[ Search ] [ Legislation ] [ Bill Summary ]
[ Home ] [ Back ] [ Bottom ]
90_HB3467
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Provides a deduction
for any amount paid to a resident by reason of being on
active or reserve duty (now active) in the Armed Forces the
United States. Exempts the deduction from the sunset
provisions. Effective immediately.
LRB9009985KDcd
LRB9009985KDcd
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- LRB9009985KDcd
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 or reserve duty in the Armed Forces of the
30 United States and in respect of any compensation
31 paid or accrued to a resident who as a governmental
32 employee was a prisoner of war or missing in action,
33 and in respect of any compensation paid to a
34 resident in 1971 or thereafter for annual training
-3- LRB9009985KDcd
1 performed pursuant to Sections 502 and 503, Title
2 32, United States Code as a member of the Illinois
3 National Guard. The changes made by this amendatory
4 Act of 1998 are exempt from the provisions of
5 Section 250;
6 (F) An amount equal to all amounts included in
7 such total pursuant to the provisions of Sections
8 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
9 408 of the Internal Revenue Code, or included in
10 such total as distributions under the provisions of
11 any retirement or disability plan for employees of
12 any governmental agency or unit, or retirement
13 payments to retired partners, which payments are
14 excluded in computing net earnings from self
15 employment by Section 1402 of the Internal Revenue
16 Code and regulations adopted pursuant thereto;
17 (G) The valuation limitation amount;
18 (H) 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 (I) An amount equal to all amounts included in
23 such total pursuant to the provisions of Section 111
24 of the Internal Revenue Code as a recovery of items
25 previously deducted from adjusted gross income in
26 the computation of taxable income;
27 (J) 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, and conducts substantially all
32 of its operations in an Enterprise Zone or zones;
33 (K) An amount equal to those dividends
34 included in such total that were paid by a
-4- LRB9009985KDcd
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 (J) of paragraph (2) of this subsection shall not be
7 eligible for the deduction provided under this
8 subparagraph (K);
9 (L) For taxable years ending after December
10 31, 1983, an amount equal to all social security
11 benefits and railroad retirement benefits included
12 in such total pursuant to Sections 72(r) and 86 of
13 the Internal Revenue Code;
14 (M) With the exception of any amounts
15 subtracted under subparagraph (N), an amount equal
16 to the sum of all amounts disallowed as deductions
17 by Sections 171(a) (2), and 265(2) of the Internal
18 Revenue Code of 1954, as now or hereafter amended,
19 and all amounts of expenses allocable to interest
20 and disallowed as deductions by Section 265(1) of
21 the Internal Revenue Code of 1954, as now or
22 hereafter amended;
23 (N) An amount equal to all amounts included in
24 such total which are exempt from taxation by this
25 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 (O) An amount equal to any contribution made
34 to a job training project established pursuant to
-5- LRB9009985KDcd
1 the Tax Increment Allocation Redevelopment Act;
2 (P) 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 (Q) An amount equal to any amounts included in
9 such total, received by the taxpayer as an
10 acceleration in the payment of life, endowment or
11 annuity benefits in advance of the time they would
12 otherwise be payable as an indemnity for a terminal
13 illness;
14 (R) An amount equal to the amount of any
15 federal or State bonus paid to veterans of the
16 Persian Gulf War;
17 (S) An amount, to the extent included in
18 adjusted gross income, equal to the amount of a
19 contribution made in the taxable year on behalf of
