[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
91_HB4652
LRB9111994SMmb
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
-2- LRB9111994SMmb
1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
-3- LRB9111994SMmb
1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
-4- LRB9111994SMmb
1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by (i) Sections 171(a) (2), and 265(2) of the
20 Internal Revenue Code of 1954, as now or hereafter
21 amended, and all amounts of expenses allocable to
22 interest and disallowed as deductions by Section
23 265(1) of the Internal Revenue Code of 1954, as now
24 or hereafter amended; and (ii) for taxable years
25 ending on or after August 13, 1999 the effective
26 date of this amendatory Act of the 91st General
27 Assembly, Sections 171(a)(2), 265, 280C, and
28 832(b)(5)(B)(i) of the Internal Revenue Code; the
29 provisions of this subparagraph are exempt from the
30 provisions of Section 250;
31 (N) An amount equal to all amounts included in
32 such total which are exempt from taxation by this
33 State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
-5- LRB9111994SMmb
1 treaties or statutes of the United States; provided
2 that, in the case of any statute of this State that
3 exempts income derived from bonds or other
4 obligations from the tax imposed under this Act, the
5 amount exempted shall be the interest net of bond
6 premium amortization;
7 (O) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act;
10 (P) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986;
16 (Q) An amount equal to any amounts included in
17 such total, received by the taxpayer as an
18 acceleration in the payment of life, endowment or
19 annuity benefits in advance of the time they would
20 otherwise be payable as an indemnity for a terminal
21 illness;
22 (R) An amount equal to the amount of any
23 federal or State bonus paid to veterans of the
24 Persian Gulf War;
25 (S) An amount, to the extent included in
26 adjusted gross income, equal to the amount of a
27 contribution made in the taxable year on behalf of
28 the taxpayer to a medical care savings account
29 established under the Medical Care Savings Account
30 Act to the extent the contribution is accepted by
31 the account administrator as provided in that Act;
32 (T) An amount, to the extent included in
33 adjusted gross income, equal to the amount of
34 interest earned in the taxable year on a medical
-6- LRB9111994SMmb
1 care savings account established under the Medical
2 Care Savings Account Act on behalf of the taxpayer,
3 other than interest added pursuant to item (D-5) of
4 this paragraph (2);
5 (U) For one taxable year beginning on or after
6 January 1, 1994, an amount equal to the total amount
7 of tax imposed and paid under subsections (a) and
8 (b) of Section 201 of this Act on grant amounts
9 received by the taxpayer under the Nursing Home
10 Grant Assistance Act during the taxpayer's taxable
11 years 1992 and 1993;
12 (V) Beginning with tax years ending on or
13 after December 31, 1995 and ending with tax years
14 ending on or before December 31, 2004, an amount
15 equal to the amount paid by a taxpayer who is a
16 self-employed taxpayer, a partner of a partnership,
17 or a shareholder in a Subchapter S corporation for
18 health insurance or long-term care insurance for
19 that taxpayer or that taxpayer's spouse or
20 dependents, to the extent that the amount paid for
21 that health insurance or long-term care insurance
22 may be deducted under Section 213 of the Internal
23 Revenue Code of 1986, has not been deducted on the
24 federal income tax return of the taxpayer, and does
25 not exceed the taxable income attributable to that
26 taxpayer's income, self-employment income, or
27 Subchapter S corporation income; except that no
28 deduction shall be allowed under this item (V) if
29 the taxpayer is eligible to participate in any
30 health insurance or long-term care insurance plan of
31 an employer of the taxpayer or the taxpayer's
32 spouse. The amount of the health insurance and
33 long-term care insurance subtracted under this item
34 (V) shall be determined by multiplying total health
-7- LRB9111994SMmb
1 insurance and long-term care insurance premiums paid
2 by the taxpayer times a number that represents the
3 fractional percentage of eligible medical expenses
4 under Section 213 of the Internal Revenue Code of
5 1986 not actually deducted on the taxpayer's federal
6 income tax return;
7 (W) For taxable years beginning on or after
8 January 1, 1998, all amounts included in the
9 taxpayer's federal gross income in the taxable year
10 from amounts converted from a regular IRA to a Roth
11 IRA. This paragraph is exempt from the provisions of
12 Section 250; and
13 (X) For taxable year 1999 and thereafter, an
14 amount equal to the amount of any (i) distributions,
15 to the extent includible in gross income for federal
16 income tax purposes, made to the taxpayer because of
17 his or her status as a victim of persecution for
18 racial or religious reasons by Nazi Germany or any
19 other Axis regime or as an heir of the victim and
20 (ii) items of income, to the extent includible in
21 gross income for federal income tax purposes,
22 attributable to, derived from or in any way related
23 to assets stolen from, hidden from, or otherwise
24 lost to a victim of persecution for racial or
25 religious reasons by Nazi Germany or any other Axis
26 regime immediately prior to, during, and immediately
27 after World War II, including, but not limited to,
28 interest on the proceeds receivable as insurance
29 under policies issued to a victim of persecution for
30 racial or religious reasons by Nazi Germany or any
31 other Axis regime by European insurance companies
32 immediately prior to and during World War II;
33 provided, however, this subtraction from federal
34 adjusted gross income does not apply to assets
-8- LRB9111994SMmb
1 acquired with such assets or with the proceeds from
2 the sale of such assets; provided, further, this
3 paragraph shall only apply to a taxpayer who was the
4 first recipient of such assets after their recovery
5 and who is a victim of persecution for racial or
6 religious reasons by Nazi Germany or any other Axis
7 regime or as an heir of the victim. The amount of
8 and the eligibility for any public assistance,
9 benefit, or similar entitlement is not affected by
10 the inclusion of items (i) and (ii) of this
11 paragraph in gross income for federal income tax
12 purposes. This paragraph is exempt from the
13 provisions of Section 250; and.
