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91_HB0027
LRB9100371JMcb
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16 withdrawn by the taxpayer in the taxable year from a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 Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
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1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and
7 (X) Beginning with taxable years ending on or
8 after December 31, 1999, for taxpayers 62 years of
9 age and older, an amount equal to all amounts the
10 taxpayer pays during the taxable year for Medicare
11 Part B benefits under Title XVIII of the federal
12 Social Security Act for costs of, including but not
13 limited to, physician services, outpatient hospital
14 services, medical equipment and supplies, and other
15 health services and supplies. This subparagraph is
16 exempt from the provisions of Section 250.
17 (b) Corporations.
18 (1) In general. In the case of a corporation, base
19 income means an amount equal to the taxpayer's taxable
20 income for the taxable year as modified by paragraph (2).
21 (2) Modifications. The taxable income referred to
22 in paragraph (1) shall be modified by adding thereto the
23 sum of the following amounts:
24 (A) An amount equal to all amounts paid or
25 accrued to the taxpayer as interest and all
26 distributions received from regulated investment
27 companies during the taxable year to the extent
28 excluded from gross income in the computation of
29 taxable income;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income in the computation of taxable income
33 for the taxable year;
34 (C) In the case of a regulated investment
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1 company, an amount equal to the excess of (i) the
2 net long-term capital gain for the taxable year,
3 over (ii) the amount of the capital gain dividends
4 designated as such in accordance with Section
5 852(b)(3)(C) of the Internal Revenue Code and any
6 amount designated under Section 852(b)(3)(D) of the
7 Internal Revenue Code, attributable to the taxable
8 year. (this amendatory Act of 1995 (Public Act
9 89-89) is declarative of existing law and is not a
10 new enactment);.
11 (D) The amount of any net operating loss
12 deduction taken in arriving at taxable income, other
13 than a net operating loss carried forward from a
14 taxable year ending prior to December 31, 1986; and
15 (E) For taxable years in which a net operating
16 loss carryback or carryforward from a taxable year
17 ending prior to December 31, 1986 is an element of
18 taxable income under paragraph (1) of subsection (e)
19 or subparagraph (E) of paragraph (2) of subsection
20 (e), the amount by which addition modifications
21 other than those provided by this subparagraph (E)
22 exceeded subtraction modifications in such earlier
23 taxable year, with the following limitations applied
24 in the order that they are listed:
25 (i) the addition modification relating to
26 the net operating loss carried back or forward
27 to the taxable year from any taxable year
28 ending prior to December 31, 1986 shall be
29 reduced by the amount of addition modification
30 under this subparagraph (E) which related to
31 that net operating loss and which was taken
32 into account in calculating the base income of
33 an earlier taxable year, and
34 (ii) the addition modification relating
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1 to the net operating loss carried back or
2 forward to the taxable year from any taxable
3 year ending prior to December 31, 1986 shall
4 not exceed the amount of such carryback or
5 carryforward;
6 For taxable years in which there is a net
7 operating loss carryback or carryforward from more
8 than one other taxable year ending prior to December
9 31, 1986, the addition modification provided in this
10 subparagraph (E) shall be the sum of the amounts
11 computed independently under the preceding
12 provisions of this subparagraph (E) for each such
13 taxable year;, and
14 (E-5) For taxable years ending after December
15 31, 1997, an amount equal to any eligible
16 remediation costs that the corporation deducted in
17 computing adjusted gross income and for which the
18 corporation claims a credit under subsection (l) of
19 Section 201;
20 and by deducting from the total so obtained the sum of
21 the following amounts:
22 (F) An amount equal to the amount of any tax
23 imposed by this Act which was refunded to the
24 taxpayer and included in such total for the taxable
25 year;
26 (G) An amount equal to any amount included in
27 such total under Section 78 of the Internal Revenue
28 Code;
29 (H) In the case of a regulated investment
30 company, an amount equal to the amount of exempt
31 interest dividends as defined in subsection (b) (5)
32 of Section 852 of the Internal Revenue Code, paid to
33 shareholders for the taxable year;
34 (I) With the exception of any amounts
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1 subtracted under subparagraph (J), an amount equal
2 to the sum of all amounts disallowed as deductions
3 by Sections 171(a) (2), and 265(a)(2) and amounts
4 disallowed as interest expense by Section 291(a)(3)
5 of the Internal Revenue Code, as now or hereafter
6 amended, and all amounts of expenses allocable to
7 interest and disallowed as deductions by Section
8 265(a)(1) of the Internal Revenue Code, as now or
9 hereafter amended;
10 (J) An amount equal to all amounts included in
11 such total which are exempt from taxation by this
12 State either by reason of its statutes or
13 Constitution or by reason of the Constitution,
14 treaties or statutes of the United States; provided
15 that, in the case of any statute of this State that
16 exempts income derived from bonds or other
17 obligations from the tax imposed under this Act, the
18 amount exempted shall be the interest net of bond
