93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4623

 

Introduced 02/04/04, by Kathleen A. Ryg

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203   from Ch. 120, par. 2-203

    Amends the Illinois Income Tax Act. Allows a deduction from federal adjusted gross income, in arriving at base income for Illinois income tax purposes, of an amount equal to earnings in a special needs trust, to the extent included in adjusted gross income. Defines "special needs trust" as a trust that is not liable to pay or reimburse the State or any public agency for financial aid or services to the individual, as provided in the Trusts and Trustees Act. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning taxes.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Income Tax Act is amended by
5 changing Section 203 as follows:
 
6     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7     Sec. 203. Base income defined.
8     (a) Individuals.
9         (1) In general. In the case of an individual, base
10     income means an amount equal to the taxpayer's adjusted
11     gross income for the taxable year as modified by paragraph
12     (2).
13         (2) Modifications. The adjusted gross income referred
14     to in paragraph (1) shall be modified by adding thereto the
15     sum of the following amounts:
16             (A) An amount equal to all amounts paid or accrued
17         to the taxpayer as interest or dividends during the
18         taxable year to the extent excluded from gross income
19         in the computation of adjusted gross income, except
20         stock dividends of qualified public utilities
21         described in Section 305(e) of the Internal Revenue
22         Code;
23             (B) An amount equal to the amount of tax imposed by
24         this Act to the extent deducted from gross income in
25         the computation of adjusted gross income for the
26         taxable year;
27             (C) An amount equal to the amount received during
28         the taxable year as a recovery or refund of real
29         property taxes paid with respect to the taxpayer's
30         principal residence under the Revenue Act of 1939 and
31         for which a deduction was previously taken under
32         subparagraph (L) of this paragraph (2) prior to July 1,

 

 

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1         1991, the retrospective application date of Article 4
2         of Public Act 87-17. In the case of multi-unit or
3         multi-use structures and farm dwellings, the taxes on
4         the taxpayer's principal residence shall be that
5         portion of the total taxes for the entire property
6         which is attributable to such principal residence;
7             (D) An amount equal to the amount of the capital
8         gain deduction allowable under the Internal Revenue
9         Code, to the extent deducted from gross income in the
10         computation of adjusted gross income;
11             (D-5) An amount, to the extent not included in
12         adjusted gross income, equal to the amount of money
13         withdrawn by the taxpayer in the taxable year from a
14         medical care savings account and the interest earned on
15         the account in the taxable year of a withdrawal
16         pursuant to subsection (b) of Section 20 of the Medical
17         Care Savings Account Act or subsection (b) of Section
18         20 of the Medical Care Savings Account Act of 2000;
19             (D-10) For taxable years ending after December 31,
20         1997, an amount equal to any eligible remediation costs
21         that the individual deducted in computing adjusted
22         gross income and for which the individual claims a
23         credit under subsection (l) of Section 201;
24             (D-15) For taxable years 2001 and thereafter, an
25         amount equal to the bonus depreciation deduction (30%
26         of the adjusted basis of the qualified property) taken
27         on the taxpayer's federal income tax return for the
28         taxable year under subsection (k) of Section 168 of the
29         Internal Revenue Code; and
30             (D-16) If the taxpayer reports a capital gain or
31         loss on the taxpayer's federal income tax return for
32         the taxable year based on a sale or transfer of
33         property for which the taxpayer was required in any
34         taxable year to make an addition modification under
35         subparagraph (D-15), then an amount equal to the
36         aggregate amount of the deductions taken in all taxable

 

 

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1         years under subparagraph (Z) with respect to that
2         property. ;
3             The taxpayer is required to make the addition
4         modification under this subparagraph only once with
5         respect to any one piece of property; . and
6             (D-20) (D-15) For taxable years beginning on or
7         after January 1, 2002, in the case of a distribution
8         from a qualified tuition program under Section 529 of
9         the Internal Revenue Code, other than (i) a
10         distribution from a College Savings Pool created under
11         Section 16.5 of the State Treasurer Act or (ii) a
12         distribution from the Illinois Prepaid Tuition Trust
13         Fund, an amount equal to the amount excluded from gross
14         income under Section 529(c)(3)(B);
15     and by deducting from the total so obtained the sum of the
16     following amounts:
17             (E) For taxable years ending before December 31,
18         2001, any amount included in such total in respect of
19         any compensation (including but not limited to any
20         compensation paid or accrued to a serviceman while a
21         prisoner of war or missing in action) paid to a
22         resident by reason of being on active duty in the Armed
23         Forces of the United States and in respect of any
24         compensation paid or accrued to a resident who as a
25         governmental employee was a prisoner of war or missing
26         in action, and in respect of any compensation paid to a
27         resident in 1971 or thereafter for annual training
28         performed pursuant to Sections 502 and 503, Title 32,
29         United States Code as a member of the Illinois National
30         Guard. For taxable years ending on or after December
31         31, 2001, any amount included in such total in respect
32         of any compensation (including but not limited to any
33         compensation paid or accrued to a serviceman while a
34         prisoner of war or missing in action) paid to a
35         resident by reason of being a member of any component
36         of the Armed Forces of the United States and in respect

 

 

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1         of any compensation paid or accrued to a resident who
2         as a governmental employee was a prisoner of war or
3         missing in action, and in respect of any compensation
4         paid to a resident in 2001 or thereafter by reason of
5         being a member of the Illinois National Guard. The
6         provisions of this amendatory Act of the 92nd General
7         Assembly are exempt from the provisions of Section 250;
8             (F) An amount equal to all amounts included in such
9         total pursuant to the provisions of Sections 402(a),
10         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
11         Internal Revenue Code, or included in such total as
12         distributions under the provisions of any retirement
13         or disability plan for employees of any governmental
14         agency or unit, or retirement payments to retired
15         partners, which payments are excluded in computing net
16         earnings from self employment by Section 1402 of the
17         Internal Revenue Code and regulations adopted pursuant
18         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 taxpayer
22         and included in such total for the taxable year;
23             (I) An amount equal to all amounts included in such
24         total pursuant to the provisions of Section 111 of the
25         Internal Revenue Code as a recovery of items previously
26         deducted from adjusted gross income in the computation
27         of taxable income;
28             (J) An amount equal to those dividends included in
29         such total which were paid by a corporation which
30         conducts business operations in an Enterprise Zone or
31         zones created under the Illinois Enterprise Zone Act,
32         and conducts substantially all of its operations in an
33         Enterprise Zone or zones;
34             (K) An amount equal to those dividends included in
35         such total that were paid by a corporation that
36         conducts business operations in a federally designated

 

 

