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91_HB3946
LRB9112073SMdv
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16 withdrawn by the taxpayer in the taxable year from a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 (i) Sections 171(a) (2), and 265(2) of the
20 Internal Revenue Code of 1954, as now or hereafter
21 amended, and all amounts of expenses allocable to
22 interest and disallowed as deductions by Section
23 265(1) of the Internal Revenue Code of 1954, as now
24 or hereafter amended; and (ii) for taxable years
25 ending on or after August 13, 1999 the effective
26 date of this amendatory Act of the 91st General
27 Assembly, Sections 171(a)(2), 265, 280C, and
28 832(b)(5)(B)(i) of the Internal Revenue Code; the
29 provisions of this subparagraph are exempt from the
30 provisions of Section 250;
31 (N) An amount equal to all amounts included in
32 such total which are exempt from taxation by this
33 State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
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1 treaties or statutes of the United States; provided
2 that, in the case of any statute of this State that
3 exempts income derived from bonds or other
4 obligations from the tax imposed under this Act, the
5 amount exempted shall be the interest net of bond
6 premium amortization;
7 (O) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act;
10 (P) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986;
16 (Q) An amount equal to any amounts included in
17 such total, received by the taxpayer as an
18 acceleration in the payment of life, endowment or
19 annuity benefits in advance of the time they would
20 otherwise be payable as an indemnity for a terminal
21 illness;
22 (R) An amount equal to the amount of any
23 federal or State bonus paid to veterans of the
24 Persian Gulf War;
25 (S) An amount, to the extent included in
26 adjusted gross income, equal to the amount of a
27 contribution made in the taxable year on behalf of
28 the taxpayer to a medical care savings account
29 established under the Medical Care Savings Account
30 Act to the extent the contribution is accepted by
31 the account administrator as provided in that Act;
32 (T) An amount, to the extent included in
33 adjusted gross income, equal to the amount of
34 interest earned in the taxable year on a medical
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1 care savings account established under the Medical
2 Care Savings Account Act on behalf of the taxpayer,
3 other than interest added pursuant to item (D-5) of
4 this paragraph (2);
5 (U) For one taxable year beginning on or after
6 January 1, 1994, an amount equal to the total amount
7 of tax imposed and paid under subsections (a) and
8 (b) of Section 201 of this Act on grant amounts
9 received by the taxpayer under the Nursing Home
10 Grant Assistance Act during the taxpayer's taxable
11 years 1992 and 1993;
12 (V) Beginning with tax years ending on or
13 after December 31, 1995 and ending with tax years
14 ending on or before December 31, 2004, an amount
15 equal to the amount paid by a taxpayer who is a
16 self-employed taxpayer, a partner of a partnership,
17 or a shareholder in a Subchapter S corporation for
18 health insurance or long-term care insurance for
19 that taxpayer or that taxpayer's spouse or
20 dependents, to the extent that the amount paid for
21 that health insurance or long-term care insurance
22 may be deducted under Section 213 of the Internal
23 Revenue Code of 1986, has not been deducted on the
24 federal income tax return of the taxpayer, and does
25 not exceed the taxable income attributable to that
26 taxpayer's income, self-employment income, or
27 Subchapter S corporation income; except that no
28 deduction shall be allowed under this item (V) if
29 the taxpayer is eligible to participate in any
30 health insurance or long-term care insurance plan of
31 an employer of the taxpayer or the taxpayer's
32 spouse. The amount of the health insurance and
33 long-term care insurance subtracted under this item
34 (V) shall be determined by multiplying total health
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1 insurance and long-term care insurance premiums paid
2 by the taxpayer times a number that represents the
3 fractional percentage of eligible medical expenses
4 under Section 213 of the Internal Revenue Code of
5 1986 not actually deducted on the taxpayer's federal
6 income tax return;
7 (W) For taxable years beginning on or after
8 January 1, 1998, all amounts included in the
9 taxpayer's federal gross income in the taxable year
10 from amounts converted from a regular IRA to a Roth
11 IRA. This paragraph is exempt from the provisions of
12 Section 250; and
13 (X) For taxable year 1999 and thereafter, an
14 amount equal to the amount of any (i) distributions,
15 to the extent includible in gross income for federal
16 income tax purposes, made to the taxpayer because of
