State of Illinois
90th General Assembly
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[ Senate Amendment 001 ]

90_SB1527

      35 ILCS 5/203             from Ch. 120, par. 2-203
          Amends the Illinois Income Tax Act.  Creates a  deduction
      for  corporations  in  an amount equal to 25% of the expenses
      related to the construction and installation  of  a  cellular
      tower  contingent  upon  the  tower  being  shared jointly by
      telecommunications carriers.  Provides that the deduction  is
      available  in tax years beginning on or after January 1, 1998
      and ending on or before December 30, 2003.
                                                     LRB9011608KDks
                                               LRB9011608KDks
 1        AN ACT to amend the Illinois Income Tax Act  by  changing
 2    Section 203.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 5.  The Illinois Income Tax  Act  is  amended  by
 6    changing Section 203 as follows:
 7        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 8        Sec. 203.  Base income defined.
 9        (a)  Individuals.
10             (1)  In general.  In the case of an individual, base
11        income  means  an amount equal to the taxpayer's adjusted
12        gross  income  for  the  taxable  year  as  modified   by
13        paragraph (2).
14             (2)  Modifications.    The   adjusted  gross  income
15        referred to in paragraph (1) shall be modified by  adding
16        thereto the sum of the following amounts:
17                  (A)  An  amount  equal  to  all amounts paid or
18             accrued to the taxpayer  as  interest  or  dividends
19             during  the taxable year to the extent excluded from
20             gross income in the computation  of  adjusted  gross
21             income,  except  stock dividends of qualified public
22             utilities  described  in  Section  305(e)   of   the
23             Internal Revenue Code;
24                  (B)  An  amount  equal  to  the  amount  of tax
25             imposed by this Act  to  the  extent  deducted  from
26             gross  income  in  the computation of adjusted gross
27             income for the taxable year;
28                  (C)  An amount equal  to  the  amount  received
29             during  the  taxable year as a recovery or refund of
30             real  property  taxes  paid  with  respect  to   the
31             taxpayer's principal residence under the Revenue Act
                            -2-                LRB9011608KDks
 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
                            -3-                LRB9011608KDks
 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
                            -4-                LRB9011608KDks
 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
                            -5-                LRB9011608KDks
 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
                            -6-                LRB9011608KDks
 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.
30        (b)  Corporations.
31             (1)  In general.  In the case of a corporation, base
32        income means an amount equal to  the  taxpayer's  taxable
33        income for the taxable year as modified by paragraph (2).
34             (2)  Modifications.   The taxable income referred to
                            -7-                LRB9011608KDks
 1        in paragraph (1) shall be modified by adding thereto  the
 2        sum of the following amounts:
 3                  (A)  An  amount  equal  to  all amounts paid or
 4             accrued  to  the  taxpayer  as  interest   and   all
 5             distributions  received  from  regulated  investment
 6             companies  during  the  taxable  year  to the extent
 7             excluded from gross income  in  the  computation  of
 8             taxable income;
 9                  (B)  An  amount  equal  to  the  amount  of tax
10             imposed by this Act  to  the  extent  deducted  from
11             gross  income  in  the computation of taxable income
12             for the taxable year;
13                  (C)  In the  case  of  a  regulated  investment
14             company,  an  amount  equal to the excess of (i) the
15             net long-term capital gain  for  the  taxable  year,
16             over  (ii)  the amount of the capital gain dividends
17             designated  as  such  in  accordance  with   Section
18             852(b)(3)(C)  of  the  Internal Revenue Code and any
19             amount designated under Section 852(b)(3)(D) of  the
20             Internal  Revenue  Code, attributable to the taxable
21             year.
22        This amendatory Act of 1995 is  declarative  of  existing
23    law and is not a new enactment.
