State of Illinois
90th General Assembly
Legislation

   [ Search ]   [ Legislation ]   [ Bill Summary ]
[ Home ]   [ Back ]   [ Bottom ]



90_HB3080

      35 ILCS 5/203             from Ch. 120, par. 2-203
          Amends the Illinois Income Tax Act.  Creates a  deduction
      for  individual  taxpayers  who  care  for  a  parent  in the
      individual's home in an amount equal to  $1,000  per  taxable
      year  for  expenses  spent  on  caring  for the parent if the
      parent has been diagnosed by a physician as  unable  to  live
      alone.  Applicable  to  taxable  years  ending  on  or  after
      December  31,  1998.   Sunsets  the  deduction after 5 years.
      Effective immediately.
                                                     LRB9009884KDpc
                                               LRB9009884KDpc
 1        AN ACT to amend the Illinois Income Tax Act  by  changing
 2    Section 203.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 5.  The Illinois Income Tax  Act  is  amended  by
 6    changing Section 203 as follows:
 7        (35 ILCS 5/203) (from Ch. 120, par. 2-203)
 8        Sec. 203.  Base income defined.
 9        (a)  Individuals.
10             (1)  In general.  In the case of an individual, base
11        income  means  an amount equal to the taxpayer's adjusted
12        gross  income  for  the  taxable  year  as  modified   by
13        paragraph (2).
14             (2)  Modifications.    The   adjusted  gross  income
15        referred to in paragraph (1) shall be modified by  adding
16        thereto the sum of the following amounts:
17                  (A)  An  amount  equal  to  all amounts paid or
18             accrued to the taxpayer  as  interest  or  dividends
19             during  the taxable year to the extent excluded from
20             gross income in the computation  of  adjusted  gross
21             income,  except  stock dividends of qualified public
22             utilities  described  in  Section  305(e)   of   the
23             Internal Revenue Code;
24                  (B)  An  amount  equal  to  the  amount  of tax
25             imposed by this Act  to  the  extent  deducted  from
26             gross  income  in  the computation of adjusted gross
27             income for the taxable year;
28                  (C)  An amount equal  to  the  amount  received
29             during  the  taxable year as a recovery or refund of
30             real  property  taxes  paid  with  respect  to   the
31             taxpayer's principal residence under the Revenue Act
                            -2-                LRB9009884KDpc
 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             and
15                  (D-5)  An amount, to the extent not included in
16             adjusted  gross income, equal to the amount of money
17             withdrawn by the taxpayer in the taxable year from a
18             medical care savings account and the interest earned
19             on the account in the taxable year of  a  withdrawal
20             pursuant  to  subsection  (b)  of  Section 20 of the
21             Medical Care Savings Account Act;
22        and by deducting from the total so obtained  the  sum  of
23        the following amounts:
24                  (E)  Any  amount  included  in  such  total  in
25             respect  of  any  compensation  (including  but  not
26             limited  to  any  compensation  paid or accrued to a
27             serviceman while a prisoner of  war  or  missing  in
28             action)  paid  to  a  resident by reason of being on
29             active duty in the Armed Forces of the United States
30             and in respect of any compensation paid  or  accrued
31             to  a  resident who as a governmental employee was a
32             prisoner of war or missing in action, and in respect
33             of any compensation paid to a resident  in  1971  or
34             thereafter for annual training performed pursuant to
                            -3-                LRB9009884KDpc
 1             Sections  502  and 503, Title 32, United States Code
 2             as a member of the Illinois National Guard;
 3                  (F)  An amount equal to all amounts included in
 4             such total pursuant to the  provisions  of  Sections
 5             402(a),  402(c), 403(a), 403(b), 406(a), 407(a), and
 6             408 of the Internal Revenue  Code,  or  included  in
 7             such  total as distributions under the provisions of
 8             any retirement or disability plan for  employees  of
 9             any  governmental  agency  or  unit,  or  retirement
10             payments  to  retired  partners,  which payments are
11             excluded  in  computing  net  earnings   from   self
12             employment  by  Section 1402 of the Internal Revenue
13             Code and regulations adopted pursuant thereto;
14                  (G)  The valuation limitation amount;
15                  (H)  An amount equal to the amount of  any  tax
16             imposed  by  this  Act  which  was  refunded  to the
17             taxpayer and included in such total for the  taxable
18             year;
19                  (I)  An amount equal to all amounts included in
20             such total pursuant to the provisions of Section 111
21             of  the Internal Revenue Code as a recovery of items
22             previously deducted from adjusted  gross  income  in
23             the computation of taxable income;
24                  (J)  An   amount   equal   to  those  dividends
25             included  in  such  total  which  were  paid  by   a
26             corporation which conducts business operations in an
27             Enterprise  Zone or zones created under the Illinois
28             Enterprise Zone Act, and conducts substantially  all
29             of its operations in an Enterprise Zone or zones;
30                  (K)  An   amount   equal   to  those  dividends
31             included  in  such  total  that  were  paid   by   a
32             corporation  that  conducts business operations in a
33             federally designated Foreign Trade Zone or  Sub-Zone
34             and  that  is  designated  a  High  Impact  Business