17 his or her status as a victim of persecution for
18 racial or religious reasons by Nazi Germany or any
19 other Axis regime or as an heir of the victim and
20 (ii) items of income, to the extent includible in
21 gross income for federal income tax purposes,
22 attributable to, derived from or in any way related
23 to assets stolen from, hidden from, or otherwise
24 lost to a victim of persecution for racial or
25 religious reasons by Nazi Germany or any other Axis
26 regime immediately prior to, during, and immediately
27 after World War II, including, but not limited to,
28 interest on the proceeds receivable as insurance
29 under policies issued to a victim of persecution for
30 racial or religious reasons by Nazi Germany or any
31 other Axis regime by European insurance companies
32 immediately prior to and during World War II;
33 provided, however, this subtraction from federal
34 adjusted gross income does not apply to assets
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1 acquired with such assets or with the proceeds from
2 the sale of such assets; provided, further, this
3 paragraph shall only apply to a taxpayer who was the
4 first recipient of such assets after their recovery
5 and who is a victim of persecution for racial or
6 religious reasons by Nazi Germany or any other Axis
7 regime or as an heir of the victim. The amount of
8 and the eligibility for any public assistance,
9 benefit, or similar entitlement is not affected by
10 the inclusion of items (i) and (ii) of this
11 paragraph in gross income for federal income tax
12 purposes. This paragraph is exempt from the
13 provisions of Section 250; and
14 (Y) For taxable years 2000 and thereafter, an
15 amount equal to the medical, dental, and other
16 expenses allowed as a deduction under Section 213 of
17 the Internal Revenue Code to the extent allowed as a
18 deduction from adjusted gross income in computing
19 federal income taxes. To obtain this subtraction
20 modification, the taxpayer must submit to the
21 Department, along with his or her tax return, a copy
22 of the Schedule A form or any successor form
23 completed and submitted for federal income tax
24 purposes. This paragraph is exempt from the
25 provisions of Section 250.
26 (b) Corporations.
27 (1) In general. In the case of a corporation, base
28 income means an amount equal to the taxpayer's taxable
29 income for the taxable year as modified by paragraph (2).
30 (2) Modifications. The taxable income referred to
31 in paragraph (1) shall be modified by adding thereto the
32 sum of the following amounts:
33 (A) An amount equal to all amounts paid or
34 accrued to the taxpayer as interest and all
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1 distributions received from regulated investment
2 companies during the taxable year to the extent
3 excluded from gross income in the computation of
4 taxable income;
5 (B) An amount equal to the amount of tax
6 imposed by this Act to the extent deducted from
7 gross income in the computation of taxable income
8 for the taxable year;
9 (C) In the case of a regulated investment
10 company, an amount equal to the excess of (i) the
11 net long-term capital gain for the taxable year,
12 over (ii) the amount of the capital gain dividends
13 designated as such in accordance with Section
14 852(b)(3)(C) of the Internal Revenue Code and any
15 amount designated under Section 852(b)(3)(D) of the
16 Internal Revenue Code, attributable to the taxable
17 year (this amendatory Act of 1995 (Public Act 89-89)
18 is declarative of existing law and is not a new
19 enactment);
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 earlier
32 taxable year, with the following limitations applied
33 in the 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; and
23 (E-5) For taxable years ending after December
24 31, 1997, an amount equal to any eligible
25 remediation costs that the corporation deducted in
26 computing adjusted gross income and for which the
27 corporation claims a credit under subsection (l) of
28 Section 201;
29 and by deducting from the total so obtained the sum of
30 the following amounts:
31 (F) An amount equal to the amount of any tax
32 imposed by this Act which was refunded to the
33 taxpayer and included in such total for the taxable
34 year;
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1 (G) An amount equal to any amount included in
2 such total under Section 78 of the Internal Revenue
3 Code;
4 (H) In the case of a regulated investment
5 company, an amount equal to the amount of exempt
6 interest dividends as defined in subsection (b) (5)
7 of Section 852 of the Internal Revenue Code, paid to
8 shareholders for the taxable year;
9 (I) With the exception of any amounts
10 subtracted under subparagraph (J), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by (i) Sections 171(a) (2), and 265(a)(2) and
