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90_SB0645sam001
SDS/90SB0645pam1/dgd
1 AMENDMENT TO SENATE BILL 645
2 AMENDMENT NO. . Amend Senate Bill 645 by replacing
3 the title with the following:
4 "AN ACT to amend the Illinois Income Tax Act by changing
5 Section 203."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Illinois Income Tax Act is amended by
9 changing Section 203 as follows:
10 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
11 Sec. 203. Base income defined.
12 (a) Individuals.
13 (1) In general. In the case of an individual, base
14 income means an amount equal to the taxpayer's adjusted
15 gross income for the taxable year as modified by
16 paragraph (2).
17 (2) Modifications. The adjusted gross income
18 referred to in paragraph (1) shall be modified by adding
19 thereto the sum of the following amounts:
20 (A) An amount equal to all amounts paid or
21 accrued to the taxpayer as interest or dividends
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1 during the taxable year to the extent excluded from
2 gross income in the computation of adjusted gross
3 income, except stock dividends of qualified public
4 utilities described in Section 305(e) of the
5 Internal Revenue Code;
6 (B) An amount equal to the amount of tax
7 imposed by this Act to the extent deducted from
8 gross income in the computation of adjusted gross
9 income for the taxable year;
10 (C) An amount equal to the amount received
11 during the taxable year as a recovery or refund of
12 real property taxes paid with respect to the
13 taxpayer's principal residence under the Revenue Act
14 of 1939 and for which a deduction was previously
15 taken under subparagraph (L) of this paragraph (2)
16 prior to July 1, 1991, the retrospective application
17 date of Article 4 of Public Act 87-17. In the case
18 of multi-unit or multi-use structures and farm
19 dwellings, the taxes on the taxpayer's principal
20 residence shall be that portion of the total taxes
21 for the entire property which is attributable to
22 such principal residence;
23 (D) An amount equal to the amount of the
24 capital gain deduction allowable under the Internal
25 Revenue Code, to the extent deducted from gross
26 income in the computation of adjusted gross income;
27 and
28 (D-5) An amount, to the extent not included in
29 adjusted gross income, equal to the amount of money
30 withdrawn by the taxpayer in the taxable year from a
31 medical care savings account and the interest earned
32 on the account in the taxable year of a withdrawal
33 pursuant to subsection (b) of Section 20 of the
34 Medical Care Savings Account Act;
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1 and by deducting from the total so obtained the sum of
2 the following amounts:
3 (E) Any amount included in such total in
4 respect of any compensation (including but not
5 limited to any compensation paid or accrued to a
6 serviceman while a prisoner of war or missing in
7 action) paid to a resident by reason of being on
8 active duty in the Armed Forces of the United States
9 and in respect of any compensation paid or accrued
10 to a resident who as a governmental employee was a
11 prisoner of war or missing in action, and in respect
12 of any compensation paid to a resident in 1971 or
13 thereafter for annual training performed pursuant to
14 Sections 502 and 503, Title 32, United States Code
15 as a member of the Illinois National Guard;
16 (F) 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
20 such total as distributions under the provisions of
21 any retirement or disability plan for employees of
22 any governmental agency or unit, or retirement
23 payments to retired partners, which payments are
24 excluded in computing net earnings from self
25 employment by Section 1402 of the Internal Revenue
26 Code and regulations adopted pursuant thereto;
27 (G) The valuation limitation amount;
28 (H) 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 (I) An amount equal to all amounts included in
33 such total pursuant to the provisions of Section 111
34 of the Internal Revenue Code as a recovery of items
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1 previously deducted from adjusted gross income in
2 the computation of taxable income;
3 (J) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act, and conducts substantially all
8 of its operations in an Enterprise Zone or zones;
9 (K) An amount equal to those dividends
10 included in such total that were paid by a
11 corporation that conducts business operations in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 and that is designated a High Impact Business
14 located in Illinois; provided that dividends
15 eligible for the deduction provided in subparagraph
16 (J) of paragraph (2) of this subsection shall not be