20 the taxpayer to a medical care savings account
21 established under the Medical Care Savings Account
22 Act to the extent the contribution is accepted by
23 the account administrator as provided in that Act;
24 (T) An amount, to the extent included in
25 adjusted gross income, equal to the amount of
26 interest earned in the taxable year on a medical
27 care savings account established under the Medical
28 Care Savings Account Act on behalf of the taxpayer,
29 other than interest added pursuant to item (D-5) of
30 this paragraph (2);
31 (U) For one taxable year beginning on or after
32 January 1, 1994, an amount equal to the total amount
33 of tax imposed and paid under subsections (a) and
34 (b) of Section 201 of this Act on grant amounts
-6- LRB9009985KDcd
1 received by the taxpayer under the Nursing Home
2 Grant Assistance Act during the taxpayer's taxable
3 years 1992 and 1993; and
4 (V) Beginning with tax years ending on or
5 after December 31, 1995 and ending with tax years
6 ending on or before December 31, 1999, an amount
7 equal to the amount paid by a taxpayer who is a
8 self-employed taxpayer, a partner of a partnership,
9 or a shareholder in a Subchapter S corporation for
10 health insurance or long-term care insurance for
11 that taxpayer or that taxpayer's spouse or
12 dependents, to the extent that the amount paid for
13 that health insurance or long-term care insurance
14 may be deducted under Section 213 of the Internal
15 Revenue Code of 1986, has not been deducted on the
16 federal income tax return of the taxpayer, and does
17 not exceed the taxable income attributable to that
18 taxpayer's income, self-employment income, or
19 Subchapter S corporation income; except that no
20 deduction shall be allowed under this item (V) if
21 the taxpayer is eligible to participate in any
22 health insurance or long-term care insurance plan of
23 an employer of the taxpayer or the taxpayer's
24 spouse. The amount of the health insurance and
25 long-term care insurance subtracted under this item
26 (V) shall be determined by multiplying total health
27 insurance and long-term care insurance premiums paid
28 by the taxpayer times a number that represents the
29 fractional percentage of eligible medical expenses
30 under Section 213 of the Internal Revenue Code of
31 1986 not actually deducted on the taxpayer's federal
32 income tax return.
33 (b) Corporations.
34 (1) In general. In the case of a corporation, base
-7- LRB9009985KDcd
1 income means an amount equal to the taxpayer's taxable
2 income for the taxable year as modified by paragraph (2).
3 (2) Modifications. The taxable income referred to
4 in paragraph (1) shall be modified by adding thereto the
5 sum of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest and all
8 distributions received from regulated investment
9 companies during the taxable year to the extent
10 excluded from gross income in the computation of
11 taxable income;
12 (B) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of taxable income
15 for the taxable year;
16 (C) In the case of a regulated investment
17 company, an amount equal to the excess of (i) the
18 net long-term capital gain for the taxable year,
19 over (ii) the amount of the capital gain dividends
20 designated as such in accordance with Section
21 852(b)(3)(C) of the Internal Revenue Code and any
22 amount designated under Section 852(b)(3)(D) of the
23 Internal Revenue Code, attributable to the taxable
24 year.
25 This amendatory Act of 1995 is declarative of existing
26 law and is not a new enactment.
27 (D) The amount of any net operating loss
28 deduction taken in arriving at taxable income, other
29 than a net operating loss carried forward from a
30 taxable year ending prior to December 31, 1986; and
31 (E) For taxable years in which a net operating
32 loss carryback or carryforward from a taxable year
33 ending prior to December 31, 1986 is an element of
34 taxable income under paragraph (1) of subsection (e)
-8- LRB9009985KDcd
