State of Illinois
90th General Assembly
Legislation

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90_SB1291sam001

                                             LRB9007338KDksam
 1                    AMENDMENT TO SENATE BILL 1291
 2        AMENDMENT NO.     .  Amend Senate Bill 1291  on  page  1,
 3    lines 2 and 6, by changing "Section 201" each time it appears
 4    to "Sections 201 and 203"; and
 5    on  page  19,  immediately  below  line  33, by inserting the
 6    following:
 7        "(35 ILCS 5/203) (from Ch. 120, par. 2-203)
 8        Sec. 203.  Base income defined.
 9        (a)  Individuals.
10             (1)  In general.  In the case of an individual, base
11        income means an amount equal to the  taxpayer's  adjusted
12        gross   income  for  the  taxable  year  as  modified  by
13        paragraph (2).
14             (2)  Modifications.   The  adjusted   gross   income
15        referred  to in paragraph (1) shall be modified by adding
16        thereto the sum of the following amounts:
17                  (A)  An amount equal to  all  amounts  paid  or
18             accrued  to  the  taxpayer  as interest or dividends
19             during the taxable year to the extent excluded  from
20             gross  income  in  the computation of adjusted gross
21             income, except stock dividends of  qualified  public
22             utilities   described   in  Section  305(e)  of  the
                            -2-              LRB9007338KDksam
 1             Internal Revenue Code;
 2                  (B)  An amount  equal  to  the  amount  of  tax
 3             imposed  by  this  Act  to  the extent deducted from
 4             gross income in the computation  of  adjusted  gross
 5             income for the taxable year;
 6                  (C)  An  amount  equal  to  the amount received
 7             during the taxable year as a recovery or  refund  of
 8             real   property  taxes  paid  with  respect  to  the
 9             taxpayer's principal residence under the Revenue Act
10             of 1939 and for which  a  deduction  was  previously
11             taken  under  subparagraph (L) of this paragraph (2)
12             prior to July 1, 1991, the retrospective application
13             date of Article 4 of Public Act 87-17.  In the  case
14             of  multi-unit  or  multi-use  structures  and  farm
15             dwellings,  the  taxes  on  the taxpayer's principal
16             residence shall be that portion of the  total  taxes
17             for  the  entire  property  which is attributable to
18             such principal residence;
19                  (D)  An amount  equal  to  the  amount  of  the
20             capital  gain deduction allowable under the Internal
21             Revenue Code, to  the  extent  deducted  from  gross
22             income  in the computation of adjusted gross income;
23             and
24                  (D-5)  An amount, to the extent not included in
25             adjusted gross income, equal to the amount of  money
26             withdrawn by the taxpayer in the taxable year from a
27             medical care savings account and the interest earned
28             on  the  account in the taxable year of a withdrawal
29             pursuant to subsection (b)  of  Section  20  of  the
30             Medical Care Savings Account Act; and
31                  (D-10)  For taxable years ending after December
32             31,  1997,  an  amount   equal   to   any   eligible
33             remediation  costs  that  the individual deducted in
34             computing adjusted gross income and  for  which  the
                            -3-              LRB9007338KDksam
 1             individual  claims  a credit under subsection (l) of
 2             Section 201;
 3        and by deducting from the total so obtained  the  sum  of
 4        the following amounts:
 5                  (E)  Any  amount  included  in  such  total  in
 6             respect  of  any  compensation  (including  but  not
 7             limited  to  any  compensation  paid or accrued to a
 8             serviceman while a prisoner of  war  or  missing  in
 9             action)  paid  to  a  resident by reason of being on
10             active duty in the Armed Forces of the United States
11             and in respect of any compensation paid  or  accrued
12             to  a  resident who as a governmental employee was a
13             prisoner of war or missing in action, and in respect
14             of any compensation paid to a resident  in  1971  or
15             thereafter for annual training performed pursuant to
16             Sections  502  and 503, Title 32, United States Code
17             as a member of the Illinois National Guard;
18                  (F)  An amount equal to all amounts included in
19             such total pursuant to the  provisions  of  Sections
20             402(a),  402(c), 403(a), 403(b), 406(a), 407(a), and
21             408 of the Internal Revenue  Code,  or  included  in
22             such  total as distributions under the provisions of
23             any retirement or disability plan for  employees  of
24             any  governmental  agency  or  unit,  or  retirement
25             payments  to  retired  partners,  which payments are
26             excluded  in  computing  net  earnings   from   self
27             employment  by  Section 1402 of the Internal Revenue
28             Code and regulations adopted pursuant thereto;
29                  (G)  The valuation limitation amount;
30                  (H)  An amount equal to the amount of  any  tax
31             imposed  by  this  Act  which  was  refunded  to the
32             taxpayer and included in such total for the  taxable
33             year;
34                  (I)  An amount equal to all amounts included in
                            -4-              LRB9007338KDksam
 1             such total pursuant to the provisions of Section 111
 2             of  the Internal Revenue Code as a recovery of items
 3             previously deducted from adjusted  gross  income  in
 4             the computation of taxable income;
 5                  (J)  An   amount   equal   to  those  dividends
 6             included  in  such  total  which  were  paid  by   a
 7             corporation which conducts business operations in an
 8             Enterprise  Zone or zones created under the Illinois
 9             Enterprise Zone Act, and conducts substantially  all
10             of its operations in an Enterprise Zone or zones;
11                  (K)  An   amount   equal   to  those  dividends