24                  (D)  The  amount  of  any  net  operating  loss
25             deduction taken in arriving at taxable income, other
26             than  a  net  operating  loss carried forward from a
27             taxable year ending prior to December 31, 1986; and
28                  (E)  For taxable years in which a net operating
29             loss carryback or carryforward from a  taxable  year
30             ending  prior  to December 31, 1986 is an element of
31             taxable income under paragraph (1) of subsection (e)
32             or subparagraph (E) of paragraph (2)  of  subsection
33             (e),  the  amount  by  which  addition modifications
34             other than those provided by this  subparagraph  (E)
                            -8-                LRB9011608KDks
 1             exceeded  subtraction  modifications in such earlier
 2             taxable year, with the following limitations applied
 3             in the order that they are listed:
 4                       (i)  the addition modification relating to
 5                  the net operating loss carried back or  forward
 6                  to  the  taxable  year  from  any  taxable year
 7                  ending prior to  December  31,  1986  shall  be
 8                  reduced  by the amount of addition modification
 9                  under this subparagraph (E)  which  related  to
10                  that  net  operating  loss  and which was taken
11                  into account in calculating the base income  of
12                  an earlier taxable year, and
13                       (ii)  the  addition  modification relating
14                  to the  net  operating  loss  carried  back  or
15                  forward  to  the  taxable year from any taxable
16                  year ending prior to December  31,  1986  shall
17                  not  exceed  the  amount  of  such carryback or
18                  carryforward;
19                  For taxable years  in  which  there  is  a  net
20             operating  loss  carryback or carryforward from more
21             than one other taxable year ending prior to December
22             31, 1986, the addition modification provided in this
23             subparagraph (E) shall be the  sum  of  the  amounts
24             computed    independently    under   the   preceding
25             provisions of this subparagraph (E)  for  each  such
26             taxable year,
27        and  by  deducting  from the total so obtained the sum of
28        the following amounts:
29                  (F)  An amount equal to the amount of  any  tax
30             imposed  by  this  Act  which  was  refunded  to the
31             taxpayer and included in such total for the  taxable
32             year;
33                  (G)  An  amount equal to any amount included in
34             such total under Section 78 of the Internal  Revenue
                            -9-                LRB9011608KDks
 1             Code;
 2                  (H)  In  the  case  of  a  regulated investment
 3             company, an amount equal to  the  amount  of  exempt
 4             interest  dividends as defined in subsection (b) (5)
 5             of Section 852 of the Internal Revenue Code, paid to
 6             shareholders for the taxable year;
 7                  (I)  With  the   exception   of   any   amounts
 8             subtracted  under  subparagraph (J), an amount equal
 9             to the sum of all amounts disallowed  as  deductions
10             by  Sections  171(a)  (2), and 265(a)(2) and amounts
11             disallowed as interest expense by Section  291(a)(3)
12             of  the  Internal  Revenue Code, as now or hereafter
13             amended, and all amounts of  expenses  allocable  to
14             interest  and  disallowed  as  deductions by Section
15             265(a)(1) of the Internal Revenue Code,  as  now  or
16             hereafter amended;
17                  (J)  An amount equal to all amounts included in
18             such  total  which  are exempt from taxation by this
19             State  either  by  reason   of   its   statutes   or
20             Constitution  or  by  reason  of  the  Constitution,
21             treaties  or statutes of the United States; provided
22             that, in the case of any statute of this State  that
23             exempts   income   derived   from   bonds  or  other
24             obligations from the tax imposed under this Act, the
25             amount exempted shall be the interest  net  of  bond
26             premium amortization;
27                  (K)  An   amount   equal   to  those  dividends
28             included  in  such  total  which  were  paid  by   a
29             corporation which conducts business operations in an
30             Enterprise  Zone or zones created under the Illinois
31             Enterprise Zone Act and conducts  substantially  all
32             of its operations in an Enterprise Zone or zones;
33                  (L)  An   amount   equal   to  those  dividends
34             included  in  such  total  that  were  paid   by   a
                            -10-               LRB9011608KDks
 1             corporation  that  conducts business operations in a
 2             federally designated Foreign Trade Zone or  Sub-Zone
 3             and  that  is  designated  a  High  Impact  Business
 4             located   in   Illinois;   provided  that  dividends
 5             eligible for the deduction provided in  subparagraph
 6             (K)  of  paragraph 2 of this subsection shall not be
 7             eligible  for  the  deduction  provided  under  this
 8             subparagraph (L);
 9                  (M)  For  any  taxpayer  that  is  a  financial
10             organization within the meaning of Section 304(c) of
11             this Act,  an  amount  included  in  such  total  as
12             interest  income  from  a loan or loans made by such
13             taxpayer to a borrower, to the extent  that  such  a
14             loan  is  secured  by property which is eligible for
15             the Enterprise Zone Investment Credit. To  determine
16             the  portion  of  a loan or loans that is secured by
17             property eligible for a  Section  201(h)  investment
18             credit  to the borrower, the entire principal amount
19             of the loan or loans between the  taxpayer  and  the
20             borrower  should  be  divided  into the basis of the
21             Section  201(h)  investment  credit  property  which
22             secures the loan or loans, using  for  this  purpose
23             the original basis of such property on the date that
24             it  was  placed  in  service in the Enterprise Zone.
