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91_HB0159
LRB9100280PTbd
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16 withdrawn by the taxpayer in the taxable year from a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) For taxable years 1999 and through 2008,
8 an amount equal to the sum spent during the taxable
9 year by the taxpayer for tuition for employees of
10 the taxpayer at a college, university, community
11 college, or vocational or trade school located in
12 Illinois.
13 (b) Corporations.
14 (1) In general. In the case of a corporation, base
15 income means an amount equal to the taxpayer's taxable
16 income for the taxable year as modified by paragraph (2).
17 (2) Modifications. The taxable income referred to
18 in paragraph (1) shall be modified by adding thereto the
19 sum of the following amounts:
20 (A) An amount equal to all amounts paid or
21 accrued to the taxpayer as interest and all
22 distributions received from regulated investment
23 companies during the taxable year to the extent
24 excluded from gross income in the computation of
25 taxable income;
26 (B) An amount equal to the amount of tax
27 imposed by this Act to the extent deducted from
28 gross income in the computation of taxable income
29 for the taxable year;
30 (C) In the case of a regulated investment
31 company, an amount equal to the excess of (i) the
32 net long-term capital gain for the taxable year,
33 over (ii) the amount of the capital gain dividends
34 designated as such in accordance with Section
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1 852(b)(3)(C) of the Internal Revenue Code and any
2 amount designated under Section 852(b)(3)(D) of the
3 Internal Revenue Code, attributable to the taxable
4 year. (this amendatory Act of 1995 (Public Act
5 89-89) is declarative of existing law and is not a
6 new enactment);.
7 (D) The amount of any net operating loss
8 deduction taken in arriving at taxable income, other
9 than a net operating loss carried forward from a
10 taxable year ending prior to December 31, 1986; and
11 (E) For taxable years in which a net operating
12 loss carryback or carryforward from a taxable year
13 ending prior to December 31, 1986 is an element of
14 taxable income under paragraph (1) of subsection (e)
15 or subparagraph (E) of paragraph (2) of subsection
16 (e), the amount by which addition modifications
17 other than those provided by this subparagraph (E)
18 exceeded subtraction modifications in such earlier
19 taxable year, with the following limitations applied
20 in the order that they are listed:
21 (i) the addition modification relating to
22 the net operating loss carried back or forward
23 to the taxable year from any taxable year
24 ending prior to December 31, 1986 shall be
25 reduced by the amount of addition modification
26 under this subparagraph (E) which related to
27 that net operating loss and which was taken
28 into account in calculating the base income of
29 an earlier taxable year, and
30 (ii) the addition modification relating
31 to the net operating loss carried back or
32 forward to the taxable year from any taxable
33 year ending prior to December 31, 1986 shall
34 not exceed the amount of such carryback or
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1 carryforward;
2 For taxable years in which there is a net
3 operating loss carryback or carryforward from more
4 than one other taxable year ending prior to December
5 31, 1986, the addition modification provided in this
6 subparagraph (E) shall be the sum of the amounts
7 computed independently under the preceding
8 provisions of this subparagraph (E) for each such
9 taxable year;, and
10 (E-5) For taxable years ending after December
11 31, 1997, an amount equal to any eligible
12 remediation costs that the corporation deducted in
13 computing adjusted gross income and for which the
14 corporation claims a credit under subsection (l) of
15 Section 201;
16 and by deducting from the total so obtained the sum of
17 the following amounts:
18 (F) An amount equal to the amount of any tax
19 imposed by this Act which was refunded to the
20 taxpayer and included in such total for the taxable
21 year;
22 (G) An amount equal to any amount included in
23 such total under Section 78 of the Internal Revenue
24 Code;
25 (H) In the case of a regulated investment
26 company, an amount equal to the amount of exempt
27 interest dividends as defined in subsection (b) (5)
28 of Section 852 of the Internal Revenue Code, paid to
29 shareholders for the taxable year;
30 (I) With the exception of any amounts
