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91_HB1480
LRB9102097PTpk
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
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1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
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1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
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1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and.
7 (X) Beginning with taxable years ending on or
8 after December 31, 1999 and ending with taxable
9 years ending on or before December 31, 2003, an
10 amount equal to $1,000 per taxable year for expenses
11 incurred in caring, in the individual's home, for a
12 parent who has been diagnosed by a physician as
13 unable to live alone.
14 (b) Corporations.
15 (1) In general. In the case of a corporation, base
16 income means an amount equal to the taxpayer's taxable
17 income for the taxable year as modified by paragraph (2).
18 (2) Modifications. The taxable income referred to
19 in paragraph (1) shall be modified by adding thereto the
20 sum of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest and all
23 distributions received from regulated investment
24 companies during the taxable year to the extent
25 excluded from gross income in the computation of
26 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 in the computation of taxable income
30 for the taxable year;
31 (C) In the case of a regulated investment
32 company, an amount equal to the excess of (i) the
33 net long-term capital gain for the taxable year,
34 over (ii) the amount of the capital gain dividends
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1 designated as such in accordance with Section
2 852(b)(3)(C) of the Internal Revenue Code and any
3 amount designated under Section 852(b)(3)(D) of the
4 Internal Revenue Code, attributable to the taxable
5 year. (this amendatory Act of 1995 (Public Act
6 89-89) is declarative of existing law and is not a
7 new enactment);.
8 (D) The amount of any net operating loss
9 deduction taken in arriving at taxable income, other
10 than a net operating loss carried forward from a
11 taxable year ending prior to December 31, 1986; and
12 (E) For taxable years in which a net operating
13 loss carryback or carryforward from a taxable year
14 ending prior to December 31, 1986 is an element of
15 taxable income under paragraph (1) of subsection (e)
16 or subparagraph (E) of paragraph (2) of subsection
17 (e), the amount by which addition modifications
18 other than those provided by this subparagraph (E)
19 exceeded subtraction modifications in such earlier
20 taxable year, with the following limitations applied
21 in the order that they are listed:
22 (i) the addition modification relating to
23 the net operating loss carried back or forward
24 to the taxable year from any taxable year
25 ending prior to December 31, 1986 shall be
26 reduced by the amount of addition modification
27 under this subparagraph (E) which related to
28 that net operating loss and which was taken
29 into account in calculating the base income of
30 an earlier taxable year, and
31 (ii) the addition modification relating
32 to the net operating loss carried back or
33 forward to the taxable year from any taxable
34 year ending prior to December 31, 1986 shall
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1 not exceed the amount of such carryback or
2 carryforward;
3 For taxable years in which there is a net
4 operating loss carryback or carryforward from more
5 than one other taxable year ending prior to December
6 31, 1986, the addition modification provided in this
7 subparagraph (E) shall be the sum of the amounts
8 computed independently under the preceding
9 provisions of this subparagraph (E) for each such
10 taxable year;, and
11 (E-5) For taxable years ending after December
12 31, 1997, an amount equal to any eligible
13 remediation costs that the corporation deducted in
14 computing adjusted gross income and for which the
15 corporation claims a credit under subsection (l) of
16 Section 201;
17 and by deducting from the total so obtained the sum of
18 the following amounts:
19 (F) An amount equal to the amount of any tax
20 imposed by this Act which was refunded to the
21 taxpayer and included in such total for the taxable
22 year;
23 (G) An amount equal to any amount included in
24 such total under Section 78 of the Internal Revenue
25 Code;
26 (H) In the case of a regulated investment
27 company, an amount equal to the amount of exempt
28 interest dividends as defined in subsection (b) (5)
29 of Section 852 of the Internal Revenue Code, paid to
30 shareholders for the taxable year;
31 (I) With the exception of any amounts
32 subtracted under subparagraph (J), an amount equal
33 to the sum of all amounts disallowed as deductions
34 by Sections 171(a) (2), and 265(a)(2) and amounts
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1 disallowed as interest expense by Section 291(a)(3)
2 of the Internal Revenue Code, as now or hereafter
3 amended, and all amounts of expenses allocable to
4 interest and disallowed as deductions by Section
5 265(a)(1) of the Internal Revenue Code, as now or
6 hereafter amended;
7 (J) An amount equal to all amounts included in
8 such total which are exempt from taxation by this
9 State either by reason of its statutes or
10 Constitution or by reason of the Constitution,
11 treaties or statutes of the United States; provided
12 that, in the case of any statute of this State that
13 exempts income derived from bonds or other
14 obligations from the tax imposed under this Act, the
15 amount exempted shall be the interest net of bond
16 premium amortization;
17 (K) An amount equal to those dividends
