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90_SB1294
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Provides that for
taxable years beginning on or after January 1, 1998 and
ending on or before December 30, 2003, an income tax
deduction not to exceed $100,000 is available to individuals,
corporations, and trusts and estates in an amount equal to
the amount contributed for educational purposes by the
taxpayer to any public or private elementary, secondary, or
post-secondary school in Illinois or to any foundation
established under Section 501(c)(3) of the Internal Revenue
Code to raise moneys for any public or private elementary or
secondary school in Illinois, as certified by the recipient
school.
LRB9009301KDks
LRB9009301KDks
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 and
15 (D-5) An amount, to the extent not included in
16 adjusted gross income, equal to the amount of money
17 withdrawn by the taxpayer in the taxable year from a
18 medical care savings account and the interest earned
19 on the account in the taxable year of a withdrawal
20 pursuant to subsection (b) of Section 20 of the
21 Medical Care Savings Account Act;
22 and by deducting from the total so obtained the sum of
23 the following amounts:
24 (E) Any amount included in such total in
25 respect of any compensation (including but not
26 limited to any compensation paid or accrued to a
27 serviceman while a prisoner of war or missing in
28 action) paid to a resident by reason of being on
29 active duty in the Armed Forces of the United States
30 and in respect of any compensation paid or accrued
31 to a resident who as a governmental employee was a
32 prisoner of war or missing in action, and in respect
33 of any compensation paid to a resident in 1971 or
34 thereafter for annual training performed pursuant to
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1 Sections 502 and 503, Title 32, United States Code
2 as a member of the Illinois National Guard;
3 (F) An amount equal to all amounts included in
4 such total pursuant to the provisions of Sections
5 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
6 408 of the Internal Revenue Code, or included in
7 such total as distributions under the provisions of
8 any retirement or disability plan for employees of
9 any governmental agency or unit, or retirement
10 payments to retired partners, which payments are
11 excluded in computing net earnings from self
12 employment by Section 1402 of the Internal Revenue
13 Code and regulations adopted pursuant thereto;
14 (G) The valuation limitation amount;
15 (H) An amount equal to the amount of any tax
16 imposed by this Act which was refunded to the
17 taxpayer and included in such total for the taxable
18 year;
19 (I) An amount equal to all amounts included in
20 such total pursuant to the provisions of Section 111
21 of the Internal Revenue Code as a recovery of items
22 previously deducted from adjusted gross income in
23 the computation of taxable income;
24 (J) An amount equal to those dividends
25 included in such total which were paid by a
26 corporation which conducts business operations in an
27 Enterprise Zone or zones created under the Illinois
28 Enterprise Zone Act, and conducts substantially all
29 of its operations in an Enterprise Zone or zones;
30 (K) An amount equal to those dividends
31 included in such total that were paid by a
32 corporation that conducts business operations in a
33 federally designated Foreign Trade Zone or Sub-Zone
34 and that is designated a High Impact Business
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1 located in Illinois; provided that dividends
2 eligible for the deduction provided in subparagraph
3 (J) of paragraph (2) of this subsection shall not be
4 eligible for the deduction provided under this
5 subparagraph (K);
6 (L) For taxable years ending after December
7 31, 1983, an amount equal to all social security
8 benefits and railroad retirement benefits included
9 in such total pursuant to Sections 72(r) and 86 of
10 the Internal Revenue Code;
11 (M) With the exception of any amounts
12 subtracted under subparagraph (N), an amount equal
13 to the sum of all amounts disallowed as deductions
14 by Sections 171(a) (2), and 265(2) of the Internal
15 Revenue Code of 1954, as now or hereafter amended,
16 and all amounts of expenses allocable to interest
17 and disallowed as deductions by Section 265(1) of
