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90_HB3185
35 ILCS 5/203 from Ch. 120, par. 2-203
Amends the Illinois Income Tax Act. Creates a deduction
for individual taxpayers who are 62 years of age or older in
an amount equal to the amount the individual pays for
Medicare Part B benefits during the taxable year. Provides
that the deduction is available in taxable years ending on or
after December 31, 1998. Exempts the deduction from the
sunset provisions. Effective immediately.
LRB9010613KDks
LRB9010613KDks
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 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
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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
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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
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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 (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
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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, for taxpayers 62 years of
32 age and older, an amount equal to all amounts the
33 taxpayer pays during the taxable year for Medicare
34 Part B benefits under Title XVIII of the federal
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1 Social Security Act for costs of, including but not
2 limited to, physician services, outpatient hospital
3 services, medical equipment and supplies, and other
4 health services and supplies. This subparagraph is
5 exempt from the provisions of Section 250.
6 (b) Corporations.
7 (1) In general. In the case of a corporation, base
8 income means an amount equal to the taxpayer's taxable
9 income for the taxable year as modified by paragraph (2).
10 (2) Modifications. The taxable income referred to
11 in paragraph (1) shall be modified by adding thereto the
12 sum of the following amounts:
13 (A) An amount equal to all amounts paid or
14 accrued to the taxpayer as interest and all
15 distributions received from regulated investment
16 companies during the taxable year to the extent
17 excluded from gross income in the computation of
18 taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income in the computation of taxable income
22 for the taxable year;
23 (C) In the case of a regulated investment
24 company, an amount equal to the excess of (i) the
25 net long-term capital gain for the taxable year,
26 over (ii) the amount of the capital gain dividends
27 designated as such in accordance with Section
28 852(b)(3)(C) of the Internal Revenue Code and any
29 amount designated under Section 852(b)(3)(D) of the
30 Internal Revenue Code, attributable to the taxable
31 year.
32 This amendatory Act of 1995 is declarative of existing
33 law and is not a new enactment.
34 (D) The amount of any net operating loss
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1 deduction taken in arriving at taxable income, other
2 than a net operating loss carried forward from a
3 taxable year ending prior to December 31, 1986; and
4 (E) For taxable years in which a net operating
5 loss carryback or carryforward from a taxable year
6 ending prior to December 31, 1986 is an element of
7 taxable income under paragraph (1) of subsection (e)
8 or subparagraph (E) of paragraph (2) of subsection
9 (e), the amount by which addition modifications
10 other than those provided by this subparagraph (E)
11 exceeded subtraction modifications in such earlier
12 taxable year, with the following limitations applied
13 in the order that they are listed:
14 (i) the addition modification relating to
15 the net operating loss carried back or forward
16 to the taxable year from any taxable year
17 ending prior to December 31, 1986 shall be
18 reduced by the amount of addition modification
19 under this subparagraph (E) which related to
20 that net operating loss and which was taken
21 into account in calculating the base income of
22 an earlier taxable year, and
23 (ii) the addition modification relating
24 to the net operating loss carried back or
25 forward to the taxable year from any taxable
26 year ending prior to December 31, 1986 shall
27 not exceed the amount of such carryback or
28 carryforward;
29 For taxable years in which there is a net
30 operating loss carryback or carryforward from more
31 than one other taxable year ending prior to December
32 31, 1986, the addition modification provided in this
33 subparagraph (E) shall be the sum of the amounts
34 computed independently under the preceding
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1 provisions of this subparagraph (E) for each such
2 taxable year,
3 and by deducting from the total so obtained the sum of
4 the following amounts:
5 (F) An amount equal to the amount of any tax
6 imposed by this Act which was refunded to the
7 taxpayer and included in such total for the taxable
8 year;
9 (G) An amount equal to any amount included in
10 such total under Section 78 of the Internal Revenue
11 Code;
12 (H) In the case of a regulated investment
13 company, an amount equal to the amount of exempt
14 interest dividends as defined in subsection (b) (5)
15 of Section 852 of the Internal Revenue Code, paid to
16 shareholders for the taxable year;
17 (I) With the exception of any amounts
18 subtracted under subparagraph (J), an amount equal
19 to the sum of all amounts disallowed as deductions
20 by Sections 171(a) (2), and 265(a)(2) and amounts
21 disallowed as interest expense by Section 291(a)(3)
22 of the Internal Revenue Code, as now or hereafter
23 amended, and all amounts of expenses allocable to
24 interest and disallowed as deductions by Section
25 265(a)(1) of the Internal Revenue Code, as now or
26 hereafter amended;
27 (J) An amount equal to all amounts included in
28 such total which are exempt from taxation by this
29 State either by reason of its statutes or
30 Constitution or by reason of the Constitution,