18 included in such total which were paid by a
19 corporation which conducts business operations in an
20 Enterprise Zone or zones created under the Illinois
21 Enterprise Zone Act and conducts substantially all
22 of its operations in an Enterprise Zone or zones;
23 (L) An amount equal to those dividends
24 included in such total that were paid by a
25 corporation that conducts business operations in a
26 federally designated Foreign Trade Zone or Sub-Zone
27 and that is designated a High Impact Business
28 located in Illinois; provided that dividends
29 eligible for the deduction provided in subparagraph
30 (K) of paragraph 2 of this subsection shall not be
31 eligible for the deduction provided under this
32 subparagraph (L);
33 (M) For any taxpayer that is a financial
34 organization within the meaning of Section 304(c) of
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1 this Act, an amount included in such total as
2 interest income from a loan or loans made by such
3 taxpayer to a borrower, to the extent that such a
4 loan is secured by property which is eligible for
5 the Enterprise Zone Investment Credit. To determine
6 the portion of a loan or loans that is secured by
7 property eligible for a Section 201(h) investment
8 credit to the borrower, the entire principal amount
9 of the loan or loans between the taxpayer and the
10 borrower should be divided into the basis of the
11 Section 201(h) investment credit property which
12 secures the loan or loans, using for this purpose
13 the original basis of such property on the date that
14 it was placed in service in the Enterprise Zone.
15 The subtraction modification available to taxpayer
16 in any year under this subsection shall be that
17 portion of the total interest paid by the borrower
18 with respect to such loan attributable to the
19 eligible property as calculated under the previous
20 sentence;
21 (M-1) For any taxpayer that is a financial
22 organization within the meaning of Section 304(c) of
23 this Act, an amount included in such total as
24 interest income from a loan or loans made by such
25 taxpayer to a borrower, to the extent that such a
26 loan is secured by property which is eligible for
27 the High Impact Business Investment Credit. To
28 determine the portion of a loan or loans that is
29 secured by property eligible for a Section 201(i)
30 investment credit to the borrower, the entire
31 principal amount of the loan or loans between the
32 taxpayer and the borrower should be divided into the
33 basis of the Section 201(i) investment credit
34 property which secures the loan or loans, using for
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1 this purpose the original basis of such property on
2 the date that it was placed in service in a
3 federally designated Foreign Trade Zone or Sub-Zone
4 located in Illinois. No taxpayer that is eligible
5 for the deduction provided in subparagraph (M) of
6 paragraph (2) of this subsection shall be eligible
7 for the deduction provided under this subparagraph
8 (M-1). The subtraction modification available to
9 taxpayers in any year under this subsection shall be
10 that portion of the total interest paid by the
11 borrower with respect to such loan attributable to
12 the eligible property as calculated under the
13 previous sentence;
14 (N) Two times any contribution made during the
15 taxable year to a designated zone organization to
16 the extent that the contribution (i) qualifies as a
17 charitable contribution under subsection (c) of
18 Section 170 of the Internal Revenue Code and (ii)
19 must, by its terms, be used for a project approved
20 by the Department of Commerce and Community Affairs
21 under Section 11 of the Illinois Enterprise Zone
22 Act;
23 (O) An amount equal to: (i) 85% for taxable
24 years ending on or before December 31, 1992, or, a
25 percentage equal to the percentage allowable under
26 Section 243(a)(1) of the Internal Revenue Code of
27 1986 for taxable years ending after December 31,
28 1992, of the amount by which dividends included in
29 taxable income and received from a corporation that
30 is not created or organized under the laws of the
31 United States or any state or political subdivision
32 thereof, including, for taxable years ending on or
33 after December 31, 1988, dividends received or
34 deemed received or paid or deemed paid under
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1 Sections 951 through 964 of the Internal Revenue
2 Code, exceed the amount of the modification provided
3 under subparagraph (G) of paragraph (2) of this
4 subsection (b) which is related to such dividends;
5 plus (ii) 100% of the amount by which dividends,
6 included in taxable income and received, including,
7 for taxable years ending on or after December 31,
8 1988, dividends received or deemed received or paid
9 or deemed paid under Sections 951 through 964 of the
10 Internal Revenue Code, from any such corporation
11 specified in clause (i) that would but for the
12 provisions of Section 1504 (b) (3) of the Internal
13 Revenue Code be treated as a member of the
14 affiliated group which includes the dividend
15 recipient, exceed the amount of the modification
16 provided under subparagraph (G) of paragraph (2) of
17 this subsection (b) which is related to such
18 dividends;
19 (P) An amount equal to any contribution made
20 to a job training project established pursuant to
21 the Tax Increment Allocation Redevelopment Act; and
22 (Q) An amount equal to the amount of the
23 deduction used to compute the federal income tax
24 credit for restoration of substantial amounts held
25 under claim of right for the taxable year pursuant
26 to Section 1341 of the Internal Revenue Code of
27 1986.