25             The subtraction modification available  to  taxpayer
26             in  any  year  under  this  subsection shall be that
27             portion of the total interest paid by  the  borrower
28             with  respect  to  such  loan  attributable  to  the
29             eligible  property  as calculated under the previous
30             sentence;
31                  (M-1)  For any taxpayer  that  is  a  financial
32             organization within the meaning of Section 304(c) of
33             this  Act,  an  amount  included  in  such  total as
34             interest income from a loan or loans  made  by  such
                            -11-               LRB9011608KDks
 1             taxpayer  to  a  borrower, to the extent that such a
 2             loan is secured by property which  is  eligible  for
 3             the  High  Impact  Business  Investment  Credit.  To
 4             determine the portion of a loan  or  loans  that  is
 5             secured  by  property  eligible for a Section 201(i)
 6             investment  credit  to  the  borrower,  the   entire
 7             principal  amount  of  the loan or loans between the
 8             taxpayer and the borrower should be divided into the
 9             basis  of  the  Section  201(i)  investment   credit
10             property  which secures the loan or loans, using for
11             this purpose the original basis of such property  on
12             the  date  that  it  was  placed  in  service  in  a
13             federally  designated Foreign Trade Zone or Sub-Zone
14             located in Illinois.  No taxpayer that  is  eligible
15             for  the  deduction  provided in subparagraph (M) of
16             paragraph (2) of this subsection shall  be  eligible
17             for  the  deduction provided under this subparagraph
18             (M-1).  The subtraction  modification  available  to
19             taxpayers in any year under this subsection shall be
20             that  portion  of  the  total  interest  paid by the
21             borrower with respect to such loan  attributable  to
22             the   eligible  property  as  calculated  under  the
23             previous sentence;
24                  (N)  Two times any contribution made during the
25             taxable year to a designated  zone  organization  to
26             the  extent that the contribution (i) qualifies as a
27             charitable  contribution  under  subsection  (c)  of
28             Section 170 of the Internal Revenue  Code  and  (ii)
29             must,  by  its terms, be used for a project approved
30             by the Department of Commerce and Community  Affairs
31             under  Section  11  of  the Illinois Enterprise Zone
32             Act;
33                  (O)  An amount equal to: (i)  85%  for  taxable
34             years  ending  on or before December 31, 1992, or, a
                            -12-               LRB9011608KDks
 1             percentage equal to the percentage  allowable  under
 2             Section  243(a)(1)  of  the Internal Revenue Code of
 3             1986 for taxable years  ending  after  December  31,
 4             1992,  of  the amount by which dividends included in
 5             taxable income and received from a corporation  that
 6             is  not  created  or organized under the laws of the
 7             United States or any state or political  subdivision
 8             thereof,  including,  for taxable years ending on or
 9             after  December  31,  1988,  dividends  received  or
10             deemed  received  or  paid  or  deemed  paid   under
11             Sections  951  through  964  of the Internal Revenue
12             Code, exceed the amount of the modification provided
13             under subparagraph (G)  of  paragraph  (2)  of  this
14             subsection  (b)  which is related to such dividends;
15             plus (ii) 100% of the  amount  by  which  dividends,
16             included  in taxable income and received, including,
17             for taxable years ending on or  after  December  31,
18             1988,  dividends received or deemed received or paid
19             or deemed paid under Sections 951 through 964 of the
20             Internal Revenue Code,  from  any  such  corporation
21             specified  in  clause  (i)  that  would  but for the
22             provisions of Section 1504 (b) (3) of  the  Internal
23             Revenue   Code   be  treated  as  a  member  of  the
24             affiliated  group  which   includes   the   dividend
25             recipient,  exceed  the  amount  of the modification
26             provided under subparagraph (G) of paragraph (2)  of
27             this   subsection  (b)  which  is  related  to  such
28             dividends;
29                  (P)  An amount equal to any  contribution  made
30             to  a  job  training project established pursuant to
31             the Tax Increment Allocation Redevelopment Act; and
32                  (Q)  An amount  equal  to  the  amount  of  the
33             deduction  used  to  compute  the federal income tax
34             credit for restoration of substantial  amounts  held
                            -13-               LRB9011608KDks
 1             under  claim  of right for the taxable year pursuant
 2             to Section 1341 of  the  Internal  Revenue  Code  of
 3             1986; and .