17 eligible for the deduction provided under this
18 subparagraph (K);
19 (L) For taxable years ending after December
20 31, 1983, an amount equal to all social security
21 benefits and railroad retirement benefits included
22 in such total pursuant to Sections 72(r) and 86 of
23 the Internal Revenue Code;
24 (M) With the exception of any amounts
25 subtracted under subparagraph (N), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by Sections 171(a) (2), and 265(2) of the Internal
28 Revenue Code of 1954, as now or hereafter amended,
29 and all amounts of expenses allocable to interest
30 and disallowed as deductions by Section 265(1) of
31 the Internal Revenue Code of 1954, as now or
32 hereafter amended;
33 (N) An amount equal to all amounts included in
34 such total which are exempt from taxation by this
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1 State either by reason of its statutes or
2 Constitution or by reason of the Constitution,
3 treaties or statutes of the United States; provided
4 that, in the case of any statute of this State that
5 exempts income derived from bonds or other
6 obligations from the tax imposed under this Act, the
7 amount exempted shall be the interest net of bond
8 premium amortization;
9 (O) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Tax Increment Allocation Redevelopment Act;
12 (P) 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 (Q) An amount equal to any amounts included in
19 such total, received by the taxpayer as an
20 acceleration in the payment of life, endowment or
21 annuity benefits in advance of the time they would
22 otherwise be payable as an indemnity for a terminal
23 illness;
24 (R) An amount equal to the amount of any
25 federal or State bonus paid to veterans of the
26 Persian Gulf War;
27 (S) An amount, to the extent included in
28 adjusted gross income, equal to the amount of a
29 contribution made in the taxable year on behalf of
30 the taxpayer to a medical care savings account
31 established under the Medical Care Savings Account
32 Act to the extent the contribution is accepted by
33 the account administrator as provided in that Act;
34 (T) An amount, to the extent included in
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1 adjusted gross income, equal to the amount of
2 interest earned in the taxable year on a medical
3 care savings account established under the Medical
4 Care Savings Account Act on behalf of the taxpayer,
5 other than interest added pursuant to item (D-5) of
6 this paragraph (2);
7 (U) For one taxable year beginning on or after
8 January 1, 1994, an amount equal to the total amount
9 of tax imposed and paid under subsections (a) and
10 (b) of Section 201 of this Act on grant amounts
11 received by the taxpayer under the Nursing Home
12 Grant Assistance Act during the taxpayer's taxable
13 years 1992 and 1993; and
14 (V) Beginning with tax years ending on or
15 after December 31, 1995 and ending with tax years
16 ending on or before December 31, 1999, an amount
17 equal to the amount paid by a taxpayer who is a
18 self-employed taxpayer, a partner of a partnership,
19 or a shareholder in a Subchapter S corporation for
20 health insurance or long-term care insurance for
21 that taxpayer or that taxpayer's spouse or
22 dependents, to the extent that the amount paid for
23 that health insurance or long-term care insurance
24 may be deducted under Section 213 of the Internal
25 Revenue Code of 1986, has not been deducted on the
26 federal income tax return of the taxpayer, and does
27 not exceed the taxable income attributable to that
28 taxpayer's income, self-employment income, or
29 Subchapter S corporation income; except that no
30 deduction shall be allowed under this item (V) if
31 the taxpayer is eligible to participate in any
32 health insurance or long-term care insurance plan of
33 an employer of the taxpayer or the taxpayer's
34 spouse. The amount of the health insurance and
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1 long-term care insurance subtracted under this item
2 (V) shall be determined by multiplying total health
3 insurance and long-term care insurance premiums paid
4 by the taxpayer times a number that represents the
5 fractional percentage of eligible medical expenses
6 under Section 213 of the Internal Revenue Code of
7 1986 not actually deducted on the taxpayer's federal
8 income tax return; and.
9 (W) Beginning with taxable years beginning on
10 or after January 1, 1997 and ending with taxable
11 years ending on or before December 30, 2002, an
12 amount, not to exceed $100,000, equal to the amount
13 contributed for educational purposes by the taxpayer
14 to any public or private elementary, secondary, or
15 post-secondary school in Illinois, as certified by
16 the recipient school.
17 (b) Corporations.
