[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
91_HB1440
LRB9104294PTpkA
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- LRB9104294PTpkA
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 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
-3- LRB9104294PTpkA
1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
-4- LRB9104294PTpkA
1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
-5- LRB9104294PTpkA
1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
-6- LRB9104294PTpkA
1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
-7- LRB9104294PTpkA
1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and.
7 (X) For taxable years ending on or after
8 December 31, 1999, an amount, to the extent included
9 in adjusted gross income, equal to the amount of
10 compensation received while a full-time student at a
11 secondary school or an institution of higher
12 education in this State; the Department must
13 determine by rule the manner in which to verify an
14 individual's status as a full-time student; for the
15 purposes of this subparagraph "secondary school"
16 means a public or private entity providing education
17 for grades 9 through 12 in compliance with Title VI
18 of the Civil Rights Act of 1964 and attendance at
19 which satisfies the requirements of Section 26-1 of
20 the School Code, "full-time student", in the case of
21 an institution of higher education, means an
22 undergraduate student under the age of 23 enrolled
23 in 12 or more semester or quarter hours of credit
24 courses, and "institution of higher education" means
25 a public or private educational organization that
26 provides a minimum of an organized 2-year program at
27 the community college level or higher and that
28 operates under or in substantial conformity with the
29 standards of public institutions of higher education
30 as that term is defined under Section 1 of the Board
31 of Higher Education Act; this subparagraph is exempt
32 from the provisions of Section 250.
33 (b) Corporations.
34 (1) In general. In the case of a corporation, base
-8- LRB9104294PTpkA
1 income means an amount equal to the taxpayer's taxable
2 income for the taxable year as modified by paragraph (2).
3 (2) Modifications. The taxable income referred to
4 in paragraph (1) shall be modified by adding thereto the
5 sum of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest and all
8 distributions received from regulated investment
9 companies during the taxable year to the extent
10 excluded from gross income in the computation of
11 taxable income;
12 (B) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of taxable income
15 for the taxable year;
16 (C) In the case of a regulated investment
17 company, an amount equal to the excess of (i) the
18 net long-term capital gain for the taxable year,
19 over (ii) the amount of the capital gain dividends
20 designated as such in accordance with Section
21 852(b)(3)(C) of the Internal Revenue Code and any
22 amount designated under Section 852(b)(3)(D) of the
23 Internal Revenue Code, attributable to the taxable
24 year. (this amendatory Act of 1995 (Public Act
25 89-89) is declarative of existing law and is not a
26 new enactment);.
27 (D) The amount of any net operating loss
28 deduction taken in arriving at taxable income, other
29 than a net operating loss carried forward from a
30 taxable year ending prior to December 31, 1986; and
31 (E) For taxable years in which a net operating
32 loss carryback or carryforward from a taxable year
33 ending prior to December 31, 1986 is an element of
34 taxable income under paragraph (1) of subsection (e)
-9- LRB9104294PTpkA
1 or subparagraph (E) of paragraph (2) of subsection
2 (e), the amount by which addition modifications
3 other than those provided by this subparagraph (E)
4 exceeded subtraction modifications in such earlier
5 taxable year, with the following limitations applied
6 in the order that they are listed:
7 (i) the addition modification relating to
8 the net operating loss carried back or forward
9 to the taxable year from any taxable year
10 ending prior to December 31, 1986 shall be
11 reduced by the amount of addition modification
12 under this subparagraph (E) which related to
