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91_HB1549
LRB9103934PTdv
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16 withdrawn by the taxpayer in the taxable year from a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) For taxable years ending on and after
30 December 31, 1999, any amount included in such total
31 in respect of any compensation (including but not
32 limited to any compensation paid or accrued to a
33 serviceman while a prisoner of war or missing in
34 action) paid to a resident by reason of being a
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1 member of any component on active duty in the Armed
2 Forces of the United States and in respect of any
3 compensation paid or accrued to a resident who as a
4 governmental employee was a prisoner of war or
5 missing in action, and in respect of any
6 compensation paid to a resident in 1971 or
7 thereafter by reason of being for annual training
8 performed pursuant to Sections 502 and 503, Title
9 32, United States Code as a member of the Illinois
10 National Guard; the provisions of this amendatory
11 Act of the 91st General Assembly are exempt from the
12 provisions of Section 250;
13 (F) An amount equal to all amounts included in
14 such total pursuant to the provisions of Sections
15 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
16 408 of the Internal Revenue Code, or included in
17 such total as distributions under the provisions of
18 any retirement or disability plan for employees of
19 any governmental agency or unit, or retirement
20 payments to retired partners, which payments are
21 excluded in computing net earnings from self
22 employment by Section 1402 of the Internal Revenue
23 Code and regulations adopted pursuant thereto;
24 (G) The valuation limitation amount;
25 (H) An amount equal to the amount of any tax
26 imposed by this Act which was refunded to the
27 taxpayer and included in such total for the taxable
28 year;
29 (I) An amount equal to all amounts included in
30 such total pursuant to the provisions of Section 111
31 of the Internal Revenue Code as a recovery of items
32 previously deducted from adjusted gross income in
33 the computation of taxable income;
34 (J) An amount equal to those dividends
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1 included in such total which were paid by a
2 corporation which conducts business operations in an
3 Enterprise Zone or zones created under the Illinois
4 Enterprise Zone Act, and conducts substantially all
5 of its operations in an Enterprise Zone or zones;
6 (K) An amount equal to those dividends
7 included in such total that were paid by a
8 corporation that conducts business operations in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 and that is designated a High Impact Business
11 located in Illinois; provided that dividends
12 eligible for the deduction provided in subparagraph
13 (J) of paragraph (2) of this subsection shall not be
14 eligible for the deduction provided under this
15 subparagraph (K);
16 (L) For taxable years ending after December
17 31, 1983, an amount equal to all social security
18 benefits and railroad retirement benefits included
19 in such total pursuant to Sections 72(r) and 86 of
20 the Internal Revenue Code;
21 (M) With the exception of any amounts
22 subtracted under subparagraph (N), an amount equal
23 to the sum of all amounts disallowed as deductions
24 by Sections 171(a) (2), and 265(2) of the Internal
25 Revenue Code of 1954, as now or hereafter amended,
26 and all amounts of expenses allocable to interest
27 and disallowed as deductions by Section 265(1) of
28 the Internal Revenue Code of 1954, as now or
29 hereafter amended;
30 (N) An amount equal to all amounts included in
31 such total which are exempt from taxation by this
32 State either by reason of its statutes or
33 Constitution or by reason of the Constitution,
34 treaties or statutes of the United States; provided
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1 that, in the case of any statute of this State that
2 exempts income derived from bonds or other
3 obligations from the tax imposed under this Act, the
4 amount exempted shall be the interest net of bond
5 premium amortization;
6 (O) An amount equal to any contribution made
7 to a job training project established pursuant to
8 the Tax Increment Allocation Redevelopment Act;
9 (P) An amount equal to the amount of the
10 deduction used to compute the federal income tax
11 credit for restoration of substantial amounts held
12 under claim of right for the taxable year pursuant
13 to Section 1341 of the Internal Revenue Code of
