[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
| [ House Amendment 002 ] | [ Senate Amendment 001 ] |
91_HB4431enr
HB4431 Enrolled LRB9110442SMdvB
1 AN ACT concerning taxes, amending named Acts.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 201, 203, 405, 502, 803, and 1501 as
6 follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows, except as adjusted by
18 subsection (d-1):
19 (1) In the case of an individual, trust or estate,
20 for taxable years ending prior to July 1, 1989, an amount
21 equal to 2 1/2% of the taxpayer's net income for the
22 taxable year.
23 (2) In the case of an individual, trust or estate,
24 for taxable years beginning prior to July 1, 1989 and
25 ending after June 30, 1989, an amount equal to the sum of
26 (i) 2 1/2% of the taxpayer's net income for the period
27 prior to July 1, 1989, as calculated under Section 202.3,
28 and (ii) 3% of the taxpayer's net income for the period
29 after June 30, 1989, as calculated under Section 202.3.
30 (3) In the case of an individual, trust or estate,
31 for taxable years beginning after June 30, 1989, an
HB4431 Enrolled -2- LRB9110442SMdvB
1 amount equal to 3% of the taxpayer's net income for the
2 taxable year.
3 (4) (Blank).
4 (5) (Blank).
5 (6) In the case of a corporation, for taxable years
6 ending prior to July 1, 1989, an amount equal to 4% of
7 the taxpayer's net income for the taxable year.
8 (7) In the case of a corporation, for taxable years
9 beginning prior to July 1, 1989 and ending after June 30,
10 1989, an amount equal to the sum of (i) 4% of the
11 taxpayer's net income for the period prior to July 1,
12 1989, as calculated under Section 202.3, and (ii) 4.8% of
13 the taxpayer's net income for the period after June 30,
14 1989, as calculated under Section 202.3.
15 (8) In the case of a corporation, for taxable years
16 beginning after June 30, 1989, an amount equal to 4.8% of
17 the taxpayer's net income for the taxable year.
18 (c) Beginning on July 1, 1979 and thereafter, in
19 addition to such income tax, there is also hereby imposed the
20 Personal Property Tax Replacement Income Tax measured by net
21 income on every corporation (including Subchapter S
22 corporations), partnership and trust, for each taxable year
23 ending after June 30, 1979. Such taxes are imposed on the
24 privilege of earning or receiving income in or as a resident
25 of this State. The Personal Property Tax Replacement Income
26 Tax shall be in addition to the income tax imposed by
27 subsections (a) and (b) of this Section and in addition to
28 all other occupation or privilege taxes imposed by this State
29 or by any municipal corporation or political subdivision
30 thereof.
31 (d) Additional Personal Property Tax Replacement Income
32 Tax Rates. The personal property tax replacement income tax
33 imposed by this subsection and subsection (c) of this Section
34 in the case of a corporation, other than a Subchapter S
HB4431 Enrolled -3- LRB9110442SMdvB
1 corporation and except as adjusted by subsection (d-1), shall
2 be an additional amount equal to 2.85% of such taxpayer's net
3 income for the taxable year, except that beginning on January
4 1, 1981, and thereafter, the rate of 2.85% specified in this
5 subsection shall be reduced to 2.5%, and in the case of a
6 partnership, trust or a Subchapter S corporation shall be an
7 additional amount equal to 1.5% of such taxpayer's net income
8 for the taxable year.
9 (d-1) Rate reduction for certain foreign insurers. In
10 the case of a foreign insurer, as defined by Section 35A-5 of
11 the Illinois Insurance Code, whose state or country of
12 domicile imposes on insurers domiciled in Illinois a
13 retaliatory tax (excluding any insurer whose reinsurance
14 premiums assumed are 50% or more of its total insurance
15 premiums as determined under paragraph (2) of subsection (b)
16 of Section 304, except that for purposes of this
17 determination reinsurance premiums do not include assumed
18 premiums from inter-affiliate pooling arrangements),
19 beginning with taxable years ending on or after December 31,
20 1999 and ending with taxable years ending on or before
21 December 31, 2000, the sum of the rates of tax imposed by
22 subsections (b) and (d) shall be reduced (but not increased)
23 to the rate at which the total amount of tax imposed under
24 this Act, net of all credits allowed under this Act, shall
25 equal (i) the total amount of tax that would be imposed on
26 the foreign insurer's net income allocable to Illinois for
27 the taxable year by such foreign insurer's state or country
28 of domicile if that net income were subject to all income
29 taxes and taxes measured by net income imposed by such
30 foreign insurer's state or country of domicile, net of all
31 credits allowed or (ii) a rate of zero if no such tax is
32 imposed on such income by the foreign insurer's state of
33 domicile.
34 (1) For the purposes of subsection (d-1), in no
HB4431 Enrolled -4- LRB9110442SMdvB
1 event shall the sum of the rates of tax imposed by
2 subsections (b) and (d) be reduced below the rate at
3 which the sum of:
4 (A) the total amount of tax imposed on such
5 foreign insurer under this Act for a taxable year,
6 net of all credits allowed under this Act, plus
7 (B) the privilege tax imposed by Section 409
8 of the Illinois Insurance Code, the fire insurance
9 company tax imposed by Section 12 of the Fire
10 Investigation Act, and the fire department taxes
11 imposed under Section 11-10-1 of the Illinois
12 Municipal Code,
13 equals 1.25% of the net taxable premiums written for the
14 taxable year, as described by subsection (1) of Section
15 409 of the Illinois Insurance Code. This paragraph will
16 in no event increase the rates imposed under subsections
17 (b) and (d).
18 (2) Any reduction in the rates of tax imposed by
19 this subsection shall be applied first against the rates
20 imposed by subsection (b) and only after the tax imposed
21 by subsection (a) net of all credits allowed under this
22 Section other than the credit allowed under subsection
23 (i) has been reduced to zero, against the rates imposed
24 by subsection (d).
25 (3) The provisions of this subsection (d-1) are
26 effective only through December 31, 2000 and cease to be
27 effective on January 1, 2001; but this does not affect
28 any claim or obligation based upon the use or application
29 of this subsection for tax years ending on December 31,
30 2000 or earlier.
31 (e) Investment credit. A taxpayer shall be allowed a
32 credit against the Personal Property Tax Replacement Income
33 Tax for investment in qualified property.
34 (1) A taxpayer shall be allowed a credit equal to
HB4431 Enrolled -5- LRB9110442SMdvB
1 .5% of the basis of qualified property placed in service
2 during the taxable year, provided such property is placed
3 in service on or after July 1, 1984. There shall be
4 allowed an additional credit equal to .5% of the basis of
5 qualified property placed in service during the taxable
6 year, provided such property is placed in service on or
7 after July 1, 1986, and the taxpayer's base employment
8 within Illinois has increased by 1% or more over the
9 preceding year as determined by the taxpayer's employment
10 records filed with the Illinois Department of Employment
11 Security. Taxpayers who are new to Illinois shall be
12 deemed to have met the 1% growth in base employment for
13 the first year in which they file employment records with
14 the Illinois Department of Employment Security. The
15 provisions added to this Section by Public Act 85-1200
16 (and restored by Public Act 87-895) shall be construed as
17 declaratory of existing law and not as a new enactment.
18 If, in any year, the increase in base employment within
19 Illinois over the preceding year is less than 1%, the
20 additional credit shall be limited to that percentage
21 times a fraction, the numerator of which is .5% and the
22 denominator of which is 1%, but shall not exceed .5%.
23 The investment credit shall not be allowed to the extent
24 that it would reduce a taxpayer's liability in any tax
25 year below zero, nor may any credit for qualified
26 property be allowed for any year other than the year in
27 which the property was placed in service in Illinois. For
28 tax years ending on or after December 31, 1987, and on or
29 before December 31, 1988, the credit shall be allowed for
30 the tax year in which the property is placed in service,
31 or, if the amount of the credit exceeds the tax liability
32 for that year, whether it exceeds the original liability
33 or the liability as later amended, such excess may be
34 carried forward and applied to the tax liability of the 5
HB4431 Enrolled -6- LRB9110442SMdvB
1 taxable years following the excess credit years if the
2 taxpayer (i) makes investments which cause the creation
3 of a minimum of 2,000 full-time equivalent jobs in
4 Illinois, (ii) is located in an enterprise zone
5 established pursuant to the Illinois Enterprise Zone Act
6 and (iii) is certified by the Department of Commerce and
7 Community Affairs as complying with the requirements
8 specified in clause (i) and (ii) by July 1, 1986. The
9 Department of Commerce and Community Affairs shall notify
10 the Department of Revenue of all such certifications
11 immediately. For tax years ending after December 31,
12 1988, the credit shall be allowed for the tax year in
13 which the property is placed in service, or, if the
14 amount of the credit exceeds the tax liability for that
15 year, whether it exceeds the original liability or the
16 liability as later amended, such excess may be carried
17 forward and applied to the tax liability of the 5 taxable
18 years following the excess credit years. The credit shall
19 be applied to the earliest year for which there is a
20 liability. If there is credit from more than one tax year
21 that is available to offset a liability, earlier credit
22 shall be applied first.
23 (2) The term "qualified property" means property
24 which:
25 (A) is tangible, whether new or used,
26 including buildings and structural components of
27 buildings and signs that are real property, but not
28 including land or improvements to real property that
29 are not a structural component of a building such as
30 landscaping, sewer lines, local access roads,
31 fencing, parking lots, and other appurtenances;
32 (B) is depreciable pursuant to Section 167 of
33 the Internal Revenue Code, except that "3-year
34 property" as defined in Section 168(c)(2)(A) of that
HB4431 Enrolled -7- LRB9110442SMdvB
1 Code is not eligible for the credit provided by this
2 subsection (e);
3 (C) is acquired by purchase as defined in
4 Section 179(d) of the Internal Revenue Code;
5 (D) is used in Illinois by a taxpayer who is
6 primarily engaged in manufacturing, or in mining
7 coal or fluorite, or in retailing; and
8 (E) has not previously been used in Illinois
9 in such a manner and by such a person as would
10 qualify for the credit provided by this subsection
11 (e) or subsection (f).
12 (3) For purposes of this subsection (e),
13 "manufacturing" means the material staging and production
14 of tangible personal property by procedures commonly
15 regarded as manufacturing, processing, fabrication, or
16 assembling which changes some existing material into new
17 shapes, new qualities, or new combinations. For purposes
18 of this subsection (e) the term "mining" shall have the
19 same meaning as the term "mining" in Section 613(c) of
20 the Internal Revenue Code. For purposes of this
21 subsection (e), the term "retailing" means the sale of
22 tangible personal property or services rendered in
23 conjunction with the sale of tangible consumer goods or
24 commodities.
25 (4) The basis of qualified property shall be the
26 basis used to compute the depreciation deduction for
27 federal income tax purposes.
28 (5) If the basis of the property for federal income
29 tax depreciation purposes is increased after it has been
30 placed in service in Illinois by the taxpayer, the amount
31 of such increase shall be deemed property placed in
32 service on the date of such increase in basis.
33 (6) The term "placed in service" shall have the
34 same meaning as under Section 46 of the Internal Revenue
HB4431 Enrolled -8- LRB9110442SMdvB
1 Code.
2 (7) If during any taxable year, any property ceases
3 to be qualified property in the hands of the taxpayer
4 within 48 months after being placed in service, or the
5 situs of any qualified property is moved outside Illinois
6 within 48 months after being placed in service, the
7 Personal Property Tax Replacement Income Tax for such
8 taxable year shall be increased. Such increase shall be
9 determined by (i) recomputing the investment credit which
10 would have been allowed for the year in which credit for
11 such property was originally allowed by eliminating such
12 property from such computation and, (ii) subtracting such
13 recomputed credit from the amount of credit previously
14 allowed. For the purposes of this paragraph (7), a
15 reduction of the basis of qualified property resulting
16 from a redetermination of the purchase price shall be
17 deemed a disposition of qualified property to the extent
18 of such reduction.
19 (8) Unless the investment credit is extended by
20 law, the basis of qualified property shall not include
21 costs incurred after December 31, 2003, except for costs
22 incurred pursuant to a binding contract entered into on
23 or before December 31, 2003.
24 (9) Each taxable year ending before December 31,
25 2000, a partnership may elect to pass through to its
26 partners the credits to which the partnership is entitled
27 under this subsection (e) for the taxable year. A
28 partner may use the credit allocated to him or her under
29 this paragraph only against the tax imposed in
30 subsections (c) and (d) of this Section. If the
31 partnership makes that election, those credits shall be
32 allocated among the partners in the partnership in
33 accordance with the rules set forth in Section 704(b) of
34 the Internal Revenue Code, and the rules promulgated
HB4431 Enrolled -9- LRB9110442SMdvB
1 under that Section, and the allocated amount of the
2 credits shall be allowed to the partners for that taxable
3 year. The partnership shall make this election on its
4 Personal Property Tax Replacement Income Tax return for
5 that taxable year. The election to pass through the
6 credits shall be irrevocable.
7 For taxable years ending on or after December 31,
8 2000, a partner that qualifies its partnership for a
9 subtraction under subparagraph (I) of paragraph (2) of
10 subsection (d) of Section 203 or a shareholder that
11 qualifies a Subchapter S corporation for a subtraction
12 under subparagraph (S) of paragraph (2) of subsection (b)
13 of Section 203 shall be allowed a credit under this
14 subsection (e) equal to its share of the credit earned
15 under this subsection (e) during the taxable year by the
16 partnership or Subchapter S corporation, determined in
17 accordance with the determination of income and
18 distributive share of income under Sections 702 and 704
19 and Subchapter S of the Internal Revenue Code. This
20 paragraph is exempt from the provisions of Section 250.