31 subtracted under subparagraph (J), an amount equal
32 to the sum of all amounts disallowed as deductions
33 by Sections 171(a) (2), and 265(a)(2) and amounts
34 disallowed as interest expense by Section 291(a)(3)
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1 of the Internal Revenue Code, as now or hereafter
2 amended, and all amounts of expenses allocable to
3 interest and disallowed as deductions by Section
4 265(a)(1) of the Internal Revenue Code, as now or
5 hereafter amended;
6 (J) An amount equal to all amounts included in
7 such total which are exempt from taxation by this
8 State either by reason of its statutes or
9 Constitution or by reason of the Constitution,
10 treaties or statutes of the United States; provided
11 that, in the case of any statute of this State that
12 exempts income derived from bonds or other
13 obligations from the tax imposed under this Act, the
14 amount exempted shall be the interest net of bond
15 premium amortization;
16 (K) An amount equal to those dividends
17 included in such total which were paid by a
18 corporation which conducts business operations in an
19 Enterprise Zone or zones created under the Illinois
20 Enterprise Zone Act and conducts substantially all
21 of its operations in an Enterprise Zone or zones;
22 (L) An amount equal to those dividends
23 included in such total that were paid by a
24 corporation that conducts business operations in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 and that is designated a High Impact Business
27 located in Illinois; provided that dividends
28 eligible for the deduction provided in subparagraph
29 (K) of paragraph 2 of this subsection shall not be
30 eligible for the deduction provided under this
31 subparagraph (L);
32 (M) For any taxpayer that is a financial
33 organization within the meaning of Section 304(c) of
34 this Act, an amount included in such total as
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1 interest income from a loan or loans made by such
2 taxpayer to a borrower, to the extent that such a
3 loan is secured by property which is eligible for
4 the Enterprise Zone Investment Credit. To determine
5 the portion of a loan or loans that is secured by
6 property eligible for a Section 201(h) investment
7 credit to the borrower, the entire principal amount
8 of the loan or loans between the taxpayer and the
9 borrower should be divided into the basis of the
10 Section 201(h) investment credit property which
11 secures the loan or loans, using for this purpose
12 the original basis of such property on the date that
13 it was placed in service in the Enterprise Zone.
14 The subtraction modification available to taxpayer
15 in any year under this subsection shall be that
16 portion of the total interest paid by the borrower
17 with respect to such loan attributable to the
18 eligible property as calculated under the previous
19 sentence;
20 (M-1) For any taxpayer that is a financial
21 organization within the meaning of Section 304(c) of
22 this Act, an amount included in such total as
23 interest income from a loan or loans made by such
24 taxpayer to a borrower, to the extent that such a
25 loan is secured by property which is eligible for
26 the High Impact Business Investment Credit. To
27 determine the portion of a loan or loans that is
28 secured by property eligible for a Section 201(i)
29 investment credit to the borrower, the entire
30 principal amount of the loan or loans between the
31 taxpayer and the borrower should be divided into the
32 basis of the Section 201(i) investment credit
33 property which secures the loan or loans, using for
34 this purpose the original basis of such property on
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1 the date that it was placed in service in a
2 federally designated Foreign Trade Zone or Sub-Zone
3 located in Illinois. No taxpayer that is eligible
4 for the deduction provided in subparagraph (M) of
5 paragraph (2) of this subsection shall be eligible
6 for the deduction provided under this subparagraph
7 (M-1). The subtraction modification available to
8 taxpayers in any year under this subsection shall be
9 that portion of the total interest paid by the
10 borrower with respect to such loan attributable to
11 the eligible property as calculated under the
12 previous sentence;
13 (N) Two times any contribution made during the
14 taxable year to a designated zone organization to
15 the extent that the contribution (i) qualifies as a
16 charitable contribution under subsection (c) of
17 Section 170 of the Internal Revenue Code and (ii)
18 must, by its terms, be used for a project approved