18 the Internal Revenue Code of 1954, as now or
19 hereafter amended;
20 (N) An amount equal to all amounts included in
21 such total which are exempt from taxation by this
22 State either by reason of its statutes or
23 Constitution or by reason of the Constitution,
24 treaties or statutes of the United States; provided
25 that, in the case of any statute of this State that
26 exempts income derived from bonds or other
27 obligations from the tax imposed under this Act, the
28 amount exempted shall be the interest net of bond
29 premium amortization;
30 (O) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (P) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986;
5 (Q) An amount equal to any amounts included in
6 such total, received by the taxpayer as an
7 acceleration in the payment of life, endowment or
8 annuity benefits in advance of the time they would
9 otherwise be payable as an indemnity for a terminal
10 illness;
11 (R) An amount equal to the amount of any
12 federal or State bonus paid to veterans of the
13 Persian Gulf War;
14 (S) An amount, to the extent included in
15 adjusted gross income, equal to the amount of a
16 contribution made in the taxable year on behalf of
17 the taxpayer to a medical care savings account
18 established under the Medical Care Savings Account
19 Act to the extent the contribution is accepted by
20 the account administrator as provided in that Act;
21 (T) An amount, to the extent included in
22 adjusted gross income, equal to the amount of
23 interest earned in the taxable year on a medical
24 care savings account established under the Medical
25 Care Savings Account Act on behalf of the taxpayer,
26 other than interest added pursuant to item (D-5) of
27 this paragraph (2);
28 (U) For one taxable year beginning on or after
29 January 1, 1994, an amount equal to the total amount
30 of tax imposed and paid under subsections (a) and
31 (b) of Section 201 of this Act on grant amounts
32 received by the taxpayer under the Nursing Home
33 Grant Assistance Act during the taxpayer's taxable
34 years 1992 and 1993; and
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1 (V) Beginning with tax years ending on or
2 after December 31, 1995 and ending with tax years
3 ending on or before December 31, 1999, an amount
4 equal to the amount paid by a taxpayer who is a
5 self-employed taxpayer, a partner of a partnership,
6 or a shareholder in a Subchapter S corporation for
7 health insurance or long-term care insurance for
8 that taxpayer or that taxpayer's spouse or
9 dependents, to the extent that the amount paid for
10 that health insurance or long-term care insurance
11 may be deducted under Section 213 of the Internal
12 Revenue Code of 1986, has not been deducted on the
13 federal income tax return of the taxpayer, and does
14 not exceed the taxable income attributable to that
15 taxpayer's income, self-employment income, or
16 Subchapter S corporation income; except that no
17 deduction shall be allowed under this item (V) if
18 the taxpayer is eligible to participate in any
19 health insurance or long-term care insurance plan of
20 an employer of the taxpayer or the taxpayer's
21 spouse. The amount of the health insurance and
22 long-term care insurance subtracted under this item
23 (V) shall be determined by multiplying total health
24 insurance and long-term care insurance premiums paid
25 by the taxpayer times a number that represents the
26 fractional percentage of eligible medical expenses
27 under Section 213 of the Internal Revenue Code of
28 1986 not actually deducted on the taxpayer's federal
29 income tax return; and .
30 (W) Beginning with taxable years beginning on
31 or after January 1, 1998 and ending with taxable
32 years ending on or before December 30, 2003, an
33 amount, not to exceed $100,000, equal to the amount
34 contributed for educational purposes by the taxpayer
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1 to any public or private elementary or secondary
2 school in Illinois or to any foundation established
3 under Section 501(c)(3) of the Internal Revenue Code
4 to raise moneys for any public or private elementary
5 or secondary school in Illinois, as certified by the
6 recipient school.
7 (b) Corporations.
8 (1) In general. In the case of a corporation, base
9 income means an amount equal to the taxpayer's taxable
10 income for the taxable year as modified by paragraph (2).