14 (Y) For taxable years 2000 and thereafter, up
15 to $5,000 paid by the taxpayer for dependent care
16 provided for a child, disabled spouse, or other
17 dependent adult during the taxable year. No amount
18 paid or incurred for dependent care shall be
19 deducted unless (i) the name, address, and taxpayer
20 identification number of the person performing the
21 services are included on the return to which the
22 deduction relates or (ii) if the person performing
23 the services is an organization described in Section
24 501(c)(3) of the Internal Revenue Code and is exempt
25 from tax under Section 501(a) of the Internal
26 Revenue Code, the name and address of the person are
27 included on the return to which the deduction
28 relates. This paragraph is exempt from the
29 provisions of Section 250.
30 (b) Corporations.
31 (1) In general. In the case of a corporation, base
32 income means an amount equal to the taxpayer's taxable
33 income for the taxable year as modified by paragraph (2).
34 (2) Modifications. The taxable income referred to
-9- LRB9111994SMmb
1 in paragraph (1) shall be modified by adding thereto the
2 sum of the following amounts:
3 (A) An amount equal to all amounts paid or
4 accrued to the taxpayer as interest and all
5 distributions received from regulated investment
6 companies during the taxable year to the extent
7 excluded from gross income in the computation of
8 taxable income;
9 (B) An amount equal to the amount of tax
10 imposed by this Act to the extent deducted from
11 gross income in the computation of taxable income
12 for the taxable year;
13 (C) In the case of a regulated investment
14 company, an amount equal to the excess of (i) the
15 net long-term capital gain for the taxable year,
16 over (ii) the amount of the capital gain dividends
17 designated as such in accordance with Section
18 852(b)(3)(C) of the Internal Revenue Code and any
19 amount designated under Section 852(b)(3)(D) of the
20 Internal Revenue Code, attributable to the taxable
21 year (this amendatory Act of 1995 (Public Act 89-89)
22 is declarative of existing law and is not a new
23 enactment);
24 (D) The amount of any net operating loss
25 deduction taken in arriving at taxable income, other
26 than a net operating loss carried forward from a
27 taxable year ending prior to December 31, 1986;
28 (E) For taxable years in which a net operating
29 loss carryback or carryforward from a taxable year
30 ending prior to December 31, 1986 is an element of
31 taxable income under paragraph (1) of subsection (e)
32 or subparagraph (E) of paragraph (2) of subsection
33 (e), the amount by which addition modifications
34 other than those provided by this subparagraph (E)
-10- LRB9111994SMmb
1 exceeded subtraction modifications in such earlier
2 taxable year, with the following limitations applied
3 in the order that they are listed:
4 (i) the addition modification relating to
5 the net operating loss carried back or forward
6 to the taxable year from any taxable year
7 ending prior to December 31, 1986 shall be
8 reduced by the amount of addition modification
9 under this subparagraph (E) which related to
10 that net operating loss and which was taken
11 into account in calculating the base income of
12 an earlier taxable year, and
13 (ii) the addition modification relating
14 to the net operating loss carried back or
15 forward to the taxable year from any taxable
16 year ending prior to December 31, 1986 shall
17 not exceed the amount of such carryback or
18 carryforward;
19 For taxable years in which there is a net
20 operating loss carryback or carryforward from more
21 than one other taxable year ending prior to December
22 31, 1986, the addition modification provided in this
23 subparagraph (E) shall be the sum of the amounts
24 computed independently under the preceding
25 provisions of this subparagraph (E) for each such