                            -4-                LRB9009884KDpc
 1             located   in   Illinois;   provided  that  dividends
 2             eligible for the deduction provided in  subparagraph
 3             (J) of paragraph (2) of this subsection shall not be
 4             eligible  for  the  deduction  provided  under  this
 5             subparagraph (K);
 6                  (L)  For  taxable  years  ending after December
 7             31, 1983, an amount equal  to  all  social  security
 8             benefits  and  railroad retirement benefits included
 9             in such total pursuant to Sections 72(r) and  86  of
10             the Internal Revenue Code;
11                  (M)  With   the   exception   of   any  amounts
12             subtracted under subparagraph (N), an  amount  equal
13             to  the  sum of all amounts disallowed as deductions
14             by Sections 171(a) (2), and 265(2) of  the  Internal
15             Revenue  Code  of 1954, as now or hereafter amended,
16             and all amounts of expenses  allocable  to  interest
17             and   disallowed  as deductions by Section 265(1) of
18             the  Internal  Revenue  Code  of  1954,  as  now  or
19             hereafter amended;
20                  (N)  An amount equal to all amounts included in
21             such total which are exempt from  taxation  by  this
22             State   either   by   reason   of  its  statutes  or
23             Constitution  or  by  reason  of  the  Constitution,
24             treaties or statutes of the United States;  provided
25             that,  in the case of any statute of this State that
26             exempts  income  derived   from   bonds   or   other
27             obligations from the tax imposed under this Act, the
28             amount  exempted  shall  be the interest net of bond
29             premium amortization;
30                  (O)  An amount equal to any  contribution  made
31             to  a  job  training project established pursuant to
32             the Tax Increment Allocation Redevelopment Act;
33                  (P)  An amount  equal  to  the  amount  of  the
34             deduction  used  to  compute  the federal income tax
                            -5-                LRB9009884KDpc
 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                  (Q)  An amount equal to any amounts included in
 6             such   total,   received   by  the  taxpayer  as  an
 7             acceleration in the payment of  life,  endowment  or
 8             annuity  benefits  in advance of the time they would
 9             otherwise be payable as an indemnity for a  terminal
10             illness;
11                  (R)  An  amount  equal  to  the  amount  of any
12             federal or State  bonus  paid  to  veterans  of  the
13             Persian Gulf War;
14                  (S)  An  amount,  to  the  extent  included  in
15             adjusted  gross  income,  equal  to  the amount of a
16             contribution made in the taxable year on  behalf  of
17             the  taxpayer  to  a  medical  care  savings account
18             established under the Medical Care  Savings  Account
19             Act  to  the  extent the contribution is accepted by
20             the account administrator as provided in that Act;
21                  (T)  An  amount,  to  the  extent  included  in
22             adjusted  gross  income,  equal  to  the  amount  of
23             interest earned in the taxable  year  on  a  medical
24             care  savings  account established under the Medical
25             Care Savings Account Act on behalf of the  taxpayer,
26             other  than interest added pursuant to item (D-5) of
27             this paragraph (2);
28                  (U)  For one taxable year beginning on or after
29             January 1, 1994, an amount equal to the total amount
30             of tax imposed and paid under  subsections  (a)  and
31             (b)  of  Section  201  of  this Act on grant amounts
32             received by the  taxpayer  under  the  Nursing  Home
33             Grant  Assistance  Act during the taxpayer's taxable
34             years 1992 and 1993; and
                            -6-                LRB9009884KDpc
 1                  (V)  Beginning with  tax  years  ending  on  or
 2             after  December  31,  1995 and ending with tax years
 3             ending on or before December  31,  1999,  an  amount
 4             equal  to  the  amount  paid  by a taxpayer who is a
 5             self-employed taxpayer, a partner of a  partnership,
 6             or  a  shareholder in a Subchapter S corporation for
 7             health insurance or  long-term  care  insurance  for
 8             that   taxpayer   or   that   taxpayer's  spouse  or
 9             dependents, to the extent that the amount  paid  for
10             that  health  insurance  or long-term care insurance
11             may be deducted under Section 213  of  the  Internal
12             Revenue  Code  of 1986, has not been deducted on the
13             federal income tax return of the taxpayer, and  does
14             not  exceed  the taxable income attributable to that
15             taxpayer's  income,   self-employment   income,   or
16             Subchapter  S  corporation  income;  except  that no
17             deduction shall be allowed under this  item  (V)  if
18             the  taxpayer  is  eligible  to  participate  in any
19             health insurance or long-term care insurance plan of
20             an  employer  of  the  taxpayer  or  the  taxpayer's
21             spouse.  The amount  of  the  health  insurance  and
22             long-term  care insurance subtracted under this item
23             (V) shall be determined by multiplying total  health
24             insurance and long-term care insurance premiums paid
25             by  the  taxpayer times a number that represents the
26             fractional percentage of eligible  medical  expenses
27             under  Section  213  of the Internal Revenue Code of
28             1986 not actually deducted on the taxpayer's federal
29             income tax return; and .