14 1986;
15 (Q) An amount equal to any amounts included in
16 such total, received by the taxpayer as an
17 acceleration in the payment of life, endowment or
18 annuity benefits in advance of the time they would
19 otherwise be payable as an indemnity for a terminal
20 illness;
21 (R) An amount equal to the amount of any
22 federal or State bonus paid to veterans of the
23 Persian Gulf War;
24 (S) An amount, to the extent included in
25 adjusted gross income, equal to the amount of a
26 contribution made in the taxable year on behalf of
27 the taxpayer to a medical care savings account
28 established under the Medical Care Savings Account
29 Act to the extent the contribution is accepted by
30 the account administrator as provided in that Act;
31 (T) An amount, to the extent included in
32 adjusted gross income, equal to the amount of
33 interest earned in the taxable year on a medical
34 care savings account established under the Medical
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1 Care Savings Account Act on behalf of the taxpayer,
2 other than interest added pursuant to item (D-5) of
3 this paragraph (2);
4 (U) For one taxable year beginning on or after
5 January 1, 1994, an amount equal to the total amount
6 of tax imposed and paid under subsections (a) and
7 (b) of Section 201 of this Act on grant amounts
8 received by the taxpayer under the Nursing Home
9 Grant Assistance Act during the taxpayer's taxable
10 years 1992 and 1993;
11 (V) Beginning with tax years ending on or
12 after December 31, 1995 and ending with tax years
13 ending on or before December 31, 1999, an amount
14 equal to the amount paid by a taxpayer who is a
15 self-employed taxpayer, a partner of a partnership,
16 or a shareholder in a Subchapter S corporation for
17 health insurance or long-term care insurance for
18 that taxpayer or that taxpayer's spouse or
19 dependents, to the extent that the amount paid for
20 that health insurance or long-term care insurance
21 may be deducted under Section 213 of the Internal
22 Revenue Code of 1986, has not been deducted on the
23 federal income tax return of the taxpayer, and does
24 not exceed the taxable income attributable to that
25 taxpayer's income, self-employment income, or
26 Subchapter S corporation income; except that no
27 deduction shall be allowed under this item (V) if
28 the taxpayer is eligible to participate in any
29 health insurance or long-term care insurance plan of
30 an employer of the taxpayer or the taxpayer's
31 spouse. The amount of the health insurance and
32 long-term care insurance subtracted under this item
33 (V) shall be determined by multiplying total health
34 insurance and long-term care insurance premiums paid
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1 by the taxpayer times a number that represents the
2 fractional percentage of eligible medical expenses
3 under Section 213 of the Internal Revenue Code of
4 1986 not actually deducted on the taxpayer's federal
5 income tax return; and
6 (W) For taxable years beginning on or after
7 January 1, 1998, all amounts included in the
8 taxpayer's federal gross income in the taxable year
9 from amounts converted from a regular IRA to a Roth
10 IRA. This paragraph is exempt from the provisions of
11 Section 250.
12 (b) Corporations.
13 (1) In general. In the case of a corporation, base
14 income means an amount equal to the taxpayer's taxable
15 income for the taxable year as modified by paragraph (2).
16 (2) Modifications. The taxable income referred to
17 in paragraph (1) shall be modified by adding thereto the
18 sum of the following amounts:
19 (A) An amount equal to all amounts paid or
20 accrued to the taxpayer as interest and all
21 distributions received from regulated investment
22 companies during the taxable year to the extent
23 excluded from gross income in the computation of
24 taxable income;
25 (B) An amount equal to the amount of tax
26 imposed by this Act to the extent deducted from
27 gross income in the computation of taxable income
28 for the taxable year;
29 (C) In the case of a regulated investment
30 company, an amount equal to the excess of (i) the
31 net long-term capital gain for the taxable year,
32 over (ii) the amount of the capital gain dividends
33 designated as such in accordance with Section
34 852(b)(3)(C) of the Internal Revenue Code and any
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1 amount designated under Section 852(b)(3)(D) of the
2 Internal Revenue Code, attributable to the taxable
3 year. (this amendatory Act of 1995 (Public Act
4 89-89) is declarative of existing law and is not a
5 new enactment);.
