State of Illinois
91st General Assembly
Legislation

   [ Search ]   [ Legislation ]
[ Home ]   [ Back ]   [ Bottom ]



91_HB3162

 
                                              LRB9110347SMdvA

 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-               LRB9110347SMdvA
 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
 
                            -3-               LRB9110347SMdvA
 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;
 
                            -4-               LRB9110347SMdvA
 1                  (K)  An  amount  equal   to   those   dividends
 2             included   in   such  total  that  were  paid  by  a
 3             corporation that conducts business operations  in  a
 4             federally  designated Foreign Trade Zone or Sub-Zone
 5             and  that  is  designated  a  High  Impact  Business
 6             located  in  Illinois;   provided   that   dividends
 7             eligible  for the deduction provided in subparagraph
 8             (J) of paragraph (2) of this subsection shall not be
 9             eligible  for  the  deduction  provided  under  this
10             subparagraph (K);
11                  (L)  For taxable years  ending  after  December
12             31,  1983,  an  amount  equal to all social security
13             benefits and railroad retirement  benefits  included
14             in  such  total pursuant to Sections 72(r) and 86 of
15             the Internal Revenue Code;
16                  (M)  With  the   exception   of   any   amounts
17             subtracted  under  subparagraph (N), an amount equal
18             to the sum of all amounts disallowed  as  deductions
19             by  (i)  Sections  171(a)  (2),  and  265(2)  of the
20             Internal Revenue Code of 1954, as now  or  hereafter
21             amended,  and  all  amounts of expenses allocable to
22             interest and  disallowed as  deductions  by  Section
23             265(1)  of the Internal Revenue Code of 1954, as now
24             or hereafter amended; and  (ii)  for  taxable  years
25             ending  on  or  after  August 13, 1999 the effective
26             date of this amendatory  Act  of  the  91st  General
27             Assembly,   Sections   171(a)(2),   265,  280C,  and
28             832(b)(5)(B)(i) of the Internal  Revenue  Code;  the
29             provisions  of this subparagraph are exempt from the
30             provisions of Section 250;
31                  (N)  An amount equal to all amounts included in
32             such total which are exempt from  taxation  by  this
33             State   either   by   reason   of  its  statutes  or
34             Constitution  or  by  reason  of  the  Constitution,
 
                            -5-               LRB9110347SMdvA
 1             treaties or statutes of the United States;  provided
 2             that,  in the case of any statute of this State that
 3             exempts  income  derived   from   bonds   or   other
 4             obligations from the tax imposed under this Act, the
 5             amount  exempted  shall  be the interest net of bond
 6             premium amortization;
 7                  (O)  An amount equal to any  contribution  made
 8             to  a  job  training project established pursuant to
 9             the Tax Increment Allocation Redevelopment Act;
10                  (P)  An amount  equal  to  the  amount  of  the
11             deduction  used  to  compute  the federal income tax
12             credit for restoration of substantial  amounts  held
13             under  claim  of right for the taxable year pursuant
14             to Section 1341 of  the  Internal  Revenue  Code  of
15             1986;
16                  (Q)  An amount equal to any amounts included in
17             such   total,   received   by  the  taxpayer  as  an
18             acceleration in the payment of  life,  endowment  or
19             annuity  benefits  in advance of the time they would
20             otherwise be payable as an indemnity for a  terminal
21             illness;
22                  (R)  An  amount  equal  to  the  amount  of any
23             federal or State  bonus  paid  to  veterans  of  the
24             Persian Gulf War;
25                  (S)  An  amount,  to  the  extent  included  in
26             adjusted  gross  income,  equal  to  the amount of a
27             contribution made in the taxable year on  behalf  of
28             the  taxpayer  to  a  medical  care  savings account
29             established under the Medical Care  Savings  Account
30             Act  to  the  extent the contribution is accepted by
31             the account administrator as provided in that Act;
32                  (T)  An  amount,  to  the  extent  included  in
33             adjusted  gross  income,  equal  to  the  amount  of
34             interest earned in the taxable  year  on  a  medical
 
                            -6-               LRB9110347SMdvA
 1             care  savings  account established under the Medical
 2             Care Savings Account Act on behalf of the  taxpayer,
 3             other  than interest added pursuant to item (D-5) of
 4             this paragraph (2);
 5                  (U)  For one taxable year beginning on or after
 6             January 1, 1994, an amount equal to the total amount
 7             of tax imposed and paid under  subsections  (a)  and
 8             (b)  of  Section  201  of  this Act on grant amounts
 9             received by the  taxpayer  under  the  Nursing  Home
10             Grant  Assistance  Act during the taxpayer's taxable
11             years 1992 and 1993;
12                  (V)  Beginning with  tax  years  ending  on  or
13             after  December  31,  1995 and ending with tax years
14             ending on or before December  31,  2004,  an  amount
15             equal  to  the  amount  paid  by a taxpayer who is a
16             self-employed taxpayer, a partner of a  partnership,
17             or  a  shareholder in a Subchapter S corporation for
18             health insurance or  long-term  care  insurance  for
19             that   taxpayer   or   that   taxpayer's  spouse  or
20             dependents, to the extent that the amount  paid  for
21             that  health  insurance  or long-term care insurance
22             may be deducted under Section 213  of  the  Internal
23             Revenue  Code  of 1986, has not been deducted on the
24             federal income tax return of the taxpayer, and  does
25             not  exceed  the taxable income attributable to that
26             taxpayer's  income,   self-employment   income,   or
27             Subchapter  S  corporation  income;  except  that no
28             deduction shall be allowed under this  item  (V)  if
29             the  taxpayer  is  eligible  to  participate  in any
30             health insurance or long-term care insurance plan of
31             an  employer  of  the  taxpayer  or  the  taxpayer's
32             spouse.  The amount  of  the  health  insurance  and
33             long-term  care insurance subtracted under this item
34             (V) shall be determined by multiplying total  health
 