13 amounts disallowed as interest expense by Section
14 291(a)(3) of the Internal Revenue Code, as now or
15 hereafter amended, and all amounts of expenses
16 allocable to interest and disallowed as deductions
17 by Section 265(a)(1) of the Internal Revenue Code,
18 as now or hereafter amended; and (ii) for taxable
19 years ending on or after August 13, 1999 the
20 effective date of this amendatory Act of the 91st
21 General Assembly, Sections 171(a)(2), 265, 280C, and
22 832(b)(5)(B)(i) of the Internal Revenue Code; the
23 provisions of this subparagraph are exempt from the
24 provisions of Section 250;
25 (J) 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 (K) An amount equal to those dividends
2 included in such total which were paid by a
3 corporation which conducts business operations in an
4 Enterprise Zone or zones created under the Illinois
5 Enterprise Zone Act and conducts substantially all
6 of its operations in an Enterprise Zone or zones;
7 (L) An amount equal to those dividends
8 included in such total that were paid by a
9 corporation that conducts business operations in a
10 federally designated Foreign Trade Zone or Sub-Zone
11 and that is designated a High Impact Business
12 located in Illinois; provided that dividends
13 eligible for the deduction provided in subparagraph
14 (K) of paragraph 2 of this subsection shall not be
15 eligible for the deduction provided under this
16 subparagraph (L);
17 (M) For any taxpayer that is a financial
18 organization within the meaning of Section 304(c) of
19 this Act, an amount included in such total as
20 interest income from a loan or loans made by such
21 taxpayer to a borrower, to the extent that such a
22 loan is secured by property which is eligible for
23 the Enterprise Zone Investment Credit. To determine
24 the portion of a loan or loans that is secured by
25 property eligible for a Section 201(h) investment
26 credit to the borrower, the entire principal amount
27 of the loan or loans between the taxpayer and the
28 borrower should be divided into the basis of the
29 Section 201(h) investment credit property which
30 secures the loan or loans, using for this purpose
31 the original basis of such property on the date that
32 it was placed in service in the Enterprise Zone.
33 The subtraction modification available to taxpayer
34 in any year under this subsection shall be that
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1 portion of the total interest paid by the borrower
2 with respect to such loan attributable to the
3 eligible property as calculated under the previous
4 sentence;
5 (M-1) For any taxpayer that is a financial
6 organization within the meaning of Section 304(c) of
7 this Act, an amount included in such total as
8 interest income from a loan or loans made by such
9 taxpayer to a borrower, to the extent that such a
10 loan is secured by property which is eligible for
11 the High Impact Business Investment Credit. To
12 determine the portion of a loan or loans that is
13 secured by property eligible for a Section 201(i)
14 investment credit to the borrower, the entire
15 principal amount of the loan or loans between the
16 taxpayer and the borrower should be divided into the
17 basis of the Section 201(i) investment credit
18 property which secures the loan or loans, using for
19 this purpose the original basis of such property on
20 the date that it was placed in service in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 located in Illinois. No taxpayer that is eligible
23 for the deduction provided in subparagraph (M) of
24 paragraph (2) of this subsection shall be eligible
25 for the deduction provided under this subparagraph
26 (M-1). The subtraction modification available to
27 taxpayers in any year under this subsection shall be
28 that portion of the total interest paid by the
29 borrower with respect to such loan attributable to
30 the eligible property as calculated under the
31 previous sentence;
32 (N) Two times any contribution made during the
33 taxable year to a designated zone organization to
34 the extent that the contribution (i) qualifies as a
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1 charitable contribution under subsection (c) of
2 Section 170 of the Internal Revenue Code and (ii)
3 must, by its terms, be used for a project approved
4 by the Department of Commerce and Community Affairs
5 under Section 11 of the Illinois Enterprise Zone
6 Act;
7 (O) An amount equal to: (i) 85% for taxable
8 years ending on or before December 31, 1992, or, a
9 percentage equal to the percentage allowable under
10 Section 243(a)(1) of the Internal Revenue Code of
11 1986 for taxable years ending after December 31,
12 1992, of the amount by which dividends included in
13 taxable income and received from a corporation that
14 is not created or organized under the laws of the
15 United States or any state or political subdivision
