State of Illinois
91st General Assembly
Legislation

   [ Search ]   [ Legislation ]
[ Home ]   [ Back ]   [ Bottom ]



91_HB0572

 
                                               LRB9101202PTpk

 1        AN  ACT  to amend the Illinois Income Tax Act by changing
 2    Section 203.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  5.   The  Illinois  Income Tax Act is amended by
 6    changing Section 203 as follows:

 7        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 8        Sec. 203.  Base income defined.
 9        (a)  Individuals.
10             (1)  In general.  In the case of an individual, base
11        income means an amount equal to the  taxpayer's  adjusted
12        gross   income  for  the  taxable  year  as  modified  by
13        paragraph (2).
14             (2)  Modifications.   The  adjusted   gross   income
15        referred  to in paragraph (1) shall be modified by adding
16        thereto the sum of the following amounts:
17                  (A)  An amount equal to  all  amounts  paid  or
18             accrued  to  the  taxpayer  as interest or dividends
19             during the taxable year to the extent excluded  from
20             gross  income  in  the computation of adjusted gross
21             income, except stock dividends of  qualified  public
22             utilities   described   in  Section  305(e)  of  the
23             Internal Revenue Code;
24                  (B)  An amount  equal  to  the  amount  of  tax
25             imposed  by  this  Act  to  the extent deducted from
26             gross income in the computation  of  adjusted  gross
27             income for the taxable year;
28                  (C)  An  amount  equal  to  the amount received
29             during the taxable year as a recovery or  refund  of
30             real   property  taxes  paid  with  respect  to  the
31             taxpayer's principal residence under the Revenue Act

 
                            -2-                LRB9101202PTpk
 1             of 1939 and for which  a  deduction  was  previously
 2             taken  under  subparagraph (L) of this paragraph (2)
 3             prior to July 1, 1991, the retrospective application
 4             date of Article 4 of Public Act 87-17.  In the  case
 5             of  multi-unit  or  multi-use  structures  and  farm
 6             dwellings,  the  taxes  on  the taxpayer's principal
 7             residence shall be that portion of the  total  taxes
 8             for  the  entire  property  which is attributable to
 9             such principal residence;
10                  (D)  An amount  equal  to  the  amount  of  the
11             capital  gain deduction allowable under the Internal
12             Revenue Code, to  the  extent  deducted  from  gross
13             income in the computation of adjusted gross income;
14                  (D-5)  An amount, to the extent not included in
15             adjusted  gross income, equal to the amount of money
16             withdrawn by the taxpayer in the taxable year from a
17             medical care savings account and the interest earned
18             on the account in the taxable year of  a  withdrawal
19             pursuant  to  subsection  (b)  of  Section 20 of the
20             Medical Care Savings Account Act; and
21                  (D-10) For taxable years ending after  December
22             31,   1997,   an   amount   equal  to  any  eligible
23             remediation costs that the  individual  deducted  in
24             computing  adjusted  gross  income and for which the
25             individual claims a credit under subsection  (l)  of
26             Section 201;
27        and  by  deducting  from the total so obtained the sum of
28        the following amounts:
29                  (E)  Any  amount  included  in  such  total  in
30             respect  of  any  compensation  (including  but  not
31             limited to any compensation paid  or  accrued  to  a
32             serviceman  while  a  prisoner  of war or missing in
33             action) paid to a resident by  reason  of  being  on
34             active duty in the Armed Forces of the United States
 