                            -7-               LRB9110347SMdvA
 1             insurance and long-term care insurance premiums paid
 2             by  the  taxpayer times a number that represents the
 3             fractional percentage of eligible  medical  expenses
 4             under  Section  213  of the Internal Revenue Code of
 5             1986 not actually deducted on the taxpayer's federal
 6             income tax return; and
 7                  (W)  For taxable years beginning  on  or  after
 8             January   1,  1998,  all  amounts  included  in  the
 9             taxpayer's federal gross income in the taxable  year
10             from  amounts converted from a regular IRA to a Roth
11             IRA. This paragraph is exempt from the provisions of
12             Section 250; and
13                  (X)  For  taxable  years  2000  through   2004,
14             $3,000  or  the  amount  included  in adjusted gross
15             income, whichever is less, for each taxpayer who was
16             a member  in  good  standing  of  a  volunteer  fire
17             department during the entire taxable year.

18        (b)  Corporations.
19             (1)  In general.  In the case of a corporation, base
20        income  means  an  amount equal to the taxpayer's taxable
21        income for the taxable year as modified by paragraph (2).
22             (2)  Modifications.  The taxable income referred  to
23        in  paragraph (1) shall be modified by adding thereto the
24        sum of the following amounts:
25                  (A)  An amount equal to  all  amounts  paid  or
26             accrued   to   the  taxpayer  as  interest  and  all
27             distributions  received  from  regulated  investment
28             companies during the  taxable  year  to  the  extent
29             excluded  from  gross  income  in the computation of
30             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 in the computation  of  taxable  income
34             for the taxable year;
 
                            -8-               LRB9110347SMdvA
 1                  (C)  In  the  case  of  a  regulated investment
 2             company, an amount equal to the excess  of  (i)  the
 3             net  long-term  capital  gain  for the taxable year,
 4             over (ii) the amount of the capital  gain  dividends
 5             designated   as  such  in  accordance  with  Section
 6             852(b)(3)(C) of the Internal Revenue  Code  and  any
 7             amount  designated under Section 852(b)(3)(D) of the
 8             Internal Revenue Code, attributable to  the  taxable
 9             year (this amendatory Act of 1995 (Public Act 89-89)
10             is  declarative  of  existing  law  and is not a new
11             enactment);
12                  (D)  The  amount  of  any  net  operating  loss
13             deduction taken in arriving at taxable income, other
14             than a net operating loss  carried  forward  from  a
15             taxable year ending prior to December 31, 1986;
16                  (E)  For taxable years in which a net operating
17             loss  carryback  or carryforward from a taxable year
18             ending prior to December 31, 1986 is an  element  of
19             taxable income under paragraph (1) of subsection (e)
20             or  subparagraph  (E) of paragraph (2) of subsection
21             (e), the  amount  by  which  addition  modifications
22             other  than  those provided by this subparagraph (E)
23             exceeded subtraction modifications in  such  earlier
24             taxable year, with the following limitations applied
25             in the order that they are listed:
26                       (i)  the addition modification relating to
27                  the  net operating loss carried back or forward
28                  to the  taxable  year  from  any  taxable  year
29                  ending  prior  to  December  31,  1986 shall be
30                  reduced by the amount of addition  modification
31                  under  this  subparagraph  (E) which related to
32                  that net operating loss  and  which  was  taken
33                  into  account in calculating the base income of
34                  an earlier taxable year, and
 
                            -9-               LRB9110347SMdvA
 1                       (ii)  the addition  modification  relating
 2                  to  the  net  operating  loss  carried  back or
 3                  forward to the taxable year  from  any  taxable
 4                  year  ending  prior  to December 31, 1986 shall
 5                  not exceed the  amount  of  such  carryback  or
 6                  carryforward;
 7                  For  taxable  years  in  which  there  is a net
 8             operating loss carryback or carryforward  from  more
 9             than one other taxable year ending prior to December
10             31, 1986, the addition modification provided in this
11             subparagraph  (E)  shall  be  the sum of the amounts
12             computed   independently   under    the    preceding
13             provisions  of  this  subparagraph (E) for each such
14             taxable year; and
15                  (E-5)  For taxable years ending after  December
16             31,   1997,   an   amount   equal  to  any  eligible
17             remediation costs that the corporation  deducted  in
18             computing  adjusted  gross  income and for which the
19             corporation claims a credit under subsection (l)  of
20             Section 201;
21        and  by  deducting  from the total so obtained the sum of
22        the following amounts:
23                  (F)  An amount equal to the amount of  any  tax
24             imposed  by  this  Act  which  was  refunded  to the
25             taxpayer and included in such total for the  taxable
26             year;
27                  (G)  An  amount equal to any amount included in
28             such total under Section 78 of the Internal  Revenue
29             Code;
30                  (H)  In  the  case  of  a  regulated investment
31             company, an amount equal to  the  amount  of  exempt
32             interest  dividends as defined in subsection (b) (5)
33             of Section 852 of the Internal Revenue Code, paid to
34             shareholders for the taxable year;
 