31 treaties or statutes of the United States; provided
32 that, in the case of any statute of this State that
33 exempts income derived from bonds or other
34 obligations from the tax imposed under this Act, the
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1 amount exempted shall be the interest net of bond
2 premium amortization;
3 (K) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act and conducts substantially all
8 of its operations in an Enterprise Zone or zones;
9 (L) An amount equal to those dividends
10 included in such total that were paid by a
11 corporation that conducts business operations in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 and that is designated a High Impact Business
14 located in Illinois; provided that dividends
15 eligible for the deduction provided in subparagraph
16 (K) of paragraph 2 of this subsection shall not be
17 eligible for the deduction provided under this
18 subparagraph (L);
19 (M) For any taxpayer that is a financial
20 organization within the meaning of Section 304(c) of
21 this Act, an amount included in such total as
22 interest income from a loan or loans made by such
23 taxpayer to a borrower, to the extent that such a
24 loan is secured by property which is eligible for
25 the Enterprise Zone Investment Credit. To determine
26 the portion of a loan or loans that is secured by
27 property eligible for a Section 201(h) investment
28 credit to the borrower, the entire principal amount
29 of the loan or loans between the taxpayer and the
30 borrower should be divided into the basis of the
31 Section 201(h) investment credit property which
32 secures the loan or loans, using for this purpose
33 the original basis of such property on the date that
34 it was placed in service in the Enterprise Zone.
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1 The subtraction modification available to taxpayer
2 in any year under this subsection shall be that
3 portion of the total interest paid by the borrower
4 with respect to such loan attributable to the
5 eligible property as calculated under the previous
6 sentence;
7 (M-1) For any taxpayer that is a financial
8 organization within the meaning of Section 304(c) of
9 this Act, an amount included in such total as
10 interest income from a loan or loans made by such
11 taxpayer to a borrower, to the extent that such a
12 loan is secured by property which is eligible for
13 the High Impact Business Investment Credit. To
14 determine the portion of a loan or loans that is
15 secured by property eligible for a Section 201(i)
16 investment credit to the borrower, the entire
17 principal amount of the loan or loans between the
18 taxpayer and the borrower should be divided into the
19 basis of the Section 201(i) investment credit
20 property which secures the loan or loans, using for
21 this purpose the original basis of such property on
22 the date that it was placed in service in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 located in Illinois. No taxpayer that is eligible
25 for the deduction provided in subparagraph (M) of
26 paragraph (2) of this subsection shall be eligible
27 for the deduction provided under this subparagraph
28 (M-1). The subtraction modification available to
29 taxpayers in any year under this subsection shall be
30 that portion of the total interest paid by the
31 borrower with respect to such loan attributable to
32 the eligible property as calculated under the
33 previous sentence;
34 (N) Two times any contribution made during the
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1 taxable year to a designated zone organization to
2 the extent that the contribution (i) qualifies as a
3 charitable contribution under subsection (c) of
4 Section 170 of the Internal Revenue Code and (ii)
5 must, by its terms, be used for a project approved
6 by the Department of Commerce and Community Affairs
7 under Section 11 of the Illinois Enterprise Zone
8 Act;
9 (O) An amount equal to: (i) 85% for taxable
10 years ending on or before December 31, 1992, or, a
11 percentage equal to the percentage allowable under
12 Section 243(a)(1) of the Internal Revenue Code of
13 1986 for taxable years ending after December 31,
14 1992, of the amount by which dividends included in
15 taxable income and received from a corporation that
16 is not created or organized under the laws of the
17 United States or any state or political subdivision
18 thereof, including, for taxable years ending on or
19 after December 31, 1988, dividends received or
20 deemed received or paid or deemed paid under
21 Sections 951 through 964 of the Internal Revenue
22 Code, exceed the amount of the modification provided
23 under subparagraph (G) of paragraph (2) of this
24 subsection (b) which is related to such dividends;
25 plus (ii) 100% of the amount by which dividends,
26 included in taxable income and received, including,
27 for taxable years ending on or after December 31,
28 1988, dividends received or deemed received or paid
29 or deemed paid under Sections 951 through 964 of the
30 Internal Revenue Code, from any such corporation
31 specified in clause (i) that would but for the
32 provisions of Section 1504 (b) (3) of the Internal
33 Revenue Code be treated as a member of the
34 affiliated group which includes the dividend
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1 recipient, exceed the amount of the modification
2 provided under subparagraph (G) of paragraph (2) of
3 this subsection (b) which is related to such
4 dividends;
5 (P) An amount equal to any contribution made
6 to a job training project established pursuant to
7 the Tax Increment Allocation Redevelopment Act; and
8 (Q) An amount equal to the amount of the
9 deduction used to compute the federal income tax
10 credit for restoration of substantial amounts held
11 under claim of right for the taxable year pursuant
12 to Section 1341 of the Internal Revenue Code of
13 1986.