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1         Foreign Trade Zone or Sub-Zone and that is designated a
2         High Impact Business located in Illinois; provided
3         that dividends eligible for the deduction provided in
4         subparagraph (J) of paragraph (2) of this subsection
5         shall not be eligible for the deduction provided under
6         this subparagraph (K);
7             (L) For taxable years ending after December 31,
8         1983, an amount equal to all social security benefits
9         and railroad retirement benefits included in such
10         total pursuant to Sections 72(r) and 86 of the Internal
11         Revenue Code;
12             (M) With the exception of any amounts subtracted
13         under subparagraph (N), an amount equal to the sum of
14         all amounts disallowed as deductions by (i) Sections
15         171(a) (2), and 265(2) of the Internal Revenue Code of
16         1954, as now or hereafter amended, and all amounts of
17         expenses allocable to interest and disallowed as
18         deductions by Section 265(1) of the Internal Revenue
19         Code of 1954, as now or hereafter amended; and (ii) for
20         taxable years ending on or after August 13, 1999,
21         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
22         the Internal Revenue Code; the provisions of this
23         subparagraph are exempt from the provisions of Section
24         250;
25             (N) An amount equal to all amounts included in such
26         total which are exempt from taxation by this State
27         either by reason of its statutes or Constitution or by
28         reason of the Constitution, treaties or statutes of the
29         United States; provided that, in the case of any
30         statute of this State that exempts income derived from
31         bonds or other obligations from the tax imposed under
32         this Act, the amount exempted shall be the interest net
33         of bond premium amortization;
34             (O) An amount equal to any contribution made to a
35         job training project established pursuant to the Tax
36         Increment Allocation Redevelopment Act;

 

 

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1             (P) An amount equal to the amount of the deduction
2         used to compute the federal income tax credit for
3         restoration of substantial amounts held under claim of
4         right for the taxable year pursuant to Section 1341 of
5         the Internal Revenue Code of 1986;
6             (Q) An amount equal to any amounts included in such
7         total, received by the taxpayer as an acceleration in
8         the payment of life, endowment or annuity benefits in
9         advance of the time they would otherwise be payable as
10         an indemnity for a terminal illness;
11             (R) An amount equal to the amount of any federal or
12         State bonus paid to veterans of the Persian Gulf War;
13             (S) An amount, to the extent included in adjusted
14         gross income, equal to the amount of a contribution
15         made in the taxable year on behalf of the taxpayer to a
16         medical care savings account established under the
17         Medical Care Savings Account Act or the Medical Care
18         Savings Account Act of 2000 to the extent the
19         contribution is accepted by the account administrator
20         as provided in that Act;
21             (T) An amount, to the extent included in adjusted
22         gross income, equal to the amount of interest earned in
23         the taxable year on a medical care savings account
24         established under the Medical Care Savings Account Act
25         or the Medical Care Savings Account Act of 2000 on
26         behalf of the taxpayer, other than interest added
27         pursuant to item (D-5) of this paragraph (2);
28             (U) For one taxable year beginning on or after
29         January 1, 1994, an amount equal to the total amount of
30         tax imposed and paid under subsections (a) and (b) of
31         Section 201 of this Act on grant amounts received by
32         the taxpayer under the Nursing Home Grant Assistance
33         Act during the taxpayer's taxable years 1992 and 1993;
34             (V) Beginning with tax years ending on or after
35         December 31, 1995 and ending with tax years ending on
36         or before December 31, 2004, an amount equal to the

 

 

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1         amount paid by a taxpayer who is a self-employed
2         taxpayer, a partner of a partnership, or a shareholder
3         in a Subchapter S corporation for health insurance or
4         long-term care insurance for that taxpayer or that
5         taxpayer's spouse or dependents, to the extent that the
6         amount paid for that health insurance or long-term care
7         insurance may be deducted under Section 213 of the
8         Internal Revenue Code of 1986, has not been deducted on
9         the federal income tax return of the taxpayer, and does
10         not exceed the taxable income attributable to that
11         taxpayer's income, self-employment income, or
12         Subchapter S corporation income; except that no
13         deduction shall be allowed under this item (V) if the
14         taxpayer is eligible to participate in any health
15         insurance or long-term care insurance plan of an
16         employer of the taxpayer or the taxpayer's spouse. The
17         amount of the health insurance and long-term care
18         insurance subtracted under this item (V) shall be
19         determined by multiplying total health insurance and
20         long-term care insurance premiums paid by the taxpayer
21         times a number that represents the fractional
22         percentage of eligible medical expenses under Section
23         213 of the Internal Revenue Code of 1986 not actually
24         deducted on the taxpayer's federal income tax return;
25             (W) For taxable years beginning on or after January
26         1, 1998, all amounts included in the taxpayer's federal
27         gross income in the taxable year from amounts converted
28         from a regular IRA to a Roth IRA. This paragraph is
29         exempt from the provisions of Section 250;
30             (X) For taxable year 1999 and thereafter, an amount
31         equal to the amount of any (i) distributions, to the
32         extent includible in gross income for federal income
33         tax purposes, made to the taxpayer because of his or
34         her status as a victim of persecution for racial or
35         religious reasons by Nazi Germany or any other Axis
36         regime or as an heir of the victim and (ii) items of

 

 

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1         income, to the extent includible in gross income for
2         federal income tax purposes, attributable to, derived
3         from or in any way related to assets stolen from,
4         hidden from, or otherwise lost to a victim of
5         persecution for racial or religious reasons by Nazi
6         Germany or any other Axis regime immediately prior to,
7         during, and immediately after World War II, including,
8         but not limited to, interest on the proceeds receivable
9         as insurance under policies issued to a victim of
10         persecution for racial or religious reasons by Nazi
11         Germany or any other Axis regime by European insurance
12         companies immediately prior to and during World War II;
13         provided, however, this subtraction from federal
14         adjusted gross income does not apply to assets acquired
15         with such assets or with the proceeds from the sale of
16         such assets; provided, further, this paragraph shall
17         only apply to a taxpayer who was the first recipient of
18         such assets after their recovery and who is a victim of
19         persecution for racial or religious reasons by Nazi
20         Germany or any other Axis regime or as an heir of the
21         victim. The amount of and the eligibility for any
22         public assistance, benefit, or similar entitlement is
23         not affected by the inclusion of items (i) and (ii) of
24         this paragraph in gross income for federal income tax
25         purposes. This paragraph is exempt from the provisions
26         of Section 250;
27             (Y) For taxable years beginning on or after January
28         1, 2002, moneys contributed in the taxable year to a
29         College Savings Pool account under Section 16.5 of the
30         State Treasurer Act, except that amounts excluded from
31         gross income under Section 529(c)(3)(C)(i) of the
32         Internal Revenue Code shall not be considered moneys
33         contributed under this subparagraph (Y). This
34         subparagraph (Y) is exempt from the provisions of
35         Section 250;
36             (Z) For taxable years 2001 and thereafter, for the

 

 