12             included  in  such  total  that  were  paid   by   a
13             corporation  that  conducts business operations in a
14             federally designated Foreign Trade Zone or  Sub-Zone
15             and  that  is  designated  a  High  Impact  Business
16             located   in   Illinois;   provided  that  dividends
17             eligible for the deduction provided in  subparagraph
18             (J) of paragraph (2) of this subsection shall not be
19             eligible  for  the  deduction  provided  under  this
20             subparagraph (K);
21                  (L)  For  taxable  years  ending after December
22             31, 1983, an amount equal  to  all  social  security
23             benefits  and  railroad retirement benefits included
24             in such total pursuant to Sections 72(r) and  86  of
25             the Internal Revenue Code;
26                  (M)  With   the   exception   of   any  amounts
27             subtracted under subparagraph (N), an  amount  equal
28             to  the  sum of all amounts disallowed as deductions
29             by Sections 171(a) (2), and 265(2) of  the  Internal
30             Revenue  Code  of 1954, as now or hereafter amended,
31             and all amounts of expenses  allocable  to  interest
32             and   disallowed  as deductions by Section 265(1) of
33             the  Internal  Revenue  Code  of  1954,  as  now  or
34             hereafter amended;
                            -5-              LRB9007338KDksam
 1                  (N)  An amount equal to all amounts included in
 2             such total which are exempt from  taxation  by  this
 3             State   either   by   reason   of  its  statutes  or
 4             Constitution  or  by  reason  of  the  Constitution,
 5             treaties or statutes of the United States;  provided
 6             that,  in the case of any statute of this State that
 7             exempts  income  derived   from   bonds   or   other
 8             obligations from the tax imposed under this Act, the
 9             amount  exempted  shall  be the interest net of bond
10             premium amortization;
11                  (O)  An amount equal to any  contribution  made
12             to  a  job  training project established pursuant to
13             the Tax Increment Allocation Redevelopment Act;
14                  (P)  An amount  equal  to  the  amount  of  the
15             deduction  used  to  compute  the federal income tax
16             credit for restoration of substantial  amounts  held
17             under  claim  of right for the taxable year pursuant
18             to Section 1341 of  the  Internal  Revenue  Code  of
19             1986;
20                  (Q)  An amount equal to any amounts included in
21             such   total,   received   by  the  taxpayer  as  an
22             acceleration in the payment of  life,  endowment  or
23             annuity  benefits  in advance of the time they would
24             otherwise be payable as an indemnity for a  terminal
25             illness;
26                  (R)  An  amount  equal  to  the  amount  of any
27             federal or State  bonus  paid  to  veterans  of  the
28             Persian Gulf War;
29                  (S)  An  amount,  to  the  extent  included  in
30             adjusted  gross  income,  equal  to  the amount of a
31             contribution made in the taxable year on  behalf  of
32             the  taxpayer  to  a  medical  care  savings account
33             established under the Medical Care  Savings  Account
34             Act  to  the  extent the contribution is accepted by
                            -6-              LRB9007338KDksam
 1             the account administrator as provided in that Act;
 2                  (T)  An  amount,  to  the  extent  included  in
 3             adjusted  gross  income,  equal  to  the  amount  of
 4             interest earned in the taxable  year  on  a  medical
 5             care  savings  account established under the Medical
 6             Care Savings Account Act on behalf of the  taxpayer,
 7             other  than interest added pursuant to item (D-5) of
 8             this paragraph (2);
 9                  (U)  For one taxable year beginning on or after
10             January 1, 1994, an amount equal to the total amount
11             of tax imposed and paid under  subsections  (a)  and
12             (b)  of  Section  201  of  this Act on grant amounts
13             received by the  taxpayer  under  the  Nursing  Home
14             Grant  Assistance  Act during the taxpayer's taxable
15             years 1992 and 1993; and
16                  (V)  Beginning with  tax  years  ending  on  or
17             after  December  31,  1995 and ending with tax years
18             ending on or before December  31,  1999,  an  amount
19             equal  to  the  amount  paid  by a taxpayer who is a
20             self-employed taxpayer, a partner of a  partnership,
21             or  a  shareholder in a Subchapter S corporation for
22             health insurance or  long-term  care  insurance  for
23             that   taxpayer   or   that   taxpayer's  spouse  or
24             dependents, to the extent that the amount  paid  for
25             that  health  insurance  or long-term care insurance
26             may be deducted under Section 213  of  the  Internal
27             Revenue  Code  of 1986, has not been deducted on the
28             federal income tax return of the taxpayer, and  does
29             not  exceed  the taxable income attributable to that
30             taxpayer's  income,   self-employment   income,   or
31             Subchapter  S  corporation  income;  except  that no
32             deduction shall be allowed under this  item  (V)  if
33             the  taxpayer  is  eligible  to  participate  in any
34             health insurance or long-term care insurance plan of
                            -7-              LRB9007338KDksam
 1             an  employer  of  the  taxpayer  or  the  taxpayer's
 2             spouse.  The amount  of  the  health  insurance  and
 3             long-term  care insurance subtracted under this item
 4             (V) shall be determined by multiplying total  health
 5             insurance and long-term care insurance premiums paid
 6             by  the  taxpayer times a number that represents the
 7             fractional percentage of eligible  medical  expenses
 8             under  Section  213  of the Internal Revenue Code of
 9             1986 not actually deducted on the taxpayer's federal
10             income tax return.