18 (1) In general. In the case of a corporation, base
19 income means an amount equal to the taxpayer's taxable
20 income for the taxable year as modified by paragraph (2).
21 (2) Modifications. The taxable income referred to
22 in paragraph (1) shall be modified by adding thereto the
23 sum of the following amounts:
24 (A) An amount equal to all amounts paid or
25 accrued to the taxpayer as interest and all
26 distributions received from regulated investment
27 companies during the taxable year to the extent
28 excluded from gross income in the computation of
29 taxable income;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income in the computation of taxable income
33 for the taxable year;
34 (C) In the case of a regulated investment
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1 company or real estate investment trust, an amount
2 equal to the excess of (i) the net long-term capital
3 gain for the taxable year, over (ii) the amount of
4 the capital gain dividends designated as such in
5 accordance with Section 852(b)(3)(C) or Section
6 857(b)(3)(C) of the Internal Revenue Code and any
7 amount designated under Section 852(b)(3)(D) of the
8 Internal Revenue Code, attributable to the taxable
9 year.
10 This amendatory Act of 1995 is declarative of existing
11 law and is not a new enactment.
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; and
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 earlier
24 taxable year, with the following limitations applied
25 in the 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 and by deducting from the total so obtained the sum of
16 the following amounts:
17 (F) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the
19 taxpayer and included in such total for the taxable
20 year;
21 (G) An amount equal to any amount included in
22 such total under Section 78 of the Internal Revenue
23 Code;
24 (H) In the case of a regulated investment
25 company, an amount equal to the amount of exempt
26 interest dividends as defined in subsection (b) (5)
27 of Section 852 of the Internal Revenue Code, paid to
28 shareholders for the taxable year;
29 (I) With the exception of any amounts
30 subtracted under subparagraph (J), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2), and 265(a)(2) and amounts
33 disallowed as interest expense by Section 291(a)(3)
34 of the Internal Revenue Code, as now or hereafter
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1 amended, and all amounts of expenses allocable to
2 interest and disallowed as deductions by Section
3 265(a)(1) of the Internal Revenue Code, as now or
4 hereafter amended;
5 (J) An amount equal to all amounts included in
6 such total which are exempt from taxation by this
7 State either by reason of its statutes or
8 Constitution or by reason of the Constitution,
9 treaties or statutes of the United States; provided
10 that, in the case of any statute of this State that
11 exempts income derived from bonds or other
12 obligations from the tax imposed under this Act, the
13 amount exempted shall be the interest net of bond
14 premium amortization;
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 and conducts substantially all
20 of its operations in an Enterprise Zone or zones;
21 (L) An amount equal to those dividends
22 included in such total that were paid by a
23 corporation that conducts business operations in a
24 federally designated Foreign Trade Zone or Sub-Zone
25 and that is designated a High Impact Business
26 located in Illinois; provided that dividends
27 eligible for the deduction provided in subparagraph
28 (K) of paragraph 2 of this subsection shall not be
29 eligible for the deduction provided under this
30 subparagraph (L);
31 (M) For any taxpayer that is a financial
32 organization within the meaning of Section 304(c) of
33 this Act, an amount included in such total as
34 interest income from a loan or loans made by such
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1 taxpayer to a borrower, to the extent that such a
2 loan is secured by property which is eligible for
3 the Enterprise Zone Investment Credit. To determine
4 the portion of a loan or loans that is secured by
5 property eligible for a Section 201(h) investment
6 credit to the borrower, the entire principal amount
7 of the loan or loans between the taxpayer and the
8 borrower should be divided into the basis of the
9 Section 201(h) investment credit property which
10 secures the loan or loans, using for this purpose
11 the original basis of such property on the date that
12 it was placed in service in the Enterprise Zone.
