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91_HB1857
LRB9104593PTpk
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
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1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
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1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
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1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250; and.
7 (X) For taxable year 1999 an amount equal to
8 50% of the taxpayer's long-term capital gains as
9 defined in Section 1222 of the federal Internal
10 Revenue Code, 26 U.S.C. 1222.
11 (b) Corporations.
12 (1) In general. In the case of a corporation, base
13 income means an amount equal to the taxpayer's taxable
14 income for the taxable year as modified by paragraph (2).
15 (2) Modifications. The taxable income referred to
16 in paragraph (1) shall be modified by adding thereto the
17 sum of the following amounts:
18 (A) An amount equal to all amounts paid or
19 accrued to the taxpayer as interest and all
20 distributions received from regulated investment
21 companies during the taxable year to the extent
22 excluded from gross income in the computation of
23 taxable income;
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 taxable income
27 for the taxable year;
28 (C) In the case of a regulated investment
29 company, an amount equal to the excess of (i) the
30 net long-term capital gain for the taxable year,
31 over (ii) the amount of the capital gain dividends
32 designated as such in accordance with Section
33 852(b)(3)(C) of the Internal Revenue Code and any
34 amount designated under Section 852(b)(3)(D) of the
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1 Internal Revenue Code, attributable to the taxable
2 year. (this amendatory Act of 1995 (Public Act
3 89-89) is declarative of existing law and is not a
4 new enactment);.
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; and
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 earlier
17 taxable year, with the following limitations applied
18 in the 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
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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;, and
8 (E-5) For taxable years ending after December
9 31, 1997, an amount equal to any eligible
10 remediation costs that the corporation deducted in
11 computing adjusted gross income and for which the
12 corporation claims a credit under subsection (l) of
13 Section 201;
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (F) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (G) An amount equal to any amount included in
21 such total under Section 78 of the Internal Revenue
22 Code;
23 (H) In the case of a regulated investment
24 company, an amount equal to the amount of exempt
25 interest dividends as defined in subsection (b) (5)
26 of Section 852 of the Internal Revenue Code, paid to
27 shareholders for the taxable year;
28 (I) With the exception of any amounts
29 subtracted under subparagraph (J), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2), and 265(a)(2) and amounts
32 disallowed as interest expense by Section 291(a)(3)
33 of the Internal Revenue Code, as now or hereafter
34 amended, and all amounts of expenses allocable to
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1 interest and disallowed as deductions by Section
2 265(a)(1) of the Internal Revenue Code, as now or
3 hereafter amended;
4 (J) An amount equal to all amounts included in
5 such total which are exempt from taxation by this
6 State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (K) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act and conducts substantially all
19 of its operations in an Enterprise Zone or zones;
20 (L) An amount equal to those dividends
21 included in such total that were paid by a
22 corporation that conducts business operations in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 and that is designated a High Impact Business
25 located in Illinois; provided that dividends
26 eligible for the deduction provided in subparagraph
27 (K) of paragraph 2 of this subsection shall not be
28 eligible for the deduction provided under this
29 subparagraph (L);
30 (M) For any taxpayer that is a financial
31 organization within the meaning of Section 304(c) of
32 this Act, an amount included in such total as
33 interest income from a loan or loans made by such
34 taxpayer to a borrower, to the extent that such a
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1 loan is secured by property which is eligible for
2 the Enterprise Zone Investment Credit. To determine
3 the portion of a loan or loans that is secured by
4 property eligible for a Section 201(h) investment
5 credit to the borrower, the entire principal amount
6 of the loan or loans between the taxpayer and the
7 borrower should be divided into the basis of the
8 Section 201(h) investment credit property which
9 secures the loan or loans, using for this purpose
10 the original basis of such property on the date that
11 it was placed in service in the Enterprise Zone.