19 premium amortization;
20 (K) An amount equal to those dividends
21 included in such total which were paid by a
22 corporation which conducts business operations in an
23 Enterprise Zone or zones created under the Illinois
24 Enterprise Zone Act and conducts substantially all
25 of its operations in an Enterprise Zone or zones;
26 (L) An amount equal to those dividends
27 included in such total that were paid by a
28 corporation that conducts business operations in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 and that is designated a High Impact Business
31 located in Illinois; provided that dividends
32 eligible for the deduction provided in subparagraph
33 (K) of paragraph 2 of this subsection shall not be
34 eligible for the deduction provided under this
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1 subparagraph (L);
2 (M) For any taxpayer that is a financial
3 organization within the meaning of Section 304(c) of
4 this Act, an amount included in such total as
5 interest income from a loan or loans made by such
6 taxpayer to a borrower, to the extent that such a
7 loan is secured by property which is eligible for
8 the Enterprise Zone Investment Credit. To determine
9 the portion of a loan or loans that is secured by
10 property eligible for a Section 201(h) investment
11 credit to the borrower, the entire principal amount
12 of the loan or loans between the taxpayer and the
13 borrower should be divided into the basis of the
14 Section 201(h) investment credit property which
15 secures the loan or loans, using for this purpose
16 the original basis of such property on the date that
17 it was placed in service in the Enterprise Zone.
18 The subtraction modification available to taxpayer
19 in any year under this subsection shall be that
20 portion of the total interest paid by the borrower
21 with respect to such loan attributable to the
22 eligible property as calculated under the previous
23 sentence;
24 (M-1) For any taxpayer that is a financial
25 organization within the meaning of Section 304(c) of
26 this Act, an amount included in such total as
27 interest income from a loan or loans made by such
28 taxpayer to a borrower, to the extent that such a
29 loan is secured by property which is eligible for
30 the High Impact Business Investment Credit. To
31 determine the portion of a loan or loans that is
32 secured by property eligible for a Section 201(i)
33 investment credit to the borrower, the entire
34 principal amount of the loan or loans between the
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1 taxpayer and the borrower should be divided into the
2 basis of the Section 201(i) investment credit
3 property which secures the loan or loans, using for
4 this purpose the original basis of such property on
5 the date that it was placed in service in a
6 federally designated Foreign Trade Zone or Sub-Zone
7 located in Illinois. No taxpayer that is eligible
8 for the deduction provided in subparagraph (M) of
9 paragraph (2) of this subsection shall be eligible
10 for the deduction provided under this subparagraph
11 (M-1). The subtraction modification available to
12 taxpayers in any year under this subsection shall be
13 that portion of the total interest paid by the
14 borrower with respect to such loan attributable to
15 the eligible property as calculated under the
16 previous sentence;
17 (N) Two times any contribution made during the
18 taxable year to a designated zone organization to
19 the extent that the contribution (i) qualifies as a
20 charitable contribution under subsection (c) of
21 Section 170 of the Internal Revenue Code and (ii)
22 must, by its terms, be used for a project approved
23 by the Department of Commerce and Community Affairs
24 under Section 11 of the Illinois Enterprise Zone
25 Act;
26 (O) An amount equal to: (i) 85% for taxable
27 years ending on or before December 31, 1992, or, a
28 percentage equal to the percentage allowable under
29 Section 243(a)(1) of the Internal Revenue Code of
30 1986 for taxable years ending after December 31,
31 1992, of the amount by which dividends included in
32 taxable income and received from a corporation that
33 is not created or organized under the laws of the
34 United States or any state or political subdivision
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1 thereof, including, for taxable years ending on or
2 after December 31, 1988, dividends received or
3 deemed received or paid or deemed paid under
4 Sections 951 through 964 of the Internal Revenue
5 Code, exceed the amount of the modification provided
6 under subparagraph (G) of paragraph (2) of this
7 subsection (b) which is related to such dividends;
8 plus (ii) 100% of the amount by which dividends,
9 included in taxable income and received, including,
10 for taxable years ending on or after December 31,
11 1988, dividends received or deemed received or paid
12 or deemed paid under Sections 951 through 964 of the
13 Internal Revenue Code, from any such corporation
14 specified in clause (i) that would but for the
15 provisions of Section 1504 (b) (3) of the Internal
16 Revenue Code be treated as a member of the
17 affiliated group which includes the dividend
18 recipient, exceed the amount of the modification
19 provided under subparagraph (G) of paragraph (2) of
20 this subsection (b) which is related to such
21 dividends;
22 (P) An amount equal to any contribution made
23 to a job training project established pursuant to
24 the Tax Increment Allocation Redevelopment Act; and
25 (Q) 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 (3) Special rule. For purposes of paragraph (2)
32 (A), "gross income" in the case of a life insurance
33 company, for tax years ending on and after December 31,
34 1994, shall mean the gross investment income for the
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1 taxable year.