19 by the Department of Commerce and Community Affairs
20 under Section 11 of the Illinois Enterprise Zone
21 Act;
22 (O) An amount equal to: (i) 85% for taxable
23 years ending on or before December 31, 1992, or, a
24 percentage equal to the percentage allowable under
25 Section 243(a)(1) of the Internal Revenue Code of
26 1986 for taxable years ending after December 31,
27 1992, of the amount by which dividends included in
28 taxable income and received from a corporation that
29 is not created or organized under the laws of the
30 United States or any state or political subdivision
31 thereof, including, for taxable years ending on or
32 after December 31, 1988, dividends received or
33 deemed received or paid or deemed paid under
34 Sections 951 through 964 of the Internal Revenue
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1 Code, exceed the amount of the modification provided
2 under subparagraph (G) of paragraph (2) of this
3 subsection (b) which is related to such dividends;
4 plus (ii) 100% of the amount by which dividends,
5 included in taxable income and received, including,
6 for taxable years ending on or after December 31,
7 1988, dividends received or deemed received or paid
8 or deemed paid under Sections 951 through 964 of the
9 Internal Revenue Code, from any such corporation
10 specified in clause (i) that would but for the
11 provisions of Section 1504 (b) (3) of the Internal
12 Revenue Code be treated as a member of the
13 affiliated group which includes the dividend
14 recipient, exceed the amount of the modification
15 provided under subparagraph (G) of paragraph (2) of
16 this subsection (b) which is related to such
17 dividends;
18 (P) An amount equal to any contribution made
19 to a job training project established pursuant to
20 the Tax Increment Allocation Redevelopment Act; and
21 (Q) An amount equal to the amount of the
22 deduction used to compute the federal income tax
23 credit for restoration of substantial amounts held
24 under claim of right for the taxable year pursuant
25 to Section 1341 of the Internal Revenue Code of 1986
26 ; and.
27 (R) For taxable years 1999 through 2004, for
28 purposes of calculating base income for the tax
29 imposed under subsections (a) and (b) of Section
30 201, an amount equal to the sum spent during the
31 taxable year by the taxpayer for tuition for
32 employees of the taxpayer at a college, university,
33 community college, or vocational or trade school
34 located in Illinois.
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1 (3) Special rule. For purposes of paragraph (2)
2 (A), "gross income" in the case of a life insurance
3 company, for tax years ending on and after December 31,
4 1994, shall mean the gross investment income for the
5 taxable year.
6 (c) Trusts and estates.
7 (1) In general. In the case of a trust or estate,
8 base income means an amount equal to the taxpayer's
9 taxable income for the taxable year as modified by
10 paragraph (2).
11 (2) Modifications. Subject to the provisions of
12 paragraph (3), the taxable income referred to in
13 paragraph (1) shall be modified by adding thereto the sum
14 of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of taxable income;
19 (B) In the case of (i) an estate, $600; (ii) a
20 trust which, under its governing instrument, is
21 required to distribute all of its income currently,
22 $300; and (iii) any other trust, $100, but in each
23 such case, only to the extent such amount was
24 deducted in the computation of taxable income;
25 (C) An amount equal to the amount of tax
26 imposed by this Act to the extent deducted from
27 gross income in the computation of taxable income
28 for the taxable year;
29 (D) The amount of any net operating loss
30 deduction taken in arriving at taxable income, other
31 than a net operating loss carried forward from a
32 taxable year ending prior to December 31, 1986;
33 (E) For taxable years in which a net operating
34 loss carryback or carryforward from a taxable year
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1 ending prior to December 31, 1986 is an element of
2 taxable income under paragraph (1) of subsection (e)
3 or subparagraph (E) of paragraph (2) of subsection
4 (e), the amount by which addition modifications
5 other than those provided by this subparagraph (E)
6 exceeded subtraction modifications in such taxable
7 year, with the following limitations applied in the
8 order that they are listed:
9 (i) the addition modification relating to
10 the net operating loss carried back or forward
11 to the taxable year from any taxable year