 4                  (R)  For   tax  years  beginning  on  or  after
 5             January 1, 1998 and ending on or before December 30,
 6             2003, an amount equal to 25% of the expenses related
 7             to the construction and installation of  a  cellular
 8             tower contingent upon the tower being shared jointly
 9             by telecommunications carriers.
10             (3)  Special  rule.   For  purposes of paragraph (2)
11        (A), "gross income" in  the  case  of  a  life  insurance
12        company,  for  tax years ending on and after December 31,
13        1994, shall mean the  gross  investment  income  for  the
14        taxable year.
15        (c)  Trusts and estates.
16             (1)  In  general.  In the case of a trust or estate,
17        base income means  an  amount  equal  to  the  taxpayer's
18        taxable  income  for  the  taxable  year  as  modified by
19        paragraph (2).
20             (2)  Modifications.  Subject to  the  provisions  of
21        paragraph   (3),   the  taxable  income  referred  to  in
22        paragraph (1) shall be modified by adding thereto the sum
23        of the following amounts:
24                  (A)  An amount equal to  all  amounts  paid  or
25             accrued  to  the  taxpayer  as interest or dividends
26             during the taxable year to the extent excluded  from
27             gross income in the computation of taxable income;
28                  (B)  In the case of (i) an estate, $600; (ii) a
29             trust  which,  under  its  governing  instrument, is
30             required to distribute all of its income  currently,
31             $300;  and  (iii) any other trust, $100, but in each
32             such case,  only  to  the  extent  such  amount  was
33             deducted in the computation of taxable income;
34                  (C)  An  amount  equal  to  the  amount  of tax
                            -14-               LRB9011608KDks
 1             imposed by this Act  to  the  extent  deducted  from
 2             gross  income  in  the computation of taxable income
 3             for the taxable year;
 4                  (D)  The  amount  of  any  net  operating  loss
 5             deduction taken in arriving at taxable income, other
 6             than a net operating loss  carried  forward  from  a
 7             taxable year ending prior to December 31, 1986;
 8                  (E)  For taxable years in which a net operating
 9             loss  carryback  or carryforward from a taxable year
10             ending prior to December 31, 1986 is an  element  of
11             taxable income under paragraph (1) of subsection (e)
12             or  subparagraph  (E) of paragraph (2) of subsection
13             (e), the  amount  by  which  addition  modifications
14             other  than  those provided by this subparagraph (E)
15             exceeded subtraction modifications in  such  taxable
16             year,  with the following limitations applied in the
17             order that they are listed:
18                       (i)  the addition modification relating to
19                  the net operating loss carried back or  forward
20                  to  the  taxable  year  from  any  taxable year
21                  ending prior to  December  31,  1986  shall  be
22                  reduced  by the amount of addition modification
23                  under this subparagraph (E)  which  related  to
24                  that  net  operating  loss  and which was taken
25                  into account in calculating the base income  of
26                  an earlier taxable year, and
27                       (ii)  the  addition  modification relating
28                  to the  net  operating  loss  carried  back  or
29                  forward  to  the  taxable year from any taxable
30                  year ending prior to December  31,  1986  shall
31                  not  exceed  the  amount  of  such carryback or
32                  carryforward;
33                  For taxable years  in  which  there  is  a  net
34             operating  loss  carryback or carryforward from more
                            -15-               LRB9011608KDks
 1             than one other taxable year ending prior to December
 2             31, 1986, the addition modification provided in this
 3             subparagraph (E) shall be the  sum  of  the  amounts
 4             computed    independently    under   the   preceding
 5             provisions of this subparagraph (E)  for  each  such
 6             taxable year;
 7                  (F)  For  taxable  years  ending  on  or  after
 8             January 1, 1989, an amount equal to the tax deducted
 9             pursuant to Section 164 of the Internal Revenue Code
10             if  the trust or estate is claiming the same tax for