6 (D) The amount of any net operating loss
7 deduction taken in arriving at taxable income, other
8 than a net operating loss carried forward from a
9 taxable year ending prior to December 31, 1986; and
10 (E) For taxable years in which a net operating
11 loss carryback or carryforward from a taxable year
12 ending prior to December 31, 1986 is an element of
13 taxable income under paragraph (1) of subsection (e)
14 or subparagraph (E) of paragraph (2) of subsection
15 (e), the amount by which addition modifications
16 other than those provided by this subparagraph (E)
17 exceeded subtraction modifications in such earlier
18 taxable year, with the following limitations applied
19 in the order that they are listed:
20 (i) the addition modification relating to
21 the net operating loss carried back or forward
22 to the taxable year from any taxable year
23 ending prior to December 31, 1986 shall be
24 reduced by the amount of addition modification
25 under this subparagraph (E) which related to
26 that net operating loss and which was taken
27 into account in calculating the base income of
28 an earlier taxable year, and
29 (ii) the addition modification relating
30 to the net operating loss carried back or
31 forward to the taxable year from any taxable
32 year ending prior to December 31, 1986 shall
33 not exceed the amount of such carryback or
34 carryforward;
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1 For taxable years in which there is a net
2 operating loss carryback or carryforward from more
3 than one other taxable year ending prior to December
4 31, 1986, the addition modification provided in this
5 subparagraph (E) shall be the sum of the amounts
6 computed independently under the preceding
7 provisions of this subparagraph (E) for each such
8 taxable year;, and
9 (E-5) For taxable years ending after December
10 31, 1997, an amount equal to any eligible
11 remediation costs that the corporation deducted in
12 computing adjusted gross income and for which the
13 corporation claims a credit under subsection (l) of
14 Section 201;
15 and by deducting from the total so obtained the sum of
16 the following amounts:
17 (F) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the
19 taxpayer and included in such total for the taxable
20 year;
21 (G) An amount equal to any amount included in
22 such total under Section 78 of the Internal Revenue
23 Code;
24 (H) In the case of a regulated investment
25 company, an amount equal to the amount of exempt
26 interest dividends as defined in subsection (b) (5)
27 of Section 852 of the Internal Revenue Code, paid to
28 shareholders for the taxable year;
29 (I) With the exception of any amounts
30 subtracted under subparagraph (J), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2), and 265(a)(2) and amounts
33 disallowed as interest expense by Section 291(a)(3)
34 of the Internal Revenue Code, as now or hereafter
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1 amended, and all amounts of expenses allocable to
2 interest and disallowed as deductions by Section
3 265(a)(1) of the Internal Revenue Code, as now or
4 hereafter amended;
5 (J) An amount equal to all amounts included in
6 such total which are exempt from taxation by this
7 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 (K) An amount equal to those dividends
16 included in such total which were paid by a
17 corporation which conducts business operations in an
18 Enterprise Zone or zones created under the Illinois
19 Enterprise Zone Act and conducts substantially all
20 of its operations in an Enterprise Zone or zones;
21 (L) An amount equal to those dividends
22 included in such total that were paid by a
23 corporation that conducts business operations in a
24 federally designated Foreign Trade Zone or Sub-Zone
25 and that is designated a High Impact Business
26 located in Illinois; provided that dividends
27 eligible for the deduction provided in subparagraph
28 (K) of paragraph 2 of this subsection shall not be
29 eligible for the deduction provided under this
30 subparagraph (L);
31 (M) For any taxpayer that is a financial
32 organization within the meaning of Section 304(c) of
33 this Act, an amount included in such total as
34 interest income from a loan or loans made by such
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1 taxpayer to a borrower, to the extent that such a
2 loan is secured by property which is eligible for
3 the Enterprise Zone Investment Credit. To determine
4 the portion of a loan or loans that is secured by
5 property eligible for a Section 201(h) investment
6 credit to the borrower, the entire principal amount
7 of the loan or loans between the taxpayer and the
8 borrower should be divided into the basis of the
9 Section 201(h) investment credit property which
10 secures the loan or loans, using for this purpose
11 the original basis of such property on the date that
12 it was placed in service in the Enterprise Zone.