13 The subtraction modification available to taxpayer
14 in any year under this subsection shall be that
15 portion of the total interest paid by the borrower
16 with respect to such loan attributable to the
17 eligible property as calculated under the previous
18 sentence;
19 (M-1) For any taxpayer that is a financial
20 organization within the meaning of Section 304(c) of
21 this Act, an amount included in such total as
22 interest income from a loan or loans made by such
23 taxpayer to a borrower, to the extent that such a
24 loan is secured by property which is eligible for
25 the High Impact Business Investment Credit. To
26 determine the portion of a loan or loans that is
27 secured by property eligible for a Section 201(i)
28 investment credit to the borrower, the entire
29 principal amount of the loan or loans between the
30 taxpayer and the borrower should be divided into the
31 basis of the Section 201(i) investment credit
32 property which secures the loan or loans, using for
33 this purpose the original basis of such property on
34 the date that it was placed in service in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 located in Illinois. No taxpayer that is eligible
3 for the deduction provided in subparagraph (M) of
4 paragraph (2) of this subsection shall be eligible
5 for the deduction provided under this subparagraph
6 (M-1). The subtraction modification available to
7 taxpayers in any year under this subsection shall be
8 that portion of the total interest paid by the
9 borrower with respect to such loan attributable to
10 the eligible property as calculated under the
11 previous sentence;
12 (N) Two times any contribution made during the
13 taxable year to a designated zone organization to
14 the extent that the contribution (i) qualifies as a
15 charitable contribution under subsection (c) of
16 Section 170 of the Internal Revenue Code and (ii)
17 must, by its terms, be used for a project approved
18 by the Department of Commerce and Community Affairs
19 under Section 11 of the Illinois Enterprise Zone
20 Act;
21 (O) An amount equal to: (i) 85% for taxable
22 years ending on or before December 31, 1992, or, a
23 percentage equal to the percentage allowable under
24 Section 243(a)(1) of the Internal Revenue Code of
25 1986 for taxable years ending after December 31,
26 1992, of the amount by which dividends included in
27 taxable income and received from a corporation that
28 is not created or organized under the laws of the
29 United States or any state or political subdivision
30 thereof, including, for taxable years ending on or
31 after December 31, 1988, dividends received or
32 deemed received or paid or deemed paid under
33 Sections 951 through 964 of the Internal Revenue
34 Code, exceed the amount of the modification provided
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1 under subparagraph (G) of paragraph (2) of this
2 subsection (b) which is related to such dividends;
3 plus (ii) 100% of the amount by which dividends,
4 included in taxable income and received, including,
5 for taxable years ending on or after December 31,
6 1988, dividends received or deemed received or paid
7 or deemed paid under Sections 951 through 964 of the
8 Internal Revenue Code, from any such corporation
9 specified in clause (i) that would but for the
10 provisions of Section 1504 (b) (3) of the Internal
11 Revenue Code be treated as a member of the
12 affiliated group which includes the dividend
13 recipient, exceed the amount of the modification
14 provided under subparagraph (G) of paragraph (2) of
15 this subsection (b) which is related to such
16 dividends;
17 (P) An amount equal to any contribution made
18 to a job training project established pursuant to
19 the Tax Increment Allocation Redevelopment Act; and
20 (Q) An amount equal to the amount of the
21 deduction used to compute the federal income tax
22 credit for restoration of substantial amounts held
23 under claim of right for the taxable year pursuant
24 to Section 1341 of the Internal Revenue Code of
25 1986; and.
26 (R) Beginning with taxable years beginning on
27 or after January 1, 1997 and ending with taxable
28 years ending on or before December 30, 2002, an
29 amount, not to exceed $100,000, equal to the amount
30 contributed for educational purposes by the taxpayer
31 to any public or private elementary, secondary, or
32 post-secondary school in Illinois, as certified by
33 the recipient school.
34 (3) Special rule. For purposes of paragraph (2)
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1 (A), "gross income" in the case of a life insurance
2 company, for tax years ending on and after December 31,
3 1994, shall mean the gross investment income for the
4 taxable year.
5 (c) Trusts and estates.
6 (1) In general. In the case of a trust or estate,
7 base income means an amount equal to the taxpayer's
8 taxable income for the taxable year as modified by
9 paragraph (2).