1 or subparagraph (E) of paragraph (2) of subsection
2 (e), the amount by which addition modifications
3 other than those provided by this subparagraph (E)
4 exceeded subtraction modifications in such earlier
5 taxable year, with the following limitations applied
6 in the order that they are listed:
7 (i) the addition modification relating to
8 the net operating loss carried back or forward
9 to the taxable year from any taxable year
10 ending prior to December 31, 1986 shall be
11 reduced by the amount of addition modification
12 under this subparagraph (E) which related to
13 that net operating loss and which was taken
14 into account in calculating the base income of
15 an earlier taxable year, and
16 (ii) the addition modification relating
17 to the net operating loss carried back or
18 forward to the taxable year from any taxable
19 year ending prior to December 31, 1986 shall
20 not exceed the amount of such carryback or
21 carryforward;
22 For taxable years in which there is a net
23 operating loss carryback or carryforward from more
24 than one other taxable year ending prior to December
25 31, 1986, the addition modification provided in this
26 subparagraph (E) shall be the sum of the amounts
27 computed independently under the preceding
28 provisions of this subparagraph (E) for each such
29 taxable year,
30 and by deducting from the total so obtained the sum of
31 the following amounts:
32 (F) 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
-9- LRB9009985KDcd
1 year;
2 (G) An amount equal to any amount included in
3 such total under Section 78 of the Internal Revenue
4 Code;
5 (H) In the case of a regulated investment
6 company, an amount equal to the amount of exempt
7 interest dividends as defined in subsection (b) (5)
8 of Section 852 of the Internal Revenue Code, paid to
9 shareholders for the taxable year;
10 (I) With the exception of any amounts
11 subtracted under subparagraph (J), an amount equal
12 to the sum of all amounts disallowed as deductions
13 by Sections 171(a) (2), and 265(a)(2) and amounts
14 disallowed as interest expense by Section 291(a)(3)
15 of the Internal Revenue Code, as now or hereafter
16 amended, and all amounts of expenses allocable to
17 interest and disallowed as deductions by Section
18 265(a)(1) of the Internal Revenue Code, as now or
19 hereafter amended;
20 (J) 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 (K) An amount equal to those dividends
31 included in such total which were paid by a
32 corporation which conducts business operations in an
33 Enterprise Zone or zones created under the Illinois
34 Enterprise Zone Act and conducts substantially all
-10- LRB9009985KDcd
1 of its operations in an Enterprise Zone or zones;
2 (L) An amount equal to those dividends
3 included in such total that were paid by a
4 corporation that conducts business operations in a
5 federally designated Foreign Trade Zone or Sub-Zone
6 and that is designated a High Impact Business
7 located in Illinois; provided that dividends
8 eligible for the deduction provided in subparagraph
9 (K) of paragraph 2 of this subsection shall not be
10 eligible for the deduction provided under this
11 subparagraph (L);
12 (M) For any taxpayer that is a financial
13 organization within the meaning of Section 304(c) of
14 this Act, an amount included in such total as
15 interest income from a loan or loans made by such
16 taxpayer to a borrower, to the extent that such a
17 loan is secured by property which is eligible for
18 the Enterprise Zone Investment Credit. To determine
19 the portion of a loan or loans that is secured by
20 property eligible for a Section 201(h) investment
21 credit to the borrower, the entire principal amount
22 of the loan or loans between the taxpayer and the
23 borrower should be divided into the basis of the
24 Section 201(h) investment credit property which
25 secures the loan or loans, using for this purpose
26 the original basis of such property on the date that
27 it was placed in service in the Enterprise Zone.