12 The subtraction modification available to taxpayer
13 in any year under this subsection shall be that
14 portion of the total interest paid by the borrower
15 with respect to such loan attributable to the
16 eligible property as calculated under the previous
17 sentence;
18 (M-1) For any taxpayer that is a financial
19 organization within the meaning of Section 304(c) of
20 this Act, an amount included in such total as
21 interest income from a loan or loans made by such
22 taxpayer to a borrower, to the extent that such a
23 loan is secured by property which is eligible for
24 the High Impact Business Investment Credit. To
25 determine the portion of a loan or loans that is
26 secured by property eligible for a Section 201(i)
27 investment credit to the borrower, the entire
28 principal amount of the loan or loans between the
29 taxpayer and the borrower should be divided into the
30 basis of the Section 201(i) investment credit
31 property which secures the loan or loans, using for
32 this purpose the original basis of such property on
33 the date that it was placed in service in a
34 federally designated Foreign Trade Zone or Sub-Zone
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1 located in Illinois. No taxpayer that is eligible
2 for the deduction provided in subparagraph (M) of
3 paragraph (2) of this subsection shall be eligible
4 for the deduction provided under this subparagraph
5 (M-1). The subtraction modification available to
6 taxpayers in any year under this subsection shall be
7 that portion of the total interest paid by the
8 borrower with respect to such loan attributable to
9 the eligible property as calculated under the
10 previous sentence;
11 (N) Two times any contribution made during the
12 taxable year to a designated zone organization to
13 the extent that the contribution (i) qualifies as a
14 charitable contribution under subsection (c) of
15 Section 170 of the Internal Revenue Code and (ii)
16 must, by its terms, be used for a project approved
17 by the Department of Commerce and Community Affairs
18 under Section 11 of the Illinois Enterprise Zone
19 Act;
20 (O) An amount equal to: (i) 85% for taxable
21 years ending on or before December 31, 1992, or, a
22 percentage equal to the percentage allowable under
23 Section 243(a)(1) of the Internal Revenue Code of
24 1986 for taxable years ending after December 31,
25 1992, of the amount by which dividends included in
26 taxable income and received from a corporation that
27 is not created or organized under the laws of the
28 United States or any state or political subdivision
29 thereof, including, for taxable years ending on or
30 after December 31, 1988, dividends received or
31 deemed received or paid or deemed paid under
32 Sections 951 through 964 of the Internal Revenue
33 Code, exceed the amount of the modification provided
34 under subparagraph (G) of paragraph (2) of this
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1 subsection (b) which is related to such dividends;
2 plus (ii) 100% of the amount by which dividends,
3 included in taxable income and received, including,
4 for taxable years ending on or after December 31,
5 1988, dividends received or deemed received or paid
6 or deemed paid under Sections 951 through 964 of the
7 Internal Revenue Code, from any such corporation
8 specified in clause (i) that would but for the
9 provisions of Section 1504 (b) (3) of the Internal
10 Revenue Code be treated as a member of the
11 affiliated group which includes the dividend
12 recipient, exceed the amount of the modification
13 provided under subparagraph (G) of paragraph (2) of
14 this subsection (b) which is related to such
15 dividends;
16 (P) An amount equal to any contribution made
17 to a job training project established pursuant to
18 the Tax Increment Allocation Redevelopment Act; and
19 (Q) An amount equal to the amount of the
20 deduction used to compute the federal income tax
21 credit for restoration of substantial amounts held
22 under claim of right for the taxable year pursuant
23 to Section 1341 of the Internal Revenue Code of
24 1986.
25 (3) Special rule. For purposes of paragraph (2)
26 (A), "gross income" in the case of a life insurance
27 company, for tax years ending on and after December 31,
28 1994, shall mean the gross investment income for the
29 taxable year.
30 (c) Trusts and estates.
31 (1) In general. In the case of a trust or estate,
32 base income means an amount equal to the taxpayer's
33 taxable income for the taxable year as modified by
34 paragraph (2).