11 (2) Modifications. The taxable income referred to
12 in paragraph (1) shall be modified by adding thereto the
13 sum of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest and all
16 distributions received from regulated investment
17 companies during the taxable year to the extent
18 excluded from gross income in the computation of
19 taxable income;
20 (B) An amount equal to the amount of tax
21 imposed by this Act to the extent deducted from
22 gross income in the computation of taxable income
23 for the taxable year;
24 (C) In the case of a regulated investment
25 company, an amount equal to the excess of (i) the
26 net long-term capital gain for the taxable year,
27 over (ii) the amount of the capital gain dividends
28 designated as such in accordance with Section
29 852(b)(3)(C) of the Internal Revenue Code and any
30 amount designated under Section 852(b)(3)(D) of the
31 Internal Revenue Code, attributable to the taxable
32 year.
33 This amendatory Act of 1995 is declarative of existing
34 law and is not a new enactment.
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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; and
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 earlier
13 taxable year, with the following limitations applied
14 in the 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
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1 computed independently under the preceding
2 provisions of this subparagraph (E) for each such
3 taxable year,
4 and by deducting from the total so obtained the sum of
5 the following amounts:
6 (F) An amount equal to the amount of any tax
7 imposed by this Act which was refunded to the
8 taxpayer and included in such total for the taxable
9 year;
10 (G) An amount equal to any amount included in
11 such total under Section 78 of the Internal Revenue
12 Code;
13 (H) In the case of a regulated investment
14 company, an amount equal to the amount of exempt
15 interest dividends as defined in subsection (b) (5)
16 of Section 852 of the Internal Revenue Code, paid to
17 shareholders for the taxable year;
18 (I) With the exception of any amounts
19 subtracted under subparagraph (J), an amount equal
20 to the sum of all amounts disallowed as deductions
21 by Sections 171(a) (2), and 265(a)(2) and amounts
22 disallowed as interest expense by Section 291(a)(3)
23 of the Internal Revenue Code, as now or hereafter
24 amended, and all amounts of expenses allocable to
25 interest and disallowed as deductions by Section
26 265(a)(1) of the Internal Revenue Code, as now or
27 hereafter amended;
28 (J) An amount equal to all amounts included in
29 such total which are exempt from taxation by this
30 State either by reason of its statutes or
31 Constitution or by reason of the Constitution,
32 treaties or statutes of the United States; provided
33 that, in the case of any statute of this State that
34 exempts income derived from bonds or other
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1 obligations from the tax imposed under this Act, the
2 amount exempted shall be the interest net of bond
3 premium amortization;
4 (K) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act and conducts substantially all
9 of its operations in an Enterprise Zone or zones;
10 (L) An amount equal to those dividends
11 included in such total that were paid by a
12 corporation that conducts business operations in a
13 federally designated Foreign Trade Zone or Sub-Zone
14 and that is designated a High Impact Business
15 located in Illinois; provided that dividends
16 eligible for the deduction provided in subparagraph
17 (K) of paragraph 2 of this subsection shall not be
18 eligible for the deduction provided under this
19 subparagraph (L);
20 (M) For any taxpayer that is a financial
21 organization within the meaning of Section 304(c) of
22 this Act, an amount included in such total as
23 interest income from a loan or loans made by such
24 taxpayer to a borrower, to the extent that such a
25 loan is secured by property which is eligible for
26 the Enterprise Zone Investment Credit. To determine
27 the portion of a loan or loans that is secured by
28 property eligible for a Section 201(h) investment
29 credit to the borrower, the entire principal amount
30 of the loan or loans between the taxpayer and the
31 borrower should be divided into the basis of the
32 Section 201(h) investment credit property which
33 secures the loan or loans, using for this purpose
34 the original basis of such property on the date that
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1 it was placed in service in the Enterprise Zone.