2 (c) Trusts and estates.
3 (1) In general. In the case of a trust or estate,
4 base income means an amount equal to the taxpayer's
5 taxable income for the taxable year as modified by
6 paragraph (2).
7 (2) Modifications. Subject to the provisions of
8 paragraph (3), the taxable income referred to in
9 paragraph (1) shall be modified by adding thereto the sum
10 of the following amounts:
11 (A) An amount equal to all amounts paid or
12 accrued to the taxpayer as interest or dividends
13 during the taxable year to the extent excluded from
14 gross income in the computation of taxable income;
15 (B) In the case of (i) an estate, $600; (ii) a
16 trust which, under its governing instrument, is
17 required to distribute all of its income currently,
18 $300; and (iii) any other trust, $100, but in each
19 such case, only to the extent such amount was
20 deducted in the computation of taxable income;
21 (C) An amount equal to the amount of tax
22 imposed by this Act to the extent deducted from
23 gross income in the computation of taxable income
24 for the taxable year;
25 (D) The amount of any net operating loss
26 deduction taken in arriving at taxable income, other
27 than a net operating loss carried forward from a
28 taxable year ending prior to December 31, 1986;
29 (E) For taxable years in which a net operating
30 loss carryback or carryforward from a taxable year
31 ending prior to December 31, 1986 is an element of
32 taxable income under paragraph (1) of subsection (e)
33 or subparagraph (E) of paragraph (2) of subsection
34 (e), the amount by which addition modifications
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1 other than those provided by this subparagraph (E)
2 exceeded subtraction modifications in such taxable
3 year, with the following limitations applied in the
4 order that they are listed:
5 (i) the addition modification relating to
6 the net operating loss carried back or forward
7 to the taxable year from any taxable year
8 ending prior to December 31, 1986 shall be
9 reduced by the amount of addition modification
10 under this subparagraph (E) which related to
11 that net operating loss and which was taken
12 into account in calculating the base income of
13 an earlier taxable year, and
14 (ii) the addition modification relating
15 to the net operating loss carried back or
16 forward to the taxable year from any taxable
17 year ending prior to December 31, 1986 shall
18 not exceed the amount of such carryback or
19 carryforward;
20 For taxable years in which there is a net
21 operating loss carryback or carryforward from more
22 than one other taxable year ending prior to December
23 31, 1986, the addition modification provided in this
24 subparagraph (E) shall be the sum of the amounts
25 computed independently under the preceding
26 provisions of this subparagraph (E) for each such
27 taxable year;
28 (F) For taxable years ending on or after
29 January 1, 1989, an amount equal to the tax deducted
30 pursuant to Section 164 of the Internal Revenue Code
31 if the trust or estate is claiming the same tax for
32 purposes of the Illinois foreign tax credit under
33 Section 601 of this Act;
34 (G) An amount equal to the amount of the
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1 capital gain deduction allowable under the Internal
2 Revenue Code, to the extent deducted from gross
3 income in the computation of taxable income; and
4 (G-5) For taxable years ending after December
5 31, 1997, an amount equal to any eligible
6 remediation costs that the trust or estate deducted
7 in computing adjusted gross income and for which the
8 trust or estate claims a credit under subsection (l)
9 of Section 201;
10 and by deducting from the total so obtained the sum of
11 the following amounts:
12 (H) An amount equal to all amounts included in
13 such total pursuant to the provisions of Sections
14 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
15 408 of the Internal Revenue Code or included in such
16 total as distributions under the provisions of any
17 retirement or disability plan for employees of any
18 governmental agency or unit, or retirement payments
19 to retired partners, which payments are excluded in
20 computing net earnings from self employment by
21 Section 1402 of the Internal Revenue Code and
22 regulations adopted pursuant thereto;
23 (I) The valuation limitation amount;
24 (J) 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 (K) An amount equal to all amounts included in
29 taxable income as modified by subparagraphs (A),
30 (B), (C), (D), (E), (F) and (G) which are exempt
31 from taxation by this State either by reason of its
32 statutes or Constitution or by reason of the
33 Constitution, treaties or statutes of the United
34 States; provided that, in the case of any statute of
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1 this State that exempts income derived from bonds or
2 other obligations from the tax imposed under this
3 Act, the amount exempted shall be the interest net
4 of bond premium amortization;
5 (L) With the exception of any amounts
6 subtracted under subparagraph (K), an amount equal
7 to the sum of all amounts disallowed as deductions