13 The subtraction modification available to taxpayer
14 in any year under this subsection shall be that
15 portion of the total interest paid by the borrower
16 with respect to such loan attributable to the
17 eligible property as calculated under the previous
18 sentence;
19 (M-1) For any taxpayer that is a financial
20 organization within the meaning of Section 304(c) of
21 this Act, an amount included in such total as
22 interest income from a loan or loans made by such
23 taxpayer to a borrower, to the extent that such a
24 loan is secured by property which is eligible for
25 the High Impact Business Investment Credit. To
26 determine the portion of a loan or loans that is
27 secured by property eligible for a Section 201(i)
28 investment credit to the borrower, the entire
29 principal amount of the loan or loans between the
30 taxpayer and the borrower should be divided into the
31 basis of the Section 201(i) investment credit
32 property which secures the loan or loans, using for
33 this purpose the original basis of such property on
34 the date that it was placed in service in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 located in Illinois. No taxpayer that is eligible
3 for the deduction provided in subparagraph (M) of
4 paragraph (2) of this subsection shall be eligible
5 for the deduction provided under this subparagraph
6 (M-1). The subtraction modification available to
7 taxpayers in any year under this subsection shall be
8 that portion of the total interest paid by the
9 borrower with respect to such loan attributable to
10 the eligible property as calculated under the
11 previous sentence;
12 (N) Two times any contribution made during the
13 taxable year to a designated zone organization to
14 the extent that the contribution (i) qualifies as a
15 charitable contribution under subsection (c) of
16 Section 170 of the Internal Revenue Code and (ii)
17 must, by its terms, be used for a project approved
18 by the Department of Commerce and Community Affairs
19 under Section 11 of the Illinois Enterprise Zone
20 Act;
21 (O) An amount equal to: (i) 85% for taxable
22 years ending on or before December 31, 1992, or, a
23 percentage equal to the percentage allowable under
24 Section 243(a)(1) of the Internal Revenue Code of
25 1986 for taxable years ending after December 31,
26 1992, of the amount by which dividends included in
27 taxable income and received from a corporation that
28 is not created or organized under the laws of the
29 United States or any state or political subdivision
30 thereof, including, for taxable years ending on or
31 after December 31, 1988, dividends received or
32 deemed received or paid or deemed paid under
33 Sections 951 through 964 of the Internal Revenue
34 Code, exceed the amount of the modification provided
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1 under subparagraph (G) of paragraph (2) of this
2 subsection (b) which is related to such dividends;
3 plus (ii) 100% of the amount by which dividends,
4 included in taxable income and received, including,
5 for taxable years ending on or after December 31,
6 1988, dividends received or deemed received or paid
7 or deemed paid under Sections 951 through 964 of the
8 Internal Revenue Code, from any such corporation
9 specified in clause (i) that would but for the
10 provisions of Section 1504 (b) (3) of the Internal
11 Revenue Code be treated as a member of the
12 affiliated group which includes the dividend
13 recipient, exceed the amount of the modification
14 provided under subparagraph (G) of paragraph (2) of
15 this subsection (b) which is related to such
16 dividends;
17 (P) An amount equal to any contribution made
18 to a job training project established pursuant to
19 the Tax Increment Allocation Redevelopment Act; and
20 (Q) An amount equal to the amount of the
21 deduction used to compute the federal income tax
22 credit for restoration of substantial amounts held
23 under claim of right for the taxable year pursuant
24 to Section 1341 of the Internal Revenue Code of
25 1986.
26 (3) Special rule. For purposes of paragraph (2)
27 (A), "gross income" in the case of a life insurance
28 company, for tax years ending on and after December 31,
29 1994, shall mean the gross investment income for the
30 taxable year.
31 (c) Trusts and estates.
32 (1) In general. In the case of a trust or estate,
33 base income means an amount equal to the taxpayer's
34 taxable income for the taxable year as modified by
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1 paragraph (2).