11        (b)  Corporations.
12             (1)  In general.  In the case of a corporation, base
13        income means an amount equal to  the  taxpayer's  taxable
14        income for the taxable year as modified by paragraph (2).
15             (2)  Modifications.   The taxable income referred to
16        in paragraph (1) shall be modified by adding thereto  the
17        sum of the following amounts:
18                  (A)  An  amount  equal  to  all amounts paid or
19             accrued  to  the  taxpayer  as  interest   and   all
20             distributions  received  from  regulated  investment
21             companies  during  the  taxable  year  to the extent
22             excluded from gross income  in  the  computation  of
23             taxable income;
24                  (B)  An  amount  equal  to  the  amount  of tax
25             imposed by this Act  to  the  extent  deducted  from
26             gross  income  in  the computation of taxable income
27             for the taxable year;
28                  (C)  In the  case  of  a  regulated  investment
29             company,  an  amount  equal to the excess of (i) the
30             net long-term capital gain  for  the  taxable  year,
31             over  (ii)  the amount of the capital gain dividends
32             designated  as  such  in  accordance  with   Section
33             852(b)(3)(C)  of  the  Internal Revenue Code and any
34             amount designated under Section 852(b)(3)(D) of  the
                            -8-              LRB9007338KDksam
 1             Internal  Revenue  Code, attributable to the taxable
 2             year.
 3        This amendatory Act of 1995 is  declarative  of  existing
 4    law and is not a new enactment.
 5                  (D)  The  amount  of  any  net  operating  loss
 6             deduction taken in arriving at taxable income, other
 7             than  a  net  operating  loss carried forward from a
 8             taxable year ending prior to December 31, 1986; and
 9                  (E)  For taxable years in which a net operating
10             loss carryback or carryforward from a  taxable  year
11             ending  prior  to December 31, 1986 is an element of
12             taxable income under paragraph (1) of subsection (e)
13             or subparagraph (E) of paragraph (2)  of  subsection
14             (e),  the  amount  by  which  addition modifications
15             other than those provided by this  subparagraph  (E)
16             exceeded  subtraction  modifications in such earlier
17             taxable year, with the following limitations applied
18             in the order that they are listed:
19                       (i)  the addition modification relating to
20                  the net operating loss carried back or  forward
21                  to  the  taxable  year  from  any  taxable year
22                  ending prior to  December  31,  1986  shall  be
23                  reduced  by the amount of addition modification
24                  under this subparagraph (E)  which  related  to
25                  that  net  operating  loss  and which was taken
26                  into account in calculating the base income  of
27                  an earlier taxable year, and
28                       (ii)  the  addition  modification relating
29                  to the  net  operating  loss  carried  back  or
30                  forward  to  the  taxable year from any taxable
31                  year ending prior to December  31,  1986  shall
32                  not  exceed  the  amount  of  such carryback or
33                  carryforward;
34                  For taxable years  in  which  there  is  a  net
                            -9-              LRB9007338KDksam
 1             operating  loss  carryback or carryforward from more
 2             than one other taxable year ending prior to December
 3             31, 1986, the addition modification provided in this
 4             subparagraph (E) shall be the  sum  of  the  amounts
 5             computed    independently    under   the   preceding
 6             provisions of this subparagraph (E)  for  each  such
 7             taxable year, and
 8                  (E-5)  For  taxable years ending after December
 9             31,  1997,  an  amount   equal   to   any   eligible
10             remediation  costs  that the corporation deducted in
11             computing adjusted gross income and  for  which  the
12             corporation  claims a credit under subsection (l) of
13             Section 201;
14        and by deducting from the total so obtained  the  sum  of
15        the following amounts:
16                  (F)  An  amount  equal to the amount of any tax
17             imposed by  this  Act  which  was  refunded  to  the
18             taxpayer  and included in such total for the taxable
19             year;
20                  (G)  An amount equal to any amount included  in
21             such  total under Section 78 of the Internal Revenue
22             Code;
23                  (H)  In the  case  of  a  regulated  investment
24             company,  an  amount  equal  to the amount of exempt
25             interest dividends as defined in subsection (b)  (5)
26             of Section 852 of the Internal Revenue Code, paid to
27             shareholders for the taxable year;
28                  (I)  With   the   exception   of   any  amounts
29             subtracted under subparagraph (J), an  amount  equal
30             to  the  sum of all amounts disallowed as deductions
31             by Sections 171(a) (2), and  265(a)(2)  and  amounts
32             disallowed  as interest expense by Section 291(a)(3)
33             of the Internal Revenue Code, as  now  or  hereafter
34             amended,  and  all  amounts of expenses allocable to
                            -10-             LRB9007338KDksam
 1             interest and disallowed  as  deductions  by  Section
 2             265(a)(1)  of  the  Internal Revenue Code, as now or
 3             hereafter amended;
 4                  (J)  An amount equal to all amounts included in
 5             such total which are exempt from  taxation  by  this
 6             State   either   by   reason   of  its  statutes  or
 7             Constitution  or  by  reason  of  the  Constitution,
 8             treaties or statutes of the United States;  provided
 9             that,  in the case of any statute of this State that
10             exempts  income  derived   from   bonds   or   other
11             obligations from the tax imposed under this Act, the
12             amount  exempted  shall  be the interest net of bond
13             premium amortization;
14                  (K)  An  amount  equal   to   those   dividends
15             included   in  such  total  which  were  paid  by  a
16             corporation which conducts business operations in an
17             Enterprise Zone or zones created under the  Illinois
18             Enterprise  Zone  Act and conducts substantially all
19             of its operations in an Enterprise Zone or zones;
20                  (L)  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             (K) of paragraph 2 of this subsection shall  not  be
28             eligible  for  the  deduction  provided  under  this
29             subparagraph (L);
30                  (M)  For  any  taxpayer  that  is  a  financial
31             organization within the meaning of Section 304(c) of
32             this  Act,  an  amount  included  in  such  total as
33             interest income from a loan or loans  made  by  such
34             taxpayer  to  a  borrower, to the extent that such a
                            -11-             LRB9007338KDksam
 1             loan is secured by property which  is  eligible  for
 2             the  Enterprise Zone Investment Credit. To determine
 3             the portion of a loan or loans that  is  secured  by
 4             property  eligible  for  a Section 201(h) investment
 5             credit to the borrower, the entire principal  amount
 6             of  the  loan  or loans between the taxpayer and the
 7             borrower should be divided into  the  basis  of  the
 8             Section  201(h)  investment  credit  property  which
 9             secures  the  loan  or loans, using for this purpose
10             the original basis of such property on the date that
11             it was placed in service  in  the  Enterprise  Zone.