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1         taxable year in which the bonus depreciation deduction
2         (30% of the adjusted basis of the qualified property)
3         is taken on the taxpayer's federal income tax return
4         under subsection (k) of Section 168 of the Internal
5         Revenue Code and for each applicable taxable year
6         thereafter, an amount equal to "x", where:
7                 (1) "y" equals the amount of the depreciation
8             deduction taken for the taxable year on the
9             taxpayer's federal income tax return on property
10             for which the bonus depreciation deduction (30% of
11             the adjusted basis of the qualified property) was
12             taken in any year under subsection (k) of Section
13             168 of the Internal Revenue Code, but not including
14             the bonus depreciation deduction; and
15                 (2) "x" equals "y" multiplied by 30 and then
16             divided by 70 (or "y" multiplied by 0.429).
17             The aggregate amount deducted under this
18         subparagraph in all taxable years for any one piece of
19         property may not exceed the amount of the bonus
20         depreciation deduction (30% of the adjusted basis of
21         the qualified property) taken on that property on the
22         taxpayer's federal income tax return under subsection
23         (k) of Section 168 of the Internal Revenue Code; and
24             (AA) If the taxpayer reports a capital gain or loss
25         on the taxpayer's federal income tax return for the
26         taxable year based on a sale or transfer of property
27         for which the taxpayer was required in any taxable year
28         to make an addition modification under subparagraph
29         (D-15), then an amount equal to that addition
30         modification.
31             The taxpayer is allowed to take the deduction under
32         this subparagraph only once with respect to any one
33         piece of property; and
34             (BB) (Z) Any amount included in adjusted gross
35         income, other than salary, received by a driver in a
36         ridesharing arrangement using a motor vehicle; and .

 

 

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1             (CC) For taxable years ending on or after December
2         31, 2004, an amount equal to the earnings on a special
3         needs trust, to the extent included in adjusted gross
4         income. As used in this subparagraph, "special needs
5         trust" means a trust that is not liable to pay or
6         reimburse the State or any public agency for financial
7         aid or services to the individual, as provided in
8         Section 15.1 of the Trusts and Trustees Act.
 
9     (b) Corporations.
10         (1) In general. In the case of a corporation, base
11     income means an amount equal to the taxpayer's taxable
12     income for the taxable year as modified by paragraph (2).
13         (2) Modifications. The taxable income referred to in
14     paragraph (1) shall be modified by adding thereto the sum
15     of the following amounts:
16             (A) An amount equal to all amounts paid or accrued
17         to the taxpayer as interest and all distributions
18         received from regulated investment companies during
19         the taxable year to the extent excluded from gross
20         income in the computation of taxable income;
21             (B) An amount equal to the amount of tax imposed by
22         this Act to the extent deducted from gross income in
23         the computation of taxable income for the taxable year;
24             (C) In the case of a regulated investment company,
25         an amount equal to the excess of (i) the net long-term
26         capital gain for the taxable year, over (ii) the amount
27         of the capital gain dividends designated as such in
28         accordance with Section 852(b)(3)(C) of the Internal
29         Revenue Code and any amount designated under Section
30         852(b)(3)(D) of the Internal Revenue Code,
31         attributable to the taxable year (this amendatory Act
32         of 1995 (Public Act 89-89) is declarative of existing
33         law and is not a new enactment);
34             (D) The amount of any net operating loss deduction
35         taken in arriving at taxable income, other than a net

 

 

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1         operating loss carried forward from a taxable year
2         ending prior to December 31, 1986;
3             (E) For taxable years in which a net operating loss
4         carryback or carryforward from a taxable year ending
5         prior to December 31, 1986 is an element of taxable
6         income under paragraph (1) of subsection (e) or
7         subparagraph (E) of paragraph (2) of subsection (e),
8         the amount by which addition modifications other than
9         those provided by this subparagraph (E) exceeded
10         subtraction modifications in such earlier taxable
11         year, with the following limitations applied in the
12         order that they are listed:
13                 (i) the addition modification relating to the
14             net operating loss carried back or forward to the
15             taxable year from any taxable year ending prior to
16             December 31, 1986 shall be reduced by the amount of
17             addition modification under this subparagraph (E)
18             which related to that net operating loss and which
19             was taken into account in calculating the base
20             income of an earlier taxable year, and
21                 (ii) the addition modification relating to the
22             net operating loss carried back or forward to the
23             taxable year from any taxable year ending prior to
24             December 31, 1986 shall not exceed the amount of
25             such carryback or carryforward;
26             For taxable years in which there is a net operating
27         loss carryback or carryforward from more than one other
28         taxable year ending prior to December 31, 1986, the
29         addition modification provided in this subparagraph
30         (E) shall be the sum of the amounts computed
31         independently under the preceding provisions of this
32         subparagraph (E) for each such taxable year;
33             (E-5) For taxable years ending after December 31,
34         1997, an amount equal to any eligible remediation costs
35         that the corporation deducted in computing adjusted
36         gross income and for which the corporation claims a

 

 

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1         credit under subsection (l) of Section 201;
2             (E-10) For taxable years 2001 and thereafter, an
3         amount equal to the bonus depreciation deduction (30%
4         of the adjusted basis of the qualified property) taken
5         on the taxpayer's federal income tax return for the
6         taxable year under subsection (k) of Section 168 of the
7         Internal Revenue Code; and
8             (E-11) If the taxpayer reports a capital gain or
9         loss on the taxpayer's federal income tax return for
10         the taxable year based on a sale or transfer of
11         property for which the taxpayer was required in any
12         taxable year to make an addition modification under
13         subparagraph (E-10), then an amount equal to the
14         aggregate amount of the deductions taken in all taxable
15         years under subparagraph (T) with respect to that
16         property. ;
17             The taxpayer is required to make the addition
18         modification under this subparagraph only once with
19         respect to any one piece of property;
20     and by deducting from the total so obtained the sum of the
21     following amounts:
22             (F) An amount equal to the amount of any tax
23         imposed by this Act which was refunded to the taxpayer
24         and included in such total for the taxable year;
25             (G) An amount equal to any amount included in such
26         total under Section 78 of the Internal Revenue Code;
27             (H) In the case of a regulated investment company,
28         an amount equal to the amount of exempt interest
29         dividends as defined in subsection (b) (5) of Section
30         852 of the Internal Revenue Code, paid to shareholders
31         for the taxable year;
32             (I) With the exception of any amounts subtracted
33         under subparagraph (J), an amount equal to the sum of
34         all amounts disallowed as deductions by (i) Sections
35         171(a) (2), and 265(a)(2) and amounts disallowed as
36         interest expense by Section 291(a)(3) of the Internal

 

 