28 The subtraction modification available to taxpayer
29 in any year under this subsection shall be that
30 portion of the total interest paid by the borrower
31 with respect to such loan attributable to the
32 eligible property as calculated under the previous
33 sentence;
34 (M-1) For any taxpayer that is a financial
-11- LRB9009985KDcd
1 organization within the meaning of Section 304(c) of
2 this Act, an amount included in such total as
3 interest income from a loan or loans made by such
4 taxpayer to a borrower, to the extent that such a
5 loan is secured by property which is eligible for
6 the High Impact Business Investment Credit. To
7 determine the portion of a loan or loans that is
8 secured by property eligible for a Section 201(i)
9 investment credit to the borrower, the entire
10 principal amount of the loan or loans between the
11 taxpayer and the borrower should be divided into the
12 basis of the Section 201(i) investment credit
13 property which secures the loan or loans, using for
14 this purpose the original basis of such property on
15 the date that it was placed in service in a
16 federally designated Foreign Trade Zone or Sub-Zone
17 located in Illinois. No taxpayer that is eligible
18 for the deduction provided in subparagraph (M) of
19 paragraph (2) of this subsection shall be eligible
20 for the deduction provided under this subparagraph
21 (M-1). The subtraction modification available to
22 taxpayers in any year under this subsection shall be
23 that portion of the total interest paid by the
24 borrower with respect to such loan attributable to
25 the eligible property as calculated under the
26 previous sentence;
27 (N) Two times any contribution made during the
28 taxable year to a designated zone organization to
29 the extent that the contribution (i) qualifies as a
30 charitable contribution under subsection (c) of
31 Section 170 of the Internal Revenue Code and (ii)
32 must, by its terms, be used for a project approved
33 by the Department of Commerce and Community Affairs
34 under Section 11 of the Illinois Enterprise Zone
-12- LRB9009985KDcd
1 Act;
2 (O) An amount equal to: (i) 85% for taxable
3 years ending on or before December 31, 1992, or, a
4 percentage equal to the percentage allowable under
5 Section 243(a)(1) of the Internal Revenue Code of
6 1986 for taxable years ending after December 31,
7 1992, of the amount by which dividends included in
8 taxable income and received from a corporation that
9 is not created or organized under the laws of the
10 United States or any state or political subdivision
11 thereof, including, for taxable years ending on or
12 after December 31, 1988, dividends received or
13 deemed received or paid or deemed paid under
14 Sections 951 through 964 of the Internal Revenue
15 Code, exceed the amount of the modification provided
16 under subparagraph (G) of paragraph (2) of this
17 subsection (b) which is related to such dividends;
18 plus (ii) 100% of the amount by which dividends,
19 included in taxable income and received, including,
20 for taxable years ending on or after December 31,
21 1988, dividends received or deemed received or paid
22 or deemed paid under Sections 951 through 964 of the
23 Internal Revenue Code, from any such corporation
24 specified in clause (i) that would but for the
25 provisions of Section 1504 (b) (3) of the Internal
26 Revenue Code be treated as a member of the
27 affiliated group which includes the dividend
28 recipient, exceed the amount of the modification
29 provided under subparagraph (G) of paragraph (2) of
30 this subsection (b) which is related to such
31 dividends;
32 (P) An amount equal to any contribution made
33 to a job training project established pursuant to
34 the Tax Increment Allocation Redevelopment Act; and
-13- LRB9009985KDcd
1 (Q) An amount equal to the amount of the
2 deduction used to compute the federal income tax
3 credit for restoration of substantial amounts held
4 under claim of right for the taxable year pursuant
5 to Section 1341 of the Internal Revenue Code of
6 1986.
7 (3) Special rule. For purposes of paragraph (2)
8 (A), "gross income" in the case of a life insurance
9 company, for tax years ending on and after December 31,
10 1994, shall mean the gross investment income for the
11 taxable year.
12 (c) Trusts and estates.
13 (1) In general. In the case of a trust or estate,
14 base income means an amount equal to the taxpayer's
15 taxable income for the taxable year as modified by
16 paragraph (2).