                            -10-              LRB9110347SMdvA
 1                  (I)  With  the   exception   of   any   amounts
 2             subtracted  under  subparagraph (J), an amount equal
 3             to the sum of all amounts disallowed  as  deductions
 4             by  (i)  Sections  171(a)  (2),  and  265(a)(2)  and
 5             amounts  disallowed  as  interest expense by Section
 6             291(a)(3) of the Internal Revenue Code,  as  now  or
 7             hereafter  amended,  and  all  amounts  of  expenses
 8             allocable  to  interest and disallowed as deductions
 9             by Section 265(a)(1) of the Internal  Revenue  Code,
10             as  now  or  hereafter amended; and (ii) for taxable
11             years  ending  on  or  after  August  13,  1999  the
12             effective date of this amendatory Act  of  the  91st
13             General Assembly, Sections 171(a)(2), 265, 280C, and
14             832(b)(5)(B)(i)  of  the  Internal Revenue Code; the
15             provisions of this subparagraph are exempt from  the
16             provisions of Section 250;
17                  (J)  An amount equal to all amounts included in
18             such  total  which  are exempt from taxation by this
19             State  either  by  reason   of   its   statutes   or
20             Constitution  or  by  reason  of  the  Constitution,
21             treaties  or statutes of the United States; provided
22             that, in the case of any statute of this State  that
23             exempts   income   derived   from   bonds  or  other
24             obligations from the tax imposed under this Act, the
25             amount exempted shall be the interest  net  of  bond
26             premium amortization;
27                  (K)  An   amount   equal   to  those  dividends
28             included  in  such  total  which  were  paid  by   a
29             corporation which conducts business operations in an
30             Enterprise  Zone or zones created under the Illinois
31             Enterprise Zone Act and conducts  substantially  all
32             of its operations in an Enterprise Zone or zones;
33                  (L)  An   amount   equal   to  those  dividends
34             included  in  such  total  that  were  paid   by   a
 
                            -11-              LRB9110347SMdvA
 1             corporation  that  conducts business operations in a
 2             federally designated Foreign Trade Zone or  Sub-Zone
 3             and  that  is  designated  a  High  Impact  Business
 4             located   in   Illinois;   provided  that  dividends
 5             eligible for the deduction provided in  subparagraph
 6             (K)  of  paragraph 2 of this subsection shall not be
 7             eligible  for  the  deduction  provided  under  this
 8             subparagraph (L);
 9                  (M)  For  any  taxpayer  that  is  a  financial
10             organization within the meaning of Section 304(c) of
11             this Act,  an  amount  included  in  such  total  as
12             interest  income  from  a loan or loans made by such
13             taxpayer to a borrower, to the extent  that  such  a
14             loan  is  secured  by property which is eligible for
15             the Enterprise Zone Investment Credit. To  determine
16             the  portion  of  a loan or loans that is secured by
17             property eligible for a  Section  201(h)  investment
18             credit  to the borrower, the entire principal amount
19             of the loan or loans between the  taxpayer  and  the
20             borrower  should  be  divided  into the basis of the
21             Section  201(h)  investment  credit  property  which
22             secures the loan or loans, using  for  this  purpose
23             the original basis of such property on the date that
24             it  was  placed  in  service in the Enterprise Zone.
25             The subtraction modification available  to  taxpayer
26             in  any  year  under  this  subsection shall be that
27             portion of the total interest paid by  the  borrower
28             with  respect  to  such  loan  attributable  to  the
29             eligible  property  as calculated under the previous
30             sentence;
31                  (M-1)  For any taxpayer  that  is  a  financial
32             organization within the meaning of Section 304(c) of
33             this  Act,  an  amount  included  in  such  total as
34             interest income from a loan or loans  made  by  such
 