14 (3) Special rule. For purposes of paragraph (2)
15 (A), "gross income" in the case of a life insurance
16 company, for tax years ending on and after December 31,
17 1994, shall mean the gross investment income for the
18 taxable year.
19 (c) Trusts and estates.
20 (1) In general. In the case of a trust or estate,
21 base income means an amount equal to the taxpayer's
22 taxable income for the taxable year as modified by
23 paragraph (2).
24 (2) Modifications. Subject to the provisions of
25 paragraph (3), the taxable income referred to in
26 paragraph (1) shall be modified by adding thereto the sum
27 of the following amounts:
28 (A) An amount equal to all amounts paid or
29 accrued to the taxpayer as interest or dividends
30 during the taxable year to the extent excluded from
31 gross income in the computation of taxable income;
32 (B) In the case of (i) an estate, $600; (ii) a
33 trust which, under its governing instrument, is
34 required to distribute all of its income currently,
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1 $300; and (iii) any other trust, $100, but in each
2 such case, only to the extent such amount was
3 deducted in the computation of taxable income;
4 (C) An amount equal to the amount of tax
5 imposed by this Act to the extent deducted from
6 gross income in the computation of taxable income
7 for the taxable year;
8 (D) The amount of any net operating loss
9 deduction taken in arriving at taxable income, other
10 than a net operating loss carried forward from a
11 taxable year ending prior to December 31, 1986;
12 (E) For taxable years in which a net operating
13 loss carryback or carryforward from a taxable year
14 ending prior to December 31, 1986 is an element of
15 taxable income under paragraph (1) of subsection (e)
16 or subparagraph (E) of paragraph (2) of subsection
17 (e), the amount by which addition modifications
18 other than those provided by this subparagraph (E)
19 exceeded subtraction modifications in such taxable
20 year, with the following limitations applied in the
21 order that they are listed:
22 (i) the addition modification relating to
23 the net operating loss carried back or forward
24 to the taxable year from any taxable year
25 ending prior to December 31, 1986 shall be
26 reduced by the amount of addition modification
27 under this subparagraph (E) which related to
28 that net operating loss and which was taken
29 into account in calculating the base income of
30 an earlier taxable year, and
31 (ii) the addition modification relating
32 to the net operating loss carried back or
33 forward to the taxable year from any taxable
34 year ending prior to December 31, 1986 shall
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1 not exceed the amount of such carryback or
2 carryforward;
3 For taxable years in which there is a net
4 operating loss carryback or carryforward from more
5 than one other taxable year ending prior to December
6 31, 1986, the addition modification provided in this
7 subparagraph (E) shall be the sum of the amounts
8 computed independently under the preceding
9 provisions of this subparagraph (E) for each such
10 taxable year;
11 (F) For taxable years ending on or after
12 January 1, 1989, an amount equal to the tax deducted
13 pursuant to Section 164 of the Internal Revenue Code
14 if the trust or estate is claiming the same tax for
15 purposes of the Illinois foreign tax credit under
16 Section 601 of this Act; and
17 (G) An amount equal to the amount of the
18 capital gain deduction allowable under the Internal
19 Revenue Code, to the extent deducted from gross
20 income in the computation of taxable income;
21 and by deducting from the total so obtained the sum of
22 the following amounts:
23 (H) An amount equal to all amounts included in
24 such total pursuant to the provisions of Sections
25 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
26 408 of the Internal Revenue Code or included in such
27 total as distributions under the provisions of any
28 retirement or disability plan for employees of any
29 governmental agency or unit, or retirement payments
30 to retired partners, which payments are excluded in
31 computing net earnings from self employment by
32 Section 1402 of the Internal Revenue Code and
33 regulations adopted pursuant thereto;
34 (I) The valuation limitation amount;
