State of Illinois
91st General Assembly
Legislation

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91_SB0111enr

 
SB111 Enrolled                                 LRB9100932PTpk

 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
 
SB111 Enrolled              -6-                LRB9100932PTpk
 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,  2004  1999,  an
 9             amount equal to the amount paid by a taxpayer who is
10             a   self-employed   taxpayer,   a   partner   of   a
11             partnership,  or  a  shareholder  in  a Subchapter S
12             corporation for health insurance or  long-term  care
13             insurance  for  that  taxpayer  or  that  taxpayer's
14             spouse  or dependents, to the extent that the amount
15             paid for that health  insurance  or  long-term  care
16             insurance  may  be deducted under Section 213 of the
17             Internal Revenue Code of 1986, has not been deducted
18             on the federal income tax return  of  the  taxpayer,
19             and  does not exceed the taxable income attributable
20             to that taxpayer's income,  self-employment  income,
21             or  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.

 7        (b)  Corporations.
 8             (1)  In general.  In the case of a corporation, base
 9        income means an amount equal to  the  taxpayer's  taxable
10        income for the taxable year as modified by paragraph (2).
11             (2)  Modifications.   The taxable income referred to
12        in paragraph (1) shall be modified by adding thereto  the
13        sum of the following amounts:
14                  (A)  An  amount  equal  to  all amounts paid or
15             accrued  to  the  taxpayer  as  interest   and   all
16             distributions  received  from  regulated  investment
17             companies  during  the  taxable  year  to the extent
18             excluded from gross income  in  the  computation  of
19             taxable income;
20                  (B)  An  amount  equal  to  the  amount  of tax
21             imposed by this Act  to  the  extent  deducted  from
22             gross  income  in  the computation of taxable income
23             for the taxable year;
24                  (C)  In the  case  of  a  regulated  investment
25             company,  an  amount  equal to the excess of (i) the
26             net long-term capital gain  for  the  taxable  year,
27             over  (ii)  the amount of the capital gain dividends
28             designated  as  such  in  accordance  with   Section
29             852(b)(3)(C)  of  the  Internal Revenue Code and any
30             amount designated under Section 852(b)(3)(D) of  the
31             Internal  Revenue  Code, attributable to the taxable
32             year. (this  amendatory  Act  of  1995  (Public  Act
33             89-89)  is  declarative of existing law and is not a
34             new enactment);.
 
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 1                  (D)  The  amount  of  any  net  operating  loss
 2             deduction taken in arriving at taxable income, other
 3             than a net operating loss  carried  forward  from  a
 4             taxable year ending prior to December 31, 1986; and
 5                  (E)  For taxable years in which a net operating
 6             loss  carryback  or carryforward from a taxable year
 7             ending prior to December 31, 1986 is an  element  of
 8             taxable income under paragraph (1) of subsection (e)
 9             or  subparagraph  (E) of paragraph (2) of subsection
10             (e), the  amount  by  which  addition  modifications
11             other  than  those provided by this subparagraph (E)
12             exceeded subtraction modifications in  such  earlier
13             taxable year, with the following limitations applied
14             in the order that they are listed:
15                       (i)  the addition modification relating to
16                  the  net operating loss carried back or forward
17                  to the  taxable  year  from  any  taxable  year
18                  ending  prior  to  December  31,  1986 shall be
19                  reduced by the amount of addition  modification
20                  under  this  subparagraph  (E) which related to
21                  that net operating loss  and  which  was  taken
22                  into  account in calculating the base income of
23                  an earlier taxable year, and
24                       (ii)  the addition  modification  relating
25                  to  the  net  operating  loss  carried  back or
26                  forward to the taxable year  from  any  taxable
27                  year  ending  prior  to December 31, 1986 shall
28                  not exceed the  amount  of  such  carryback  or
29                  carryforward;
30                  For  taxable  years  in  which  there  is a net
31             operating loss carryback or carryforward  from  more
32             than one other taxable year ending prior to December
33             31, 1986, the addition modification provided in this
34             subparagraph  (E)  shall  be  the sum of the amounts
 