8 by Sections 171(a) (2) and 265(a)(2) of the Internal
9 Revenue Code, as now or hereafter amended, and all
10 amounts of expenses allocable to interest and
11 disallowed as deductions by Section 265(1) of the
12 Internal Revenue Code of 1954, as now or hereafter
13 amended;
14 (M) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act and conducts substantially all
19 of its operations in an Enterprise Zone or Zones;
20 (N) An amount equal to any contribution made
21 to a job training project established pursuant to
22 the Tax Increment Allocation Redevelopment Act;
23 (O) An amount equal to those dividends
24 included in such total that were paid by a
25 corporation that conducts business operations in a
26 federally designated Foreign Trade Zone or Sub-Zone
27 and that is designated a High Impact Business
28 located in Illinois; provided that dividends
29 eligible for the deduction provided in subparagraph
30 (M) of paragraph (2) of this subsection shall not be
31 eligible for the deduction provided under this
32 subparagraph (O); and
33 (P) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986.
5 (3) Limitation. The amount of any modification
6 otherwise required under this subsection shall, under
7 regulations prescribed by the Department, be adjusted by
8 any amounts included therein which were properly paid,
9 credited, or required to be distributed, or permanently
10 set aside for charitable purposes pursuant to Internal
11 Revenue Code Section 642(c) during the taxable year.
12 (d) Partnerships.
13 (1) In general. In the case of a partnership, base
14 income means an amount equal to the taxpayer's taxable
15 income for the taxable year as modified by paragraph (2).
16 (2) Modifications. The taxable income referred to
17 in paragraph (1) shall be modified by adding thereto the
18 sum of the following amounts:
19 (A) An amount equal to all amounts paid or
20 accrued to the taxpayer as interest or dividends
21 during the taxable year to the extent excluded from
22 gross income in the computation of taxable income;
23 (B) An amount equal to the amount of tax
24 imposed by this Act to the extent deducted from
25 gross income for the taxable year; and
26 (C) The amount of deductions allowed to the
27 partnership pursuant to Section 707 (c) of the
28 Internal Revenue Code in calculating its taxable
29 income; and
30 (D) An amount equal to the amount of the
31 capital gain deduction allowable under the Internal
32 Revenue Code, to the extent deducted from gross
33 income in the computation of taxable income;
34 and by deducting from the total so obtained the following
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1 amounts:
2 (E) The valuation limitation amount;
3 (F) An amount equal to the amount of any tax
4 imposed by this Act which was refunded to the
5 taxpayer and included in such total for the taxable
6 year;
7 (G) An amount equal to all amounts included in
8 taxable income as modified by subparagraphs (A),
9 (B), (C) and (D) which are exempt from taxation by
10 this State either by reason of its statutes or
11 Constitution or by reason of the Constitution,
12 treaties or statutes of the United States; provided
13 that, in the case of any statute of this State that
14 exempts income derived from bonds or other
15 obligations from the tax imposed under this Act, the
16 amount exempted shall be the interest net of bond
17 premium amortization;
18 (H) Any income of the partnership which
19 constitutes personal service income as defined in
20 Section 1348 (b) (1) of the Internal Revenue Code
21 (as in effect December 31, 1981) or a reasonable
22 allowance for compensation paid or accrued for
23 services rendered by partners to the partnership,
24 whichever is greater;
25 (I) An amount equal to all amounts of income
26 distributable to an entity subject to the Personal
27 Property Tax Replacement Income Tax imposed by
28 subsections (c) and (d) of Section 201 of this Act
29 including amounts distributable to organizations
30 exempt from federal income tax by reason of Section
31 501(a) of the Internal Revenue Code;
32 (J) With the exception of any amounts
33 subtracted under subparagraph (G), an amount equal
34 to the sum of all amounts disallowed as deductions
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1 by Sections 171(a) (2), and 265(2) of the Internal
2 Revenue Code of 1954, as now or hereafter amended,
3 and all amounts of expenses allocable to interest
4 and disallowed as deductions by Section 265(1) of
5 the Internal Revenue Code, as now or hereafter
6 amended;
7 (K) An amount equal to those dividends
8 included in such total which were paid by a
9 corporation which conducts business operations in an
10 Enterprise Zone or zones created under the Illinois
11 Enterprise Zone Act, enacted by the 82nd General
12 Assembly, and which does not conduct such operations
13 other than in an Enterprise Zone or Zones;
14 (L) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Real Property Tax Increment Allocation
17 Redevelopment Act;
18 (M) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (K) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (M); and
28 (N) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986.