2 (2) Modifications. Subject to the provisions of
3 paragraph (3), the taxable income referred to in
4 paragraph (1) shall be modified by adding thereto the sum
5 of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest or dividends
8 during the taxable year to the extent excluded from
9 gross income in the computation of taxable income;
10 (B) In the case of (i) an estate, $600; (ii) a
11 trust which, under its governing instrument, is
12 required to distribute all of its income currently,
13 $300; and (iii) any other trust, $100, but in each
14 such case, only to the extent such amount was
15 deducted in the computation of taxable income;
16 (C) An amount equal to the amount of tax
17 imposed by this Act to the extent deducted from
18 gross income in the computation of taxable income
19 for the taxable year;
20 (D) The amount of any net operating loss
21 deduction taken in arriving at taxable income, other
22 than a net operating loss carried forward from a
23 taxable year ending prior to December 31, 1986;
24 (E) For taxable years in which a net operating
25 loss carryback or carryforward from a taxable year
26 ending prior to December 31, 1986 is an element of
27 taxable income under paragraph (1) of subsection (e)
28 or subparagraph (E) of paragraph (2) of subsection
29 (e), the amount by which addition modifications
30 other than those provided by this subparagraph (E)
31 exceeded subtraction modifications in such taxable
32 year, with the following limitations applied in the
33 order that they are listed:
34 (i) the addition modification relating to
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1 the net operating loss carried back or forward
2 to the taxable year from any taxable year
3 ending prior to December 31, 1986 shall be
4 reduced by the amount of addition modification
5 under this subparagraph (E) which related to
6 that net operating loss and which was taken
7 into account in calculating the base income of
8 an earlier taxable year, and
9 (ii) the addition modification relating
10 to the net operating loss carried back or
11 forward to the taxable year from any taxable
12 year ending prior to December 31, 1986 shall
13 not exceed the amount of such carryback or
14 carryforward;
15 For taxable years in which there is a net
16 operating loss carryback or carryforward from more
17 than one other taxable year ending prior to December
18 31, 1986, the addition modification provided in this
19 subparagraph (E) shall be the sum of the amounts
20 computed independently under the preceding
21 provisions of this subparagraph (E) for each such
22 taxable year;
23 (F) For taxable years ending on or after
24 January 1, 1989, an amount equal to the tax deducted
25 pursuant to Section 164 of the Internal Revenue Code
26 if the trust or estate is claiming the same tax for
27 purposes of the Illinois foreign tax credit under
28 Section 601 of this Act;
29 (G) An amount equal to the amount of the
30 capital gain deduction allowable under the Internal
31 Revenue Code, to the extent deducted from gross
32 income in the computation of taxable income; and
33 (G-5) For taxable years ending after December
34 31, 1997, an amount equal to any eligible
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1 remediation costs that the trust or estate deducted
2 in computing adjusted gross income and for which the
3 trust or estate claims a credit under subsection (l)
4 of Section 201;
5 and by deducting from the total so obtained the sum of
6 the following amounts:
7 (H) An amount equal to all amounts included in
8 such total pursuant to the provisions of Sections
9 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
10 408 of the Internal Revenue Code or included in such
11 total as distributions under the provisions of any
12 retirement or disability plan for employees of any
13 governmental agency or unit, or retirement payments
14 to retired partners, which payments are excluded in
15 computing net earnings from self employment by
16 Section 1402 of the Internal Revenue Code and
17 regulations adopted pursuant thereto;
18 (I) The valuation limitation amount;
19 (J) 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 (K) An amount equal to all amounts included in
24 taxable income as modified by subparagraphs (A),
25 (B), (C), (D), (E), (F) and (G) which are exempt
26 from taxation by this State either by reason of its
27 statutes or Constitution or by reason of the
28 Constitution, treaties or statutes of the United
29 States; provided that, in the case of any statute of
30 this State that exempts income derived from bonds or
31 other obligations from the tax imposed under this
32 Act, the amount exempted shall be the interest net
33 of bond premium amortization;
34 (L) With the exception of any amounts
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1 subtracted under subparagraph (K), an amount equal
2 to the sum of all amounts disallowed as deductions
3 by Sections 171(a) (2) and 265(a)(2) of the Internal
4 Revenue Code, as now or hereafter amended, and all
5 amounts of expenses allocable to interest and
6 disallowed as deductions by Section 265(1) of the
7 Internal Revenue Code of 1954, as now or hereafter
8 amended;
9 (M) An amount equal to those dividends
10 included in such total which were paid by a
11 corporation which conducts business operations in an
12 Enterprise Zone or zones created under the Illinois
13 Enterprise Zone Act and conducts substantially all
14 of its operations in an Enterprise Zone or Zones;
15 (N) An amount equal to any contribution made
16 to a job training project established pursuant to
17 the Tax Increment Allocation Redevelopment Act;
18 (O) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (M) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (O); and
28 (P) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986.
