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91_SB1306
LRB9110225SMdv
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (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16 withdrawn by the taxpayer in the taxable year from a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
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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;
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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 (i) Sections 171(a) (2), and 265(2) of the
20 Internal Revenue Code of 1954, as now or hereafter
21 amended, and all amounts of expenses allocable to
22 interest and disallowed as deductions by Section
23 265(1) of the Internal Revenue Code of 1954, as now
24 or hereafter amended; and (ii) for taxable years
25 ending on or after August 13, 1999 the effective
26 date of this amendatory Act of the 91st General
27 Assembly, Sections 171(a)(2), 265, 280C, and
28 832(b)(5)(B)(i) of the Internal Revenue Code; the
29 provisions of this subparagraph are exempt from the
30 provisions of Section 250;
31 (N) An amount equal to all amounts included in
32 such total which are exempt from taxation by this
33 State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
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1 treaties or statutes of the United States; provided
2 that, in the case of any statute of this State that
3 exempts income derived from bonds or other
4 obligations from the tax imposed under this Act, the
5 amount exempted shall be the interest net of bond
6 premium amortization;
7 (O) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act;
10 (P) 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 (Q) An amount equal to any amounts included in
17 such total, received by the taxpayer as an
18 acceleration in the payment of life, endowment or
19 annuity benefits in advance of the time they would
20 otherwise be payable as an indemnity for a terminal
21 illness;
22 (R) An amount equal to the amount of any
23 federal or State bonus paid to veterans of the
24 Persian Gulf War;
25 (S) An amount, to the extent included in
26 adjusted gross income, equal to the amount of a
27 contribution made in the taxable year on behalf of
28 the taxpayer to a medical care savings account
29 established under the Medical Care Savings Account
30 Act to the extent the contribution is accepted by
31 the account administrator as provided in that Act;
32 (T) An amount, to the extent included in
33 adjusted gross income, equal to the amount of
34 interest earned in the taxable year on a medical
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1 care savings account established under the Medical
2 Care Savings Account Act on behalf of the taxpayer,
3 other than interest added pursuant to item (D-5) of
4 this paragraph (2);
5 (U) For one taxable year beginning on or after
6 January 1, 1994, an amount equal to the total amount
7 of tax imposed and paid under subsections (a) and
8 (b) of Section 201 of this Act on grant amounts
9 received by the taxpayer under the Nursing Home
10 Grant Assistance Act during the taxpayer's taxable
11 years 1992 and 1993;
12 (V) Beginning with tax years ending on or
13 after December 31, 1995 and ending with tax years
14 ending on or before December 31, 2004, an amount
15 equal to the amount paid by a taxpayer who is a
16 self-employed taxpayer, a partner of a partnership,
17 or a shareholder in a Subchapter S corporation for
18 health insurance or long-term care insurance for
19 that taxpayer or that taxpayer's spouse or
20 dependents, to the extent that the amount paid for
21 that health insurance or long-term care insurance
22 may be deducted under Section 213 of the Internal
23 Revenue Code of 1986, has not been deducted on the
24 federal income tax return of the taxpayer, and does
25 not exceed the taxable income attributable to that
26 taxpayer's income, self-employment income, or
27 Subchapter S corporation income; except that no
28 deduction shall be allowed under this item (V) if
29 the taxpayer is eligible to participate in any
30 health insurance or long-term care insurance plan of
31 an employer of the taxpayer or the taxpayer's
32 spouse. The amount of the health insurance and
33 long-term care insurance subtracted under this item
34 (V) shall be determined by multiplying total health
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1 insurance and long-term care insurance premiums paid
2 by the taxpayer times a number that represents the
3 fractional percentage of eligible medical expenses
4 under Section 213 of the Internal Revenue Code of
5 1986 not actually deducted on the taxpayer's federal
6 income tax return; and
7 (W) For taxable years beginning on or after
8 January 1, 1998, all amounts included in the
9 taxpayer's federal gross income in the taxable year
10 from amounts converted from a regular IRA to a Roth
11 IRA. This paragraph is exempt from the provisions of
12 Section 250.
13 (X) For taxable years beginning on or after
14 January 1, 2000, an amount not to exceed $10,000 in
15 wages, salaries, and tips earned in the taxable year
16 or all wages, salaries, and tips earned in the
17 taxable year, whichever is less. This paragraph is
18 exempt from the provisions of Section 250.