10 (2) Modifications. Subject to the provisions of
11 paragraph (3), the taxable income referred to in
12 paragraph (1) shall be modified by adding thereto the sum
13 of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest or dividends
16 during the taxable year to the extent excluded from
17 gross income in the computation of taxable income;
18 (B) In the case of (i) an estate, $600; (ii) a
19 trust which, under its governing instrument, is
20 required to distribute all of its income currently,
21 $300; and (iii) any other trust, $100, but in each
22 such case, only to the extent such amount was
23 deducted in the computation of taxable income;
24 (C) 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 taxable income
27 for the taxable year;
28 (D) The amount of any net operating loss
29 deduction taken in arriving at taxable income, other
30 than a net operating loss carried forward from a
31 taxable year ending prior to December 31, 1986;
32 (E) For taxable years in which a net operating
33 loss carryback or carryforward from a taxable year
34 ending prior to December 31, 1986 is an element of
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1 taxable income under paragraph (1) of subsection (e)
2 or subparagraph (E) of paragraph (2) of subsection
3 (e), the amount by which addition modifications
4 other than those provided by this subparagraph (E)
5 exceeded subtraction modifications in such taxable
6 year, with the following limitations applied in the
7 order that they are listed:
8 (i) the addition modification relating to
9 the net operating loss carried back or forward
10 to the taxable year from any taxable year
11 ending prior to December 31, 1986 shall be
12 reduced by the amount of addition modification
13 under this subparagraph (E) which related to
14 that net operating loss and which was taken
15 into account in calculating the base income of
16 an earlier taxable year, and
17 (ii) the addition modification relating
18 to the net operating loss carried back or
19 forward to the taxable year from any taxable
20 year ending prior to December 31, 1986 shall
21 not exceed the amount of such carryback or
22 carryforward;
23 For taxable years in which there is a net
24 operating loss carryback or carryforward from more
25 than one other taxable year ending prior to December
26 31, 1986, the addition modification provided in this
27 subparagraph (E) shall be the sum of the amounts
28 computed independently under the preceding
29 provisions of this subparagraph (E) for each such
30 taxable year;
31 (F) For taxable years ending on or after
32 January 1, 1989, an amount equal to the tax deducted
33 pursuant to Section 164 of the Internal Revenue Code
34 if the trust or estate is claiming the same tax for
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1 purposes of the Illinois foreign tax credit under
2 Section 601 of this Act; and
3 (G) An amount equal to the amount of the
4 capital gain deduction allowable under the Internal
5 Revenue Code, to the extent deducted from gross
6 income in the computation of taxable income;
7 and by deducting from the total so obtained the sum of
8 the following amounts:
9 (H) An amount equal to all amounts included in
10 such total pursuant to the provisions of Sections
11 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
12 408 of the Internal Revenue Code or included in such
13 total as distributions under the provisions of any
14 retirement or disability plan for employees of any
15 governmental agency or unit, or retirement payments
16 to retired partners, which payments are excluded in
17 computing net earnings from self employment by
18 Section 1402 of the Internal Revenue Code and
19 regulations adopted pursuant thereto;
20 (I) The valuation limitation amount;
21 (J) An amount equal to the amount of any tax
22 imposed by this Act which was refunded to the
23 taxpayer and included in such total for the taxable
24 year;
25 (K) An amount equal to all amounts included in
26 taxable income as modified by subparagraphs (A),
27 (B), (C), (D), (E), (F) and (G) which are exempt
28 from taxation by this State either by reason of its
29 statutes or Constitution or by reason of the
30 Constitution, treaties or statutes of the United
31 States; provided that, in the case of any statute of
32 this State that exempts income derived from bonds or
33 other obligations from the tax imposed under this
34 Act, the amount exempted shall be the interest net
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1 of bond premium amortization;
2 (L) With the exception of any amounts
3 subtracted under subparagraph (K), an amount equal
4 to the sum of all amounts disallowed as deductions
5 by Sections 171(a) (2) and 265(a)(2) of the Internal
6 Revenue Code, as now or hereafter amended, and all
7 amounts of expenses allocable to interest and
8 disallowed as deductions by Section 265(1) of the
9 Internal Revenue Code of 1954, as now or hereafter
10 amended;
11 (M) 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 and conducts substantially all
16 of its operations in an Enterprise Zone or Zones;
17 (N) An amount equal to any contribution made
18 to a job training project established pursuant to
19 the Tax Increment Allocation Redevelopment Act;
20 (O) An amount equal to those dividends
21 included in such total that were paid by a
22 corporation that conducts business operations in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 and that is designated a High Impact Business
25 located in Illinois; provided that dividends
26 eligible for the deduction provided in subparagraph
27 (M) of paragraph (2) of this subsection shall not be
28 eligible for the deduction provided under this
29 subparagraph (O); and
30 (P) An amount equal to the amount of the
31 deduction used to compute the federal income tax
32 credit for restoration of substantial amounts held
33 under claim of right for the taxable year pursuant
34 to Section 1341 of the Internal Revenue Code of
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1 1986; and.