12             The  subtraction  modification available to taxpayer
13             in any year under  this  subsection  shall  be  that
14             portion  of  the total interest paid by the borrower
15             with  respect  to  such  loan  attributable  to  the
16             eligible property as calculated under  the  previous
17             sentence;
18                  (M-1)  For  any  taxpayer  that  is a financial
19             organization within the meaning of Section 304(c) of
20             this Act,  an  amount  included  in  such  total  as
21             interest  income  from  a loan or loans made by such
22             taxpayer to a borrower, to the extent  that  such  a
23             loan  is  secured  by property which is eligible for
24             the High  Impact  Business  Investment  Credit.   To
25             determine  the  portion  of  a loan or loans that is
26             secured by property eligible for  a  Section  201(i)
27             investment   credit  to  the  borrower,  the  entire
28             principal amount of the loan or  loans  between  the
29             taxpayer and the borrower should be divided into the
30             basis   of  the  Section  201(i)  investment  credit
31             property which secures the loan or loans, using  for
32             this  purpose the original basis of such property on
33             the  date  that  it  was  placed  in  service  in  a
34             federally designated Foreign Trade Zone or  Sub-Zone
                            -12-             LRB9007338KDksam
 1             located  in  Illinois.  No taxpayer that is eligible
 2             for the deduction provided in  subparagraph  (M)  of
 3             paragraph  (2)  of this subsection shall be eligible
 4             for the deduction provided under  this  subparagraph
 5             (M-1).   The  subtraction  modification available to
 6             taxpayers in any year under this subsection shall be
 7             that portion of  the  total  interest  paid  by  the
 8             borrower  with  respect to such loan attributable to
 9             the  eligible  property  as  calculated  under   the
10             previous sentence;
11                  (N)  Two times any contribution made during the
12             taxable  year  to  a designated zone organization to
13             the extent that the contribution (i) qualifies as  a
14             charitable  contribution  under  subsection  (c)  of
15             Section  170  of  the Internal Revenue Code and (ii)
16             must, by its terms, be used for a  project  approved
17             by  the Department of Commerce and Community Affairs
18             under Section 11 of  the  Illinois  Enterprise  Zone
19             Act;
20                  (O)  An  amount  equal  to: (i) 85% for taxable
21             years ending on or before December 31, 1992,  or,  a
22             percentage  equal  to the percentage allowable under
23             Section 243(a)(1) of the Internal  Revenue  Code  of
24             1986  for  taxable  years  ending after December 31,
25             1992, of the amount by which dividends  included  in
26             taxable  income and received from a corporation that
27             is not created or organized under the  laws  of  the
28             United  States or any state or political subdivision
29             thereof, including, for taxable years ending  on  or
30             after  December  31,  1988,  dividends  received  or
31             deemed   received  or  paid  or  deemed  paid  under
32             Sections 951 through 964  of  the  Internal  Revenue
33             Code, exceed the amount of the modification provided
34             under  subparagraph  (G)  of  paragraph  (2) of this
                            -13-             LRB9007338KDksam
 1             subsection (b) which is related to  such  dividends;
 2             plus  (ii)  100%  of  the amount by which dividends,
 3             included in taxable income and received,  including,
 4             for  taxable  years  ending on or after December 31,
 5             1988, dividends received or deemed received or  paid
 6             or deemed paid under Sections 951 through 964 of the
 7             Internal  Revenue  Code,  from  any such corporation
 8             specified in clause  (i)  that  would  but  for  the
 9             provisions  of  Section 1504 (b) (3) of the Internal
10             Revenue  Code  be  treated  as  a  member   of   the
11             affiliated   group   which   includes  the  dividend
12             recipient, exceed the  amount  of  the  modification
13             provided  under subparagraph (G) of paragraph (2) of
14             this  subsection  (b)  which  is  related  to   such
15             dividends;
16                  (P)  An  amount  equal to any contribution made
17             to a job training project  established  pursuant  to
18             the Tax Increment Allocation Redevelopment Act; and
19                  (Q)  An  amount  equal  to  the  amount  of the
20             deduction used to compute  the  federal  income  tax
21             credit  for  restoration of substantial amounts held
22             under claim of right for the taxable  year  pursuant
23             to  Section  1341  of  the  Internal Revenue Code of
24             1986.