21 (f) Investment credit; Enterprise Zone.
22 (1) A taxpayer shall be allowed a credit against
23 the tax imposed by subsections (a) and (b) of this
24 Section for investment in qualified property which is
25 placed in service in an Enterprise Zone created pursuant
26 to the Illinois Enterprise Zone Act. For partners,
27 shareholders of Subchapter S corporations, and owners of
28 limited liability companies, if the liability company is
29 treated as a partnership for purposes of federal and
30 State income taxation, there shall be allowed a credit
31 under this subsection (f) to be determined in accordance
32 with the determination of income and distributive share
33 of income under Sections 702 and 704 and Subchapter S of
34 the Internal Revenue Code. The credit shall be .5% of the
HB4431 Enrolled -10- LRB9110442SMdvB
1 basis for such property. The credit shall be available
2 only in the taxable year in which the property is placed
3 in service in the Enterprise Zone and shall not be
4 allowed to the extent that it would reduce a taxpayer's
5 liability for the tax imposed by subsections (a) and (b)
6 of this Section to below zero. For tax years ending on or
7 after December 31, 1985, the credit shall be allowed for
8 the tax year in which the property is placed in service,
9 or, if the amount of the credit exceeds the tax liability
10 for that year, whether it exceeds the original liability
11 or the liability as later amended, such excess may be
12 carried forward and applied to the tax liability of the 5
13 taxable years following the excess credit year. The
14 credit shall be applied to the earliest year for which
15 there is a liability. If there is credit from more than
16 one tax year that is available to offset a liability, the
17 credit accruing first in time shall be applied first.
18 (2) The term qualified property means property
19 which:
20 (A) is tangible, whether new or used,
21 including buildings and structural components of
22 buildings;
23 (B) is depreciable pursuant to Section 167 of
24 the Internal Revenue Code, except that "3-year
25 property" as defined in Section 168(c)(2)(A) of that
26 Code is not eligible for the credit provided by this
27 subsection (f);
28 (C) is acquired by purchase as defined in
29 Section 179(d) of the Internal Revenue Code;
30 (D) is used in the Enterprise Zone by the
31 taxpayer; and
32 (E) has not been previously used in Illinois
33 in such a manner and by such a person as would
34 qualify for the credit provided by this subsection
HB4431 Enrolled -11- LRB9110442SMdvB
1 (f) or subsection (e).
2 (3) The basis of qualified property shall be the
3 basis used to compute the depreciation deduction for
4 federal income tax purposes.
5 (4) If the basis of the property for federal income
6 tax depreciation purposes is increased after it has been
7 placed in service in the Enterprise Zone by the taxpayer,
8 the amount of such increase shall be deemed property
9 placed in service on the date of such increase in basis.
10 (5) The term "placed in service" shall have the
11 same meaning as under Section 46 of the Internal Revenue
12 Code.
13 (6) If during any taxable year, any property ceases
14 to be qualified property in the hands of the taxpayer
15 within 48 months after being placed in service, or the
16 situs of any qualified property is moved outside the
17 Enterprise Zone within 48 months after being placed in
18 service, the tax imposed under subsections (a) and (b) of
19 this Section for such taxable year shall be increased.
20 Such increase shall be determined by (i) recomputing the
21 investment credit which would have been allowed for the
22 year in which credit for such property was originally
23 allowed by eliminating such property from such
24 computation, and (ii) subtracting such recomputed credit
25 from the amount of credit previously allowed. For the
26 purposes of this paragraph (6), a reduction of the basis
27 of qualified property resulting from a redetermination of
28 the purchase price shall be deemed a disposition of
29 qualified property to the extent of such reduction.
30 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
31 Zone or Sub-Zone.
32 (1) A taxpayer conducting a trade or business in an
33 enterprise zone or a High Impact Business designated by
34 the Department of Commerce and Community Affairs
HB4431 Enrolled -12- LRB9110442SMdvB
1 conducting a trade or business in a federally designated
2 Foreign Trade Zone or Sub-Zone shall be allowed a credit
3 against the tax imposed by subsections (a) and (b) of
4 this Section in the amount of $500 per eligible employee
5 hired to work in the zone during the taxable year.
6 (2) To qualify for the credit:
7 (A) the taxpayer must hire 5 or more eligible
8 employees to work in an enterprise zone or federally
9 designated Foreign Trade Zone or Sub-Zone during the
10 taxable year;
11 (B) the taxpayer's total employment within the
12 enterprise zone or federally designated Foreign
13 Trade Zone or Sub-Zone must increase by 5 or more
14 full-time employees beyond the total employed in
15 that zone at the end of the previous tax year for
16 which a jobs tax credit under this Section was
17 taken, or beyond the total employed by the taxpayer
18 as of December 31, 1985, whichever is later; and
19 (C) the eligible employees must be employed
20 180 consecutive days in order to be deemed hired for
21 purposes of this subsection.
22 (3) An "eligible employee" means an employee who
23 is:
24 (A) Certified by the Department of Commerce
25 and Community Affairs as "eligible for services"
26 pursuant to regulations promulgated in accordance
27 with Title II of the Job Training Partnership Act,
28 Training Services for the Disadvantaged or Title III
29 of the Job Training Partnership Act, Employment and
30 Training Assistance for Dislocated Workers Program.
31 (B) Hired after the enterprise zone or
32 federally designated Foreign Trade Zone or Sub-Zone
33 was designated or the trade or business was located
34 in that zone, whichever is later.
HB4431 Enrolled -13- LRB9110442SMdvB
1 (C) Employed in the enterprise zone or Foreign
2 Trade Zone or Sub-Zone. An employee is employed in
3 an enterprise zone or federally designated Foreign
4 Trade Zone or Sub-Zone if his services are rendered
5 there or it is the base of operations for the
6 services performed.
7 (D) A full-time employee working 30 or more
8 hours per week.
9 (4) For tax years ending on or after December 31,
10 1985 and prior to December 31, 1988, the credit shall be
11 allowed for the tax year in which the eligible employees
12 are hired. For tax years ending on or after December 31,
13 1988, the credit shall be allowed for the tax year
14 immediately following the tax year in which the eligible
15 employees are hired. If the amount of the credit exceeds
16 the tax liability for that year, whether it exceeds the
17 original liability or the liability as later amended,
18 such excess may be carried forward and applied to the tax
19 liability of the 5 taxable years following the excess
20 credit year. The credit shall be applied to the earliest
21 year for which there is a liability. If there is credit
22 from more than one tax year that is available to offset a
23 liability, earlier credit shall be applied first.
24 (5) The Department of Revenue shall promulgate such
25 rules and regulations as may be deemed necessary to carry
26 out the purposes of this subsection (g).
27 (6) The credit shall be available for eligible
28 employees hired on or after January 1, 1986.
29 (h) Investment credit; High Impact Business.
30 (1) Subject to subsection (b) of Section 5.5 of the
31 Illinois Enterprise Zone Act, a taxpayer shall be allowed
32 a credit against the tax imposed by subsections (a) and
33 (b) of this Section for investment in qualified property
34 which is placed in service by a Department of Commerce
HB4431 Enrolled -14- LRB9110442SMdvB
1 and Community Affairs designated High Impact Business.
2 The credit shall be .5% of the basis for such property.
3 The credit shall not be available until the minimum
4 investments in qualified property set forth in Section
5 5.5 of the Illinois Enterprise Zone Act have been
6 satisfied and shall not be allowed to the extent that it
7 would reduce a taxpayer's liability for the tax imposed
8 by subsections (a) and (b) of this Section to below zero.
9 The credit applicable to such minimum investments shall
10 be taken in the taxable year in which such minimum
11 investments have been completed. The credit for
12 additional investments beyond the minimum investment by a
13 designated high impact business shall be available only
14 in the taxable year in which the property is placed in
15 service and shall not be allowed to the extent that it
16 would reduce a taxpayer's liability for the tax imposed
17 by subsections (a) and (b) of this Section to below zero.
18 For tax years ending on or after December 31, 1987, the
19 credit shall be allowed for the tax year in which the
20 property is placed in service, or, if the amount of the
21 credit exceeds the tax liability for that year, whether
22 it exceeds the original liability or the liability as
23 later amended, such excess may be carried forward and
24 applied to the tax liability of the 5 taxable years
25 following the excess credit year. The credit shall be
26 applied to the earliest year for which there is a
27 liability. If there is credit from more than one tax
28 year that is available to offset a liability, the credit
29 accruing first in time shall be applied first.
30 Changes made in this subdivision (h)(1) by Public
31 Act 88-670 restore changes made by Public Act 85-1182 and
32 reflect existing law.
33 (2) The term qualified property means property
34 which:
HB4431 Enrolled -15- LRB9110442SMdvB
1 (A) is tangible, whether new or used,
2 including buildings and structural components of
3 buildings;
4 (B) is depreciable pursuant to Section 167 of
5 the Internal Revenue Code, except that "3-year
6 property" as defined in Section 168(c)(2)(A) of that
7 Code is not eligible for the credit provided by this
8 subsection (h);
9 (C) is acquired by purchase as defined in
10 Section 179(d) of the Internal Revenue Code; and
11 (D) is not eligible for the Enterprise Zone
12 Investment Credit provided by subsection (f) of this
13 Section.
14 (3) The basis of qualified property shall be the
15 basis used to compute the depreciation deduction for
16 federal income tax purposes.
17 (4) If the basis of the property for federal income
18 tax depreciation purposes is increased after it has been
19 placed in service in a federally designated Foreign Trade
20 Zone or Sub-Zone located in Illinois by the taxpayer, the
21 amount of such increase shall be deemed property placed
22 in service on the date of such increase in basis.
23 (5) The term "placed in service" shall have the
24 same meaning as under Section 46 of the Internal Revenue
25 Code.
26 (6) If during any taxable year ending on or before
27 December 31, 1996, any property ceases to be qualified
28 property in the hands of the taxpayer within 48 months
29 after being placed in service, or the situs of any
30 qualified property is moved outside Illinois within 48
31 months after being placed in service, the tax imposed
32 under subsections (a) and (b) of this Section for such
33 taxable year shall be increased. Such increase shall be
34 determined by (i) recomputing the investment credit which
HB4431 Enrolled -16- LRB9110442SMdvB
1 would have been allowed for the year in which credit for
2 such property was originally allowed by eliminating such
3 property from such computation, and (ii) subtracting such
4 recomputed credit from the amount of credit previously
5 allowed. For the purposes of this paragraph (6), a
6 reduction of the basis of qualified property resulting
7 from a redetermination of the purchase price shall be
8 deemed a disposition of qualified property to the extent
9 of such reduction.
10 (7) Beginning with tax years ending after December
11 31, 1996, if a taxpayer qualifies for the credit under
12 this subsection (h) and thereby is granted a tax
13 abatement and the taxpayer relocates its entire facility
14 in violation of the explicit terms and length of the
15 contract under Section 18-183 of the Property Tax Code,
16 the tax imposed under subsections (a) and (b) of this
17 Section shall be increased for the taxable year in which
18 the taxpayer relocated its facility by an amount equal to
19 the amount of credit received by the taxpayer under this
20 subsection (h).
21 (i) A credit shall be allowed against the tax imposed by
22 subsections (a) and (b) of this Section for the tax imposed
23 by subsections (c) and (d) of this Section. This credit
24 shall be computed by multiplying the tax imposed by
25 subsections (c) and (d) of this Section by a fraction, the
26 numerator of which is base income allocable to Illinois and
27 the denominator of which is Illinois base income, and further
28 multiplying the product by the tax rate imposed by
29 subsections (a) and (b) of this Section.
30 Any credit earned on or after December 31, 1986 under
31 this subsection which is unused in the year the credit is
32 computed because it exceeds the tax liability imposed by
33 subsections (a) and (b) for that year (whether it exceeds the
34 original liability or the liability as later amended) may be
HB4431 Enrolled -17- LRB9110442SMdvB
1 carried forward and applied to the tax liability imposed by
2 subsections (a) and (b) of the 5 taxable years following the
3 excess credit year. This credit shall be applied first to
4 the earliest year for which there is a liability. If there
5 is a credit under this subsection from more than one tax year
6 that is available to offset a liability the earliest credit
7 arising under this subsection shall be applied first.
8 If, during any taxable year ending on or after December
9 31, 1986, the tax imposed by subsections (c) and (d) of this
10 Section for which a taxpayer has claimed a credit under this
11 subsection (i) is reduced, the amount of credit for such tax
12 shall also be reduced. Such reduction shall be determined by
13 recomputing the credit to take into account the reduced tax
14 imposed by subsection (c) and (d). If any portion of the
15 reduced amount of credit has been carried to a different
16 taxable year, an amended return shall be filed for such
17 taxable year to reduce the amount of credit claimed.