16 thereof, including, for taxable years ending on or
17 after December 31, 1988, dividends received or
18 deemed received or paid or deemed paid under
19 Sections 951 through 964 of the Internal Revenue
20 Code, exceed the amount of the modification provided
21 under subparagraph (G) of paragraph (2) of this
22 subsection (b) which is related to such dividends;
23 plus (ii) 100% of the amount by which dividends,
24 included in taxable income and received, including,
25 for taxable years ending on or after December 31,
26 1988, dividends received or deemed received or paid
27 or deemed paid under Sections 951 through 964 of the
28 Internal Revenue Code, from any such corporation
29 specified in clause (i) that would but for the
30 provisions of Section 1504 (b) (3) of the Internal
31 Revenue Code be treated as a member of the
32 affiliated group which includes the dividend
33 recipient, exceed the amount of the modification
34 provided under subparagraph (G) of paragraph (2) of
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1 this subsection (b) which is related to such
2 dividends;
3 (P) An amount equal to any contribution made
4 to a job training project established pursuant to
5 the Tax Increment Allocation Redevelopment Act;
6 (Q) An amount equal to the amount of the
7 deduction used to compute the federal income tax
8 credit for restoration of substantial amounts held
9 under claim of right for the taxable year pursuant
10 to Section 1341 of the Internal Revenue Code of
11 1986; and
12 (R) In the case of an attorney-in-fact with
13 respect to whom an interinsurer or a reciprocal
14 insurer has made the election under Section 835 of
15 the Internal Revenue Code, 26 U.S.C. 835, an amount
16 equal to the excess, if any, of the amounts paid or
17 incurred by that interinsurer or reciprocal insurer
18 in the taxable year to the attorney-in-fact over the
19 deduction allowed to that interinsurer or reciprocal
20 insurer with respect to the attorney-in-fact under
21 Section 835(b) of the Internal Revenue Code for the
22 taxable year.
23 (3) Special rule. For purposes of paragraph (2)
24 (A), "gross income" in the case of a life insurance
25 company, for tax years ending on and after December 31,
26 1994, shall mean the gross investment income for the
27 taxable year.
28 (c) Trusts and estates.
29 (1) In general. In the case of a trust or estate,
30 base income means an amount equal to the taxpayer's
31 taxable income for the taxable year as modified by
32 paragraph (2).
33 (2) Modifications. Subject to the provisions of
34 paragraph (3), the taxable income referred to in
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1 paragraph (1) shall be modified by adding thereto the sum
2 of the following amounts:
3 (A) An amount equal to all amounts paid or
4 accrued to the taxpayer as interest or dividends
5 during the taxable year to the extent excluded from
6 gross income in the computation of taxable income;
7 (B) In the case of (i) an estate, $600; (ii) a
8 trust which, under its governing instrument, is
9 required to distribute all of its income currently,
10 $300; and (iii) any other trust, $100, but in each
11 such case, only to the extent such amount was
12 deducted in the computation of taxable income;
13 (C) An amount equal to the amount of tax
14 imposed by this Act to the extent deducted from
15 gross income in the computation of taxable income
16 for the taxable year;
17 (D) The amount of any net operating loss
18 deduction taken in arriving at taxable income, other
19 than a net operating loss carried forward from a
20 taxable year ending prior to December 31, 1986;
21 (E) For taxable years in which a net operating
22 loss carryback or carryforward from a taxable year
23 ending prior to December 31, 1986 is an element of
24 taxable income under paragraph (1) of subsection (e)
25 or subparagraph (E) of paragraph (2) of subsection
26 (e), the amount by which addition modifications
27 other than those provided by this subparagraph (E)
28 exceeded subtraction modifications in such taxable
29 year, with the following limitations applied in the
30 order that they are listed:
31 (i) the addition modification relating to
32 the net operating loss carried back or forward
33 to the taxable year from any taxable year
34 ending prior to December 31, 1986 shall be
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1 reduced by the amount of addition modification
2 under this subparagraph (E) which related to
3 that net operating loss and which was taken
4 into account in calculating the base income of
5 an earlier taxable year, and
6 (ii) the addition modification relating
7 to the net operating loss carried back or
8 forward to the taxable year from any taxable
9 year ending prior to December 31, 1986 shall
10 not exceed the amount of such carryback or
11 carryforward;
12 For taxable years in which there is a net
13 operating loss carryback or carryforward from more