19 (b) Corporations.
20 (1) In general. In the case of a corporation, 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 and all
28 distributions received from regulated investment
29 companies during the taxable year to the extent
30 excluded from gross income in the computation of
31 taxable income;
32 (B) An amount equal to the amount of tax
33 imposed by this Act to the extent deducted from
34 gross income in the computation of taxable income
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1 for the taxable year;
2 (C) In the case of a regulated investment
3 company, an amount equal to the excess of (i) the
4 net long-term capital gain for the taxable year,
5 over (ii) the amount of the capital gain dividends
6 designated as such in accordance with Section
7 852(b)(3)(C) of the Internal Revenue Code and any
8 amount designated under Section 852(b)(3)(D) of the
9 Internal Revenue Code, attributable to the taxable
10 year (this amendatory Act of 1995 (Public Act 89-89)
11 is declarative of existing law and is not a new
12 enactment);
13 (D) The amount of any net operating loss
14 deduction taken in arriving at taxable income, other
15 than a net operating loss carried forward from a
16 taxable year ending prior to December 31, 1986;
17 (E) For taxable years in which a net operating
18 loss carryback or carryforward from a taxable year
19 ending prior to December 31, 1986 is an element of
20 taxable income under paragraph (1) of subsection (e)
21 or subparagraph (E) of paragraph (2) of subsection
22 (e), the amount by which addition modifications
23 other than those provided by this subparagraph (E)
24 exceeded subtraction modifications in such earlier
25 taxable year, with the following limitations applied
26 in the order that they are listed:
27 (i) the addition modification relating to
28 the net operating loss carried back or forward
29 to the taxable year from any taxable year
30 ending prior to December 31, 1986 shall be
31 reduced by the amount of addition modification
32 under this subparagraph (E) which related to
33 that net operating loss and which was taken
34 into account in calculating the base income of
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1 an earlier taxable year, and
2 (ii) the addition modification relating
3 to the net operating loss carried back or
4 forward to the taxable year from any taxable
5 year ending prior to December 31, 1986 shall
6 not exceed the amount of such carryback or
7 carryforward;
8 For taxable years in which there is a net
9 operating loss carryback or carryforward from more
10 than one other taxable year ending prior to December
11 31, 1986, the addition modification provided in this
12 subparagraph (E) shall be the sum of the amounts
13 computed independently under the preceding
14 provisions of this subparagraph (E) for each such
15 taxable year; and
16 (E-5) For taxable years ending after December
17 31, 1997, an amount equal to any eligible
18 remediation costs that the corporation deducted in
19 computing adjusted gross income and for which the
20 corporation claims a credit under subsection (l) of
21 Section 201;
22 and by deducting from the total so obtained the sum of
23 the following amounts:
24 (F) An amount equal to the amount of any tax
25 imposed by this Act which was refunded to the
26 taxpayer and included in such total for the taxable
27 year;
28 (G) An amount equal to any amount included in
29 such total under Section 78 of the Internal Revenue
30 Code;
31 (H) In the case of a regulated investment
32 company, an amount equal to the amount of exempt
33 interest dividends as defined in subsection (b) (5)
34 of Section 852 of the Internal Revenue Code, paid to
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1 shareholders for the taxable year;
2 (I) With the exception of any amounts
3 subtracted under subparagraph (J), an amount equal
4 to the sum of all amounts disallowed as deductions
5 by (i) Sections 171(a) (2), and 265(a)(2) and
6 amounts disallowed as interest expense by Section
7 291(a)(3) of the Internal Revenue Code, as now or
8 hereafter amended, and all amounts of expenses
9 allocable to interest and disallowed as deductions
10 by Section 265(a)(1) of the Internal Revenue Code,
11 as now or hereafter amended; and (ii) for taxable
12 years ending on or after August 13, 1999 the
13 effective date of this amendatory Act of the 91st
14 General Assembly, Sections 171(a)(2), 265, 280C, and