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1         Revenue Code, as now or hereafter amended, and all
2         amounts of expenses allocable to interest and
3         disallowed as deductions by Section 265(a)(1) of the
4         Internal Revenue Code, as now or hereafter amended; and
5         (ii) for taxable years ending on or after August 13,
6         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
7         832(b)(5)(B)(i) of the Internal Revenue Code; the
8         provisions of this subparagraph are exempt from the
9         provisions of Section 250;
10             (J) An amount equal to all amounts included in such
11         total which are exempt from taxation by this State
12         either by reason of its statutes or Constitution or by
13         reason of the Constitution, treaties or statutes of the
14         United States; provided that, in the case of any
15         statute of this State that exempts income derived from
16         bonds or other obligations from the tax imposed under
17         this Act, the amount exempted shall be the interest net
18         of bond premium amortization;
19             (K) An amount equal to those dividends included in
20         such total which were paid by a corporation which
21         conducts business operations in an Enterprise Zone or
22         zones created under the Illinois Enterprise Zone Act
23         and conducts substantially all of its operations in an
24         Enterprise Zone or zones;
25             (L) An amount equal to those dividends included in
26         such total that were paid by a corporation that
27         conducts business operations in a federally designated
28         Foreign Trade Zone or Sub-Zone and that is designated a
29         High Impact Business located in Illinois; provided
30         that dividends eligible for the deduction provided in
31         subparagraph (K) of paragraph 2 of this subsection
32         shall not be eligible for the deduction provided under
33         this subparagraph (L);
34             (M) For any taxpayer that is a financial
35         organization within the meaning of Section 304(c) of
36         this Act, an amount included in such total as interest

 

 

HB4623 - 14 - LRB093 16612 SJM 42262 b

1         income from a loan or loans made by such taxpayer to a
2         borrower, to the extent that such a loan is secured by
3         property which is eligible for the Enterprise Zone
4         Investment Credit. To determine the portion of a loan
5         or loans that is secured by property eligible for a
6         Section 201(f) investment credit to the borrower, the
7         entire principal amount of the loan or loans between
8         the taxpayer and the borrower should be divided into
9         the basis of the Section 201(f) investment credit
10         property which secures the loan or loans, using for
11         this purpose the original basis of such property on the
12         date that it was placed in service in the Enterprise
13         Zone. The subtraction modification available to
14         taxpayer in any year under this subsection shall be
15         that portion of the total interest paid by the borrower
16         with respect to such loan attributable to the eligible
17         property as calculated under the previous sentence;
18             (M-1) For any taxpayer that is a financial
19         organization within the meaning of Section 304(c) of
20         this Act, an amount included in such total as interest
21         income from a loan or loans made by such taxpayer to a
22         borrower, to the extent that such a loan is secured by
23         property which is eligible for the High Impact Business
24         Investment Credit. To determine the portion of a loan
25         or loans that is secured by property eligible for a
26         Section 201(h) investment credit to the borrower, the
27         entire principal amount of the loan or loans between
28         the taxpayer and the borrower should be divided into
29         the basis of the Section 201(h) investment credit
30         property which secures the loan or loans, using for
31         this purpose the original basis of such property on the
32         date that it was placed in service in a federally
33         designated Foreign Trade Zone or Sub-Zone located in
34         Illinois. No taxpayer that is eligible for the
35         deduction provided in subparagraph (M) of paragraph
36         (2) of this subsection shall be eligible for the

 

 

HB4623 - 15 - LRB093 16612 SJM 42262 b

1         deduction provided under this subparagraph (M-1). The
2         subtraction modification available to taxpayers in any
3         year under this subsection shall be that portion of the
4         total interest paid by the borrower with respect to
5         such loan attributable to the eligible property as
6         calculated under the previous sentence;
7             (N) Two times any contribution made during the
8         taxable year to a designated zone organization to the
9         extent that the contribution (i) qualifies as a
10         charitable contribution under subsection (c) of
11         Section 170 of the Internal Revenue Code and (ii) must,
12         by its terms, be used for a project approved by the
13         Department of Commerce and Economic Opportunity
14         Community Affairs under Section 11 of the Illinois
15         Enterprise Zone Act;
16             (O) An amount equal to: (i) 85% for taxable years
17         ending on or before December 31, 1992, or, a percentage
18         equal to the percentage allowable under Section
19         243(a)(1) of the Internal Revenue Code of 1986 for
20         taxable years ending after December 31, 1992, of the
21         amount by which dividends included in taxable income
22         and received from a corporation that is not created or
23         organized under the laws of the United States or any
24         state or political subdivision thereof, including, for
25         taxable years ending on or after December 31, 1988,
26         dividends received or deemed received or paid or deemed
27         paid under Sections 951 through 964 of the Internal
28         Revenue Code, exceed the amount of the modification
29         provided under subparagraph (G) of paragraph (2) of
30         this subsection (b) which is related to such dividends;
31         plus (ii) 100% of the amount by which dividends,
32         included in taxable income and received, including,
33         for taxable years ending on or after December 31, 1988,
34         dividends received or deemed received or paid or deemed
35         paid under Sections 951 through 964 of the Internal
36         Revenue Code, from any such corporation specified in

 

 

HB4623 - 16 - LRB093 16612 SJM 42262 b

1         clause (i) that would but for the provisions of Section
2         1504 (b) (3) of the Internal Revenue Code be treated as
3         a member of the affiliated group which includes the
4         dividend recipient, exceed the amount of the
5         modification provided under subparagraph (G) of
6         paragraph (2) of this subsection (b) which is related
7         to such dividends;
8             (P) An amount equal to any contribution made to a
9         job training project established pursuant to the Tax
10         Increment Allocation Redevelopment Act;
11             (Q) An amount equal to the amount of the deduction
12         used to compute the federal income tax credit for
13         restoration of substantial amounts held under claim of
14         right for the taxable year pursuant to Section 1341 of
15         the Internal Revenue Code of 1986;
16             (R) In the case of an attorney-in-fact with respect
17         to whom an interinsurer or a reciprocal insurer has
18         made the election under Section 835 of the Internal
19         Revenue Code, 26 U.S.C. 835, an amount equal to the
20         excess, if any, of the amounts paid or incurred by that
21         interinsurer or reciprocal insurer in the taxable year
22         to the attorney-in-fact over the deduction allowed to
23         that interinsurer or reciprocal insurer with respect
24         to the attorney-in-fact under Section 835(b) of the
25         Internal Revenue Code for the taxable year;
26             (S) For taxable years ending on or after December
27         31, 1997, in the case of a Subchapter S corporation, an
28         amount equal to all amounts of income allocable to a
29         shareholder subject to the Personal Property Tax
30         Replacement Income Tax imposed by subsections (c) and
31         (d) of Section 201 of this Act, including amounts
32         allocable to organizations exempt from federal income
33         tax by reason of Section 501(a) of the Internal Revenue
34         Code. This subparagraph (S) is exempt from the
35         provisions of Section 250;
36             (T) For taxable years 2001 and thereafter, for the

 

 

