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90_SB1291enr
35 ILCS 5/201 from Ch. 120, par. 2-201
Amends the Illinois Income Tax Act. Deletes provision
stating that "unreimbursed eligible remediation costs" does
not include approved eligible remediation costs that are
deducted under the provisions of the Internal Revenue Code or
costs that are taken into account in calculating an
environmental remediation credit granted against a tax
imposed under the Internal Revenue Code. Effective
immediately.
LRB9007338KDks
SB1291 Enrolled LRB9007338KDks
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Sections 201 and 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 Sections 201 and 203 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows:
18 (1) In the case of an individual, trust or estate,
19 for taxable years ending prior to July 1, 1989, an amount
20 equal to 2 1/2% of the taxpayer's net income for the
21 taxable year.
22 (2) In the case of an individual, trust or estate,
23 for taxable years beginning prior to July 1, 1989 and
24 ending after June 30, 1989, an amount equal to the sum of
25 (i) 2 1/2% of the taxpayer's net income for the period
26 prior to July 1, 1989, as calculated under Section 202.3,
27 and (ii) 3% of the taxpayer's net income for the period
28 after June 30, 1989, as calculated under Section 202.3.
29 (3) In the case of an individual, trust or estate,
30 for taxable years beginning after June 30, 1989, an
31 amount equal to 3% of the taxpayer's net income for the
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1 taxable year.
2 (4) (Blank).
3 (5) (Blank).
4 (6) In the case of a corporation, for taxable years
5 ending prior to July 1, 1989, an amount equal to 4% of
6 the taxpayer's net income for the taxable year.
7 (7) In the case of a corporation, for taxable years
8 beginning prior to July 1, 1989 and ending after June 30,
9 1989, an amount equal to the sum of (i) 4% of the
10 taxpayer's net income for the period prior to July 1,
11 1989, as calculated under Section 202.3, and (ii) 4.8% of
12 the taxpayer's net income for the period after June 30,
13 1989, as calculated under Section 202.3.
14 (8) In the case of a corporation, for taxable years
15 beginning after June 30, 1989, an amount equal to 4.8% of
16 the taxpayer's net income for the taxable year.
17 (c) Beginning on July 1, 1979 and thereafter, in
18 addition to such income tax, there is also hereby imposed the
19 Personal Property Tax Replacement Income Tax measured by net
20 income on every corporation (including Subchapter S
21 corporations), partnership and trust, for each taxable year
22 ending after June 30, 1979. Such taxes are imposed on the
23 privilege of earning or receiving income in or as a resident
24 of this State. The Personal Property Tax Replacement Income
25 Tax shall be in addition to the income tax imposed by
26 subsections (a) and (b) of this Section and in addition to
27 all other occupation or privilege taxes imposed by this State
28 or by any municipal corporation or political subdivision
29 thereof.
30 (d) Additional Personal Property Tax Replacement Income
31 Tax Rates. The personal property tax replacement income tax
32 imposed by this subsection and subsection (c) of this Section
33 in the case of a corporation, other than a Subchapter S
34 corporation, shall be an additional amount equal to 2.85% of
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1 such taxpayer's net income for the taxable year, except that
2 beginning on January 1, 1981, and thereafter, the rate of
3 2.85% specified in this subsection shall be reduced to 2.5%,
4 and in the case of a partnership, trust or a Subchapter S
5 corporation shall be an additional amount equal to 1.5% of
6 such taxpayer's net income for the taxable year.
7 (e) Investment credit. A taxpayer shall be allowed a
8 credit against the Personal Property Tax Replacement Income
9 Tax for investment in qualified property.
10 (1) A taxpayer shall be allowed a credit equal to
11 .5% of the basis of qualified property placed in service
12 during the taxable year, provided such property is placed
13 in service on or after July 1, 1984. There shall be
14 allowed an additional credit equal to .5% of the basis of
15 qualified property placed in service during the taxable
16 year, provided such property is placed in service on or
17 after July 1, 1986, and the taxpayer's base employment
18 within Illinois has increased by 1% or more over the
19 preceding year as determined by the taxpayer's employment
20 records filed with the Illinois Department of Employment
21 Security. Taxpayers who are new to Illinois shall be
22 deemed to have met the 1% growth in base employment for
23 the first year in which they file employment records with
24 the Illinois Department of Employment Security. The
25 provisions added to this Section by Public Act 85-1200
26 (and restored by Public Act 87-895) shall be construed as
27 declaratory of existing law and not as a new enactment.
28 If, in any year, the increase in base employment within
29 Illinois over the preceding year is less than 1%, the
30 additional credit shall be limited to that percentage
31 times a fraction, the numerator of which is .5% and the
32 denominator of which is 1%, but shall not exceed .5%.
33 The investment credit shall not be allowed to the extent
34 that it would reduce a taxpayer's liability in any tax
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1 year below zero, nor may any credit for qualified
2 property be allowed for any year other than the year in
3 which the property was placed in service in Illinois. For
4 tax years ending on or after December 31, 1987, and on or
5 before December 31, 1988, the credit shall be allowed for
6 the tax year in which the property is placed in service,
7 or, if the amount of the credit exceeds the tax liability
8 for that year, whether it exceeds the original liability
9 or the liability as later amended, such excess may be
10 carried forward and applied to the tax liability of the 5
11 taxable years following the excess credit years if the
12 taxpayer (i) makes investments which cause the creation
13 of a minimum of 2,000 full-time equivalent jobs in
14 Illinois, (ii) is located in an enterprise zone
15 established pursuant to the Illinois Enterprise Zone Act
16 and (iii) is certified by the Department of Commerce and
17 Community Affairs as complying with the requirements
18 specified in clause (i) and (ii) by July 1, 1986. The
19 Department of Commerce and Community Affairs shall notify
20 the Department of Revenue of all such certifications
21 immediately. For tax years ending after December 31,
22 1988, the credit shall be allowed for the tax year in
23 which the property is placed in service, or, if the
24 amount of the credit exceeds the tax liability for that
25 year, whether it exceeds the original liability or the
26 liability as later amended, such excess may be carried
27 forward and applied to the tax liability of the 5 taxable
28 years following the excess credit years. The credit shall
29 be applied to the earliest year for which there is a
30 liability. If there is credit from more than one tax year
31 that is available to offset a liability, earlier credit
32 shall be applied first.