13 that net operating loss and which was taken
14 into account in calculating the base income of
15 an earlier taxable year, and
16 (ii) the addition modification relating
17 to the net operating loss carried back or
18 forward to the taxable year from any taxable
19 year ending prior to December 31, 1986 shall
20 not exceed the amount of such carryback or
21 carryforward;
22 For taxable years in which there is a net
23 operating loss carryback or carryforward from more
24 than one other taxable year ending prior to December
25 31, 1986, the addition modification provided in this
26 subparagraph (E) shall be the sum of the amounts
27 computed independently under the preceding
28 provisions of this subparagraph (E) for each such
29 taxable year;, and
30 (E-5) For taxable years ending after December
31 31, 1997, an amount equal to any eligible
32 remediation costs that the corporation deducted in
33 computing adjusted gross income and for which the
34 corporation claims a credit under subsection (l) of
-10- LRB9104294PTpkA
1 Section 201;
2 and by deducting from the total so obtained the sum of
3 the following amounts:
4 (F) An amount equal to the amount of any tax
5 imposed by this Act which was refunded to the
6 taxpayer and included in such total for the taxable
7 year;
8 (G) An amount equal to any amount included in
9 such total under Section 78 of the Internal Revenue
10 Code;
11 (H) In the case of a regulated investment
12 company, an amount equal to the amount of exempt
13 interest dividends as defined in subsection (b) (5)
14 of Section 852 of the Internal Revenue Code, paid to
15 shareholders for the taxable year;
16 (I) With the exception of any amounts
17 subtracted under subparagraph (J), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(a)(2) and amounts
20 disallowed as interest expense by Section 291(a)(3)
21 of the Internal Revenue Code, as now or hereafter
22 amended, and all amounts of expenses allocable to
23 interest and disallowed as deductions by Section
24 265(a)(1) of the Internal Revenue Code, as now or
25 hereafter amended;
26 (J) An amount equal to all amounts included in
27 such total which are exempt from taxation by this
28 State either by reason of its statutes or
29 Constitution or by reason of the Constitution,
30 treaties or statutes of the United States; provided
31 that, in the case of any statute of this State that
32 exempts income derived from bonds or other
33 obligations from the tax imposed under this Act, the
34 amount exempted shall be the interest net of bond
-11- LRB9104294PTpkA
1 premium amortization;
2 (K) An amount equal to those dividends
3 included in such total which were paid by a
4 corporation which conducts business operations in an
5 Enterprise Zone or zones created under the Illinois
6 Enterprise Zone Act and conducts substantially all
7 of its operations in an Enterprise Zone or zones;
8 (L) An amount equal to those dividends
9 included in such total that were paid by a
10 corporation that conducts business operations in a
11 federally designated Foreign Trade Zone or Sub-Zone
12 and that is designated a High Impact Business
13 located in Illinois; provided that dividends
14 eligible for the deduction provided in subparagraph
15 (K) of paragraph 2 of this subsection shall not be
16 eligible for the deduction provided under this
17 subparagraph (L);
18 (M) For any taxpayer that is a financial
19 organization within the meaning of Section 304(c) of
20 this Act, an amount included in such total as
21 interest income from a loan or loans made by such
22 taxpayer to a borrower, to the extent that such a
23 loan is secured by property which is eligible for
24 the Enterprise Zone Investment Credit. To determine
25 the portion of a loan or loans that is secured by
26 property eligible for a Section 201(h) investment
27 credit to the borrower, the entire principal amount
28 of the loan or loans between the taxpayer and the
29 borrower should be divided into the basis of the
30 Section 201(h) investment credit property which
31 secures the loan or loans, using for this purpose
32 the original basis of such property on the date that
33 it was placed in service in the Enterprise Zone.