28 (3) Special rule. For purposes of paragraph (2)
29 (A), "gross income" in the case of a life insurance
30 company, for tax years ending on and after December 31,
31 1994, shall mean the gross investment income for the
32 taxable year.
33 (c) Trusts and estates.
34 (1) In general. In the case of a trust or estate,
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1 base income means an amount equal to the taxpayer's
2 taxable income for the taxable year as modified by
3 paragraph (2).
4 (2) Modifications. Subject to the provisions of
5 paragraph (3), the taxable income referred to in
6 paragraph (1) shall be modified by adding thereto the sum
7 of the following amounts:
8 (A) An amount equal to all amounts paid or
9 accrued to the taxpayer as interest or dividends
10 during the taxable year to the extent excluded from
11 gross income in the computation of taxable income;
12 (B) In the case of (i) an estate, $600; (ii) a
13 trust which, under its governing instrument, is
14 required to distribute all of its income currently,
15 $300; and (iii) any other trust, $100, but in each
16 such case, only to the extent such amount was
17 deducted in the computation of taxable income;
18 (C) An amount equal to the amount of tax
19 imposed by this Act to the extent deducted from
20 gross income in the computation of taxable income
21 for the taxable year;
22 (D) The amount of any net operating loss
23 deduction taken in arriving at taxable income, other
24 than a net operating loss carried forward from a
25 taxable year ending prior to December 31, 1986;
26 (E) For taxable years in which a net operating
27 loss carryback or carryforward from a taxable year
28 ending prior to December 31, 1986 is an element of
29 taxable income under paragraph (1) of subsection (e)
30 or subparagraph (E) of paragraph (2) of subsection
31 (e), the amount by which addition modifications
32 other than those provided by this subparagraph (E)
33 exceeded subtraction modifications in such taxable
34 year, with the following limitations applied in the
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1 order that they are listed:
2 (i) the addition modification relating to
3 the net operating loss carried back or forward
4 to the taxable year from any taxable year
5 ending prior to December 31, 1986 shall be
6 reduced by the amount of addition modification
7 under this subparagraph (E) which related to
8 that net operating loss and which was taken
9 into account in calculating the base income of
10 an earlier taxable year, and
11 (ii) the addition modification relating
12 to the net operating loss carried back or
13 forward to the taxable year from any taxable
14 year ending prior to December 31, 1986 shall
15 not exceed the amount of such carryback or
16 carryforward;
17 For taxable years in which there is a net
18 operating loss carryback or carryforward from more
19 than one other taxable year ending prior to December
20 31, 1986, the addition modification provided in this
21 subparagraph (E) shall be the sum of the amounts
22 computed independently under the preceding
23 provisions of this subparagraph (E) for each such
24 taxable year;
25 (F) For taxable years ending on or after
26 January 1, 1989, an amount equal to the tax deducted
27 pursuant to Section 164 of the Internal Revenue Code
28 if the trust or estate is claiming the same tax for
29 purposes of the Illinois foreign tax credit under
30 Section 601 of this Act;
31 (G) An amount equal to the amount of the
32 capital gain deduction allowable under the Internal
33 Revenue Code, to the extent deducted from gross
34 income in the computation of taxable income; and
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1 (G-5) For taxable years ending after December
2 31, 1997, an amount equal to any eligible
3 remediation costs that the trust or estate deducted
4 in computing adjusted gross income and for which the
5 trust or estate claims a credit under subsection (l)
6 of Section 201;
7 and by deducting from the total so obtained the sum of
8 the following amounts:
9 (H) An amount equal to all amounts included in
10 such total pursuant to the provisions of Sections
11 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
12 408 of the Internal Revenue Code or included in such
13 total as distributions under the provisions of any
14 retirement or disability plan for employees of any
15 governmental agency or unit, or retirement payments