33 (2) The term "qualified property" means property
34 which:
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1 (A) is tangible, whether new or used,
2 including buildings and structural components of
3 buildings and signs that are real property, but not
4 including land or improvements to real property that
5 are not a structural component of a building such as
6 landscaping, sewer lines, local access roads,
7 fencing, parking lots, and other appurtenances;
8 (B) is depreciable pursuant to Section 167 of
9 the Internal Revenue Code, except that "3-year
10 property" as defined in Section 168(c)(2)(A) of that
11 Code is not eligible for the credit provided by this
12 subsection (e);
13 (C) is acquired by purchase as defined in
14 Section 179(d) of the Internal Revenue Code;
15 (D) is used in Illinois by a taxpayer who is
16 primarily engaged in manufacturing, or in mining
17 coal or fluorite, or in retailing; and
18 (E) has not previously been used in Illinois
19 in such a manner and by such a person as would
20 qualify for the credit provided by this subsection
21 (e) or subsection (f).
22 (3) For purposes of this subsection (e),
23 "manufacturing" means the material staging and production
24 of tangible personal property by procedures commonly
25 regarded as manufacturing, processing, fabrication, or
26 assembling which changes some existing material into new
27 shapes, new qualities, or new combinations. For purposes
28 of this subsection (e) the term "mining" shall have the
29 same meaning as the term "mining" in Section 613(c) of
30 the Internal Revenue Code. For purposes of this
31 subsection (e), the term "retailing" means the sale of
32 tangible personal property or services rendered in
33 conjunction with the sale of tangible consumer goods or
34 commodities.
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1 (4) The basis of qualified property shall be the
2 basis used to compute the depreciation deduction for
3 federal income tax purposes.
4 (5) If the basis of the property for federal income
5 tax depreciation purposes is increased after it has been
6 placed in service in Illinois by the taxpayer, the amount
7 of such increase shall be deemed property placed in
8 service on the date of such increase in basis.
9 (6) The term "placed in service" shall have the
10 same meaning as under Section 46 of the Internal Revenue
11 Code.
12 (7) If during any taxable year, any property ceases
13 to be qualified property in the hands of the taxpayer
14 within 48 months after being placed in service, or the
15 situs of any qualified property is moved outside Illinois
16 within 48 months after being placed in service, the
17 Personal Property Tax Replacement Income Tax for such
18 taxable year shall be increased. Such increase shall be
19 determined by (i) recomputing the investment credit which
20 would have been allowed for the year in which credit for
21 such property was originally allowed by eliminating such
22 property from such computation and, (ii) subtracting such
23 recomputed credit from the amount of credit previously
24 allowed. For the purposes of this paragraph (7), a
25 reduction of the basis of qualified property resulting
26 from a redetermination of the purchase price shall be
27 deemed a disposition of qualified property to the extent
28 of such reduction.
29 (8) Unless the investment credit is extended by
30 law, the basis of qualified property shall not include
31 costs incurred after December 31, 2003, except for costs
32 incurred pursuant to a binding contract entered into on
33 or before December 31, 2003.
34 (9) Each taxable year, a partnership may elect to
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1 pass through to its partners the credits to which the
2 partnership is entitled under this subsection (e) for the
3 taxable year. A partner may use the credit allocated to
4 him or her under this paragraph only against the tax
5 imposed in subsections (c) and (d) of this Section. If
6 the partnership makes that election, those credits shall
7 be allocated among the partners in the partnership in
8 accordance with the rules set forth in Section 704(b) of
9 the Internal Revenue Code, and the rules promulgated
10 under that Section, and the allocated amount of the
11 credits shall be allowed to the partners for that taxable
12 year. The partnership shall make this election on its
13 Personal Property Tax Replacement Income Tax return for
14 that taxable year. The election to pass through the
15 credits shall be irrevocable.
16 (f) Investment credit; Enterprise Zone.
17 (1) A taxpayer shall be allowed a credit against
18 the tax imposed by subsections (a) and (b) of this
19 Section for investment in qualified property which is
20 placed in service in an Enterprise Zone created pursuant
21 to the Illinois Enterprise Zone Act. For partners and for
22 shareholders of Subchapter S corporations, there shall be
23 allowed a credit under this subsection (f) to be
24 determined in accordance with the determination of income
25 and distributive share of income under Sections 702 and
26 704 and Subchapter S of the Internal Revenue Code. The
27 credit shall be .5% of the basis for such property. The
28 credit shall be available only in the taxable year in
29 which the property is placed in service in the Enterprise
30 Zone and shall not be allowed to the extent that it would
31 reduce a taxpayer's liability for the tax imposed by
32 subsections (a) and (b) of this Section to below zero.
33 For tax years ending on or after December 31, 1985, the
34 credit shall be allowed for the tax year in which the
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1 property is placed in service, or, if the amount of the
2 credit exceeds the tax liability for that year, whether
3 it exceeds the original liability or the liability as
4 later amended, such excess may be carried forward and
5 applied to the tax liability of the 5 taxable years
6 following the excess credit year. The credit shall be
7 applied to the earliest year for which there is a
8 liability. If there is credit from more than one tax year
9 that is available to offset a liability, the credit
10 accruing first in time shall be applied first.
11 (2) The term qualified property means property
12 which:
13 (A) is tangible, whether new or used,
14 including buildings and structural components of
15 buildings;
16 (B) is depreciable pursuant to Section 167 of
17 the Internal Revenue Code, except that "3-year
18 property" as defined in Section 168(c)(2)(A) of that
19 Code is not eligible for the credit provided by this
20 subsection (f);
21 (C) is acquired by purchase as defined in
22 Section 179(d) of the Internal Revenue Code;
23 (D) is used in the Enterprise Zone by the
24 taxpayer; and
25 (E) has not been previously used in Illinois
26 in such a manner and by such a person as would
27 qualify for the credit provided by this subsection
28 (f) or subsection (e).
29 (3) The basis of qualified property shall be the
30 basis used to compute the depreciation deduction for
31 federal income tax purposes.
32 (4) If the basis of the property for federal income
33 tax depreciation purposes is increased after it has been
34 placed in service in the Enterprise Zone by the taxpayer,
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1 the amount of such increase shall be deemed property
2 placed in service on the date of such increase in basis.
3 (5) The term "placed in service" shall have the
4 same meaning as under Section 46 of the Internal Revenue
5 Code.
6 (6) If during any taxable year, any property ceases
7 to be qualified property in the hands of the taxpayer
8 within 48 months after being placed in service, or the
9 situs of any qualified property is moved outside the
10 Enterprise Zone within 48 months after being placed in
11 service, the tax imposed under subsections (a) and (b) of
12 this Section for such taxable year shall be increased.
13 Such increase shall be determined by (i) recomputing the
14 investment credit which would have been allowed for the
15 year in which credit for such property was originally
16 allowed by eliminating such property from such
17 computation, and (ii) subtracting such recomputed credit
18 from the amount of credit previously allowed. For the
19 purposes of this paragraph (6), a reduction of the basis
20 of qualified property resulting from a redetermination of
21 the purchase price shall be deemed a disposition of
22 qualified property to the extent of such reduction.