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1 (2) Modifications. Subject to the provisions of
2 paragraph (3), the taxable income referred to in
3 paragraph (1) shall be modified by adding thereto the sum
4 of the following amounts:
5 (A) An amount equal to all amounts paid or
6 accrued to the taxpayer as interest or dividends
7 during the taxable year to the extent excluded from
8 gross income in the computation of taxable income;
9 (B) In the case of (i) an estate, $600; (ii) a
10 trust which, under its governing instrument, is
11 required to distribute all of its income currently,
12 $300; and (iii) any other trust, $100, but in each
13 such case, only to the extent such amount was
14 deducted in the computation of taxable income;
15 (C) An amount equal to the amount of tax
16 imposed by this Act to the extent deducted from
17 gross income in the computation of taxable income
18 for the taxable year;
19 (D) The amount of any net operating loss
20 deduction taken in arriving at taxable income, other
21 than a net operating loss carried forward from a
22 taxable year ending prior to December 31, 1986;
23 (E) For taxable years in which a net operating
24 loss carryback or carryforward from a taxable year
25 ending prior to December 31, 1986 is an element of
26 taxable income under paragraph (1) of subsection (e)
27 or subparagraph (E) of paragraph (2) of subsection
28 (e), the amount by which addition modifications
29 other than those provided by this subparagraph (E)
30 exceeded subtraction modifications in such taxable
31 year, with the following limitations applied in the
32 order that they are listed:
33 (i) the addition modification relating to
34 the net operating loss carried back or forward
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1 to the taxable year from any taxable year
2 ending prior to December 31, 1986 shall be
3 reduced by the amount of addition modification
4 under this subparagraph (E) which related to
5 that net operating loss and which was taken
6 into account in calculating the base income of
7 an earlier taxable year, and
8 (ii) the addition modification relating
9 to the net operating loss carried back or
10 forward to the taxable year from any taxable
11 year ending prior to December 31, 1986 shall
12 not exceed the amount of such carryback or
13 carryforward;
14 For taxable years in which there is a net
15 operating loss carryback or carryforward from more
16 than one other taxable year ending prior to December
17 31, 1986, the addition modification provided in this
18 subparagraph (E) shall be the sum of the amounts
19 computed independently under the preceding
20 provisions of this subparagraph (E) for each such
21 taxable year;
22 (F) For taxable years ending on or after
23 January 1, 1989, an amount equal to the tax deducted
24 pursuant to Section 164 of the Internal Revenue Code
25 if the trust or estate is claiming the same tax for
26 purposes of the Illinois foreign tax credit under
27 Section 601 of this Act;
28 (G) An amount equal to the amount of the
29 capital gain deduction allowable under the Internal
30 Revenue Code, to the extent deducted from gross
31 income in the computation of taxable income; and
32 (G-5) For taxable years ending after December
33 31, 1997, an amount equal to any eligible
34 remediation costs that the trust or estate deducted
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1 in computing adjusted gross income and for which the
2 trust or estate claims a credit under subsection (l)
3 of Section 201;
4 and by deducting from the total so obtained the sum of
5 the following amounts:
6 (H) An amount equal to all amounts included in
7 such total pursuant to the provisions of Sections
8 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
9 408 of the Internal Revenue Code or included in such
10 total as distributions under the provisions of any
11 retirement or disability plan for employees of any
12 governmental agency or unit, or retirement payments
13 to retired partners, which payments are excluded in
14 computing net earnings from self employment by
15 Section 1402 of the Internal Revenue Code and
16 regulations adopted pursuant thereto;
17 (I) The valuation limitation amount;
18 (J) An amount equal to the amount of any tax
19 imposed by this Act which was refunded to the
20 taxpayer and included in such total for the taxable
21 year;
22 (K) An amount equal to all amounts included in
23 taxable income as modified by subparagraphs (A),
24 (B), (C), (D), (E), (F) and (G) which are exempt
25 from taxation by this State either by reason of its
26 statutes or Constitution or by reason of the
27 Constitution, treaties or statutes of the United
28 States; provided that, in the case of any statute of
29 this State that exempts income derived from bonds or
30 other obligations from the tax imposed under this
31 Act, the amount exempted shall be the interest net
32 of bond premium amortization;
33 (L) With the exception of any amounts
34 subtracted under subparagraph (K), an amount equal
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1 to the sum of all amounts disallowed as deductions
2 by Sections 171(a) (2) and 265(a)(2) of the Internal
3 Revenue Code, as now or hereafter amended, and all
4 amounts of expenses allocable to interest and
5 disallowed as deductions by Section 265(1) of the
6 Internal Revenue Code of 1954, as now or hereafter
7 amended;
8 (M) An amount equal to those dividends
9 included in such total which were paid by a
10 corporation which conducts business operations in an
11 Enterprise Zone or zones created under the Illinois
12 Enterprise Zone Act and conducts substantially all
13 of its operations in an Enterprise Zone or Zones;
14 (N) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Tax Increment Allocation Redevelopment Act;
17 (O) An amount equal to those dividends
18 included in such total that were paid by a
19 corporation that conducts business operations in a
20 federally designated Foreign Trade Zone or Sub-Zone
21 and that is designated a High Impact Business
22 located in Illinois; provided that dividends
23 eligible for the deduction provided in subparagraph
24 (M) of paragraph (2) of this subsection shall not be
25 eligible for the deduction provided under this
26 subparagraph (O); and
27 (P) An amount equal to the amount of the
28 deduction used to compute the federal income tax
29 credit for restoration of substantial amounts held
30 under claim of right for the taxable year pursuant
31 to Section 1341 of the Internal Revenue Code of
32 1986.