18 (j) Training expense credit. Beginning with tax years
19 ending on or after December 31, 1986, a taxpayer shall be
20 allowed a credit against the tax imposed by subsection (a)
21 and (b) under this Section for all amounts paid or accrued,
22 on behalf of all persons employed by the taxpayer in Illinois
23 or Illinois residents employed outside of Illinois by a
24 taxpayer, for educational or vocational training in
25 semi-technical or technical fields or semi-skilled or skilled
26 fields, which were deducted from gross income in the
27 computation of taxable income. The credit against the tax
28 imposed by subsections (a) and (b) shall be 1.6% of such
29 training expenses. For partners, shareholders of subchapter
30 S corporations, and owners of limited liability companies, if
31 the liability company is treated as a partnership for
32 purposes of federal and State income taxation, there shall be
33 allowed a credit under this subsection (j) to be determined
34 in accordance with the determination of income and
HB4431 Enrolled -18- LRB9110442SMdvB
1 distributive share of income under Sections 702 and 704 and
2 subchapter S of the Internal Revenue Code.
3 Any credit allowed under this subsection which is unused
4 in the year the credit is earned may be carried forward to
5 each of the 5 taxable years following the year for which the
6 credit is first computed until it is used. This credit shall
7 be applied first to the earliest year for which there is a
8 liability. If there is a credit under this subsection from
9 more than one tax year that is available to offset a
10 liability the earliest credit arising under this subsection
11 shall be applied first.
12 (k) Research and development credit.
13 Beginning with tax years ending after July 1, 1990, a
14 taxpayer shall be allowed a credit against the tax imposed by
15 subsections (a) and (b) of this Section for increasing
16 research activities in this State. The credit allowed
17 against the tax imposed by subsections (a) and (b) shall be
18 equal to 6 1/2% of the qualifying expenditures for increasing
19 research activities in this State. For partners, shareholders
20 of subchapter S corporations, and owners of limited liability
21 companies, if the liability company is treated as a
22 partnership for purposes of federal and State income
23 taxation, there shall be allowed a credit under this
24 subsection to be determined in accordance with the
25 determination of income and distributive share of income
26 under Sections 702 and 704 and subchapter S of the Internal
27 Revenue Code.
28 For purposes of this subsection, "qualifying
29 expenditures" means the qualifying expenditures as defined
30 for the federal credit for increasing research activities
31 which would be allowable under Section 41 of the Internal
32 Revenue Code and which are conducted in this State,
33 "qualifying expenditures for increasing research activities
34 in this State" means the excess of qualifying expenditures
HB4431 Enrolled -19- LRB9110442SMdvB
1 for the taxable year in which incurred over qualifying
2 expenditures for the base period, "qualifying expenditures
3 for the base period" means the average of the qualifying
4 expenditures for each year in the base period, and "base
5 period" means the 3 taxable years immediately preceding the
6 taxable year for which the determination is being made.
7 Any credit in excess of the tax liability for the taxable
8 year may be carried forward. A taxpayer may elect to have the
9 unused credit shown on its final completed return carried
10 over as a credit against the tax liability for the following
11 5 taxable years or until it has been fully used, whichever
12 occurs first.
13 If an unused credit is carried forward to a given year
14 from 2 or more earlier years, that credit arising in the
15 earliest year will be applied first against the tax liability
16 for the given year. If a tax liability for the given year
17 still remains, the credit from the next earliest year will
18 then be applied, and so on, until all credits have been used
19 or no tax liability for the given year remains. Any
20 remaining unused credit or credits then will be carried
21 forward to the next following year in which a tax liability
22 is incurred, except that no credit can be carried forward to
23 a year which is more than 5 years after the year in which the
24 expense for which the credit is given was incurred.
25 Unless extended by law, the credit shall not include
26 costs incurred after December 31, 2004, except for costs
27 incurred pursuant to a binding contract entered into on or
28 before December 31, 2004.
29 No inference shall be drawn from this amendatory Act of
30 the 91st General Assembly in construing this Section for
31 taxable years beginning before January 1, 1999.
32 (l) Environmental Remediation Tax Credit.
33 (i) For tax years ending after December 31, 1997
34 and on or before December 31, 2001, a taxpayer shall be
HB4431 Enrolled -20- LRB9110442SMdvB
1 allowed a credit against the tax imposed by subsections
2 (a) and (b) of this Section for certain amounts paid for
3 unreimbursed eligible remediation costs, as specified in
4 this subsection. For purposes of this Section,
5 "unreimbursed eligible remediation costs" means costs
6 approved by the Illinois Environmental Protection Agency
7 ("Agency") under Section 58.14 of the Environmental
8 Protection Act that were paid in performing environmental
9 remediation at a site for which a No Further Remediation
10 Letter was issued by the Agency and recorded under
11 Section 58.10 of the Environmental Protection Act. The
12 credit must be claimed for the taxable year in which
13 Agency approval of the eligible remediation costs is
14 granted. The credit is not available to any taxpayer if
15 the taxpayer or any related party caused or contributed
16 to, in any material respect, a release of regulated
17 substances on, in, or under the site that was identified
18 and addressed by the remedial action pursuant to the Site
19 Remediation Program of the Environmental Protection Act.
20 After the Pollution Control Board rules are adopted
21 pursuant to the Illinois Administrative Procedure Act for
22 the administration and enforcement of Section 58.9 of the
23 Environmental Protection Act, determinations as to credit
24 availability for purposes of this Section shall be made
25 consistent with those rules. For purposes of this
26 Section, "taxpayer" includes a person whose tax
27 attributes the taxpayer has succeeded to under Section
28 381 of the Internal Revenue Code and "related party"
29 includes the persons disallowed a deduction for losses by
30 paragraphs (b), (c), and (f)(1) of Section 267 of the
31 Internal Revenue Code by virtue of being a related
32 taxpayer, as well as any of its partners. The credit
33 allowed against the tax imposed by subsections (a) and
34 (b) shall be equal to 25% of the unreimbursed eligible
HB4431 Enrolled -21- LRB9110442SMdvB
1 remediation costs in excess of $100,000 per site, except
2 that the $100,000 threshold shall not apply to any site
3 contained in an enterprise zone as determined by the
4 Department of Commerce and Community Affairs. The total
5 credit allowed shall not exceed $40,000 per year with a
6 maximum total of $150,000 per site. For partners and
7 shareholders of subchapter S corporations, there shall be
8 allowed a credit under this subsection to be determined
9 in accordance with the determination of income and
10 distributive share of income under Sections 702 and 704
11 of subchapter S of the Internal Revenue Code.
12 (ii) A credit allowed under this subsection that is
13 unused in the year the credit is earned may be carried
14 forward to each of the 5 taxable years following the year
15 for which the credit is first earned until it is used.
16 The term "unused credit" does not include any amounts of
17 unreimbursed eligible remediation costs in excess of the
18 maximum credit per site authorized under paragraph (i).
19 This credit shall be applied first to the earliest year
20 for which there is a liability. If there is a credit
21 under this subsection from more than one tax year that is
22 available to offset a liability, the earliest credit
23 arising under this subsection shall be applied first. A
24 credit allowed under this subsection may be sold to a
25 buyer as part of a sale of all or part of the remediation
26 site for which the credit was granted. The purchaser of
27 a remediation site and the tax credit shall succeed to
28 the unused credit and remaining carry-forward period of
29 the seller. To perfect the transfer, the assignor shall
30 record the transfer in the chain of title for the site
31 and provide written notice to the Director of the
32 Illinois Department of Revenue of the assignor's intent
33 to sell the remediation site and the amount of the tax
34 credit to be transferred as a portion of the sale. In no
HB4431 Enrolled -22- LRB9110442SMdvB
1 event may a credit be transferred to any taxpayer if the
2 taxpayer or a related party would not be eligible under
3 the provisions of subsection (i).
4 (iii) For purposes of this Section, the term "site"
5 shall have the same meaning as under Section 58.2 of the
6 Environmental Protection Act.
7 (m) Education expense credit.
8 Beginning with tax years ending after December 31, 1999,
9 a taxpayer who is the custodian of one or more qualifying
10 pupils shall be allowed a credit against the tax imposed by
11 subsections (a) and (b) of this Section for qualified
12 education expenses incurred on behalf of the qualifying
13 pupils. The credit shall be equal to 25% of qualified
14 education expenses, but in no event may the total credit
15 under this Section claimed by a family that is the custodian
16 of qualifying pupils exceed $500. In no event shall a credit
17 under this subsection reduce the taxpayer's liability under
18 this Act to less than zero. This subsection is exempt from
19 the provisions of Section 250 of this Act.
20 For purposes of this subsection;
21 "Qualifying pupils" means individuals who (i) are
22 residents of the State of Illinois, (ii) are under the age of
23 21 at the close of the school year for which a credit is
24 sought, and (iii) during the school year for which a credit
25 is sought were full-time pupils enrolled in a kindergarten
26 through twelfth grade education program at any school, as
27 defined in this subsection.
28 "Qualified education expense" means the amount incurred
29 on behalf of a qualifying pupil in excess of $250 for
30 tuition, book fees, and lab fees at the school in which the
31 pupil is enrolled during the regular school year.
32 "School" means any public or nonpublic elementary or
33 secondary school in Illinois that is in compliance with Title
34 VI of the Civil Rights Act of 1964 and attendance at which
HB4431 Enrolled -23- LRB9110442SMdvB
1 satisfies the requirements of Section 26-1 of the School
2 Code, except that nothing shall be construed to require a
3 child to attend any particular public or nonpublic school to
4 qualify for the credit under this Section.
5 "Custodian" means, with respect to qualifying pupils, an
6 Illinois resident who is a parent, the parents, a legal
7 guardian, or the legal guardians of the qualifying pupils.
8 (Source: P.A. 90-123, eff. 7-21-97; 90-458, eff. 8-17-97;
9 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717, eff.
10 8-7-98; 90-792, eff. 1-1-99; 91-9, eff. 1-1-00; 91-357, eff.
11 7-29-99; 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; revised
12 8-27-99.)
13 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
14 Sec. 203. Base income defined.
15 (a) Individuals.
16 (1) In general. In the case of an individual, base
17 income means an amount equal to the taxpayer's adjusted
18 gross income for the taxable year as modified by
19 paragraph (2).