34 The subtraction modification available to taxpayer
-12- LRB9104294PTpkA
1 in any year under this subsection shall be that
2 portion of the total interest paid by the borrower
3 with respect to such loan attributable to the
4 eligible property as calculated under the previous
5 sentence;
6 (M-1) For any taxpayer that is a financial
7 organization within the meaning of Section 304(c) of
8 this Act, an amount included in such total as
9 interest income from a loan or loans made by such
10 taxpayer to a borrower, to the extent that such a
11 loan is secured by property which is eligible for
12 the High Impact Business Investment Credit. To
13 determine the portion of a loan or loans that is
14 secured by property eligible for a Section 201(i)
15 investment credit to the borrower, the entire
16 principal amount of the loan or loans between the
17 taxpayer and the borrower should be divided into the
18 basis of the Section 201(i) investment credit
19 property which secures the loan or loans, using for
20 this purpose the original basis of such property on
21 the date that it was placed in service in a
22 federally designated Foreign Trade Zone or Sub-Zone
23 located in Illinois. No taxpayer that is eligible
24 for the deduction provided in subparagraph (M) of
25 paragraph (2) of this subsection shall be eligible
26 for the deduction provided under this subparagraph
27 (M-1). The subtraction modification available to
28 taxpayers in any year under this subsection shall be
29 that portion of the total interest paid by the
30 borrower with respect to such loan attributable to
31 the eligible property as calculated under the
32 previous sentence;
33 (N) Two times any contribution made during the
34 taxable year to a designated zone organization to
-13- LRB9104294PTpkA
1 the extent that the contribution (i) qualifies as a
2 charitable contribution under subsection (c) of
3 Section 170 of the Internal Revenue Code and (ii)
4 must, by its terms, be used for a project approved
5 by the Department of Commerce and Community Affairs
6 under Section 11 of the Illinois Enterprise Zone
7 Act;
8 (O) An amount equal to: (i) 85% for taxable
9 years ending on or before December 31, 1992, or, a
10 percentage equal to the percentage allowable under
11 Section 243(a)(1) of the Internal Revenue Code of
12 1986 for taxable years ending after December 31,
13 1992, of the amount by which dividends included in
14 taxable income and received from a corporation that
15 is not created or organized under the laws of the
16 United States or any state or political subdivision
17 thereof, including, for taxable years ending on or
18 after December 31, 1988, dividends received or
19 deemed received or paid or deemed paid under
20 Sections 951 through 964 of the Internal Revenue
21 Code, exceed the amount of the modification provided
22 under subparagraph (G) of paragraph (2) of this
23 subsection (b) which is related to such dividends;
24 plus (ii) 100% of the amount by which dividends,
25 included in taxable income and received, including,
26 for taxable years ending on or after December 31,
27 1988, dividends received or deemed received or paid
28 or deemed paid under Sections 951 through 964 of the
29 Internal Revenue Code, from any such corporation
30 specified in clause (i) that would but for the
31 provisions of Section 1504 (b) (3) of the Internal
32 Revenue Code be treated as a member of the
33 affiliated group which includes the dividend
34 recipient, exceed the amount of the modification
-14- LRB9104294PTpkA
1 provided under subparagraph (G) of paragraph (2) of
2 this subsection (b) which is related to such
3 dividends;
4 (P) An amount equal to any contribution made
5 to a job training project established pursuant to
6 the Tax Increment Allocation Redevelopment Act; and
7 (Q) An amount equal to the amount of the
8 deduction used to compute the federal income tax
9 credit for restoration of substantial amounts held
10 under claim of right for the taxable year pursuant
11 to Section 1341 of the Internal Revenue Code of
12 1986.
13 (3) Special rule. For purposes of paragraph (2)
14 (A), "gross income" in the case of a life insurance
15 company, for tax years ending on and after December 31,
16 1994, shall mean the gross investment income for the
17 taxable year.
18 (c) Trusts and estates.
19 (1) In general. In the case of a trust or estate,
20 base income means an amount equal to the taxpayer's
21 taxable income for the taxable year as modified by
22 paragraph (2).