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 1             computed   independently   under    the    preceding
 2             provisions  of  this  subparagraph (E) for each such
 3             taxable year;, and
 4                  (E-5)  For taxable years ending after  December
 5             31,   1997,   an   amount   equal  to  any  eligible
 6             remediation costs that the corporation  deducted  in
 7             computing  adjusted  gross  income and for which the
 8             corporation claims a credit under subsection (l)  of
 9             Section 201;
10        and  by  deducting  from the total so obtained the sum of
11        the following amounts:
12                  (F)  An amount equal to the amount of  any  tax
13             imposed  by  this  Act  which  was  refunded  to the
14             taxpayer and included in such total for the  taxable
15             year;
16                  (G)  An  amount equal to any amount included in
17             such total under Section 78 of the Internal  Revenue
18             Code;
19                  (H)  In  the  case  of  a  regulated investment
20             company, an amount equal to  the  amount  of  exempt
21             interest  dividends as defined in subsection (b) (5)
22             of Section 852 of the Internal Revenue Code, paid to
23             shareholders for the taxable year;
24                  (I)  With  the   exception   of   any   amounts
25             subtracted  under  subparagraph (J), an amount equal
26             to the sum of all amounts disallowed  as  deductions
27             by  Sections  171(a)  (2), and 265(a)(2) and amounts
28             disallowed as interest expense by Section  291(a)(3)
29             of  the  Internal  Revenue Code, as now or hereafter
30             amended, and all amounts of  expenses  allocable  to
31             interest  and  disallowed  as  deductions by Section
32             265(a)(1) of the Internal Revenue Code,  as  now  or
33             hereafter amended;
34                  (J)  An amount equal to all amounts included in
 
SB111 Enrolled              -10-               LRB9100932PTpk
 1             such  total  which  are exempt from taxation by this
 2             State  either  by  reason   of   its   statutes   or
 3             Constitution  or  by  reason  of  the  Constitution,
 4             treaties  or statutes of the United States; provided
 5             that, in the case of any statute of this State  that
 6             exempts   income   derived   from   bonds  or  other
 7             obligations from the tax imposed under this Act, the
 8             amount exempted shall be the interest  net  of  bond
 9             premium amortization;
10                  (K)  An   amount   equal   to  those  dividends
11             included  in  such  total  which  were  paid  by   a
12             corporation which conducts business operations in an
13             Enterprise  Zone or zones created under the Illinois
14             Enterprise Zone Act and conducts  substantially  all
15             of its operations in an Enterprise Zone or zones;
16                  (L)  An   amount   equal   to  those  dividends
17             included  in  such  total  that  were  paid   by   a
18             corporation  that  conducts business operations in a
19             federally designated Foreign Trade Zone or  Sub-Zone
20             and  that  is  designated  a  High  Impact  Business
21             located   in   Illinois;   provided  that  dividends
22             eligible for the deduction provided in  subparagraph
23             (K)  of  paragraph 2 of this subsection shall not be
24             eligible  for  the  deduction  provided  under  this
25             subparagraph (L);
26                  (M)  For  any  taxpayer  that  is  a  financial
27             organization within the meaning of Section 304(c) of
28             this Act,  an  amount  included  in  such  total  as
29             interest  income  from  a loan or loans made by such
30             taxpayer to a borrower, to the extent  that  such  a
31             loan  is  secured  by property which is eligible for
32             the Enterprise Zone Investment Credit. To  determine
33             the  portion  of  a loan or loans that is secured by
34             property eligible for a  Section  201(h)  investment
 