23 (g) Jobs Tax Credit; Enterprise Zone and Foreign
24 Trade Zone or Sub-Zone.
25 (1) A taxpayer conducting a trade or business in an
26 enterprise zone or a High Impact Business designated by
27 the Department of Commerce and Community Affairs
28 conducting a trade or business in a federally designated
29 Foreign Trade Zone or Sub-Zone shall be allowed a credit
30 against the tax imposed by subsections (a) and (b) of
31 this Section in the amount of $500 per eligible employee
32 hired to work in the zone during the taxable year.
33 (2) To qualify for the credit:
34 (A) the taxpayer must hire 5 or more eligible
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1 employees to work in an enterprise zone or federally
2 designated Foreign Trade Zone or Sub-Zone during the
3 taxable year;
4 (B) the taxpayer's total employment within the
5 enterprise zone or federally designated Foreign
6 Trade Zone or Sub-Zone must increase by 5 or more
7 full-time employees beyond the total employed in
8 that zone at the end of the previous tax year for
9 which a jobs tax credit under this Section was
10 taken, or beyond the total employed by the taxpayer
11 as of December 31, 1985, whichever is later; and
12 (C) the eligible employees must be employed
13 180 consecutive days in order to be deemed hired for
14 purposes of this subsection.
15 (3) An "eligible employee" means an employee who
16 is:
17 (A) Certified by the Department of Commerce
18 and Community Affairs as "eligible for services"
19 pursuant to regulations promulgated in accordance
20 with Title II of the Job Training Partnership Act,
21 Training Services for the Disadvantaged or Title III
22 of the Job Training Partnership Act, Employment and
23 Training Assistance for Dislocated Workers Program.
24 (B) Hired after the enterprise zone or
25 federally designated Foreign Trade Zone or Sub-Zone
26 was designated or the trade or business was located
27 in that zone, whichever is later.
28 (C) Employed in the enterprise zone or Foreign
29 Trade Zone or Sub-Zone. An employee is employed in
30 an enterprise zone or federally designated Foreign
31 Trade Zone or Sub-Zone if his services are rendered
32 there or it is the base of operations for the
33 services performed.
34 (D) A full-time employee working 30 or more
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1 hours per week.
2 (4) For tax years ending on or after December 31,
3 1985 and prior to December 31, 1988, the credit shall be
4 allowed for the tax year in which the eligible employees
5 are hired. For tax years ending on or after December 31,
6 1988, the credit shall be allowed for the tax year
7 immediately following the tax year in which the eligible
8 employees are hired. If the amount of the credit exceeds
9 the tax liability for that year, whether it exceeds the
10 original liability or the liability as later amended,
11 such excess may be carried forward and applied to the tax
12 liability of the 5 taxable years following the excess
13 credit year. The credit shall be applied to the earliest
14 year for which there is a liability. If there is credit
15 from more than one tax year that is available to offset a
16 liability, earlier credit shall be applied first.
17 (5) The Department of Revenue shall promulgate such
18 rules and regulations as may be deemed necessary to carry
19 out the purposes of this subsection (g).
20 (6) The credit shall be available for eligible
21 employees hired on or after January 1, 1986.
22 (h) Investment credit; High Impact Business.
23 (1) Subject to subsection (b) of Section 5.5 of the
24 Illinois Enterprise Zone Act, a taxpayer shall be allowed
25 a credit against the tax imposed by subsections (a) and
26 (b) of this Section for investment in qualified property
27 which is placed in service by a Department of Commerce
28 and Community Affairs designated High Impact Business.
29 The credit shall be .5% of the basis for such property.
30 The credit shall not be available until the minimum
31 investments in qualified property set forth in Section
32 5.5 of the Illinois Enterprise Zone Act have been
33 satisfied and shall not be allowed to the extent that it
34 would reduce a taxpayer's liability for the tax imposed
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1 by subsections (a) and (b) of this Section to below zero.
2 The credit applicable to such minimum investments shall
3 be taken in the taxable year in which such minimum
4 investments have been completed. The credit for
5 additional investments beyond the minimum investment by a
6 designated high impact business shall be available only
7 in the taxable year in which the property is placed in
8 service and shall not be allowed to the extent that it
9 would reduce a taxpayer's liability for the tax imposed
10 by subsections (a) and (b) of this Section to below zero.
11 For tax years ending on or after December 31, 1987, the
12 credit shall be allowed for the tax year in which the
13 property is placed in service, or, if the amount of the
14 credit exceeds the tax liability for that year, whether
15 it exceeds the original liability or the liability as
16 later amended, such excess may be carried forward and
17 applied to the tax liability of the 5 taxable years
18 following the excess credit year. The credit shall be
19 applied to the earliest year for which there is a
20 liability. If there is credit from more than one tax
21 year that is available to offset a liability, the credit
22 accruing first in time shall be applied first.
23 Changes made in this subdivision (h)(1) by Public
24 Act 88-670 restore changes made by Public Act 85-1182 and
25 reflect existing law.
26 (2) The term qualified property means property
27 which:
28 (A) is tangible, whether new or used,
29 including buildings and structural components of
30 buildings;
31 (B) is depreciable pursuant to Section 167 of
32 the Internal Revenue Code, except that "3-year
33 property" as defined in Section 168(c)(2)(A) of that
34 Code is not eligible for the credit provided by this
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1 subsection (h);
2 (C) is acquired by purchase as defined in
3 Section 179(d) of the Internal Revenue Code; and
4 (D) is not eligible for the Enterprise Zone
5 Investment Credit provided by subsection (f) of this
6 Section.
7 (3) The basis of qualified property shall be the
8 basis used to compute the depreciation deduction for
9 federal income tax purposes.
10 (4) If the basis of the property for federal income
11 tax depreciation purposes is increased after it has been
12 placed in service in a federally designated Foreign Trade
13 Zone or Sub-Zone located in Illinois by the taxpayer, the
14 amount of such increase shall be deemed property placed
15 in service on the date of such increase in basis.
16 (5) The term "placed in service" shall have the
17 same meaning as under Section 46 of the Internal Revenue
18 Code.
19 (6) If during any taxable year ending on or before
20 December 31, 1996, any property ceases to be qualified
21 property in the hands of the taxpayer within 48 months
22 after being placed in service, or the situs of any
23 qualified property is moved outside Illinois within 48
24 months after being placed in service, the tax imposed
25 under subsections (a) and (b) of this Section for such
26 taxable year shall be increased. Such increase shall be
27 determined by (i) recomputing the investment credit which
28 would have been allowed for the year in which credit for
29 such property was originally allowed by eliminating such
30 property from such computation, and (ii) subtracting such
31 recomputed credit from the amount of credit previously
32 allowed. For the purposes of this paragraph (6), a
33 reduction of the basis of qualified property resulting
34 from a redetermination of the purchase price shall be
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1 deemed a disposition of qualified property to the extent
2 of such reduction.