26 taxable year; and
27 (E-5) For taxable years ending after December
28 31, 1997, an amount equal to any eligible
29 remediation costs that the corporation deducted in
30 computing adjusted gross income and for which the
31 corporation claims a credit under subsection (l) of
32 Section 201;
33 and by deducting from the total so obtained the sum of
34 the following amounts:
-11- LRB9111994SMmb
1 (F) An amount equal to the amount of any tax
2 imposed by this Act which was refunded to the
3 taxpayer and included in such total for the taxable
4 year;
5 (G) An amount equal to any amount included in
6 such total under Section 78 of the Internal Revenue
7 Code;
8 (H) In the case of a regulated investment
9 company, an amount equal to the amount of exempt
10 interest dividends as defined in subsection (b) (5)
11 of Section 852 of the Internal Revenue Code, paid to
12 shareholders for the taxable year;
13 (I) With the exception of any amounts
14 subtracted under subparagraph (J), an amount equal
15 to the sum of all amounts disallowed as deductions
16 by (i) Sections 171(a) (2), and 265(a)(2) and
17 amounts disallowed as interest expense by Section
18 291(a)(3) of the Internal Revenue Code, as now or
19 hereafter amended, and all amounts of expenses
20 allocable to interest and disallowed as deductions
21 by Section 265(a)(1) of the Internal Revenue Code,
22 as now or hereafter amended; and (ii) for taxable
23 years ending on or after August 13, 1999 the
24 effective date of this amendatory Act of the 91st
25 General Assembly, Sections 171(a)(2), 265, 280C, and
26 832(b)(5)(B)(i) of the Internal Revenue Code; the
27 provisions of this subparagraph are exempt from the
28 provisions of Section 250;
29 (J) An amount equal to all amounts included in
30 such total which are exempt from taxation by this
31 State either by reason of its statutes or
32 Constitution or by reason of the Constitution,
33 treaties or statutes of the United States; provided
34 that, in the case of any statute of this State that
-12- LRB9111994SMmb
1 exempts income derived from bonds or other
2 obligations from the tax imposed under this Act, the
3 amount exempted shall be the interest net of bond
4 premium amortization;
5 (K) An amount equal to those dividends
6 included in such total which were paid by a
7 corporation which conducts business operations in an
8 Enterprise Zone or zones created under the Illinois
9 Enterprise Zone Act and conducts substantially all
10 of its operations in an Enterprise Zone or zones;
11 (L) An amount equal to those dividends
12 included in such total that were paid by a
13 corporation that conducts business operations in a
14 federally designated Foreign Trade Zone or Sub-Zone
15 and that is designated a High Impact Business
16 located in Illinois; provided that dividends
17 eligible for the deduction provided in subparagraph
18 (K) of paragraph 2 of this subsection shall not be
19 eligible for the deduction provided under this
20 subparagraph (L);
21 (M) For any taxpayer that is a financial
22 organization within the meaning of Section 304(c) of
23 this Act, an amount included in such total as
24 interest income from a loan or loans made by such
25 taxpayer to a borrower, to the extent that such a
26 loan is secured by property which is eligible for
27 the Enterprise Zone Investment Credit. To determine
28 the portion of a loan or loans that is secured by
29 property eligible for a Section 201(h) investment
30 credit to the borrower, the entire principal amount
31 of the loan or loans between the taxpayer and the
32 borrower should be divided into the basis of the
33 Section 201(h) investment credit property which
34 secures the loan or loans, using for this purpose
-13- LRB9111994SMmb
1 the original basis of such property on the date that
2 it was placed in service in the Enterprise Zone.