25             (3)  Special rule.  For purposes  of  paragraph  (2)
26        (A),  "gross  income"  in  the  case  of a life insurance
27        company, for tax years ending on and after  December  31,
28        1994,  shall  mean  the  gross  investment income for the
29        taxable year.
30        (c)  Trusts and estates.
31             (1)  In general.  In the case of a trust or  estate,
32        base  income  means  an  amount  equal  to the taxpayer's
33        taxable income  for  the  taxable  year  as  modified  by
34        paragraph (2).
                            -14-             LRB9007338KDksam
 1             (2)  Modifications.   Subject  to  the provisions of
 2        paragraph  (3),  the  taxable  income  referred   to   in
 3        paragraph (1) shall be modified by adding thereto the sum
 4        of the following amounts:
 5                  (A)  An  amount  equal  to  all amounts paid or
 6             accrued to the taxpayer  as  interest  or  dividends
 7             during  the taxable year to the extent excluded from
 8             gross income in the computation of taxable income;
 9                  (B)  In the case of (i) an estate, $600; (ii) a
10             trust which,  under  its  governing  instrument,  is
11             required  to distribute all of its income currently,
12             $300; and (iii) any other trust, $100, but  in  each
13             such  case,  only  to  the  extent  such  amount was
14             deducted in the computation of taxable income;
15                  (C)  An amount  equal  to  the  amount  of  tax
16             imposed  by  this  Act  to  the extent deducted from
17             gross income in the computation  of  taxable  income
18             for the taxable year;
19                  (D)  The  amount  of  any  net  operating  loss
20             deduction taken in arriving at taxable income, other
21             than  a  net  operating  loss carried forward from a
22             taxable year ending prior to December 31, 1986;
23                  (E)  For taxable years in which a net operating
24             loss carryback or carryforward from a  taxable  year
25             ending  prior  to December 31, 1986 is an element of
26             taxable income under paragraph (1) of subsection (e)
27             or subparagraph (E) of paragraph (2)  of  subsection
28             (e),  the  amount  by  which  addition modifications
29             other than those provided by this  subparagraph  (E)
30             exceeded  subtraction  modifications in such taxable
31             year, with the following limitations applied in  the
32             order that they are listed:
33                       (i)  the addition modification relating to
34                  the  net operating loss carried back or forward
                            -15-             LRB9007338KDksam
 1                  to the  taxable  year  from  any  taxable  year
 2                  ending  prior  to  December  31,  1986 shall be
 3                  reduced by the amount of addition  modification
 4                  under  this  subparagraph  (E) which related to
 5                  that net operating loss  and  which  was  taken
 6                  into  account in calculating the base income of
 7                  an earlier taxable year, and
 8                       (ii)  the addition  modification  relating
 9                  to  the  net  operating  loss  carried  back or
10                  forward to the taxable year  from  any  taxable
11                  year  ending  prior  to December 31, 1986 shall
12                  not exceed the  amount  of  such  carryback  or
13                  carryforward;
14                  For  taxable  years  in  which  there  is a net
15             operating loss carryback or carryforward  from  more
16             than one other taxable year ending prior to December
17             31, 1986, the addition modification provided in this
18             subparagraph  (E)  shall  be  the sum of the amounts
19             computed   independently   under    the    preceding
20             provisions  of  this  subparagraph (E) for each such
21             taxable year;
22                  (F)  For  taxable  years  ending  on  or  after
23             January 1, 1989, an amount equal to the tax deducted
24             pursuant to Section 164 of the Internal Revenue Code
25             if the trust or estate is claiming the same tax  for
26             purposes  of  the  Illinois foreign tax credit under
27             Section 601 of this Act; and
28                  (G)  An amount  equal  to  the  amount  of  the
29             capital  gain deduction allowable under the Internal
30             Revenue Code, to  the  extent  deducted  from  gross
31             income in the computation of taxable income; and
32                  (G-5)  For  taxable years ending after December
33             31,  1997,  an  amount   equal   to   any   eligible
34             remediation  costs that the trust or estate deducted
                            -16-             LRB9007338KDksam
 1             in computing adjusted gross income and for which the
 2             trust or estate claims a credit under subsection (l)
 3             of Section 201;
 4        and by deducting from the total so obtained  the  sum  of
 5        the following amounts:
 6                  (H)  An amount equal to all amounts included in
 7             such  total  pursuant  to the provisions of Sections
 8             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
 9             408 of the Internal Revenue Code or included in such
10             total  as  distributions under the provisions of any
11             retirement or disability plan for employees  of  any
12             governmental  agency or unit, or retirement payments
13             to retired partners, which payments are excluded  in
14             computing  net  earnings  from  self  employment  by