17 (2) Modifications. Subject to the provisions of
18 paragraph (3), the taxable income referred to in
19 paragraph (1) shall be modified by adding thereto the sum
20 of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest or dividends
23 during the taxable year to the extent excluded from
24 gross income in the computation of taxable income;
25 (B) In the case of (i) an estate, $600; (ii) a
26 trust which, under its governing instrument, is
27 required to distribute all of its income currently,
28 $300; and (iii) any other trust, $100, but in each
29 such case, only to the extent such amount was
30 deducted in the computation of taxable income;
31 (C) An amount equal to the amount of tax
32 imposed by this Act to the extent deducted from
33 gross income in the computation of taxable income
34 for the taxable year;
-14- LRB9009985KDcd
1 (D) The amount of any net operating loss
2 deduction taken in arriving at taxable income, other
3 than a net operating loss carried forward from a
4 taxable year ending prior to December 31, 1986;
5 (E) For taxable years in which a net operating
6 loss carryback or carryforward from a taxable year
7 ending prior to December 31, 1986 is an element of
8 taxable income under paragraph (1) of subsection (e)
9 or subparagraph (E) of paragraph (2) of subsection
10 (e), the amount by which addition modifications
11 other than those provided by this subparagraph (E)
12 exceeded subtraction modifications in such taxable
13 year, with the following limitations applied in the
14 order that they are listed:
15 (i) the addition modification relating to
16 the net operating loss carried back or forward
17 to the taxable year from any taxable year
18 ending prior to December 31, 1986 shall be
19 reduced by the amount of addition modification
20 under this subparagraph (E) which related to
21 that net operating loss and which was taken
22 into account in calculating the base income of
23 an earlier taxable year, and
24 (ii) the addition modification relating
25 to the net operating loss carried back or
26 forward to the taxable year from any taxable
27 year ending prior to December 31, 1986 shall
28 not exceed the amount of such carryback or
29 carryforward;
30 For taxable years in which there is a net
31 operating loss carryback or carryforward from more
32 than one other taxable year ending prior to December
33 31, 1986, the addition modification provided in this
34 subparagraph (E) shall be the sum of the amounts
-15- LRB9009985KDcd
1 computed independently under the preceding
2 provisions of this subparagraph (E) for each such
3 taxable year;
4 (F) For taxable years ending on or after
5 January 1, 1989, an amount equal to the tax deducted
6 pursuant to Section 164 of the Internal Revenue Code
7 if the trust or estate is claiming the same tax for
8 purposes of the Illinois foreign tax credit under
9 Section 601 of this Act; and
10 (G) 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 taxable income;
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (H) An amount equal to all amounts included in
17 such total pursuant to the provisions of Sections
18 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
19 408 of the Internal Revenue Code or included in such
20 total as distributions under the provisions of any
21 retirement or disability plan for employees of any
22 governmental agency or unit, or retirement payments
23 to retired partners, which payments are excluded in
24 computing net earnings from self employment by
25 Section 1402 of the Internal Revenue Code and
26 regulations adopted pursuant thereto;
27 (I) The valuation limitation amount;
28 (J) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (K) An amount equal to all amounts included in
33 taxable income as modified by subparagraphs (A),
34 (B), (C), (D), (E), (F) and (G) which are exempt
-16- LRB9009985KDcd
1 from taxation by this State either by reason of its
2 statutes or Constitution or by reason of the
3 Constitution, treaties or statutes of the United
4 States; provided that, in the case of any statute of
5 this State that exempts income derived from bonds or
6 other obligations from the tax imposed under this
7 Act, the amount exempted shall be the interest net
8 of bond premium amortization;
9 (L) With the exception of any amounts
10 subtracted under subparagraph (K), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by Sections 171(a) (2) and 265(a)(2) of the Internal
13 Revenue Code, as now or hereafter amended, and all
14 amounts of expenses allocable to interest and
15 disallowed as deductions by Section 265(1) of the
16 Internal Revenue Code of 1954, as now or hereafter
17 amended;
18 (M) An amount equal to those dividends
19 included in such total which were paid by a
20 corporation which conducts business operations in an
21 Enterprise Zone or zones created under the Illinois
22 Enterprise Zone Act and conducts substantially all
23 of its operations in an Enterprise Zone or Zones;
24 (N) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Tax Increment Allocation Redevelopment Act;
27 (O) An amount equal to those dividends
28 included in such total that were paid by a
29 corporation that conducts business operations in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 and that is designated a High Impact Business
32 located in Illinois; provided that dividends
33 eligible for the deduction provided in subparagraph
34 (M) of paragraph (2) of this subsection shall not be
-17- LRB9009985KDcd
1 eligible for the deduction provided under this
2 subparagraph (O); and
3 (P) An amount equal to the amount of the
4 deduction used to compute the federal income tax
5 credit for restoration of substantial amounts held
6 under claim of right for the taxable year pursuant
7 to Section 1341 of the Internal Revenue Code of
8 1986.