2 The subtraction modification available to taxpayer
3 in any year under this subsection shall be that
4 portion of the total interest paid by the borrower
5 with respect to such loan attributable to the
6 eligible property as calculated under the previous
7 sentence;
8 (M-1) For any taxpayer that is a financial
9 organization within the meaning of Section 304(c) of
10 this Act, an amount included in such total as
11 interest income from a loan or loans made by such
12 taxpayer to a borrower, to the extent that such a
13 loan is secured by property which is eligible for
14 the High Impact Business Investment Credit. To
15 determine the portion of a loan or loans that is
16 secured by property eligible for a Section 201(i)
17 investment credit to the borrower, the entire
18 principal amount of the loan or loans between the
19 taxpayer and the borrower should be divided into the
20 basis of the Section 201(i) investment credit
21 property which secures the loan or loans, using for
22 this purpose the original basis of such property on
23 the date that it was placed in service in a
24 federally designated Foreign Trade Zone or Sub-Zone
25 located in Illinois. No taxpayer that is eligible
26 for the deduction provided in subparagraph (M) of
27 paragraph (2) of this subsection shall be eligible
28 for the deduction provided under this subparagraph
29 (M-1). The subtraction modification available to
30 taxpayers in any year under this subsection shall be
31 that portion of the total interest paid by the
32 borrower with respect to such loan attributable to
33 the eligible property as calculated under the
34 previous sentence;
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1 (N) Two times any contribution made during the
2 taxable year to a designated zone organization to
3 the extent that the contribution (i) qualifies as a
4 charitable contribution under subsection (c) of
5 Section 170 of the Internal Revenue Code and (ii)
6 must, by its terms, be used for a project approved
7 by the Department of Commerce and Community Affairs
8 under Section 11 of the Illinois Enterprise Zone
9 Act;
10 (O) An amount equal to: (i) 85% for taxable
11 years ending on or before December 31, 1992, or, a
12 percentage equal to the percentage allowable under
13 Section 243(a)(1) of the Internal Revenue Code of
14 1986 for taxable years ending after December 31,
15 1992, of the amount by which dividends included in
16 taxable income and received from a corporation that
17 is not created or organized under the laws of the
18 United States or any state or political subdivision
19 thereof, including, for taxable years ending on or
20 after December 31, 1988, dividends received or
21 deemed received or paid or deemed paid under
22 Sections 951 through 964 of the Internal Revenue
23 Code, exceed the amount of the modification provided
24 under subparagraph (G) of paragraph (2) of this
25 subsection (b) which is related to such dividends;
26 plus (ii) 100% of the amount by which dividends,
27 included in taxable income and received, including,
28 for taxable years ending on or after December 31,
29 1988, dividends received or deemed received or paid
30 or deemed paid under Sections 951 through 964 of the
31 Internal Revenue Code, from any such corporation
32 specified in clause (i) that would but for the
33 provisions of Section 1504 (b) (3) of the Internal
34 Revenue Code be treated as a member of the
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1 affiliated group which includes the dividend
2 recipient, exceed the amount of the modification
3 provided under subparagraph (G) of paragraph (2) of
4 this subsection (b) which is related to such
5 dividends;
6 (P) An amount equal to any contribution made
7 to a job training project established pursuant to
8 the Tax Increment Allocation Redevelopment Act; and
9 (Q) 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; and .
15 (R) Beginning with taxable years beginning on
16 or after January 1, 1998 and ending with taxable
17 years ending on or before December 30, 2003, an
18 amount, not to exceed $100,000, equal to the amount
19 contributed for educational purposes by the taxpayer
20 to any public or private elementary or secondary
21 school in Illinois or to any foundation established
22 under Section 501(c)(3) of the Internal Revenue Code
23 to raise moneys for any public or private elementary
24 or secondary school in Illinois, as certified by the
25 recipient school.
26 (3) Special rule. For purposes of paragraph (2)
27 (A), "gross income" in the case of a life insurance
28 company, for tax years ending on and after December 31,
29 1994, shall mean the gross investment income for the
30 taxable year.
31 (c) Trusts and estates.
32 (1) In general. In the case of a trust or estate,
33 base income means an amount equal to the taxpayer's
34 taxable income for the taxable year as modified by
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1 paragraph (2).