                            -3-                LRB9101202PTpk
 1             and  in  respect of any compensation paid or accrued
 2             to a resident who as a governmental employee  was  a
 3             prisoner of war or missing in action, and in respect
 4             of  any  compensation  paid to a resident in 1971 or
 5             thereafter for annual training performed pursuant to
 6             Sections 502 and 503, Title 32, United  States  Code
 7             as a member of the Illinois National Guard;
 8                  (F)  An amount equal to all amounts included in
 9             such  total  pursuant  to the provisions of Sections
10             402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
11             408  of  the  Internal  Revenue Code, or included in
12             such total as distributions under the provisions  of
13             any  retirement  or disability plan for employees of
14             any  governmental  agency  or  unit,  or  retirement
15             payments to retired  partners,  which  payments  are
16             excluded   in   computing  net  earnings  from  self
17             employment by Section 1402 of the  Internal  Revenue
18             Code and regulations adopted pursuant thereto;
19                  (G)  The valuation limitation amount;
20                  (H)  An  amount  equal to the amount of any tax
21             imposed by  this  Act  which  was  refunded  to  the
22             taxpayer  and included in such total for the taxable
23             year;
24                  (I)  An amount equal to all amounts included in
25             such total pursuant to the provisions of Section 111
26             of the Internal Revenue Code as a recovery of  items
27             previously  deducted  from  adjusted gross income in
28             the computation of taxable income;
29                  (J)  An  amount  equal   to   those   dividends
30             included   in  such  total  which  were  paid  by  a
31             corporation which conducts business operations in an
32             Enterprise Zone or zones created under the  Illinois
33             Enterprise  Zone Act, and conducts substantially all
34             of its operations in an Enterprise Zone or zones;
 
                            -4-                LRB9101202PTpk
 1                  (K)  An  amount  equal   to   those   dividends
 2             included   in   such  total  that  were  paid  by  a
 3             corporation that conducts business operations  in  a
 4             federally  designated Foreign Trade Zone or Sub-Zone
 5             and  that  is  designated  a  High  Impact  Business
 6             located  in  Illinois;   provided   that   dividends
 7             eligible  for the deduction provided in subparagraph
 8             (J) of paragraph (2) of this subsection shall not be
 9             eligible  for  the  deduction  provided  under  this
10             subparagraph (K);
11                  (L)  For taxable years  ending  after  December
12             31,  1983,  an  amount  equal to all social security
13             benefits and railroad retirement  benefits  included
14             in  such  total pursuant to Sections 72(r) and 86 of
15             the Internal Revenue Code;
16                  (M)  With  the   exception   of   any   amounts
17             subtracted  under  subparagraph (N), an amount equal
18             to the sum of all amounts disallowed  as  deductions
19             by  Sections  171(a) (2), and 265(2) of the Internal
20             Revenue Code of 1954, as now or  hereafter  amended,
21             and  all  amounts  of expenses allocable to interest
22             and  disallowed as deductions by Section  265(1)  of
23             the  Internal  Revenue  Code  of  1954,  as  now  or
24             hereafter amended;
25                  (N)  An amount equal to all amounts included in
26             such  total  which  are exempt from taxation by this
27             State  either  by  reason   of   its   statutes   or
28             Constitution  or  by  reason  of  the  Constitution,
29             treaties  or statutes of the United States; provided
30             that, in the case of any statute of this State  that
31             exempts   income   derived   from   bonds  or  other
32             obligations from the tax imposed under this Act, the
33             amount exempted shall be the interest  net  of  bond
34             premium amortization;
 
                            -5-                LRB9101202PTpk
 1                  (O)  An  amount  equal to any contribution made
 2             to a job training project  established  pursuant  to
 3             the Tax Increment Allocation Redevelopment Act;
 4                  (P)  An  amount  equal  to  the  amount  of the
 5             deduction used to compute  the  federal  income  tax
 6             credit  for  restoration of substantial amounts held
 7             under claim of right for the taxable  year  pursuant
 8             to  Section  1341  of  the  Internal Revenue Code of
 9             1986;
10                  (Q)  An amount equal to any amounts included in
11             such  total,  received  by  the   taxpayer   as   an
12             acceleration  in  the  payment of life, endowment or
13             annuity benefits in advance of the time  they  would
14             otherwise  be payable as an indemnity for a terminal
15             illness;
16                  (R)  An amount  equal  to  the  amount  of  any
17             federal  or  State  bonus  paid  to  veterans of the
18             Persian Gulf War;
19                  (S)  An  amount,  to  the  extent  included  in
20             adjusted gross income, equal  to  the  amount  of  a
21             contribution  made  in the taxable year on behalf of
22             the taxpayer  to  a  medical  care  savings  account
23             established  under  the Medical Care Savings Account
24             Act to the extent the contribution  is  accepted  by
25             the account administrator as provided in that Act;
26                  (T)  An  amount,  to  the  extent  included  in
27             adjusted  gross  income,  equal  to  the  amount  of
28             interest  earned  in  the  taxable year on a medical
29             care savings account established under  the  Medical
30             Care  Savings Account Act on behalf of the taxpayer,
31             other than interest added pursuant to item (D-5)  of
32             this paragraph (2);
33                  (U)  For one taxable year beginning on or after
34             January 1, 1994, an amount equal to the total amount
 