15 832(b)(5)(B)(i) of the Internal Revenue Code; the
16 provisions of this subparagraph are exempt from the
17 provisions of Section 250;
18 (J) An amount equal to all amounts included in
19 such total which are exempt from taxation by this
20 State either by reason of its statutes or
21 Constitution or by reason of the Constitution,
22 treaties or statutes of the United States; provided
23 that, in the case of any statute of this State that
24 exempts income derived from bonds or other
25 obligations from the tax imposed under this Act, the
26 amount exempted shall be the interest net of bond
27 premium amortization;
28 (K) An amount equal to those dividends
29 included in such total which were paid by a
30 corporation which conducts business operations in an
31 Enterprise Zone or zones created under the Illinois
32 Enterprise Zone Act and conducts substantially all
33 of its operations in an Enterprise Zone or zones;
34 (L) An amount equal to those dividends
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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 (L);
10 (M) For any taxpayer that is a financial
11 organization within the meaning of Section 304(c) of
12 this Act, an amount included in such total as
13 interest income from a loan or loans made by such
14 taxpayer to a borrower, to the extent that such a
15 loan is secured by property which is eligible for
16 the Enterprise Zone Investment Credit. To determine
17 the portion of a loan or loans that is secured by
18 property eligible for a Section 201(h) investment
19 credit to the borrower, the entire principal amount
20 of the loan or loans between the taxpayer and the
21 borrower should be divided into the basis of the
22 Section 201(h) investment credit property which
23 secures the loan or loans, using for this purpose
24 the original basis of such property on the date that
25 it was placed in service in the Enterprise Zone.
26 The subtraction modification available to taxpayer
27 in any year under this subsection shall be that
28 portion of the total interest paid by the borrower
29 with respect to such loan attributable to the
30 eligible property as calculated under the previous
31 sentence;
32 (M-1) For any taxpayer that is a financial
33 organization within the meaning of Section 304(c) of
34 this Act, an amount included in such total as
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1 interest income from a loan or loans made by such
2 taxpayer to a borrower, to the extent that such a
3 loan is secured by property which is eligible for
4 the High Impact Business Investment Credit. To
5 determine the portion of a loan or loans that is
6 secured by property eligible for a Section 201(i)
7 investment credit to the borrower, the entire
8 principal amount of the loan or loans between the
9 taxpayer and the borrower should be divided into the
10 basis of the Section 201(i) investment credit
11 property which secures the loan or loans, using for
12 this purpose the original basis of such property on
13 the date that it was placed in service in a
14 federally designated Foreign Trade Zone or Sub-Zone
15 located in Illinois. No taxpayer that is eligible
16 for the deduction provided in subparagraph (M) of
17 paragraph (2) of this subsection shall be eligible
18 for the deduction provided under this subparagraph
19 (M-1). The subtraction modification available to
20 taxpayers in any year under this subsection shall be
21 that portion of the total interest paid by the
22 borrower with respect to such loan attributable to
23 the eligible property as calculated under the
24 previous sentence;
25 (N) Two times any contribution made during the
26 taxable year to a designated zone organization to
27 the extent that the contribution (i) qualifies as a
28 charitable contribution under subsection (c) of
29 Section 170 of the Internal Revenue Code and (ii)
30 must, by its terms, be used for a project approved
31 by the Department of Commerce and Community Affairs
32 under Section 11 of the Illinois Enterprise Zone
33 Act;
34 (O) An amount equal to: (i) 85% for taxable
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1 years ending on or before December 31, 1992, or, a
2 percentage equal to the percentage allowable under
3 Section 243(a)(1) of the Internal Revenue Code of
4 1986 for taxable years ending after December 31,
5 1992, of the amount by which dividends included in