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 1             credit  to the borrower, the entire principal amount
 2             of the loan or loans between the  taxpayer  and  the
 3             borrower  should  be  divided  into the basis of the
 4             Section  201(h)  investment  credit  property  which
 5             secures the loan or loans, using  for  this  purpose
 6             the original basis of such property on the date that
 7             it  was  placed  in  service in the Enterprise Zone.
 8             The subtraction modification available  to  taxpayer
 9             in  any  year  under  this  subsection shall be that
10             portion of the total interest paid by  the  borrower
11             with  respect  to  such  loan  attributable  to  the
12             eligible  property  as calculated under the previous
13             sentence;
14                  (M-1)  For any taxpayer  that  is  a  financial
15             organization within the meaning of Section 304(c) of
16             this  Act,  an  amount  included  in  such  total as
17             interest income from a loan or loans  made  by  such
18             taxpayer  to  a  borrower, to the extent that such a
19             loan is secured by property which  is  eligible  for
20             the  High  Impact  Business  Investment  Credit.  To
21             determine the portion of a loan  or  loans  that  is
22             secured  by  property  eligible for a Section 201(i)
23             investment  credit  to  the  borrower,  the   entire
24             principal  amount  of  the loan or loans between the
25             taxpayer and the borrower should be divided into the
26             basis  of  the  Section  201(i)  investment   credit
27             property  which secures the loan or loans, using for
28             this purpose the original basis of such property  on
29             the  date  that  it  was  placed  in  service  in  a
30             federally  designated Foreign Trade Zone or Sub-Zone
31             located in Illinois.  No taxpayer that  is  eligible
32             for  the  deduction  provided in subparagraph (M) of
33             paragraph (2) of this subsection shall  be  eligible
34             for  the  deduction provided under this subparagraph
 
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 1             (M-1).  The subtraction  modification  available  to
 2             taxpayers in any year under this subsection shall be
 3             that  portion  of  the  total  interest  paid by the
 4             borrower with respect to such loan  attributable  to
 5             the   eligible  property  as  calculated  under  the
 6             previous sentence;
 7                  (N)  Two times any contribution made during the
 8             taxable year to a designated  zone  organization  to
 9             the  extent that the contribution (i) qualifies as a
10             charitable  contribution  under  subsection  (c)  of
11             Section 170 of the Internal Revenue  Code  and  (ii)
12             must,  by  its terms, be used for a project approved
13             by the Department of Commerce and Community  Affairs
14             under  Section  11  of  the Illinois Enterprise Zone
15             Act;
16                  (O)  An amount equal to: (i)  85%  for  taxable
17             years  ending  on or before December 31, 1992, or, a
18             percentage equal to the percentage  allowable  under
19             Section  243(a)(1)  of  the Internal Revenue Code of
20             1986 for taxable years  ending  after  December  31,
21             1992,  of  the amount by which dividends included in
22             taxable income and received from a corporation  that
23             is  not  created  or organized under the laws of the
24             United States or any state or political  subdivision
25             thereof,  including,  for taxable years ending on or
26             after  December  31,  1988,  dividends  received  or
27             deemed  received  or  paid  or  deemed  paid   under
28             Sections  951  through  964  of the Internal Revenue
29             Code, exceed the amount of the modification provided
30             under subparagraph (G)  of  paragraph  (2)  of  this
31             subsection  (b)  which is related to such dividends;
32             plus (ii) 100% of the  amount  by  which  dividends,
33             included  in taxable income and received, including,
34             for taxable years ending on or  after  December  31,
 
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 1             1988,  dividends received or deemed received or paid
 2             or deemed paid under Sections 951 through 964 of the
 3             Internal Revenue Code,  from  any  such  corporation
 4             specified  in  clause  (i)  that  would  but for the
 5             provisions of Section 1504 (b) (3) of  the  Internal
 6             Revenue   Code   be  treated  as  a  member  of  the
 7             affiliated  group  which   includes   the   dividend
 8             recipient,  exceed  the  amount  of the modification
 9             provided under subparagraph (G) of paragraph (2)  of
10             this   subsection  (b)  which  is  related  to  such
11             dividends;
12                  (P)  An amount equal to any  contribution  made
13             to  a  job  training project established pursuant to
14             the Tax Increment Allocation Redevelopment Act; and
15                  (Q)  An amount  equal  to  the  amount  of  the
16             deduction  used  to  compute  the federal income tax
17             credit for restoration of substantial  amounts  held
18             under  claim  of right for the taxable year pursuant
19             to Section 1341 of  the  Internal  Revenue  Code  of
20             1986.
21             (3)  Special  rule.   For  purposes of paragraph (2)
22        (A), "gross income" in  the  case  of  a  life  insurance
23        company,  for  tax years ending on and after December 31,
24        1994, shall mean the  gross  investment  income  for  the
25        taxable year.