                            -6-                LRB9101202PTpk
 1             of  tax  imposed  and paid under subsections (a) and
 2             (b) of Section 201 of  this  Act  on  grant  amounts
 3             received  by  the  taxpayer  under  the Nursing Home
 4             Grant Assistance Act during the  taxpayer's  taxable
 5             years 1992 and 1993;
 6                  (V)  Beginning  with  tax  years  ending  on or
 7             after December 31, 1995 and ending  with  tax  years
 8             ending  on  or  before  December 31, 1999, an amount
 9             equal to the amount paid by  a  taxpayer  who  is  a
10             self-employed  taxpayer, a partner of a partnership,
11             or a shareholder in a Subchapter S  corporation  for
12             health  insurance  or  long-term  care insurance for
13             that  taxpayer  or   that   taxpayer's   spouse   or
14             dependents,  to  the extent that the amount paid for
15             that health insurance or  long-term  care  insurance
16             may  be  deducted  under Section 213 of the Internal
17             Revenue Code of 1986, has not been deducted  on  the
18             federal  income tax return of the taxpayer, and does
19             not exceed the taxable income attributable  to  that
20             taxpayer's   income,   self-employment   income,  or
21             Subchapter S  corporation  income;  except  that  no
22             deduction  shall  be  allowed under this item (V) if
23             the taxpayer  is  eligible  to  participate  in  any
24             health insurance or long-term care insurance plan of
25             an  employer  of  the  taxpayer  or  the  taxpayer's
26             spouse.   The  amount  of  the  health insurance and
27             long-term care insurance subtracted under this  item
28             (V)  shall be determined by multiplying total health
29             insurance and long-term care insurance premiums paid
30             by the taxpayer times a number that  represents  the
31             fractional  percentage  of eligible medical expenses
32             under Section 213 of the Internal  Revenue  Code  of
33             1986 not actually deducted on the taxpayer's federal
34             income tax return; and
 
                            -7-                LRB9101202PTpk
 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.

 7        (b)  Corporations.
 8             (1)  In general.  In the case of a corporation, base
 9        income  means  an  amount equal to the taxpayer's taxable
10        income for the taxable year as modified by paragraph (2).
11             (2)  Modifications.  The taxable income referred  to
12        in  paragraph (1) shall be modified by adding thereto the
13        sum of the following amounts:
14                  (A)  An amount equal to  all  amounts  paid  or
15             accrued   to   the  taxpayer  as  interest  and  all
16             distributions  received  from  regulated  investment
17             companies during the  taxable  year  to  the  extent
18             excluded  from  gross  income  in the computation of
19             taxable  income,  except  that  the  amount   of   a
20             taxpayer's  adjustment under Section 832(b)(5)(B)(i)
21             of the Internal Revenue Code shall not be treated as
22             an amount of interest excluded from gross income  in
23             the  computation of taxable income; the changes made
24             by this amendatory Act of the 91st General  Assembly
25             are exempt from the provisions of Section 250;
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
 
                            -8-                LRB9101202PTpk
 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
 
                            -9-                LRB9101202PTpk
 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)
 
                            -10-               LRB9101202PTpk
 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
 
                            -11-               LRB9101202PTpk
 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
 
                            -12-               LRB9101202PTpk
 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
 
                            -13-               LRB9101202PTpk
 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
26             1986.
27             (3)  Special  rule.   For  purposes of paragraph (2)
28        (A), "gross income" in  the  case  of  a  life  insurance
29        company,  for  tax years ending on and after December 31,
30        1994, shall mean the  gross  investment  income  for  the
31        taxable year.