11             purposes of the Illinois foreign  tax  credit  under
12             Section 601 of this Act; and
13                  (G)  An  amount  equal  to  the  amount  of the
14             capital gain deduction allowable under the  Internal
15             Revenue  Code,  to  the  extent  deducted from gross
16             income in the computation of taxable income;
17        and by deducting from the total so obtained  the  sum  of
18        the following amounts:
19                  (H)  An amount equal to all amounts included in
20             such  total  pursuant  to the provisions of Sections
21             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
22             408 of the Internal Revenue Code or included in such
23             total  as  distributions under the provisions of any
24             retirement or disability plan for employees  of  any
25             governmental  agency or unit, or retirement payments
26             to retired partners, which payments are excluded  in
27             computing  net  earnings  from  self  employment  by
28             Section  1402  of  the  Internal  Revenue  Code  and
29             regulations adopted pursuant thereto;
30                  (I)  The valuation limitation amount;
31                  (J)  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;
                            -16-               LRB9011608KDks
 1                  (K)  An amount equal to all amounts included in
 2             taxable income as  modified  by  subparagraphs  (A),
 3             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
 4             from taxation by this State either by reason of  its
 5             statutes   or  Constitution  or  by  reason  of  the
 6             Constitution, treaties or  statutes  of  the  United
 7             States; provided that, in the case of any statute of
 8             this State that exempts income derived from bonds or
 9             other  obligations  from  the tax imposed under this
10             Act, the amount exempted shall be the  interest  net
11             of bond premium amortization;
12                  (L)  With   the   exception   of   any  amounts
13             subtracted under subparagraph (K), an  amount  equal
14             to  the  sum of all amounts disallowed as deductions
15             by Sections 171(a) (2) and 265(a)(2) of the Internal
16             Revenue Code, as now or hereafter amended,  and  all
17             amounts   of  expenses  allocable  to  interest  and
18             disallowed as deductions by Section  265(1)  of  the
19             Internal  Revenue  Code of 1954, as now or hereafter
20             amended;
21                  (M)  An  amount  equal   to   those   dividends
22             included   in  such  total  which  were  paid  by  a
23             corporation which conducts business operations in an
24             Enterprise Zone or zones created under the  Illinois
25             Enterprise  Zone  Act and conducts substantially all
26             of its operations in an Enterprise Zone or Zones;
27                  (N)  An amount equal to any  contribution  made
28             to  a  job  training project established pursuant to
29             the Tax Increment Allocation Redevelopment Act;
30                  (O)  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
                            -17-               LRB9011608KDks
 1             located  in  Illinois;   provided   that   dividends
 2             eligible  for the deduction provided in subparagraph
 3             (M) of paragraph (2) of this subsection shall not be
 4             eligible  for  the  deduction  provided  under  this
 5             subparagraph (O); and
 6                  (P)  An amount  equal  to  the  amount  of  the
 7             deduction  used  to  compute  the federal income tax
 8             credit for restoration of substantial  amounts  held
 9             under  claim  of right for the taxable year pursuant
10             to Section 1341 of  the  Internal  Revenue  Code  of
11             1986.
12             (3)  Limitation.   The  amount  of  any modification
13        otherwise required under  this  subsection  shall,  under
14        regulations  prescribed by the Department, be adjusted by
15        any amounts included therein which  were  properly  paid,
16        credited,  or  required to be distributed, or permanently
17        set aside for charitable purposes pursuant   to  Internal
18        Revenue Code Section 642(c) during the taxable year.
19        (d)  Partnerships.
20             (1)  In  general. In the case of a partnership, base
21        income means an amount equal to  the  taxpayer's  taxable
22        income for the taxable year as modified by paragraph (2).