34 (e) Gross income; adjusted gross income; taxable income.
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1 (1) In general. Subject to the provisions of
2 paragraph (2) and subsection (b) (3), for purposes of
3 this Section and Section 803(e), a taxpayer's gross
4 income, adjusted gross income, or taxable income for the
5 taxable year shall mean the amount of gross income,
6 adjusted gross income or taxable income properly
7 reportable for federal income tax purposes for the
8 taxable year under the provisions of the Internal Revenue
9 Code. Taxable income may be less than zero. However, for
10 taxable years ending on or after December 31, 1986, net
11 operating loss carryforwards from taxable years ending
12 prior to December 31, 1986, may not exceed the sum of
13 federal taxable income for the taxable year before net
14 operating loss deduction, plus the excess of addition
15 modifications over subtraction modifications for the
16 taxable year. For taxable years ending prior to December
17 31, 1986, taxable income may never be an amount in excess
18 of the net operating loss for the taxable year as defined
19 in subsections (c) and (d) of Section 172 of the Internal
20 Revenue Code, provided that when taxable income of a
21 corporation (other than a Subchapter S corporation),
22 trust, or estate is less than zero and addition
23 modifications, other than those provided by subparagraph
24 (E) of paragraph (2) of subsection (b) for corporations
25 or subparagraph (E) of paragraph (2) of subsection (c)
26 for trusts and estates, exceed subtraction modifications,
27 an addition modification must be made under those
28 subparagraphs for any other taxable year to which the
29 taxable income less than zero (net operating loss) is
30 applied under Section 172 of the Internal Revenue Code or
31 under subparagraph (E) of paragraph (2) of this
32 subsection (e) applied in conjunction with Section 172 of
33 the Internal Revenue Code.
34 (2) Special rule. For purposes of paragraph (1) of
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1 this subsection, the taxable income properly reportable
2 for federal income tax purposes shall mean:
3 (A) Certain life insurance companies. In the
4 case of a life insurance company subject to the tax
5 imposed by Section 801 of the Internal Revenue Code,
6 life insurance company taxable income, plus the
7 amount of distribution from pre-1984 policyholder
8 surplus accounts as calculated under Section 815a of
9 the Internal Revenue Code;
10 (B) Certain other insurance companies. In the
11 case of mutual insurance companies subject to the
12 tax imposed by Section 831 of the Internal Revenue
13 Code, insurance company taxable income;
14 (C) Regulated investment companies. In the
15 case of a regulated investment company subject to
16 the tax imposed by Section 852 of the Internal
17 Revenue Code, investment company taxable income;
18 (D) Real estate investment trusts. In the
19 case of a real estate investment trust subject to
20 the tax imposed by Section 857 of the Internal
21 Revenue Code, real estate investment trust taxable
22 income;
23 (E) Consolidated corporations. In the case of
24 a corporation which is a member of an affiliated
25 group of corporations filing a consolidated income
26 tax return for the taxable year for federal income
27 tax purposes, taxable income determined as if such
28 corporation had filed a separate return for federal
29 income tax purposes for the taxable year and each
30 preceding taxable year for which it was a member of
31 an affiliated group. For purposes of this
32 subparagraph, the taxpayer's separate taxable income
33 shall be determined as if the election provided by
34 Section 243(b) (2) of the Internal Revenue Code had
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1 been in effect for all such years;
2 (F) Cooperatives. In the case of a
3 cooperative corporation or association, the taxable
4 income of such organization determined in accordance
5 with the provisions of Section 1381 through 1388 of
6 the Internal Revenue Code;
7 (G) Subchapter S corporations. In the case
8 of: (i) a Subchapter S corporation for which there
9 is in effect an election for the taxable year under
10 Section 1362 of the Internal Revenue Code, the
11 taxable income of such corporation determined in