3 The subtraction modification available to taxpayer
4 in any year under this subsection shall be that
5 portion of the total interest paid by the borrower
6 with respect to such loan attributable to the
7 eligible property as calculated under the previous
8 sentence;
9 (M-1) 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 High Impact Business Investment Credit. To
16 determine the portion of a loan or loans that is
17 secured by property eligible for a Section 201(i)
18 investment credit to the borrower, the entire
19 principal amount of the loan or loans between the
20 taxpayer and the borrower should be divided into the
21 basis of the Section 201(i) investment credit
22 property which secures the loan or loans, using for
23 this purpose the original basis of such property on
24 the date that it was placed in service in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 located in Illinois. No taxpayer that is eligible
27 for the deduction provided in subparagraph (M) of
28 paragraph (2) of this subsection shall be eligible
29 for the deduction provided under this subparagraph
30 (M-1). The subtraction modification available to
31 taxpayers in any year under this subsection shall be
32 that portion of the total interest paid by the
33 borrower with respect to such loan attributable to
34 the eligible property as calculated under the
-14- LRB9111994SMmb
1 previous sentence;
2 (N) Two times any contribution made during the
3 taxable year to a designated zone organization to
4 the extent that the contribution (i) qualifies as a
5 charitable contribution under subsection (c) of
6 Section 170 of the Internal Revenue Code and (ii)
7 must, by its terms, be used for a project approved
8 by the Department of Commerce and Community Affairs
9 under Section 11 of the Illinois Enterprise Zone
10 Act;
11 (O) An amount equal to: (i) 85% for taxable
12 years ending on or before December 31, 1992, or, a
13 percentage equal to the percentage allowable under
14 Section 243(a)(1) of the Internal Revenue Code of
15 1986 for taxable years ending after December 31,
16 1992, of the amount by which dividends included in
17 taxable income and received from a corporation that
18 is not created or organized under the laws of the
19 United States or any state or political subdivision
20 thereof, including, for taxable years ending on or
21 after December 31, 1988, dividends received or
22 deemed received or paid or deemed paid under
23 Sections 951 through 964 of the Internal Revenue
24 Code, exceed the amount of the modification provided
25 under subparagraph (G) of paragraph (2) of this
26 subsection (b) which is related to such dividends;
27 plus (ii) 100% of the amount by which dividends,
28 included in taxable income and received, including,
29 for taxable years ending on or after December 31,
30 1988, dividends received or deemed received or paid
31 or deemed paid under Sections 951 through 964 of the
32 Internal Revenue Code, from any such corporation
33 specified in clause (i) that would but for the
34 provisions of Section 1504 (b) (3) of the Internal
-15- LRB9111994SMmb
1 Revenue Code be treated as a member of the
2 affiliated group which includes the dividend
3 recipient, exceed the amount of the modification
4 provided under subparagraph (G) of paragraph (2) of
5 this subsection (b) which is related to such
6 dividends;
7 (P) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act;
10 (Q) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986; and
16 (R) In the case of an attorney-in-fact with
17 respect to whom an interinsurer or a reciprocal
18 insurer has made the election under Section 835 of
19 the Internal Revenue Code, 26 U.S.C. 835, an amount
20 equal to the excess, if any, of the amounts paid or
21 incurred by that interinsurer or reciprocal insurer
22 in the taxable year to the attorney-in-fact over the
23 deduction allowed to that interinsurer or reciprocal
24 insurer with respect to the attorney-in-fact under
25 Section 835(b) of the Internal Revenue Code for the
26 taxable year.
27 (3) Special rule. For purposes of paragraph (2)
28 (A), "gross income" in the case of a life insurance
29 company, for tax years ending on and after December 31,
30 1994, shall mean the gross investment income for the
31 taxable year.
32 (c) Trusts and estates.
33 (1) In general. In the case of a trust or estate,
34 base income means an amount equal to the taxpayer's
-16- LRB9111994SMmb
1 taxable income for the taxable year as modified by
2 paragraph (2).
3 (2) Modifications. Subject to the provisions of
4 paragraph (3), the taxable income referred to in
5 paragraph (1) shall be modified by adding thereto the sum
6 of the following amounts:
7 (A) An amount equal to all amounts paid or
8 accrued to the taxpayer as interest or dividends
9 during the taxable year to the extent excluded from
10 gross income in the computation of taxable income;
11 (B) In the case of (i) an estate, $600; (ii) a