34 (3) Limitation. The amount of any modification
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1 otherwise required under this subsection shall, under
2 regulations prescribed by the Department, be adjusted by
3 any amounts included therein which were properly paid,
4 credited, or required to be distributed, or permanently
5 set aside for charitable purposes pursuant to Internal
6 Revenue Code Section 642(c) during the taxable year.
7 (d) Partnerships.
8 (1) In general. In the case of a partnership, 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 or dividends
16 during the taxable year to the extent excluded from
17 gross income in the computation of taxable income;
18 (B) An amount equal to the amount of tax
19 imposed by this Act to the extent deducted from
20 gross income for the taxable year; and
21 (C) The amount of deductions allowed to the
22 partnership pursuant to Section 707 (c) of the
23 Internal Revenue Code in calculating its taxable
24 income; and
25 (D) An amount equal to the amount of the
26 capital gain deduction allowable under the Internal
27 Revenue Code, to the extent deducted from gross
28 income in the computation of taxable income;
29 and by deducting from the total so obtained the following
30 amounts:
31 (E) The valuation limitation amount;
32 (F) An amount equal to the amount of any tax
33 imposed by this Act which was refunded to the
34 taxpayer and included in such total for the taxable
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1 year;
2 (G) An amount equal to all amounts included in
3 taxable income as modified by subparagraphs (A),
4 (B), (C) and (D) which are exempt from taxation by
5 this State either by reason of its statutes or
6 Constitution or by reason of the Constitution,
7 treaties or statutes of the United States; provided
8 that, in the case of any statute of this State that
9 exempts income derived from bonds or other
10 obligations from the tax imposed under this Act, the
11 amount exempted shall be the interest net of bond
12 premium amortization;
13 (H) Any income of the partnership which
14 constitutes personal service income as defined in
15 Section 1348 (b) (1) of the Internal Revenue Code
16 (as in effect December 31, 1981) or a reasonable
17 allowance for compensation paid or accrued for
18 services rendered by partners to the partnership,
19 whichever is greater;
20 (I) An amount equal to all amounts of income
21 distributable to an entity subject to the Personal
22 Property Tax Replacement Income Tax imposed by
23 subsections (c) and (d) of Section 201 of this Act
24 including amounts distributable to organizations
25 exempt from federal income tax by reason of Section
26 501(a) of the Internal Revenue Code;
27 (J) With the exception of any amounts
28 subtracted under subparagraph (G), an amount equal
29 to the sum of all amounts disallowed as deductions
30 by Sections 171(a) (2), and 265(2) of the Internal
31 Revenue Code of 1954, as now or hereafter amended,
32 and all amounts of expenses allocable to interest
33 and disallowed as deductions by Section 265(1) of
34 the Internal Revenue Code, as now or hereafter
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1 amended;
2 (K) An amount equal to those dividends
3 included in such total which were paid by a
4 corporation which conducts business operations in an
5 Enterprise Zone or zones created under the Illinois
6 Enterprise Zone Act, enacted by the 82nd General
7 Assembly, and which does not conduct such operations
8 other than in an Enterprise Zone or Zones;
9 (L) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Real Property Tax Increment Allocation
12 Redevelopment Act;
13 (M) An amount equal to those dividends
14 included in such total that were paid by a
15 corporation that conducts business operations in a
16 federally designated Foreign Trade Zone or Sub-Zone
17 and that is designated a High Impact Business
18 located in Illinois; provided that dividends
19 eligible for the deduction provided in subparagraph
20 (K) of paragraph (2) of this subsection shall not be
21 eligible for the deduction provided under this
22 subparagraph (M); and
23 (N) An amount equal to the amount of the
24 deduction used to compute the federal income tax
25 credit for restoration of substantial amounts held
26 under claim of right for the taxable year pursuant
27 to Section 1341 of the Internal Revenue Code of
28 1986.