9 (3) Limitation. The amount of any modification
10 otherwise required under this subsection shall, under
11 regulations prescribed by the Department, be adjusted by
12 any amounts included therein which were properly paid,
13 credited, or required to be distributed, or permanently
14 set aside for charitable purposes pursuant to Internal
15 Revenue Code Section 642(c) during the taxable year.
16 (d) Partnerships.
17 (1) In general. In the case of a partnership, base
18 income means an amount equal to the taxpayer's taxable
19 income for the taxable year as modified by paragraph (2).
20 (2) Modifications. The taxable income referred to
21 in paragraph (1) shall be modified by adding thereto the
22 sum of the following amounts:
23 (A) An amount equal to all amounts paid or
24 accrued to the taxpayer as interest or dividends
25 during the taxable year to the extent excluded from
26 gross income in the computation of 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 for the taxable year; and
30 (C) The amount of deductions allowed to the
31 partnership pursuant to Section 707 (c) of the
32 Internal Revenue Code in calculating its taxable
33 income;
34 (D) An amount equal to the amount of the
-18- LRB9009985KDcd
1 capital gain deduction allowable under the Internal
2 Revenue Code, to the extent deducted from gross
3 income in the computation of taxable income;
4 and by deducting from the total so obtained the following
5 amounts:
6 (E) The valuation limitation amount;
7 (F) An amount equal to the amount of any tax
8 imposed by this Act which was refunded to the
9 taxpayer and included in such total for the taxable
10 year;
11 (G) An amount equal to all amounts included in
12 taxable income as modified by subparagraphs (A),
13 (B), (C) and (D) which are exempt from taxation by
14 this State either by reason of its statutes or
15 Constitution or by reason of the Constitution,
16 treaties or statutes of the United States; provided
17 that, in the case of any statute of this State that
18 exempts income derived from bonds or other
19 obligations from the tax imposed under this Act, the
20 amount exempted shall be the interest net of bond
21 premium amortization;
22 (H) Any income of the partnership which
23 constitutes personal service income as defined in
24 Section 1348 (b) (1) of the Internal Revenue Code
25 (as in effect December 31, 1981) or a reasonable
26 allowance for compensation paid or accrued for
27 services rendered by partners to the partnership,
28 whichever is greater;
29 (I) An amount equal to all amounts of income
30 distributable to an entity subject to the Personal
31 Property Tax Replacement Income Tax imposed by
32 subsections (c) and (d) of Section 201 of this Act
33 including amounts distributable to organizations
34 exempt from federal income tax by reason of Section
-19- LRB9009985KDcd
1 501(a) of the Internal Revenue Code;
2 (J) With the exception of any amounts
3 subtracted under subparagraph (G), an amount equal
4 to the sum of all amounts disallowed as deductions
5 by Sections 171(a) (2), and 265(2) of the Internal
6 Revenue Code of 1954, as now or hereafter amended,
7 and all amounts of expenses allocable to interest
8 and disallowed as deductions by Section 265(1) of
9 the Internal Revenue Code, as now or hereafter
10 amended;
11 (K) An amount equal to those dividends
12 included in such total which were paid by a
13 corporation which conducts business operations in an
14 Enterprise Zone or zones created under the Illinois
15 Enterprise Zone Act, enacted by the 82nd General
16 Assembly, and which does not conduct such operations
17 other than in an Enterprise Zone or Zones;
18 (L) An amount equal to any contribution made
19 to a job training project established pursuant to
20 the Real Property Tax Increment Allocation
21 Redevelopment Act;
22 (M) An amount equal to those dividends
23 included in such total that were paid by a
24 corporation that conducts business operations in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 and that is designated a High Impact Business
27 located in Illinois; provided that dividends
28 eligible for the deduction provided in subparagraph
29 (K) of paragraph (2) of this subsection shall not be
30 eligible for the deduction provided under this
31 subparagraph (M); and
32 (N) An amount equal to the amount of the
33 deduction used to compute the federal income tax
34 credit for restoration of substantial amounts held
-20- LRB9009985KDcd
1 under claim of right for the taxable year pursuant
2 to Section 1341 of the Internal Revenue Code of
3 1986.