12 trust which, under its governing instrument, is
13 required to distribute all of its income currently,
14 $300; and (iii) any other trust, $100, but in each
15 such case, only to the extent such amount was
16 deducted in the computation of taxable income;
17 (C) An amount equal to the amount of tax
18 imposed by this Act to the extent deducted from
19 gross income in the computation of taxable income
20 for the taxable year;
21 (D) The amount of any net operating loss
22 deduction taken in arriving at taxable income, other
23 than a net operating loss carried forward from a
24 taxable year ending prior to December 31, 1986;
25 (E) For taxable years in which a net operating
26 loss carryback or carryforward from a taxable year
27 ending prior to December 31, 1986 is an element of
28 taxable income under paragraph (1) of subsection (e)
29 or subparagraph (E) of paragraph (2) of subsection
30 (e), the amount by which addition modifications
31 other than those provided by this subparagraph (E)
32 exceeded subtraction modifications in such taxable
33 year, with the following limitations applied in the
34 order that they are listed:
-17- LRB9111994SMmb
1 (i) the addition modification relating to
2 the net operating loss carried back or forward
3 to the taxable year from any taxable year
4 ending prior to December 31, 1986 shall be
5 reduced by the amount of addition modification
6 under this subparagraph (E) which related to
7 that net operating loss and which was taken
8 into account in calculating the base income of
9 an earlier taxable year, and
10 (ii) the addition modification relating
11 to the net operating loss carried back or
12 forward to the taxable year from any taxable
13 year ending prior to December 31, 1986 shall
14 not exceed the amount of such carryback or
15 carryforward;
16 For taxable years in which there is a net
17 operating loss carryback or carryforward from more
18 than one other taxable year ending prior to December
19 31, 1986, the addition modification provided in this
20 subparagraph (E) shall be the sum of the amounts
21 computed independently under the preceding
22 provisions of this subparagraph (E) for each such
23 taxable year;
24 (F) For taxable years ending on or after
25 January 1, 1989, an amount equal to the tax deducted
26 pursuant to Section 164 of the Internal Revenue Code
27 if the trust or estate is claiming the same tax for
28 purposes of the Illinois foreign tax credit under
29 Section 601 of this Act;
30 (G) An amount equal to the amount of the
31 capital gain deduction allowable under the Internal
32 Revenue Code, to the extent deducted from gross
33 income in the computation of taxable income; and
34 (G-5) For taxable years ending after December
-18- LRB9111994SMmb
1 31, 1997, an amount equal to any eligible
2 remediation costs that the trust or estate deducted
3 in computing adjusted gross income and for which the
4 trust or estate claims a credit under subsection (l)
5 of Section 201;
6 and by deducting from the total so obtained the sum of
7 the following amounts:
8 (H) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
11 408 of the Internal Revenue Code or included in such
12 total as distributions under the provisions of any
13 retirement or disability plan for employees of any
14 governmental agency or unit, or retirement payments
15 to retired partners, which payments are excluded in
16 computing net earnings from self employment by
17 Section 1402 of the Internal Revenue Code and
18 regulations adopted pursuant thereto;
19 (I) The valuation limitation amount;
20 (J) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (K) An amount equal to all amounts included in
25 taxable income as modified by subparagraphs (A),
26 (B), (C), (D), (E), (F) and (G) which are exempt
27 from taxation by this State either by reason of its
28 statutes or Constitution or by reason of the
29 Constitution, treaties or statutes of the United
30 States; provided that, in the case of any statute of
31 this State that exempts income derived from bonds or
32 other obligations from the tax imposed under this
33 Act, the amount exempted shall be the interest net
34 of bond premium amortization;
-19- LRB9111994SMmb
1 (L) With the exception of any amounts
2 subtracted under subparagraph (K), an amount equal
3 to the sum of all amounts disallowed as deductions
4 by (i) Sections 171(a) (2) and 265(a)(2) of the
5 Internal Revenue Code, as now or hereafter amended,
6 and all amounts of expenses allocable to interest
7 and disallowed as deductions by Section 265(1) of
8 the Internal Revenue Code of 1954, as now or
9 hereafter amended; and (ii) for taxable years ending
10 on or after August 13, 1999 the effective date of
11 this amendatory Act of the 91st General Assembly,
12 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
13 of the Internal Revenue Code; the provisions of this
14 subparagraph are exempt from the provisions of
15 Section 250;