26        (c)  Trusts and estates.
27             (1)  In  general.  In the case of a trust or estate,
28        base income means  an  amount  equal  to  the  taxpayer's
29        taxable  income  for  the  taxable  year  as  modified by
30        paragraph (2).
31             (2)  Modifications.  Subject to  the  provisions  of
32        paragraph   (3),   the  taxable  income  referred  to  in
33        paragraph (1) shall be modified by adding thereto the sum
34        of the following amounts:
 
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 1                  (A)  An amount equal to  all  amounts  paid  or
 2             accrued  to  the  taxpayer  as interest or dividends
 3             during the taxable year to the extent excluded  from
 4             gross income in the computation of taxable income;
 5                  (B)  In the case of (i) an estate, $600; (ii) a
 6             trust  which,  under  its  governing  instrument, is
 7             required to distribute all of its income  currently,
 8             $300;  and  (iii) any other trust, $100, but in each
 9             such case,  only  to  the  extent  such  amount  was
10             deducted in the computation of taxable income;
11                  (C)  An  amount  equal  to  the  amount  of tax
12             imposed by this Act  to  the  extent  deducted  from
13             gross  income  in  the computation of taxable income
14             for the taxable year;
15                  (D)  The  amount  of  any  net  operating  loss
16             deduction taken in arriving at taxable income, other
17             than a net operating loss  carried  forward  from  a
18             taxable year ending prior to December 31, 1986;
19                  (E)  For taxable years in which a net operating
20             loss  carryback  or carryforward from a taxable year
21             ending prior to December 31, 1986 is an  element  of
22             taxable income under paragraph (1) of subsection (e)
23             or  subparagraph  (E) of paragraph (2) of subsection
24             (e), the  amount  by  which  addition  modifications
25             other  than  those provided by this subparagraph (E)
26             exceeded subtraction modifications in  such  taxable
27             year,  with the following limitations applied in the
28             order that they are listed:
29                       (i)  the addition modification relating to
30                  the net operating loss carried back or  forward
31                  to  the  taxable  year  from  any  taxable year
32                  ending prior to  December  31,  1986  shall  be
33                  reduced  by the amount of addition modification
34                  under this subparagraph (E)  which  related  to
 
SB111 Enrolled              -15-               LRB9100932PTpk
 1                  that  net  operating  loss  and which was taken
 2                  into account in calculating the base income  of
 3                  an earlier taxable year, and
 4                       (ii)  the  addition  modification relating
 5                  to the  net  operating  loss  carried  back  or
 6                  forward  to  the  taxable year from any taxable
 7                  year ending prior to December  31,  1986  shall
 8                  not  exceed  the  amount  of  such carryback or
 9                  carryforward;
10                  For taxable years  in  which  there  is  a  net
11             operating  loss  carryback or carryforward from more
12             than one other taxable year ending prior to December
13             31, 1986, the addition modification provided in this
14             subparagraph (E) shall be the  sum  of  the  amounts
15             computed    independently    under   the   preceding
16             provisions of this subparagraph (E)  for  each  such
17             taxable year;
18                  (F)  For  taxable  years  ending  on  or  after
19             January 1, 1989, an amount equal to the tax deducted
20             pursuant to Section 164 of the Internal Revenue Code
21             if  the trust or estate is claiming the same tax for
22             purposes of the Illinois foreign  tax  credit  under
23             Section 601 of this Act;
24                  (G)  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; and
28                  (G-5) For taxable years ending  after  December
29             31,   1997,   an   amount   equal  to  any  eligible
30             remediation costs that the trust or estate  deducted
31             in computing adjusted gross income and for which the
32             trust or estate claims a credit under subsection (l)
33             of Section 201;
34        and  by  deducting  from the total so obtained the sum of
 