12 accordance with Section 1363(b) of the Internal
13 Revenue Code, except that taxable income shall take
14 into account those items which are required by
15 Section 1363(b)(1) of the Internal Revenue Code to
16 be separately stated; and (ii) a Subchapter S
17 corporation for which there is in effect a federal
18 election to opt out of the provisions of the
19 Subchapter S Revision Act of 1982 and have applied
20 instead the prior federal Subchapter S rules as in
21 effect on July 1, 1982, the taxable income of such
22 corporation determined in accordance with the
23 federal Subchapter S rules as in effect on July 1,
24 1982; and
25 (H) Partnerships. In the case of a
26 partnership, taxable income determined in accordance
27 with Section 703 of the Internal Revenue Code,
28 except that taxable income shall take into account
29 those items which are required by Section 703(a)(1)
30 to be separately stated but which would be taken
31 into account by an individual in calculating his
32 taxable income.
33 (f) Valuation limitation amount.
34 (1) In general. The valuation limitation amount
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1 referred to in subsections (a) (2) (G), (c) (2) (I) and
2 (d)(2) (E) is an amount equal to:
3 (A) The sum of the pre-August 1, 1969
4 appreciation amounts (to the extent consisting of
5 gain reportable under the provisions of Section 1245
6 or 1250 of the Internal Revenue Code) for all
7 property in respect of which such gain was reported
8 for the taxable year; plus
9 (B) The lesser of (i) the sum of the
10 pre-August 1, 1969 appreciation amounts (to the
11 extent consisting of capital gain) for all property
12 in respect of which such gain was reported for
13 federal income tax purposes for the taxable year, or
14 (ii) the net capital gain for the taxable year,
15 reduced in either case by any amount of such gain
16 included in the amount determined under subsection
17 (a) (2) (F) or (c) (2) (H).
18 (2) Pre-August 1, 1969 appreciation amount.
19 (A) If the fair market value of property
20 referred to in paragraph (1) was readily
21 ascertainable on August 1, 1969, the pre-August 1,
22 1969 appreciation amount for such property is the
23 lesser of (i) the excess of such fair market value
24 over the taxpayer's basis (for determining gain) for
25 such property on that date (determined under the
26 Internal Revenue Code as in effect on that date), or
27 (ii) the total gain realized and reportable for
28 federal income tax purposes in respect of the sale,
29 exchange or other disposition of such property.
30 (B) If the fair market value of property
31 referred to in paragraph (1) was not readily
32 ascertainable on August 1, 1969, the pre-August 1,
33 1969 appreciation amount for such property is that
34 amount which bears the same ratio to the total gain
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1 reported in respect of the property for federal
2 income tax purposes for the taxable year, as the
3 number of full calendar months in that part of the
4 taxpayer's holding period for the property ending
5 July 31, 1969 bears to the number of full calendar
6 months in the taxpayer's entire holding period for
7 the property.
8 (C) The Department shall prescribe such
9 regulations as may be necessary to carry out the
10 purposes of this paragraph.
11 (g) Double deductions. Unless specifically provided
12 otherwise, nothing in this Section shall permit the same item
13 to be deducted more than once.
14 (h) Legislative intention. Except as expressly provided
15 by this Section there shall be no modifications or
16 limitations on the amounts of income, gain, loss or deduction
17 taken into account in determining gross income, adjusted
18 gross income or taxable income for federal income tax
19 purposes for the taxable year, or in the amount of such items
20 entering into the computation of base income and net income
21 under this Act for such taxable year, whether in respect of
22 property values as of August 1, 1969 or otherwise.
23 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
24 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
25 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
26 eff. 8-14-98; revised 9-21-98.)
27 Section 99. Effective date. This Act takes effect upon
28 becoming law.