2 (2) Modifications. Subject to the provisions of
3 paragraph (3), the taxable income referred to in
4 paragraph (1) shall be modified by adding thereto the sum
5 of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest or dividends
8 during the taxable year to the extent excluded from
9 gross income in the computation of taxable income;
10 (B) In the case of (i) an estate, $600; (ii) a
11 trust which, under its governing instrument, is
12 required to distribute all of its income currently,
13 $300; and (iii) any other trust, $100, but in each
14 such case, only to the extent such amount was
15 deducted in the computation of taxable income;
16 (C) An amount equal to the amount of tax
17 imposed by this Act to the extent deducted from
18 gross income in the computation of taxable income
19 for the taxable year;
20 (D) The amount of any net operating loss
21 deduction taken in arriving at taxable income, other
22 than a net operating loss carried forward from a
23 taxable year ending prior to December 31, 1986;
24 (E) For taxable years in which a net operating
25 loss carryback or carryforward from a taxable year
26 ending prior to December 31, 1986 is an element of
27 taxable income under paragraph (1) of subsection (e)
28 or subparagraph (E) of paragraph (2) of subsection
29 (e), the amount by which addition modifications
30 other than those provided by this subparagraph (E)
31 exceeded subtraction modifications in such taxable
32 year, with the following limitations applied in the
33 order that they are listed:
34 (i) the addition modification relating to
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1 the net operating loss carried back or forward
2 to the taxable year from any taxable year
3 ending prior to December 31, 1986 shall be
4 reduced by the amount of addition modification
5 under this subparagraph (E) which related to
6 that net operating loss and which was taken
7 into account in calculating the base income of
8 an earlier taxable year, and
9 (ii) the addition modification relating
10 to the net operating loss carried back or
11 forward to the taxable year from any taxable
12 year ending prior to December 31, 1986 shall
13 not exceed the amount of such carryback or
14 carryforward;
15 For taxable years in which there is a net
16 operating loss carryback or carryforward from more
17 than one other taxable year ending prior to December
18 31, 1986, the addition modification provided in this
19 subparagraph (E) shall be the sum of the amounts
20 computed independently under the preceding
21 provisions of this subparagraph (E) for each such
22 taxable year;
23 (F) For taxable years ending on or after
24 January 1, 1989, an amount equal to the tax deducted
25 pursuant to Section 164 of the Internal Revenue Code
26 if the trust or estate is claiming the same tax for
27 purposes of the Illinois foreign tax credit under
28 Section 601 of this Act; and
29 (G) An amount equal to the amount of the
30 capital gain deduction allowable under the Internal
31 Revenue Code, to the extent deducted from gross
32 income in the computation of taxable income;
33 and by deducting from the total so obtained the sum of
34 the following amounts:
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1 (H) An amount equal to all amounts included in
2 such total pursuant to the provisions of Sections
3 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
4 408 of the Internal Revenue Code or included in such
5 total as distributions under the provisions of any
6 retirement or disability plan for employees of any
7 governmental agency or unit, or retirement payments
8 to retired partners, which payments are excluded in
9 computing net earnings from self employment by
10 Section 1402 of the Internal Revenue Code and
11 regulations adopted pursuant thereto;
12 (I) The valuation limitation amount;
13 (J) 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 (K) An amount equal to all amounts included in
18 taxable income as modified by subparagraphs (A),
19 (B), (C), (D), (E), (F) and (G) which are exempt
20 from taxation by this State either by reason of its
21 statutes or Constitution or by reason of the
22 Constitution, treaties or statutes of the United
23 States; provided that, in the case of any statute of
24 this State that exempts income derived from bonds or
25 other obligations from the tax imposed under this
26 Act, the amount exempted shall be the interest net
27 of bond premium amortization;
28 (L) With the exception of any amounts
29 subtracted under subparagraph (K), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2) and 265(a)(2) of the Internal
32 Revenue Code, as now or hereafter amended, and all
33 amounts of expenses allocable to interest and
34 disallowed as deductions by Section 265(1) of the
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1 Internal Revenue Code of 1954, as now or hereafter
2 amended;
3 (M) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act and conducts substantially all
8 of its operations in an Enterprise Zone or Zones;
9 (N) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Tax Increment Allocation Redevelopment Act;
12 (O) 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 (M) of paragraph (2) of this subsection shall not be
20 eligible for the deduction provided under this
21 subparagraph (O); and
22 (P) 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; and .