SB111 Enrolled              -16-               LRB9100932PTpk
 1        the following amounts:
 2                  (H)  An amount equal to all amounts included in
 3             such total pursuant to the  provisions  of  Sections
 4             402(a),  402(c),  403(a), 403(b), 406(a), 407(a) and
 5             408 of the Internal Revenue Code or included in such
 6             total as distributions under the provisions  of  any
 7             retirement  or  disability plan for employees of any
 8             governmental agency or unit, or retirement  payments
 9             to  retired partners, which payments are excluded in
10             computing  net  earnings  from  self  employment  by
11             Section  1402  of  the  Internal  Revenue  Code  and
12             regulations adopted pursuant thereto;
13                  (I)  The valuation limitation amount;
14                  (J)  An amount equal to the amount of  any  tax
15             imposed  by  this  Act  which  was  refunded  to the
16             taxpayer and included in such total for the  taxable
17             year;
18                  (K)  An amount equal to all amounts included in
19             taxable  income  as  modified  by subparagraphs (A),
20             (B), (C), (D), (E), (F) and  (G)  which  are  exempt
21             from  taxation by this State either by reason of its
22             statutes  or  Constitution  or  by  reason  of   the
23             Constitution,  treaties  or  statutes  of the United
24             States; provided that, in the case of any statute of
25             this State that exempts income derived from bonds or
26             other obligations from the tax  imposed  under  this
27             Act,  the  amount exempted shall be the interest net
28             of bond premium amortization;
29                  (L)  With  the   exception   of   any   amounts
30             subtracted  under  subparagraph (K), an amount equal
31             to the sum of all amounts disallowed  as  deductions
32             by Sections 171(a) (2) and 265(a)(2) of the Internal
33             Revenue  Code,  as now or hereafter amended, and all
34             amounts  of  expenses  allocable  to  interest   and
 
SB111 Enrolled              -17-               LRB9100932PTpk
 1             disallowed  as  deductions  by Section 265(1) of the
 2             Internal Revenue Code of 1954, as now  or  hereafter
 3             amended;
 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
 
SB111 Enrolled              -18-               LRB9100932PTpk
 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; and
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
 
SB111 Enrolled              -19-               LRB9100932PTpk
 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  Sections  171(a) (2), and 265(2) of the Internal
26             Revenue Code of 1954, as now or  hereafter  amended,
27             and  all  amounts  of expenses allocable to interest
28             and disallowed as deductions by  Section  265(1)  of
29             the  Internal  Revenue  Code,  as  now  or hereafter
30             amended;
31                  (K)  An  amount  equal   to   those   dividends
32             included   in  such  total  which  were  paid  by  a
33             corporation which conducts business operations in an
34             Enterprise Zone or zones created under the  Illinois
 
SB111 Enrolled              -20-               LRB9100932PTpk
 1             Enterprise  Zone  Act,  enacted  by the 82nd General
 2             Assembly, and which does not conduct such operations
 3             other than in an Enterprise Zone or Zones;
 4                  (L)  An amount equal to any  contribution  made
 5             to  a  job  training project established pursuant to
 6             the   Real   Property   Tax   Increment   Allocation
 7             Redevelopment Act;
 8                  (M)  An  amount  equal   to   those   dividends
 9             included   in   such  total  that  were  paid  by  a
10             corporation that conducts business operations  in  a
11             federally  designated Foreign Trade Zone or Sub-Zone
12             and  that  is  designated  a  High  Impact  Business
13             located  in  Illinois;   provided   that   dividends
14             eligible  for the deduction provided in subparagraph
15             (K) of paragraph (2) of this subsection shall not be
16             eligible  for  the  deduction  provided  under  this
17             subparagraph (M); and
18                  (N)  An amount  equal  to  the  amount  of  the
19             deduction  used  to  compute  the federal income tax
20             credit for restoration of substantial  amounts  held
21             under  claim  of right for the taxable year pursuant
22             to Section 1341 of  the  Internal  Revenue  Code  of
23             1986.

24        (e)  Gross income; adjusted gross income; taxable income.
25             (1)  In  general.   Subject  to  the  provisions  of
26        paragraph  (2)  and  subsection  (b) (3), for purposes of
27        this Section  and  Section  803(e),  a  taxpayer's  gross
28        income,  adjusted gross income, or taxable income for the
29        taxable year shall  mean  the  amount  of  gross  income,
30        adjusted   gross   income   or  taxable  income  properly
31        reportable  for  federal  income  tax  purposes  for  the
32        taxable year under the provisions of the Internal Revenue
33        Code. Taxable income may be less than zero. However,  for
34        taxable  years  ending on or after December 31, 1986, net
 