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1 (J) An amount equal to the amount of any tax
2 imposed by this Act which was refunded to the
3 taxpayer and included in such total for the taxable
4 year;
5 (K) An amount equal to all amounts included in
6 taxable income as modified by subparagraphs (A),
7 (B), (C), (D), (E), (F) and (G) which are exempt
8 from taxation by this State either by reason of its
9 statutes or Constitution or by reason of the
10 Constitution, treaties or statutes of the United
11 States; provided that, in the case of any statute of
12 this State that exempts income derived from bonds or
13 other obligations from the tax imposed under this
14 Act, the amount exempted shall be the interest net
15 of bond premium amortization;
16 (L) With the exception of any amounts
17 subtracted under subparagraph (K), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2) and 265(a)(2) of the Internal
20 Revenue Code, as now or hereafter amended, and all
21 amounts of expenses allocable to interest and
22 disallowed as deductions by Section 265(1) of the
23 Internal Revenue Code of 1954, as now or hereafter
24 amended;
25 (M) An amount equal to those dividends
26 included in such total which were paid by a
27 corporation which conducts business operations in an
28 Enterprise Zone or zones created under the Illinois
29 Enterprise Zone Act and conducts substantially all
30 of its operations in an Enterprise Zone or Zones;
31 (N) An amount equal to any contribution made
32 to a job training project established pursuant to
33 the Tax Increment Allocation Redevelopment Act;
34 (O) An amount equal to those dividends
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1 included in such total that were paid by a
2 corporation that conducts business operations in a
3 federally designated Foreign Trade Zone or Sub-Zone
4 and that is designated a High Impact Business
5 located in Illinois; provided that dividends
6 eligible for the deduction provided in subparagraph
7 (M) of paragraph (2) of this subsection shall not be
8 eligible for the deduction provided under this
9 subparagraph (O); and
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 (3) Limitation. The amount of any modification
17 otherwise required under this subsection shall, under
18 regulations prescribed by the Department, be adjusted by
19 any amounts included therein which were properly paid,
20 credited, or required to be distributed, or permanently
21 set aside for charitable purposes pursuant to Internal
22 Revenue Code Section 642(c) during the taxable year.
23 (d) Partnerships.
24 (1) In general. In the case of a partnership, base
25 income means an amount equal to the taxpayer's taxable
26 income for the taxable year as modified by paragraph (2).
27 (2) Modifications. The taxable income referred to
28 in paragraph (1) shall be modified by adding thereto the
29 sum of the following amounts:
30 (A) An amount equal to all amounts paid or
31 accrued to the taxpayer as interest or dividends
32 during the taxable year to the extent excluded from
33 gross income in the computation of taxable income;
34 (B) An amount equal to the amount of tax
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1 imposed by this Act to the extent deducted from
2 gross income for the taxable year; and
3 (C) The amount of deductions allowed to the
4 partnership pursuant to Section 707 (c) of the
5 Internal Revenue Code in calculating its taxable
6 income;
7 (D) An amount equal to the amount of the
8 capital gain deduction allowable under the Internal
9 Revenue Code, to the extent deducted from gross
10 income in the computation of taxable income;
11 and by deducting from the total so obtained the following
12 amounts:
13 (E) The valuation limitation amount;
14 (F) An amount equal to the amount of any tax
15 imposed by this Act which was refunded to the
16 taxpayer and included in such total for the taxable
17 year;
18 (G) An amount equal to all amounts included in
19 taxable income as modified by subparagraphs (A),
20 (B), (C) and (D) which are exempt from taxation by
21 this State either by reason of its statutes or
22 Constitution or by reason of the Constitution,
23 treaties or statutes of the United States; provided
24 that, in the case of any statute of this State that
25 exempts income derived from bonds or other