23             (2)  Modifications.  The  taxable income referred to
24        in paragraph (1) shall be modified by adding thereto  the
25        sum of the following amounts:
26                  (A)  An  amount  equal  to  all amounts paid or
27             accrued to the taxpayer  as  interest  or  dividends
28             during  the taxable year to the extent excluded from
29             gross income in the computation of taxable income;
30                  (B)  An amount  equal  to  the  amount  of  tax
31             imposed  by  this  Act  to  the extent deducted from
32             gross income for the taxable year; and
33                  (C)  The amount of deductions  allowed  to  the
34             partnership  pursuant  to  Section  707  (c)  of the
                            -18-               LRB9011608KDks
 1             Internal Revenue Code  in  calculating  its  taxable
 2             income;
 3                  (D)  An  amount  equal  to  the  amount  of the
 4             capital gain deduction allowable under the  Internal
 5             Revenue  Code,  to  the  extent  deducted from gross
 6             income in the computation of taxable income;
 7        and by deducting from the total so obtained the following
 8        amounts:
 9                  (E)  The valuation limitation amount;
10                  (F)  An amount equal to the amount of  any  tax
11             imposed  by  this  Act  which  was  refunded  to the
12             taxpayer and included in such total for the  taxable
13             year;
14                  (G)  An amount equal to all amounts included in
15             taxable  income  as  modified  by subparagraphs (A),
16             (B), (C) and (D) which are exempt from  taxation  by
17             this  State  either  by  reason  of  its statutes or
18             Constitution  or  by  reason  of  the  Constitution,
19             treaties or statutes of the United States;  provided
20             that,  in the case of any statute of this State that
21             exempts  income  derived   from   bonds   or   other
22             obligations from the tax imposed under this Act, the
23             amount  exempted  shall  be the interest net of bond
24             premium amortization;
25                  (H)  Any  income  of  the   partnership   which
26             constitutes  personal  service  income as defined in
27             Section 1348 (b) (1) of the  Internal  Revenue  Code
28             (as  in  effect  December  31, 1981) or a reasonable
29             allowance  for  compensation  paid  or  accrued  for
30             services rendered by partners  to  the  partnership,
31             whichever is greater;
32                  (I)  An  amount  equal to all amounts of income
33             distributable to an entity subject to  the  Personal
34             Property  Tax  Replacement  Income  Tax  imposed  by
                            -19-               LRB9011608KDks
 1             subsections  (c)  and (d) of Section 201 of this Act
 2             including  amounts  distributable  to  organizations
 3             exempt from federal income tax by reason of  Section
 4             501(a) of the Internal Revenue Code;
 5                  (J)  With   the   exception   of   any  amounts
 6             subtracted under subparagraph (G), an  amount  equal
 7             to  the  sum of all amounts disallowed as deductions
 8             by Sections 171(a) (2), and 265(2) of  the  Internal
 9             Revenue  Code  of 1954, as now or hereafter amended,
10             and all amounts of expenses  allocable  to  interest
11             and  disallowed  as  deductions by Section 265(1) of
12             the Internal  Revenue  Code,  as  now  or  hereafter
13             amended;
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, enacted  by  the  82nd  General
19             Assembly, and which does not conduct such operations
20             other than in an Enterprise Zone or Zones;
21                  (L)  An  amount  equal to any contribution made
22             to a job training project  established  pursuant  to
23             the   Real   Property   Tax   Increment   Allocation
24             Redevelopment Act;
25                  (M)  An   amount   equal   to  those  dividends
26             included  in  such  total  that  were  paid   by   a
27             corporation  that  conducts business operations in a
28             federally designated Foreign Trade Zone or  Sub-Zone
29             and  that  is  designated  a  High  Impact  Business
30             located   in   Illinois;   provided  that  dividends
31             eligible for the deduction provided in  subparagraph
32             (K) of paragraph (2) of this subsection shall not be
33             eligible  for  the  deduction  provided  under  this
34             subparagraph (M); and
                            -20-               LRB9011608KDks
 1                  (N)  An  amount  equal  to  the  amount  of the
 2             deduction used to compute  the  federal  income  tax
 3             credit  for  restoration of substantial amounts held
 4             under claim of right for the taxable  year  pursuant
 5             to  Section  1341  of  the  Internal Revenue Code of
 6             1986.
 7        (e)  Gross income; adjusted gross income; taxable income.