SB111 Enrolled              -21-               LRB9100932PTpk
 1        operating loss carryforwards from  taxable  years  ending
 2        prior  to  December  31,  1986, may not exceed the sum of
 3        federal taxable income for the taxable  year  before  net
 4        operating  loss  deduction,  plus  the excess of addition
 5        modifications  over  subtraction  modifications  for  the
 6        taxable year.  For taxable years ending prior to December
 7        31, 1986, taxable income may never be an amount in excess
 8        of the net operating loss for the taxable year as defined
 9        in subsections (c) and (d) of Section 172 of the Internal
10        Revenue Code, provided that  when  taxable  income  of  a
11        corporation  (other  than  a  Subchapter  S corporation),
12        trust,  or  estate  is  less  than  zero   and   addition
13        modifications,  other than those provided by subparagraph
14        (E) of paragraph (2) of subsection (b)  for  corporations
15        or  subparagraph  (E)  of paragraph (2) of subsection (c)
16        for trusts and estates, exceed subtraction modifications,
17        an  addition  modification  must  be  made  under   those
18        subparagraphs  for  any  other  taxable year to which the
19        taxable income less than zero  (net  operating  loss)  is
20        applied under Section 172 of the Internal Revenue Code or
21        under   subparagraph   (E)   of  paragraph  (2)  of  this
22        subsection (e) applied in conjunction with Section 172 of
23        the Internal Revenue Code.
24             (2)  Special rule.  For purposes of paragraph (1) of
25        this subsection, the taxable income  properly  reportable
26        for federal income tax purposes shall mean:
27                  (A)  Certain  life insurance companies.  In the
28             case of a life insurance company subject to the  tax
29             imposed by Section 801 of the Internal Revenue Code,
30             life  insurance  company  taxable  income,  plus the
31             amount of distribution  from  pre-1984  policyholder
32             surplus accounts as calculated under Section 815a of
33             the Internal Revenue Code;
34                  (B)  Certain other insurance companies.  In the
 
SB111 Enrolled              -22-               LRB9100932PTpk
 1             case  of  mutual  insurance companies subject to the
 2             tax imposed by Section 831 of the  Internal  Revenue
 3             Code, insurance company taxable income;
 4                  (C)  Regulated  investment  companies.   In the
 5             case of a regulated investment  company  subject  to
 6             the  tax  imposed  by  Section  852  of the Internal
 7             Revenue Code, investment company taxable income;
 8                  (D)  Real estate  investment  trusts.   In  the
 9             case  of  a  real estate investment trust subject to
10             the tax imposed  by  Section  857  of  the  Internal
11             Revenue  Code,  real estate investment trust taxable
12             income;
13                  (E)  Consolidated corporations.  In the case of
14             a corporation which is a  member  of  an  affiliated
15             group  of  corporations filing a consolidated income
16             tax return for the taxable year for  federal  income
17             tax  purposes,  taxable income determined as if such
18             corporation had filed a separate return for  federal
19             income  tax  purposes  for the taxable year and each
20             preceding taxable year for which it was a member  of
21             an   affiliated   group.   For   purposes   of  this
22             subparagraph, the taxpayer's separate taxable income
23             shall be determined as if the election  provided  by
24             Section  243(b) (2) of the Internal Revenue Code had
25             been in effect for all such years;
26                  (F)  Cooperatives.    In   the   case   of    a
27             cooperative  corporation or association, the taxable
28             income of such organization determined in accordance
29             with the provisions of Section 1381 through 1388  of
30             the Internal Revenue Code;
31                  (G)  Subchapter  S  corporations.   In the case
32             of: (i) a Subchapter S corporation for  which  there
33             is  in effect an election for the taxable year under
34             Section 1362  of  the  Internal  Revenue  Code,  the
 
SB111 Enrolled              -23-               LRB9100932PTpk
 1             taxable  income  of  such  corporation determined in
 2             accordance with  Section  1363(b)  of  the  Internal
 3             Revenue  Code, except that taxable income shall take
 4             into account  those  items  which  are  required  by
 5             Section  1363(b)(1)  of the Internal Revenue Code to
 6             be  separately  stated;  and  (ii)  a  Subchapter  S
 7             corporation for which there is in effect  a  federal
 8             election  to  opt  out  of  the  provisions  of  the
 9             Subchapter  S  Revision Act of 1982 and have applied
10             instead the prior federal Subchapter S rules  as  in
11             effect  on  July 1, 1982, the taxable income of such
12             corporation  determined  in  accordance   with   the
13             federal  Subchapter  S rules as in effect on July 1,
14             1982; and
15                  (H)  Partnerships.    In   the   case   of    a
16             partnership, taxable income determined in accordance
17             with  Section  703  of  the  Internal  Revenue Code,
18             except that taxable income shall take  into  account
19             those  items which are required by Section 703(a)(1)
20             to be separately stated but  which  would  be  taken
21             into  account  by  an  individual in calculating his
22             taxable income.