32        (c)  Trusts and estates.
33             (1)  In  general.  In the case of a trust or estate,
34        base income means  an  amount  equal  to  the  taxpayer's
 
                            -14-               LRB9101202PTpk
 1        taxable  income  for  the  taxable  year  as  modified by
 2        paragraph (2).
 3             (2)  Modifications.  Subject to  the  provisions  of
 4        paragraph   (3),   the  taxable  income  referred  to  in
 5        paragraph (1) shall be modified by adding thereto the sum
 6        of the following amounts:
 7                  (A)  An amount equal to  all  amounts  paid  or
 8             accrued  to  the  taxpayer  as interest or dividends
 9             during the taxable year to the extent excluded  from
10             gross income in the computation of taxable income;
11                  (B)  In the case of (i) an estate, $600; (ii) a
12             trust  which,  under  its  governing  instrument, is
13             required to distribute all of its income  currently,
14             $300;  and  (iii) any other trust, $100, but in each
15             such case,  only  to  the  extent  such  amount  was
16             deducted in the computation of taxable income;
17                  (C)  An  amount  equal  to  the  amount  of tax
18             imposed by this Act  to  the  extent  deducted  from
19             gross  income  in  the computation of taxable income
20             for the taxable year;
21                  (D)  The  amount  of  any  net  operating  loss
22             deduction taken in arriving at taxable income, other
23             than a net operating loss  carried  forward  from  a
24             taxable year ending prior to December 31, 1986;
25                  (E)  For taxable years in which a net operating
26             loss  carryback  or carryforward from a taxable year
27             ending prior to December 31, 1986 is an  element  of
28             taxable income under paragraph (1) of subsection (e)
29             or  subparagraph  (E) of paragraph (2) of subsection
30             (e), the  amount  by  which  addition  modifications
31             other  than  those provided by this subparagraph (E)
32             exceeded subtraction modifications in  such  taxable
33             year,  with the following limitations applied in the
34             order that they are listed:
 
                            -15-               LRB9101202PTpk
 1                       (i)  the addition modification relating to
 2                  the net operating loss carried back or  forward
 3                  to  the  taxable  year  from  any  taxable year
 4                  ending prior to  December  31,  1986  shall  be
 5                  reduced  by the amount of addition modification
 6                  under this subparagraph (E)  which  related  to
 7                  that  net  operating  loss  and which was taken
 8                  into account in calculating the base income  of
 9                  an earlier taxable year, and
10                       (ii)  the  addition  modification relating
11                  to the  net  operating  loss  carried  back  or
12                  forward  to  the  taxable year from any taxable
13                  year ending prior to December  31,  1986  shall
14                  not  exceed  the  amount  of  such carryback or
15                  carryforward;
16                  For taxable years  in  which  there  is  a  net
17             operating  loss  carryback or carryforward from more
18             than one other taxable year ending prior to December
19             31, 1986, the addition modification provided in this
20             subparagraph (E) shall be the  sum  of  the  amounts
21             computed    independently    under   the   preceding
22             provisions of this subparagraph (E)  for  each  such
23             taxable year;
24                  (F)  For  taxable  years  ending  on  or  after
25             January 1, 1989, an amount equal to the tax deducted
26             pursuant to Section 164 of the Internal Revenue Code
27             if  the trust or estate is claiming the same tax for
28             purposes of the Illinois foreign  tax  credit  under
29             Section 601 of this Act;
30                  (G)  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; and
34                  (G-5) For taxable years ending  after  December
 
                            -16-               LRB9101202PTpk
 1             31,   1997,   an   amount   equal  to  any  eligible
 2             remediation costs that the trust or estate  deducted
 3             in computing adjusted gross income and for which the
 4             trust or estate claims a credit under subsection (l)
 5             of Section 201;
 6        and  by  deducting  from the total so obtained the sum of
 7        the following amounts:
 8                  (H)  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 such
12             total as distributions under the provisions  of  any
13             retirement  or  disability plan for employees of any
14             governmental agency or unit, or retirement  payments
15             to  retired partners, which payments are excluded in
16             computing  net  earnings  from  self  employment  by
17             Section  1402  of  the  Internal  Revenue  Code  and
18             regulations adopted pursuant thereto;
19                  (I)  The valuation limitation amount;
20                  (J)  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                  (K)  An amount equal to all amounts included in
25             taxable  income  as  modified  by subparagraphs (A),
26             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
27             from  taxation by this State either by reason of its
28             statutes  or  Constitution  or  by  reason  of   the
29             Constitution,  treaties  or  statutes  of the United
30             States; provided that, in the case of any statute of
31             this State that exempts income derived from bonds or
32             other obligations from the tax  imposed  under  this
33             Act,  the  amount exempted shall be the interest net
34             of bond premium amortization;
 