30                  (W)  Beginning with taxable years ending on  or
31             after  December  31,  1998  and  ending with taxable
32             years ending on or  before  December  31,  2002,  an
33             amount equal to $1,000 per taxable year for expenses
34             incurred  in caring, in the individual's home, for a
                            -7-                LRB9009884KDpc
 1             parent who has been  diagnosed  by  a  physician  as
 2             unable to live alone.
 3        (b)  Corporations.
 4             (1)  In general.  In the case of a corporation, base
 5        income  means  an  amount equal to the taxpayer's taxable
 6        income for the taxable year as modified by paragraph (2).
 7             (2)  Modifications.  The taxable income referred  to
 8        in  paragraph (1) shall be modified by adding thereto the
 9        sum of the following amounts:
10                  (A)  An amount equal to  all  amounts  paid  or
11             accrued   to   the  taxpayer  as  interest  and  all
12             distributions  received  from  regulated  investment
13             companies during the  taxable  year  to  the  extent
14             excluded  from  gross  income  in the computation of
15             taxable income;
16                  (B)  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                  (C)  In  the  case  of  a  regulated investment
21             company, an amount equal to the excess  of  (i)  the
22             net  long-term  capital  gain  for the taxable year,
23             over (ii) the amount of the capital  gain  dividends
24             designated   as  such  in  accordance  with  Section
25             852(b)(3)(C) of the Internal Revenue  Code  and  any
26             amount  designated under Section 852(b)(3)(D) of the
27             Internal Revenue Code, attributable to  the  taxable
28             year.
29        This  amendatory  Act  of 1995 is declarative of existing
30    law and is not a new enactment.
31                  (D)  The  amount  of  any  net  operating  loss
32             deduction taken in arriving at taxable income, other
33             than a net operating loss  carried  forward  from  a
34             taxable year ending prior to December 31, 1986; and
                            -8-                LRB9009884KDpc
 1                  (E)  For taxable years in which a net operating
 2             loss  carryback  or carryforward from a taxable year
 3             ending prior to December 31, 1986 is an  element  of
 4             taxable income under paragraph (1) of subsection (e)
 5             or  subparagraph  (E) of paragraph (2) of subsection
 6             (e), the  amount  by  which  addition  modifications
 7             other  than  those provided by this subparagraph (E)
 8             exceeded subtraction modifications in  such  earlier
 9             taxable year, with the following limitations applied
10             in the order that they are listed:
11                       (i)  the addition modification relating to
12                  the  net operating loss carried back or forward
13                  to the  taxable  year  from  any  taxable  year
14                  ending  prior  to  December  31,  1986 shall be
15                  reduced by the amount of addition  modification
16                  under  this  subparagraph  (E) which related to
17                  that net operating loss  and  which  was  taken
18                  into  account in calculating the base income of
19                  an earlier taxable year, and
20                       (ii)  the addition  modification  relating
21                  to  the  net  operating  loss  carried  back or
22                  forward to the taxable year  from  any  taxable
23                  year  ending  prior  to December 31, 1986 shall
24                  not exceed the  amount  of  such  carryback  or
25                  carryforward;
26                  For  taxable  years  in  which  there  is a net
27             operating loss carryback or carryforward  from  more
28             than one other taxable year ending prior to December
29             31, 1986, the addition modification provided in this
30             subparagraph  (E)  shall  be  the sum of the amounts
31             computed   independently   under    the    preceding
32             provisions  of  this  subparagraph (E) for each such
33             taxable year,
34        and by deducting from the total so obtained  the  sum  of
                            -9-                LRB9009884KDpc
 1        the following amounts:
 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 any amount included  in
 7             such  total under Section 78 of the Internal Revenue
 8             Code;
 9                  (H)  In the  case  of  a  regulated  investment
10             company,  an  amount  equal  to the amount of exempt
11             interest dividends as defined in subsection (b)  (5)
12             of Section 852 of the Internal Revenue Code, paid to
13             shareholders for the taxable year;
14                  (I)  With   the   exception   of   any  amounts
15             subtracted under subparagraph (J), an  amount  equal
16             to  the  sum of all amounts disallowed as deductions
17             by Sections 171(a) (2), and  265(a)(2)  and  amounts
18             disallowed  as interest expense by Section 291(a)(3)
19             of the Internal Revenue Code, as  now  or  hereafter
20             amended,  and  all  amounts of expenses allocable to
21             interest and disallowed  as  deductions  by  Section
22             265(a)(1)  of  the  Internal Revenue Code, as now or
23             hereafter amended;
24                  (J)  An amount equal to all amounts included in
25             such total which are exempt from  taxation  by  this
26             State   either   by   reason   of  its  statutes  or
27             Constitution  or  by  reason  of  the  Constitution,
28             treaties or statutes of the United States;  provided
29             that,  in the case of any statute of this State that
30             exempts  income  derived   from   bonds   or   other
31             obligations from the tax imposed under this Act, the
32             amount  exempted  shall  be the interest net of bond
33             premium amortization;
34                  (K)  An  amount  equal   to   those   dividends
                            -10-               LRB9009884KDpc
 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                  (L)  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             (K) of paragraph 2 of this subsection shall  not  be
14             eligible  for  the  deduction  provided  under  this
15             subparagraph (L);
16                  (M)  For  any  taxpayer  that  is  a  financial
17             organization within the meaning of Section 304(c) of
18             this  Act,  an  amount  included  in  such  total as
19             interest income from a loan or loans  made  by  such
20             taxpayer  to  a  borrower, to the extent that such a
21             loan is secured by property which  is  eligible  for
22             the  Enterprise Zone Investment Credit. To determine
23             the portion of a loan or loans that  is  secured  by
24             property  eligible  for  a Section 201(h) investment
25             credit to the borrower, the entire principal  amount
26             of  the  loan  or loans between the taxpayer and the
27             borrower should be divided into  the  basis  of  the
28             Section  201(h)  investment  credit  property  which
29             secures  the  loan  or loans, using for this purpose
30             the original basis of such property on the date that
31             it was placed in service  in  the  Enterprise  Zone.