20 (2) Modifications. The adjusted gross income
21 referred to in paragraph (1) shall be modified by adding
22 thereto the sum of the following amounts:
23 (A) An amount equal to all amounts paid or
24 accrued to the taxpayer as interest or dividends
25 during the taxable year to the extent excluded from
26 gross income in the computation of adjusted gross
27 income, except stock dividends of qualified public
28 utilities described in Section 305(e) of the
29 Internal Revenue Code;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income in the computation of adjusted gross
33 income for the taxable year;
HB4431 Enrolled -24- LRB9110442SMdvB
1 (C) An amount equal to the amount received
2 during the taxable year as a recovery or refund of
3 real property taxes paid with respect to the
4 taxpayer's principal residence under the Revenue Act
5 of 1939 and for which a deduction was previously
6 taken under subparagraph (L) of this paragraph (2)
7 prior to July 1, 1991, the retrospective application
8 date of Article 4 of Public Act 87-17. In the case
9 of multi-unit or multi-use structures and farm
10 dwellings, the taxes on the taxpayer's principal
11 residence shall be that portion of the total taxes
12 for the entire property which is attributable to
13 such principal residence;
14 (D) An amount equal to the amount of the
15 capital gain deduction allowable under the Internal
16 Revenue Code, to the extent deducted from gross
17 income in the computation of adjusted gross income;
18 (D-5) An amount, to the extent not included in
19 adjusted gross income, equal to the amount of money
20 withdrawn by the taxpayer in the taxable year from a
21 medical care savings account and the interest earned
22 on the account in the taxable year of a withdrawal
23 pursuant to subsection (b) of Section 20 of the
24 Medical Care Savings Account Act; and
25 (D-10) For taxable years ending after December
26 31, 1997, an amount equal to any eligible
27 remediation costs that the individual deducted in
28 computing adjusted gross income and for which the
29 individual claims a credit under subsection (l) of
30 Section 201;
31 and by deducting from the total so obtained the sum of
32 the following amounts:
33 (E) Any amount included in such total in
34 respect of any compensation (including but not
HB4431 Enrolled -25- LRB9110442SMdvB
1 limited to any compensation paid or accrued to a
2 serviceman while a prisoner of war or missing in
3 action) paid to a resident by reason of being on
4 active duty in the Armed Forces of the United States
5 and in respect of any compensation paid or accrued
6 to a resident who as a governmental employee was a
7 prisoner of war or missing in action, and in respect
8 of any compensation paid to a resident in 1971 or
9 thereafter for annual training performed pursuant to
10 Sections 502 and 503, Title 32, United States Code
11 as a member of the Illinois National Guard;
12 (F) An amount equal to all amounts included in
13 such total pursuant to the provisions of Sections
14 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
15 408 of the Internal Revenue Code, or included in
16 such total as distributions under the provisions of
17 any retirement or disability plan for employees of
18 any governmental agency or unit, or retirement
19 payments to retired partners, which payments are
20 excluded in computing net earnings from self
21 employment by Section 1402 of the Internal Revenue
22 Code and regulations adopted pursuant thereto;
23 (G) The valuation limitation amount;
24 (H) An amount equal to the amount of any tax
25 imposed by this Act which was refunded to the
26 taxpayer and included in such total for the taxable
27 year;
28 (I) An amount equal to all amounts included in
29 such total pursuant to the provisions of Section 111
30 of the Internal Revenue Code as a recovery of items
31 previously deducted from adjusted gross income in
32 the computation of taxable income;
33 (J) An amount equal to those dividends
34 included in such total which were paid by a
HB4431 Enrolled -26- LRB9110442SMdvB
1 corporation which conducts business operations in an
2 Enterprise Zone or zones created under the Illinois
3 Enterprise Zone Act, and conducts substantially all
4 of its operations in an Enterprise Zone or zones;
5 (K) An amount equal to those dividends
6 included in such total that were paid by a
7 corporation that conducts business operations in a
8 federally designated Foreign Trade Zone or Sub-Zone
9 and that is designated a High Impact Business
10 located in Illinois; provided that dividends
11 eligible for the deduction provided in subparagraph
12 (J) of paragraph (2) of this subsection shall not be
13 eligible for the deduction provided under this
14 subparagraph (K);
15 (L) For taxable years ending after December
16 31, 1983, an amount equal to all social security
17 benefits and railroad retirement benefits included
18 in such total pursuant to Sections 72(r) and 86 of
19 the Internal Revenue Code;
20 (M) With the exception of any amounts
21 subtracted under subparagraph (N), an amount equal
22 to the sum of all amounts disallowed as deductions
23 by (i) Sections 171(a) (2), and 265(2) of the
24 Internal Revenue Code of 1954, as now or hereafter
25 amended, and all amounts of expenses allocable to
26 interest and disallowed as deductions by Section
27 265(1) of the Internal Revenue Code of 1954, as now
28 or hereafter amended; and (ii) for taxable years
29 ending on or after August 13, 1999 the effective
30 date of this amendatory Act of the 91st General
31 Assembly, Sections 171(a)(2), 265, 280C, and
32 832(b)(5)(B)(i) of the Internal Revenue Code; the
33 provisions of this subparagraph are exempt from the
34 provisions of Section 250;
HB4431 Enrolled -27- LRB9110442SMdvB
1 (N) An amount equal to all amounts included in
2 such total which are exempt from taxation by this
3 State either by reason of its statutes or
4 Constitution or by reason of the Constitution,
5 treaties or statutes of the United States; provided
6 that, in the case of any statute of this State that
7 exempts income derived from bonds or other
8 obligations from the tax imposed under this Act, the
9 amount exempted shall be the interest net of bond
10 premium amortization;
11 (O) An amount equal to any contribution made
12 to a job training project established pursuant to
13 the Tax Increment Allocation Redevelopment Act;
14 (P) An amount equal to the amount of the
15 deduction used to compute the federal income tax
16 credit for restoration of substantial amounts held
17 under claim of right for the taxable year pursuant
18 to Section 1341 of the Internal Revenue Code of
19 1986;
20 (Q) An amount equal to any amounts included in
21 such total, received by the taxpayer as an
22 acceleration in the payment of life, endowment or
23 annuity benefits in advance of the time they would
24 otherwise be payable as an indemnity for a terminal
25 illness;
26 (R) An amount equal to the amount of any
27 federal or State bonus paid to veterans of the
28 Persian Gulf War;
29 (S) An amount, to the extent included in
30 adjusted gross income, equal to the amount of a
31 contribution made in the taxable year on behalf of
32 the taxpayer to a medical care savings account
33 established under the Medical Care Savings Account
34 Act to the extent the contribution is accepted by
HB4431 Enrolled -28- LRB9110442SMdvB
1 the account administrator as provided in that Act;
2 (T) An amount, to the extent included in
3 adjusted gross income, equal to the amount of
4 interest earned in the taxable year on a medical
5 care savings account established under the Medical
6 Care Savings Account Act on behalf of the taxpayer,
7 other than interest added pursuant to item (D-5) of
8 this paragraph (2);
9 (U) For one taxable year beginning on or after
10 January 1, 1994, an amount equal to the total amount
11 of tax imposed and paid under subsections (a) and
12 (b) of Section 201 of this Act on grant amounts
13 received by the taxpayer under the Nursing Home
14 Grant Assistance Act during the taxpayer's taxable
15 years 1992 and 1993;
16 (V) Beginning with tax years ending on or
17 after December 31, 1995 and ending with tax years
18 ending on or before December 31, 2004, an amount
19 equal to the amount paid by a taxpayer who is a
20 self-employed taxpayer, a partner of a partnership,
21 or a shareholder in a Subchapter S corporation for
22 health insurance or long-term care insurance for
23 that taxpayer or that taxpayer's spouse or
24 dependents, to the extent that the amount paid for
25 that health insurance or long-term care insurance
26 may be deducted under Section 213 of the Internal
27 Revenue Code of 1986, has not been deducted on the
28 federal income tax return of the taxpayer, and does
29 not exceed the taxable income attributable to that
30 taxpayer's income, self-employment income, or
31 Subchapter S corporation income; except that no
32 deduction shall be allowed under this item (V) if
33 the taxpayer is eligible to participate in any
34 health insurance or long-term care insurance plan of
HB4431 Enrolled -29- LRB9110442SMdvB
1 an employer of the taxpayer or the taxpayer's
2 spouse. The amount of the health insurance and
3 long-term care insurance subtracted under this item
4 (V) shall be determined by multiplying total health
5 insurance and long-term care insurance premiums paid
6 by the taxpayer times a number that represents the
7 fractional percentage of eligible medical expenses
8 under Section 213 of the Internal Revenue Code of
9 1986 not actually deducted on the taxpayer's federal
10 income tax return;
11 (W) For taxable years beginning on or after
12 January 1, 1998, all amounts included in the
13 taxpayer's federal gross income in the taxable year
14 from amounts converted from a regular IRA to a Roth
15 IRA. This paragraph is exempt from the provisions of
16 Section 250; and
17 (X) For taxable year 1999 and thereafter, an
18 amount equal to the amount of any (i) distributions,
19 to the extent includible in gross income for federal
20 income tax purposes, made to the taxpayer because of
21 his or her status as a victim of persecution for
22 racial or religious reasons by Nazi Germany or any
23 other Axis regime or as an heir of the victim and
24 (ii) items of income, to the extent includible in
25 gross income for federal income tax purposes,
26 attributable to, derived from or in any way related
27 to assets stolen from, hidden from, or otherwise
28 lost to a victim of persecution for racial or
29 religious reasons by Nazi Germany or any other Axis
30 regime immediately prior to, during, and immediately
31 after World War II, including, but not limited to,
32 interest on the proceeds receivable as insurance
33 under policies issued to a victim of persecution for
34 racial or religious reasons by Nazi Germany or any
HB4431 Enrolled -30- LRB9110442SMdvB
1 other Axis regime by European insurance companies
2 immediately prior to and during World War II;
3 provided, however, this subtraction from federal
4 adjusted gross income does not apply to assets
5 acquired with such assets or with the proceeds from
6 the sale of such assets; provided, further, this
7 paragraph shall only apply to a taxpayer who was the
8 first recipient of such assets after their recovery
9 and who is a victim of persecution for racial or
10 religious reasons by Nazi Germany or any other Axis
11 regime or as an heir of the victim. The amount of
12 and the eligibility for any public assistance,
13 benefit, or similar entitlement is not affected by
14 the inclusion of items (i) and (ii) of this
15 paragraph in gross income for federal income tax
16 purposes. This paragraph is exempt from the
17 provisions of Section 250.
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;
HB4431 Enrolled -31- LRB9110442SMdvB
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
HB4431 Enrolled -32- LRB9110442SMdvB
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;
HB4431 Enrolled -33- LRB9110442SMdvB
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,
14 291(a)(3), and 832(b)(5)(B)(i) of the Internal
15 Revenue Code; the provisions of this subparagraph
16 are exempt from the 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
HB4431 Enrolled -34- LRB9110442SMdvB
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
HB4431 Enrolled -35- LRB9110442SMdvB
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
HB4431 Enrolled -36- LRB9110442SMdvB
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
HB4431 Enrolled -37- LRB9110442SMdvB
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; and
15 (S) For taxable years ending on or after
16 December 31, 1997, in the case of a Subchapter S
17 corporation, an amount equal to all amounts of
18 income allocable to a shareholder subject to the
19 Personal Property Tax Replacement Income Tax imposed
20 by subsections (c) and (d) of Section 201 of this
21 Act, including amounts allocable to organizations
22 exempt from federal income tax by reason of Section
23 501(a) of the Internal Revenue Code. This
24 subparagraph (S) is exempt from the provisions of
25 Section 250.
26 (3) Special rule. For purposes of paragraph (2)
27 (A), "gross income" in the case of a life insurance
28 company, for tax years ending on and after December 31,
29 1994, shall mean the gross investment income for the
30 taxable year.
31 (c) Trusts and estates.
32 (1) In general. In the case of a trust or estate,
33 base income means an amount equal to the taxpayer's
34 taxable income for the taxable year as modified by
HB4431 Enrolled -38- LRB9110442SMdvB
1 paragraph (2).
2 (2) Modifications. Subject to the provisions of
3 paragraph (3), the taxable income referred to in
4 paragraph (1) shall be modified by adding thereto the sum
5 of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest or dividends
8 during the taxable year to the extent excluded from
9 gross income in the computation of taxable income;
10 (B) In the case of (i) an estate, $600; (ii) a
11 trust which, under its governing instrument, is
12 required to distribute all of its income currently,
13 $300; and (iii) any other trust, $100, but in each
14 such case, only to the extent such amount was
15 deducted in the computation of taxable income;
16 (C) An amount equal to the amount of tax
17 imposed by this Act to the extent deducted from
18 gross income in the computation of taxable income
19 for the taxable year;
20 (D) The amount of any net operating loss
21 deduction taken in arriving at taxable income, other
22 than a net operating loss carried forward from a
23 taxable year ending prior to December 31, 1986;
24 (E) For taxable years in which a net operating
25 loss carryback or carryforward from a taxable year
26 ending prior to December 31, 1986 is an element of
27 taxable income under paragraph (1) of subsection (e)
28 or subparagraph (E) of paragraph (2) of subsection
29 (e), the amount by which addition modifications
30 other than those provided by this subparagraph (E)
31 exceeded subtraction modifications in such taxable
32 year, with the following limitations applied in the
33 order that they are listed:
34 (i) the addition modification relating to
HB4431 Enrolled -39- LRB9110442SMdvB
1 the net operating loss carried back or forward
2 to the taxable year from any taxable year
3 ending prior to December 31, 1986 shall be
4 reduced by the amount of addition modification
5 under this subparagraph (E) which related to
6 that net operating loss and which was taken
7 into account in calculating the base income of
8 an earlier taxable year, and
9 (ii) the addition modification relating
10 to the net operating loss carried back or
11 forward to the taxable year from any taxable
12 year ending prior to December 31, 1986 shall
13 not exceed the amount of such carryback or
14 carryforward;
15 For taxable years in which there is a net
16 operating loss carryback or carryforward from more
17 than one other taxable year ending prior to December
18 31, 1986, the addition modification provided in this
19 subparagraph (E) shall be the sum of the amounts
20 computed independently under the preceding
21 provisions of this subparagraph (E) for each such
22 taxable year;
23 (F) For taxable years ending on or after
24 January 1, 1989, an amount equal to the tax deducted
25 pursuant to Section 164 of the Internal Revenue Code
26 if the trust or estate is claiming the same tax for
27 purposes of the Illinois foreign tax credit under
28 Section 601 of this Act;
29 (G) An amount equal to the amount of the
30 capital gain deduction allowable under the Internal
31 Revenue Code, to the extent deducted from gross
32 income in the computation of taxable income; and
33 (G-5) For taxable years ending after December
34 31, 1997, an amount equal to any eligible
HB4431 Enrolled -40- LRB9110442SMdvB
1 remediation costs that the trust or estate deducted
2 in computing adjusted gross income and for which the
3 trust or estate claims a credit under subsection (l)
4 of Section 201;
5 and by deducting from the total so obtained the sum of
6 the following amounts:
7 (H) An amount equal to all amounts included in
8 such total pursuant to the provisions of Sections
9 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
10 408 of the Internal Revenue Code or included in such
11 total as distributions under the provisions of any
12 retirement or disability plan for employees of any
13 governmental agency or unit, or retirement payments
14 to retired partners, which payments are excluded in
15 computing net earnings from self employment by
16 Section 1402 of the Internal Revenue Code and
17 regulations adopted pursuant thereto;
18 (I) The valuation limitation amount;
19 (J) An amount equal to the amount of any tax
20 imposed by this Act which was refunded to the
21 taxpayer and included in such total for the taxable
22 year;
23 (K) An amount equal to all amounts included in
24 taxable income as modified by subparagraphs (A),
25 (B), (C), (D), (E), (F) and (G) which are exempt
26 from taxation by this State either by reason of its
27 statutes or Constitution or by reason of the
28 Constitution, treaties or statutes of the United
29 States; provided that, in the case of any statute of
30 this State that exempts income derived from bonds or
31 other obligations from the tax imposed under this
32 Act, the amount exempted shall be the interest net
33 of bond premium amortization;
34 (L) With the exception of any amounts
HB4431 Enrolled -41- LRB9110442SMdvB
1 subtracted under subparagraph (K), an amount equal
2 to the sum of all amounts disallowed as deductions
3 by (i) Sections 171(a) (2) and 265(a)(2) of the
4 Internal Revenue Code, as now or hereafter amended,
5 and all amounts of expenses allocable to interest
6 and disallowed as deductions by Section 265(1) of
7 the Internal Revenue Code of 1954, as now or
8 hereafter amended; and (ii) for taxable years ending
9 on or after August 13, 1999 the effective date of
10 this amendatory Act of the 91st General Assembly,
11 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
12 of the Internal Revenue Code; the provisions of this
13 subparagraph are exempt from the provisions of
14 Section 250;
15 (M) An amount equal to those dividends
16 included in such total which were paid by a
17 corporation which conducts business operations in an
18 Enterprise Zone or zones created under the Illinois
19 Enterprise Zone Act and conducts substantially all
20 of its operations in an Enterprise Zone or Zones;
21 (N) An amount equal to any contribution made
22 to a job training project established pursuant to
23 the Tax Increment Allocation Redevelopment Act;
24 (O) An amount equal to those dividends
25 included in such total that were paid by a
26 corporation that conducts business operations in a
27 federally designated Foreign Trade Zone or Sub-Zone
28 and that is designated a High Impact Business
29 located in Illinois; provided that dividends
30 eligible for the deduction provided in subparagraph
31 (M) of paragraph (2) of this subsection shall not be
32 eligible for the deduction provided under this
33 subparagraph (O);
34 (P) An amount equal to the amount of the
HB4431 Enrolled -42- LRB9110442SMdvB
1 deduction used to compute the federal income tax
2 credit for restoration of substantial amounts held
3 under claim of right for the taxable year pursuant
4 to Section 1341 of the Internal Revenue Code of
5 1986; and
6 (Q) For taxable year 1999 and thereafter, an
7 amount equal to the amount of any (i) distributions,
8 to the extent includible in gross income for federal
9 income tax purposes, made to the taxpayer because of
10 his or her status as a victim of persecution for
11 racial or religious reasons by Nazi Germany or any
12 other Axis regime or as an heir of the victim and
13 (ii) items of income, to the extent includible in
14 gross income for federal income tax purposes,
15 attributable to, derived from or in any way related
16 to assets stolen from, hidden from, or otherwise
17 lost to a victim of persecution for racial or
18 religious reasons by Nazi Germany or any other Axis
19 regime immediately prior to, during, and immediately
20 after World War II, including, but not limited to,
21 interest on the proceeds receivable as insurance
22 under policies issued to a victim of persecution for
23 racial or religious reasons by Nazi Germany or any
24 other Axis regime by European insurance companies
25 immediately prior to and during World War II;
26 provided, however, this subtraction from federal
27 adjusted gross income does not apply to assets
28 acquired with such assets or with the proceeds from
29 the sale of such assets; provided, further, this
30 paragraph shall only apply to a taxpayer who was the
31 first recipient of such assets after their recovery
32 and who is a victim of persecution for racial or
33 religious reasons by Nazi Germany or any other Axis
34 regime or as an heir of the victim. The amount of
HB4431 Enrolled -43- LRB9110442SMdvB
1 and the eligibility for any public assistance,
2 benefit, or similar entitlement is not affected by
3 the inclusion of items (i) and (ii) of this
4 paragraph in gross income for federal income tax
5 purposes. This paragraph is exempt from the
6 provisions of Section 250.