                            -17-               LRB9101202PTpk
 1                  (L)  With  the   exception   of   any   amounts
 2             subtracted  under  subparagraph (K), an amount equal
 3             to the sum of all amounts disallowed  as  deductions
 4             by Sections 171(a) (2) and 265(a)(2) of the Internal
 5             Revenue  Code,  as now or hereafter amended, and all
 6             amounts  of  expenses  allocable  to  interest   and
 7             disallowed  as  deductions  by Section 265(1) of the
 8             Internal Revenue Code of 1954, as now  or  hereafter
 9             amended;
10                  (M)  An   amount   equal   to  those  dividends
11             included  in  such  total  which  were  paid  by   a
12             corporation which conducts business operations in an
13             Enterprise  Zone or zones created under the Illinois
14             Enterprise Zone Act and conducts  substantially  all
15             of its operations in an Enterprise Zone or Zones;
16                  (N)  An  amount  equal to any contribution made
17             to a job training project  established  pursuant  to
18             the Tax Increment Allocation Redevelopment Act;
19                  (O)  An   amount   equal   to  those  dividends
20             included  in  such  total  that  were  paid   by   a
21             corporation  that  conducts business operations in a
22             federally designated Foreign Trade Zone or  Sub-Zone
23             and  that  is  designated  a  High  Impact  Business
24             located   in   Illinois;   provided  that  dividends
25             eligible for the deduction provided in  subparagraph
26             (M) of paragraph (2) of this subsection shall not be
27             eligible  for  the  deduction  provided  under  this
28             subparagraph (O); and
29                  (P)  An  amount  equal  to  the  amount  of the
30             deduction used to compute  the  federal  income  tax
31             credit  for  restoration of substantial amounts held
32             under claim of right for the taxable  year  pursuant
33             to  Section  1341  of  the  Internal Revenue Code of
34             1986.
 
                            -18-               LRB9101202PTpk
 1             (3)  Limitation.  The  amount  of  any  modification
 2        otherwise  required  under  this  subsection shall, under
 3        regulations prescribed by the Department, be adjusted  by
 4        any  amounts  included  therein which were properly paid,
 5        credited, or required to be distributed,  or  permanently
 6        set  aside  for charitable purposes pursuant  to Internal
 7        Revenue Code Section 642(c) during the taxable year.

 8        (d)  Partnerships.
 9             (1)  In general. In the case of a partnership,  base
10        income  means  an  amount equal to the taxpayer's taxable
11        income for the taxable year as modified by paragraph (2).
12             (2)  Modifications. The taxable income  referred  to
13        in  paragraph (1) shall be modified by adding thereto the
14        sum 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)  An  amount  equal  to  the  amount  of tax
20             imposed by this Act  to  the  extent  deducted  from
21             gross income for the taxable year; and
22                  (C)  The  amount  of  deductions allowed to the
23             partnership pursuant  to  Section  707  (c)  of  the
24             Internal  Revenue  Code  in  calculating its taxable
25             income; and
26                  (D)  An amount  equal  to  the  amount  of  the
27             capital  gain deduction allowable under the Internal
28             Revenue Code, to  the  extent  deducted  from  gross
29             income in the computation of taxable income;
30        and by deducting from the total so obtained the following
31        amounts:
32                  (E)  The valuation limitation amount;
33                  (F)  An  amount  equal to the amount of any tax
34             imposed by  this  Act  which  was  refunded  to  the
 