16 (M) An amount equal to those dividends
17 included in such total which were paid by a
18 corporation which conducts business operations in an
19 Enterprise Zone or zones created under the Illinois
20 Enterprise Zone Act and conducts substantially all
21 of its operations in an Enterprise Zone or Zones;
22 (N) An amount equal to any contribution made
23 to a job training project established pursuant to
24 the Tax Increment Allocation Redevelopment Act;
25 (O) An amount equal to those dividends
26 included in such total that were paid by a
27 corporation that conducts business operations in a
28 federally designated Foreign Trade Zone or Sub-Zone
29 and that is designated a High Impact Business
30 located in Illinois; provided that dividends
31 eligible for the deduction provided in subparagraph
32 (M) of paragraph (2) of this subsection shall not be
33 eligible for the deduction provided under this
34 subparagraph (O);
-20- LRB9111994SMmb
1 (P) An amount equal to the amount of the
2 deduction used to compute the federal income tax
3 credit for restoration of substantial amounts held
4 under claim of right for the taxable year pursuant
5 to Section 1341 of the Internal Revenue Code of
6 1986; and
7 (Q) For taxable year 1999 and thereafter, an
8 amount equal to the amount of any (i) distributions,
9 to the extent includible in gross income for federal
10 income tax purposes, made to the taxpayer because of
11 his or her status as a victim of persecution for
12 racial or religious reasons by Nazi Germany or any
13 other Axis regime or as an heir of the victim and
14 (ii) items of income, to the extent includible in
15 gross income for federal income tax purposes,
16 attributable to, derived from or in any way related
17 to assets stolen from, hidden from, or otherwise
18 lost to a victim of persecution for racial or
19 religious reasons by Nazi Germany or any other Axis
20 regime immediately prior to, during, and immediately
21 after World War II, including, but not limited to,
22 interest on the proceeds receivable as insurance
23 under policies issued to a victim of persecution for
24 racial or religious reasons by Nazi Germany or any
25 other Axis regime by European insurance companies
26 immediately prior to and during World War II;
27 provided, however, this subtraction from federal
28 adjusted gross income does not apply to assets
29 acquired with such assets or with the proceeds from
30 the sale of such assets; provided, further, this
31 paragraph shall only apply to a taxpayer who was the
32 first recipient of such assets after their recovery
33 and who is a victim of persecution for racial or
34 religious reasons by Nazi Germany or any other Axis
-21- LRB9111994SMmb
1 regime or as an heir of the victim. The amount of
2 and the eligibility for any public assistance,
3 benefit, or similar entitlement is not affected by
4 the inclusion of items (i) and (ii) of this
5 paragraph in gross income for federal income tax
6 purposes. This paragraph is exempt from the
7 provisions of Section 250.
8 (3) Limitation. The amount of any modification
9 otherwise required under this subsection shall, under
10 regulations prescribed by the Department, be adjusted by
11 any amounts included therein which were properly paid,
12 credited, or required to be distributed, or permanently
13 set aside for charitable purposes pursuant to Internal
14 Revenue Code Section 642(c) during the taxable year.
15 (d) Partnerships.
16 (1) In general. In the case of a partnership, base
17 income means an amount equal to the taxpayer's taxable
18 income for the taxable year as modified by paragraph (2).
19 (2) Modifications. The taxable income referred to
20 in paragraph (1) shall be modified by adding thereto the
21 sum of the following amounts:
22 (A) An amount equal to all amounts paid or
23 accrued to the taxpayer as interest or dividends
24 during the taxable year to the extent excluded from
25 gross income in the computation of taxable income;
26 (B) An amount equal to the amount of tax
27 imposed by this Act to the extent deducted from
28 gross income for the taxable year;
29 (C) The amount of deductions allowed to the
30 partnership pursuant to Section 707 (c) of the
31 Internal Revenue Code in calculating its taxable
32 income; and
33 (D) An amount equal to the amount of the
34 capital gain deduction allowable under the Internal
-22- LRB9111994SMmb
1 Revenue Code, to the extent deducted from gross
2 income in the computation of taxable income;
3 and by deducting from the total so obtained the following
4 amounts:
5 (E) The valuation limitation amount;
6 (F) An amount equal to the amount of any tax
7 imposed by this Act which was refunded to the
8 taxpayer and included in such total for the taxable
9 year;
10 (G) An amount equal to all amounts included in
11 taxable income as modified by subparagraphs (A),
12 (B), (C) and (D) which are exempt from taxation by
13 this State either by reason of its statutes or