3 (7) Beginning with tax years ending after December
4 31, 1996, if a taxpayer qualifies for the credit under
5 this subsection (h) and thereby is granted a tax
6 abatement and the taxpayer relocates its entire facility
7 in violation of the explicit terms and length of the
8 contract under Section 18-183 of the Property Tax Code,
9 the tax imposed under subsections (a) and (b) of this
10 Section shall be increased for the taxable year in which
11 the taxpayer relocated its facility by an amount equal to
12 the amount of credit received by the taxpayer under this
13 subsection (h).
14 (i) A credit shall be allowed against the tax imposed by
15 subsections (a) and (b) of this Section for the tax imposed
16 by subsections (c) and (d) of this Section. This credit
17 shall be computed by multiplying the tax imposed by
18 subsections (c) and (d) of this Section by a fraction, the
19 numerator of which is base income allocable to Illinois and
20 the denominator of which is Illinois base income, and further
21 multiplying the product by the tax rate imposed by
22 subsections (a) and (b) of this Section.
23 Any credit earned on or after December 31, 1986 under
24 this subsection which is unused in the year the credit is
25 computed because it exceeds the tax liability imposed by
26 subsections (a) and (b) for that year (whether it exceeds the
27 original liability or the liability as later amended) may be
28 carried forward and applied to the tax liability imposed by
29 subsections (a) and (b) of the 5 taxable years following the
30 excess credit year. This credit shall be applied first to
31 the earliest year for which there is a liability. If there
32 is a credit under this subsection from more than one tax year
33 that is available to offset a liability the earliest credit
34 arising under this subsection shall be applied first.
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1 If, during any taxable year ending on or after December
2 31, 1986, the tax imposed by subsections (c) and (d) of this
3 Section for which a taxpayer has claimed a credit under this
4 subsection (i) is reduced, the amount of credit for such tax
5 shall also be reduced. Such reduction shall be determined by
6 recomputing the credit to take into account the reduced tax
7 imposed by subsection (c) and (d). If any portion of the
8 reduced amount of credit has been carried to a different
9 taxable year, an amended return shall be filed for such
10 taxable year to reduce the amount of credit claimed.
11 (j) Training expense credit. Beginning with tax years
12 ending on or after December 31, 1986, a taxpayer shall be
13 allowed a credit against the tax imposed by subsection (a)
14 and (b) under this Section for all amounts paid or accrued,
15 on behalf of all persons employed by the taxpayer in Illinois
16 or Illinois residents employed outside of Illinois by a
17 taxpayer, for educational or vocational training in
18 semi-technical or technical fields or semi-skilled or skilled
19 fields, which were deducted from gross income in the
20 computation of taxable income. The credit against the tax
21 imposed by subsections (a) and (b) shall be 1.6% of such
22 training expenses. For partners and for shareholders of
23 subchapter S corporations, there shall be allowed a credit
24 under this subsection (j) to be determined in accordance with
25 the determination of income and distributive share of income
26 under Sections 702 and 704 and subchapter S of the Internal
27 Revenue Code.
28 Any credit allowed under this subsection which is unused
29 in the year the credit is earned may be carried forward to
30 each of the 5 taxable years following the year for which the
31 credit is first computed until it is used. This credit shall
32 be applied first to the earliest year for which there is a
33 liability. If there is a credit under this subsection from
34 more than one tax year that is available to offset a
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1 liability the earliest credit arising under this subsection
2 shall be applied first.
3 (k) Research and development credit.
4 Beginning with tax years ending after July 1, 1990, a
5 taxpayer shall be allowed a credit against the tax imposed by
6 subsections (a) and (b) of this Section for increasing
7 research activities in this State. The credit allowed
8 against the tax imposed by subsections (a) and (b) shall be
9 equal to 6 1/2% of the qualifying expenditures for increasing
10 research activities in this State.
11 For purposes of this subsection, "qualifying
12 expenditures" means the qualifying expenditures as defined
13 for the federal credit for increasing research activities
14 which would be allowable under Section 41 of the Internal
15 Revenue Code and which are conducted in this State,
16 "qualifying expenditures for increasing research activities
17 in this State" means the excess of qualifying expenditures
18 for the taxable year in which incurred over qualifying
19 expenditures for the base period, "qualifying expenditures
20 for the base period" means the average of the qualifying
21 expenditures for each year in the base period, and "base
22 period" means the 3 taxable years immediately preceding the
23 taxable year for which the determination is being made.
24 Any credit in excess of the tax liability for the taxable
25 year may be carried forward. A taxpayer may elect to have the
26 unused credit shown on its final completed return carried
27 over as a credit against the tax liability for the following
28 5 taxable years or until it has been fully used, whichever
29 occurs first.
30 If an unused credit is carried forward to a given year
31 from 2 or more earlier years, that credit arising in the
32 earliest year will be applied first against the tax liability
33 for the given year. If a tax liability for the given year
34 still remains, the credit from the next earliest year will
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1 then be applied, and so on, until all credits have been used
2 or no tax liability for the given year remains. Any
3 remaining unused credit or credits then will be carried
4 forward to the next following year in which a tax liability
5 is incurred, except that no credit can be carried forward to
6 a year which is more than 5 years after the year in which the
7 expense for which the credit is given was incurred.
8 Unless extended by law, the credit shall not include
9 costs incurred after December 31, 1999, except for costs
10 incurred pursuant to a binding contract entered into on or
11 before December 31, 1999.
12 (l) Environmental Remediation Tax Credit.