14 than one other taxable year ending prior to December
15 31, 1986, the addition modification provided in this
16 subparagraph (E) shall be the sum of the amounts
17 computed independently under the preceding
18 provisions of this subparagraph (E) for each such
19 taxable year;
20 (F) For taxable years ending on or after
21 January 1, 1989, an amount equal to the tax deducted
22 pursuant to Section 164 of the Internal Revenue Code
23 if the trust or estate is claiming the same tax for
24 purposes of the Illinois foreign tax credit under
25 Section 601 of this Act;
26 (G) 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; and
30 (G-5) For taxable years ending after December
31 31, 1997, an amount equal to any eligible
32 remediation costs that the trust or estate deducted
33 in computing adjusted gross income and for which the
34 trust or estate claims a credit under subsection (l)
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1 of Section 201;
2 and by deducting from the total so obtained the sum of
3 the following amounts:
4 (H) An amount equal to all amounts included in
5 such total pursuant to the provisions of Sections
6 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
7 408 of the Internal Revenue Code or included in such
8 total as distributions under the provisions of any
9 retirement or disability plan for employees of any
10 governmental agency or unit, or retirement payments
11 to retired partners, which payments are excluded in
12 computing net earnings from self employment by
13 Section 1402 of the Internal Revenue Code and
14 regulations adopted pursuant thereto;
15 (I) The valuation limitation amount;
16 (J) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (K) An amount equal to all amounts included in
21 taxable income as modified by subparagraphs (A),
22 (B), (C), (D), (E), (F) and (G) which are exempt
23 from taxation by this State either by reason of its
24 statutes or Constitution or by reason of the
25 Constitution, treaties or statutes of the United
26 States; provided that, in the case of any statute of
27 this State that exempts income derived from bonds or
28 other obligations from the tax imposed under this
29 Act, the amount exempted shall be the interest net
30 of bond premium amortization;
31 (L) With the exception of any amounts
32 subtracted under subparagraph (K), an amount equal
33 to the sum of all amounts disallowed as deductions
34 by (i) Sections 171(a) (2) and 265(a)(2) of the
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1 Internal Revenue Code, as now or hereafter amended,
2 and all amounts of expenses allocable to interest
3 and disallowed as deductions by Section 265(1) of
4 the Internal Revenue Code of 1954, as now or
5 hereafter amended; and (ii) for taxable years ending
6 on or after August 13, 1999 the effective date of
7 this amendatory Act of the 91st General Assembly,
8 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
9 of the Internal Revenue Code; the provisions of this
10 subparagraph are exempt from the provisions of
11 Section 250;
12 (M) An amount equal to those dividends
13 included in such total which were paid by a
14 corporation which conducts business operations in an
15 Enterprise Zone or zones created under the Illinois
16 Enterprise Zone Act and conducts substantially all
17 of its operations in an Enterprise Zone or Zones;
18 (N) An amount equal to any contribution made
19 to a job training project established pursuant to
20 the Tax Increment Allocation Redevelopment Act;
21 (O) 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 (M) of paragraph (2) of this subsection shall not be
29 eligible for the deduction provided under this
30 subparagraph (O);
31 (P) An amount equal to the amount of the
32 deduction used to compute the federal income tax
33 credit for restoration of substantial amounts held
34 under claim of right for the taxable year pursuant
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1 to Section 1341 of the Internal Revenue Code of
2 1986; and
3 (Q) For taxable year 1999 and thereafter, an
4 amount equal to the amount of any (i) distributions,
5 to the extent includible in gross income for federal
6 income tax purposes, made to the taxpayer because of
7 his or her status as a victim of persecution for
8 racial or religious reasons by Nazi Germany or any
9 other Axis regime or as an heir of the victim and
10 (ii) items of income, to the extent includible in
11 gross income for federal income tax purposes,
12 attributable to, derived from or in any way related
13 to assets stolen from, hidden from, or otherwise
14 lost to a victim of persecution for racial or
15 religious reasons by Nazi Germany or any other Axis
16 regime immediately prior to, during, and immediately
17 after World War II, including, but not limited to,
18 interest on the proceeds receivable as insurance
19 under policies issued to a victim of persecution for