12 ending prior to December 31, 1986 shall be
13 reduced by the amount of addition modification
14 under this subparagraph (E) which related to
15 that net operating loss and which was taken
16 into account in calculating the base income of
17 an earlier taxable year, and
18 (ii) the addition modification relating
19 to the net operating loss carried back or
20 forward to the taxable year from any taxable
21 year ending prior to December 31, 1986 shall
22 not exceed the amount of such carryback or
23 carryforward;
24 For taxable years in which there is a net
25 operating loss carryback or carryforward from more
26 than one other taxable year ending prior to December
27 31, 1986, the addition modification provided in this
28 subparagraph (E) shall be the sum of the amounts
29 computed independently under the preceding
30 provisions of this subparagraph (E) for each such
31 taxable year;
32 (F) For taxable years ending on or after
33 January 1, 1989, an amount equal to the tax deducted
34 pursuant to Section 164 of the Internal Revenue Code
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1 if the trust or estate is claiming the same tax for
2 purposes of the Illinois foreign tax credit under
3 Section 601 of this Act;
4 (G) An amount equal to the amount of the
5 capital gain deduction allowable under the Internal
6 Revenue Code, to the extent deducted from gross
7 income in the computation of taxable income; and
8 (G-5) For taxable years ending after December
9 31, 1997, an amount equal to any eligible
10 remediation costs that the trust or estate deducted
11 in computing adjusted gross income and for which the
12 trust or estate claims a credit under subsection (l)
13 of Section 201;
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (H) An amount equal to all amounts included in
17 such total pursuant to the provisions of Sections
18 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
19 408 of the Internal Revenue Code or included in such
20 total as distributions under the provisions of any
21 retirement or disability plan for employees of any
22 governmental agency or unit, or retirement payments
23 to retired partners, which payments are excluded in
24 computing net earnings from self employment by
25 Section 1402 of the Internal Revenue Code and
26 regulations adopted pursuant thereto;
27 (I) The valuation limitation amount;
28 (J) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (K) An amount equal to all amounts included in
33 taxable income as modified by subparagraphs (A),
34 (B), (C), (D), (E), (F) and (G) which are exempt
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1 from taxation by this State either by reason of its
2 statutes or Constitution or by reason of the
3 Constitution, treaties or statutes of the United
4 States; provided that, in the case of any statute of
5 this State that exempts income derived from bonds or
6 other obligations from the tax imposed under this
7 Act, the amount exempted shall be the interest net
8 of bond premium amortization;
9 (L) With the exception of any amounts
10 subtracted under subparagraph (K), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by Sections 171(a) (2) and 265(a)(2) of the Internal
13 Revenue Code, as now or hereafter amended, and all
14 amounts of expenses allocable to interest and
15 disallowed as deductions by Section 265(1) of the
16 Internal Revenue Code of 1954, as now or hereafter
17 amended;
18 (M) An amount equal to those dividends
19 included in such total which were paid by a
20 corporation which conducts business operations in an
21 Enterprise Zone or zones created under the Illinois
22 Enterprise Zone Act and conducts substantially all
23 of its operations in an Enterprise Zone or Zones;
24 (N) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Tax Increment Allocation Redevelopment Act;
27 (O) An amount equal to those dividends
28 included in such total that were paid by a
29 corporation that conducts business operations in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 and that is designated a High Impact Business
32 located in Illinois; provided that dividends
33 eligible for the deduction provided in subparagraph
34 (M) of paragraph (2) of this subsection shall not be
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1 eligible for the deduction provided under this
2 subparagraph (O); and
3 (P) An amount equal to the amount of the
4 deduction used to compute the federal income tax
5 credit for restoration of substantial amounts held
6 under claim of right for the taxable year pursuant
7 to Section 1341 of the Internal Revenue Code of
8 1986.