13 (i) For tax years ending after December 31, 1997
14 and on or before December 31, 2001, a taxpayer shall be
15 allowed a credit against the tax imposed by subsections
16 (a) and (b) of this Section for certain amounts paid for
17 unreimbursed eligible remediation costs, as specified in
18 this subsection. For purposes of this Section,
19 "unreimbursed eligible remediation costs" means costs
20 approved by the Illinois Environmental Protection Agency
21 ("Agency") under Section 58.14 of the Environmental
22 Protection Act that were paid in performing environmental
23 remediation at a site for which a No Further Remediation
24 Letter was issued by the Agency and recorded under
25 Section 58.10 of the Environmental Protection Act, and
26 does not mean approved eligible remediation costs that
27 are at any time deducted under the provisions of the
28 Internal Revenue Code. The credit must be claimed for
29 the taxable year in which Agency approval of the eligible
30 remediation costs is granted. In no event shall
31 unreimbursed eligible remediation costs include any costs
32 taken into account in calculating an environmental
33 remediation credit granted against a tax imposed under
34 the provisions of the Internal Revenue Code. The credit
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1 is not available to any taxpayer if the taxpayer or any
2 related party caused or contributed to, in any material
3 respect, a release of regulated substances on, in, or
4 under the site that was identified and addressed by the
5 remedial action pursuant to the Site Remediation Program
6 of the Environmental Protection Act. After the Pollution
7 Control Board rules are adopted pursuant to the Illinois
8 Administrative Procedure Act for the administration and
9 enforcement of Section 58.9 of the Environmental
10 Protection Act, determinations as to credit availability
11 for purposes of this Section shall be made consistent
12 with those rules. For purposes of this Section,
13 "taxpayer" includes a person whose tax attributes the
14 taxpayer has succeeded to under Section 381 of the
15 Internal Revenue Code and "related party" includes the
16 persons disallowed a deduction for losses by paragraphs
17 (b), (c), and (f)(1) of Section 267 of the Internal
18 Revenue Code by virtue of being a related taxpayer, as
19 well as any of its partners. The credit allowed against
20 the tax imposed by subsections (a) and (b) shall be equal
21 to 25% of the unreimbursed eligible remediation costs in
22 excess of $100,000 per site, except that the $100,000
23 threshold shall not apply to any site contained in an
24 enterprise zone and located in a census tract that is
25 located in a minor civil division and place or county
26 that has been determined by the Department of Commerce
27 and Community Affairs to contain a majority of households
28 consisting of low and moderate income persons. The total
29 credit allowed shall not exceed $40,000 per year with a
30 maximum total of $150,000 per site. For partners and
31 shareholders of subchapter S corporations, there shall be
32 allowed a credit under this subsection to be determined
33 in accordance with the determination of income and
34 distributive share of income under Sections 702 and 704
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1 of subchapter S of the Internal Revenue Code.
2 (ii) A credit allowed under this subsection that is
3 unused in the year the credit is earned may be carried
4 forward to each of the 5 taxable years following the year
5 for which the credit is first earned until it is used.
6 The term "unused credit" does not include any amounts of
7 unreimbursed eligible remediation costs in excess of the
8 maximum credit per site authorized under paragraph (i).
9 This credit shall be applied first to the earliest year
10 for which there is a liability. If there is a credit
11 under this subsection from more than one tax year that is
12 available to offset a liability, the earliest credit
13 arising under this subsection shall be applied first. A
14 credit allowed under this subsection may be sold to a
15 buyer as part of a sale of all or part of the remediation
16 site for which the credit was granted. The purchaser of
17 a remediation site and the tax credit shall succeed to
18 the unused credit and remaining carry-forward period of
19 the seller. To perfect the transfer, the assignor shall
20 record the transfer in the chain of title for the site
21 and provide written notice to the Director of the
22 Illinois Department of Revenue of the assignor's intent
23 to sell the remediation site and the amount of the tax
24 credit to be transferred as a portion of the sale. In no
25 event may a credit be transferred to any taxpayer if the
26 taxpayer or a related party would not be eligible under
27 the provisions of subsection (i).
28 (iii) For purposes of this Section, the term "site"
29 shall have the same meaning as under Section 58.2 of the
30 Environmental Protection Act.
31 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
32 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
33 8-17-97; revised 10-16-97.)
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1 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
2 Sec. 203. Base income defined.
3 (a) Individuals.
4 (1) In general. In the case of an individual, base
5 income means an amount equal to the taxpayer's adjusted
6 gross income for the taxable year as modified by
7 paragraph (2).
8 (2) Modifications. The adjusted gross income
9 referred to in paragraph (1) shall be modified by adding
10 thereto the sum of the following amounts:
11 (A) An amount equal to all amounts paid or
12 accrued to the taxpayer as interest or dividends
13 during the taxable year to the extent excluded from
14 gross income in the computation of adjusted gross
15 income, except stock dividends of qualified public
16 utilities described in Section 305(e) of the
17 Internal Revenue Code;
18 (B) An amount equal to the amount of tax
19 imposed by this Act to the extent deducted from
20 gross income in the computation of adjusted gross
21 income for the taxable year;
22 (C) An amount equal to the amount received
23 during the taxable year as a recovery or refund of
24 real property taxes paid with respect to the
25 taxpayer's principal residence under the Revenue Act
26 of 1939 and for which a deduction was previously
27 taken under subparagraph (L) of this paragraph (2)
28 prior to July 1, 1991, the retrospective application
29 date of Article 4 of Public Act 87-17. In the case
30 of multi-unit or multi-use structures and farm
31 dwellings, the taxes on the taxpayer's principal
32 residence shall be that portion of the total taxes
33 for the entire property which is attributable to
34 such principal residence;
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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 adjusted gross income;
5 and
6 (D-5) An amount, to the extent not included in
7 adjusted gross income, equal to the amount of money
8 withdrawn by the taxpayer in the taxable year from a
9 medical care savings account and the interest earned
10 on the account in the taxable year of a withdrawal
11 pursuant to subsection (b) of Section 20 of the
12 Medical Care Savings Account Act; and
13 (D-10) For taxable years ending after December
14 31, 1997, an amount equal to any eligible
15 remediation costs that the individual deducted in
16 computing adjusted gross income and for which the
17 individual claims a credit under subsection (l) of
18 Section 201;
19 and by deducting from the total so obtained the sum of
20 the following amounts:
21 (E) Any amount included in such total in
22 respect of any compensation (including but not
23 limited to any compensation paid or accrued to a
24 serviceman while a prisoner of war or missing in
25 action) paid to a resident by reason of being on
26 active duty in the Armed Forces of the United States
27 and in respect of any compensation paid or accrued
28 to a resident who as a governmental employee was a
29 prisoner of war or missing in action, and in respect
30 of any compensation paid to a resident in 1971 or
31 thereafter for annual training performed pursuant to
32 Sections 502 and 503, Title 32, United States Code
33 as a member of the Illinois National Guard;
34 (F) An amount equal to all amounts included in