32             The  subtraction  modification available to taxpayer
33             in any year under  this  subsection  shall  be  that
34             portion  of  the total interest paid by the borrower
                            -11-               LRB9009884KDpc
 1             with  respect  to  such  loan  attributable  to  the
 2             eligible property as calculated under  the  previous
 3             sentence;
 4                  (M-1)  For  any  taxpayer  that  is a financial
 5             organization within the meaning of Section 304(c) of
 6             this Act,  an  amount  included  in  such  total  as
 7             interest  income  from  a loan or loans made by such
 8             taxpayer to a borrower, to the extent  that  such  a
 9             loan  is  secured  by property which is eligible for
10             the High  Impact  Business  Investment  Credit.   To
11             determine  the  portion  of  a loan or loans that is
12             secured by property eligible for  a  Section  201(i)
13             investment   credit  to  the  borrower,  the  entire
14             principal amount of the loan or  loans  between  the
15             taxpayer and the borrower should be divided into the
16             basis   of  the  Section  201(i)  investment  credit
17             property which secures the loan or loans, using  for
18             this  purpose the original basis of such property on
19             the  date  that  it  was  placed  in  service  in  a
20             federally designated Foreign Trade Zone or  Sub-Zone
21             located  in  Illinois.  No taxpayer that is eligible
22             for the deduction provided in  subparagraph  (M)  of
23             paragraph  (2)  of this subsection shall be eligible
24             for the deduction provided under  this  subparagraph
25             (M-1).   The  subtraction  modification available to
26             taxpayers in any year under this subsection shall be
27             that portion of  the  total  interest  paid  by  the
28             borrower  with  respect to such loan attributable to
29             the  eligible  property  as  calculated  under   the
30             previous sentence;
31                  (N)  Two times any contribution made during the
32             taxable  year  to  a designated zone organization to
33             the extent that the contribution (i) qualifies as  a
34             charitable  contribution  under  subsection  (c)  of
                            -12-               LRB9009884KDpc
 1             Section  170  of  the Internal Revenue Code and (ii)
 2             must, by its terms, be used for a  project  approved
 3             by  the Department of Commerce and Community Affairs
 4             under Section 11 of  the  Illinois  Enterprise  Zone
 5             Act;
 6                  (O)  An  amount  equal  to: (i) 85% for taxable
 7             years ending on or before December 31, 1992,  or,  a
 8             percentage  equal  to the percentage allowable under
 9             Section 243(a)(1) of the Internal  Revenue  Code  of
10             1986  for  taxable  years  ending after December 31,
11             1992, of the amount by which dividends  included  in
12             taxable  income and received from a corporation that
13             is not created or organized under the  laws  of  the
14             United  States or any state or political subdivision
15             thereof, including, for taxable years ending  on  or
16             after  December  31,  1988,  dividends  received  or
17             deemed   received  or  paid  or  deemed  paid  under
18             Sections 951 through 964  of  the  Internal  Revenue
19             Code, exceed the amount of the modification provided
20             under  subparagraph  (G)  of  paragraph  (2) of this
21             subsection (b) which is related to  such  dividends;
22             plus  (ii)  100%  of  the amount by which dividends,
23             included in taxable income and received,  including,
24             for  taxable  years  ending on or after December 31,
25             1988, dividends received or deemed received or  paid
26             or deemed paid under Sections 951 through 964 of the
27             Internal  Revenue  Code,  from  any such corporation
28             specified in clause  (i)  that  would  but  for  the
29             provisions  of  Section 1504 (b) (3) of the Internal
30             Revenue  Code  be  treated  as  a  member   of   the
31             affiliated   group   which   includes  the  dividend
32             recipient, exceed the  amount  of  the  modification
33             provided  under subparagraph (G) of paragraph (2) of
34             this  subsection  (b)  which  is  related  to   such
                            -13-               LRB9009884KDpc
 1             dividends;
 2                  (P)  An  amount  equal to any contribution made
 3             to a job training project  established  pursuant  to
 4             the Tax Increment Allocation Redevelopment Act; and
 5                  (Q)  An  amount  equal  to  the  amount  of the
 6             deduction used to compute  the  federal  income  tax
 7             credit  for  restoration of substantial amounts held
 8             under claim of right for the taxable  year  pursuant
 9             to  Section  1341  of  the  Internal Revenue Code of
10             1986.