28 (Q) Beginning with taxable years beginning on
29 or after January 1, 1998 and ending with taxable
30 years ending on or before December 30, 2003, an
31 amount, not to exceed $100,000, equal to the amount
32 contributed for educational purposes by the taxpayer
33 to any public or private elementary or secondary
34 school in Illinois or to any foundation established
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1 under Section 501(c)(3) of the Internal Revenue Code
2 to raise moneys for any public or private elementary
3 or secondary school in Illinois, as certified by the
4 recipient school.
5 (3) Limitation. The amount of any modification
6 otherwise required under this subsection shall, under
7 regulations prescribed by the Department, be adjusted by
8 any amounts included therein which were properly paid,
9 credited, or required to be distributed, or permanently
10 set aside for charitable purposes pursuant to Internal
11 Revenue Code Section 642(c) during the taxable year.
12 (d) Partnerships.
13 (1) In general. In the case of a partnership, base
14 income means an amount equal to the taxpayer's taxable
15 income for the taxable year as modified by paragraph (2).
16 (2) Modifications. The taxable income referred to
17 in paragraph (1) shall be modified by adding thereto the
18 sum of the following amounts:
19 (A) An amount equal to all amounts paid or
20 accrued to the taxpayer as interest or dividends
21 during the taxable year to the extent excluded from
22 gross income in the computation of taxable income;
23 (B) An amount equal to the amount of tax
24 imposed by this Act to the extent deducted from
25 gross income for the taxable year; and
26 (C) The amount of deductions allowed to the
27 partnership pursuant to Section 707 (c) of the
28 Internal Revenue Code in calculating its taxable
29 income;
30 (D) An amount equal to the amount of the
31 capital gain deduction allowable under the Internal
32 Revenue Code, to the extent deducted from gross
33 income in the computation of taxable income;
34 and by deducting from the total so obtained the following
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1 amounts:
2 (E) The valuation limitation amount;
3 (F) An amount equal to the amount of any tax
4 imposed by this Act which was refunded to the
5 taxpayer and included in such total for the taxable
6 year;
7 (G) An amount equal to all amounts included in
8 taxable income as modified by subparagraphs (A),
9 (B), (C) and (D) which are exempt from taxation by
10 this State either by reason of its statutes or
11 Constitution or by reason of the Constitution,
12 treaties or statutes of the United States; provided
13 that, in the case of any statute of this State that
14 exempts income derived from bonds or other
15 obligations from the tax imposed under this Act, the
16 amount exempted shall be the interest net of bond
17 premium amortization;
18 (H) Any income of the partnership which
19 constitutes personal service income as defined in
20 Section 1348 (b) (1) of the Internal Revenue Code
21 (as in effect December 31, 1981) or a reasonable
22 allowance for compensation paid or accrued for
23 services rendered by partners to the partnership,
24 whichever is greater;
25 (I) An amount equal to all amounts of income
26 distributable to an entity subject to the Personal
27 Property Tax Replacement Income Tax imposed by
28 subsections (c) and (d) of Section 201 of this Act
29 including amounts distributable to organizations
30 exempt from federal income tax by reason of Section
31 501(a) of the Internal Revenue Code;
32 (J) With the exception of any amounts
33 subtracted under subparagraph (G), an amount equal
34 to the sum of all amounts disallowed as deductions
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1 by Sections 171(a) (2), and 265(2) of the Internal
2 Revenue Code of 1954, as now or hereafter amended,
3 and all amounts of expenses allocable to interest
4 and disallowed as deductions by Section 265(1) of
5 the Internal Revenue Code, as now or hereafter
6 amended;
7 (K) An amount equal to those dividends
8 included in such total which were paid by a
9 corporation which conducts business operations in an
10 Enterprise Zone or zones created under the Illinois
11 Enterprise Zone Act, enacted by the 82nd General
12 Assembly, and which does not conduct such operations
13 other than in an Enterprise Zone or Zones;
14 (L) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Real Property Tax Increment Allocation
17 Redevelopment Act;
18 (M) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (K) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (M); and
28 (N) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986.