29 (e) Gross income; adjusted gross income; taxable income.
30 (1) In general. Subject to the provisions of
31 paragraph (2) and subsection (b) (3), for purposes of
32 this Section and Section 803(e), a taxpayer's gross
33 income, adjusted gross income, or taxable income for the
34 taxable year shall mean the amount of gross income,
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1 adjusted gross income or taxable income properly
2 reportable for federal income tax purposes for the
3 taxable year under the provisions of the Internal Revenue
4 Code. Taxable income may be less than zero. However, for
5 taxable years ending on or after December 31, 1986, net
6 operating loss carryforwards from taxable years ending
7 prior to December 31, 1986, may not exceed the sum of
8 federal taxable income for the taxable year before net
9 operating loss deduction, plus the excess of addition
10 modifications over subtraction modifications for the
11 taxable year. For taxable years ending prior to December
12 31, 1986, taxable income may never be an amount in excess
13 of the net operating loss for the taxable year as defined
14 in subsections (c) and (d) of Section 172 of the Internal
15 Revenue Code, provided that when taxable income of a
16 corporation (other than a Subchapter S corporation),
17 trust, or estate is less than zero and addition
18 modifications, other than those provided by subparagraph
19 (E) of paragraph (2) of subsection (b) for corporations
20 or subparagraph (E) of paragraph (2) of subsection (c)
21 for trusts and estates, exceed subtraction modifications,
22 an addition modification must be made under those
23 subparagraphs for any other taxable year to which the
24 taxable income less than zero (net operating loss) is
25 applied under Section 172 of the Internal Revenue Code or
26 under subparagraph (E) of paragraph (2) of this
27 subsection (e) applied in conjunction with Section 172 of
28 the Internal Revenue Code.
29 (2) Special rule. For purposes of paragraph (1) of
30 this subsection, the taxable income properly reportable
31 for federal income tax purposes shall mean:
32 (A) Certain life insurance companies. In the
33 case of a life insurance company subject to the tax
34 imposed by Section 801 of the Internal Revenue Code,
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1 life insurance company taxable income, plus the
2 amount of distribution from pre-1984 policyholder
3 surplus accounts as calculated under Section 815a of
4 the Internal Revenue Code;
5 (B) Certain other insurance companies. In the
6 case of mutual insurance companies subject to the
7 tax imposed by Section 831 of the Internal Revenue
8 Code, insurance company taxable income;
9 (C) Regulated investment companies. In the
10 case of a regulated investment company subject to
11 the tax imposed by Section 852 of the Internal
12 Revenue Code, investment company taxable income;
13 (D) Real estate investment trusts. In the
14 case of a real estate investment trust subject to
15 the tax imposed by Section 857 of the Internal
16 Revenue Code, real estate investment trust taxable
17 income;
18 (E) Consolidated corporations. In the case of
19 a corporation which is a member of an affiliated
20 group of corporations filing a consolidated income
21 tax return for the taxable year for federal income
22 tax purposes, taxable income determined as if such
23 corporation had filed a separate return for federal
24 income tax purposes for the taxable year and each
25 preceding taxable year for which it was a member of
26 an affiliated group. For purposes of this
27 subparagraph, the taxpayer's separate taxable income
28 shall be determined as if the election provided by
29 Section 243(b) (2) of the Internal Revenue Code had
30 been in effect for all such years;
31 (F) Cooperatives. In the case of a
32 cooperative corporation or association, the taxable
33 income of such organization determined in accordance
34 with the provisions of Section 1381 through 1388 of
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1 the Internal Revenue Code;
2 (G) Subchapter S corporations. In the case
3 of: (i) a Subchapter S corporation for which there
4 is in effect an election for the taxable year under
5 Section 1362 of the Internal Revenue Code, the
6 taxable income of such corporation determined in