HB4623 - 17 - LRB093 16612 SJM 42262 b

1         taxable year in which the bonus depreciation deduction
2         (30% of the adjusted basis of the qualified property)
3         is taken on the taxpayer's federal income tax return
4         under subsection (k) of Section 168 of the Internal
5         Revenue Code and for each applicable taxable year
6         thereafter, an amount equal to "x", where:
7                 (1) "y" equals the amount of the depreciation
8             deduction taken for the taxable year on the
9             taxpayer's federal income tax return on property
10             for which the bonus depreciation deduction (30% of
11             the adjusted basis of the qualified property) was
12             taken in any year under subsection (k) of Section
13             168 of the Internal Revenue Code, but not including
14             the bonus depreciation deduction; and
15                 (2) "x" equals "y" multiplied by 30 and then
16             divided by 70 (or "y" multiplied by 0.429).
17             The aggregate amount deducted under this
18         subparagraph in all taxable years for any one piece of
19         property may not exceed the amount of the bonus
20         depreciation deduction (30% of the adjusted basis of
21         the qualified property) taken on that property on the
22         taxpayer's federal income tax return under subsection
23         (k) of Section 168 of the Internal Revenue Code; and
24             (U) If the taxpayer reports a capital gain or loss
25         on the taxpayer's federal income tax return for the
26         taxable year based on a sale or transfer of property
27         for which the taxpayer was required in any taxable year
28         to make an addition modification under subparagraph
29         (E-10), then an amount equal to that addition
30         modification.
31             The taxpayer is allowed to take the deduction under
32         this subparagraph only once with respect to any one
33         piece of property; and .
34             (V) For taxable years ending on or after December
35         31, 2004, an amount equal to the earnings on a special
36         needs trust, to the extent included in adjusted gross

 

 

HB4623 - 18 - LRB093 16612 SJM 42262 b

1         income. As used in this subparagraph, "special needs
2         trust" means a trust that is not liable to pay or
3         reimburse the State or any public agency for financial
4         aid or services to the individual, as provided in
5         Section 15.1 of the Trusts and Trustees Act.
6         (3) Special rule. For purposes of paragraph (2) (A),
7     "gross income" in the case of a life insurance company, for
8     tax years ending on and after December 31, 1994, shall mean
9     the gross investment income for the taxable year.
 
10     (c) Trusts and estates.
11         (1) In general. In the case of a trust or estate, base
12     income means an amount equal to the taxpayer's taxable
13     income for the taxable year as modified by paragraph (2).
14         (2) Modifications. Subject to the provisions of
15     paragraph (3), the taxable income referred to in paragraph
16     (1) shall be modified by adding thereto the sum of the
17     following amounts:
18             (A) An amount equal to all amounts paid or accrued
19         to the taxpayer as interest or dividends during the
20         taxable year to the extent excluded from gross income
21         in the computation of taxable income;
22             (B) In the case of (i) an estate, $600; (ii) a
23         trust which, under its governing instrument, is
24         required to distribute all of its income currently,
25         $300; and (iii) any other trust, $100, but in each such
26         case, only to the extent such amount was deducted in
27         the computation of taxable income;
28             (C) An amount equal to the amount of tax imposed by
29         this Act to the extent deducted from gross income in
30         the computation of taxable income for the taxable year;
31             (D) The amount of any net operating loss deduction
32         taken in arriving at taxable income, other than a net
33         operating loss carried forward from a taxable year
34         ending prior to December 31, 1986;
35             (E) For taxable years in which a net operating loss

 

 

HB4623 - 19 - LRB093 16612 SJM 42262 b

1         carryback or carryforward from a taxable year ending
2         prior to December 31, 1986 is an element of taxable
3         income under paragraph (1) of subsection (e) or
4         subparagraph (E) of paragraph (2) of subsection (e),
5         the amount by which addition modifications other than
6         those provided by this subparagraph (E) exceeded
7         subtraction modifications in such taxable year, with
8         the following limitations applied in the order that
9         they are listed:
10                 (i) the addition modification relating to the
11             net operating loss carried back or forward to the
12             taxable year from any taxable year ending prior to
13             December 31, 1986 shall be reduced by the amount of
14             addition modification under this subparagraph (E)
15             which related to that net operating loss and which
16             was taken into account in calculating the base
17             income of an earlier taxable year, and
18                 (ii) the addition modification relating to the
19             net operating loss carried back or forward to the
20             taxable year from any taxable year ending prior to
21             December 31, 1986 shall not exceed the amount of
22             such carryback or carryforward;
23             For taxable years in which there is a net operating
24         loss carryback or carryforward from more than one other
25         taxable year ending prior to December 31, 1986, the
26         addition modification provided in this subparagraph
27         (E) shall be the sum of the amounts computed
28         independently under the preceding provisions of this
29         subparagraph (E) for each such taxable year;
30             (F) For taxable years ending on or after January 1,
31         1989, an amount equal to the tax deducted pursuant to
32         Section 164 of the Internal Revenue Code if the trust
33         or estate is claiming the same tax for purposes of the
34         Illinois foreign tax credit under Section 601 of this
35         Act;
36             (G) An amount equal to the amount of the capital

 

 

HB4623 - 20 - LRB093 16612 SJM 42262 b

1         gain deduction allowable under the Internal Revenue
2         Code, to the extent deducted from gross income in the
3         computation of taxable income;
4             (G-5) For taxable years ending after December 31,
5         1997, an amount equal to any eligible remediation costs
6         that the trust or estate deducted in computing adjusted
7         gross income and for which the trust or estate claims a
8         credit under subsection (l) of Section 201;
9             (G-10) For taxable years 2001 and thereafter, an
10         amount equal to the bonus depreciation deduction (30%
11         of the adjusted basis of the qualified property) taken
12         on the taxpayer's federal income tax return for the
13         taxable year under subsection (k) of Section 168 of the
14         Internal Revenue Code; and
15             (G-11) If the taxpayer reports a capital gain or
16         loss on the taxpayer's federal income tax return for
17         the taxable year based on a sale or transfer of
18         property for which the taxpayer was required in any
19         taxable year to make an addition modification under
20         subparagraph (G-10), then an amount equal to the
21         aggregate amount of the deductions taken in all taxable
22         years under subparagraph (R) with respect to that
23         property. ;
24             The taxpayer is required to make the addition
25         modification under this subparagraph only once with
26         respect to any one piece of property;
27     and by deducting from the total so obtained the sum of the
28     following amounts:
29             (H) An amount equal to all amounts included in such
30         total pursuant to the provisions of Sections 402(a),
31         402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
32         Internal Revenue Code or included in such total as
33         distributions under the provisions of any retirement
34         or disability plan for employees of any governmental
35         agency or unit, or retirement payments to retired
36         partners, which payments are excluded in computing net

 

 