14 Constitution or by reason of the Constitution,
15 treaties or statutes of the United States; provided
16 that, in the case of any statute of this State that
17 exempts income derived from bonds or other
18 obligations from the tax imposed under this Act, the
19 amount exempted shall be the interest net of bond
20 premium amortization;
21 (H) Any income of the partnership which
22 constitutes personal service income as defined in
23 Section 1348 (b) (1) of the Internal Revenue Code
24 (as in effect December 31, 1981) or a reasonable
25 allowance for compensation paid or accrued for
26 services rendered by partners to the partnership,
27 whichever is greater;
28 (I) An amount equal to all amounts of income
29 distributable to an entity subject to the Personal
30 Property Tax Replacement Income Tax imposed by
31 subsections (c) and (d) of Section 201 of this Act
32 including amounts distributable to organizations
33 exempt from federal income tax by reason of Section
34 501(a) of the Internal Revenue Code;
-23- LRB9111994SMmb
1 (J) With the exception of any amounts
2 subtracted under subparagraph (G), an amount equal
3 to the sum of all amounts disallowed as deductions
4 by (i) Sections 171(a) (2), and 265(2) of the
5 Internal Revenue Code of 1954, as now or hereafter
6 amended, and all amounts of expenses allocable to
7 interest and disallowed as deductions by Section
8 265(1) of the Internal Revenue Code, as now or
9 hereafter amended; and (ii) for taxable years ending
10 on or after August 13, 1999 the effective date of
11 this amendatory Act of the 91st General Assembly,
12 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
13 of the Internal Revenue Code; the provisions of this
14 subparagraph are exempt from the provisions of
15 Section 250;
16 (K) An amount equal to those dividends
17 included in such total which were paid by a
18 corporation which conducts business operations in an
19 Enterprise Zone or zones created under the Illinois
20 Enterprise Zone Act, enacted by the 82nd General
21 Assembly, and which does not conduct such operations
22 other than in an Enterprise Zone or Zones;
23 (L) An amount equal to any contribution made
24 to a job training project established pursuant to
25 the Real Property Tax Increment Allocation
26 Redevelopment Act;
27 (M) An amount equal to those dividends
28 included in such total that were paid by a
29 corporation that conducts business operations in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 and that is designated a High Impact Business
32 located in Illinois; provided that dividends
33 eligible for the deduction provided in subparagraph
34 (K) of paragraph (2) of this subsection shall not be
-24- LRB9111994SMmb
1 eligible for the deduction provided under this
2 subparagraph (M); and
3 (N) An amount equal to the amount of the
4 deduction used to compute the federal income tax
5 credit for restoration of substantial amounts held
6 under claim of right for the taxable year pursuant
7 to Section 1341 of the Internal Revenue Code of
8 1986.
9 (e) Gross income; adjusted gross income; taxable income.
10 (1) In general. Subject to the provisions of
11 paragraph (2) and subsection (b) (3), for purposes of
12 this Section and Section 803(e), a taxpayer's gross
13 income, adjusted gross income, or taxable income for the
14 taxable year shall mean the amount of gross income,
15 adjusted gross income or taxable income properly
16 reportable for federal income tax purposes for the
17 taxable year under the provisions of the Internal Revenue
18 Code. Taxable income may be less than zero. However, for
19 taxable years ending on or after December 31, 1986, net
20 operating loss carryforwards from taxable years ending
21 prior to December 31, 1986, may not exceed the sum of
22 federal taxable income for the taxable year before net
23 operating loss deduction, plus the excess of addition
24 modifications over subtraction modifications for the
25 taxable year. For taxable years ending prior to December
26 31, 1986, taxable income may never be an amount in excess
27 of the net operating loss for the taxable year as defined
28 in subsections (c) and (d) of Section 172 of the Internal
29 Revenue Code, provided that when taxable income of a
30 corporation (other than a Subchapter S corporation),
31 trust, or estate is less than zero and addition
32 modifications, other than those provided by subparagraph
33 (E) of paragraph (2) of subsection (b) for corporations
34 or subparagraph (E) of paragraph (2) of subsection (c)
-25- LRB9111994SMmb
1 for trusts and estates, exceed subtraction modifications,
2 an addition modification must be made under those
3 subparagraphs for any other taxable year to which the
4 taxable income less than zero (net operating loss) is
5 applied under Section 172 of the Internal Revenue Code or
6 under subparagraph (E) of paragraph (2) of this
7 subsection (e) applied in conjunction with Section 172 of
8 the Internal Revenue Code.