33 (3) Limitation. The amount of any modification
34 otherwise required under this subsection shall, under
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1 regulations prescribed by the Department, be adjusted by
2 any amounts included therein which were properly paid,
3 credited, or required to be distributed, or permanently
4 set aside for charitable purposes pursuant to Internal
5 Revenue Code Section 642(c) during the taxable year.
6 (d) Partnerships.
7 (1) In general. In the case of a partnership, 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 or dividends
15 during the taxable year to the extent excluded from
16 gross income in the computation of taxable income;
17 (B) An amount equal to the amount of tax
18 imposed by this Act to the extent deducted from
19 gross income for the taxable year; and
20 (C) The amount of deductions allowed to the
21 partnership pursuant to Section 707 (c) of the
22 Internal Revenue Code in calculating its taxable
23 income; and
24 (D) An amount equal to the amount of the
25 capital gain deduction allowable under the Internal
26 Revenue Code, to the extent deducted from gross
27 income in the computation of taxable income;
28 and by deducting from the total so obtained the following
29 amounts:
30 (E) The valuation limitation amount;
31 (F) An amount equal to the amount of any tax
32 imposed by this Act which was refunded to the
33 taxpayer and included in such total for the taxable
34 year;
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1 (G) An amount equal to all amounts included in
2 taxable income as modified by subparagraphs (A),
3 (B), (C) and (D) which are exempt from taxation by
4 this State either by reason of its statutes or
5 Constitution or by reason of the Constitution,
6 treaties or statutes of the United States; provided
7 that, in the case of any statute of this State that
8 exempts income derived from bonds or other
9 obligations from the tax imposed under this Act, the
10 amount exempted shall be the interest net of bond
11 premium amortization;
12 (H) Any income of the partnership which
13 constitutes personal service income as defined in
14 Section 1348 (b) (1) of the Internal Revenue Code
15 (as in effect December 31, 1981) or a reasonable
16 allowance for compensation paid or accrued for
17 services rendered by partners to the partnership,
18 whichever is greater;
19 (I) An amount equal to all amounts of income
20 distributable to an entity subject to the Personal
21 Property Tax Replacement Income Tax imposed by
22 subsections (c) and (d) of Section 201 of this Act
23 including amounts distributable to organizations
24 exempt from federal income tax by reason of Section
25 501(a) of the Internal Revenue Code;
26 (J) With the exception of any amounts
27 subtracted under subparagraph (G), an amount equal
28 to the sum of all amounts disallowed as deductions
29 by Sections 171(a) (2), and 265(2) of the Internal
30 Revenue Code of 1954, as now or hereafter amended,
31 and all amounts of expenses allocable to interest
32 and disallowed as deductions by Section 265(1) of
33 the Internal Revenue Code, as now or hereafter
34 amended;
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1 (K) An amount equal to those dividends
2 included in such total which were paid by a
3 corporation which conducts business operations in an
4 Enterprise Zone or zones created under the Illinois
5 Enterprise Zone Act, enacted by the 82nd General
6 Assembly, and which does not conduct such operations
7 other than in an Enterprise Zone or Zones;
8 (L) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Real Property Tax Increment Allocation
11 Redevelopment Act;
12 (M) An amount equal to those dividends
13 included in such total that were paid by a
14 corporation that conducts business operations in a
15 federally designated Foreign Trade Zone or Sub-Zone
16 and that is designated a High Impact Business
17 located in Illinois; provided that dividends
18 eligible for the deduction provided in subparagraph
19 (K) of paragraph (2) of this subsection shall not be
20 eligible for the deduction provided under this
21 subparagraph (M); and
22 (N) An amount equal to the amount of the
23 deduction used to compute the federal income tax
24 credit for restoration of substantial amounts held
25 under claim of right for the taxable year pursuant
26 to Section 1341 of the Internal Revenue Code of
27 1986.