11             (3)  Special rule.  For purposes  of  paragraph  (2)
12        (A),  "gross  income"  in  the  case  of a life insurance
13        company, for tax years ending on and after  December  31,
14        1994,  shall  mean  the  gross  investment income for the
15        taxable year.
16        (c)  Trusts and estates.
17             (1)  In general.  In the case of a trust or  estate,
18        base  income  means  an  amount  equal  to the taxpayer's
19        taxable income  for  the  taxable  year  as  modified  by
20        paragraph (2).
21             (2)  Modifications.   Subject  to  the provisions of
22        paragraph  (3),  the  taxable  income  referred   to   in
23        paragraph (1) shall be modified by adding thereto the sum
24        of the following amounts:
25                  (A)  An  amount  equal  to  all amounts paid or
26             accrued to the taxpayer  as  interest  or  dividends
27             during  the taxable year to the extent excluded from
28             gross income in the computation of taxable income;
29                  (B)  In the case of (i) an estate, $600; (ii) a
30             trust which,  under  its  governing  instrument,  is
31             required  to distribute all of its income currently,
32             $300; and (iii) any other trust, $100, but  in  each
33             such  case,  only  to  the  extent  such  amount was
34             deducted in the computation of taxable income;
                            -14-               LRB9009884KDpc
 1                  (C)  An amount  equal  to  the  amount  of  tax
 2             imposed  by  this  Act  to  the extent deducted from
 3             gross income in the computation  of  taxable  income
 4             for the taxable year;
 5                  (D)  The  amount  of  any  net  operating  loss
 6             deduction taken in arriving at taxable income, other
 7             than  a  net  operating  loss carried forward from a
 8             taxable year ending prior to December 31, 1986;
 9                  (E)  For taxable years in which a net operating
10             loss carryback or carryforward from a  taxable  year
11             ending  prior  to December 31, 1986 is an element of
12             taxable income under paragraph (1) of subsection (e)
13             or subparagraph (E) of paragraph (2)  of  subsection
14             (e),  the  amount  by  which  addition modifications
15             other than those provided by this  subparagraph  (E)
16             exceeded  subtraction  modifications in such taxable
17             year, with the following limitations applied in  the
18             order that they are listed:
19                       (i)  the addition modification relating to
20                  the  net operating loss carried back or forward
21                  to the  taxable  year  from  any  taxable  year
22                  ending  prior  to  December  31,  1986 shall be
23                  reduced by the amount of addition  modification
24                  under  this  subparagraph  (E) which related to
25                  that net operating loss  and  which  was  taken
26                  into  account in calculating the base income of
27                  an earlier taxable year, and
28                       (ii)  the addition  modification  relating
29                  to  the  net  operating  loss  carried  back or
30                  forward to the taxable year  from  any  taxable
31                  year  ending  prior  to December 31, 1986 shall
32                  not exceed the  amount  of  such  carryback  or
33                  carryforward;
34                  For  taxable  years  in  which  there  is a net
                            -15-               LRB9009884KDpc
 1             operating loss carryback or carryforward  from  more
 2             than one other taxable year ending prior to December
 3             31, 1986, the addition modification provided in this
 4             subparagraph  (E)  shall  be  the sum of the amounts
 5             computed   independently   under    the    preceding
 6             provisions  of  this  subparagraph (E) for each such
 7             taxable year;
 8                  (F)  For  taxable  years  ending  on  or  after
 9             January 1, 1989, an amount equal to the tax deducted
10             pursuant to Section 164 of the Internal Revenue Code
11             if the trust or estate is claiming the same tax  for
12             purposes  of  the  Illinois foreign tax credit under
13             Section 601 of this Act; and
14                  (G)  An amount  equal  to  the  amount  of  the
15             capital  gain deduction allowable under the Internal
16             Revenue Code, to  the  extent  deducted  from  gross
17             income in the computation of taxable income;
18        and  by  deducting  from the total so obtained the sum of
19        the following amounts:
20                  (H)  An amount equal to all amounts included in
21             such total pursuant to the  provisions  of  Sections
22             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
23             408 of the Internal Revenue Code or included in such
24             total as distributions under the provisions  of  any
25             retirement  or  disability plan for employees of any
26             governmental agency or unit, or retirement  payments
27             to  retired partners, which payments are excluded in
28             computing  net  earnings  from  self  employment  by
29             Section  1402  of  the  Internal  Revenue  Code  and
30             regulations adopted pursuant thereto;
31                  (I)  The valuation limitation amount;
32                  (J)  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
                            -16-               LRB9009884KDpc
 1             year;
 2                  (K)  An amount equal to all amounts included in
 3             taxable  income  as  modified  by subparagraphs (A),
 4             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
 5             from  taxation by this State either by reason of its
 6             statutes  or  Constitution  or  by  reason  of   the
 7             Constitution,  treaties  or  statutes  of the United
 8             States; provided that, in the case of any statute of
 9             this State that exempts income derived from bonds or
10             other obligations from the tax  imposed  under  this
11             Act,  the  amount exempted shall be the interest net
12             of bond premium amortization;
13                  (L)  With  the   exception   of   any   amounts
14             subtracted  under  subparagraph (K), an amount equal
15             to the sum of all amounts disallowed  as  deductions
16             by Sections 171(a) (2) and 265(a)(2) of the Internal
17             Revenue  Code,  as now or hereafter amended, and all
18             amounts  of  expenses  allocable  to  interest   and
19             disallowed  as  deductions  by Section 265(1) of the
20             Internal Revenue Code of 1954, as now  or  hereafter
21             amended;
22                  (M)  An   amount   equal   to  those  dividends
23             included  in  such  total  which  were  paid  by   a
24             corporation which conducts business operations in an
25             Enterprise  Zone or zones created under the Illinois