HB4623 - 21 - LRB093 16612 SJM 42262 b

1         earnings from self employment by Section 1402 of the
2         Internal Revenue Code and regulations adopted pursuant
3         thereto;
4             (I) The valuation limitation amount;
5             (J) An amount equal to the amount of any tax
6         imposed by this Act which was refunded to the taxpayer
7         and included in such total for the taxable year;
8             (K) An amount equal to all amounts included in
9         taxable income as modified by subparagraphs (A), (B),
10         (C), (D), (E), (F) and (G) which are exempt from
11         taxation by this State either by reason of its statutes
12         or Constitution or by reason of the Constitution,
13         treaties or statutes of the United States; provided
14         that, in the case of any statute of this State that
15         exempts income derived from bonds or other obligations
16         from the tax imposed under this Act, the amount
17         exempted shall be the interest net of bond premium
18         amortization;
19             (L) With the exception of any amounts subtracted
20         under subparagraph (K), an amount equal to the sum of
21         all amounts disallowed as deductions by (i) Sections
22         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
23         as now or hereafter amended, and all amounts of
24         expenses allocable to interest and disallowed as
25         deductions by Section 265(1) of the Internal Revenue
26         Code of 1954, as now or hereafter amended; and (ii) for
27         taxable years ending on or after August 13, 1999,
28         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
29         the Internal Revenue Code; the provisions of this
30         subparagraph are exempt from the provisions of Section
31         250;
32             (M) An amount equal to those dividends included in
33         such total which were paid by a corporation which
34         conducts business operations in an Enterprise Zone or
35         zones created under the Illinois Enterprise Zone Act
36         and conducts substantially all of its operations in an

 

 

HB4623 - 22 - LRB093 16612 SJM 42262 b

1         Enterprise Zone or Zones;
2             (N) An amount equal to any contribution made to a
3         job training project established pursuant to the Tax
4         Increment Allocation Redevelopment Act;
5             (O) An amount equal to those dividends included in
6         such total that were paid by a corporation that
7         conducts business operations in a federally designated
8         Foreign Trade Zone or Sub-Zone and that is designated a
9         High Impact Business located in Illinois; provided
10         that dividends eligible for the deduction provided in
11         subparagraph (M) of paragraph (2) of this subsection
12         shall not be eligible for the deduction provided under
13         this subparagraph (O);
14             (P) An amount equal to the amount of the deduction
15         used to compute the federal income tax credit for
16         restoration of substantial amounts held under claim of
17         right for the taxable year pursuant to Section 1341 of
18         the Internal Revenue Code of 1986;
19             (Q) For taxable year 1999 and thereafter, an amount
20         equal to the amount of any (i) distributions, to the
21         extent includible in gross income for federal income
22         tax purposes, made to the taxpayer because of his or
23         her status as a victim of persecution for racial or
24         religious reasons by Nazi Germany or any other Axis
25         regime or as an heir of the victim and (ii) items of
26         income, to the extent includible in gross income for
27         federal income tax purposes, attributable to, derived
28         from or in any way related to assets stolen from,
29         hidden from, or otherwise lost to a victim of
30         persecution for racial or religious reasons by Nazi
31         Germany or any other Axis regime immediately prior to,
32         during, and immediately after World War II, including,
33         but not limited to, interest on the proceeds receivable
34         as insurance under policies issued to a victim of
35         persecution for racial or religious reasons by Nazi
36         Germany or any other Axis regime by European insurance

 

 

HB4623 - 23 - LRB093 16612 SJM 42262 b

1         companies immediately prior to and during World War II;
2         provided, however, this subtraction from federal
3         adjusted gross income does not apply to assets acquired
4         with such assets or with the proceeds from the sale of
5         such assets; provided, further, this paragraph shall
6         only apply to a taxpayer who was the first recipient of
7         such assets after their recovery and who is a victim of
8         persecution for racial or religious reasons by Nazi
9         Germany or any other Axis regime or as an heir of the
10         victim. The amount of and the eligibility for any
11         public assistance, benefit, or similar entitlement is
12         not affected by the inclusion of items (i) and (ii) of
13         this paragraph in gross income for federal income tax
14         purposes. This paragraph is exempt from the provisions
15         of Section 250;
16             (R) For taxable years 2001 and thereafter, for the
17         taxable year in which the bonus depreciation deduction
18         (30% of the adjusted basis of the qualified property)
19         is taken on the taxpayer's federal income tax return
20         under subsection (k) of Section 168 of the Internal
21         Revenue Code and for each applicable taxable year
22         thereafter, an amount equal to "x", where:
23                 (1) "y" equals the amount of the depreciation
24             deduction taken for the taxable year on the
25             taxpayer's federal income tax return on property
26             for which the bonus depreciation deduction (30% of
27             the adjusted basis of the qualified property) was
28             taken in any year under subsection (k) of Section
29             168 of the Internal Revenue Code, but not including
30             the bonus depreciation deduction; and
31                 (2) "x" equals "y" multiplied by 30 and then
32             divided by 70 (or "y" multiplied by 0.429).
33             The aggregate amount deducted under this
34         subparagraph in all taxable years for any one piece of
35         property may not exceed the amount of the bonus
36         depreciation deduction (30% of the adjusted basis of

 

 

HB4623 - 24 - LRB093 16612 SJM 42262 b

1         the qualified property) taken on that property on the
2         taxpayer's federal income tax return under subsection
3         (k) of Section 168 of the Internal Revenue Code; and
4             (S) If the taxpayer reports a capital gain or loss
5         on the taxpayer's federal income tax return for the
6         taxable year based on a sale or transfer of property
7         for which the taxpayer was required in any taxable year
8         to make an addition modification under subparagraph
9         (G-10), then an amount equal to that addition
10         modification.
11             The taxpayer is allowed to take the deduction under
12         this subparagraph only once with respect to any one
13         piece of property; and .
14             (T) For taxable years ending on or after December
15         31, 2004, an amount equal to the earnings on a special
16         needs trust, to the extent included in adjusted gross
17         income. As used in this subparagraph, "special needs
18         trust" means a trust that is not liable to pay or
19         reimburse the State or any public agency for financial
20         aid or services to the individual, as provided in
21         Section 15.1 of the Trusts and Trustees Act.
22         (3) Limitation. The amount of any modification
23     otherwise required under this subsection shall, under
24     regulations prescribed by the Department, be adjusted by
25     any amounts included therein which were properly paid,
26     credited, or required to be distributed, or permanently set
27     aside for charitable purposes pursuant to Internal Revenue
28     Code Section 642(c) during the taxable year.
 