2 (Q) Beginning with taxable years beginning on
3 or after January 1, 1997 and ending with taxable
4 years ending on or before December 30, 2002, an
5 amount, not to exceed $100,000, equal to the amount
6 contributed for educational purposes by the taxpayer
7 to any public or private elementary, secondary, or
8 post-secondary school in Illinois, as certified by
9 the recipient school.
10 (3) Limitation. The amount of any modification
11 otherwise required under this subsection shall, under
12 regulations prescribed by the Department, be adjusted by
13 any amounts included therein which were properly paid,
14 credited, or required to be distributed, or permanently
15 set aside for charitable purposes pursuant to Internal
16 Revenue Code Section 642(c) during the taxable year.
17 (d) Partnerships.
18 (1) In general. In the case of a partnership, base
19 income means an amount equal to the taxpayer's taxable
20 income for the taxable year as modified by paragraph (2).
21 (2) Modifications. The taxable income referred to
22 in paragraph (1) shall be modified by adding thereto the
23 sum of the following amounts:
24 (A) An amount equal to all amounts paid or
25 accrued to the taxpayer as interest or dividends
26 during the taxable year to the extent excluded from
27 gross income in the computation of taxable income;
28 (B) An amount equal to the amount of tax
29 imposed by this Act to the extent deducted from
30 gross income for the taxable year; and
31 (C) The amount of deductions allowed to the
32 partnership pursuant to Section 707 (c) of the
33 Internal Revenue Code in calculating its taxable
34 income;
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1 (D) An amount equal to the amount of the
2 capital gain deduction allowable under the Internal
3 Revenue Code, to the extent deducted from gross
4 income in the computation of taxable income;
5 and by deducting from the total so obtained the following
6 amounts:
7 (E) The valuation limitation amount;
8 (F) An amount equal to the amount of any tax
9 imposed by this Act which was refunded to the
10 taxpayer and included in such total for the taxable
11 year;
12 (G) An amount equal to all amounts included in
13 taxable income as modified by subparagraphs (A),
14 (B), (C) and (D) which are exempt from taxation by
15 this State either by reason of its statutes or
16 Constitution or by reason of the Constitution,
17 treaties or statutes of the United States; provided
18 that, in the case of any statute of this State that
19 exempts income derived from bonds or other
20 obligations from the tax imposed under this Act, the
21 amount exempted shall be the interest net of bond
22 premium amortization;
23 (H) Any income of the partnership which
24 constitutes personal service income as defined in
25 Section 1348 (b) (1) of the Internal Revenue Code
26 (as in effect December 31, 1981) or a reasonable
27 allowance for compensation paid or accrued for
28 services rendered by partners to the partnership,
29 whichever is greater;
30 (I) An amount equal to all amounts of income
31 distributable to an entity subject to the Personal
32 Property Tax Replacement Income Tax imposed by
33 subsections (c) and (d) of Section 201 of this Act
34 including amounts distributable to organizations
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1 exempt from federal income tax by reason of Section
2 501(a) of the Internal Revenue Code;
3 (J) With the exception of any amounts
4 subtracted under subparagraph (G), an amount equal
5 to the sum of all amounts disallowed as deductions
6 by Sections 171(a) (2), and 265(2) of the Internal
7 Revenue Code of 1954, as now or hereafter amended,
8 and all amounts of expenses allocable to interest
9 and disallowed as deductions by Section 265(1) of
10 the Internal Revenue Code, as now or hereafter
11 amended;
12 (K) An amount equal to those dividends
13 included in such total which were paid by a
14 corporation which conducts business operations in an
15 Enterprise Zone or zones created under the Illinois
16 Enterprise Zone Act, enacted by the 82nd General
17 Assembly, and which does not conduct such operations
18 other than in an Enterprise Zone or Zones;
19 (L) An amount equal to any contribution made
20 to a job training project established pursuant to
21 the Real Property Tax Increment Allocation
22 Redevelopment Act;
23 (M) An amount equal to those dividends
24 included in such total that were paid by a
25 corporation that conducts business operations in a
26 federally designated Foreign Trade Zone or Sub-Zone
27 and that is designated a High Impact Business
28 located in Illinois; provided that dividends
29 eligible for the deduction provided in subparagraph
30 (K) of paragraph (2) of this subsection shall not be
31 eligible for the deduction provided under this
32 subparagraph (M); and
33 (N) 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 (e) Gross income; adjusted gross income; taxable income.