26 obligations from the tax imposed under this Act, the
27 amount exempted shall be the interest net of bond
28 premium amortization;
29 (H) Any income of the partnership which
30 constitutes personal service income as defined in
31 Section 1348 (b) (1) of the Internal Revenue Code
32 (as in effect December 31, 1981) or a reasonable
33 allowance for compensation paid or accrued for
34 services rendered by partners to the partnership,
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1 whichever is greater;
2 (I) An amount equal to all amounts of income
3 distributable to an entity subject to the Personal
4 Property Tax Replacement Income Tax imposed by
5 subsections (c) and (d) of Section 201 of this Act
6 including amounts distributable to organizations
7 exempt from federal income tax by reason of Section
8 501(a) of the Internal Revenue Code;
9 (J) With the exception of any amounts
10 subtracted under subparagraph (G), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by Sections 171(a) (2), and 265(2) of the Internal
13 Revenue Code of 1954, as now or hereafter amended,
14 and all amounts of expenses allocable to interest
15 and disallowed as deductions by Section 265(1) of
16 the Internal Revenue Code, as now or hereafter
17 amended;
18 (K) An amount equal to those dividends
19 included in such total which were paid by a
20 corporation which conducts business operations in an
21 Enterprise Zone or zones created under the Illinois
22 Enterprise Zone Act, enacted by the 82nd General
23 Assembly, and which does not conduct such operations
24 other than in an Enterprise Zone or Zones;
25 (L) An amount equal to any contribution made
26 to a job training project established pursuant to
27 the Real Property Tax Increment Allocation
28 Redevelopment Act;
29 (M) An amount equal to those dividends
30 included in such total that were paid by a
31 corporation that conducts business operations in a
32 federally designated Foreign Trade Zone or Sub-Zone
33 and that is designated a High Impact Business
34 located in Illinois; provided that dividends
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1 eligible for the deduction provided in subparagraph
2 (K) of paragraph (2) of this subsection shall not be
3 eligible for the deduction provided under this
4 subparagraph (M); and
5 (N) 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 (e) Gross income; adjusted gross income; taxable income.
12 (1) In general. Subject to the provisions of
13 paragraph (2) and subsection (b) (3), for purposes of
14 this Section and Section 803(e), a taxpayer's gross
15 income, adjusted gross income, or taxable income for the
16 taxable year shall mean the amount of gross income,
17 adjusted gross income or taxable income properly
18 reportable for federal income tax purposes for the
19 taxable year under the provisions of the Internal Revenue
20 Code. Taxable income may be less than zero. However, for
21 taxable years ending on or after December 31, 1986, net
22 operating loss carryforwards from taxable years ending
23 prior to December 31, 1986, may not exceed the sum of
24 federal taxable income for the taxable year before net
25 operating loss deduction, plus the excess of addition
26 modifications over subtraction modifications for the
27 taxable year. For taxable years ending prior to December
28 31, 1986, taxable income may never be an amount in excess
29 of the net operating loss for the taxable year as defined
30 in subsections (c) and (d) of Section 172 of the Internal
31 Revenue Code, provided that when taxable income of a
32 corporation (other than a Subchapter S corporation),
33 trust, or estate is less than zero and addition
34 modifications, other than those provided by subparagraph
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1 (E) of paragraph (2) of subsection (b) for corporations
2 or subparagraph (E) of paragraph (2) of subsection (c)
3 for trusts and estates, exceed subtraction modifications,
4 an addition modification must be made under those
5 subparagraphs for any other taxable year to which the
6 taxable income less than zero (net operating loss) is
7 applied under Section 172 of the Internal Revenue Code or
8 under subparagraph (E) of paragraph (2) of this
9 subsection (e) applied in conjunction with Section 172 of
10 the Internal Revenue Code.
