969 appreciation amount for such property is the
4 lesser of (i) the excess of such fair market value
5 over the taxpayer's basis (for determining gain) for
6 such property on that date (determined under the
7 Internal Revenue Code as in effect on that date), or
8 (ii) the total gain realized and reportable for
9 federal income tax purposes in respect of the sale,
10 exchange or other disposition of such property.
11 (B) If the fair market value of property
12 referred to in paragraph (1) was not readily
13 ascertainable on August 1, 1969, the pre-August 1,
14 1969 appreciation amount for such property is that
15 amount which bears the same ratio to the total gain
16 reported in respect of the property for federal
17 income tax purposes for the taxable year, as the
18 number of full calendar months in that part of the
19 taxpayer's holding period for the property ending
20 July 31, 1969 bears to the number of full calendar
21 months in the taxpayer's entire holding period for
22 the property.
23 (C) The Department shall prescribe such
24 regulations as may be necessary to carry out the
25 purposes of this paragraph.
26 (g) Double deductions. Unless specifically provided
27 otherwise, nothing in this Section shall permit the same item
28 to be deducted more than once.
29 (h) Legislative intention. Except as expressly provided
30 by this Section there shall be no modifications or
31 limitations on the amounts of income, gain, loss or deduction
32 taken into account in determining gross income, adjusted
33 gross income or taxable income for federal income tax
34 purposes for the taxable year, or in the amount of such items
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1 entering into the computation of base income and net income
2 under this Act for such taxable year, whether in respect of
3 property values as of August 1, 1969 or otherwise.
4 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
5 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
6 8-9-96; 90-491, eff. 1-1-98.)
7 Section 99. Effective date. This Act takes effect upon
8 becoming law.