 8             (1)  In  general.   Subject  to  the  provisions  of
 9        paragraph (2) and subsection (b)  (3),  for  purposes  of
10        this  Section  and  Section  803(e),  a  taxpayer's gross
11        income, adjusted gross income, or taxable income for  the
12        taxable  year  shall  mean  the  amount  of gross income,
13        adjusted  gross  income  or   taxable   income   properly
14        reportable  for  federal  income  tax  purposes  for  the
15        taxable year under the provisions of the Internal Revenue
16        Code.  Taxable income may be less than zero. However, for
17        taxable years ending on or after December 31,  1986,  net
18        operating  loss  carryforwards  from taxable years ending
19        prior to December 31, 1986, may not  exceed  the  sum  of
20        federal  taxable  income  for the taxable year before net
21        operating loss deduction, plus  the  excess  of  addition
22        modifications  over  subtraction  modifications  for  the
23        taxable year.  For taxable years ending prior to December
24        31, 1986, taxable income may never be an amount in excess
25        of the net operating loss for the taxable year as defined
26        in subsections (c) and (d) of Section 172 of the Internal
27        Revenue  Code,  provided  that  when  taxable income of a
28        corporation (other  than  a  Subchapter  S  corporation),
29        trust,   or   estate  is  less  than  zero  and  addition
30        modifications, other than those provided by  subparagraph
31        (E)  of  paragraph (2) of subsection (b) for corporations
32        or subparagraph (E) of paragraph (2)  of  subsection  (c)
33        for trusts and estates, exceed subtraction modifications,
34        an   addition  modification  must  be  made  under  those
                            -21-               LRB9011608KDks
 1        subparagraphs for any other taxable  year  to  which  the
 2        taxable  income  less  than  zero (net operating loss) is
 3        applied under Section 172 of the Internal Revenue Code or
 4        under  subparagraph  (E)  of  paragraph   (2)   of   this
 5        subsection (e) applied in conjunction with Section 172 of
 6        the Internal Revenue Code.
 7             (2)  Special rule.  For purposes of paragraph (1) of
 8        this  subsection,  the taxable income properly reportable
 9        for federal income tax purposes shall mean:
10                  (A)  Certain life insurance companies.  In  the
11             case  of a life insurance company subject to the tax
12             imposed by Section 801 of the Internal Revenue Code,
13             life insurance  company  taxable  income,  plus  the
14             amount  of  distribution  from pre-1984 policyholder
15             surplus accounts as calculated under Section 815a of
16             the Internal Revenue Code;
17                  (B)  Certain other insurance companies.  In the
18             case of mutual insurance companies  subject  to  the
19             tax  imposed  by Section 831 of the Internal Revenue
20             Code, insurance company taxable income;
21                  (C)  Regulated investment  companies.   In  the
22             case  of  a  regulated investment company subject to
23             the tax imposed  by  Section  852  of  the  Internal
24             Revenue Code, investment company taxable income;
25                  (D)  Real  estate  investment  trusts.   In the
26             case of a real estate investment  trust  subject  to
27             the  tax  imposed  by  Section  857  of the Internal
28             Revenue Code, real estate investment  trust  taxable
29             income;
30                  (E)  Consolidated corporations.  In the case of
31             a  corporation  which  is  a member of an affiliated
32             group of corporations filing a  consolidated  income
33             tax  return  for the taxable year for federal income
34             tax purposes, taxable income determined as  if  such
                            -22-               LRB9011608KDks
 1             corporation  had filed a separate return for federal
 2             income tax purposes for the taxable  year  and  each
 3             preceding  taxable year for which it was a member of
 4             an  affiliated   group.   For   purposes   of   this
 5             subparagraph, the taxpayer's separate taxable income
 6             shall  be  determined as if the election provided by
 7             Section 243(b) (2) of the Internal Revenue Code  had
 8             been in effect for all such years;
 9                  (F)  Cooperatives.     In   the   case   of   a
10             cooperative corporation or association, the  taxable
11             income of such organization determined in accordance
12             with  the provisions of Section 1381 through 1388 of
13             the Internal Revenue Code;
14                  (G)  Subchapter S corporations.   In  the  case
15             of:  (i)  a Subchapter S corporation for which there
16             is in effect an election for the taxable year  under
17             Section  1362  of  the  Internal  Revenue  Code, the
18             taxable income of  such  corporation  determined  in
19             accordance  with  Section  1363(b)  of  the Internal
20             Revenue Code, except that taxable income shall  take
21             into  account  those  items  which  are  required by
22             Section 1363(b)(1) of the Internal Revenue  Code  to
23             be  separately  stated;  and  (ii)  a  Subchapter  S
24             corporation  for  which there is in effect a federal
25             election  to  opt  out  of  the  provisions  of  the
26             Subchapter S Revision Act of 1982 and  have  applied
27             instead  the  prior federal Subchapter S rules as in
28             effect on July 1, 1982, the taxable income  of  such
29             corporation   determined   in  accordance  with  the
30             federal Subchapter S rules as in effect on  July  1,
31             1982; and
32                  (H)  Partnerships.     In   the   case   of   a
33             partnership, taxable income determined in accordance
34             with Section  703  of  the  Internal  Revenue  Code,
                            -23-               LRB9011608KDks
 1             except  that  taxable income shall take into account
 2             those items which are required by Section  703(a)(1)
 3             to  be  separately  stated  but which would be taken
 4             into account by an  individual  in  calculating  his
 5             taxable income.