16 to retired partners, which payments are excluded in
17 computing net earnings from self employment by
18 Section 1402 of the Internal Revenue Code and
19 regulations adopted pursuant thereto;
20 (I) The valuation limitation amount;
21 (J) An amount equal to the amount of any tax
22 imposed by this Act which was refunded to the
23 taxpayer and included in such total for the taxable
24 year;
25 (K) An amount equal to all amounts included in
26 taxable income as modified by subparagraphs (A),
27 (B), (C), (D), (E), (F) and (G) which are exempt
28 from taxation by this State either by reason of its
29 statutes or Constitution or by reason of the
30 Constitution, treaties or statutes of the United
31 States; provided that, in the case of any statute of
32 this State that exempts income derived from bonds or
33 other obligations from the tax imposed under this
34 Act, the amount exempted shall be the interest net
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1 of bond premium amortization;
2 (L) With the exception of any amounts
3 subtracted under subparagraph (K), an amount equal
4 to the sum of all amounts disallowed as deductions
5 by Sections 171(a) (2) and 265(a)(2) of the Internal
6 Revenue Code, as now or hereafter amended, and all
7 amounts of expenses allocable to interest and
8 disallowed as deductions by Section 265(1) of the
9 Internal Revenue Code of 1954, as now or hereafter
10 amended;
11 (M) 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 and conducts substantially all
16 of its operations in an Enterprise Zone or Zones;
17 (N) An amount equal to any contribution made
18 to a job training project established pursuant to
19 the Tax Increment Allocation Redevelopment Act;
20 (O) An amount equal to those dividends
21 included in such total that were paid by a
22 corporation that conducts business operations in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 and that is designated a High Impact Business
25 located in Illinois; provided that dividends
26 eligible for the deduction provided in subparagraph
27 (M) of paragraph (2) of this subsection shall not be
28 eligible for the deduction provided under this
29 subparagraph (O); and
30 (P) An amount equal to the amount of the
31 deduction used to compute the federal income tax
32 credit for restoration of substantial amounts held
33 under claim of right for the taxable year pursuant
34 to Section 1341 of the Internal Revenue Code of
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1 1986.
2 (3) Limitation. The amount of any modification
3 otherwise required under this subsection shall, under
4 regulations prescribed by the Department, be adjusted by
5 any amounts included therein which were properly paid,
6 credited, or required to be distributed, or permanently
7 set aside for charitable purposes pursuant to Internal
8 Revenue Code Section 642(c) during the taxable year.
9 (d) Partnerships.
10 (1) In general. In the case of a partnership, base
11 income means an amount equal to the taxpayer's taxable
12 income for the taxable year as modified by paragraph (2).
13 (2) Modifications. The taxable income referred to
14 in paragraph (1) shall be modified by adding thereto the
15 sum of the following amounts:
16 (A) An amount equal to all amounts paid or
17 accrued to the taxpayer as interest or dividends
18 during the taxable year to the extent excluded from
19 gross income in the computation of taxable income;
20 (B) An amount equal to the amount of tax
21 imposed by this Act to the extent deducted from
22 gross income for the taxable year; and
23 (C) The amount of deductions allowed to the
24 partnership pursuant to Section 707 (c) of the
25 Internal Revenue Code in calculating its taxable
26 income; and
27 (D) An amount equal to the amount of the
28 capital gain deduction allowable under the Internal
29 Revenue Code, to the extent deducted from gross
30 income in the computation of taxable income;
31 and by deducting from the total so obtained the following
32 amounts:
33 (E) The valuation limitation amount;
34 (F) An amount equal to the amount of any tax
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1 imposed by this Act which was refunded to the
2 taxpayer and included in such total for the taxable
3 year;
4 (G) An amount equal to all amounts included in
5 taxable income as modified by subparagraphs (A),
6 (B), (C) and (D) which are exempt from taxation by
7 this State either by reason of its statutes or