7 (3) Limitation. The amount of any modification
8 otherwise required under this subsection shall, under
9 regulations prescribed by the Department, be adjusted by
10 any amounts included therein which were properly paid,
11 credited, or required to be distributed, or permanently
12 set aside for charitable purposes pursuant to Internal
13 Revenue Code Section 642(c) during the taxable year.
14 (d) Partnerships.
15 (1) In general. In the case of a partnership, base
16 income means an amount equal to the taxpayer's taxable
17 income for the taxable year as modified by paragraph (2).
18 (2) Modifications. The taxable income referred to
19 in paragraph (1) shall be modified by adding thereto the
20 sum of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest or dividends
23 during the taxable year to the extent excluded from
24 gross income in the computation of taxable income;
25 (B) An amount equal to the amount of tax
26 imposed by this Act to the extent deducted from
27 gross income for the taxable year;
28 (C) The amount of deductions allowed to the
29 partnership pursuant to Section 707 (c) of the
30 Internal Revenue Code in calculating its taxable
31 income; and
32 (D) An amount equal to the amount of the
33 capital gain deduction allowable under the Internal
34 Revenue Code, to the extent deducted from gross
HB4431 Enrolled -44- LRB9110442SMdvB
1 income in the computation of taxable income;
2 and by deducting from the total so obtained the following
3 amounts:
4 (E) The valuation limitation amount;
5 (F) An amount equal to the amount of any tax
6 imposed by this Act which was refunded to the
7 taxpayer and included in such total for the taxable
8 year;
9 (G) An amount equal to all amounts included in
10 taxable income as modified by subparagraphs (A),
11 (B), (C) and (D) which are exempt from taxation by
12 this State either by reason of its statutes or
13 Constitution or by reason of the Constitution,
14 treaties or statutes of the United States; provided
15 that, in the case of any statute of this State that
16 exempts income derived from bonds or other
17 obligations from the tax imposed under this Act, the
18 amount exempted shall be the interest net of bond
19 premium amortization;
20 (H) Any income of the partnership which
21 constitutes personal service income as defined in
22 Section 1348 (b) (1) of the Internal Revenue Code
23 (as in effect December 31, 1981) or a reasonable
24 allowance for compensation paid or accrued for
25 services rendered by partners to the partnership,
26 whichever is greater;
27 (I) An amount equal to all amounts of income
28 distributable to an entity subject to the Personal
29 Property Tax Replacement Income Tax imposed by
30 subsections (c) and (d) of Section 201 of this Act
31 including amounts distributable to organizations
32 exempt from federal income tax by reason of Section
33 501(a) of the Internal Revenue Code;
34 (J) With the exception of any amounts
HB4431 Enrolled -45- LRB9110442SMdvB
1 subtracted under subparagraph (G), an amount equal
2 to the sum of all amounts disallowed as deductions
3 by (i) Sections 171(a) (2), and 265(2) of the
4 Internal Revenue Code of 1954, as now or hereafter
5 amended, and all amounts of expenses allocable to
6 interest and disallowed as deductions by Section
7 265(1) of the Internal Revenue Code, as now or
8 hereafter amended; and (ii) for taxable years ending
9 on or after August 13, 1999 the effective date of
10 this amendatory Act of the 91st General Assembly,
11 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
12 of the Internal Revenue Code; the provisions of this
13 subparagraph are exempt from the provisions of
14 Section 250;
15 (K) An amount equal to those dividends
16 included in such total which were paid by a
17 corporation which conducts business operations in an
18 Enterprise Zone or zones created under the Illinois
19 Enterprise Zone Act, enacted by the 82nd General
20 Assembly, and which does not conduct such operations
21 other than in an Enterprise Zone or Zones;
22 (L) An amount equal to any contribution made
23 to a job training project established pursuant to
24 the Real Property Tax Increment Allocation
25 Redevelopment Act;
26 (M) An amount equal to those dividends
27 included in such total that were paid by a
28 corporation that conducts business operations in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 and that is designated a High Impact Business
31 located in Illinois; provided that dividends
32 eligible for the deduction provided in subparagraph
33 (K) of paragraph (2) of this subsection shall not be
34 eligible for the deduction provided under this
HB4431 Enrolled -46- LRB9110442SMdvB
1 subparagraph (M); and
2 (N) An amount equal to the amount of the
3 deduction used to compute the federal income tax
4 credit for restoration of substantial amounts held
5 under claim of right for the taxable year pursuant
6 to Section 1341 of the Internal Revenue Code of
7 1986.
8 (e) Gross income; adjusted gross income; taxable income.
9 (1) In general. Subject to the provisions of
10 paragraph (2) and subsection (b) (3), for purposes of
11 this Section and Section 803(e), a taxpayer's gross
12 income, adjusted gross income, or taxable income for the
13 taxable year shall mean the amount of gross income,
14 adjusted gross income or taxable income properly
15 reportable for federal income tax purposes for the
16 taxable year under the provisions of the Internal Revenue
17 Code. Taxable income may be less than zero. However, for
18 taxable years ending on or after December 31, 1986, net
19 operating loss carryforwards from taxable years ending
20 prior to December 31, 1986, may not exceed the sum of
21 federal taxable income for the taxable year before net
22 operating loss deduction, plus the excess of addition
23 modifications over subtraction modifications for the
24 taxable year. For taxable years ending prior to December
25 31, 1986, taxable income may never be an amount in excess
26 of the net operating loss for the taxable year as defined
27 in subsections (c) and (d) of Section 172 of the Internal
28 Revenue Code, provided that when taxable income of a
29 corporation (other than a Subchapter S corporation),
30 trust, or estate is less than zero and addition
31 modifications, other than those provided by subparagraph
32 (E) of paragraph (2) of subsection (b) for corporations
33 or subparagraph (E) of paragraph (2) of subsection (c)
34 for trusts and estates, exceed subtraction modifications,
HB4431 Enrolled -47- LRB9110442SMdvB
1 an addition modification must be made under those
2 subparagraphs for any other taxable year to which the
3 taxable income less than zero (net operating loss) is
4 applied under Section 172 of the Internal Revenue Code or
5 under subparagraph (E) of paragraph (2) of this
6 subsection (e) applied in conjunction with Section 172 of
7 the Internal Revenue Code.
8 (2) Special rule. For purposes of paragraph (1) of
9 this subsection, the taxable income properly reportable
10 for federal income tax purposes shall mean:
11 (A) Certain life insurance companies. In the
12 case of a life insurance company subject to the tax
13 imposed by Section 801 of the Internal Revenue Code,
14 life insurance company taxable income, plus the
15 amount of distribution from pre-1984 policyholder
16 surplus accounts as calculated under Section 815a of
17 the Internal Revenue Code;
18 (B) Certain other insurance companies. In the
19 case of mutual insurance companies subject to the
20 tax imposed by Section 831 of the Internal Revenue
21 Code, insurance company taxable income;
22 (C) Regulated investment companies. In the
23 case of a regulated investment company subject to
24 the tax imposed by Section 852 of the Internal
25 Revenue Code, investment company taxable income;
26 (D) Real estate investment trusts. In the
27 case of a real estate investment trust subject to
28 the tax imposed by Section 857 of the Internal
29 Revenue Code, real estate investment trust taxable
30 income;
31 (E) Consolidated corporations. In the case of
32 a corporation which is a member of an affiliated
33 group of corporations filing a consolidated income
34 tax return for the taxable year for federal income
HB4431 Enrolled -48- LRB9110442SMdvB
1 tax purposes, taxable income determined as if such
2 corporation had filed a separate return for federal
3 income tax purposes for the taxable year and each
4 preceding taxable year for which it was a member of
5 an affiliated group. For purposes of this
6 subparagraph, the taxpayer's separate taxable income
7 shall be determined as if the election provided by
8 Section 243(b) (2) of the Internal Revenue Code had
9 been in effect for all such years;
10 (F) Cooperatives. In the case of a
11 cooperative corporation or association, the taxable
12 income of such organization determined in accordance
13 with the provisions of Section 1381 through 1388 of
14 the Internal Revenue Code;
15 (G) Subchapter S corporations. In the case
16 of: (i) a Subchapter S corporation for which there
17 is in effect an election for the taxable year under
18 Section 1362 of the Internal Revenue Code, the
19 taxable income of such corporation determined in
20 accordance with Section 1363(b) of the Internal
21 Revenue Code, except that taxable income shall take
22 into account those items which are required by
23 Section 1363(b)(1) of the Internal Revenue Code to
24 be separately stated; and (ii) a Subchapter S
25 corporation for which there is in effect a federal
26 election to opt out of the provisions of the
27 Subchapter S Revision Act of 1982 and have applied
28 instead the prior federal Subchapter S rules as in
29 effect on July 1, 1982, the taxable income of such
30 corporation determined in accordance with the
31 federal Subchapter S rules as in effect on July 1,
32 1982; and
33 (H) Partnerships. In the case of a
34 partnership, taxable income determined in accordance
HB4431 Enrolled -49- LRB9110442SMdvB
1 with Section 703 of the Internal Revenue Code,
2 except that taxable income shall take into account
3 those items which are required by Section 703(a)(1)
4 to be separately stated but which would be taken
5 into account by an individual in calculating his
6 taxable income.
7 (f) Valuation limitation amount.
8 (1) In general. The valuation limitation amount
9 referred to in subsections (a) (2) (G), (c) (2) (I) and
10 (d)(2) (E) is an amount equal to:
11 (A) The sum of the pre-August 1, 1969
12 appreciation amounts (to the extent consisting of
13 gain reportable under the provisions of Section 1245
14 or 1250 of the Internal Revenue Code) for all
15 property in respect of which such gain was reported
16 for the taxable year; plus
17 (B) The lesser of (i) the sum of the
18 pre-August 1, 1969 appreciation amounts (to the
19 extent consisting of capital gain) for all property
20 in respect of which such gain was reported for
21 federal income tax purposes for the taxable year, or
22 (ii) the net capital gain for the taxable year,
23 reduced in either case by any amount of such gain
24 included in the amount determined under subsection
25 (a) (2) (F) or (c) (2) (H).
26 (2) Pre-August 1, 1969 appreciation amount.