23 (2) Modifications. Subject to the provisions of
24 paragraph (3), the taxable income referred to in
25 paragraph (1) shall be modified by adding thereto the sum
26 of the following amounts:
27 (A) An amount equal to all amounts paid or
28 accrued to the taxpayer as interest or dividends
29 during the taxable year to the extent excluded from
30 gross income in the computation of taxable income;
31 (B) In the case of (i) an estate, $600; (ii) a
32 trust which, under its governing instrument, is
33 required to distribute all of its income currently,
34 $300; and (iii) any other trust, $100, but in each
-15- LRB9104294PTpkA
1 such case, only to the extent such amount was
2 deducted in the computation of taxable income;
3 (C) An amount equal to the amount of tax
4 imposed by this Act to the extent deducted from
5 gross income in the computation of taxable income
6 for the taxable year;
7 (D) The amount of any net operating loss
8 deduction taken in arriving at taxable income, other
9 than a net operating loss carried forward from a
10 taxable year ending prior to December 31, 1986;
11 (E) For taxable years in which a net operating
12 loss carryback or carryforward from a taxable year
13 ending prior to December 31, 1986 is an element of
14 taxable income under paragraph (1) of subsection (e)
15 or subparagraph (E) of paragraph (2) of subsection
16 (e), the amount by which addition modifications
17 other than those provided by this subparagraph (E)
18 exceeded subtraction modifications in such taxable
19 year, with the following limitations applied in the
20 order that they are listed:
21 (i) the addition modification relating to
22 the net operating loss carried back or forward
23 to the taxable year from any taxable year
24 ending prior to December 31, 1986 shall be
25 reduced by the amount of addition modification
26 under this subparagraph (E) which related to
27 that net operating loss and which was taken
28 into account in calculating the base income of
29 an earlier taxable year, and
30 (ii) the addition modification relating
31 to the net operating loss carried back or
32 forward to the taxable year from any taxable
33 year ending prior to December 31, 1986 shall
34 not exceed the amount of such carryback or
-16- LRB9104294PTpkA
1 carryforward;
2 For taxable years in which there is a net
3 operating loss carryback or carryforward from more
4 than one other taxable year ending prior to December
5 31, 1986, the addition modification provided in this
6 subparagraph (E) shall be the sum of the amounts
7 computed independently under the preceding
8 provisions of this subparagraph (E) for each such
9 taxable year;
10 (F) For taxable years ending on or after
11 January 1, 1989, an amount equal to the tax deducted
12 pursuant to Section 164 of the Internal Revenue Code
13 if the trust or estate is claiming the same tax for
14 purposes of the Illinois foreign tax credit under
15 Section 601 of this Act;
16 (G) An amount equal to the amount of the
17 capital gain deduction allowable under the Internal
18 Revenue Code, to the extent deducted from gross
19 income in the computation of taxable income; and
20 (G-5) For taxable years ending after December
21 31, 1997, an amount equal to any eligible
22 remediation costs that the trust or estate deducted
23 in computing adjusted gross income and for which the
24 trust or estate claims a credit under subsection (l)
25 of Section 201;
26 and by deducting from the total so obtained the sum of
27 the following amounts:
28 (H) An amount equal to all amounts included in
29 such total pursuant to the provisions of Sections
30 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
31 408 of the Internal Revenue Code or included in such
32 total as distributions under the provisions of any
33 retirement or disability plan for employees of any
34 governmental agency or unit, or retirement payments
-17- LRB9104294PTpkA
1 to retired partners, which payments are excluded in
2 computing net earnings from self employment by
3 Section 1402 of the Internal Revenue Code and
4 regulations adopted pursuant thereto;
5 (I) The valuation limitation amount;
6 (J) 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 (K) An amount equal to all amounts included in
11 taxable income as modified by subparagraphs (A),
12 (B), (C), (D), (E), (F) and (G) which are exempt
13 from taxation by this State either by reason of its
14 statutes or Constitution or by reason of the
15 Constitution, treaties or statutes of the United
16 States; provided that, in the case of any statute of
17 this State that exempts income derived from bonds or
18 other obligations from the tax imposed under this
19 Act, the amount exempted shall be the interest net
20 of bond premium amortization;
21 (L) With the exception of any amounts
22 subtracted under subparagraph (K), an amount equal
23 to the sum of all amounts disallowed as deductions
24 by Sections 171(a) (2) and 265(a)(2) of the Internal
25 Revenue Code, as now or hereafter amended, and all
26 amounts of expenses allocable to interest and
27 disallowed as deductions by Section 265(1) of the
28 Internal Revenue Code of 1954, as now or hereafter
29 amended;
30 (M) An amount equal to those dividends
31 included in such total which were paid by a
32 corporation which conducts business operations in an
33 Enterprise Zone or zones created under the Illinois
34 Enterprise Zone Act and conducts substantially all
-18- LRB9104294PTpkA
1 of its operations in an Enterprise Zone or Zones;
2 (N) An amount equal to any contribution made
3 to a job training project established pursuant to
4 the Tax Increment Allocation Redevelopment Act;
5 (O) An amount equal to those dividends
6 included in such total that were paid by a
7 corporation that conducts business operations in a
8 federally designated Foreign Trade Zone or Sub-Zone
9 and that is designated a High Impact Business
10 located in Illinois; provided that dividends
11 eligible for the deduction provided in subparagraph
12 (M) of paragraph (2) of this subsection shall not be
13 eligible for the deduction provided under this
14 subparagraph (O); and
15 (P) An amount equal to the amount of the
16 deduction used to compute the federal income tax
17 credit for restoration of substantial amounts held
18 under claim of right for the taxable year pursuant
19 to Section 1341 of the Internal Revenue Code of
20 1986.