8 Constitution or by reason of the Constitution,
9 treaties or statutes of the United States; provided
10 that, in the case of any statute of this State that
11 exempts income derived from bonds or other
12 obligations from the tax imposed under this Act, the
13 amount exempted shall be the interest net of bond
14 premium amortization;
15 (H) Any income of the partnership which
16 constitutes personal service income as defined in
17 Section 1348 (b) (1) of the Internal Revenue Code
18 (as in effect December 31, 1981) or a reasonable
19 allowance for compensation paid or accrued for
20 services rendered by partners to the partnership,
21 whichever is greater;
22 (I) An amount equal to all amounts of income
23 distributable to an entity subject to the Personal
24 Property Tax Replacement Income Tax imposed by
25 subsections (c) and (d) of Section 201 of this Act
26 including amounts distributable to organizations
27 exempt from federal income tax by reason of Section
28 501(a) of the Internal Revenue Code;
29 (J) With the exception of any amounts
30 subtracted under subparagraph (G), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2), and 265(2) of the Internal
33 Revenue Code of 1954, as now or hereafter amended,
34 and all amounts of expenses allocable to interest
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1 and disallowed as deductions by Section 265(1) of
2 the Internal Revenue Code, as now or hereafter
3 amended;
4 (K) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act, enacted by the 82nd General
9 Assembly, and which does not conduct such operations
10 other than in an Enterprise Zone or Zones;
11 (L) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Real Property Tax Increment Allocation
14 Redevelopment Act;
15 (M) An amount equal to those dividends
16 included in such total that were paid by a
17 corporation that conducts business operations in a
18 federally designated Foreign Trade Zone or Sub-Zone
19 and that is designated a High Impact Business
20 located in Illinois; provided that dividends
21 eligible for the deduction provided in subparagraph
22 (K) of paragraph (2) of this subsection shall not be
23 eligible for the deduction provided under this
24 subparagraph (M); and
25 (N) An amount equal to the amount of the
26 deduction used to compute the federal income tax
27 credit for restoration of substantial amounts held
28 under claim of right for the taxable year pursuant
29 to Section 1341 of the Internal Revenue Code of
30 1986.
31 (e) Gross income; adjusted gross income; taxable income.
32 (1) In general. Subject to the provisions of
33 paragraph (2) and subsection (b) (3), for purposes of
34 this Section and Section 803(e), a taxpayer's gross
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1 income, adjusted gross income, or taxable income for the
2 taxable year shall mean the amount of gross income,
3 adjusted gross income or taxable income properly
4 reportable for federal income tax purposes for the
5 taxable year under the provisions of the Internal Revenue
6 Code. Taxable income may be less than zero. However, for
7 taxable years ending on or after December 31, 1986, net
8 operating loss carryforwards from taxable years ending
9 prior to December 31, 1986, may not exceed the sum of
10 federal taxable income for the taxable year before net
11 operating loss deduction, plus the excess of addition
12 modifications over subtraction modifications for the
13 taxable year. For taxable years ending prior to December
14 31, 1986, taxable income may never be an amount in excess
15 of the net operating loss for the taxable year as defined
16 in subsections (c) and (d) of Section 172 of the Internal
17 Revenue Code, provided that when taxable income of a
18 corporation (other than a Subchapter S corporation),
19 trust, or estate is less than zero and addition
20 modifications, other than those provided by subparagraph
21 (E) of paragraph (2) of subsection (b) for corporations
22 or subparagraph (E) of paragraph (2) of subsection (c)
23 for trusts and estates, exceed subtraction modifications,
24 an addition modification must be made under those
25 subparagraphs for any other taxable year to which the
26 taxable income less than zero (net operating loss) is
27 applied under Section 172 of the Internal Revenue Code or
28 under subparagraph (E) of paragraph (2) of this
29 subsection (e) applied in conjunction with Section 172 of
30 the Internal Revenue Code.