6 taxable income and received from a corporation that
7 is not created or organized under the laws of the
8 United States or any state or political subdivision
9 thereof, including, for taxable years ending on or
10 after December 31, 1988, dividends received or
11 deemed received or paid or deemed paid under
12 Sections 951 through 964 of the Internal Revenue
13 Code, exceed the amount of the modification provided
14 under subparagraph (G) of paragraph (2) of this
15 subsection (b) which is related to such dividends;
16 plus (ii) 100% of the amount by which dividends,
17 included in taxable income and received, including,
18 for taxable years ending on or after December 31,
19 1988, dividends received or deemed received or paid
20 or deemed paid under Sections 951 through 964 of the
21 Internal Revenue Code, from any such corporation
22 specified in clause (i) that would but for the
23 provisions of Section 1504 (b) (3) of the Internal
24 Revenue Code be treated as a member of the
25 affiliated group which includes the dividend
26 recipient, exceed the amount of the modification
27 provided under subparagraph (G) of paragraph (2) of
28 this subsection (b) which is related to such
29 dividends;
30 (P) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (Q) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986; and
5 (R) In the case of an attorney-in-fact with
6 respect to whom an interinsurer or a reciprocal
7 insurer has made the election under Section 835 of
8 the Internal Revenue Code, 26 U.S.C. 835, an amount
9 equal to the excess, if any, of the amounts paid or
10 incurred by that interinsurer or reciprocal insurer
11 in the taxable year to the attorney-in-fact over the
12 deduction allowed to that interinsurer or reciprocal
13 insurer with respect to the attorney-in-fact under
14 Section 835(b) of the Internal Revenue Code for the
15 taxable year.
16 (3) Special rule. For purposes of paragraph (2)
17 (A), "gross income" in the case of a life insurance
18 company, for tax years ending on and after December 31,
19 1994, shall mean the gross investment income for the
20 taxable year.
21 (c) Trusts and estates.
22 (1) In general. In the case of a trust or estate,
23 base income means an amount equal to the taxpayer's
24 taxable income for the taxable year as modified by
25 paragraph (2).
26 (2) Modifications. Subject to the provisions of
27 paragraph (3), the taxable income referred to in
28 paragraph (1) shall be modified by adding thereto the sum
29 of the following amounts:
30 (A) An amount equal to all amounts paid or
31 accrued to the taxpayer as interest or dividends
32 during the taxable year to the extent excluded from
33 gross income in the computation of taxable income;
34 (B) In the case of (i) an estate, $600; (ii) a
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1 trust which, under its governing instrument, is
2 required to distribute all of its income currently,
3 $300; and (iii) any other trust, $100, but in each
4 such case, only to the extent such amount was
5 deducted in the computation of taxable income;
6 (C) An amount equal to the amount of tax
7 imposed by this Act to the extent deducted from
8 gross income in the computation of taxable income
9 for the taxable year;
10 (D) The amount of any net operating loss
11 deduction taken in arriving at taxable income, other
12 than a net operating loss carried forward from a
13 taxable year ending prior to December 31, 1986;
14 (E) For taxable years in which a net operating
15 loss carryback or carryforward from a taxable year
16 ending prior to December 31, 1986 is an element of
17 taxable income under paragraph (1) of subsection (e)
18 or subparagraph (E) of paragraph (2) of subsection
19 (e), the amount by which addition modifications
20 other than those provided by this subparagraph (E)
21 exceeded subtraction modifications in such taxable
22 year, with the following limitations applied in the
23 order that they are listed:
24 (i) the addition modification relating to
25 the net operating loss carried back or forward
26 to the taxable year from any taxable year
27 ending prior to December 31, 1986 shall be
28 reduced by the amount of addition modification
29 under this subparagraph (E) which related to
30 that net operating loss and which was taken
31 into account in calculating the base income of
32 an earlier taxable year, and
33 (ii) the addition modification relating