9 (3) Limitation. The amount of any modification
10 otherwise required under this subsection shall, under
11 regulations prescribed by the Department, be adjusted by
12 any amounts included therein which were properly paid,
13 credited, or required to be distributed, or permanently
14 set aside for charitable purposes pursuant to Internal
15 Revenue Code Section 642(c) during the taxable year.
16 (d) Partnerships.
17 (1) In general. In the case of a partnership, base
18 income means an amount equal to the taxpayer's taxable
19 income for the taxable year as modified by paragraph (2).
20 (2) Modifications. The taxable income referred to
21 in paragraph (1) shall be modified by adding thereto the
22 sum of the following amounts:
23 (A) An amount equal to all amounts paid or
24 accrued to the taxpayer as interest or dividends
25 during the taxable year to the extent excluded from
26 gross income in the computation of taxable income;
27 (B) An amount equal to the amount of tax
28 imposed by this Act to the extent deducted from
29 gross income for the taxable year; and
30 (C) The amount of deductions allowed to the
31 partnership pursuant to Section 707 (c) of the
32 Internal Revenue Code in calculating its taxable
33 income; and
34 (D) 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;
4 and by deducting from the total so obtained the following
5 amounts:
6 (E) The valuation limitation amount;
7 (F) An amount equal to the amount of any tax
8 imposed by this Act which was refunded to the
9 taxpayer and included in such total for the taxable
10 year;
11 (G) An amount equal to all amounts included in
12 taxable income as modified by subparagraphs (A),
13 (B), (C) and (D) which are exempt from taxation by
14 this State either by reason of its statutes or
15 Constitution or by reason of the Constitution,
16 treaties or statutes of the United States; provided
17 that, in the case of any statute of this State that
18 exempts income derived from bonds or other
19 obligations from the tax imposed under this Act, the
20 amount exempted shall be the interest net of bond
21 premium amortization;
22 (H) Any income of the partnership which
23 constitutes personal service income as defined in
24 Section 1348 (b) (1) of the Internal Revenue Code
25 (as in effect December 31, 1981) or a reasonable
26 allowance for compensation paid or accrued for
27 services rendered by partners to the partnership,
28 whichever is greater;
29 (I) An amount equal to all amounts of income
30 distributable to an entity subject to the Personal
31 Property Tax Replacement Income Tax imposed by
32 subsections (c) and (d) of Section 201 of this Act
33 including amounts distributable to organizations
34 exempt from federal income tax by reason of Section
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1 501(a) of the Internal Revenue Code;
2 (J) With the exception of any amounts
3 subtracted under subparagraph (G), an amount equal
4 to the sum of all amounts disallowed as deductions
5 by Sections 171(a) (2), and 265(2) of the Internal
6 Revenue Code of 1954, as now or hereafter amended,
7 and all amounts of expenses allocable to interest
8 and disallowed as deductions by Section 265(1) of
9 the Internal Revenue Code, as now or hereafter
10 amended;
11 (K) An amount equal to those dividends
12 included in such total which were paid by a
13 corporation which conducts business operations in an
14 Enterprise Zone or zones created under the Illinois
15 Enterprise Zone Act, enacted by the 82nd General
16 Assembly, and which does not conduct such operations
17 other than in an Enterprise Zone or Zones;
18 (L) An amount equal to any contribution made
19 to a job training project established pursuant to
20 the Real Property Tax Increment Allocation
21 Redevelopment Act;
22 (M) An amount equal to those dividends
23 included in such total that were paid by a
24 corporation that conducts business operations in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 and that is designated a High Impact Business
27 located in Illinois; provided that dividends
28 eligible for the deduction provided in subparagraph
29 (K) of paragraph (2) of this subsection shall not be
30 eligible for the deduction provided under this
31 subparagraph (M); and
32 (N) An amount equal to the amount of the
33 deduction used to compute the federal income tax
34 credit for restoration of substantial amounts held
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1 under claim of right for the taxable year pursuant
2 to Section 1341 of the Internal Revenue Code of
3 1986.