15             Section  1402  of  the  Internal  Revenue  Code  and
16             regulations adopted pursuant thereto;
17                  (I)  The valuation limitation amount;
18                  (J)  An  amount  equal to the amount of any tax
19             imposed by  this  Act  which  was  refunded  to  the
20             taxpayer  and included in such total for the taxable
21             year;
22                  (K)  An amount equal to all amounts included in
23             taxable income as  modified  by  subparagraphs  (A),
24             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
25             from taxation by this State either by reason of  its
26             statutes   or  Constitution  or  by  reason  of  the
27             Constitution, treaties or  statutes  of  the  United
28             States; provided that, in the case of any statute of
29             this State that exempts income derived from bonds or
30             other  obligations  from  the tax imposed under this
31             Act, the amount exempted shall be the  interest  net
32             of bond premium amortization;
33                  (L)  With   the   exception   of   any  amounts
34             subtracted under subparagraph (K), an  amount  equal
                            -17-             LRB9007338KDksam
 1             to  the  sum of all amounts disallowed as deductions
 2             by Sections 171(a) (2) and 265(a)(2) of the Internal
 3             Revenue Code, as now or hereafter amended,  and  all
 4             amounts   of  expenses  allocable  to  interest  and
 5             disallowed as deductions by Section  265(1)  of  the
 6             Internal  Revenue  Code of 1954, as now or hereafter
 7             amended;
 8                  (M)  An  amount  equal   to   those   dividends
 9             included   in  such  total  which  were  paid  by  a
10             corporation which conducts business operations in an
11             Enterprise Zone or zones created under the  Illinois
12             Enterprise  Zone  Act and conducts substantially all
13             of its operations in an Enterprise Zone or Zones;
14                  (N)  An amount equal to any  contribution  made
15             to  a  job  training project established pursuant to
16             the Tax Increment Allocation Redevelopment Act;
17                  (O)  An  amount  equal   to   those   dividends
18             included   in   such  total  that  were  paid  by  a
19             corporation that conducts business operations  in  a
20             federally  designated Foreign Trade Zone or Sub-Zone
21             and  that  is  designated  a  High  Impact  Business
22             located  in  Illinois;   provided   that   dividends
23             eligible  for the deduction provided in subparagraph
24             (M) of paragraph (2) of this subsection shall not be
25             eligible  for  the  deduction  provided  under  this
26             subparagraph (O); and
27                  (P)  An amount  equal  to  the  amount  of  the
28             deduction  used  to  compute  the federal income tax
29             credit for restoration of substantial  amounts  held
30             under  claim  of right for the taxable year pursuant
31             to Section 1341 of  the  Internal  Revenue  Code  of
32             1986.
33             (3)  Limitation.   The  amount  of  any modification
34        otherwise required under  this  subsection  shall,  under
                            -18-             LRB9007338KDksam
 1        regulations  prescribed by the Department, be adjusted by
 2        any amounts included therein which  were  properly  paid,
 3        credited,  or  required to be distributed, or permanently
 4        set aside for charitable purposes pursuant   to  Internal
 5        Revenue Code Section 642(c) during the taxable year.
 6        (d)  Partnerships.
 7             (1)  In  general. In the case of a partnership, base
 8        income means an amount equal to  the  taxpayer's  taxable
 9        income for the taxable year as modified by paragraph (2).
10             (2)  Modifications.  The  taxable income referred to
11        in paragraph (1) shall be modified by adding thereto  the
12        sum of the following amounts:
13                  (A)  An  amount  equal  to  all amounts paid or
14             accrued to the taxpayer  as  interest  or  dividends
15             during  the taxable year to the extent excluded from
16             gross income in the computation of taxable income;
17                  (B)  An amount  equal  to  the  amount  of  tax
18             imposed  by  this  Act  to  the extent deducted from
19             gross income for the taxable year; and
20                  (C)  The amount of deductions  allowed  to  the
21             partnership  pursuant  to  Section  707  (c)  of the
22             Internal Revenue Code  in  calculating  its  taxable
23             income;
24                  (D)  An  amount  equal  to  the  amount  of the
25             capital gain deduction allowable under the  Internal
26             Revenue  Code,  to  the  extent  deducted from gross
27             income in the computation of taxable income;
28        and by deducting from the total so obtained the following
29        amounts:
30                  (E)  The valuation limitation amount;
31                  (F)  An amount equal to the amount of  any  tax
32             imposed  by  this  Act  which  was  refunded  to the
33             taxpayer and included in such total for the  taxable
34             year;
                            -19-             LRB9007338KDksam
 1                  (G)  An amount equal to all amounts included in
 2             taxable  income  as  modified  by subparagraphs (A),
 3             (B), (C) and (D) which are exempt from  taxation  by
 4             this  State  either  by  reason  of  its statutes or