4 (e) Gross income; adjusted gross income; taxable income.
5 (1) In general. Subject to the provisions of
6 paragraph (2) and subsection (b) (3), for purposes of
7 this Section and Section 803(e), a taxpayer's gross
8 income, adjusted gross income, or taxable income for the
9 taxable year shall mean the amount of gross income,
10 adjusted gross income or taxable income properly
11 reportable for federal income tax purposes for the
12 taxable year under the provisions of the Internal Revenue
13 Code. Taxable income may be less than zero. However, for
14 taxable years ending on or after December 31, 1986, net
15 operating loss carryforwards from taxable years ending
16 prior to December 31, 1986, may not exceed the sum of
17 federal taxable income for the taxable year before net
18 operating loss deduction, plus the excess of addition
19 modifications over subtraction modifications for the
20 taxable year. For taxable years ending prior to December
21 31, 1986, taxable income may never be an amount in excess
22 of the net operating loss for the taxable year as defined
23 in subsections (c) and (d) of Section 172 of the Internal
24 Revenue Code, provided that when taxable income of a
25 corporation (other than a Subchapter S corporation),
26 trust, or estate is less than zero and addition
27 modifications, other than those provided by subparagraph
28 (E) of paragraph (2) of subsection (b) for corporations
29 or subparagraph (E) of paragraph (2) of subsection (c)
30 for trusts and estates, exceed subtraction modifications,
31 an addition modification must be made under those
32 subparagraphs for any other taxable year to which the
33 taxable income less than zero (net operating loss) is
34 applied under Section 172 of the Internal Revenue Code or
-21- LRB9009985KDcd
1 under subparagraph (E) of paragraph (2) of this
2 subsection (e) applied in conjunction with Section 172 of
3 the Internal Revenue Code.
4 (2) Special rule. For purposes of paragraph (1) of
5 this subsection, the taxable income properly reportable
6 for federal income tax purposes shall mean:
7 (A) Certain life insurance companies. In the
8 case of a life insurance company subject to the tax
9 imposed by Section 801 of the Internal Revenue Code,
10 life insurance company taxable income, plus the
11 amount of distribution from pre-1984 policyholder
12 surplus accounts as calculated under Section 815a of
13 the Internal Revenue Code;
14 (B) Certain other insurance companies. In the
15 case of mutual insurance companies subject to the
16 tax imposed by Section 831 of the Internal Revenue
17 Code, insurance company taxable income;
18 (C) Regulated investment companies. In the
19 case of a regulated investment company subject to
20 the tax imposed by Section 852 of the Internal
21 Revenue Code, investment company taxable income;
22 (D) Real estate investment trusts. In the
23 case of a real estate investment trust subject to
24 the tax imposed by Section 857 of the Internal
25 Revenue Code, real estate investment trust taxable
26 income;
27 (E) Consolidated corporations. In the case of
28 a corporation which is a member of an affiliated
29 group of corporations filing a consolidated income
30 tax return for the taxable year for federal income
31 tax purposes, taxable income determined as if such
32 corporation had filed a separate return for federal
33 income tax purposes for the taxable year and each
34 preceding taxable year for which it was a member of
-22- LRB9009985KDcd
1 an affiliated group. For purposes of this
2 subparagraph, the taxpayer's separate taxable income
3 shall be determined as if the election provided by
4 Section 243(b) (2) of the Internal Revenue Code had
5 been in effect for all such years;
6 (F) Cooperatives. In the case of a
7 cooperative corporation or association, the taxable
8 income of such organization determined in accordance
9 with the provisions of Section 1381 through 1388 of
10 the Internal Revenue Code;
11 (G) Subchapter S corporations. In the case
12 of: (i) a Subchapter S corporation for which there
13 is in effect an election for the taxable year under
14 Section 1362 of the Internal Revenue Code, the
15 taxable income of such corporation determined in
16 accordance with Section 1363(b) of the Internal
17 Revenue Code, except that taxable income shall take
18 into account those items which are required by
19 Section 1363(b)(1) of the Internal Revenue Code to
20 be separately stated; and (ii) a Subchapter S
21 corporation for which there is in effect a federal
22 election to opt out of the provisions of the
23 Subchapter S Revision Act of 1982 and have applied
24 instead the prior federal Subchapter S rules as in
25 effect on July 1, 1982, the taxable income of such
26 corporation determined in accordance with the
27 federal Subchapter S rules as in effect on July 1,
28 1982; and
29 (H) Partnerships. In the case of a
30 partnership, taxable income determined in accordance
31 with Section 703 of the Internal Revenue Code,
32 except that taxable income shall take into account
33 those items which are required by Section 703(a)(1)
34 to be separately stated but which would be taken
-23- LRB9009985KDcd
1 into account by an individual in calculating his
2 taxable income.