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1 such total pursuant to the provisions of Sections
2 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
3 408 of the Internal Revenue Code, or included in
4 such total as distributions under the provisions of
5 any retirement or disability plan for employees of
6 any governmental agency or unit, or retirement
7 payments to retired partners, which payments are
8 excluded in computing net earnings from self
9 employment by Section 1402 of the Internal Revenue
10 Code and regulations adopted pursuant thereto;
11 (G) The valuation limitation amount;
12 (H) An amount equal to the amount of any tax
13 imposed by this Act which was refunded to the
14 taxpayer and included in such total for the taxable
15 year;
16 (I) An amount equal to all amounts included in
17 such total pursuant to the provisions of Section 111
18 of the Internal Revenue Code as a recovery of items
19 previously deducted from adjusted gross income in
20 the computation of taxable income;
21 (J) An amount equal to those dividends
22 included in such total which were paid by a
23 corporation which conducts business operations in an
24 Enterprise Zone or zones created under the Illinois
25 Enterprise Zone Act, and conducts substantially all
26 of its operations in an Enterprise Zone or zones;
27 (K) 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 (J) of paragraph (2) of this subsection shall not be
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1 eligible for the deduction provided under this
2 subparagraph (K);
3 (L) For taxable years ending after December
4 31, 1983, an amount equal to all social security
5 benefits and railroad retirement benefits included
6 in such total pursuant to Sections 72(r) and 86 of
7 the Internal Revenue Code;
8 (M) With the exception of any amounts
9 subtracted under subparagraph (N), an amount equal
10 to the sum of all amounts disallowed as deductions
11 by Sections 171(a) (2), and 265(2) of the Internal
12 Revenue Code of 1954, as now or hereafter amended,
13 and all amounts of expenses allocable to interest
14 and disallowed as deductions by Section 265(1) of
15 the Internal Revenue Code of 1954, as now or
16 hereafter amended;
17 (N) An amount equal to all amounts included in
18 such total which are exempt from taxation by this
19 State either by reason of its statutes or
20 Constitution or by reason of the Constitution,
21 treaties or statutes of the United States; provided
22 that, in the case of any statute of this State that
23 exempts income derived from bonds or other
24 obligations from the tax imposed under this Act, the
25 amount exempted shall be the interest net of bond
26 premium amortization;
27 (O) An amount equal to any contribution made
28 to a job training project established pursuant to
29 the Tax Increment Allocation Redevelopment Act;
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;
2 (Q) An amount equal to any amounts included in
3 such total, received by the taxpayer as an
4 acceleration in the payment of life, endowment or
5 annuity benefits in advance of the time they would
6 otherwise be payable as an indemnity for a terminal
7 illness;
8 (R) An amount equal to the amount of any
9 federal or State bonus paid to veterans of the
10 Persian Gulf War;
11 (S) An amount, to the extent included in
12 adjusted gross income, equal to the amount of a
13 contribution made in the taxable year on behalf of
14 the taxpayer to a medical care savings account
15 established under the Medical Care Savings Account
16 Act to the extent the contribution is accepted by
17 the account administrator as provided in that Act;
18 (T) An amount, to the extent included in
19 adjusted gross income, equal to the amount of
20 interest earned in the taxable year on a medical
21 care savings account established under the Medical
22 Care Savings Account Act on behalf of the taxpayer,
23 other than interest added pursuant to item (D-5) of
24 this paragraph (2);
25 (U) For one taxable year beginning on or after
26 January 1, 1994, an amount equal to the total amount
27 of tax imposed and paid under subsections (a) and
28 (b) of Section 201 of this Act on grant amounts
29 received by the taxpayer under the Nursing Home
30 Grant Assistance Act during the taxpayer's taxable
31 years 1992 and 1993; and
32 (V) Beginning with tax years ending on or
33 after December 31, 1995 and ending with tax years
34 ending on or before December 31, 1999, an amount
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1 equal to the amount paid by a taxpayer who is a
2 self-employed taxpayer, a partner of a partnership,
3 or a shareholder in a Subchapter S corporation for
4 health insurance or long-term care insurance for
5 that taxpayer or that taxpayer's spouse or
6 dependents, to the extent that the amount paid for
7 that health insurance or long-term care insurance
8 may be deducted under Section 213 of the Internal
9 Revenue Code of 1986, has not been deducted on the
10 federal income tax return of the taxpayer, and does
11 not exceed the taxable income attributable to that
12 taxpayer's income, self-employment income, or
13 Subchapter S corporation income; except that no
14 deduction shall be allowed under this item (V) if
15 the taxpayer is eligible to participate in any
16 health insurance or long-term care insurance plan of
17 an employer of the taxpayer or the taxpayer's
18 spouse. The amount of the health insurance and
19 long-term care insurance subtracted under this item
20 (V) shall be determined by multiplying total health
21 insurance and long-term care insurance premiums paid
22 by the taxpayer times a number that represents the
23 fractional percentage of eligible medical expenses
24 under Section 213 of the Internal Revenue Code of
25 1986 not actually deducted on the taxpayer's federal
26 income tax return.
27 (b) Corporations.
28 (1) In general. In the case of a corporation, 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 and all
2 distributions received from regulated investment
3 companies during the taxable year to the extent
4 excluded from gross income in the computation of
5 taxable income;
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 taxable income
9 for the taxable year;
10 (C) In the case of a regulated investment
11 company, an amount equal to the excess of (i) the
12 net long-term capital gain for the taxable year,
13 over (ii) the amount of the capital gain dividends
14 designated as such in accordance with Section
15 852(b)(3)(C) of the Internal Revenue Code and any
16 amount designated under Section 852(b)(3)(D) of the
17 Internal Revenue Code, attributable to the taxable
18 year.
19 This amendatory Act of 1995 is declarative of existing
20 law and is not a new enactment.
21 (D) The amount of any net operating loss
22 deduction taken in arriving at taxable income, other
23 than a net operating loss carried forward from a
24 taxable year ending prior to December 31, 1986; and
25 (E) For taxable years in which a net operating
26 loss carryback or carryforward from a taxable year
27 ending prior to December 31, 1986 is an element of
28 taxable income under paragraph (1) of subsection (e)
29 or subparagraph (E) of paragraph (2) of subsection
30 (e), the amount by which addition modifications
31 other than those provided by this subparagraph (E)
32 exceeded subtraction modifications in such earlier
33 taxable year, with the following limitations applied
34 in the order that they are listed:
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1 (i) the addition modification relating to
2 the net operating loss carried back or forward
3 to the taxable year from any taxable year
4 ending prior to December 31, 1986 shall be
5 reduced by the amount of addition modification
6 under this subparagraph (E) which related to
7 that net operating loss and which was taken
8 into account in calculating the base income of
9 an earlier taxable year, and
10 (ii) the addition modification relating
11 to the net operating loss carried back or
12 forward to the taxable year from any taxable
13 year ending prior to December 31, 1986 shall
14 not exceed the amount of such carryback or
15 carryforward;
16 For taxable years in which there is a net
17 operating loss carryback or carryforward from more
18 than one other taxable year ending prior to December
19 31, 1986, the addition modification provided in this