21 (3) Limitation. The amount of any modification
22 otherwise required under this subsection shall, under
23 regulations prescribed by the Department, be adjusted by
24 any amounts included therein which were properly paid,
25 credited, or required to be distributed, or permanently
26 set aside for charitable purposes pursuant to Internal
27 Revenue Code Section 642(c) during the taxable year.
28 (d) Partnerships.
29 (1) In general. In the case of a partnership, base
30 income means an amount equal to the taxpayer's taxable
31 income for the taxable year as modified by paragraph (2).
32 (2) Modifications. The taxable income referred to
33 in paragraph (1) shall be modified by adding thereto the
34 sum of the following amounts:
-19- LRB9104294PTpkA
1 (A) An amount equal to all amounts paid or
2 accrued to the taxpayer as interest or dividends
3 during the taxable year to the extent excluded from
4 gross income in the computation of taxable income;
5 (B) An amount equal to the amount of tax
6 imposed by this Act to the extent deducted from
7 gross income for the taxable year; and
8 (C) The amount of deductions allowed to the
9 partnership pursuant to Section 707 (c) of the
10 Internal Revenue Code in calculating its taxable
11 income; and
12 (D) An amount equal to the amount of the
13 capital gain deduction allowable under the Internal
14 Revenue Code, to the extent deducted from gross
15 income in the computation of taxable income;
16 and by deducting from the total so obtained the following
17 amounts:
18 (E) The valuation limitation amount;
19 (F) An amount equal to the amount of any tax
20 imposed by this Act which was refunded to the
21 taxpayer and included in such total for the taxable
22 year;
23 (G) An amount equal to all amounts included in
24 taxable income as modified by subparagraphs (A),
25 (B), (C) and (D) which are exempt from taxation by
26 this State either by reason of its statutes or
27 Constitution or by reason of the Constitution,
28 treaties or statutes of the United States; provided
29 that, in the case of any statute of this State that
30 exempts income derived from bonds or other
31 obligations from the tax imposed under this Act, the
32 amount exempted shall be the interest net of bond
33 premium amortization;
34 (H) Any income of the partnership which
-20- LRB9104294PTpkA
1 constitutes personal service income as defined in
2 Section 1348 (b) (1) of the Internal Revenue Code
3 (as in effect December 31, 1981) or a reasonable
4 allowance for compensation paid or accrued for
5 services rendered by partners to the partnership,
6 whichever is greater;
7 (I) An amount equal to all amounts of income
8 distributable to an entity subject to the Personal
9 Property Tax Replacement Income Tax imposed by
10 subsections (c) and (d) of Section 201 of this Act
11 including amounts distributable to organizations
12 exempt from federal income tax by reason of Section
13 501(a) of the Internal Revenue Code;
14 (J) With the exception of any amounts
15 subtracted under subparagraph (G), an amount equal
16 to the sum of all amounts disallowed as deductions
17 by Sections 171(a) (2), and 265(2) of the Internal
18 Revenue Code of 1954, as now or hereafter amended,
19 and all amounts of expenses allocable to interest
20 and disallowed as deductions by Section 265(1) of
21 the Internal Revenue Code, as now or hereafter
22 amended;
23 (K) An amount equal to those dividends
24 included in such total which were paid by a
25 corporation which conducts business operations in an
26 Enterprise Zone or zones created under the Illinois
27 Enterprise Zone Act, enacted by the 82nd General
28 Assembly, and which does not conduct such operations
29 other than in an Enterprise Zone or Zones;
30 (L) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Real Property Tax Increment Allocation
33 Redevelopment Act;
34 (M) An amount equal to those dividends
-21- LRB9104294PTpkA
1 included in such total that were paid by a
2 corporation that conducts business operations in a
3 federally designated Foreign Trade Zone or Sub-Zone
4 and that is designated a High Impact Business
5 located in Illinois; provided that dividends
6 eligible for the deduction provided in subparagraph
7 (K) of paragraph (2) of this subsection shall not be
8 eligible for the deduction provided under this
9 subparagraph (M); and
10 (N) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986.