20 racial or religious reasons by Nazi Germany or any
21 other Axis regime by European insurance companies
22 immediately prior to and during World War II;
23 provided, however, this subtraction from federal
24 adjusted gross income does not apply to assets
25 acquired with such assets or with the proceeds from
26 the sale of such assets; provided, further, this
27 paragraph shall only apply to a taxpayer who was the
28 first recipient of such assets after their recovery
29 and who is a victim of persecution for racial or
30 religious reasons by Nazi Germany or any other Axis
31 regime or as an heir of the victim. The amount of
32 and the eligibility for any public assistance,
33 benefit, or similar entitlement is not affected by
34 the inclusion of items (i) and (ii) of this
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1 paragraph in gross income for federal income tax
2 purposes. This paragraph is exempt from the
3 provisions of Section 250.
4 (3) Limitation. The amount of any modification
5 otherwise required under this subsection shall, under
6 regulations prescribed by the Department, be adjusted by
7 any amounts included therein which were properly paid,
8 credited, or required to be distributed, or permanently
9 set aside for charitable purposes pursuant to Internal
10 Revenue Code Section 642(c) during the taxable year.
11 (d) Partnerships.
12 (1) In general. In the case of a partnership, base
13 income means an amount equal to the taxpayer's taxable
14 income for the taxable year as modified by paragraph (2).
15 (2) Modifications. The taxable income referred to
16 in paragraph (1) shall be modified by adding thereto the
17 sum of the following amounts:
18 (A) An amount equal to all amounts paid or
19 accrued to the taxpayer as interest or dividends
20 during the taxable year to the extent excluded from
21 gross income in the computation of taxable income;
22 (B) An amount equal to the amount of tax
23 imposed by this Act to the extent deducted from
24 gross income for the taxable year;
25 (C) The amount of deductions allowed to the
26 partnership pursuant to Section 707 (c) of the
27 Internal Revenue Code in calculating its taxable
28 income; and
29 (D) 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;
33 and by deducting from the total so obtained the following
34 amounts:
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1 (E) The valuation limitation amount;
2 (F) An amount equal to the amount of any tax
3 imposed by this Act which was refunded to the
4 taxpayer and included in such total for the taxable
5 year;
6 (G) An amount equal to all amounts included in
7 taxable income as modified by subparagraphs (A),
8 (B), (C) and (D) which are exempt from taxation by
9 this 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 (H) Any income of the partnership which
18 constitutes personal service income as defined in
19 Section 1348 (b) (1) of the Internal Revenue Code
20 (as in effect December 31, 1981) or a reasonable
21 allowance for compensation paid or accrued for
22 services rendered by partners to the partnership,
23 whichever is greater;
24 (I) An amount equal to all amounts of income
25 distributable to an entity subject to the Personal
26 Property Tax Replacement Income Tax imposed by
27 subsections (c) and (d) of Section 201 of this Act
28 including amounts distributable to organizations
29 exempt from federal income tax by reason of Section
30 501(a) of the Internal Revenue Code;
31 (J) With the exception of any amounts
32 subtracted under subparagraph (G), an amount equal
33 to the sum of all amounts disallowed as deductions
34 by (i) Sections 171(a) (2), and 265(2) of the
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1 Internal Revenue Code of 1954, as now or hereafter
2 amended, and all amounts of expenses allocable to
3 interest and disallowed as deductions by Section
4 265(1) of the Internal Revenue Code, as now or
5 hereafter amended; and (ii) for taxable years ending
6 on or after August 13, 1999 the effective date of
7 this amendatory Act of the 91st General Assembly,
8 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
9 of the Internal Revenue Code; the provisions of this
10 subparagraph are exempt from the provisions of
11 Section 250;
12 (K) An amount equal to those dividends
13 included in such total which were paid by a
14 corporation which conducts business operations in an
15 Enterprise Zone or zones created under the Illinois
16 Enterprise Zone Act, enacted by the 82nd General
17 Assembly, and which does not conduct such operations
18 other than in an Enterprise Zone or Zones;
19 (L) An amount equal to any contribution made
20 to a job training project established pursuant to
21 the Real Property Tax Increment Allocation
22 Redevelopment Act;
23 (M) 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 (M); and
33 (N) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986.