 5             Constitution  or  by  reason  of  the  Constitution,
 6             treaties or statutes of the United States;  provided
 7             that,  in the case of any statute of this State that
 8             exempts  income  derived   from   bonds   or   other
 9             obligations from the tax imposed under this Act, the
10             amount  exempted  shall  be the interest net of bond
11             premium amortization;
12                  (H)  Any  income  of  the   partnership   which
13             constitutes  personal  service  income as defined in
14             Section 1348 (b) (1) of the  Internal  Revenue  Code
15             (as  in  effect  December  31, 1981) or a reasonable
16             allowance  for  compensation  paid  or  accrued  for
17             services rendered by partners  to  the  partnership,
18             whichever is greater;
19                  (I)  An  amount  equal to all amounts of income
20             distributable to an entity subject to  the  Personal
21             Property  Tax  Replacement  Income  Tax  imposed  by
22             subsections  (c)  and (d) of Section 201 of this Act
23             including  amounts  distributable  to  organizations
24             exempt from federal income tax by reason of  Section
25             501(a) of the Internal Revenue Code;
26                  (J)  With   the   exception   of   any  amounts
27             subtracted under subparagraph (G), an  amount  equal
28             to  the  sum of all amounts disallowed as deductions
29             by Sections 171(a) (2), and 265(2) of  the  Internal
30             Revenue  Code  of 1954, as now or hereafter amended,
31             and all amounts of expenses  allocable  to  interest
32             and  disallowed  as  deductions by Section 265(1) of
33             the Internal  Revenue  Code,  as  now  or  hereafter
34             amended;
                            -20-             LRB9007338KDksam
 1                  (K)  An   amount   equal   to  those  dividends
 2             included  in  such  total  which  were  paid  by   a
 3             corporation which conducts business operations in an
 4             Enterprise  Zone or zones created under the Illinois
 5             Enterprise Zone Act, enacted  by  the  82nd  General
 6             Assembly, and which does not conduct such operations
 7             other than in an Enterprise Zone or Zones;
 8                  (L)  An  amount  equal to any contribution made
 9             to a job training project  established  pursuant  to
10             the   Real   Property   Tax   Increment   Allocation
11             Redevelopment Act;
12                  (M)  An   amount   equal   to  those  dividends
13             included  in  such  total  that  were  paid   by   a
14             corporation  that  conducts business operations in a
15             federally designated Foreign Trade Zone or  Sub-Zone
16             and  that  is  designated  a  High  Impact  Business
17             located   in   Illinois;   provided  that  dividends
18             eligible for the deduction provided in  subparagraph
19             (K) of paragraph (2) of this subsection shall not be
20             eligible  for  the  deduction  provided  under  this
21             subparagraph (M); and
22                  (N)  An  amount  equal  to  the  amount  of the
23             deduction used to compute  the  federal  income  tax
24             credit  for  restoration of substantial amounts held
25             under claim of right for the taxable  year  pursuant
26             to  Section  1341  of  the  Internal Revenue Code of
27             1986.
28        (e)  Gross income; adjusted gross income; taxable income.
29             (1)  In  general.   Subject  to  the  provisions  of
30        paragraph (2) and subsection (b)  (3),  for  purposes  of
31        this  Section  and  Section  803(e),  a  taxpayer's gross
32        income, adjusted gross income, or taxable income for  the
33        taxable  year  shall  mean  the  amount  of gross income,
34        adjusted  gross  income  or   taxable   income   properly
                            -21-             LRB9007338KDksam
 1        reportable  for  federal  income  tax  purposes  for  the
 2        taxable year under the provisions of the Internal Revenue
 3        Code.  Taxable income may be less than zero. However, for
 4        taxable years ending on or after December 31,  1986,  net
 5        operating  loss  carryforwards  from taxable years ending
 6        prior to December 31, 1986, may not  exceed  the  sum  of
 7        federal  taxable  income  for the taxable year before net
 8        operating loss deduction, plus  the  excess  of  addition
 9        modifications  over  subtraction  modifications  for  the
10        taxable year.  For taxable years ending prior to December
11        31, 1986, taxable income may never be an amount in excess
12        of the net operating loss for the taxable year as defined
13        in subsections (c) and (d) of Section 172 of the Internal
14        Revenue  Code,  provided  that  when  taxable income of a
15        corporation (other  than  a  Subchapter  S  corporation),
16        trust,   or   estate  is  less  than  zero  and  addition
17        modifications, other than those provided by  subparagraph
18        (E)  of  paragraph (2) of subsection (b) for corporations
19        or subparagraph (E) of paragraph (2)  of  subsection  (c)
20        for trusts and estates, exceed subtraction modifications,
21        an   addition  modification  must  be  made  under  those
22        subparagraphs for any other taxable  year  to  which  the
23        taxable  income  less  than  zero (net operating loss) is
24        applied under Section 172 of the Internal Revenue Code or
25        under  subparagraph  (E)  of  paragraph   (2)   of   this
26        subsection (e) applied in conjunction with Section 172 of
27        the Internal Revenue Code.