16 (e) Gross income; adjusted gross income; taxable income.
17 (1) In general. Subject to the provisions of
18 paragraph (2) and subsection (b) (3), for purposes of
19 this Section and Section 803(e), a taxpayer's gross
20 income, adjusted gross income, or taxable income for the
21 taxable year shall mean the amount of gross income,
22 adjusted gross income or taxable income properly
23 reportable for federal income tax purposes for the
24 taxable year under the provisions of the Internal Revenue
25 Code. Taxable income may be less than zero. However, for
26 taxable years ending on or after December 31, 1986, net
27 operating loss carryforwards from taxable years ending
28 prior to December 31, 1986, may not exceed the sum of
29 federal taxable income for the taxable year before net
30 operating loss deduction, plus the excess of addition
31 modifications over subtraction modifications for the
32 taxable year. For taxable years ending prior to December
33 31, 1986, taxable income may never be an amount in excess
34 of the net operating loss for the taxable year as defined
-22- LRB9104294PTpkA
1 in subsections (c) and (d) of Section 172 of the Internal
2 Revenue Code, provided that when taxable income of a
3 corporation (other than a Subchapter S corporation),
4 trust, or estate is less than zero and addition
5 modifications, other than those provided by subparagraph
6 (E) of paragraph (2) of subsection (b) for corporations
7 or subparagraph (E) of paragraph (2) of subsection (c)
8 for trusts and estates, exceed subtraction modifications,
9 an addition modification must be made under those
10 subparagraphs for any other taxable year to which the
11 taxable income less than zero (net operating loss) is
12 applied under Section 172 of the Internal Revenue Code or
13 under subparagraph (E) of paragraph (2) of this
14 subsection (e) applied in conjunction with Section 172 of
15 the Internal Revenue Code.
16 (2) Special rule. For purposes of paragraph (1) of
17 this subsection, the taxable income properly reportable
18 for federal income tax purposes shall mean:
19 (A) Certain life insurance companies. In the
20 case of a life insurance company subject to the tax
21 imposed by Section 801 of the Internal Revenue Code,
22 life insurance company taxable income, plus the
23 amount of distribution from pre-1984 policyholder
24 surplus accounts as calculated under Section 815a of
25 the Internal Revenue Code;
26 (B) Certain other insurance companies. In the
27 case of mutual insurance companies subject to the
28 tax imposed by Section 831 of the Internal Revenue
29 Code, insurance company taxable income;
30 (C) Regulated investment companies. In the
31 case of a regulated investment company subject to
32 the tax imposed by Section 852 of the Internal
33 Revenue Code, investment company taxable income;
34 (D) Real estate investment trusts. In the
-23- LRB9104294PTpkA
1 case of a real estate investment trust subject to
2 the tax imposed by Section 857 of the Internal
3 Revenue Code, real estate investment trust taxable
4 income;
5 (E) Consolidated corporations. In the case of
6 a corporation which is a member of an affiliated
7 group of corporations filing a consolidated income
8 tax return for the taxable year for federal income
9 tax purposes, taxable income determined as if such
10 corporation had filed a separate return for federal
11 income tax purposes for the taxable year and each
12 preceding taxable year for which it was a member of
13 an affiliated group. For purposes of this
14 subparagraph, the taxpayer's separate taxable income
15 shall be determined as if the election provided by
16 Section 243(b) (2) of the Internal Revenue Code had
17 been in effect for all such years;
18 (F) Cooperatives. In the case of a
19 cooperative corporation or association, the taxable
20 income of such organization determined in accordance
21 with the provisions of Section 1381 through 1388 of
22 the Internal Revenue Code;
23 (G) Subchapter S corporations. In the case
24 of: (i) a Subchapter S corporation for which there
25 is in effect an election for the taxable year under
26 Section 1362 of the Internal Revenue Code, the
27 taxable income of such corporation determined in
28 accordance with Section 1363(b) of the Internal
29 Revenue Code, except that taxable income shall take
30 into account those items which are required by
31 Section 1363(b)(1) of the Internal Revenue Code to
32 be separately stated; and (ii) a Subchapter S
33 corporation for which there is in effect a federal
34 election to opt out of the provisions of the
-24- LRB9104294PTpkA
1 Subchapter S Revision Act of 1982 and have applied
2 instead the prior federal Subchapter S rules as in
3 effect on July 1, 1982, the taxable income of such
4 corporation determined in accordance with the
5 federal Subchapter S rules as in effect on July 1,
6 1982; and
7 (H) Partnerships. In the case of a
8 partnership, taxable income determined in accordance
9 with Section 703 of the Internal Revenue Code,
10 except that taxable income shall take into account
11 those items which are required by Section 703(a)(1)
12 to be separately stated but which would be taken
13 into account by an individual in calculating his
14 taxable income.