34 (e) Gross income; adjusted gross income; taxable income.
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1 (1) In general. Subject to the provisions of
2 paragraph (2) and subsection (b) (3), for purposes of
3 this Section and Section 803(e), a taxpayer's gross
4 income, adjusted gross income, or taxable income for the
5 taxable year shall mean the amount of gross income,
6 adjusted gross income or taxable income properly
7 reportable for federal income tax purposes for the
8 taxable year under the provisions of the Internal Revenue
9 Code. Taxable income may be less than zero. However, for
10 taxable years ending on or after December 31, 1986, net
11 operating loss carryforwards from taxable years ending
12 prior to December 31, 1986, may not exceed the sum of
13 federal taxable income for the taxable year before net
14 operating loss deduction, plus the excess of addition
15 modifications over subtraction modifications for the
16 taxable year. For taxable years ending prior to December
17 31, 1986, taxable income may never be an amount in excess
18 of the net operating loss for the taxable year as defined
19 in subsections (c) and (d) of Section 172 of the Internal
20 Revenue Code, provided that when taxable income of a
21 corporation (other than a Subchapter S corporation),
22 trust, or estate is less than zero and addition
23 modifications, other than those provided by subparagraph
24 (E) of paragraph (2) of subsection (b) for corporations
25 or subparagraph (E) of paragraph (2) of subsection (c)
26 for trusts and estates, exceed subtraction modifications,
27 an addition modification must be made under those
28 subparagraphs for any other taxable year to which the
29 taxable income less than zero (net operating loss) is
30 applied under Section 172 of the Internal Revenue Code or
31 under subparagraph (E) of paragraph (2) of this
32 subsection (e) applied in conjunction with Section 172 of
33 the Internal Revenue Code.
34 (2) Special rule. For purposes of paragraph (1) of
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1 this subsection, the taxable income properly reportable
2 for federal income tax purposes shall mean:
3 (A) Certain life insurance companies. In the
4 case of a life insurance company subject to the tax
5 imposed by Section 801 of the Internal Revenue Code,
6 life insurance company taxable income, plus the
7 amount of distribution from pre-1984 policyholder
8 surplus accounts as calculated under Section 815a of
9 the Internal Revenue Code;
10 (B) Certain other insurance companies. In the
11 case of mutual insurance companies subject to the
12 tax imposed by Section 831 of the Internal Revenue
13 Code, insurance company taxable income;
14 (C) Regulated investment companies. In the
15 case of a regulated investment company subject to
16 the tax imposed by Section 852 of the Internal
17 Revenue Code, investment company taxable income;
18 (D) Real estate investment trusts. In the
19 case of a real estate investment trust subject to
20 the tax imposed by Section 857 of the Internal
21 Revenue Code, real estate investment trust taxable
22 income;
23 (E) Consolidated corporations. In the case of
24 a corporation which is a member of an affiliated
25 group of corporations filing a consolidated income
26 tax return for the taxable year for federal income
27 tax purposes, taxable income determined as if such
28 corporation had filed a separate return for federal
29 income tax purposes for the taxable year and each
30 preceding taxable year for which it was a member of
31 an affiliated group. For purposes of this
32 subparagraph, the taxpayer's separate taxable income
33 shall be determined as if the election provided by
34 Section 243(b) (2) of the Internal Revenue Code had
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1 been in effect for all such years;
2 (F) Cooperatives. In the case of a
3 cooperative corporation or association, the taxable
4 income of such organization determined in accordance
5 with the provisions of Section 1381 through 1388 of
6 the Internal Revenue Code;
7 (G) Subchapter S corporations. In the case
8 of: (i) a Subchapter S corporation for which there
9 is in effect an election for the taxable year under