28 (e) Gross income; adjusted gross income; taxable income.
29 (1) In general. Subject to the provisions of
30 paragraph (2) and subsection (b) (3), for purposes of
31 this Section and Section 803(e), a taxpayer's gross
32 income, adjusted gross income, or taxable income for the
33 taxable year shall mean the amount of gross income,
34 adjusted gross income or taxable income properly
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1 reportable for federal income tax purposes for the
2 taxable year under the provisions of the Internal Revenue
3 Code. Taxable income may be less than zero. However, for
4 taxable years ending on or after December 31, 1986, net
5 operating loss carryforwards from taxable years ending
6 prior to December 31, 1986, may not exceed the sum of
7 federal taxable income for the taxable year before net
8 operating loss deduction, plus the excess of addition
9 modifications over subtraction modifications for the
10 taxable year. For taxable years ending prior to December
11 31, 1986, taxable income may never be an amount in excess
12 of the net operating loss for the taxable year as defined
13 in subsections (c) and (d) of Section 172 of the Internal
14 Revenue Code, provided that when taxable income of a
15 corporation (other than a Subchapter S corporation),
16 trust, or estate is less than zero and addition
17 modifications, other than those provided by subparagraph
18 (E) of paragraph (2) of subsection (b) for corporations
19 or subparagraph (E) of paragraph (2) of subsection (c)
20 for trusts and estates, exceed subtraction modifications,
21 an addition modification must be made under those
22 subparagraphs for any other taxable year to which the
23 taxable income less than zero (net operating loss) is
24 applied under Section 172 of the Internal Revenue Code or
25 under subparagraph (E) of paragraph (2) of this
26 subsection (e) applied in conjunction with Section 172 of
27 the Internal Revenue Code.
28 (2) Special rule. For purposes of paragraph (1) of
29 this subsection, the taxable income properly reportable
30 for federal income tax purposes shall mean:
31 (A) Certain life insurance companies. In the
32 case of a life insurance company subject to the tax
33 imposed by Section 801 of the Internal Revenue Code,
34 life insurance company taxable income, plus the
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1 amount of distribution from pre-1984 policyholder
2 surplus accounts as calculated under Section 815a of
3 the Internal Revenue Code;
4 (B) Certain other insurance companies. In the
5 case of mutual insurance companies subject to the
6 tax imposed by Section 831 of the Internal Revenue
7 Code, insurance company taxable income;
8 (C) Regulated investment companies. In the
9 case of a regulated investment company subject to
10 the tax imposed by Section 852 of the Internal
11 Revenue Code, investment company taxable income;
12 (D) Real estate investment trusts. In the
13 case of a real estate investment trust subject to
14 the tax imposed by Section 857 of the Internal
15 Revenue Code, real estate investment trust taxable
16 income;
17 (E) Consolidated corporations. In the case of
18 a corporation which is a member of an affiliated
19 group of corporations filing a consolidated income
20 tax return for the taxable year for federal income
21 tax purposes, taxable income determined as if such
22 corporation had filed a separate return for federal
23 income tax purposes for the taxable year and each
24 preceding taxable year for which it was a member of
25 an affiliated group. For purposes of this
26 subparagraph, the taxpayer's separate taxable income
27 shall be determined as if the election provided by
28 Section 243(b) (2) of the Internal Revenue Code had
29 been in effect for all such years;
30 (F) Cooperatives. In the case of a
31 cooperative corporation or association, the taxable
32 income of such organization determined in accordance
33 with the provisions of Section 1381 through 1388 of
34 the Internal Revenue Code;
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1 (G) Subchapter S corporations. In the case
2 of: (i) a Subchapter S corporation for which there
3 is in effect an election for the taxable year under
4 Section 1362 of the Internal Revenue Code, the
5 taxable income of such corporation determined in