28             (2)  Special rule.  For purposes of paragraph (1) of
29        this  subsection,  the taxable income properly reportable
30        for federal income tax purposes shall mean:
31                  (A)  Certain life insurance companies.  In  the
32             case  of a life insurance company subject to the tax
33             imposed by Section 801 of the Internal Revenue Code,
34             life insurance  company  taxable  income,  plus  the
                            -22-             LRB9007338KDksam
 1             amount  of  distribution  from pre-1984 policyholder
 2             surplus accounts as calculated under Section 815a of
 3             the Internal Revenue Code;
 4                  (B)  Certain other insurance companies.  In the
 5             case of mutual insurance companies  subject  to  the
 6             tax  imposed  by Section 831 of the Internal Revenue
 7             Code, insurance company taxable income;
 8                  (C)  Regulated investment  companies.   In  the
 9             case  of  a  regulated investment company subject to
10             the tax imposed  by  Section  852  of  the  Internal
11             Revenue Code, investment company taxable income;
12                  (D)  Real  estate  investment  trusts.   In the
13             case of a real estate investment  trust  subject  to
14             the  tax  imposed  by  Section  857  of the Internal
15             Revenue Code, real estate investment  trust  taxable
16             income;
17                  (E)  Consolidated corporations.  In the case of
18             a  corporation  which  is  a member of an affiliated
19             group of corporations filing a  consolidated  income
20             tax  return  for the taxable year for federal income
21             tax purposes, taxable income determined as  if  such
22             corporation  had filed a separate return for federal
23             income tax purposes for the taxable  year  and  each
24             preceding  taxable year for which it was a member of
25             an  affiliated   group.   For   purposes   of   this
26             subparagraph, the taxpayer's separate taxable income
27             shall  be  determined as if the election provided by
28             Section 243(b) (2) of the Internal Revenue Code  had
29             been in effect for all such years;
30                  (F)  Cooperatives.     In   the   case   of   a
31             cooperative corporation or association, the  taxable
32             income of such organization determined in accordance
33             with  the provisions of Section 1381 through 1388 of
34             the Internal Revenue Code;
                            -23-             LRB9007338KDksam
 1                  (G)  Subchapter S corporations.   In  the  case
 2             of:  (i)  a Subchapter S corporation for which there
 3             is in effect an election for the taxable year  under
 4             Section  1362  of  the  Internal  Revenue  Code, the
 5             taxable income of  such  corporation  determined  in
 6             accordance  with  Section  1363(b)  of  the Internal
 7             Revenue Code, except that taxable income shall  take
 8             into  account  those  items  which  are  required by
 9             Section 1363(b)(1) of the Internal Revenue  Code  to
10             be  separately  stated;  and  (ii)  a  Subchapter  S
11             corporation  for  which there is in effect a federal
12             election  to  opt  out  of  the  provisions  of  the
13             Subchapter S Revision Act of 1982 and  have  applied
14             instead  the  prior federal Subchapter S rules as in
15             effect on July 1, 1982, the taxable income  of  such
16             corporation   determined   in  accordance  with  the
17             federal Subchapter S rules as in effect on  July  1,
18             1982; and
19                  (H)  Partnerships.     In   the   case   of   a
20             partnership, taxable income determined in accordance
21             with Section  703  of  the  Internal  Revenue  Code,
22             except  that  taxable income shall take into account
23             those items which are required by Section  703(a)(1)
24             to  be  separately  stated  but which would be taken
25             into account by an  individual  in  calculating  his
26             taxable income.
27        (f)  Valuation limitation amount.
28             (1)  In  general.   The  valuation limitation amount
29        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
30        (d)(2) (E) is an amount equal to:
31                  (A)  The   sum   of   the  pre-August  1,  1969
32             appreciation amounts (to the  extent  consisting  of
33             gain reportable under the provisions of Section 1245
34             or  1250  of  the  Internal  Revenue  Code)  for all
                            -24-             LRB9007338KDksam
 1             property in respect of which such gain was  reported
 2             for the taxable year; plus
 3                  (B)  The   lesser   of   (i)  the  sum  of  the
 4             pre-August 1,  1969  appreciation  amounts  (to  the
 5             extent  consisting of capital gain) for all property
 6             in respect of  which  such  gain  was  reported  for
 7             federal income tax purposes for the taxable year, or
 8             (ii)  the  net  capital  gain  for the taxable year,
 9             reduced in either case by any amount  of  such  gain
10             included  in  the amount determined under subsection
11             (a) (2) (F) or (c) (2) (H).
12        (2)  Pre-August 1, 1969 appreciation amount.
13                  (A)  If  the  fair  market  value  of  property
14             referred   to   in   paragraph   (1)   was   readily
15             ascertainable on August 1, 1969, the  pre-August  1,
16             1969  appreciation  amount  for such property is the
17             lesser of (i) the excess of such fair  market  value
18             over the taxpayer's basis (for determining gain) for
19             such  property  on  that  date (determined under the
20             Internal Revenue Code as in effect on that date), or
21             (ii) the total  gain  realized  and  reportable  for
22             federal  income tax purposes in respect of the sale,
23             exchange or other disposition of such property.
24                  (B)  If  the  fair  market  value  of  property
25             referred  to  in  paragraph  (1)  was  not   readily
26             ascertainable  on  August 1, 1969, the pre-August 1,
27             1969 appreciation amount for such property  is  that
28             amount  which bears the same ratio to the total gain
29             reported in respect  of  the  property  for  federal
30             income  tax  purposes  for  the taxable year, as the
31             number of full calendar months in that part  of  the
32             taxpayer's  holding  period  for the property ending
33             July 31, 1969 bears to the number of  full  calendar
34             months  in  the taxpayer's entire holding period for
                            -25-             LRB9007338KDksam
 1             the property.
 2                  (C)  The  Department   shall   prescribe   such
 3             regulations  as  may  be  necessary to carry out the
 4             purposes of this paragraph.
 5        (g)  Double  deductions.   Unless  specifically  provided
 6    otherwise, nothing in this Section shall permit the same item
 7    to be deducted more than once.
 8        (h)  Legislative intention.  Except as expressly provided
 9    by  this  Section  there  shall  be   no   modifications   or
10    limitations on the amounts of income, gain, loss or deduction
11    taken  into  account  in  determining  gross income, adjusted
12    gross  income  or  taxable  income  for  federal  income  tax
13    purposes for the taxable year, or in the amount of such items
14    entering into the computation of base income and  net  income
15    under  this  Act for such taxable year, whether in respect of
16    property values as of August 1, 1969 or otherwise.
17    (Source: P.A.  89-89,  eff.  6-30-95;  89-235,  eff.  8-4-95;
18    89-418,  eff.  11-15-95;  89-460,  eff. 5-24-96; 89-626, eff.
19    8-9-96; 90-491, eff. 1-1-98.)".

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