27 (A) If the fair market value of property
28 referred to in paragraph (1) was readily
29 ascertainable on August 1, 1969, the pre-August 1,
30 1969 appreciation amount for such property is the
31 lesser of (i) the excess of such fair market value
32 over the taxpayer's basis (for determining gain) for
33 such property on that date (determined under the
34 Internal Revenue Code as in effect on that date), or
HB4431 Enrolled -50- LRB9110442SMdvB
1 (ii) the total gain realized and reportable for
2 federal income tax purposes in respect of the sale,
3 exchange or other disposition of such property.
4 (B) If the fair market value of property
5 referred to in paragraph (1) was not readily
6 ascertainable on August 1, 1969, the pre-August 1,
7 1969 appreciation amount for such property is that
8 amount which bears the same ratio to the total gain
9 reported in respect of the property for federal
10 income tax purposes for the taxable year, as the
11 number of full calendar months in that part of the
12 taxpayer's holding period for the property ending
13 July 31, 1969 bears to the number of full calendar
14 months in the taxpayer's entire holding period for
15 the property.
16 (C) The Department shall prescribe such
17 regulations as may be necessary to carry out the
18 purposes of this paragraph.
19 (g) Double deductions. Unless specifically provided
20 otherwise, nothing in this Section shall permit the same item
21 to be deducted more than once.
22 (h) Legislative intention. Except as expressly provided
23 by this Section there shall be no modifications or
24 limitations on the amounts of income, gain, loss or deduction
25 taken into account in determining gross income, adjusted
26 gross income or taxable income for federal income tax
27 purposes for the taxable year, or in the amount of such items
28 entering into the computation of base income and net income
29 under this Act for such taxable year, whether in respect of
30 property values as of August 1, 1969 or otherwise.
31 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
32 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
33 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676,
HB4431 Enrolled -51- LRB9110442SMdvB
1 eff. 12-23-99; revised 1-5-00.)
2 (35 ILCS 5/405)
3 Sec. 405. Carryovers in certain acquisitions.
4 (a) In the case of the acquisition of assets of a
5 corporation by another corporation described in Section
6 381(a) of the Internal Revenue Code, the acquiring
7 corporation shall succeed to and take into account, as of the
8 close of the day of distribution or transfer, all Article 2
9 credits and net losses under Section 207 of the corporation
10 from which the assets were where acquired, without limitation
11 under Section 382 of the Internal Revenue Code or the
12 separate return limitation year regulations promulgated under
13 Section 1502 of the Internal Revenue Code.
14 (b) In the case of the acquisition of assets of a
15 partnership by another partnership in a transaction in which
16 the acquiring partnership is considered to be a continuation
17 of the partnership from which the assets were acquired under
18 the provisions of Section 708 of the Internal Revenue Code
19 and any regulations promulgated under that Section, the
20 acquiring partnership shall succeed to and take into account,
21 as of the close of the day of distribution or transfer, all
22 Article 2 credits and net losses under Section 207 of the
23 partnership from which the assets were acquired.
24 (b-5) No limitation under Section 382 of the Internal
25 Revenue Code or the separate return limitation year
26 regulations promulgated under Section 1502 of the Internal
27 Revenue Code shall apply to the carryover of any Article 2
28 credit or net loss allowable under Section 207.
29 (c) The provisions of this amendatory Act of the 91st
30 General Assembly shall apply to all acquisitions occurring in
31 taxable years ending on or after December 31, 1986; provided
32 that if a taxpayer's Illinois income tax liability for any
33 taxable year, as assessed under Section 903 prior to January
HB4431 Enrolled -52- LRB9110442SMdvB
1 1, 1999, was computed without taking into account all of the
2 Article 2 credits and net losses under Section 207 as allowed
3 by this Section:
4 (1) no refund shall be payable to the taxpayer for
5 that taxable year as the result of allowing any portion
6 of the Article 2 credits or net losses under Section 207
7 that were not taken into account in computing the tax
8 assessed prior to January 1, 1999;
9 (2) any deficiency which has not been paid may be
10 reduced (but not below zero) by the allowance of some or
11 all of the Article 2 credits or net losses under Section
12 207 that were not taken into account in computing the tax
13 assessed prior to January 1, 1999; and
14 (3) in the case of any Article 2 credit or net loss
15 under Section 207 that, pursuant to this subsection (c),
16 could not be taken into account either in computing the
17 tax assessed prior to January 1, 1999 for a taxable year
18 or in reducing a deficiency for that taxable year under
19 paragraph (2) of subsection (c), the allowance of such
20 credit or loss in any other taxable year shall not be
21 denied on the grounds that such credit or loss should
22 properly have been claimed in that taxable year under
23 subsection (a) or (b).
24 (Source: P.A. 91-541, eff. 8-13-99.)
25 (35 ILCS 5/502) (from Ch. 120, par. 5-502)
26 Sec. 502. Returns and notices.
27 (a) In general. A return with respect to the taxes
28 imposed by this Act shall be made by every person for any
29 taxable year:
30 (1) For which such person is liable for a tax
31 imposed by this Act, or
32 (2) In the case of a resident or in the case of a
33 corporation which is qualified to do business in this
HB4431 Enrolled -53- LRB9110442SMdvB
1 State, for which such person is required to make a
2 federal income tax return, regardless of whether such
3 person is liable for a tax imposed by this Act. However,
4 this paragraph shall not require a resident to make a
5 return if such person has an Illinois base income of the
6 basic amount in Section 204(b) or less and is either
7 claimed as a dependent on another person's tax return
8 under the Internal Revenue Code of 1986, or is claimed as
9 a dependent on another person's tax return under this
10 Act.
11 (b) Fiduciaries and receivers.
12 (1) Decedents. If an individual is deceased, any
13 return or notice required of such individual under this
14 Act shall be made by his executor, administrator, or
15 other person charged with the property of such decedent.
16 (2) Individuals under a disability. If an
17 individual is unable to make a return or notice required
18 under this Act, the return or notice required of such
19 individual shall be made by his duly authorized agent,
20 guardian, fiduciary or other person charged with the care
21 of the person or property of such individual.
22 (3) Estates and trusts. Returns or notices required
23 of an estate or a trust shall be made by the fiduciary
24 thereof.
25 (4) Receivers, trustees and assignees for
26 corporations. In a case where a receiver, trustee in
27 bankruptcy, or assignee, by order of a court of competent
28 jurisdiction, by operation of law, or otherwise, has
29 possession of or holds title to all or substantially all
30 the property or business of a corporation, whether or not
31 such property or business is being operated, such
32 receiver, trustee, or assignee shall make the returns and
33 notices required of such corporation in the same manner
34 and form as corporations are required to make such
HB4431 Enrolled -54- LRB9110442SMdvB
1 returns and notices.
2 (c) Joint returns by husband and wife.
3 (1) Except as provided in paragraph (3), if a
4 husband and wife file a joint federal income tax return
5 for a taxable year they shall file a joint return under
6 this Act for such taxable year and their liabilities
7 shall be joint and several, but if the federal income tax
8 liability of either spouse is determined on a separate
9 federal income tax return, they shall file separate
10 returns under this Act.
11 (2) If neither spouse is required to file a federal
12 income tax return and either or both are required to file
13 a return under this Act, they may elect to file separate
14 or joint returns and pursuant to such election their
15 liabilities shall be separate or joint and several.
16 (3) If either husband or wife is a resident and the
17 other is a nonresident, they shall file separate returns
18 in this State on such forms as may be required by the
19 Department in which event their tax liabilities shall be
20 separate; but they may elect to determine their joint net
21 income and file a joint return as if both were residents
22 and in such case, their liabilities shall be joint and
23 several.
24 (4) Innocent spouses.
25 (A) However, for tax liabilities arising and
26 paid prior to the effective date of this amendatory
27 Act of the 91st General Assembly, an innocent spouse
28 shall be relieved of liability for tax (including
29 interest and penalties) for any taxable year for
30 which a joint return has been made, upon submission
31 of proof that the Internal Revenue Service has made
32 a determination under Section 6013(e) of the
33 Internal Revenue Code, for the same taxable year,
34 which determination relieved the spouse from
HB4431 Enrolled -55- LRB9110442SMdvB
1 liability for federal income taxes. If there is no
2 federal income tax liability at issue for the same
3 taxable year, the Department shall rely on the
4 provisions of Section 6013(e) to determine whether
5 the person requesting innocent spouse abatement of
6 tax, penalty, and interest is entitled to that
7 relief.
8 (B) For tax liabilities arising after the
9 effective date of this amendatory Act of the 91st
10 General Assembly or which arose prior to that
11 effective date, but remain unpaid as of the
12 effective date, if an individual who filed a joint
13 return for any taxable year has made an election
14 under this paragraph, the individual's liability for
15 any tax shown on the joint return shall not exceed
16 the individual's separate return amount and the
17 individual's liability for any deficiency assessed
18 for that taxable year shall not exceed the portion
19 of the deficiency properly allocable to the
20 individual. For purposes of this paragraph:
21 (i) An election properly made pursuant to
22 Section 6015 of the Internal Revenue Code shall
23 constitute an election under this paragraph,
24 provided that the election shall not be
25 effective until the individual has notified the
26 Department of the election in the form and
27 manner prescribed by the Department.
28 (ii) If no election has been made under
29 Section 6015, the individual may make an
30 election under this paragraph in the form and
31 manner prescribed by the Department, provided
32 that no election may be made if the Department
33 finds that assets were transferred between
34 individuals filing a joint return as part of a
HB4431 Enrolled -56- LRB9110442SMdvB
1 scheme by such individuals to avoid payment of
2 Illinois income tax and the election shall not
3 eliminate the individual's liability for any
4 portion of a deficiency attributable to an
5 error on the return of which the individual had
6 actual knowledge as of the date of filing.
7 (iii) In determining the separate return
8 amount or portion of any deficiency
9 attributable to an individual, the Department
10 shall follow the provisions in Section 6015(b)
11 and (c) of the Internal Revenue Code.
12 (iv) In determining the validity of an
13 individual's election under subparagraph (ii)
14 and in determining an electing individual's
15 separate return amount or portion of any
16 deficiency under subparagraph (iii), any
17 determination made by the Secretary of the
18 Treasury under Section 6015(a) of the Internal
19 Revenue Code regarding criteria for eligibility
20 or under Section 6015(b) or (c) of the Internal
21 Revenue Code regarding the allocation of any
22 item of income, deduction, payment, or credit
23 between an individual making the federal
24 election and that individual's spouse shall be
25 conclusively presumed to be correct. With
26 respect to any item that is not the subject of
27 a determination by the Secretary of the
28 Treasury, in any proceeding involving this
29 subsection, the individual making the election
30 shall have the burden of proof with respect to
31 any item except that the Department shall have
32 the burden of proof with respect to items in
33 subdivision (ii).
34 (v) Any election made by an individual
HB4431 Enrolled -57- LRB9110442SMdvB
1 under this subsection shall apply to all years
2 for which that individual and the spouse named
3 in the election have filed a joint return.
4 (vi) After receiving a notice that the
5 federal election has been made or after
6 receiving an election under subdivision (ii),
7 the Department shall take no collection action
8 against the electing individual for any
9 liability arising from a joint return covered
10 by the election until the Department has
11 notified the electing individual in writing
12 that the election is invalid or of the portion
13 of the liability the Department has allocated
14 to the electing individual. Within 60 days
15 (150 days if the individual is outside the
16 United States) after the issuance of such
17 notification, the individual may file a written
18 protest of the denial of the election or of the
19 Department's determination of the liability
20 allocated to him or her and shall be granted a
21 hearing within the Department under the
22 provisions of Section 908. If a protest is
23 filed, the Department shall take no collection
24 action against the electing individual until
25 the decision regarding the protest has become
26 final under subsection (d) of Section 908 or,
27 if administrative review of the Department's
28 decision is requested under Section 1201, until
29 the decision of the court becomes final.
30 (d) Partnerships. Every partnership having any base
31 income allocable to this State in accordance with section
32 305(c) shall retain information concerning all items of
33 income, gain, loss and deduction; the names and addresses of
34 all of the partners, or names and addresses of members of a
HB4431 Enrolled -58- LRB9110442SMdvB
1 limited liability company, or other persons who would be
2 entitled to share in the base income of the partnership if
3 distributed; the amount of the distributive share of each;
4 and such other pertinent information as the Department may by
5 forms or regulations prescribe. The partnership shall make
6 that information available to the Department when requested
7 by the Department.
8 (e) For taxable years ending on or after December 31,
9 1985, and before December 31, 1993, taxpayers that are
10 corporations (other than Subchapter S corporations) having
11 the same taxable year and that are members of the same
12 unitary business group may elect to be treated as one
13 taxpayer for purposes of any original return, amended return
14 which includes the same taxpayers of the unitary group which
15 joined in the election to file the original return,
16 extension, claim for refund, assessment, collection and
17 payment and determination of the group's tax liability under
18 this Act. This subsection (e) does not permit the election to
19 be made for some, but not all, of the purposes enumerated
20 above. For taxable years ending on or after December 31,
21 1987, corporate members (other than Subchapter S
22 corporations) of the same unitary business group making this
23 subsection (e) election are not required to have the same
24 taxable year.
25 For taxable years ending on or after December 31, 1993,
26 taxpayers that are corporations (other than Subchapter S
27 corporations) and that are members of the same unitary
28 business group shall be treated as one taxpayer for purposes
29 of any original return, amended return which includes the
30 same taxpayers of the unitary group which joined in filing
31 the original return, extension, claim for refund, assessment,
32 collection and payment and determination of the group's tax
33 liability under this Act.