4 (e) Gross income; adjusted gross income; taxable income.
5 (1) In general. Subject to the provisions of
6 paragraph (2) and subsection (b) (3), for purposes of
7 this Section and Section 803(e), a taxpayer's gross
8 income, adjusted gross income, or taxable income for the
9 taxable year shall mean the amount of gross income,
10 adjusted gross income or taxable income properly
11 reportable for federal income tax purposes for the
12 taxable year under the provisions of the Internal Revenue
13 Code. Taxable income may be less than zero. However, for
14 taxable years ending on or after December 31, 1986, net
15 operating loss carryforwards from taxable years ending
16 prior to December 31, 1986, may not exceed the sum of
17 federal taxable income for the taxable year before net
18 operating loss deduction, plus the excess of addition
19 modifications over subtraction modifications for the
20 taxable year. For taxable years ending prior to December
21 31, 1986, taxable income may never be an amount in excess
22 of the net operating loss for the taxable year as defined
23 in subsections (c) and (d) of Section 172 of the Internal
24 Revenue Code, provided that when taxable income of a
25 corporation (other than a Subchapter S corporation),
26 trust, or estate is less than zero and addition
27 modifications, other than those provided by subparagraph
28 (E) of paragraph (2) of subsection (b) for corporations
29 or subparagraph (E) of paragraph (2) of subsection (c)
30 for trusts and estates, exceed subtraction modifications,
31 an addition modification must be made under those
32 subparagraphs for any other taxable year to which the
33 taxable income less than zero (net operating loss) is
34 applied under Section 172 of the Internal Revenue Code or
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1 under subparagraph (E) of paragraph (2) of this
2 subsection (e) applied in conjunction with Section 172 of
3 the Internal Revenue Code.
4 (2) Special rule. For purposes of paragraph (1) of
5 this subsection, the taxable income properly reportable
6 for federal income tax purposes shall mean:
7 (A) Certain life insurance companies. In the
8 case of a life insurance company subject to the tax
9 imposed by Section 801 of the Internal Revenue Code,
10 life insurance company taxable income, plus the
11 amount of distribution from pre-1984 policyholder
12 surplus accounts as calculated under Section 815a of
13 the Internal Revenue Code;
14 (B) Certain other insurance companies. In the
15 case of mutual insurance companies subject to the
16 tax imposed by Section 831 of the Internal Revenue
17 Code, insurance company taxable income;
18 (C) Regulated investment companies. In the
19 case of a regulated investment company subject to
20 the tax imposed by Section 852 of the Internal
21 Revenue Code, investment company taxable income;
22 (D) Real estate investment trusts. In the
23 case of a real estate investment trust subject to
24 the tax imposed by Section 857 of the Internal
25 Revenue Code, real estate investment trust taxable
26 income;
27 (E) Consolidated corporations. In the case of
28 a corporation which is a member of an affiliated
29 group of corporations filing a consolidated income
30 tax return for the taxable year for federal income
31 tax purposes, taxable income determined as if such
32 corporation had filed a separate return for federal
33 income tax purposes for the taxable year and each
34 preceding taxable year for which it was a member of
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1 an affiliated group. For purposes of this
2 subparagraph, the taxpayer's separate taxable income
3 shall be determined as if the election provided by
4 Section 243(b) (2) of the Internal Revenue Code had
5 been in effect for all such years;
6 (F) Cooperatives. In the case of a
7 cooperative corporation or association, the taxable
8 income of such organization determined in accordance
9 with the provisions of Section 1381 through 1388 of
10 the Internal Revenue Code;
11 (G) Subchapter S corporations. In the case
12 of: (i) a Subchapter S corporation for which there
13 is in effect an election for the taxable year under
14 Section 1362 of the Internal Revenue Code, the
15 taxable income of such corporation determined in
16 accordance with Section 1363(b) of the Internal
17 Revenue Code, except that taxable income shall take
18 into account those items which are required by
19 Section 1363(b)(1) of the Internal Revenue Code to
20 be separately stated; and (ii) a Subchapter S
21 corporation for which there is in effect a federal
22 election to opt out of the provisions of the
23 Subchapter S Revision Act of 1982 and have applied
24 instead the prior federal Subchapter S rules as in
25 effect on July 1, 1982, the taxable income of such
26 corporation determined in accordance with the
27 federal Subchapter S rules as in effect on July 1,
28 1982; and
29 (H) Partnerships. In the case of a
30 partnership, taxable income determined in accordance
31 with Section 703 of the Internal Revenue Code,
32 except that taxable income shall take into account
33 those items which are required by Section 703(a)(1)
34 to be separately stated but which would be taken
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1 into account by an individual in calculating his
2 taxable income.