 6        (f)  Valuation limitation amount.
 7             (1)  In  general.   The  valuation limitation amount
 8        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
 9        (d)(2) (E) is an amount equal to:
10                  (A)  The   sum   of   the  pre-August  1,  1969
11             appreciation amounts (to the  extent  consisting  of
12             gain reportable under the provisions of Section 1245
13             or  1250  of  the  Internal  Revenue  Code)  for all
14             property in respect of which such gain was  reported
15             for the taxable year; plus
16                  (B)  The   lesser   of   (i)  the  sum  of  the
17             pre-August 1,  1969  appreciation  amounts  (to  the
18             extent  consisting of capital gain) for all property
19             in respect of  which  such  gain  was  reported  for
20             federal income tax purposes for the taxable year, or
21             (ii)  the  net  capital  gain  for the taxable year,
22             reduced in either case by any amount  of  such  gain
23             included  in  the amount determined under subsection
24             (a) (2) (F) or (c) (2) (H).
25        (2)  Pre-August 1, 1969 appreciation amount.
26                  (A)  If  the  fair  market  value  of  property
27             referred   to   in   paragraph   (1)   was   readily
28             ascertainable on August 1, 1969, the  pre-August  1,
29             1969  appreciation  amount  for such property is the
30             lesser of (i) the excess of such fair  market  value
31             over the taxpayer's basis (for determining gain) for
32             such  property  on  that  date (determined under the
33             Internal Revenue Code as in effect on that date), or
34             (ii) the total  gain  realized  and  reportable  for
                            -24-               LRB9011608KDks
 1             federal  income tax purposes in respect of the sale,
 2             exchange or other disposition of such property.
 3                  (B)  If  the  fair  market  value  of  property
 4             referred  to  in  paragraph  (1)  was  not   readily
 5             ascertainable  on  August 1, 1969, the pre-August 1,
 6             1969 appreciation amount for such property  is  that
 7             amount  which bears the same ratio to the total gain
 8             reported in respect  of  the  property  for  federal
 9             income  tax  purposes  for  the taxable year, as the
10             number of full calendar months in that part  of  the
11             taxpayer's  holding  period  for the property ending
12             July 31, 1969 bears to the number of  full  calendar
13             months  in  the taxpayer's entire holding period for
14             the property.
15                  (C)  The  Department   shall   prescribe   such
16             regulations  as  may  be  necessary to carry out the
17             purposes of this paragraph.
18        (g)  Double  deductions.   Unless  specifically  provided
19    otherwise, nothing in this Section shall permit the same item
20    to be deducted more than once.
21        (h)  Legislative intention.  Except as expressly provided
22    by  this  Section  there  shall  be   no   modifications   or
23    limitations on the amounts of income, gain, loss or deduction
24    taken  into  account  in  determining  gross income, adjusted
25    gross  income  or  taxable  income  for  federal  income  tax
26    purposes for the taxable year, or in the amount of such items
27    entering into the computation of base income and  net  income
28    under  this  Act for such taxable year, whether in respect of
29    property values as of August 1, 1969 or otherwise.
30    (Source: P.A.  89-89,  eff.  6-30-95;  89-235,  eff.  8-4-95;
31    89-418,  eff.  11-15-95;  89-460,  eff. 5-24-96; 89-626, eff.
32    8-9-96; 90-491, eff. 1-1-98.)

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