7 accordance with Section 1363(b) of the Internal
8 Revenue Code, except that taxable income shall take
9 into account those items which are required by
10 Section 1363(b)(1) of the Internal Revenue Code to
11 be separately stated; and (ii) a Subchapter S
12 corporation for which there is in effect a federal
13 election to opt out of the provisions of the
14 Subchapter S Revision Act of 1982 and have applied
15 instead the prior federal Subchapter S rules as in
16 effect on July 1, 1982, the taxable income of such
17 corporation determined in accordance with the
18 federal Subchapter S rules as in effect on July 1,
19 1982; and
20 (H) Partnerships. In the case of a
21 partnership, taxable income determined in accordance
22 with Section 703 of the Internal Revenue Code,
23 except that taxable income shall take into account
24 those items which are required by Section 703(a)(1)
25 to be separately stated but which would be taken
26 into account by an individual in calculating his
27 taxable income.
28 (f) Valuation limitation amount.
29 (1) In general. The valuation limitation amount
30 referred to in subsections (a) (2) (G), (c) (2) (I) and
31 (d)(2) (E) is an amount equal to:
32 (A) The sum of the pre-August 1, 1969
33 appreciation amounts (to the extent consisting of
34 gain reportable under the provisions of Section 1245
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1 or 1250 of the Internal Revenue Code) for all
2 property in respect of which such gain was reported
3 for the taxable year; plus
4 (B) The lesser of (i) the sum of the
5 pre-August 1, 1969 appreciation amounts (to the
6 extent consisting of capital gain) for all property
7 in respect of which such gain was reported for
8 federal income tax purposes for the taxable year, or
9 (ii) the net capital gain for the taxable year,
10 reduced in either case by any amount of such gain
11 included in the amount determined under subsection
12 (a) (2) (F) or (c) (2) (H).
13 (2) Pre-August 1, 1969 appreciation amount.
14 (A) If the fair market value of property
15 referred to in paragraph (1) was readily
16 ascertainable on August 1, 1969, the pre-August 1,
17 1969 appreciation amount for such property is the
18 lesser of (i) the excess of such fair market value
19 over the taxpayer's basis (for determining gain) for
20 such property on that date (determined under the
21 Internal Revenue Code as in effect on that date), or
22 (ii) the total gain realized and reportable for
23 federal income tax purposes in respect of the sale,
24 exchange or other disposition of such property.
25 (B) If the fair market value of property
26 referred to in paragraph (1) was not readily
27 ascertainable on August 1, 1969, the pre-August 1,
28 1969 appreciation amount for such property is that
29 amount which bears the same ratio to the total gain
30 reported in respect of the property for federal
31 income tax purposes for the taxable year, as the
32 number of full calendar months in that part of the
33 taxpayer's holding period for the property ending
34 July 31, 1969 bears to the number of full calendar
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1 months in the taxpayer's entire holding period for
2 the property.
3 (C) The Department shall prescribe such
4 regulations as may be necessary to carry out the
5 purposes of this paragraph.
6 (g) Double deductions. Unless specifically provided
7 otherwise, nothing in this Section shall permit the same item
8 to be deducted more than once.
9 (h) Legislative intention. Except as expressly provided
10 by this Section there shall be no modifications or
11 limitations on the amounts of income, gain, loss or deduction
12 taken into account in determining gross income, adjusted
13 gross income or taxable income for federal income tax
14 purposes for the taxable year, or in the amount of such items
15 entering into the computation of base income and net income
16 under this Act for such taxable year, whether in respect of
17 property values as of August 1, 1969 or otherwise.
18 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
19 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
20 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
21 eff. 8-14-98; revised 9-21-98.)
22 Section 99. Effective date. This Act takes effect upon
23 becoming law.