6 accordance with Section 1363(b) of the Internal
7 Revenue Code, except that taxable income shall take
8 into account those items which are required by
9 Section 1363(b)(1) of the Internal Revenue Code to
10 be separately stated; and (ii) a Subchapter S
11 corporation for which there is in effect a federal
12 election to opt out of the provisions of the
13 Subchapter S Revision Act of 1982 and have applied
14 instead the prior federal Subchapter S rules as in
15 effect on July 1, 1982, the taxable income of such
16 corporation determined in accordance with the
17 federal Subchapter S rules as in effect on July 1,
18 1982; and
19 (H) Partnerships. In the case of a
20 partnership, taxable income determined in accordance
21 with Section 703 of the Internal Revenue Code,
22 except that taxable income shall take into account
23 those items which are required by Section 703(a)(1)
24 to be separately stated but which would be taken
25 into account by an individual in calculating his
26 taxable income.
27 (f) Valuation limitation amount.
28 (1) In general. The valuation limitation amount
29 referred to in subsections (a) (2) (G), (c) (2) (I) and
30 (d)(2) (E) is an amount equal to:
31 (A) The sum of the pre-August 1, 1969
32 appreciation amounts (to the extent consisting of
33 gain reportable under the provisions of Section 1245
34 or 1250 of the Internal Revenue Code) for all
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1 property in respect of which such gain was reported
2 for the taxable year; plus
3 (B) The lesser of (i) the sum of the
4 pre-August 1, 1969 appreciation amounts (to the
5 extent consisting of capital gain) for all property
6 in respect of which such gain was reported for
7 federal income tax purposes for the taxable year, or
8 (ii) the net capital gain for the taxable year,
9 reduced in either case by any amount of such gain
10 included in the amount determined under subsection
11 (a) (2) (F) or (c) (2) (H).
12 (2) Pre-August 1, 1969 appreciation amount.
13 (A) If the fair market value of property
14 referred to in paragraph (1) was readily
15 ascertainable on August 1, 1969, the pre-August 1,
16 1969 appreciation amount for such property is the
17 lesser of (i) the excess of such fair market value
18 over the taxpayer's basis (for determining gain) for
19 such property on that date (determined under the
20 Internal Revenue Code as in effect on that date), or
21 (ii) the total gain realized and reportable for
22 federal income tax purposes in respect of the sale,
23 exchange or other disposition of such property.
24 (B) If the fair market value of property
25 referred to in paragraph (1) was not readily
26 ascertainable on August 1, 1969, the pre-August 1,
27 1969 appreciation amount for such property is that
28 amount which bears the same ratio to the total gain
29 reported in respect of the property for federal
30 income tax purposes for the taxable year, as the
31 number of full calendar months in that part of the
32 taxpayer's holding period for the property ending
33 July 31, 1969 bears to the number of full calendar
34 months in the taxpayer's entire holding period for
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1 the property.
2 (C) The Department shall prescribe such
3 regulations as may be necessary to carry out the
4 purposes of this paragraph.
5 (g) Double deductions. Unless specifically provided
6 otherwise, nothing in this Section shall permit the same item
7 to be deducted more than once.
8 (h) Legislative intention. Except as expressly provided
9 by this Section there shall be no modifications or
10 limitations on the amounts of income, gain, loss or deduction
11 taken into account in determining gross income, adjusted
12 gross income or taxable income for federal income tax
13 purposes for the taxable year, or in the amount of such items
14 entering into the computation of base income and net income
15 under this Act for such taxable year, whether in respect of
16 property values as of August 1, 1969 or otherwise.
17 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
18 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
19 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
20 eff. 8-14-98; revised 9-21-98.)
21 Section 99. Effective date. This Act takes effect upon
22 becoming law.