34 to the net operating loss carried back or
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1 forward to the taxable year from any taxable
2 year ending prior to December 31, 1986 shall
3 not exceed the amount of such carryback or
4 carryforward;
5 For taxable years in which there is a net
6 operating loss carryback or carryforward from more
7 than one other taxable year ending prior to December
8 31, 1986, the addition modification provided in this
9 subparagraph (E) shall be the sum of the amounts
10 computed independently under the preceding
11 provisions of this subparagraph (E) for each such
12 taxable year;
13 (F) For taxable years ending on or after
14 January 1, 1989, an amount equal to the tax deducted
15 pursuant to Section 164 of the Internal Revenue Code
16 if the trust or estate is claiming the same tax for
17 purposes of the Illinois foreign tax credit under
18 Section 601 of this Act;
19 (G) An amount equal to the amount of the
20 capital gain deduction allowable under the Internal
21 Revenue Code, to the extent deducted from gross
22 income in the computation of taxable income; and
23 (G-5) For taxable years ending after December
24 31, 1997, an amount equal to any eligible
25 remediation costs that the trust or estate deducted
26 in computing adjusted gross income and for which the
27 trust or estate claims a credit under subsection (l)
28 of Section 201;
29 and by deducting from the total so obtained the sum of
30 the following amounts:
31 (H) An amount equal to all amounts included in
32 such total pursuant to the provisions of Sections
33 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
34 408 of the Internal Revenue Code or included in such
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1 total as distributions under the provisions of any
2 retirement or disability plan for employees of any
3 governmental agency or unit, or retirement payments
4 to retired partners, which payments are excluded in
5 computing net earnings from self employment by
6 Section 1402 of the Internal Revenue Code and
7 regulations adopted pursuant thereto;
8 (I) The valuation limitation amount;
9 (J) An amount equal to the amount of any tax
10 imposed by this Act which was refunded to the
11 taxpayer and included in such total for the taxable
12 year;
13 (K) An amount equal to all amounts included in
14 taxable income as modified by subparagraphs (A),
15 (B), (C), (D), (E), (F) and (G) which are exempt
16 from taxation by this State either by reason of its
17 statutes or Constitution or by reason of the
18 Constitution, treaties or statutes of the United
19 States; provided that, in the case of any statute of
20 this State that exempts income derived from bonds or
21 other obligations from the tax imposed under this
22 Act, the amount exempted shall be the interest net
23 of bond premium amortization;
24 (L) With the exception of any amounts
25 subtracted under subparagraph (K), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by (i) Sections 171(a) (2) and 265(a)(2) of the
28 Internal Revenue Code, as now or hereafter amended,
29 and all amounts of expenses allocable to interest
30 and disallowed as deductions by Section 265(1) of
31 the Internal Revenue Code of 1954, as now or
32 hereafter amended; and (ii) for taxable years ending
33 on or after August 13, 1999 the effective date of
34 this amendatory Act of the 91st General Assembly,
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1 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
2 of the Internal Revenue Code; the provisions of this
3 subparagraph are exempt from the provisions of
4 Section 250;
5 (M) An amount equal to those dividends
6 included in such total which were paid by a
7 corporation which conducts business operations in an
8 Enterprise Zone or zones created under the Illinois
9 Enterprise Zone Act and conducts substantially all
10 of its operations in an Enterprise Zone or Zones;
11 (N) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Tax Increment Allocation Redevelopment Act;
14 (O) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (M) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (O); and
24 (P) An amount equal to the amount of the
25 deduction used to compute the federal income tax
26 credit for restoration of substantial amounts held
27 under claim of right for the taxable year pursuant
28 to Section 1341 of the Internal Revenue Code of
29 1986.