26             Enterprise Zone Act and conducts  substantially  all
27             of its operations in an Enterprise Zone or Zones;
28                  (N)  An  amount  equal to any contribution made
29             to a job training project  established  pursuant  to
30             the Tax Increment Allocation Redevelopment Act;
31                  (O)  An   amount   equal   to  those  dividends
32             included  in  such  total  that  were  paid   by   a
33             corporation  that  conducts business operations in a
34             federally designated Foreign Trade Zone or  Sub-Zone
                            -17-               LRB9009884KDpc
 1             and  that  is  designated  a  High  Impact  Business
 2             located   in   Illinois;   provided  that  dividends
 3             eligible for the deduction provided in  subparagraph
 4             (M) of paragraph (2) of this subsection shall not be
 5             eligible  for  the  deduction  provided  under  this
 6             subparagraph (O); and
 7                  (P)  An  amount  equal  to  the  amount  of the
 8             deduction used to compute  the  federal  income  tax
 9             credit  for  restoration of substantial amounts held
10             under claim of right for the taxable  year  pursuant
11             to  Section  1341  of  the  Internal Revenue Code of
12             1986.
13             (3)  Limitation.  The  amount  of  any  modification
14        otherwise  required  under  this  subsection shall, under
15        regulations prescribed by the Department, be adjusted  by
16        any  amounts  included  therein which were properly paid,
17        credited, or required to be distributed,  or  permanently
18        set  aside  for charitable purposes pursuant  to Internal
19        Revenue Code Section 642(c) during the taxable year.
20        (d)  Partnerships.
21             (1)  In general. In the case of a partnership,  base
22        income  means  an  amount equal to the taxpayer's taxable
23        income for the taxable year as modified by paragraph (2).
24             (2)  Modifications. The taxable income  referred  to
25        in  paragraph (1) shall be modified by adding thereto the
26        sum of the following amounts:
27                  (A)  An amount equal to  all  amounts  paid  or
28             accrued  to  the  taxpayer  as interest or dividends
29             during the taxable year to the extent excluded  from
30             gross income in the computation of taxable income;
31                  (B)  An  amount  equal  to  the  amount  of tax
32             imposed by this Act  to  the  extent  deducted  from
33             gross income for the taxable year; and
34                  (C)  The  amount  of  deductions allowed to the
                            -18-               LRB9009884KDpc
 1             partnership pursuant  to  Section  707  (c)  of  the
 2             Internal  Revenue  Code  in  calculating its taxable
 3             income;
 4                  (D)  An amount  equal  to  the  amount  of  the
 5             capital  gain deduction allowable under the Internal
 6             Revenue Code, to  the  extent  deducted  from  gross
 7             income in the computation of taxable income;
 8        and by deducting from the total so obtained the following
 9        amounts:
10                  (E)  The valuation limitation amount;
11                  (F)  An  amount  equal to the amount of any tax
12             imposed by  this  Act  which  was  refunded  to  the
13             taxpayer  and included in such total for the taxable
14             year;
15                  (G)  An amount equal to all amounts included in
16             taxable income as  modified  by  subparagraphs  (A),
17             (B),  (C)  and (D) which are exempt from taxation by
18             this State either  by  reason  of  its  statutes  or
19             Constitution  or  by  reason  of  the  Constitution,
20             treaties  or statutes of the United States; provided
21             that, in the case of any statute of this State  that
22             exempts   income   derived   from   bonds  or  other
23             obligations from the tax imposed under this Act, the
24             amount exempted shall be the interest  net  of  bond
25             premium amortization;
26                  (H)  Any   income   of  the  partnership  which
27             constitutes personal service income  as  defined  in
28             Section  1348  (b)  (1) of the Internal Revenue Code
29             (as in effect December 31,  1981)  or  a  reasonable
30             allowance  for  compensation  paid  or  accrued  for
31             services  rendered  by  partners to the partnership,
32             whichever is greater;
33                  (I)  An amount equal to all amounts  of  income
34             distributable  to  an entity subject to the Personal
                            -19-               LRB9009884KDpc
 1             Property  Tax  Replacement  Income  Tax  imposed  by
 2             subsections (c) and (d) of Section 201 of  this  Act
 3             including  amounts  distributable  to  organizations
 4             exempt  from federal income tax by reason of Section
 5             501(a) of the Internal Revenue Code;
 6                  (J)  With  the   exception   of   any   amounts
 7             subtracted  under  subparagraph (G), an amount equal
 8             to the sum of all amounts disallowed  as  deductions
 9             by  Sections  171(a) (2), and 265(2) of the Internal
10             Revenue Code of 1954, as now or  hereafter  amended,
11             and  all  amounts  of expenses allocable to interest
12             and disallowed as deductions by  Section  265(1)  of
13             the  Internal  Revenue  Code,  as  now  or hereafter
14             amended;
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,  enacted  by the 82nd General
20             Assembly, and which does not conduct such operations
21             other than in an Enterprise Zone or Zones;
22                  (L)  An amount equal to any  contribution  made
23             to  a  job  training project established pursuant to
24             the   Real   Property   Tax   Increment   Allocation
25             Redevelopment Act;
26                  (M)  An  amount  equal   to   those   dividends
27             included   in   such  total  that  were  paid  by  a
28             corporation that conducts business operations  in  a
29             federally  designated Foreign Trade Zone or Sub-Zone
30             and  that  is  designated  a  High  Impact  Business
31             located  in  Illinois;   provided   that   dividends
32             eligible  for the deduction provided in subparagraph
33             (K) of paragraph (2) of this subsection shall not be
34             eligible  for  the  deduction  provided  under  this
                            -20-               LRB9009884KDpc
 1             subparagraph (M); and
 2                  (N)  An amount  equal  to  the  amount  of  the
 3             deduction  used  to  compute  the federal income tax
 4             credit for restoration of substantial  amounts  held
 5             under  claim  of right for the taxable year pursuant
 6             to Section 1341 of  the  Internal  Revenue  Code  of
 7             1986.