                            -19-               LRB9101202PTpk
 1             taxpayer  and included in such total for the taxable
 2             year;
 3                  (G)  An amount equal to all amounts included in
 4             taxable income as  modified  by  subparagraphs  (A),
 5             (B),  (C)  and (D) which are exempt from taxation by
 6             this State either  by  reason  of  its  statutes  or
 7             Constitution  or  by  reason  of  the  Constitution,
 8             treaties  or statutes of the United States; provided
 9             that, in the case of any statute of this State  that
10             exempts   income   derived   from   bonds  or  other
11             obligations from the tax imposed under this Act, the
12             amount exempted shall be the interest  net  of  bond
13             premium amortization;
14                  (H)  Any   income   of  the  partnership  which
15             constitutes personal service income  as  defined  in
16             Section  1348  (b)  (1) of the Internal Revenue Code
17             (as in effect December 31,  1981)  or  a  reasonable
18             allowance  for  compensation  paid  or  accrued  for
19             services  rendered  by  partners to the partnership,
20             whichever is greater;
21                  (I)  An amount equal to all amounts  of  income
22             distributable  to  an entity subject to the Personal
23             Property  Tax  Replacement  Income  Tax  imposed  by
24             subsections (c) and (d) of Section 201 of  this  Act
25             including  amounts  distributable  to  organizations
26             exempt  from federal income tax by reason of Section
27             501(a) of the Internal Revenue Code;
28                  (J)  With  the   exception   of   any   amounts
29             subtracted  under  subparagraph (G), an amount equal
30             to the sum of all amounts disallowed  as  deductions
31             by  Sections  171(a) (2), and 265(2) of the Internal
32             Revenue Code of 1954, as now or  hereafter  amended,
33             and  all  amounts  of expenses allocable to interest
34             and disallowed as deductions by  Section  265(1)  of
 
                            -20-               LRB9101202PTpk
 1             the  Internal  Revenue  Code,  as  now  or hereafter
 2             amended;
 3                  (K)  An  amount  equal   to   those   dividends
 4             included   in  such  total  which  were  paid  by  a
 5             corporation which conducts business operations in an
 6             Enterprise Zone or zones created under the  Illinois
 7             Enterprise  Zone  Act,  enacted  by the 82nd General
 8             Assembly, and which does not conduct such operations
 9             other than in an Enterprise Zone or Zones;
10                  (L)  An amount equal to any  contribution  made
11             to  a  job  training project established pursuant to
12             the   Real   Property   Tax   Increment   Allocation
13             Redevelopment Act;
14                  (M)  An  amount  equal   to   those   dividends
15             included   in   such  total  that  were  paid  by  a
16             corporation that conducts business operations  in  a
17             federally  designated Foreign Trade Zone or Sub-Zone
18             and  that  is  designated  a  High  Impact  Business
19             located  in  Illinois;   provided   that   dividends
20             eligible  for the deduction provided in subparagraph
21             (K) of paragraph (2) of this subsection shall not be
22             eligible  for  the  deduction  provided  under  this
23             subparagraph (M); and
24                  (N)  An amount  equal  to  the  amount  of  the
25             deduction  used  to  compute  the federal income tax
26             credit for restoration of substantial  amounts  held
27             under  claim  of right for the taxable year pursuant
28             to Section 1341 of  the  Internal  Revenue  Code  of
29             1986.

30        (e)  Gross income; adjusted gross income; taxable income.
31             (1)  In  general.   Subject  to  the  provisions  of
32        paragraph  (2)  and  subsection  (b) (3), for purposes of
33        this Section  and  Section  803(e),  a  taxpayer's  gross
34        income,  adjusted gross income, or taxable income for the
 