30 (3) Limitation. The amount of any modification
31 otherwise required under this subsection shall, under
32 regulations prescribed by the Department, be adjusted by
33 any amounts included therein which were properly paid,
34 credited, or required to be distributed, or permanently
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1 set aside for charitable purposes pursuant to Internal
2 Revenue Code Section 642(c) during the taxable year.
3 (d) Partnerships.
4 (1) In general. In the case of a partnership, base
5 income means an amount equal to the taxpayer's taxable
6 income for the taxable year as modified by paragraph (2).
7 (2) Modifications. The taxable income referred to
8 in paragraph (1) shall be modified by adding thereto the
9 sum of the following amounts:
10 (A) An amount equal to all amounts paid or
11 accrued to the taxpayer as interest or dividends
12 during the taxable year to the extent excluded from
13 gross income in the computation of taxable income;
14 (B) An amount equal to the amount of tax
15 imposed by this Act to the extent deducted from
16 gross income for the taxable year;
17 (C) The amount of deductions allowed to the
18 partnership pursuant to Section 707 (c) of the
19 Internal Revenue Code in calculating its taxable
20 income; and
21 (D) An amount equal to the amount of the
22 capital gain deduction allowable under the Internal
23 Revenue Code, to the extent deducted from gross
24 income in the computation of taxable income;
25 and by deducting from the total so obtained the following
26 amounts:
27 (E) The valuation limitation amount;
28 (F) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (G) An amount equal to all amounts included in
33 taxable income as modified by subparagraphs (A),
34 (B), (C) and (D) which are exempt from taxation by
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1 this State either by reason of its statutes or
2 Constitution or by reason of the Constitution,
3 treaties or statutes of the United States; provided
4 that, in the case of any statute of this State that
5 exempts income derived from bonds or other
6 obligations from the tax imposed under this Act, the
7 amount exempted shall be the interest net of bond
8 premium amortization;
9 (H) Any income of the partnership which
10 constitutes personal service income as defined in
11 Section 1348 (b) (1) of the Internal Revenue Code
12 (as in effect December 31, 1981) or a reasonable
13 allowance for compensation paid or accrued for
14 services rendered by partners to the partnership,
15 whichever is greater;
16 (I) An amount equal to all amounts of income
17 distributable to an entity subject to the Personal
18 Property Tax Replacement Income Tax imposed by
19 subsections (c) and (d) of Section 201 of this Act
20 including amounts distributable to organizations
21 exempt from federal income tax by reason of Section
22 501(a) of the Internal Revenue Code;
23 (J) With the exception of any amounts
24 subtracted under subparagraph (G), an amount equal
25 to the sum of all amounts disallowed as deductions
26 by (i) Sections 171(a) (2), and 265(2) of the
27 Internal Revenue Code of 1954, as now or hereafter
28 amended, and all amounts of expenses allocable to
29 interest and disallowed as deductions by Section
30 265(1) of the Internal Revenue Code, as now or
31 hereafter amended; and (ii) for taxable years ending
32 on or after August 13, 1999 the effective date of
33 this amendatory Act of the 91st General Assembly,
34 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
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1 of the Internal Revenue Code; the provisions of this
2 subparagraph are exempt from the provisions of
3 Section 250;
4 (K) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act, enacted by the 82nd General
9 Assembly, and which does not conduct such operations
10 other than in an Enterprise Zone or Zones;
11 (L) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Real Property Tax Increment Allocation
14 Redevelopment Act;
15 (M) An amount equal to those dividends
16 included in such total that were paid by a
17 corporation that conducts business operations in a
18 federally designated Foreign Trade Zone or Sub-Zone
19 and that is designated a High Impact Business
20 located in Illinois; provided that dividends
21 eligible for the deduction provided in subparagraph
22 (K) of paragraph (2) of this subsection shall not be
23 eligible for the deduction provided under this
24 subparagraph (M); and
25 (N) An amount equal to the amount of the
26 deduction used to compute the federal income tax
27 credit for restoration of substantial amounts held
28 under claim of right for the taxable year pursuant
29 to Section 1341 of the Internal Revenue Code of
30 1986.