9 (2) Special rule. For purposes of paragraph (1) of
10 this subsection, the taxable income properly reportable
11 for federal income tax purposes shall mean:
12 (A) Certain life insurance companies. In the
13 case of a life insurance company subject to the tax
14 imposed by Section 801 of the Internal Revenue Code,
15 life insurance company taxable income, plus the
16 amount of distribution from pre-1984 policyholder
17 surplus accounts as calculated under Section 815a of
18 the Internal Revenue Code;
19 (B) Certain other insurance companies. In the
20 case of mutual insurance companies subject to the
21 tax imposed by Section 831 of the Internal Revenue
22 Code, insurance company taxable income;
23 (C) Regulated investment companies. In the
24 case of a regulated investment company subject to
25 the tax imposed by Section 852 of the Internal
26 Revenue Code, investment company taxable income;
27 (D) Real estate investment trusts. In the
28 case of a real estate investment trust subject to
29 the tax imposed by Section 857 of the Internal
30 Revenue Code, real estate investment trust taxable
31 income;
32 (E) Consolidated corporations. In the case of
33 a corporation which is a member of an affiliated
34 group of corporations filing a consolidated income
-26- LRB9111994SMmb
1 tax return for the taxable year for federal income
2 tax purposes, taxable income determined as if such
3 corporation had filed a separate return for federal
4 income tax purposes for the taxable year and each
5 preceding taxable year for which it was a member of
6 an affiliated group. For purposes of this
7 subparagraph, the taxpayer's separate taxable income
8 shall be determined as if the election provided by
9 Section 243(b) (2) of the Internal Revenue Code had
10 been in effect for all such years;
11 (F) Cooperatives. In the case of a
12 cooperative corporation or association, the taxable
13 income of such organization determined in accordance
14 with the provisions of Section 1381 through 1388 of
15 the Internal Revenue Code;
16 (G) Subchapter S corporations. In the case
17 of: (i) a Subchapter S corporation for which there
18 is in effect an election for the taxable year under
19 Section 1362 of the Internal Revenue Code, the
20 taxable income of such corporation determined in
21 accordance with Section 1363(b) of the Internal
22 Revenue Code, except that taxable income shall take
23 into account those items which are required by
24 Section 1363(b)(1) of the Internal Revenue Code to
25 be separately stated; and (ii) a Subchapter S
26 corporation for which there is in effect a federal
27 election to opt out of the provisions of the
28 Subchapter S Revision Act of 1982 and have applied
29 instead the prior federal Subchapter S rules as in
30 effect on July 1, 1982, the taxable income of such
31 corporation determined in accordance with the
32 federal Subchapter S rules as in effect on July 1,
33 1982; and
34 (H) Partnerships. In the case of a
-27- LRB9111994SMmb
1 partnership, taxable income determined in accordance
2 with Section 703 of the Internal Revenue Code,
3 except that taxable income shall take into account
4 those items which are required by Section 703(a)(1)
5 to be separately stated but which would be taken
6 into account by an individual in calculating his
7 taxable income.
8 (f) Valuation limitation amount.
9 (1) In general. The valuation limitation amount
10 referred to in subsections (a) (2) (G), (c) (2) (I) and
11 (d)(2) (E) is an amount equal to:
12 (A) The sum of the pre-August 1, 1969
13 appreciation amounts (to the extent consisting of
14 gain reportable under the provisions of Section 1245
15 or 1250 of the Internal Revenue Code) for all
16 property in respect of which such gain was reported
17 for the taxable year; plus
18 (B) The lesser of (i) the sum of the
19 pre-August 1, 1969 appreciation amounts (to the
20 extent consisting of capital gain) for all property
21 in respect of which such gain was reported for
22 federal income tax purposes for the taxable year, or
23 (ii) the net capital gain for the taxable year,
24 reduced in either case by any amount of such gain
25 included in the amount determined under subsection
26 (a) (2) (F) or (c) (2) (H).
27 (2) Pre-August 1, 1969 appreciation amount.
28 (A) If the fair market value of property
29 referred to in paragraph (1) was readily
30 ascertainable on August 1, 1969, the pre-August 1,
31 1969 appreciation amount for such property is the
32 lesser of (i) the excess of such fair market value
33 over the taxpayer's basis (for determining gain) for
34 such property on that date (determined under the
-28- LRB9111994SMmb
1 Internal Revenue Code as in effect on that date), or
2 (ii) the total gain realized and reportable for
3 federal income tax purposes in respect of the sale,
4 exchange or other disposition of such property.
5 (B) If the fair market value of property
6 referred to in paragraph (1) was not readily
7 ascertainable on August 1, 1969, the pre-August 1,
8 1969 appreciation amount for such property is that
9 amount which bears the same ratio to the total gain
10 reported in respect of the property for federal
11 income tax purposes for the taxable year, as the
12 number of full calendar months in that part of the
13 taxpayer's holding period for the property ending
14 July 31, 1969 bears to the number of full calendar
15 months in the taxpayer's entire holding period for
16 the property.
17 (C) The Department shall prescribe such
18 regulations as may be necessary to carry out the
19 purposes of this paragraph.
20 (g) Double deductions. Unless specifically provided
21 otherwise, nothing in this Section shall permit the same item
22 to be deducted more than once.
23 (h) Legislative intention. Except as expressly provided
24 by this Section there shall be no modifications or
25 limitations on the amounts of income, gain, loss or deduction
26 taken into account in determining gross income, adjusted
27 gross income or taxable income for federal income tax
28 purposes for the taxable year, or in the amount of such items
29 entering into the computation of base income and net income
30 under this Act for such taxable year, whether in respect of
31 property values as of August 1, 1969 or otherwise.
32 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
33 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
-29- LRB9111994SMmb
1 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676,
2 eff. 12-23-99; revised 1-5-00.)
3 Section 99. Effective date. This Act takes effect upon
4 becoming law.