5 (e) Gross income; adjusted gross income; taxable income.
6 (1) In general. Subject to the provisions of
7 paragraph (2) and subsection (b) (3), for purposes of
8 this Section and Section 803(e), a taxpayer's gross
9 income, adjusted gross income, or taxable income for the
10 taxable year shall mean the amount of gross income,
11 adjusted gross income or taxable income properly
12 reportable for federal income tax purposes for the
13 taxable year under the provisions of the Internal Revenue
14 Code. Taxable income may be less than zero. However, for
15 taxable years ending on or after December 31, 1986, net
16 operating loss carryforwards from taxable years ending
17 prior to December 31, 1986, may not exceed the sum of
18 federal taxable income for the taxable year before net
19 operating loss deduction, plus the excess of addition
20 modifications over subtraction modifications for the
21 taxable year. For taxable years ending prior to December
22 31, 1986, taxable income may never be an amount in excess
23 of the net operating loss for the taxable year as defined
24 in subsections (c) and (d) of Section 172 of the Internal
25 Revenue Code, provided that when taxable income of a
26 corporation (other than a Subchapter S corporation),
27 trust, or estate is less than zero and addition
28 modifications, other than those provided by subparagraph
29 (E) of paragraph (2) of subsection (b) for corporations
30 or subparagraph (E) of paragraph (2) of subsection (c)
31 for trusts and estates, exceed subtraction modifications,
32 an addition modification must be made under those
33 subparagraphs for any other taxable year to which the
34 taxable income less than zero (net operating loss) is
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1 applied under Section 172 of the Internal Revenue Code or
2 under subparagraph (E) of paragraph (2) of this
3 subsection (e) applied in conjunction with Section 172 of
4 the Internal Revenue Code.
5 (2) Special rule. For purposes of paragraph (1) of
6 this subsection, the taxable income properly reportable
7 for federal income tax purposes shall mean:
8 (A) Certain life insurance companies. In the
9 case of a life insurance company subject to the tax
10 imposed by Section 801 of the Internal Revenue Code,
11 life insurance company taxable income, plus the
12 amount of distribution from pre-1984 policyholder
13 surplus accounts as calculated under Section 815a of
14 the Internal Revenue Code;
15 (B) Certain other insurance companies. In the
16 case of mutual insurance companies subject to the
17 tax imposed by Section 831 of the Internal Revenue
18 Code, insurance company taxable income;
19 (C) Regulated investment companies. In the
20 case of a regulated investment company subject to
21 the tax imposed by Section 852 of the Internal
22 Revenue Code, investment company taxable income;
23 (D) Real estate investment trusts. In the
24 case of a real estate investment trust subject to
25 the tax imposed by Section 857 of the Internal
26 Revenue Code, real estate investment trust taxable
27 income;
28 (E) Consolidated corporations. In the case of
29 a corporation which is a member of an affiliated
30 group of corporations filing a consolidated income
31 tax return for the taxable year for federal income
32 tax purposes, taxable income determined as if such
33 corporation had filed a separate return for federal
34 income tax purposes for the taxable year and each
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1 preceding taxable year for which it was a member of
2 an affiliated group. For purposes of this
3 subparagraph, the taxpayer's separate taxable income
4 shall be determined as if the election provided by
5 Section 243(b) (2) of the Internal Revenue Code had
6 been in effect for all such years;
7 (F) Cooperatives. In the case of a
8 cooperative corporation or association, the taxable
9 income of such organization determined in accordance
10 with the provisions of Section 1381 through 1388 of
11 the Internal Revenue Code;
12 (G) Subchapter S corporations. In the case
13 of: (i) a Subchapter S corporation for which there
14 is in effect an election for the taxable year under
15 Section 1362 of the Internal Revenue Code, the
16 taxable income of such corporation determined in
17 accordance with Section 1363(b) of the Internal