29     (d) Partnerships.
30         (1) In general. In the case of a partnership, base
31     income means an amount equal to the taxpayer's taxable
32     income for the taxable year as modified by paragraph (2).
33         (2) Modifications. The taxable income referred to in
34     paragraph (1) shall be modified by adding thereto the sum
35     of the following amounts:

 

 

HB4623 - 25 - LRB093 16612 SJM 42262 b

1             (A) An amount equal to all amounts paid or accrued
2         to the taxpayer as interest or dividends during the
3         taxable year to the extent excluded from gross income
4         in the computation of taxable income;
5             (B) An amount equal to the amount of tax imposed by
6         this Act to the extent deducted from gross income for
7         the taxable year;
8             (C) The amount of deductions allowed to the
9         partnership pursuant to Section 707 (c) of the Internal
10         Revenue Code in calculating its taxable income;
11             (D) An amount equal to the amount of the capital
12         gain deduction allowable under the Internal Revenue
13         Code, to the extent deducted from gross income in the
14         computation of taxable income;
15             (D-5) For taxable years 2001 and thereafter, an
16         amount equal to the bonus depreciation deduction (30%
17         of the adjusted basis of the qualified property) taken
18         on the taxpayer's federal income tax return for the
19         taxable year under subsection (k) of Section 168 of the
20         Internal Revenue Code; and
21             (D-6) If the taxpayer reports a capital gain or
22         loss on the taxpayer's federal income tax return for
23         the taxable year based on a sale or transfer of
24         property for which the taxpayer was required in any
25         taxable year to make an addition modification under
26         subparagraph (D-5), then an amount equal to the
27         aggregate amount of the deductions taken in all taxable
28         years under subparagraph (O) with respect to that
29         property. ;
30             The taxpayer is required to make the addition
31         modification under this subparagraph only once with
32         respect to any one piece of property;
33     and by deducting from the total so obtained the following
34     amounts:
35             (E) The valuation limitation amount;
36             (F) An amount equal to the amount of any tax

 

 

HB4623 - 26 - LRB093 16612 SJM 42262 b

1         imposed by this Act which was refunded to the taxpayer
2         and included in such total for the taxable year;
3             (G) An amount equal to all amounts included in
4         taxable income as modified by subparagraphs (A), (B),
5         (C) and (D) which are exempt from taxation by this
6         State either by reason of its statutes or Constitution
7         or by reason of the Constitution, treaties or statutes
8         of the United States; provided that, in the case of any
9         statute of this State that exempts income derived from
10         bonds or other obligations from the tax imposed under
11         this Act, the amount exempted shall be the interest net
12         of bond premium amortization;
13             (H) Any income of the partnership which
14         constitutes personal service income as defined in
15         Section 1348 (b) (1) of the Internal Revenue Code (as
16         in effect December 31, 1981) or a reasonable allowance
17         for compensation paid or accrued for services rendered
18         by partners to the partnership, whichever is greater;
19             (I) An amount equal to all amounts of income
20         distributable to an entity subject to the Personal
21         Property Tax Replacement Income Tax imposed by
22         subsections (c) and (d) of Section 201 of this Act
23         including amounts distributable to organizations
24         exempt from federal income tax by reason of Section
25         501(a) of the Internal Revenue Code;
26             (J) With the exception of any amounts subtracted
27         under subparagraph (G), an amount equal to the sum of
28         all amounts disallowed as deductions by (i) Sections
29         171(a) (2), and 265(2) of the Internal Revenue Code of
30         1954, as now or hereafter amended, and all amounts of
31         expenses allocable to interest and disallowed as
32         deductions by Section 265(1) of the Internal Revenue
33         Code, as now or hereafter amended; and (ii) for taxable
34         years ending on or after August 13, 1999, Sections
35         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
36         Internal Revenue Code; the provisions of this

 

 

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1         subparagraph are exempt from the provisions of Section
2         250;
3             (K) An amount equal to those dividends included in
4         such total which were paid by a corporation which
5         conducts business operations in an Enterprise Zone or
6         zones created under the Illinois Enterprise Zone Act,
7         enacted by the 82nd General Assembly, and conducts
8         substantially all of its operations in an Enterprise
9         Zone or Zones;
10             (L) An amount equal to any contribution made to a
11         job training project established pursuant to the Real
12         Property Tax Increment Allocation Redevelopment Act;
13             (M) An amount equal to those dividends included in
14         such total that were paid by a corporation that
15         conducts business operations in a federally designated
16         Foreign Trade Zone or Sub-Zone and that is designated a
17         High Impact Business located in Illinois; provided
18         that dividends eligible for the deduction provided in
19         subparagraph (K) of paragraph (2) of this subsection
20         shall not be eligible for the deduction provided under
21         this subparagraph (M);
22             (N) An amount equal to the amount of the deduction
23         used to compute the federal income tax credit for
24         restoration of substantial amounts held under claim of
25         right for the taxable year pursuant to Section 1341 of
26         the Internal Revenue Code of 1986;
27             (O) For taxable years 2001 and thereafter, for the
28         taxable year in which the bonus depreciation deduction
29         (30% of the adjusted basis of the qualified property)
30         is taken on the taxpayer's federal income tax return
31         under subsection (k) of Section 168 of the Internal
32         Revenue Code and for each applicable taxable year
33         thereafter, an amount equal to "x", where:
34                 (1) "y" equals the amount of the depreciation
35             deduction taken for the taxable year on the
36             taxpayer's federal income tax return on property

 

 

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1             for which the bonus depreciation deduction (30% of
2             the adjusted basis of the qualified property) was
3             taken in any year under subsection (k) of Section
4             168 of the Internal Revenue Code, but not including
5             the bonus depreciation deduction; and
6                 (2) "x" equals "y" multiplied by 30 and then
7             divided by 70 (or "y" multiplied by 0.429).
8             The aggregate amount deducted under this
9         subparagraph in all taxable years for any one piece of
10         property may not exceed the amount of the bonus
11         depreciation deduction (30% of the adjusted basis of
12         the qualified property) taken on that property on the
13         taxpayer's federal income tax return under subsection
14         (k) of Section 168 of the Internal Revenue Code; and
15             (P) If the taxpayer reports a capital gain or loss
16         on the taxpayer's federal income tax return for the
17         taxable year based on a sale or transfer of property
18         for which the taxpayer was required in any taxable year
19         to make an addition modification under subparagraph
20         (D-5), then an amount equal to that addition
21         modification.
22             The taxpayer is allowed to take the deduction under
23         this subparagraph only once with respect to any one
24         piece of property; and .
25             (Q) For taxable years ending on or after December
26         31, 2004, an amount equal to the earnings on a special
27         needs trust, to the extent included in adjusted gross
28         income. As used in this subparagraph, "special needs
29         trust" means a trust that is not liable to pay or
30         reimburse the State or any public agency for financial
31         aid or services to the individual, as provided in
32         Section 15.1 of the Trusts and Trustees Act.
 