23        (f)  Valuation limitation amount.
24             (1)  In general.  The  valuation  limitation  amount
25        referred  to  in subsections (a) (2) (G), (c) (2) (I) and
26        (d)(2) (E) is an amount equal to:
27                  (A)  The  sum  of  the   pre-August   1,   1969
28             appreciation  amounts  (to  the extent consisting of
29             gain reportable under the provisions of Section 1245
30             or 1250  of  the  Internal  Revenue  Code)  for  all
31             property  in respect of which such gain was reported
32             for the taxable year; plus
33                  (B)  The  lesser  of  (i)  the   sum   of   the
34             pre-August  1,  1969  appreciation  amounts  (to the
 
SB111 Enrolled              -24-               LRB9100932PTpk
 1             extent consisting of capital gain) for all  property
 2             in  respect  of  which  such  gain  was reported for
 3             federal income tax purposes for the taxable year, or
 4             (ii) the net capital  gain  for  the  taxable  year,
 5             reduced  in  either  case by any amount of such gain
 6             included in the amount determined  under  subsection
 7             (a) (2) (F) or (c) (2) (H).
 8        (2)  Pre-August 1, 1969 appreciation amount.
 9                  (A)  If  the  fair  market  value  of  property
10             referred   to   in   paragraph   (1)   was   readily
11             ascertainable  on  August 1, 1969, the pre-August 1,
12             1969 appreciation amount for such  property  is  the
13             lesser  of  (i) the excess of such fair market value
14             over the taxpayer's basis (for determining gain) for
15             such property on that  date  (determined  under  the
16             Internal Revenue Code as in effect on that date), or
17             (ii)  the  total  gain  realized  and reportable for
18             federal income tax purposes in respect of the  sale,
19             exchange or other disposition of such property.
20                  (B)  If  the  fair  market  value  of  property
21             referred   to  in  paragraph  (1)  was  not  readily
22             ascertainable on August 1, 1969, the  pre-August  1,
23             1969  appreciation  amount for such property is that
24             amount which bears the same ratio to the total  gain
25             reported  in  respect  of  the  property for federal
26             income tax purposes for the  taxable  year,  as  the
27             number  of  full calendar months in that part of the
28             taxpayer's holding period for  the  property  ending
29             July  31,  1969 bears to the number of full calendar
30             months in the taxpayer's entire holding  period  for
31             the property.
32                  (C)  The   Department   shall   prescribe  such
33             regulations as may be necessary  to  carry  out  the
34             purposes of this paragraph.
 
SB111 Enrolled              -25-               LRB9100932PTpk
 1        (g)  Double  deductions.   Unless  specifically  provided
 2    otherwise, nothing in this Section shall permit the same item
 3    to be deducted more than once.

 4        (h)  Legislative intention.  Except as expressly provided
 5    by   this   Section   there  shall  be  no  modifications  or
 6    limitations on the amounts of income, gain, loss or deduction
 7    taken into account  in  determining  gross  income,  adjusted
 8    gross  income  or  taxable  income  for  federal  income  tax
 9    purposes for the taxable year, or in the amount of such items
10    entering  into  the computation of base income and net income
11    under this Act for such taxable year, whether in  respect  of
12    property values as of August 1, 1969 or otherwise.
13    (Source:  P.A.  89-89,  eff.  6-30-95;  89-235,  eff. 8-4-95;
14    89-418, eff. 11-15-95; 89-460,  eff.  5-24-96;  89-626,  eff.
15    8-9-96;  90-491,  eff.  1-1-98;  90-717, eff. 8-7-98; 90-770,
16    eff. 8-14-98; revised 9-21-98.)

17        Section 99.  Effective date.  This Act takes effect  upon
18    becoming law.

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