3 (f) Valuation limitation amount.
4 (1) In general. The valuation limitation amount
5 referred to in subsections (a) (2) (G), (c) (2) (I) and
6 (d)(2) (E) is an amount equal to:
7 (A) The sum of the pre-August 1, 1969
8 appreciation amounts (to the extent consisting of
9 gain reportable under the provisions of Section 1245
10 or 1250 of the Internal Revenue Code) for all
11 property in respect of which such gain was reported
12 for the taxable year; plus
13 (B) The lesser of (i) the sum of the
14 pre-August 1, 1969 appreciation amounts (to the
15 extent consisting of capital gain) for all property
16 in respect of which such gain was reported for
17 federal income tax purposes for the taxable year, or
18 (ii) the net capital gain for the taxable year,
19 reduced in either case by any amount of such gain
20 included in the amount determined under subsection
21 (a) (2) (F) or (c) (2) (H).
22 (2) Pre-August 1, 1969 appreciation amount.
23 (A) If the fair market value of property
24 referred to in paragraph (1) was readily
25 ascertainable on August 1, 1969, the pre-August 1,
26 1969 appreciation amount for such property is the
27 lesser of (i) the excess of such fair market value
28 over the taxpayer's basis (for determining gain) for
29 such property on that date (determined under the
30 Internal Revenue Code as in effect on that date), or
31 (ii) the total gain realized and reportable for
32 federal income tax purposes in respect of the sale,
33 exchange or other disposition of such property.
34 (B) If the fair market value of property
-24- LRB9009985KDcd
1 referred to in paragraph (1) was not readily
2 ascertainable on August 1, 1969, the pre-August 1,
3 1969 appreciation amount for such property is that
4 amount which bears the same ratio to the total gain
5 reported in respect of the property for federal
6 income tax purposes for the taxable year, as the
7 number of full calendar months in that part of the
8 taxpayer's holding period for the property ending
9 July 31, 1969 bears to the number of full calendar
10 months in the taxpayer's entire holding period for
11 the property.
12 (C) The Department shall prescribe such
13 regulations as may be necessary to carry out the
14 purposes of this paragraph.
15 (g) Double deductions. Unless specifically provided
16 otherwise, nothing in this Section shall permit the same item
17 to be deducted more than once.
18 (h) Legislative intention. Except as expressly provided
19 by this Section there shall be no modifications or
20 limitations on the amounts of income, gain, loss or deduction
21 taken into account in determining gross income, adjusted
22 gross income or taxable income for federal income tax
23 purposes for the taxable year, or in the amount of such items
24 entering into the computation of base income and net income
25 under this Act for such taxable year, whether in respect of
26 property values as of August 1, 1969 or otherwise.
27 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
28 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
29 8-9-96; 90-491, eff. 1-1-98.)
30 Section 99. Effective date. This Act takes effect upon
31 becoming law.