34 (f) The Department may promulgate regulations to permit
HB4431 Enrolled -59- LRB9110442SMdvB
1 nonresident individual partners of the same partnership,
2 nonresident Subchapter S corporation shareholders of the same
3 Subchapter S corporation, and nonresident individuals
4 transacting an insurance business in Illinois under a Lloyds
5 plan of operation, and nonresident individual members of the
6 same limited liability company that is treated as a
7 partnership under Section 1501 (a)(16) of this Act, to file
8 composite individual income tax returns reflecting the
9 composite income of such individuals allocable to Illinois
10 and to make composite individual income tax payments. The
11 Department may by regulation also permit such composite
12 returns to include the income tax owed by Illinois residents
13 attributable to their income from partnerships, Subchapter S
14 corporations, insurance businesses organized under a Lloyds
15 plan of operation, or limited liability companies that are
16 treated as partnership under Section 1501 (a)(16) of this
17 Act, in which case such Illinois residents will be permitted
18 to claim credits on their individual returns for their shares
19 of the composite tax payments. This paragraph of subsection
20 (f) applies to taxable years ending on or after December 31,
21 1987.
22 For taxable years ending on or after December 31, 1999,
23 the Department may, by regulation, also permit any persons
24 transacting an insurance business organized under a Lloyds
25 plan of operation to file composite returns reflecting the
26 income of such persons allocable to Illinois and the tax
27 rates applicable to such persons under Section 201 and to
28 make composite tax payments and shall, by regulation, also
29 provide that the income and apportionment factors
30 attributable to the transaction of an insurance business
31 organized under a Lloyds plan of operation by any person
32 joining in the filing of a composite return shall, for
33 purposes of allocating and apportioning income under Article
34 3 of this Act and computing net income under Section 202 of
HB4431 Enrolled -60- LRB9110442SMdvB
1 this Act, be excluded from any other income and apportionment
2 factors of that person or of any unitary business group, as
3 defined in subdivision (a)(27) of Section 1501, to which that
4 person may belong.
5 (g) The Department may adopt rules to authorize the
6 electronic filing of any return required to be filed under
7 this Section.
8 (Source: P.A. 90-613, eff. 7-9-98; 91-541, eff. 8-13-99.)
9 (35 ILCS 5/803) (from Ch. 120, par. 8-803)
10 Sec. 803. Payment of Estimated Tax.
11 (a) Every taxpayer other than an estate, trust,
12 partnership, Subchapter S corporation or farmer is required
13 to pay estimated tax for the taxable year, in such amount and
14 with such forms as the Department shall prescribe, if the
15 amount payable as estimated tax can reasonably be expected to
16 be more than (i) $250 for taxable years ending before
17 December 31, 2001 and $500 for taxable years ending on or
18 after December 31, 2001 or (ii) $400 for corporations.
19 (b) Estimated tax defined. The term "estimated tax"
20 means the excess of:
21 (1) The amount which the taxpayer estimates to be his
22 tax under this Act for the taxable year, over
23 (2) The amount which he estimates to be the sum of any
24 amounts to be withheld on account of or credited against such
25 tax.
26 (c) Joint payment. If they are eligible to do so for
27 federal tax purposes, a husband and wife may pay estimated
28 tax as if they were one taxpayer, in which case the liability
29 with respect to the estimated tax shall be joint and several.
30 If a joint payment is made but the husband and wife elect to
31 determine their taxes under this Act separately, the
32 estimated tax for such year may be treated as the estimated
33 tax of either husband or wife, or may be divided between
HB4431 Enrolled -61- LRB9110442SMdvB
1 them, as they may elect.
2 (d) There shall be paid 4 equal installments of
3 estimated tax for each taxable year, payable as follows:
4 Required Installment: Due Date:
5 1st April 15
6 2nd June 15
7 3rd September 15
8 4th Individuals: January 15 of the
9 following taxable year
10 Corporations: December 15
11 (e) Farmers. An individual, having gross income from
12 farming for the taxable year which is at least 2/3 of his
13 total estimated gross income for such year.
14 (f) Application to short taxable years. The application
15 of this section to taxable years of less than 12 months shall
16 be in accordance with regulations prescribed by the
17 Department.
18 (g) Fiscal years. In the application of this section to
19 the case of a taxable year beginning on any date other than
20 January 1, there shall be substituted, for the months
21 specified in subsections (d) and (e), the months which
22 correspond thereto.
23 (h) Installments paid in advance. Any installment of
24 estimated tax may be paid before the date prescribed for its
25 payment.
26 The changes in this Section made by this amendatory Act
27 of 1985 shall apply to taxable years ending on or after
28 January 1, 1986.
29 (Source: P.A. 86-678.)
30 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
31 Sec. 1501. Definitions.
32 (a) In general. When used in this Act, where not
33 otherwise distinctly expressed or manifestly incompatible
HB4431 Enrolled -62- LRB9110442SMdvB
1 with the intent thereof:
2 (1) Business income. The term "business income"
3 means income arising from transactions and activity in
4 the regular course of the taxpayer's trade or business,
5 net of the deductions allocable thereto, and includes
6 income from tangible and intangible property if the
7 acquisition, management, and disposition of the property
8 constitute integral parts of the taxpayer's regular trade
9 or business operations. Such term does not include
10 compensation or the deductions allocable thereto.
11 (2) Commercial domicile. The term "commercial
12 domicile" means the principal place from which the trade
13 or business of the taxpayer is directed or managed.
14 (3) Compensation. The term "compensation" means
15 wages, salaries, commissions and any other form of
16 remuneration paid to employees for personal services.
17 (4) Corporation. The term "corporation" includes
18 associations, joint-stock companies, insurance companies
19 and cooperatives. Any entity, including a limited
20 liability company formed under the Illinois Limited
21 Liability Company Act, shall be treated as a corporation
22 if it is so classified for federal income tax purposes.
23 (5) Department. The term "Department" means the
24 Department of Revenue of this State.
25 (6) Director. The term "Director" means the
26 Director of Revenue of this State.
27 (7) Fiduciary. The term "fiduciary" means a
28 guardian, trustee, executor, administrator, receiver, or
29 any person acting in any fiduciary capacity for any
30 person.
31 (8) Financial organization.
32 (A) The term "financial organization" means
33 any bank, bank holding company, trust company,
34 savings bank, industrial bank, land bank, safe
HB4431 Enrolled -63- LRB9110442SMdvB
1 deposit company, private banker, savings and loan
2 association, building and loan association, credit
3 union, currency exchange, cooperative bank, small
4 loan company, sales finance company, investment
5 company, or any person which is owned by a bank or
6 bank holding company. For the purpose of this
7 Section a "person" will include only those persons
8 which a bank holding company may acquire and hold an
9 interest in, directly or indirectly, under the
10 provisions of the Bank Holding Company Act of 1956
11 (12 U.S.C. 1841, et seq.), except where interests in
12 any person must be disposed of within certain
13 required time limits under the Bank Holding Company
14 Act of 1956.
15 (B) For purposes of subparagraph (A) of this
16 paragraph, the term "bank" includes (i) any entity
17 that is regulated by the Comptroller of the Currency
18 under the National Bank Act, or by the Federal
19 Reserve Board, or by the Federal Deposit Insurance
20 Corporation and (ii) any federally or State
21 chartered bank operating as a credit card bank.
22 (C) For purposes of subparagraph (A) of this
23 paragraph, the term "sales finance company" has the
24 meaning provided in the following item (i) or (ii):
25 (i) A person primarily engaged in one or
26 more of the following businesses: the business
27 of purchasing customer receivables, the
28 business of making loans upon the security of
29 customer receivables, the business of making
30 loans for the express purpose of funding
31 purchases of tangible personal property or
32 services by the borrower, or the business of
33 finance leasing. For purposes of this item
34 (i), "customer receivable" means:
HB4431 Enrolled -64- LRB9110442SMdvB
1 (a) a retail installment contract or
2 retail charge agreement within the meaning of
3 the Sales Finance Agency Act, the Retail
4 Installment Sales Act, or the Motor Vehicle
5 Retail Installment Sales Act;
6 (b) an installment, charge, credit, or
7 similar contract or agreement arising from the
8 sale of tangible personal property or services
9 in a transaction involving a deferred payment
10 price payable in one or more installments
11 subsequent to the sale; or
12 (c) the outstanding balance of a contract
13 or agreement described in provisions (a) or (b)
14 of this item (i).
15 A customer receivable need not provide for
16 payment of interest on deferred payments. A sales
17 finance company may purchase a customer receivable
18 from, or make a loan secured by a customer
19 receivable to, the seller in the original
20 transaction or to a person who purchased the
21 customer receivable directly or indirectly from that
22 seller.
23 (ii) A corporation meeting each of the
24 following criteria:
25 (a) the corporation must be a member of
26 an "affiliated group" within the meaning of
27 Section 1504(a) of the Internal Revenue Code,
28 determined without regard to Section 1504(b) of
29 the Internal Revenue Code;
30 (b) more than 50% of the gross income of
31 the corporation for the taxable year must be
32 interest income derived from qualifying loans.
33 A "qualifying loan" is a loan made to a member
34 of the corporation's affiliated group that
HB4431 Enrolled -65- LRB9110442SMdvB
1 originates customer receivables (within the
2 meaning of item (i)) or to whom customer
3 receivables originated by a member of the
4 affiliated group have been transferred, to the
5 extent the average outstanding balance of loans
6 from that corporation to members of its
7 affiliated group during the taxable year do not
8 exceed the limitation amount for that
9 corporation. The "limitation amount" for a
10 corporation is the average outstanding balances
11 during the taxable year of customer receivables
12 (within the meaning of item (i)) originated by
13 all members of the affiliated group. If the
14 average outstanding balances of the loans made
15 by a corporation to members of its affiliated
16 group exceed the limitation amount, the
17 interest income of that corporation from
18 qualifying loans shall be equal to its interest
19 income from loans to members of its affiliated
20 groups times a fraction equal to the limitation
21 amount divided by the average outstanding
22 balances of the loans made by that corporation
23 to members of its affiliated group;
24 (c) the total of all shareholder's equity
25 (including, without limitation, paid-in capital
26 on common and preferred stock and retained
27 earnings) of the corporation plus the total of
28 all of its loans, advances, and other
29 obligations payable or owed to members of its
30 affiliated group may not exceed 20% of the
31 total assets of the corporation at any time
32 during the tax year; and
33 (d) more than 50% of all interest-bearing
34 obligations of the affiliated group payable to
HB4431 Enrolled -66- LRB9110442SMdvB
1 persons outside the group determined in
2 accordance with generally accepted accounting
3 principles must be obligations of the
4 corporation.
5 This amendatory Act of the 91st General Assembly is
6 declaratory of existing law.
7 (D) Subparagraphs (B) and (C) of this
8 paragraph are declaratory of existing law and apply
9 retroactively, for all tax years beginning on or
10 before December 31, 1996, to all original returns,
11 to all amended returns filed no later than 30 days
12 after the effective date of this amendatory Act of
13 1996, and to all notices issued on or before the
14 effective date of this amendatory Act of 1996 under
15 subsection (a) of Section 903, subsection (a) of
16 Section 904, subsection (e) of Section 909, or
17 Section 912. A taxpayer that is a "financial
18 organization" that engages in any transaction with
19 an affiliate shall be a "financial organization" for
20 all purposes of this Act.
21 (E) For all tax years beginning on or before
22 December 31, 1996, a taxpayer that falls within the
23 definition of a "financial organization" under
24 subparagraphs (B) or (C) of this paragraph, but who
25 does not fall within the definition of a "financial
26 organization" under the Proposed Regulations issued
27 by the Department of Revenue on July 19, 1996, may
28 irrevocably elect to apply the Proposed Regulations
29 for all of those years as though the Proposed
30 Regulations had been lawfully promulgated, adopted,
31 and in effect for all of those years. For purposes
32 of applying subparagraphs (B) or (C) of this
33 paragraph to all of those years, the election
34 allowed by this subparagraph applies only to the
HB4431 Enrolled -67- LRB9110442SMdvB
1 taxpayer making the election and to those members of
2 the taxpayer's unitary business group who are
3 ordinarily required to apportion business income
4 under the same subsection of Section 304 of this Act
5 as the taxpayer making the election. No election
6 allowed by this subparagraph shall be made under a
7 claim filed under subsection (d) of Section 909 more
8 than 30 days after the effective date of this
9 amendatory Act of 1996.
10 (F) Finance Leases. For purposes of this
11 subsection, a finance lease shall be treated as a
12 loan or other extension of credit, rather than as a
13 lease, regardless of how the transaction is
14 characterized for any other purpose, including the
15 purposes of any regulatory agency to which the
16 lessor is subject. A finance lease is any
17 transaction in the form of a lease in which the
18 lessee is treated as the owner of the leased asset
19 entitled to any deduction for depreciation allowed
20 under Section 167 of the Internal Revenue Code.
21 (9) Fiscal year. The term "fiscal year" means an
22 accounting period of 12 months ending on the last day of
23 any month other than December.
24 (10) Includes and including. The terms "includes"
25 and "including" when used in a definition contained in
26 this Act shall not be deemed to exclude other things
27 otherwise within the meaning of the term defined.
28 (11) Internal Revenue Code. The term "Internal
29 Revenue Code" means the United States Internal Revenue
30 Code of 1954 or any successor law or laws relating to
31 federal income taxes in effect for the taxable year.