11 (2) Special rule. For purposes of paragraph (1) of
12 this subsection, the taxable income properly reportable
13 for federal income tax purposes shall mean:
14 (A) Certain life insurance companies. In the
15 case of a life insurance company subject to the tax
16 imposed by Section 801 of the Internal Revenue Code,
17 life insurance company taxable income, plus the
18 amount of distribution from pre-1984 policyholder
19 surplus accounts as calculated under Section 815a of
20 the Internal Revenue Code;
21 (B) Certain other insurance companies. In the
22 case of mutual insurance companies subject to the
23 tax imposed by Section 831 of the Internal Revenue
24 Code, insurance company taxable income;
25 (C) Regulated investment companies. In the
26 case of a regulated investment company subject to
27 the tax imposed by Section 852 of the Internal
28 Revenue Code, investment company taxable income;
29 (D) Real estate investment trusts. In the
30 case of a real estate investment trust subject to
31 the tax imposed by Section 857 of the Internal
32 Revenue Code, real estate investment trust taxable
33 income;
34 (E) Consolidated corporations. In the case of
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1 a corporation which is a member of an affiliated
2 group of corporations filing a consolidated income
3 tax return for the taxable year for federal income
4 tax purposes, taxable income determined as if such
5 corporation had filed a separate return for federal
6 income tax purposes for the taxable year and each
7 preceding taxable year for which it was a member of
8 an affiliated group. For purposes of this
9 subparagraph, the taxpayer's separate taxable income
10 shall be determined as if the election provided by
11 Section 243(b) (2) of the Internal Revenue Code had
12 been in effect for all such years;
13 (F) Cooperatives. In the case of a
14 cooperative corporation or association, the taxable
15 income of such organization determined in accordance
16 with the provisions of Section 1381 through 1388 of
17 the Internal Revenue Code;
18 (G) Subchapter S corporations. In the case
19 of: (i) a Subchapter S corporation for which there
20 is in effect an election for the taxable year under
21 Section 1362 of the Internal Revenue Code, the
22 taxable income of such corporation determined in
23 accordance with Section 1363(b) of the Internal
24 Revenue Code, except that taxable income shall take
25 into account those items which are required by
26 Section 1363(b)(1) of the Internal Revenue Code to
27 be separately stated; and (ii) a Subchapter S
28 corporation for which there is in effect a federal
29 election to opt out of the provisions of the
30 Subchapter S Revision Act of 1982 and have applied
31 instead the prior federal Subchapter S rules as in
32 effect on July 1, 1982, the taxable income of such
33 corporation determined in accordance with the
34 federal Subchapter S rules as in effect on July 1,
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1 1982; and
2 (H) Partnerships. In the case of a
3 partnership, taxable income determined in accordance
4 with Section 703 of the Internal Revenue Code,
5 except that taxable income shall take into account
6 those items which are required by Section 703(a)(1)
7 to be separately stated but which would be taken
8 into account by an individual in calculating his
9 taxable income.
10 (f) Valuation limitation amount.
11 (1) In general. The valuation limitation amount
12 referred to in subsections (a) (2) (G), (c) (2) (I) and
13 (d)(2) (E) is an amount equal to:
14 (A) The sum of the pre-August 1, 1969
15 appreciation amounts (to the extent consisting of
16 gain reportable under the provisions of Section 1245
17 or 1250 of the Internal Revenue Code) for all
18 property in respect of which such gain was reported
19 for the taxable year; plus
20 (B) The lesser of (i) the sum of the
21 pre-August 1, 1969 appreciation amounts (to the
22 extent consisting of capital gain) for all property
23 in respect of which such gain was reported for
24 federal income tax purposes for the taxable year, or
25 (ii) the net capital gain for the taxable year,
26 reduced in either case by any amount of such gain
27 included in the amount determined under subsection
28 (a) (2) (F) or (c) (2) (H).
29 (2) Pre-August 1, 1969 appreciation amount.
30 (A) If the fair market value of property
31 referred to in paragraph (1) was readily
32 ascertainable on August 1, 1969, the pre-August 1,
33 1969 appreciation amount for such property is the
34 lesser of (i) the excess of such fair market value
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1 over the taxpayer's basis (for determining gain) for
2 such property on that date (determined under the
3 Internal Revenue Code as in effect on that date), or
4 (ii) the total gain realized and reportable for
5 federal income tax purposes in respect of the sale,
6 exchange or other disposition of such property.
7 (B) If the fair market value of property
8 referred to in paragraph (1) was not readily
9 ascertainable on August 1, 1969, the pre-August 1,
10 1969 appreciation amount for such property is that
11 amount which bears the same ratio to the total gain
12 reported in respect of the property for federal
13 income tax purposes for the taxable year, as the
14 number of full calendar months in that part of the
15 taxpayer's holding period for the property ending
16 July 31, 1969 bears to the number of full calendar
17 months in the taxpayer's entire holding period for
18 the property.
19 (C) The Department shall prescribe such
20 regulations as may be necessary to carry out the
21 purposes of this paragraph.
22 (g) Double deductions. Unless specifically provided
23 otherwise, nothing in this Section shall permit the same item
24 to be deducted more than once.
25 (h) Legislative intention. Except as expressly provided
26 by this Section there shall be no modifications or
27 limitations on the amounts of income, gain, loss or deduction
28 taken into account in determining gross income, adjusted
29 gross income or taxable income for federal income tax
30 purposes for the taxable year, or in the amount of such items
31 entering into the computation of base income and net income
32 under this Act for such taxable year, whether in respect of
33 property values as of August 1, 1969 or otherwise.
34 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
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1 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
2 8-9-96; 90-491, eff. 1-1-98.)
3 Section 99. Effective date. This Act takes effect upon
4 becoming law.