15 (f) Valuation limitation amount.
16 (1) In general. The valuation limitation amount
17 referred to in subsections (a) (2) (G), (c) (2) (I) and
18 (d)(2) (E) is an amount equal to:
19 (A) The sum of the pre-August 1, 1969
20 appreciation amounts (to the extent consisting of
21 gain reportable under the provisions of Section 1245
22 or 1250 of the Internal Revenue Code) for all
23 property in respect of which such gain was reported
24 for the taxable year; plus
25 (B) The lesser of (i) the sum of the
26 pre-August 1, 1969 appreciation amounts (to the
27 extent consisting of capital gain) for all property
28 in respect of which such gain was reported for
29 federal income tax purposes for the taxable year, or
30 (ii) the net capital gain for the taxable year,
31 reduced in either case by any amount of such gain
32 included in the amount determined under subsection
33 (a) (2) (F) or (c) (2) (H).
34 (2) Pre-August 1, 1969 appreciation amount.
-25- LRB9104294PTpkA
1 (A) If the fair market value of property
2 referred to in paragraph (1) was readily
3 ascertainable on August 1, 1969, the pre-August 1,
4 1969 appreciation amount for such property is the
5 lesser of (i) the excess of such fair market value
6 over the taxpayer's basis (for determining gain) for
7 such property on that date (determined under the
8 Internal Revenue Code as in effect on that date), or
9 (ii) the total gain realized and reportable for
10 federal income tax purposes in respect of the sale,
11 exchange or other disposition of such property.
12 (B) If the fair market value of property
13 referred to in paragraph (1) was not readily
14 ascertainable on August 1, 1969, the pre-August 1,
15 1969 appreciation amount for such property is that
16 amount which bears the same ratio to the total gain
17 reported in respect of the property for federal
18 income tax purposes for the taxable year, as the
19 number of full calendar months in that part of the
20 taxpayer's holding period for the property ending
21 July 31, 1969 bears to the number of full calendar
22 months in the taxpayer's entire holding period for
23 the property.
24 (C) The Department shall prescribe such
25 regulations as may be necessary to carry out the
26 purposes of this paragraph.
27 (g) Double deductions. Unless specifically provided
28 otherwise, nothing in this Section shall permit the same item
29 to be deducted more than once.
30 (h) Legislative intention. Except as expressly provided
31 by this Section there shall be no modifications or
32 limitations on the amounts of income, gain, loss or deduction
33 taken into account in determining gross income, adjusted
-26- LRB9104294PTpkA
1 gross income or taxable income for federal income tax
2 purposes for the taxable year, or in the amount of such items
3 entering into the computation of base income and net income
4 under this Act for such taxable year, whether in respect of
5 property values as of August 1, 1969 or otherwise.
6 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
7 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
8 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
9 eff. 8-14-98; revised 9-21-98.)
10 Section 99. Effective date. This Act takes effect upon
11 becoming law.