32 (12) Mathematical error. The term "mathematical
33 error" includes the following types of errors, omissions,
34 or defects in a return filed by a taxpayer which prevents
HB4431 Enrolled -68- LRB9110442SMdvB
1 acceptance of the return as filed for processing:
2 (A) arithmetic errors or incorrect
3 computations on the return or supporting schedules;
4 (B) entries on the wrong lines;
5 (C) omission of required supporting forms or
6 schedules or the omission of the information in
7 whole or in part called for thereon; and
8 (D) an attempt to claim, exclude, deduct, or
9 improperly report, in a manner directly contrary to
10 the provisions of the Act and regulations thereunder
11 any item of income, exemption, deduction, or credit.
12 (13) Nonbusiness income. The term "nonbusiness
13 income" means all income other than business income or
14 compensation.
15 (14) Nonresident. The term "nonresident" means a
16 person who is not a resident.
17 (15) Paid, incurred and accrued. The terms "paid",
18 "incurred" and "accrued" shall be construed according to
19 the method of accounting upon the basis of which the
20 person's base income is computed under this Act.
21 (16) Partnership and partner. The term
22 "partnership" includes a syndicate, group, pool, joint
23 venture or other unincorporated organization, through or
24 by means of which any business, financial operation, or
25 venture is carried on, and which is not, within the
26 meaning of this Act, a trust or estate or a corporation;
27 and the term "partner" includes a member in such
28 syndicate, group, pool, joint venture or organization.
29 The term "partnership" includes any entity,
30 including a limited liability company formed under the
31 Illinois Limited Liability Company Act, shall be treated
32 as a partnership if it is so classified as a partnership
33 for federal income tax purposes.
34 For purposes of the tax imposed at subsection (c) of
HB4431 Enrolled -69- LRB9110442SMdvB
1 Section 201 of this Act, The term "partnership" does not
2 include a syndicate, group, pool, joint venture, or other
3 unincorporated organization established for the sole
4 purpose of playing the Illinois State Lottery.
5 (17) Part-year resident. The term "part-year
6 resident" means an individual who became a resident
7 during the taxable year or ceased to be a resident during
8 the taxable year. Under Section 1501 (a) (20) (A) (i)
9 residence commences with presence in this State for other
10 than a temporary or transitory purpose and ceases with
11 absence from this State for other than a temporary or
12 transitory purpose. Under Section 1501 (a) (20) (A) (ii)
13 residence commences with the establishment of domicile in
14 this State and ceases with the establishment of domicile
15 in another State.
16 (18) Person. The term "person" shall be construed
17 to mean and include an individual, a trust, estate,
18 partnership, association, firm, company, corporation,
19 limited liability company, or fiduciary. For purposes of
20 Section 1301 and 1302 of this Act, a "person" means (i)
21 an individual, (ii) a corporation, (iii) an officer,
22 agent, or employee of a corporation, (iv) a member, agent
23 or employee of a partnership, or (v) a member, manager,
24 employee, officer, director, or agent of a limited
25 liability company who in such capacity commits an offense
26 specified in Section 1301 and 1302.
27 (18A) Records. The term "records" includes all
28 data maintained by the taxpayer, whether on paper,
29 microfilm, microfiche, or any type of machine-sensible
30 data compilation.
31 (19) Regulations. The term "regulations" includes
32 rules promulgated and forms prescribed by the Department.
33 (20) Resident. The term "resident" means:
34 (A) an individual (i) who is in this State for
HB4431 Enrolled -70- LRB9110442SMdvB
1 other than a temporary or transitory purpose during
2 the taxable year; or (ii) who is domiciled in this
3 State but is absent from the State for a temporary
4 or transitory purpose during the taxable year;
5 (B) The estate of a decedent who at his or her
6 death was domiciled in this State;
7 (C) A trust created by a will of a decedent
8 who at his death was domiciled in this State; and
9 (D) An irrevocable trust, the grantor of which
10 was domiciled in this State at the time such trust
11 became irrevocable. For purpose of this
12 subparagraph, a trust shall be considered
13 irrevocable to the extent that the grantor is not
14 treated as the owner thereof under Sections 671
15 through 678 of the Internal Revenue Code.
16 (21) Sales. The term "sales" means all gross
17 receipts of the taxpayer not allocated under Sections
18 301, 302 and 303.
19 (22) State. The term "state" when applied to a
20 jurisdiction other than this State means any state of the
21 United States, the District of Columbia, the Commonwealth
22 of Puerto Rico, any Territory or Possession of the United
23 States, and any foreign country, or any political
24 subdivision of any of the foregoing. For purposes of the
25 foreign tax credit under Section 601, the term "state"
26 means any state of the United States, the District of
27 Columbia, the Commonwealth of Puerto Rico, and any
28 territory or possession of the United States, or any
29 political subdivision of any of the foregoing, effective
30 for tax years ending on or after December 31, 1989.
31 (23) Taxable year. The term "taxable year" means
32 the calendar year, or the fiscal year ending during such
33 calendar year, upon the basis of which the base income is
34 computed under this Act. "Taxable year" means, in the
HB4431 Enrolled -71- LRB9110442SMdvB
1 case of a return made for a fractional part of a year
2 under the provisions of this Act, the period for which
3 such return is made.
4 (24) Taxpayer. The term "taxpayer" means any person
5 subject to the tax imposed by this Act.
6 (25) International banking facility. The term
7 international banking facility shall have the same
8 meaning as is set forth in the Illinois Banking Act or as
9 is set forth in the laws of the United States or
10 regulations of the Board of Governors of the Federal
11 Reserve System.
12 (26) Income Tax Return Preparer.
13 (A) The term "income tax return preparer"
14 means any person who prepares for compensation, or
15 who employs one or more persons to prepare for
16 compensation, any return of tax imposed by this Act
17 or any claim for refund of tax imposed by this Act.
18 The preparation of a substantial portion of a return
19 or claim for refund shall be treated as the
20 preparation of that return or claim for refund.
21 (B) A person is not an income tax return
22 preparer if all he or she does is
23 (i) furnish typing, reproducing, or other
24 mechanical assistance;
25 (ii) prepare returns or claims for
26 refunds for the employer by whom he or she is
27 regularly and continuously employed;
28 (iii) prepare as a fiduciary returns or
29 claims for refunds for any person; or
30 (iv) prepare claims for refunds for a
31 taxpayer in response to any notice of
32 deficiency issued to that taxpayer or in
33 response to any waiver of restriction after the
34 commencement of an audit of that taxpayer or of
HB4431 Enrolled -72- LRB9110442SMdvB
1 another taxpayer if a determination in the
2 audit of the other taxpayer directly or
3 indirectly affects the tax liability of the
4 taxpayer whose claims he or she is preparing.
5 (27) Unitary business group. The term "unitary
6 business group" means a group of persons related through
7 common ownership whose business activities are integrated
8 with, dependent upon and contribute to each other. The
9 group will not include those members whose business
10 activity outside the United States is 80% or more of any
11 such member's total business activity; for purposes of
12 this paragraph and clause (a) (3) (B) (ii) of Section
13 304, business activity within the United States shall be
14 measured by means of the factors ordinarily applicable
15 under subsections (a), (b), (c), (d), or (h) of Section
16 304 except that, in the case of members ordinarily
17 required to apportion business income by means of the 3
18 factor formula of property, payroll and sales specified
19 in subsection (a) of Section 304, including the formula
20 as weighted in subsection (h) of Section 304, such
21 members shall not use the sales factor in the computation
22 and the results of the property and payroll factor
23 computations of subsection (a) of Section 304 shall be
24 divided by 2 (by one if either the property or payroll
25 factor has a denominator of zero). The computation
26 required by the preceding sentence shall, in each case,
27 involve the division of the member's property, payroll,
28 or revenue miles in the United States, insurance premiums
29 on property or risk in the United States, or financial
30 organization business income from sources within the
31 United States, as the case may be, by the respective
32 worldwide figures for such items. Common ownership in
33 the case of corporations is the direct or indirect
34 control or ownership of more than 50% of the outstanding
HB4431 Enrolled -73- LRB9110442SMdvB
1 voting stock of the persons carrying on unitary business
2 activity. Unitary business activity can ordinarily be
3 illustrated where the activities of the members are: (1)
4 in the same general line (such as manufacturing,
5 wholesaling, retailing of tangible personal property,
6 insurance, transportation or finance); or (2) are steps
7 in a vertically structured enterprise or process (such as
8 the steps involved in the production of natural
9 resources, which might include exploration, mining,
10 refining, and marketing); and, in either instance, the
11 members are functionally integrated through the exercise
12 of strong centralized management (where, for example,
13 authority over such matters as purchasing, financing, tax
14 compliance, product line, personnel, marketing and
15 capital investment is not left to each member). In no
16 event, however, will any unitary business group include
17 members which are ordinarily required to apportion
18 business income under different subsections of Section
19 304 except that for tax years ending on or after December
20 31, 1987 this prohibition shall not apply to a unitary
21 business group composed of one or more taxpayers all of
22 which apportion business income pursuant to subsection
23 (b) of Section 304, or all of which apportion business
24 income pursuant to subsection (d) of Section 304, and a
25 holding company of such single-factor taxpayers (see
26 definition of "financial organization" for rule regarding
27 holding companies of financial organizations). If a
28 unitary business group would, but for the preceding
29 sentence, include members that are ordinarily required to
30 apportion business income under different subsections of
31 Section 304, then for each subsection of Section 304 for
32 which there are two or more members, there shall be a
33 separate unitary business group composed of such members.
34 For purposes of the preceding two sentences, a member is
HB4431 Enrolled -74- LRB9110442SMdvB
1 "ordinarily required to apportion business income" under
2 a particular subsection of Section 304 if it would be
3 required to use the apportionment method prescribed by
4 such subsection except for the fact that it derives
5 business income solely from Illinois. If the unitary
6 business group members' accounting periods differ, the
7 common parent's accounting period or, if there is no
8 common parent, the accounting period of the member that
9 is expected to have, on a recurring basis, the greatest
10 Illinois income tax liability must be used to determine
11 whether to use the apportionment method provided in
12 subsection (a) or subsection (h) of Section 304. The
13 prohibition against membership in a unitary business
14 group for taxpayers ordinarily required to apportion
15 income under different subsections of Section 304 does
16 not apply to taxpayers required to apportion income under
17 subsection (a) and subsection (h) of Section 304. The
18 provisions of this amendatory Act of 1998 apply to tax
19 years ending on or after December 31, 1998.
20 (28) Subchapter S corporation. The term
21 "Subchapter S corporation" means a corporation for which
22 there is in effect an election under Section 1362 of the
23 Internal Revenue Code, or for which there is a federal
24 election to opt out of the provisions of the Subchapter S
25 Revision Act of 1982 and have applied instead the prior
26 federal Subchapter S rules as in effect on July 1, 1982.
27 (b) Other definitions.
28 (1) Words denoting number, gender, and so forth,
29 when used in this Act, where not otherwise distinctly
30 expressed or manifestly incompatible with the intent
31 thereof:
32 (A) Words importing the singular include and
33 apply to several persons, parties or things;
34 (B) Words importing the plural include the
HB4431 Enrolled -75- LRB9110442SMdvB
1 singular; and
2 (C) Words importing the masculine gender
3 include the feminine as well.
4 (2) "Company" or "association" as including
5 successors and assigns. The word "company" or
6 "association", when used in reference to a corporation,
7 shall be deemed to embrace the words "successors and
8 assigns of such company or association", and in like
9 manner as if these last-named words, or words of similar
10 import, were expressed.
11 (3) Other terms. Any term used in any Section of
12 this Act with respect to the application of, or in
13 connection with, the provisions of any other Section of
14 this Act shall have the same meaning as in such other
15 Section.
16 (Source: P.A. 90-613, eff. 7-9-98; 91-535, eff. 1-1-00)
17 Section 99. Effective date. This Act takes effect
18 January 1, 2001.
HB4431 Enrolled -76- LRB9110442SMdvB
1 INDEX
2 Statutes amended in order of appearance
3 35 ILCS 5/201 from Ch. 120, par. 2-201
4 35 ILCS 5/203 from Ch. 120, par. 2-203
5 35 ILCS 5/405
6 35 ILCS 5/803 from Ch. 120, par. 8-803
7 35 ILCS 5/1501 from Ch. 120, par. 15-1501
8 35 ILCS 105/3-5 from Ch. 120, par. 439.3-5
9 35 ILCS 105/3-70 from Ch. 120, par. 439.3-70
10 35 ILCS 105/9 from Ch. 120, par. 439.9
11 35 ILCS 105/10 from Ch. 120, par. 439.10
12 35 ILCS 105/22 from Ch. 120, par. 439.22
13 35 ILCS 110/20 from Ch. 120, par. 439.50
14 35 ILCS 115/3-5 from Ch. 120, par. 439.103-5
15 35 ILCS 115/20 from Ch. 120, par. 439.120
16 35 ILCS 120/3 from Ch. 120, par. 442
17 35 ILCS 120/6 from Ch. 120, par. 445
18 35 ILCS 130/4 from Ch. 120, par. 453.4
19 35 ILCS 130/6 from Ch. 120, par. 453.6
20 35 ILCS 135/4 from Ch. 120, par. 453.34
21 35 ILCS 135/6 from Ch. 120, par. 453.36