20 subparagraph (E) shall be the sum of the amounts
21 computed independently under the preceding
22 provisions of this subparagraph (E) for each such
23 taxable year, and
24 (E-5) For taxable years ending after December
25 31, 1997, an amount equal to any eligible
26 remediation costs that the corporation deducted in
27 computing adjusted gross income and for which the
28 corporation claims a credit under subsection (l) of
29 Section 201;
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
SB1291 Enrolled -28- LRB9007338KDks
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
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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
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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
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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
SB1291 Enrolled -32- LRB9007338KDks
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;
SB1291 Enrolled -33- LRB9007338KDks
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
SB1291 Enrolled -34- LRB9007338KDks
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; and
14 (G-5) For taxable years ending after December
15 31, 1997, an amount equal to any eligible
16 remediation costs that the trust or estate deducted
17 in computing adjusted gross income and for which the
18 trust or estate claims a credit under subsection (l)
19 of Section 201;
20 and by deducting from the total so obtained the sum of
21 the following amounts:
22 (H) An amount equal to all amounts included in
23 such total pursuant to the provisions of Sections
24 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
25 408 of the Internal Revenue Code or included in such
26 total as distributions under the provisions of any
27 retirement or disability plan for employees of any
28 governmental agency or unit, or retirement payments
29 to retired partners, which payments are excluded in
30 computing net earnings from self employment by
31 Section 1402 of the Internal Revenue Code and
32 regulations adopted pursuant thereto;
33 (I) The valuation limitation amount;
34 (J) An amount equal to the amount of any tax
SB1291 Enrolled -35- LRB9007338KDks
1 imposed by this Act which was refunded to the
2 taxpayer and included in such total for the taxable
3 year;
4 (K) An amount equal to all amounts included in
5 taxable income as modified by subparagraphs (A),
6 (B), (C), (D), (E), (F) and (G) which are exempt
7 from taxation by this State either by reason of its
8 statutes or Constitution or by reason of the
9 Constitution, treaties or statutes of the United
10 States; provided that, in the case of any statute of
11 this State that exempts income derived from bonds or
12 other obligations from the tax imposed under this
13 Act, the amount exempted shall be the interest net
14 of bond premium amortization;
15 (L) With the exception of any amounts
16 subtracted under subparagraph (K), an amount equal
17 to the sum of all amounts disallowed as deductions
18 by Sections 171(a) (2) and 265(a)(2) of the Internal
19 Revenue Code, as now or hereafter amended, and all
20 amounts of expenses allocable to interest and
21 disallowed as deductions by Section 265(1) of the
22 Internal Revenue Code of 1954, as now or hereafter
23 amended;
24 (M) 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 (N) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (O) An amount equal to those dividends
34 included in such total that were paid by a
SB1291 Enrolled -36- LRB9007338KDks
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 (M) of paragraph (2) of this subsection shall not be
7 eligible for the deduction provided under this
8 subparagraph (O); and
9 (P) 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 (3) Limitation. The amount of any modification
16 otherwise required under this subsection shall, under
17 regulations prescribed by the Department, be adjusted by
18 any amounts included therein which were properly paid,
19 credited, or required to be distributed, or permanently
20 set aside for charitable purposes pursuant to Internal
21 Revenue Code Section 642(c) during the taxable year.
22 (d) Partnerships.
23 (1) In general. In the case of a partnership, base
24 income means an amount equal to the taxpayer's taxable
25 income for the taxable year as modified by paragraph (2).
26 (2) Modifications. The taxable income referred to
27 in paragraph (1) shall be modified by adding thereto the
28 sum of the following amounts:
29 (A) An amount equal to all amounts paid or
30 accrued to the taxpayer as interest or dividends
31 during the taxable year to the extent excluded from
32 gross income in the computation of taxable income;
33 (B) An amount equal to the amount of tax
34 imposed by this Act to the extent deducted from
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1 gross income for the taxable year; and
2 (C) The amount of deductions allowed to the
3 partnership pursuant to Section 707 (c) of the
4 Internal Revenue Code in calculating its taxable
5 income;
6 (D) An amount equal to the amount of the
7 capital gain deduction allowable under the Internal
8 Revenue Code, to the extent deducted from gross
9 income in the computation of taxable income;
10 and by deducting from the total so obtained the following
11 amounts:
12 (E) The valuation limitation amount;
13 (F) An amount equal to the amount of any tax
14 imposed by this Act which was refunded to the
15 taxpayer and included in such total for the taxable
16 year;
17 (G) An amount equal to all amounts included in
18 taxable income as modified by subparagraphs (A),
19 (B), (C) and (D) which are exempt from taxation by
20 this State either by reason of its statutes or
21 Constitution or by reason of the Constitution,
22 treaties or statutes of the United States; provided
23 that, in the case of any statute of this State that
24 exempts income derived from bonds or other
25 obligations from the tax imposed under this Act, the
26 amount exempted shall be the interest net of bond
27 premium amortization;
28 (H) Any income of the partnership which
29 constitutes personal service income as defined in
30 Section 1348 (b) (1) of the Internal Revenue Code
31 (as in effect December 31, 1981) or a reasonable
32 allowance for compensation paid or accrued for
33 services rendered by partners to the partnership,
34 whichever is greater;
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1 (I) An amount equal to all amounts of income
2 distributable to an entity subject to the Personal
3 Property Tax Replacement Income Tax imposed by
4 subsections (c) and (d) of Section 201 of this Act
5 including amounts distributable to organizations
6 exempt from federal income tax by reason of Section
7 501(a) of the Internal Revenue Code;
8 (J) With the exception of any amounts
9 subtracted under subparagraph (G), an amount equal
10 to the sum of all amounts disallowed as deductions
11 by Sections 171(a) (2), and 265(2) of the Internal
12 Revenue Code of 1954, as now or hereafter amended,
13 and all amounts of expenses allocable to interest
14 and disallowed as deductions by Section 265(1) of
15 the Internal Revenue Code, as now or hereafter
16 amended;
17 (K) An amount equal to those dividends
18 included in such total which were paid by a
19 corporation which conducts business operations in an
20 Enterprise Zone or zones created under the Illinois
21 Enterprise Zone Act, enacted by the 82nd General
22 Assembly, and which does not conduct such operations
23 other than in an Enterprise Zone or Zones;
24 (L) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Real Property Tax Increment Allocation
27 Redevelopment Act;
28 (M) An amount equal to those dividends
29 included in such total that were paid by a
30 corporation that conducts business operations in a
31 federally designated Foreign Trade Zone or Sub-Zone
32 and that is designated a High Impact Business
33 located in Illinois; provided that dividends
34 eligible for the deduction provided in subparagraph
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1 (K) of paragraph (2) of this subsection shall not be
2 eligible for the deduction provided under this
3 subparagraph (M); and
4 (N) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986.
10 (e) Gross income; adjusted gross income; taxable income.