31 (e) Gross income; adjusted gross income; taxable income.
32 (1) In general. Subject to the provisions of
33 paragraph (2) and subsection (b) (3), for purposes of
34 this Section and Section 803(e), a taxpayer's gross
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1 income, adjusted gross income, or taxable income for the
2 taxable year shall mean the amount of gross income,
3 adjusted gross income or taxable income properly
4 reportable for federal income tax purposes for the
5 taxable year under the provisions of the Internal Revenue
6 Code. Taxable income may be less than zero. However, for
7 taxable years ending on or after December 31, 1986, net
8 operating loss carryforwards from taxable years ending
9 prior to December 31, 1986, may not exceed the sum of
10 federal taxable income for the taxable year before net
11 operating loss deduction, plus the excess of addition
12 modifications over subtraction modifications for the
13 taxable year. For taxable years ending prior to December
14 31, 1986, taxable income may never be an amount in excess
15 of the net operating loss for the taxable year as defined
16 in subsections (c) and (d) of Section 172 of the Internal
17 Revenue Code, provided that when taxable income of a
18 corporation (other than a Subchapter S corporation),
19 trust, or estate is less than zero and addition
20 modifications, other than those provided by subparagraph
21 (E) of paragraph (2) of subsection (b) for corporations
22 or subparagraph (E) of paragraph (2) of subsection (c)
23 for trusts and estates, exceed subtraction modifications,
24 an addition modification must be made under those
25 subparagraphs for any other taxable year to which the
26 taxable income less than zero (net operating loss) is
27 applied under Section 172 of the Internal Revenue Code or
28 under subparagraph (E) of paragraph (2) of this
29 subsection (e) applied in conjunction with Section 172 of
30 the Internal Revenue Code.
31 (2) Special rule. For purposes of paragraph (1) of
32 this subsection, the taxable income properly reportable
33 for federal income tax purposes shall mean:
34 (A) Certain life insurance companies. In the
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1 case of a life insurance company subject to the tax
2 imposed by Section 801 of the Internal Revenue Code,
3 life insurance company taxable income, plus the
4 amount of distribution from pre-1984 policyholder
5 surplus accounts as calculated under Section 815a of
6 the Internal Revenue Code;
7 (B) Certain other insurance companies. In the
8 case of mutual insurance companies subject to the
9 tax imposed by Section 831 of the Internal Revenue
10 Code, insurance company taxable income;
11 (C) Regulated investment companies. In the
12 case of a regulated investment company subject to
13 the tax imposed by Section 852 of the Internal
14 Revenue Code, investment company taxable income;
15 (D) Real estate investment trusts. In the
16 case of a real estate investment trust subject to
17 the tax imposed by Section 857 of the Internal
18 Revenue Code, real estate investment trust taxable
19 income;
20 (E) Consolidated corporations. In the case of
21 a corporation which is a member of an affiliated
22 group of corporations filing a consolidated income
23 tax return for the taxable year for federal income
24 tax purposes, taxable income determined as if such
25 corporation had filed a separate return for federal
26 income tax purposes for the taxable year and each
27 preceding taxable year for which it was a member of
28 an affiliated group. For purposes of this
29 subparagraph, the taxpayer's separate taxable income
30 shall be determined as if the election provided by
31 Section 243(b) (2) of the Internal Revenue Code had
32 been in effect for all such years;
33 (F) Cooperatives. In the case of a
34 cooperative corporation or association, the taxable
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1 income of such organization determined in accordance
2 with the provisions of Section 1381 through 1388 of
3 the Internal Revenue Code;
4 (G) Subchapter S corporations. In the case
5 of: (i) a Subchapter S corporation for which there
6 is in effect an election for the taxable year under
7 Section 1362 of the Internal Revenue Code, the
8 taxable income of such corporation determined in
9 accordance with Section 1363(b) of the Internal
10 Revenue Code, except that taxable income shall take
11 into account those items which are required by
12 Section 1363(b)(1) of the Internal Revenue Code to
13 be separately stated; and (ii) a Subchapter S
14 corporation for which there is in effect a federal
15 election to opt out of the provisions of the
16 Subchapter S Revision Act of 1982 and have applied
17 instead the prior federal Subchapter S rules as in
18 effect on July 1, 1982, the taxable income of such
19 corporation determined in accordance with the
20 federal Subchapter S rules as in effect on July 1,
21 1982; and
22 (H) Partnerships. In the case of a
23 partnership, taxable income determined in accordance
24 with Section 703 of the Internal Revenue Code,
25 except that taxable income shall take into account
26 those items which are required by Section 703(a)(1)
27 to be separately stated but which would be taken
28 into account by an individual in calculating his
29 taxable income.