 8        (e)  Gross income; adjusted gross income; taxable income.
 9             (1)  In  general.   Subject  to  the  provisions  of
10        paragraph  (2)  and  subsection  (b) (3), for purposes of
11        this Section  and  Section  803(e),  a  taxpayer's  gross
12        income,  adjusted gross income, or taxable income for the
13        taxable year shall  mean  the  amount  of  gross  income,
14        adjusted   gross   income   or  taxable  income  properly
15        reportable  for  federal  income  tax  purposes  for  the
16        taxable year under the provisions of the Internal Revenue
17        Code. Taxable income may be less than zero. However,  for
18        taxable  years  ending on or after December 31, 1986, net
19        operating loss carryforwards from  taxable  years  ending
20        prior  to  December  31,  1986, may not exceed the sum of
21        federal taxable income for the taxable  year  before  net
22        operating  loss  deduction,  plus  the excess of addition
23        modifications  over  subtraction  modifications  for  the
24        taxable year.  For taxable years ending prior to December
25        31, 1986, taxable income may never be an amount in excess
26        of the net operating loss for the taxable year as defined
27        in subsections (c) and (d) of Section 172 of the Internal
28        Revenue Code, provided that  when  taxable  income  of  a
29        corporation  (other  than  a  Subchapter  S corporation),
30        trust,  or  estate  is  less  than  zero   and   addition
31        modifications,  other than those provided by subparagraph
32        (E) of paragraph (2) of subsection (b)  for  corporations
33        or  subparagraph  (E)  of paragraph (2) of subsection (c)
34        for trusts and estates, exceed subtraction modifications,
                            -21-               LRB9009884KDpc
 1        an  addition  modification  must  be  made  under   those
 2        subparagraphs  for  any  other  taxable year to which the
 3        taxable income less than zero  (net  operating  loss)  is
 4        applied under Section 172 of the Internal Revenue Code or
 5        under   subparagraph   (E)   of  paragraph  (2)  of  this
 6        subsection (e) applied in conjunction with Section 172 of
 7        the Internal Revenue Code.
 8             (2)  Special rule.  For purposes of paragraph (1) of
 9        this subsection, the taxable income  properly  reportable
10        for federal income tax purposes shall mean:
11                  (A)  Certain  life insurance companies.  In the
12             case of a life insurance company subject to the  tax
13             imposed by Section 801 of the Internal Revenue Code,
14             life  insurance  company  taxable  income,  plus the
15             amount of distribution  from  pre-1984  policyholder
16             surplus accounts as calculated under Section 815a of
17             the Internal Revenue Code;
18                  (B)  Certain other insurance companies.  In the
19             case  of  mutual  insurance companies subject to the
20             tax imposed by Section 831 of the  Internal  Revenue
21             Code, insurance company taxable income;
22                  (C)  Regulated  investment  companies.   In the
23             case of a regulated investment  company  subject  to
24             the  tax  imposed  by  Section  852  of the Internal
25             Revenue Code, investment company taxable income;
26                  (D)  Real estate  investment  trusts.   In  the
27             case  of  a  real estate investment trust subject to
28             the tax imposed  by  Section  857  of  the  Internal
29             Revenue  Code,  real estate investment trust taxable
30             income;
31                  (E)  Consolidated corporations.  In the case of
32             a corporation which is a  member  of  an  affiliated
33             group  of  corporations filing a consolidated income
34             tax return for the taxable year for  federal  income
                            -22-               LRB9009884KDpc
 1             tax  purposes,  taxable income determined as if such
 2             corporation had filed a separate return for  federal
 3             income  tax  purposes  for the taxable year and each
 4             preceding taxable year for which it was a member  of
 5             an   affiliated   group.   For   purposes   of  this
 6             subparagraph, the taxpayer's separate taxable income
 7             shall be determined as if the election  provided  by
 8             Section  243(b) (2) of the Internal Revenue Code had
 9             been in effect for all such years;
10                  (F)  Cooperatives.    In   the   case   of    a
11             cooperative  corporation or association, the taxable
12             income of such organization determined in accordance
13             with the provisions of Section 1381 through 1388  of
14             the Internal Revenue Code;
15                  (G)  Subchapter  S  corporations.   In the case
16             of: (i) a Subchapter S corporation for  which  there
17             is  in effect an election for the taxable year under
18             Section 1362  of  the  Internal  Revenue  Code,  the
19             taxable  income  of  such  corporation determined in
20             accordance with  Section  1363(b)  of  the  Internal