                            -21-               LRB9101202PTpk
 1        taxable year shall  mean  the  amount  of  gross  income,
 2        adjusted   gross   income   or  taxable  income  properly
 3        reportable  for  federal  income  tax  purposes  for  the
 4        taxable year under the provisions of the Internal Revenue
 5        Code. Taxable income may be less than zero. However,  for
 6        taxable  years  ending on or after December 31, 1986, net
 7        operating loss carryforwards from  taxable  years  ending
 8        prior  to  December  31,  1986, may not exceed the sum of
 9        federal taxable income for the taxable  year  before  net
10        operating  loss  deduction,  plus  the excess of addition
11        modifications  over  subtraction  modifications  for  the
12        taxable year.  For taxable years ending prior to December
13        31, 1986, taxable income may never be an amount in excess
14        of the net operating loss for the taxable year as defined
15        in subsections (c) and (d) of Section 172 of the Internal
16        Revenue Code, provided that  when  taxable  income  of  a
17        corporation  (other  than  a  Subchapter  S corporation),
18        trust,  or  estate  is  less  than  zero   and   addition
19        modifications,  other than those provided by subparagraph
20        (E) of paragraph (2) of subsection (b)  for  corporations
21        or  subparagraph  (E)  of paragraph (2) of subsection (c)
22        for trusts and estates, exceed subtraction modifications,
23        an  addition  modification  must  be  made  under   those
24        subparagraphs  for  any  other  taxable year to which the
25        taxable income less than zero  (net  operating  loss)  is
26        applied under Section 172 of the Internal Revenue Code or
27        under   subparagraph   (E)   of  paragraph  (2)  of  this
28        subsection (e) applied in conjunction with Section 172 of
29        the Internal Revenue Code.
30             (2)  Special rule.  For purposes of paragraph (1) of
31        this subsection, the taxable income  properly  reportable
32        for federal income tax purposes shall mean:
33                  (A)  Certain  life insurance companies.  In the
34             case of a life insurance company subject to the  tax
 
                            -22-               LRB9101202PTpk
 1             imposed by Section 801 of the Internal Revenue Code,
 2             life  insurance  company  taxable  income,  plus the
 3             amount of distribution  from  pre-1984  policyholder
 4             surplus accounts as calculated under Section 815a of
 5             the Internal Revenue Code;
 6                  (B)  Certain other insurance companies.  In the
 7             case  of  mutual  insurance companies subject to the
 8             tax imposed by Section 831 of the  Internal  Revenue
 9             Code, insurance company taxable income;
10                  (C)  Regulated  investment  companies.   In the
11             case of a regulated investment  company  subject  to
12             the  tax  imposed  by  Section  852  of the Internal
13             Revenue Code, investment company taxable income;
14                  (D)  Real estate  investment  trusts.   In  the
15             case  of  a  real estate investment trust subject to
16             the tax imposed  by  Section  857  of  the  Internal
17             Revenue  Code,  real estate investment trust taxable
18             income;
19                  (E)  Consolidated corporations.  In the case of
20             a corporation which is a  member  of  an  affiliated
21             group  of  corporations filing a consolidated income
22             tax return for the taxable year for  federal  income
23             tax  purposes,  taxable income determined as if such
24             corporation had filed a separate return for  federal
25             income  tax  purposes  for the taxable year and each
26             preceding taxable year for which it was a member  of
27             an   affiliated   group.   For   purposes   of  this
28             subparagraph, the taxpayer's separate taxable income
29             shall be determined as if the election  provided  by
30             Section  243(b) (2) of the Internal Revenue Code had
31             been in effect for all such years;
32                  (F)  Cooperatives.    In   the   case   of    a
33             cooperative  corporation or association, the taxable
34             income of such organization determined in accordance
 
                            -23-               LRB9101202PTpk
 1             with the provisions of Section 1381 through 1388  of
 2             the Internal Revenue Code;
 3                  (G)  Subchapter  S  corporations.   In the case
 4             of: (i) a Subchapter S corporation for  which  there
 5             is  in effect an election for the taxable year under
 6             Section 1362  of  the  Internal  Revenue  Code,  the
 7             taxable  income  of  such  corporation determined in
 8             accordance with  Section  1363(b)  of  the  Internal
 9             Revenue  Code, except that taxable income shall take
10             into account  those  items  which  are  required  by
11             Section  1363(b)(1)  of the Internal Revenue Code to
12             be  separately  stated;  and  (ii)  a  Subchapter  S
13             corporation for which there is in effect  a  federal
14             election  to  opt  out  of  the  provisions  of  the
15             Subchapter  S  Revision Act of 1982 and have applied
16             instead the prior federal Subchapter S rules  as  in
17             effect  on  July 1, 1982, the taxable income of such
18             corporation  determined  in  accordance   with   the
19             federal  Subchapter  S rules as in effect on July 1,
20             1982; and
21                  (H)  Partnerships.    In   the   case   of    a
22             partnership, taxable income determined in accordance
23             with  Section  703  of  the  Internal  Revenue Code,
24             except that taxable income shall take  into  account
25             those  items which are required by Section 703(a)(1)
26             to be separately stated but  which  would  be  taken
27             into  account  by  an  individual in calculating his
28             taxable income.