10 Section 1362 of the Internal Revenue Code, the
11 taxable income of such corporation determined in
12 accordance with Section 1363(b) of the Internal
13 Revenue Code, except that taxable income shall take
14 into account those items which are required by
15 Section 1363(b)(1) of the Internal Revenue Code to
16 be separately stated; and (ii) a Subchapter S
17 corporation for which there is in effect a federal
18 election to opt out of the provisions of the
19 Subchapter S Revision Act of 1982 and have applied
20 instead the prior federal Subchapter S rules as in
21 effect on July 1, 1982, the taxable income of such
22 corporation determined in accordance with the
23 federal Subchapter S rules as in effect on July 1,
24 1982; and
25 (H) Partnerships. In the case of a
26 partnership, taxable income determined in accordance
27 with Section 703 of the Internal Revenue Code,
28 except that taxable income shall take into account
29 those items which are required by Section 703(a)(1)
30 to be separately stated but which would be taken
31 into account by an individual in calculating his
32 taxable income.
33 (f) Valuation limitation amount.
34 (1) In general. The valuation limitation amount
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1 referred to in subsections (a) (2) (G), (c) (2) (I) and
2 (d)(2) (E) is an amount equal to:
3 (A) The sum of the pre-August 1, 1969
4 appreciation amounts (to the extent consisting of
5 gain reportable under the provisions of Section 1245
6 or 1250 of the Internal Revenue Code) for all
7 property in respect of which such gain was reported
8 for the taxable year; plus
9 (B) The lesser of (i) the sum of the
10 pre-August 1, 1969 appreciation amounts (to the
11 extent consisting of capital gain) for all property
12 in respect of which such gain was reported for
13 federal income tax purposes for the taxable year, or
14 (ii) the net capital gain for the taxable year,
15 reduced in either case by any amount of such gain
16 included in the amount determined under subsection
17 (a) (2) (F) or (c) (2) (H).
18 (2) Pre-August 1, 1969 appreciation amount.
19 (A) If the fair market value of property
20 referred to in paragraph (1) was readily
21 ascertainable on August 1, 1969, the pre-August 1,
22 1969 appreciation amount for such property is the
23 lesser of (i) the excess of such fair market value
24 over the taxpayer's basis (for determining gain) for
25 such property on that date (determined under the
26 Internal Revenue Code as in effect on that date), or
27 (ii) the total gain realized and reportable for
28 federal income tax purposes in respect of the sale,
29 exchange or other disposition of such property.
30 (B) If the fair market value of property
31 referred to in paragraph (1) was not readily
32 ascertainable on August 1, 1969, the pre-August 1,
33 1969 appreciation amount for such property is that
34 amount which bears the same ratio to the total gain
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1 reported in respect of the property for federal
2 income tax purposes for the taxable year, as the
3 number of full calendar months in that part of the
4 taxpayer's holding period for the property ending
5 July 31, 1969 bears to the number of full calendar
6 months in the taxpayer's entire holding period for
7 the property.
8 (C) The Department shall prescribe such
9 regulations as may be necessary to carry out the
10 purposes of this paragraph.
11 (g) Double deductions. Unless specifically provided
12 otherwise, nothing in this Section shall permit the same item
13 to be deducted more than once.
14 (h) Legislative intention. Except as expressly provided
15 by this Section there shall be no modifications or
16 limitations on the amounts of income, gain, loss or deduction
17 taken into account in determining gross income, adjusted
18 gross income or taxable income for federal income tax
19 purposes for the taxable year, or in the amount of such items
20 entering into the computation of base income and net income
21 under this Act for such taxable year, whether in respect of
22 property values as of August 1, 1969 or otherwise.
23 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
24 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
25 8-9-96; 90-491, eff. 1-1-98.)