30 (f) Valuation limitation amount.
31 (1) In general. The valuation limitation amount
32 referred to in subsections (a) (2) (G), (c) (2) (I) and
33 (d)(2) (E) is an amount equal to:
34 (A) The sum of the pre-August 1, 1969
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1 appreciation amounts (to the extent consisting of
2 gain reportable under the provisions of Section 1245
3 or 1250 of the Internal Revenue Code) for all
4 property in respect of which such gain was reported
5 for the taxable year; plus
6 (B) The lesser of (i) the sum of the
7 pre-August 1, 1969 appreciation amounts (to the
8 extent consisting of capital gain) for all property
9 in respect of which such gain was reported for
10 federal income tax purposes for the taxable year, or
11 (ii) the net capital gain for the taxable year,
12 reduced in either case by any amount of such gain
13 included in the amount determined under subsection
14 (a) (2) (F) or (c) (2) (H).
15 (2) Pre-August 1, 1969 appreciation amount.
16 (A) If the fair market value of property
17 referred to in paragraph (1) was readily
18 ascertainable on August 1, 1969, the pre-August 1,
19 1969 appreciation amount for such property is the
20 lesser of (i) the excess of such fair market value
21 over the taxpayer's basis (for determining gain) for
22 such property on that date (determined under the
23 Internal Revenue Code as in effect on that date), or
24 (ii) the total gain realized and reportable for
25 federal income tax purposes in respect of the sale,
26 exchange or other disposition of such property.
27 (B) If the fair market value of property
28 referred to in paragraph (1) was not readily
29 ascertainable on August 1, 1969, the pre-August 1,
30 1969 appreciation amount for such property is that
31 amount which bears the same ratio to the total gain
32 reported in respect of the property for federal
33 income tax purposes for the taxable year, as the
34 number of full calendar months in that part of the
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1 taxpayer's holding period for the property ending
2 July 31, 1969 bears to the number of full calendar
3 months in the taxpayer's entire holding period for
4 the property.
5 (C) The Department shall prescribe such
6 regulations as may be necessary to carry out the
7 purposes of this paragraph.
8 (g) Double deductions. Unless specifically provided
9 otherwise, nothing in this Section shall permit the same item
10 to be deducted more than once.
11 (h) Legislative intention. Except as expressly provided
12 by this Section there shall be no modifications or
13 limitations on the amounts of income, gain, loss or deduction
14 taken into account in determining gross income, adjusted
15 gross income or taxable income for federal income tax
16 purposes for the taxable year, or in the amount of such items
17 entering into the computation of base income and net income
18 under this Act for such taxable year, whether in respect of
19 property values as of August 1, 1969 or otherwise.
20 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
21 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
22 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; revised
23 8-23-99.)