                            -12-              LRB9110347SMdvA
 1             taxpayer  to  a  borrower, to the extent that such a
 2             loan is secured by property which  is  eligible  for
 3             the  High  Impact  Business  Investment  Credit.  To
 4             determine the portion of a loan  or  loans  that  is
 5             secured  by  property  eligible for a Section 201(i)
 6             investment  credit  to  the  borrower,  the   entire
 7             principal  amount  of  the loan or loans between the
 8             taxpayer and the borrower should be divided into the
 9             basis  of  the  Section  201(i)  investment   credit
10             property  which secures the loan or loans, using for
11             this purpose the original basis of such property  on
12             the  date  that  it  was  placed  in  service  in  a
13             federally  designated Foreign Trade Zone or Sub-Zone
14             located in Illinois.  No taxpayer that  is  eligible
15             for  the  deduction  provided in subparagraph (M) of
16             paragraph (2) of this subsection shall  be  eligible
17             for  the  deduction provided under this subparagraph
18             (M-1).  The subtraction  modification  available  to
19             taxpayers in any year under this subsection shall be
20             that  portion  of  the  total  interest  paid by the
21             borrower with respect to such loan  attributable  to
22             the   eligible  property  as  calculated  under  the
23             previous sentence;
24                  (N)  Two times any contribution made during the
25             taxable year to a designated  zone  organization  to
26             the  extent that the contribution (i) qualifies as a
27             charitable  contribution  under  subsection  (c)  of
28             Section 170 of the Internal Revenue  Code  and  (ii)
29             must,  by  its terms, be used for a project approved
30             by the Department of Commerce and Community  Affairs
31             under  Section  11  of  the Illinois Enterprise Zone
32             Act;
33                  (O)  An amount equal to: (i)  85%  for  taxable
34             years  ending  on or before December 31, 1992, or, a
 
                            -13-              LRB9110347SMdvA
 1             percentage equal to the percentage  allowable  under
 2             Section  243(a)(1)  of  the Internal Revenue Code of
 3             1986 for taxable years  ending  after  December  31,
 4             1992,  of  the amount by which dividends included in
 5             taxable income and received from a corporation  that
 6             is  not  created  or organized under the laws of the
 7             United States or any state or political  subdivision
 8             thereof,  including,  for taxable years ending on or
 9             after  December  31,  1988,  dividends  received  or
10             deemed  received  or  paid  or  deemed  paid   under
11             Sections  951  through  964  of the Internal Revenue
12             Code, exceed the amount of the modification provided
13             under subparagraph (G)  of  paragraph  (2)  of  this
14             subsection  (b)  which is related to such dividends;
15             plus (ii) 100% of the  amount  by  which  dividends,
16             included  in taxable income and received, including,
17             for taxable years ending on or  after  December  31,
18             1988,  dividends received or deemed received or paid
19             or deemed paid under Sections 951 through 964 of the
20             Internal Revenue Code,  from  any  such  corporation
21             specified  in  clause  (i)  that  would  but for the
22             provisions of Section 1504 (b) (3) of  the  Internal
23             Revenue   Code   be  treated  as  a  member  of  the
24             affiliated  group  which   includes   the   dividend
25             recipient,  exceed  the  amount  of the modification
26             provided under subparagraph (G) of paragraph (2)  of
27             this   subsection  (b)  which  is  related  to  such
28             dividends;
29                  (P)  An amount equal to any  contribution  made
30             to  a  job  training project established pursuant to
31             the Tax Increment Allocation Redevelopment Act;
32                  (Q)  An amount  equal  to  the  amount  of  the
33             deduction  used  to  compute  the federal income tax
34             credit for restoration of substantial  amounts  held
 
                            -14-              LRB9110347SMdvA
 1             under  claim  of right for the taxable year pursuant
 2             to Section 1341 of  the  Internal  Revenue  Code  of
 3             1986; and
 4                  (R)  In  the  case  of an attorney-in-fact with
 5             respect to whom  an  interinsurer  or  a  reciprocal
 6             insurer  has  made the election under Section 835 of
 7             the Internal Revenue Code, 26 U.S.C. 835, an  amount
 8             equal  to the excess, if any, of the amounts paid or
 9             incurred by that interinsurer or reciprocal  insurer
10             in the taxable year to the attorney-in-fact over the
11             deduction allowed to that interinsurer or reciprocal
12             insurer  with  respect to the attorney-in-fact under
13             Section 835(b) of the Internal Revenue Code for  the
14             taxable year.
15             (3)  Special  rule.   For  purposes of paragraph (2)
16        (A), "gross income" in  the  case  of  a  life  insurance
17        company,  for  tax years ending on and after December 31,
18        1994, shall mean the  gross  investment  income  for  the
19        taxable year.

20        (c)  Trusts and estates.
21             (1)  In  general.  In the case of a trust or estate,
22        base income means  an  amount  equal  to  the  taxpayer's
23        taxable  income  for  the  taxable  year  as  modified by
24        paragraph (2).
25             (2)  Modifications.  Subject to  the  provisions  of
26        paragraph   (3),   the  taxable  income  referred  to  in
27        paragraph (1) shall be modified by adding thereto the sum
28        of the following amounts:
29                  (A)  An amount equal to  all  amounts  paid  or
30             accrued  to  the  taxpayer  as interest or dividends
31             during the taxable year to the extent excluded  from
32             gross income in the computation of taxable income;
33                  (B)  In the case of (i) an estate, $600; (ii) a
34             trust  which,  under  its  governing  instrument, is
 