33     (e) Gross income; adjusted gross income; taxable income.
34         (1) In general. Subject to the provisions of paragraph
35     (2) and subsection (b) (3), for purposes of this Section

 

 

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1     and Section 803(e), a taxpayer's gross income, adjusted
2     gross income, or taxable income for the taxable year shall
3     mean the amount of gross income, adjusted gross income or
4     taxable income properly reportable for federal income tax
5     purposes for the taxable year under the provisions of the
6     Internal Revenue Code. Taxable income may be less than
7     zero. However, for taxable years ending on or after
8     December 31, 1986, net operating loss carryforwards from
9     taxable years ending prior to December 31, 1986, may not
10     exceed the sum of federal taxable income for the taxable
11     year before net operating loss deduction, plus the excess
12     of addition modifications over subtraction modifications
13     for the taxable year. For taxable years ending prior to
14     December 31, 1986, taxable income may never be an amount in
15     excess of the net operating loss for the taxable year as
16     defined in subsections (c) and (d) of Section 172 of the
17     Internal Revenue Code, provided that when taxable income of
18     a 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 or
22     subparagraph (E) of paragraph (2) of subsection (c) for
23     trusts and estates, exceed subtraction modifications, an
24     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 subsection
29     (e) applied in conjunction with Section 172 of the Internal
30     Revenue Code.
31         (2) Special rule. For purposes of paragraph (1) of this
32     subsection, the taxable income properly reportable for
33     federal income tax purposes shall mean:
34             (A) Certain life insurance companies. In the case
35         of a life insurance company subject to the tax imposed
36         by Section 801 of the Internal Revenue Code, life

 

 

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1         insurance company taxable income, plus the amount of
2         distribution from pre-1984 policyholder surplus
3         accounts as calculated under Section 815a of the
4         Internal Revenue Code;
5             (B) Certain other insurance companies. In the case
6         of mutual insurance companies subject to the tax
7         imposed by Section 831 of the Internal Revenue Code,
8         insurance company taxable income;
9             (C) Regulated investment companies. In the case of
10         a regulated investment company subject to the tax
11         imposed by Section 852 of the Internal Revenue Code,
12         investment company taxable income;
13             (D) Real estate investment trusts. In the case of a
14         real estate investment trust subject to the tax imposed
15         by Section 857 of the Internal Revenue Code, real
16         estate investment trust taxable income;
17             (E) Consolidated corporations. In the case of a
18         corporation which is a member of an affiliated group of
19         corporations filing a consolidated income tax return
20         for the taxable year for federal income tax purposes,
21         taxable income determined as if such corporation had
22         filed a separate return for federal income tax purposes
23         for the taxable year and each preceding taxable year
24         for which it was a member of an affiliated group. For
25         purposes of this subparagraph, the taxpayer's separate
26         taxable income shall be determined as if the election
27         provided by Section 243(b) (2) of the Internal Revenue
28         Code had been in effect for all such years;
29             (F) Cooperatives. In the case of a cooperative
30         corporation or association, the taxable income of such
31         organization determined in accordance with the
32         provisions of Section 1381 through 1388 of the Internal
33         Revenue Code;
34             (G) Subchapter S corporations. In the case of: (i)
35         a Subchapter S corporation for which there is in effect
36         an election for the taxable year under Section 1362 of

 

 

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1         the Internal Revenue Code, the taxable income of such
2         corporation determined in accordance with Section
3         1363(b) of the Internal Revenue Code, except that
4         taxable income shall take into account those items
5         which are required by Section 1363(b)(1) of the
6         Internal Revenue Code to be separately stated; and (ii)
7         a Subchapter S corporation for which there is in effect
8         a federal election to opt out of the provisions of the
9         Subchapter S Revision Act of 1982 and have applied
10         instead the prior federal Subchapter S rules as in
11         effect on July 1, 1982, the taxable income of such
12         corporation determined in accordance with the federal
13         Subchapter S rules as in effect on July 1, 1982; and
14             (H) Partnerships. In the case of a partnership,
15         taxable income determined in accordance with Section
16         703 of the Internal Revenue Code, except that taxable
17         income shall take into account those items which are
18         required by Section 703(a)(1) to be separately stated
19         but which would be taken into account by an individual
20         in calculating his taxable income.
 
21     (f) Valuation limitation amount.
22         (1) In general. The valuation limitation amount
23     referred to in subsections (a) (2) (G), (c) (2) (I) and
24     (d)(2) (E) is an amount equal to:
25             (A) The sum of the pre-August 1, 1969 appreciation
26         amounts (to the extent consisting of gain reportable
27         under the provisions of Section 1245 or 1250 of the
28         Internal Revenue Code) for all property in respect of
29         which such gain was reported for the taxable year; plus
30             (B) The lesser of (i) the sum of the pre-August 1,
31         1969 appreciation amounts (to the extent consisting of
32         capital gain) for all property in respect of which such
33         gain was reported for federal income tax purposes for
34         the taxable year, or (ii) the net capital gain for the
35         taxable year, reduced in either case by any amount of

 

 

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1         such gain included in the amount determined under
2         subsection (a) (2) (F) or (c) (2) (H).
3         (2) Pre-August 1, 1969 appreciation amount.
4             (A) If the fair market value of property referred
5         to in paragraph (1) was readily ascertainable on August
6         1, 1969, the pre-August 1, 1969 appreciation amount for
7         such property is the lesser of (i) the excess of such
8         fair market value over the taxpayer's basis (for
9         determining gain) for such property on that date
10         (determined under the Internal Revenue Code as in
11         effect on that date), or (ii) the total gain realized
12         and reportable for federal income tax purposes in
13         respect of the sale, exchange or other disposition of
14         such property.
15             (B) If the fair market value of property referred
16         to in paragraph (1) was not readily ascertainable on
17         August 1, 1969, the pre-August 1, 1969 appreciation
18         amount for such property is that amount which bears the
19         same ratio to the total gain reported in respect of the
20         property for federal income tax purposes for the
21         taxable year, as the number of full calendar months in
22         that part of the taxpayer's holding period for the
23         property ending July 31, 1969 bears to the number of
24         full calendar months in the taxpayer's entire holding
25         period for the property.
26             (C) The Department shall prescribe such
27         regulations as may be necessary to carry out the
28         purposes of this paragraph.
 
29     (g) Double deductions. Unless specifically provided
30 otherwise, nothing in this Section shall permit the same item
31 to be deducted more than once.
 
32     (h) Legislative intention. Except as expressly provided by
33 this Section there shall be no modifications or limitations on
34 the amounts of income, gain, loss or deduction taken into

 

 

HB4623 - 33 - LRB093 16612 SJM 42262 b

1 account in determining gross income, adjusted gross income or
2 taxable income for federal income tax purposes for the taxable
3 year, or in the amount of such items entering into the
4 computation of base income and net income under this Act for
5 such taxable year, whether in respect of property values as of
6 August 1, 1969 or otherwise.
7 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
8 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
9 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
10 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
11 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
12 7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
 
13     Section 99. Effective date. This Act takes effect upon
14 becoming law.