11 (1) In general. Subject to the provisions of
12 paragraph (2) and subsection (b) (3), for purposes of
13 this Section and Section 803(e), a taxpayer's gross
14 income, adjusted gross income, or taxable income for the
15 taxable year shall mean the amount of gross income,
16 adjusted gross income or taxable income properly
17 reportable for federal income tax purposes for the
18 taxable year under the provisions of the Internal Revenue
19 Code. Taxable income may be less than zero. However, for
20 taxable years ending on or after December 31, 1986, net
21 operating loss carryforwards from taxable years ending
22 prior to December 31, 1986, may not exceed the sum of
23 federal taxable income for the taxable year before net
24 operating loss deduction, plus the excess of addition
25 modifications over subtraction modifications for the
26 taxable year. For taxable years ending prior to December
27 31, 1986, taxable income may never be an amount in excess
28 of the net operating loss for the taxable year as defined
29 in subsections (c) and (d) of Section 172 of the Internal
30 Revenue Code, provided that when taxable income of a
31 corporation (other than a Subchapter S corporation),
32 trust, or estate is less than zero and addition
33 modifications, other than those provided by subparagraph
34 (E) of paragraph (2) of subsection (b) for corporations
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1 or subparagraph (E) of paragraph (2) of subsection (c)
2 for trusts and estates, exceed subtraction modifications,
3 an addition modification must be made under those
4 subparagraphs for any other taxable year to which the
5 taxable income less than zero (net operating loss) is
6 applied under Section 172 of the Internal Revenue Code or
7 under subparagraph (E) of paragraph (2) of this
8 subsection (e) applied in conjunction with Section 172 of
9 the Internal Revenue Code.
10 (2) Special rule. For purposes of paragraph (1) of
11 this subsection, the taxable income properly reportable
12 for federal income tax purposes shall mean:
13 (A) Certain life insurance companies. In the
14 case of a life insurance company subject to the tax
15 imposed by Section 801 of the Internal Revenue Code,
16 life insurance company taxable income, plus the
17 amount of distribution from pre-1984 policyholder
18 surplus accounts as calculated under Section 815a of
19 the Internal Revenue Code;
20 (B) Certain other insurance companies. In the
21 case of mutual insurance companies subject to the
22 tax imposed by Section 831 of the Internal Revenue
23 Code, insurance company taxable income;
24 (C) Regulated investment companies. In the
25 case of a regulated investment company subject to
26 the tax imposed by Section 852 of the Internal
27 Revenue Code, investment company taxable income;
28 (D) Real estate investment trusts. In the
29 case of a real estate investment trust subject to
30 the tax imposed by Section 857 of the Internal
31 Revenue Code, real estate investment trust taxable
32 income;
33 (E) Consolidated corporations. In the case of
34 a corporation which is a member of an affiliated
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1 group of corporations filing a consolidated income
2 tax return for the taxable year for federal income
3 tax purposes, taxable income determined as if such
4 corporation had filed a separate return for federal
5 income tax purposes for the taxable year and each
6 preceding taxable year for which it was a member of
7 an affiliated group. For purposes of this
8 subparagraph, the taxpayer's separate taxable income
9 shall be determined as if the election provided by
10 Section 243(b) (2) of the Internal Revenue Code had
11 been in effect for all such years;
12 (F) Cooperatives. In the case of a
13 cooperative corporation or association, the taxable
14 income of such organization determined in accordance
15 with the provisions of Section 1381 through 1388 of
16 the Internal Revenue Code;
17 (G) Subchapter S corporations. In the case
18 of: (i) a Subchapter S corporation for which there
19 is in effect an election for the taxable year under
20 Section 1362 of the Internal Revenue Code, the
21 taxable income of such corporation determined in
22 accordance with Section 1363(b) of the Internal
23 Revenue Code, except that taxable income shall take
24 into account those items which are required by
25 Section 1363(b)(1) of the Internal Revenue Code to
26 be separately stated; and (ii) a Subchapter S
27 corporation for which there is in effect a federal
28 election to opt out of the provisions of the
29 Subchapter S Revision Act of 1982 and have applied
30 instead the prior federal Subchapter S rules as in
31 effect on July 1, 1982, the taxable income of such
32 corporation determined in accordance with the
33 federal Subchapter S rules as in effect on July 1,
34 1982; and
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1 (H) Partnerships. In the case of a
2 partnership, taxable income determined in accordance
3 with Section 703 of the Internal Revenue Code,
4 except that taxable income shall take into account
5 those items which are required by Section 703(a)(1)
6 to be separately stated but which would be taken
7 into account by an individual in calculating his
8 taxable income.
9 (f) Valuation limitation amount.
10 (1) In general. The valuation limitation amount
11 referred to in subsections (a) (2) (G), (c) (2) (I) and
12 (d)(2) (E) is an amount equal to:
13 (A) The sum of the pre-August 1, 1969
14 appreciation amounts (to the extent consisting of
15 gain reportable under the provisions of Section 1245
16 or 1250 of the Internal Revenue Code) for all
17 property in respect of which such gain was reported
18 for the taxable year; plus
19 (B) The lesser of (i) the sum of the
20 pre-August 1, 1969 appreciation amounts (to the
21 extent consisting of capital gain) for all property
22 in respect of which such gain was reported for
23 federal income tax purposes for the taxable year, or
24 (ii) the net capital gain for the taxable year,
25 reduced in either case by any amount of such gain
26 included in the amount determined under subsection
27 (a) (2) (F) or (c) (2) (H).
28 (2) Pre-August 1, 1969 appreciation amount.
29 (A) If the fair market value of property
30 referred to in paragraph (1) was readily
31 ascertainable on August 1, 1969, the pre-August 1,
32 1969 appreciation amount for such property is the
33 lesser of (i) the excess of such fair market value
34 over the taxpayer's basis (for determining gain) for
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1 such property on that date (determined under the
2 Internal Revenue Code as in effect on that date), or
3 (ii) the total gain realized and reportable for
4 federal income tax purposes in respect of the sale,
5 exchange or other disposition of such property.
6 (B) If the fair market value of property
7 referred to in paragraph (1) was not readily
8 ascertainable on August 1, 1969, the pre-August 1,
9 1969 appreciation amount for such property is that
10 amount which bears the same ratio to the total gain
11 reported in respect of the property for federal
12 income tax purposes for the taxable year, as the
13 number of full calendar months in that part of the
14 taxpayer's holding period for the property ending
15 July 31, 1969 bears to the number of full calendar
16 months in the taxpayer's entire holding period for
17 the property.
18 (C) The Department shall prescribe such
19 regulations as may be necessary to carry out the
20 purposes of this paragraph.
21 (g) Double deductions. Unless specifically provided
22 otherwise, nothing in this Section shall permit the same item
23 to be deducted more than once.
24 (h) Legislative intention. Except as expressly provided
25 by this Section there shall be no modifications or
26 limitations on the amounts of income, gain, loss or deduction
27 taken into account in determining gross income, adjusted
28 gross income or taxable income for federal income tax
29 purposes for the taxable year, or in the amount of such items
30 entering into the computation of base income and net income
31 under this Act for such taxable year, whether in respect of
32 property values as of August 1, 1969 or otherwise.
33 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
34 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
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1 8-9-96; 90-491, eff. 1-1-98.)
2 Section 99. Effective date. This Act takes effect upon
3 becoming law.