6 (1) In general. Subject to the provisions of
7 paragraph (2) and subsection (b) (3), for purposes of
8 this Section and Section 803(e), a taxpayer's gross
9 income, adjusted gross income, or taxable income for the
10 taxable year shall mean the amount of gross income,
11 adjusted gross income or taxable income properly
12 reportable for federal income tax purposes for the
13 taxable year under the provisions of the Internal Revenue
14 Code. Taxable income may be less than zero. However, for
15 taxable years ending on or after December 31, 1986, net
16 operating loss carryforwards from taxable years ending
17 prior to December 31, 1986, may not exceed the sum of
18 federal taxable income for the taxable year before net
19 operating loss deduction, plus the excess of addition
20 modifications over subtraction modifications for the
21 taxable year. For taxable years ending prior to December
22 31, 1986, taxable income may never be an amount in excess
23 of the net operating loss for the taxable year as defined
24 in subsections (c) and (d) of Section 172 of the Internal
25 Revenue Code, provided that when taxable income of a
26 corporation (other than a Subchapter S corporation),
27 trust, or estate is less than zero and addition
28 modifications, other than those provided by subparagraph
29 (E) of paragraph (2) of subsection (b) for corporations
30 or subparagraph (E) of paragraph (2) of subsection (c)
31 for trusts and estates, exceed subtraction modifications,
32 an addition modification must be made under those
33 subparagraphs for any other taxable year to which the
34 taxable income less than zero (net operating loss) is
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1 applied under Section 172 of the Internal Revenue Code or
2 under subparagraph (E) of paragraph (2) of this
3 subsection (e) applied in conjunction with Section 172 of
4 the Internal Revenue Code.
5 (2) Special rule. For purposes of paragraph (1) of
6 this subsection, the taxable income properly reportable
7 for federal income tax purposes shall mean:
8 (A) Certain life insurance companies. In the
9 case of a life insurance company subject to the tax
10 imposed by Section 801 of the Internal Revenue Code,
11 life insurance company taxable income, plus the
12 amount of distribution from pre-1984 policyholder
13 surplus accounts as calculated under Section 815a of
14 the Internal Revenue Code;
15 (B) Certain other insurance companies. In the
16 case of mutual insurance companies subject to the
17 tax imposed by Section 831 of the Internal Revenue
18 Code, insurance company taxable income;
19 (C) Regulated investment companies. In the
20 case of a regulated investment company subject to
21 the tax imposed by Section 852 of the Internal
22 Revenue Code, investment company taxable income;
23 (D) Real estate investment trusts. In the
24 case of a real estate investment trust subject to
25 the tax imposed by Section 857 of the Internal
26 Revenue Code, real estate investment trust taxable
27 income;
28 (E) Consolidated corporations. In the case of
29 a corporation which is a member of an affiliated
30 group of corporations filing a consolidated income
31 tax return for the taxable year for federal income
32 tax purposes, taxable income determined as if such
33 corporation had filed a separate return for federal
34 income tax purposes for the taxable year and each
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1 preceding taxable year for which it was a member of
2 an affiliated group. For purposes of this
3 subparagraph, the taxpayer's separate taxable income
4 shall be determined as if the election provided by
5 Section 243(b) (2) of the Internal Revenue Code had
6 been in effect for all such years;
7 (F) Cooperatives. In the case of a
8 cooperative corporation or association, the taxable
9 income of such organization determined in accordance
10 with the provisions of Section 1381 through 1388 of
11 the Internal Revenue Code;
12 (G) Subchapter S corporations. In the case
13 of: (i) a Subchapter S corporation for which there
14 is in effect an election for the taxable year under
15 Section 1362 of the Internal Revenue Code, the
16 taxable income of such corporation determined in