3 (f) Valuation limitation amount.
4 (1) In general. The valuation limitation amount
5 referred to in subsections (a) (2) (G), (c) (2) (I) and
6 (d)(2) (E) is an amount equal to:
7 (A) The sum of the pre-August 1, 1969
8 appreciation amounts (to the extent consisting of
9 gain reportable under the provisions of Section 1245
10 or 1250 of the Internal Revenue Code) for all
11 property in respect of which such gain was reported
12 for the taxable year; plus
13 (B) The lesser of (i) the sum of the
14 pre-August 1, 1969 appreciation amounts (to the
15 extent consisting of capital gain) for all property
16 in respect of which such gain was reported for
17 federal income tax purposes for the taxable year, or
18 (ii) the net capital gain for the taxable year,
19 reduced in either case by any amount of such gain
20 included in the amount determined under subsection
21 (a) (2) (F) or (c) (2) (H).
22 (2) Pre-August 1, 1969 appreciation amount.
23 (A) If the fair market value of property
24 referred to in paragraph (1) was readily
25 ascertainable on August 1, 1969, the pre-August 1,
26 1969 appreciation amount for such property is the
27 lesser of (i) the excess of such fair market value
28 over the taxpayer's basis (for determining gain) for
29 such property on that date (determined under the
30 Internal Revenue Code as in effect on that date), or
31 (ii) the total gain realized and reportable for
32 federal income tax purposes in respect of the sale,
33 exchange or other disposition of such property.
34 (B) If the fair market value of property
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1 referred to in paragraph (1) was not readily
2 ascertainable on August 1, 1969, the pre-August 1,
3 1969 appreciation amount for such property is that
4 amount which bears the same ratio to the total gain
5 reported in respect of the property for federal
6 income tax purposes for the taxable year, as the
7 number of full calendar months in that part of the
8 taxpayer's holding period for the property ending
9 July 31, 1969 bears to the number of full calendar
10 months in the taxpayer's entire holding period for
11 the property.
12 (C) The Department shall prescribe such
13 regulations as may be necessary to carry out the
14 purposes of this paragraph.
15 (g) Double deductions. Unless specifically provided
16 otherwise, nothing in this Section shall permit the same item
17 to be deducted more than once.
18 (h) Legislative intention. Except as expressly provided
19 by this Section there shall be no modifications or
20 limitations on the amounts of income, gain, loss or deduction
21 taken into account in determining gross income, adjusted
22 gross income or taxable income for federal income tax
23 purposes for the taxable year, or in the amount of such items
24 entering into the computation of base income and net income
25 under this Act for such taxable year, whether in respect of
26 property values as of August 1, 1969 or otherwise.
27 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
28 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
29 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
30 eff. 8-14-98; revised 9-21-98.)
31 Section 99. Effective date. This Act takes effect upon
32 becoming law.