                            -15-              LRB9110347SMdvA
 1             required to distribute all of its income  currently,
 2             $300;  and  (iii) any other trust, $100, but in each
 3             such case,  only  to  the  extent  such  amount  was
 4             deducted in the computation of taxable income;
 5                  (C)  An  amount  equal  to  the  amount  of tax
 6             imposed by this Act  to  the  extent  deducted  from
 7             gross  income  in  the computation of taxable income
 8             for the taxable year;
 9                  (D)  The  amount  of  any  net  operating  loss
10             deduction taken in arriving at taxable income, other
11             than a net operating loss  carried  forward  from  a
12             taxable year ending prior to December 31, 1986;
13                  (E)  For taxable years in which a net operating
14             loss  carryback  or carryforward from a taxable year
15             ending prior to December 31, 1986 is an  element  of
16             taxable income under paragraph (1) of subsection (e)
17             or  subparagraph  (E) of paragraph (2) of subsection
18             (e), the  amount  by  which  addition  modifications
19             other  than  those provided by this subparagraph (E)
20             exceeded subtraction modifications in  such  taxable
21             year,  with the following limitations applied in the
22             order that they are listed:
23                       (i)  the addition modification relating to
24                  the net operating loss carried back or  forward
25                  to  the  taxable  year  from  any  taxable year
26                  ending prior to  December  31,  1986  shall  be
27                  reduced  by the amount of addition modification
28                  under this subparagraph (E)  which  related  to
29                  that  net  operating  loss  and which was taken
30                  into account in calculating the base income  of
31                  an earlier taxable year, and
32                       (ii)  the  addition  modification relating
33                  to the  net  operating  loss  carried  back  or
34                  forward  to  the  taxable year from any taxable
 
                            -16-              LRB9110347SMdvA
 1                  year ending prior to December  31,  1986  shall
 2                  not  exceed  the  amount  of  such carryback or
 3                  carryforward;
 4                  For taxable years  in  which  there  is  a  net
 5             operating  loss  carryback or carryforward from more
 6             than one other taxable year ending prior to December
 7             31, 1986, the addition modification provided in this
 8             subparagraph (E) shall be the  sum  of  the  amounts
 9             computed    independently    under   the   preceding
10             provisions of this subparagraph (E)  for  each  such
11             taxable year;
12                  (F)  For  taxable  years  ending  on  or  after
13             January 1, 1989, an amount equal to the tax deducted
14             pursuant to Section 164 of the Internal Revenue Code
15             if  the trust or estate is claiming the same tax for
16             purposes of the Illinois foreign  tax  credit  under
17             Section 601 of this Act;
18                  (G)  An  amount  equal  to  the  amount  of the
19             capital gain deduction allowable under the  Internal
20             Revenue  Code,  to  the  extent  deducted from gross
21             income in the computation of taxable income; and
22                  (G-5)  For taxable years ending after  December
23             31,   1997,   an   amount   equal  to  any  eligible
24             remediation costs that the trust or estate  deducted
25             in computing adjusted gross income and for which the
26             trust or estate claims a credit under subsection (l)
27             of Section 201;
28        and  by  deducting  from the total so obtained the sum of
29        the following amounts:
30                  (H)  An amount equal to all amounts included in
31             such total pursuant to the  provisions  of  Sections
32             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
33             408 of the Internal Revenue Code or included in such
34             total as distributions under the provisions  of  any
 
                            -17-              LRB9110347SMdvA
 1             retirement  or  disability plan for employees of any
 2             governmental agency or unit, or retirement  payments
 3             to  retired partners, which payments are excluded in
 4             computing  net  earnings  from  self  employment  by
 5             Section  1402  of  the  Internal  Revenue  Code  and
 6             regulations adopted pursuant thereto;
 7                  (I)  The valuation limitation amount;
 8                  (J)  An amount equal to the amount of  any  tax
 9             imposed  by  this  Act  which  was  refunded  to the
10             taxpayer and included in such total for the  taxable
11             year;
12                  (K)  An amount equal to all amounts included in
13             taxable  income  as  modified  by subparagraphs (A),
14             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
15             from  taxation by this State either by reason of its
16             statutes  or  Constitution  or  by  reason  of   the
17             Constitution,  treaties  or  statutes  of the United
18             States; provided that, in the case of any statute of
19             this State that exempts income derived from bonds or
20             other obligations from the tax  imposed  under  this
21             Act,  the  amount exempted shall be the interest net
22             of bond premium amortization;
23                  (L)  With  the   exception   of   any   amounts
24             subtracted  under  subparagraph (K), an amount equal
25             to the sum of all amounts disallowed  as  deductions
26             by  (i)  Sections  171(a)  (2)  and 265(a)(2) of the
27             Internal Revenue Code, as now or hereafter  amended,
28             and  all  amounts  of expenses allocable to interest
29             and disallowed as deductions by  Section  265(1)  of
30             the  Internal  Revenue  Code  of  1954,  as  now  or
31             hereafter amended; and (ii) for taxable years ending
32             on  or  after  August 13, 1999 the effective date of
33             this amendatory Act of the  91st  General  Assembly,
34             Sections  171(a)(2),  265, 280C, and 832(b)(5)(B)(i)
 