17 accordance with Section 1363(b) of the Internal
18 Revenue Code, except that taxable income shall take
19 into account those items which are required by
20 Section 1363(b)(1) of the Internal Revenue Code to
21 be separately stated; and (ii) a Subchapter S
22 corporation for which there is in effect a federal
23 election to opt out of the provisions of the
24 Subchapter S Revision Act of 1982 and have applied
25 instead the prior federal Subchapter S rules as in
26 effect on July 1, 1982, the taxable income of such
27 corporation determined in accordance with the
28 federal Subchapter S rules as in effect on July 1,
29 1982; and
30 (H) Partnerships. In the case of a
31 partnership, taxable income determined in accordance
32 with Section 703 of the Internal Revenue Code,
33 except that taxable income shall take into account
34 those items which are required by Section 703(a)(1)
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1 to be separately stated but which would be taken
2 into account by an individual in calculating his
3 taxable income.
4 (f) Valuation limitation amount.
5 (1) In general. The valuation limitation amount
6 referred to in subsections (a) (2) (G), (c) (2) (I) and
7 (d)(2) (E) is an amount equal to:
8 (A) The sum of the pre-August 1, 1969
9 appreciation amounts (to the extent consisting of
10 gain reportable under the provisions of Section 1245
11 or 1250 of the Internal Revenue Code) for all
12 property in respect of which such gain was reported
13 for the taxable year; plus
14 (B) The lesser of (i) the sum of the
15 pre-August 1, 1969 appreciation amounts (to the
16 extent consisting of capital gain) for all property
17 in respect of which such gain was reported for
18 federal income tax purposes for the taxable year, or
19 (ii) the net capital gain for the taxable year,
20 reduced in either case by any amount of such gain
21 included in the amount determined under subsection
22 (a) (2) (F) or (c) (2) (H).
23 (2) Pre-August 1, 1969 appreciation amount.
24 (A) If the fair market value of property
25 referred to in paragraph (1) was readily
26 ascertainable on August 1, 1969, the pre-August 1,
27 1969 appreciation amount for such property is the
28 lesser of (i) the excess of such fair market value
29 over the taxpayer's basis (for determining gain) for
30 such property on that date (determined under the
31 Internal Revenue Code as in effect on that date), or
32 (ii) the total gain realized and reportable for
33 federal income tax purposes in respect of the sale,
34 exchange or other disposition of such property.
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1 (B) If the fair market value of property
2 referred to in paragraph (1) was not readily
3 ascertainable on August 1, 1969, the pre-August 1,
4 1969 appreciation amount for such property is that
5 amount which bears the same ratio to the total gain
6 reported in respect of the property for federal
7 income tax purposes for the taxable year, as the
8 number of full calendar months in that part of the
9 taxpayer's holding period for the property ending
10 July 31, 1969 bears to the number of full calendar
11 months in the taxpayer's entire holding period for
12 the property.
13 (C) The Department shall prescribe such
14 regulations as may be necessary to carry out the
15 purposes of this paragraph.
16 (g) Double deductions. Unless specifically provided
17 otherwise, nothing in this Section shall permit the same item
18 to be deducted more than once.
19 (h) Legislative intention. Except as expressly provided
20 by this Section there shall be no modifications or
21 limitations on the amounts of income, gain, loss or deduction
22 taken into account in determining gross income, adjusted
23 gross income or taxable income for federal income tax
24 purposes for the taxable year, or in the amount of such items
25 entering into the computation of base income and net income
26 under this Act for such taxable year, whether in respect of
27 property values as of August 1, 1969 or otherwise.
28 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
29 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
30 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
31 89-626, eff. 8-9-96.)".