31 (2) Special rule. For purposes of paragraph (1) of
32 this subsection, the taxable income properly reportable
33 for federal income tax purposes shall mean:
34 (A) Certain life insurance companies. In the
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1 case of a life insurance company subject to the tax
2 imposed by Section 801 of the Internal Revenue Code,
3 life insurance company taxable income, plus the
4 amount of distribution from pre-1984 policyholder
5 surplus accounts as calculated under Section 815a of
6 the Internal Revenue Code;
7 (B) Certain other insurance companies. In the
8 case of mutual insurance companies subject to the
9 tax imposed by Section 831 of the Internal Revenue
10 Code, insurance company taxable income;
11 (C) Regulated investment companies. In the
12 case of a regulated investment company subject to
13 the tax imposed by Section 852 of the Internal
14 Revenue Code, investment company taxable income;
15 (D) Real estate investment trusts. In the
16 case of a real estate investment trust subject to
17 the tax imposed by Section 857 of the Internal
18 Revenue Code, real estate investment trust taxable
19 income;
20 (E) Consolidated corporations. In the case of
21 a corporation which is a member of an affiliated
22 group of corporations filing a consolidated income
23 tax return for the taxable year for federal income
24 tax purposes, taxable income determined as if such
25 corporation had filed a separate return for federal
26 income tax purposes for the taxable year and each
27 preceding taxable year for which it was a member of
28 an affiliated group. For purposes of this
29 subparagraph, the taxpayer's separate taxable income
30 shall be determined as if the election provided by
31 Section 243(b) (2) of the Internal Revenue Code had
32 been in effect for all such years;
33 (F) Cooperatives. In the case of a
34 cooperative corporation or association, the taxable
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1 income of such organization determined in accordance
2 with the provisions of Section 1381 through 1388 of
3 the Internal Revenue Code;
4 (G) Subchapter S corporations. In the case
5 of: (i) a Subchapter S corporation for which there
6 is in effect an election for the taxable year under
7 Section 1362 of the Internal Revenue Code, the
8 taxable income of such corporation determined in
9 accordance with Section 1363(b) of the Internal
10 Revenue Code, except that taxable income shall take
11 into account those items which are required by
12 Section 1363(b)(1) of the Internal Revenue Code to
13 be separately stated; and (ii) a Subchapter S
14 corporation for which there is in effect a federal
15 election to opt out of the provisions of the
16 Subchapter S Revision Act of 1982 and have applied
17 instead the prior federal Subchapter S rules as in
18 effect on July 1, 1982, the taxable income of such
19 corporation determined in accordance with the
20 federal Subchapter S rules as in effect on July 1,
21 1982; and
22 (H) Partnerships. In the case of a
23 partnership, taxable income determined in accordance
24 with Section 703 of the Internal Revenue Code,
25 except that taxable income shall take into account
26 those items which are required by Section 703(a)(1)
27 to be separately stated but which would be taken
28 into account by an individual in calculating his
29 taxable income.
30 (f) Valuation limitation amount.
31 (1) In general. The valuation limitation amount
32 referred to in subsections (a) (2) (G), (c) (2) (I) and
33 (d)(2) (E) is an amount equal to:
34 (A) The sum of the pre-August 1, 1969
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1 appreciation amounts (to the extent consisting of
2 gain reportable under the provisions of Section 1245
3 or 1250 of the Internal Revenue Code) for all
4 property in respect of which such gain was reported
5 for the taxable year; plus
6 (B) The lesser of (i) the sum of the
7 pre-August 1, 1969 appreciation amounts (to the
8 extent consisting of capital gain) for all property
9 in respect of which such gain was reported for
10 federal income tax purposes for the taxable year, or
11 (ii) the net capital gain for the taxable year,
12 reduced in either case by any amount of such gain
13 included in the amount determined under subsection
14 (a) (2) (F) or (c) (2) (H).
15 (2) Pre-August 1, 1969 appreciation amount.
16 (A) If the fair market value of property
17 referred to in paragraph (1) was readily
18 ascertainable on August 1, 1969, the pre-August 1,
19 1969 appreciation amount for such property is the
20 lesser of (i) the excess of such fair market value
21 over the taxpayer's basis (for determining gain) for
22 such property on that date (determined under the
23 Internal Revenue Code as in effect on that date), or
24 (ii) the total gain realized and reportable for
25 federal income tax purposes in respect of the sale,
26 exchange or other disposition of such property.
27 (B) If the fair market value of property
28 referred to in paragraph (1) was not readily
29 ascertainable on August 1, 1969, the pre-August 1,
30 1969 appreciation amount for such property is that
31 amount which bears the same ratio to the total gain
32 reported in respect of the property for federal
33 income tax purposes for the taxable year, as the
34 number of full calendar months in that part of the
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1 taxpayer's holding period for the property ending
2 July 31, 1969 bears to the number of full calendar
3 months in the taxpayer's entire holding period for
4 the property.
5 (C) The Department shall prescribe such
6 regulations as may be necessary to carry out the
7 purposes of this paragraph.
8 (g) Double deductions. Unless specifically provided
9 otherwise, nothing in this Section shall permit the same item
10 to be deducted more than once.
11 (h) Legislative intention. Except as expressly provided
12 by this Section there shall be no modifications or
13 limitations on the amounts of income, gain, loss or deduction
14 taken into account in determining gross income, adjusted
15 gross income or taxable income for federal income tax
16 purposes for the taxable year, or in the amount of such items
17 entering into the computation of base income and net income
18 under this Act for such taxable year, whether in respect of
19 property values as of August 1, 1969 or otherwise.
20 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
21 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
22 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
23 eff. 8-14-98; revised 9-21-98.)
24 Section 99. Effective date. This Act takes effect upon
25 becoming law.