                            -18-              LRB9110347SMdvA
 1             of the Internal Revenue Code; the provisions of this
 2             subparagraph  are  exempt  from  the  provisions  of
 3             Section 250;
 4                  (M)  An  amount  equal   to   those   dividends
 5             included   in  such  total  which  were  paid  by  a
 6             corporation which conducts business operations in an
 7             Enterprise Zone or zones created under the  Illinois
 8             Enterprise  Zone  Act and conducts substantially all
 9             of its operations in an Enterprise Zone or Zones;
10                  (N)  An amount equal to any  contribution  made
11             to  a  job  training project established pursuant to
12             the Tax Increment Allocation Redevelopment Act;
13                  (O)  An  amount  equal   to   those   dividends
14             included   in   such  total  that  were  paid  by  a
15             corporation that conducts business operations  in  a
16             federally  designated Foreign Trade Zone or Sub-Zone
17             and  that  is  designated  a  High  Impact  Business
18             located  in  Illinois;   provided   that   dividends
19             eligible  for the deduction provided in subparagraph
20             (M) of paragraph (2) of this subsection shall not be
21             eligible  for  the  deduction  provided  under  this
22             subparagraph (O); and
23                  (P)  An amount  equal  to  the  amount  of  the
24             deduction  used  to  compute  the federal income tax
25             credit for restoration of substantial  amounts  held
26             under  claim  of right for the taxable year pursuant
27             to Section 1341 of  the  Internal  Revenue  Code  of
28             1986.
29             (3)  Limitation.   The  amount  of  any modification
30        otherwise required under  this  subsection  shall,  under
31        regulations  prescribed by the Department, be adjusted by
32        any amounts included therein which  were  properly  paid,
33        credited,  or  required to be distributed, or permanently
34        set aside for charitable purposes pursuant   to  Internal
 
                            -19-              LRB9110347SMdvA
 1        Revenue Code Section 642(c) during the taxable year.

 2        (d)  Partnerships.
 3             (1)  In  general. In the case of a partnership, base
 4        income means an amount equal to  the  taxpayer's  taxable
 5        income for the taxable year as modified by paragraph (2).
 6             (2)  Modifications.  The  taxable income referred to
 7        in paragraph (1) shall be modified by adding thereto  the
 8        sum of the following amounts:
 9                  (A)  An  amount  equal  to  all amounts paid or
10             accrued to the taxpayer  as  interest  or  dividends
11             during  the taxable year to the extent excluded from
12             gross income in the computation of taxable income;
13                  (B)  An amount  equal  to  the  amount  of  tax
14             imposed  by  this  Act  to  the extent deducted from
15             gross income for the taxable year;
16                  (C)  The amount of deductions  allowed  to  the
17             partnership  pursuant  to  Section  707  (c)  of the
18             Internal Revenue Code  in  calculating  its  taxable
19             income; and
20                  (D)  An  amount  equal  to  the  amount  of the
21             capital gain deduction allowable under the  Internal
22             Revenue  Code,  to  the  extent  deducted from gross
23             income in the computation of taxable income;
24        and by deducting from the total so obtained the following
25        amounts:
26                  (E)  The valuation limitation amount;
27                  (F)  An amount equal to the amount of  any  tax
28             imposed  by  this  Act  which  was  refunded  to the
29             taxpayer and included in such total for the  taxable
30             year;
31                  (G)  An amount equal to all amounts included in
32             taxable  income  as  modified  by subparagraphs (A),
33             (B), (C) and (D) which are exempt from  taxation  by
34             this  State  either  by  reason  of  its statutes or
 
                            -20-              LRB9110347SMdvA
 1             Constitution  or  by  reason  of  the  Constitution,
 2             treaties or statutes of the United States;  provided
 3             that,  in the case of any statute of this State that
 4             exempts  income  derived   from   bonds   or   other
 5             obligations from the tax imposed under this Act, the
 6             amount  exempted  shall  be the interest net of bond
 7             premium amortization;
 8                  (H)  Any  income  of  the   partnership   which
 9             constitutes  personal  service  income as defined in
10             Section 1348 (b) (1) of the  Internal  Revenue  Code
11             (as  in  effect  December  31, 1981) or a reasonable
12             allowance  for  compensation  paid  or  accrued  for
13             services rendered by partners  to  the  partnership,
14             whichever is greater;
15                  (I)  An  amount  equal to all amounts of income
16             distributable to an entity subject to  the  Personal
17             Property  Tax  Replacement  Income  Tax  imposed  by
18             subsections  (c)  and (d) of Section 201 of this Act
19             including  amounts  distributable  to  organizations
20             exempt from federal income tax by reason of  Section
21             501(a) of the Internal Revenue Code;
22                  (J)  With   the   exception   of   any  amounts
23             subtracted under subparagraph (G), an  amount  equal
24             to  the  sum of all amounts disallowed as deductions
25             by (i)  Sections  171(a)  (2),  and  265(2)  of  the
26             Internal  Revenue  Code of 1954, as now or hereafter
27             amended, and all amounts of  expenses  allocable  to
28             interest  and  disallowed  as  deductions by Section
29             265(1) of the  Internal  Revenue  Code,  as  now  or
30             hereafter amended; and (ii) for taxable years ending
31             on  or  after  August 13, 1999 the effective date of
32             this amendatory Act of the  91st  General  Assembly,
33             Sections  171(a)(2),  265, 280C, and 832(b)(5)(B)(i)
34             of the Internal Revenue Code; the provisions of this
 