21             Revenue  Code, except that taxable income shall take
22             into account  those  items  which  are  required  by
23             Section  1363(b)(1)  of the Internal Revenue Code to
24             be  separately  stated;  and  (ii)  a  Subchapter  S
25             corporation for which there is in effect  a  federal
26             election  to  opt  out  of  the  provisions  of  the
27             Subchapter  S  Revision Act of 1982 and have applied
28             instead the prior federal Subchapter S rules  as  in
29             effect  on  July 1, 1982, the taxable income of such
30             corporation  determined  in  accordance   with   the
31             federal  Subchapter  S rules as in effect on July 1,
32             1982; and
33                  (H)  Partnerships.    In   the   case   of    a
34             partnership, taxable income determined in accordance
                            -23-               LRB9009884KDpc
 1             with  Section  703  of  the  Internal  Revenue Code,
 2             except that taxable income shall take  into  account
 3             those  items which are required by Section 703(a)(1)
 4             to be separately stated but  which  would  be  taken
 5             into  account  by  an  individual in calculating his
 6             taxable income.
 7        (f)  Valuation limitation amount.
 8             (1)  In general.  The  valuation  limitation  amount
 9        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
10        (d)(2) (E) is an amount equal to:
11                  (A)  The  sum  of  the   pre-August   1,   1969
12             appreciation  amounts  (to  the extent consisting of
13             gain reportable under the provisions of Section 1245
14             or 1250  of  the  Internal  Revenue  Code)  for  all
15             property  in respect of which such gain was reported
16             for the taxable year; plus
17                  (B)  The  lesser  of  (i)  the   sum   of   the
18             pre-August  1,  1969  appreciation  amounts  (to the
19             extent consisting of capital gain) for all  property
20             in  respect  of  which  such  gain  was reported for
21             federal income tax purposes for the taxable year, or
22             (ii) the net capital  gain  for  the  taxable  year,
23             reduced  in  either  case by any amount of such gain
24             included in the amount determined  under  subsection
25             (a) (2) (F) or (c) (2) (H).
26        (2)  Pre-August 1, 1969 appreciation amount.
27                  (A)  If  the  fair  market  value  of  property
28             referred   to   in   paragraph   (1)   was   readily
29             ascertainable  on  August 1, 1969, the pre-August 1,
30             1969 appreciation amount for such  property  is  the
31             lesser  of  (i) the excess of such fair market value
32             over the taxpayer's basis (for determining gain) for
33             such property on that  date  (determined  under  the
34             Internal Revenue Code as in effect on that date), or
                            -24-               LRB9009884KDpc
 1             (ii)  the  total  gain  realized  and reportable for
 2             federal income tax purposes in respect of the  sale,
 3             exchange or other disposition of such property.
 4                  (B)  If  the  fair  market  value  of  property
 5             referred   to  in  paragraph  (1)  was  not  readily
 6             ascertainable on August 1, 1969, the  pre-August  1,
 7             1969  appreciation  amount for such property is that
 8             amount which bears the same ratio to the total  gain
 9             reported  in  respect  of  the  property for federal
10             income tax purposes for the  taxable  year,  as  the
11             number  of  full calendar months in that part of the
12             taxpayer's holding period for  the  property  ending
13             July  31,  1969 bears to the number of full calendar
14             months in the taxpayer's entire holding  period  for
15             the property.
16                  (C)  The   Department   shall   prescribe  such
17             regulations as may be necessary  to  carry  out  the
18             purposes of this paragraph.
19        (g)  Double  deductions.   Unless  specifically  provided
20    otherwise, nothing in this Section shall permit the same item
21    to be deducted more than once.
22        (h)  Legislative intention.  Except as expressly provided
23    by   this   Section   there  shall  be  no  modifications  or
24    limitations on the amounts of income, gain, loss or deduction
25    taken into account  in  determining  gross  income,  adjusted
26    gross  income  or  taxable  income  for  federal  income  tax
27    purposes for the taxable year, or in the amount of such items
28    entering  into  the computation of base income and net income
29    under this Act for such taxable year, whether in  respect  of
30    property values as of August 1, 1969 or otherwise.
31    (Source:  P.A.  89-89,  eff.  6-30-95;  89-235,  eff. 8-4-95;
32    89-418, eff. 11-15-95; 89-460,  eff.  5-24-96;  89-626,  eff.
33    8-9-96; 90-491, eff. 1-1-98.)
                            -25-               LRB9009884KDpc
 1        Section  99.  Effective date.  This Act takes effect upon
 2    becoming law.

[ Top ]