18 Revenue Code, except that taxable income shall take
19 into account those items which are required by
20 Section 1363(b)(1) of the Internal Revenue Code to
21 be separately stated; and (ii) a Subchapter S
22 corporation for which there is in effect a federal
23 election to opt out of the provisions of the
24 Subchapter S Revision Act of 1982 and have applied
25 instead the prior federal Subchapter S rules as in
26 effect on July 1, 1982, the taxable income of such
27 corporation determined in accordance with the
28 federal Subchapter S rules as in effect on July 1,
29 1982; and
30 (H) Partnerships. In the case of a
31 partnership, taxable income determined in accordance
32 with Section 703 of the Internal Revenue Code,
33 except that taxable income shall take into account
34 those items which are required by Section 703(a)(1)
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1 to be separately stated but which would be taken
2 into account by an individual in calculating his
3 taxable income.
4 (f) Valuation limitation amount.
5 (1) In general. The valuation limitation amount
6 referred to in subsections (a) (2) (G), (c) (2) (I) and
7 (d)(2) (E) is an amount equal to:
8 (A) The sum of the pre-August 1, 1969
9 appreciation amounts (to the extent consisting of
10 gain reportable under the provisions of Section 1245
11 or 1250 of the Internal Revenue Code) for all
12 property in respect of which such gain was reported
13 for the taxable year; plus
14 (B) The lesser of (i) the sum of the
15 pre-August 1, 1969 appreciation amounts (to the
16 extent consisting of capital gain) for all property
17 in respect of which such gain was reported for
18 federal income tax purposes for the taxable year, or
19 (ii) the net capital gain for the taxable year,
20 reduced in either case by any amount of such gain
21 included in the amount determined under subsection
22 (a) (2) (F) or (c) (2) (H).
23 (2) Pre-August 1, 1969 appreciation amount.
24 (A) If the fair market value of property
25 referred to in paragraph (1) was readily
26 ascertainable on August 1, 1969, the pre-August 1,
27 1969 appreciation amount for such property is the
28 lesser of (i) the excess of such fair market value
29 over the taxpayer's basis (for determining gain) for
30 such property on that date (determined under the
31 Internal Revenue Code as in effect on that date), or
32 (ii) the total gain realized and reportable for
33 federal income tax purposes in respect of the sale,
34 exchange or other disposition of such property.
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1 (B) If the fair market value of property
2 referred to in paragraph (1) was not readily
3 ascertainable on August 1, 1969, the pre-August 1,
4 1969 appreciation amount for such property is that
5 amount which bears the same ratio to the total gain
6 reported in respect of the property for federal
7 income tax purposes for the taxable year, as the
8 number of full calendar months in that part of the
9 taxpayer's holding period for the property ending
10 July 31, 1969 bears to the number of full calendar
11 months in the taxpayer's entire holding period for
12 the property.
13 (C) The Department shall prescribe such
14 regulations as may be necessary to carry out the
15 purposes of this paragraph.
16 (g) Double deductions. Unless specifically provided
17 otherwise, nothing in this Section shall permit the same item
18 to be deducted more than once.
19 (h) Legislative intention. Except as expressly provided
20 by this Section there shall be no modifications or
21 limitations on the amounts of income, gain, loss or deduction
22 taken into account in determining gross income, adjusted
23 gross income or taxable income for federal income tax
24 purposes for the taxable year, or in the amount of such items
25 entering into the computation of base income and net income
26 under this Act for such taxable year, whether in respect of
27 property values as of August 1, 1969 or otherwise.
28 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
29 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
30 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676,
31 eff. 12-23-99; revised 1-5-00.)
32 Section 99. Effective date. This Act takes effect upon
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1 becoming law.