                            -21-              LRB9110347SMdvA
 1             subparagraph  are  exempt  from  the  provisions  of
 2             Section 250;
 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,  enacted  by the 82nd General
 8             Assembly, and which does not conduct such operations
 9             other than in an Enterprise Zone or Zones;
10                  (L)  An amount equal to any  contribution  made
11             to  a  job  training project established pursuant to
12             the   Real   Property   Tax   Increment   Allocation
13             Redevelopment Act;
14                  (M)  An  amount  equal   to   those   dividends
15             included   in   such  total  that  were  paid  by  a
16             corporation that conducts business operations  in  a
17             federally  designated Foreign Trade Zone or Sub-Zone
18             and  that  is  designated  a  High  Impact  Business
19             located  in  Illinois;   provided   that   dividends
20             eligible  for the deduction provided in subparagraph
21             (K) of paragraph (2) of this subsection shall not be
22             eligible  for  the  deduction  provided  under  this
23             subparagraph (M); and
24                  (N)  An amount  equal  to  the  amount  of  the
25             deduction  used  to  compute  the federal income tax
26             credit for restoration of substantial  amounts  held
27             under  claim  of right for the taxable year pursuant
28             to Section 1341 of  the  Internal  Revenue  Code  of
29             1986.

30        (e)  Gross income; adjusted gross income; taxable income.
31             (1)  In  general.   Subject  to  the  provisions  of
32        paragraph  (2)  and  subsection  (b) (3), for purposes of
33        this Section  and  Section  803(e),  a  taxpayer's  gross
34        income,  adjusted gross income, or taxable income for the
 
                            -22-              LRB9110347SMdvA
 1        taxable year shall  mean  the  amount  of  gross  income,
 2        adjusted   gross   income   or  taxable  income  properly
 3        reportable  for  federal  income  tax  purposes  for  the
 4        taxable year under the provisions of the Internal Revenue
 5        Code. Taxable income may be less than zero. However,  for
 6        taxable  years  ending on or after December 31, 1986, net
 7        operating loss carryforwards from  taxable  years  ending
 8        prior  to  December  31,  1986, may not exceed the sum of
 9        federal taxable income for the taxable  year  before  net
10        operating  loss  deduction,  plus  the excess of addition
11        modifications  over  subtraction  modifications  for  the
12        taxable year.  For taxable years ending prior to December
13        31, 1986, taxable income may never be an amount in excess
14        of the net operating loss for the taxable year as defined
15        in subsections (c) and (d) of Section 172 of the Internal
16        Revenue Code, provided that  when  taxable  income  of  a
17        corporation  (other  than  a  Subchapter  S corporation),
18        trust,  or  estate  is  less  than  zero   and   addition
19        modifications,  other than those provided by subparagraph
20        (E) of paragraph (2) of subsection (b)  for  corporations
21        or  subparagraph  (E)  of paragraph (2) of subsection (c)
22        for trusts and estates, exceed subtraction modifications,
23        an  addition  modification  must  be  made  under   those
24        subparagraphs  for  any  other  taxable year to which the
25        taxable income less than zero  (net  operating  loss)  is
26        applied under Section 172 of the Internal Revenue Code or
27        under   subparagraph   (E)   of  paragraph  (2)  of  this
28        subsection (e) applied in conjunction with Section 172 of
29        the Internal Revenue Code.
30             (2)  Special rule.  For purposes of paragraph (1) of
31        this subsection, the taxable income  properly  reportable
32        for federal income tax purposes shall mean:
33                  (A)  Certain  life insurance companies.  In the
34             case of a life insurance company subject to the  tax
 
                            -23-              LRB9110347SMdvA
 1             imposed by Section 801 of the Internal Revenue Code,
 2             life  insurance  company  taxable  income,  plus the
 3             amount of distribution  from  pre-1984  policyholder
 4             surplus accounts as calculated under Section 815a of
 5             the Internal Revenue Code;
 6                  (B)  Certain other insurance companies.  In the
 7             case  of  mutual  insurance companies subject to the
 8             tax imposed by Section 831 of the  Internal  Revenue
 9             Code, insurance company taxable income;
10                  (C)  Regulated  investment  companies.   In the
11             case of a regulated investment  company  subject  to
12             the  tax  imposed  by  Section  852  of the Internal
13             Revenue Code, investment company taxable income;
14                  (D)  Real estate  investment  trusts.   In  the
15             case  of  a  real estate investment trust subject to
16             the tax imposed  by  Section  857  of  the  Internal
17             Revenue  Code,  real estate investment trust taxable
18             income;
19                  (E)  Consolidated corporations.  In the case of
20             a corporation which is a  member  of  an  affiliated
21             group  of  corporations filing a consolidated income
22             tax return for the taxable year for  federal  income
23             tax  purposes,  taxable income determined as if such
24             corporation had filed a separate return for  federal
25             income  tax  purposes  for the taxable year and each
26             preceding taxable year for which it was a member  of
27             an   affiliated   group.   For   purposes   of  this
28             subparagraph, the taxpayer's separate taxable income
29             shall be determined as if the election  provided  by
30             Section  243(b) (2) of the Internal Revenue Code had
31             been in effect for all such years;
32                  (F)  Cooperatives.    In   the   case   of    a
33             cooperative  corporation or association, the taxable
34             income of such organization determined in accordance
 