29        (f)  Valuation limitation amount.
30             (1)  In general.  The  valuation  limitation  amount
31        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
32        (d)(2) (E) is an amount equal to:
33                  (A)  The  sum  of  the   pre-August   1,   1969
34             appreciation  amounts  (to  the extent consisting of
 
                            -24-               LRB9101202PTpk
 1             gain reportable under the provisions of Section 1245
 2             or 1250  of  the  Internal  Revenue  Code)  for  all
 3             property  in respect of which such gain was reported
 4             for the taxable year; plus
 5                  (B)  The  lesser  of  (i)  the   sum   of   the
 6             pre-August  1,  1969  appreciation  amounts  (to the
 7             extent consisting of capital gain) for all  property
 8             in  respect  of  which  such  gain  was reported for
 9             federal income tax purposes for the taxable year, or
10             (ii) the net capital  gain  for  the  taxable  year,
11             reduced  in  either  case by any amount of such gain
12             included in the amount determined  under  subsection
13             (a) (2) (F) or (c) (2) (H).
14        (2)  Pre-August 1, 1969 appreciation amount.
15                  (A)  If  the  fair  market  value  of  property
16             referred   to   in   paragraph   (1)   was   readily
17             ascertainable  on  August 1, 1969, the pre-August 1,
18             1969 appreciation amount for such  property  is  the
19             lesser  of  (i) the excess of such fair market value
20             over the taxpayer's basis (for determining gain) for
21             such property on that  date  (determined  under  the
22             Internal Revenue Code as in effect on that date), or
23             (ii)  the  total  gain  realized  and reportable for
24             federal income tax purposes in respect of the  sale,
25             exchange or other disposition of such property.
26                  (B)  If  the  fair  market  value  of  property
27             referred   to  in  paragraph  (1)  was  not  readily
28             ascertainable on August 1, 1969, the  pre-August  1,
29             1969  appreciation  amount for such property is that
30             amount which bears the same ratio to the total  gain
31             reported  in  respect  of  the  property for federal
32             income tax purposes for the  taxable  year,  as  the
33             number  of  full calendar months in that part of the
34             taxpayer's holding period for  the  property  ending
 
                            -25-               LRB9101202PTpk
 1             July  31,  1969 bears to the number of full calendar
 2             months in the taxpayer's entire holding  period  for
 3             the property.
 4                  (C)  The   Department   shall   prescribe  such
 5             regulations as may be necessary  to  carry  out  the
 6             purposes of this paragraph.

 7        (g)  Double  deductions.   Unless  specifically  provided
 8    otherwise, nothing in this Section shall permit the same item
 9    to be deducted more than once.

10        (h)  Legislative intention.  Except as expressly provided
11    by   this   Section   there  shall  be  no  modifications  or
12    limitations on the amounts of income, gain, loss or deduction
13    taken into account  in  determining  gross  income,  adjusted
14    gross  income  or  taxable  income  for  federal  income  tax
15    purposes for the taxable year, or in the amount of such items
16    entering  into  the computation of base income and net income
17    under this Act for such taxable year, whether in  respect  of
18    property values as of August 1, 1969 or otherwise.
19    (Source:  P.A.  89-89,  eff.  6-30-95;  89-235,  eff. 8-4-95;
20    89-418, eff. 11-15-95; 89-460,  eff.  5-24-96;  89-626,  eff.
21    8-9-96;  90-491,  eff.  1-1-98;  90-717, eff. 8-7-98; 90-770,
22    eff. 8-14-98; revised 9-21-98.)

23        Section 99.   Effective  date.   This  Act  takes  effect
24    January 1, 2000.

[ Top ]