                            -24-              LRB9110347SMdvA
 1             with the provisions of Section 1381 through 1388  of
 2             the Internal Revenue Code;
 3                  (G)  Subchapter  S  corporations.   In the case
 4             of: (i) a Subchapter S corporation for  which  there
 5             is  in effect an election for the taxable year under
 6             Section 1362  of  the  Internal  Revenue  Code,  the
 7             taxable  income  of  such  corporation determined in
 8             accordance with  Section  1363(b)  of  the  Internal
 9             Revenue  Code, except that taxable income shall take
10             into account  those  items  which  are  required  by
11             Section  1363(b)(1)  of the Internal Revenue Code to
12             be  separately  stated;  and  (ii)  a  Subchapter  S
13             corporation for which there is in effect  a  federal
14             election  to  opt  out  of  the  provisions  of  the
15             Subchapter  S  Revision Act of 1982 and have applied
16             instead the prior federal Subchapter S rules  as  in
17             effect  on  July 1, 1982, the taxable income of such
18             corporation  determined  in  accordance   with   the
19             federal  Subchapter  S rules as in effect on July 1,
20             1982; and
21                  (H)  Partnerships.    In   the   case   of    a
22             partnership, taxable income determined in accordance
23             with  Section  703  of  the  Internal  Revenue Code,
24             except that taxable income shall take  into  account
25             those  items which are required by Section 703(a)(1)
26             to be separately stated but  which  would  be  taken
27             into  account  by  an  individual in calculating his
28             taxable income.

29        (f)  Valuation limitation amount.
30             (1)  In general.  The  valuation  limitation  amount
31        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
32        (d)(2) (E) is an amount equal to:
33                  (A)  The  sum  of  the   pre-August   1,   1969
34             appreciation  amounts  (to  the extent consisting of
 
                            -25-              LRB9110347SMdvA
 1             gain reportable under the provisions of Section 1245
 2             or 1250  of  the  Internal  Revenue  Code)  for  all
 3             property  in respect of which such gain was reported
 4             for the taxable year; plus
 5                  (B)  The  lesser  of  (i)  the   sum   of   the
 6             pre-August  1,  1969  appreciation  amounts  (to the
 7             extent consisting of capital gain) for all  property
 8             in  respect  of  which  such  gain  was reported for
 9             federal income tax purposes for the taxable year, or
10             (ii) the net capital  gain  for  the  taxable  year,
11             reduced  in  either  case by any amount of such gain
12             included in the amount determined  under  subsection
13             (a) (2) (F) or (c) (2) (H).
14             (2)  Pre-August 1, 1969 appreciation amount.
15                  (A)  If  the  fair  market  value  of  property
16             referred   to   in   paragraph   (1)   was   readily
17             ascertainable  on  August 1, 1969, the pre-August 1,
18             1969 appreciation amount for such  property  is  the
19             lesser  of  (i) the excess of such fair market value
20             over the taxpayer's basis (for determining gain) for
21             such property on that  date  (determined  under  the
22             Internal Revenue Code as in effect on that date), or
23             (ii)  the  total  gain  realized  and reportable for
24             federal income tax purposes in respect of the  sale,
25             exchange or other disposition of such property.
26                  (B)  If  the  fair  market  value  of  property
27             referred   to  in  paragraph  (1)  was  not  readily
28             ascertainable on August 1, 1969, the  pre-August  1,
29             1969  appreciation  amount for such property is that
30             amount which bears the same ratio to the total  gain
31             reported  in  respect  of  the  property for federal
32             income tax purposes for the  taxable  year,  as  the
33             number  of  full calendar months in that part of the
34             taxpayer's holding period for  the  property  ending
 
                            -26-              LRB9110347SMdvA
 1             July  31,  1969 bears to the number of full calendar
 2             months in the taxpayer's entire holding  period  for
 3             the property.
 4                  (C)  The   Department   shall   prescribe  such
 5             regulations as may be necessary  to  carry  out  the
 6             purposes of this paragraph.

 7        (g)  Double  deductions.   Unless  specifically  provided
 8    otherwise, nothing in this Section shall permit the same item
 9    to be deducted more than once.

10        (h)  Legislative intention.  Except as expressly provided
11    by   this   Section   there  shall  be  no  modifications  or
12    limitations on the amounts of income, gain, loss or deduction
13    taken into account  in  determining  gross  income,  adjusted
14    gross  income  or  taxable  income  for  federal  income  tax
15    purposes for the taxable year, or in the amount of such items
16    entering  into  the computation of base income and net income
17    under this Act for such taxable year, whether in  respect  of
18    property values as of August 1, 1969 or otherwise.
19    (Source:  P.A.  90-491,  eff.  1-1-98;  90-717,  eff. 8-7-98;
20    90-770, eff. 8-14-98;  91-192,  eff.  7-20-99;  91-205,  eff.
21    7-20-99;  91-357, eff. 7-29-99; 91-541, eff. 8-13-99; revised
22    8-23-99.)

23        Section 99.  Effective date.  This Act takes effect  upon
24    becoming law.

[ Top ]