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91_SB0111
LRB9100932PTpk
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
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1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
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1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by Sections 171(a) (2), and 265(2) of the Internal
20 Revenue Code of 1954, as now or hereafter amended,
21 and all amounts of expenses allocable to interest
22 and disallowed as deductions by Section 265(1) of
23 the Internal Revenue Code of 1954, as now or
24 hereafter amended;
25 (N) An amount equal to all amounts included in
26 such total which are exempt from taxation by this
27 State either by reason of its statutes or
28 Constitution or by reason of the Constitution,
29 treaties or statutes of the United States; provided
30 that, in the case of any statute of this State that
31 exempts income derived from bonds or other
32 obligations from the tax imposed under this Act, the
33 amount exempted shall be the interest net of bond
34 premium amortization;
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1 (O) An amount equal to any contribution made
2 to a job training project established pursuant to
3 the Tax Increment Allocation Redevelopment Act;
4 (P) An amount equal to the amount of the
5 deduction used to compute the federal income tax
6 credit for restoration of substantial amounts held
7 under claim of right for the taxable year pursuant
8 to Section 1341 of the Internal Revenue Code of
9 1986;
10 (Q) An amount equal to any amounts included in
11 such total, received by the taxpayer as an
12 acceleration in the payment of life, endowment or
13 annuity benefits in advance of the time they would
14 otherwise be payable as an indemnity for a terminal
15 illness;
16 (R) An amount equal to the amount of any
17 federal or State bonus paid to veterans of the
18 Persian Gulf War;
19 (S) An amount, to the extent included in
20 adjusted gross income, equal to the amount of a
21 contribution made in the taxable year on behalf of
22 the taxpayer to a medical care savings account
23 established under the Medical Care Savings Account
24 Act to the extent the contribution is accepted by
25 the account administrator as provided in that Act;
26 (T) An amount, to the extent included in
27 adjusted gross income, equal to the amount of
28 interest earned in the taxable year on a medical
29 care savings account established under the Medical
30 Care Savings Account Act on behalf of the taxpayer,
31 other than interest added pursuant to item (D-5) of
32 this paragraph (2);
33 (U) For one taxable year beginning on or after
34 January 1, 1994, an amount equal to the total amount
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1 of tax imposed and paid under subsections (a) and
2 (b) of Section 201 of this Act on grant amounts
3 received by the taxpayer under the Nursing Home
4 Grant Assistance Act during the taxpayer's taxable
5 years 1992 and 1993;
6 (V) Beginning with tax years ending on or
7 after December 31, 1995 and ending with tax years
8 ending on or before December 31, 2004 1999, an
9 amount equal to the amount paid by a taxpayer who is
10 a self-employed taxpayer, a partner of a
11 partnership, or a shareholder in a Subchapter S
12 corporation for health insurance or long-term care
13 insurance for that taxpayer or that taxpayer's
14 spouse or dependents, to the extent that the amount
15 paid for that health insurance or long-term care
16 insurance may be deducted under Section 213 of the
17 Internal Revenue Code of 1986, has not been deducted
18 on the federal income tax return of the taxpayer,
19 and does not exceed the taxable income attributable
20 to that taxpayer's income, self-employment income,
21 or Subchapter S corporation income; except that no
22 deduction shall be allowed under this item (V) if
23 the taxpayer is eligible to participate in any
24 health insurance or long-term care insurance plan of
25 an employer of the taxpayer or the taxpayer's
26 spouse. The amount of the health insurance and
27 long-term care insurance subtracted under this item
28 (V) shall be determined by multiplying total health
29 insurance and long-term care insurance premiums paid
30 by the taxpayer times a number that represents the
31 fractional percentage of eligible medical expenses
32 under Section 213 of the Internal Revenue Code of
33 1986 not actually deducted on the taxpayer's federal
34 income tax return; and
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1 (W) For taxable years beginning on or after
2 January 1, 1998, all amounts included in the
3 taxpayer's federal gross income in the taxable year
4 from amounts converted from a regular IRA to a Roth
5 IRA. This paragraph is exempt from the provisions of
6 Section 250.
7 (b) Corporations.
8 (1) In general. In the case of a corporation, base
9 income means an amount equal to the taxpayer's taxable
10 income for the taxable year as modified by paragraph (2).
11 (2) Modifications. The taxable income referred to
12 in paragraph (1) shall be modified by adding thereto the
13 sum of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest and all
16 distributions received from regulated investment
17 companies during the taxable year to the extent
18 excluded from gross income in the computation of
19 taxable income;
20 (B) An amount equal to the amount of tax
21 imposed by this Act to the extent deducted from
22 gross income in the computation of taxable income
23 for the taxable year;
24 (C) In the case of a regulated investment
25 company, an amount equal to the excess of (i) the
26 net long-term capital gain for the taxable year,
27 over (ii) the amount of the capital gain dividends
28 designated as such in accordance with Section
29 852(b)(3)(C) of the Internal Revenue Code and any
30 amount designated under Section 852(b)(3)(D) of the
31 Internal Revenue Code, attributable to the taxable
32 year. (this amendatory Act of 1995 (Public Act
33 89-89) is declarative of existing law and is not a
34 new enactment);.
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1 (D) The amount of any net operating loss
2 deduction taken in arriving at taxable income, other
3 than a net operating loss carried forward from a
4 taxable year ending prior to December 31, 1986; and
5 (E) For taxable years in which a net operating
6 loss carryback or carryforward from a taxable year
7 ending prior to December 31, 1986 is an element of
8 taxable income under paragraph (1) of subsection (e)
9 or subparagraph (E) of paragraph (2) of subsection
10 (e), the amount by which addition modifications
11 other than those provided by this subparagraph (E)
12 exceeded subtraction modifications in such earlier
13 taxable year, with the following limitations applied
14 in the order that they are listed:
15 (i) the addition modification relating to
16 the net operating loss carried back or forward
17 to the taxable year from any taxable year
18 ending prior to December 31, 1986 shall be
19 reduced by the amount of addition modification
20 under this subparagraph (E) which related to
21 that net operating loss and which was taken
22 into account in calculating the base income of
23 an earlier taxable year, and
24 (ii) the addition modification relating
25 to the net operating loss carried back or
26 forward to the taxable year from any taxable
27 year ending prior to December 31, 1986 shall
28 not exceed the amount of such carryback or
29 carryforward;
30 For taxable years in which there is a net
31 operating loss carryback or carryforward from more
32 than one other taxable year ending prior to December
33 31, 1986, the addition modification provided in this
34 subparagraph (E) shall be the sum of the amounts
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1 computed independently under the preceding
2 provisions of this subparagraph (E) for each such
3 taxable year;, and
4 (E-5) For taxable years ending after December
5 31, 1997, an amount equal to any eligible
6 remediation costs that the corporation deducted in
7 computing adjusted gross income and for which the
8 corporation claims a credit under subsection (l) of
9 Section 201;
10 and by deducting from the total so obtained the sum of
11 the following amounts:
12 (F) An amount equal to the amount of any tax
13 imposed by this Act which was refunded to the
14 taxpayer and included in such total for the taxable
15 year;
16 (G) An amount equal to any amount included in
17 such total under Section 78 of the Internal Revenue
18 Code;
19 (H) In the case of a regulated investment
20 company, an amount equal to the amount of exempt
21 interest dividends as defined in subsection (b) (5)
22 of Section 852 of the Internal Revenue Code, paid to
23 shareholders for the taxable year;
24 (I) With the exception of any amounts
25 subtracted under subparagraph (J), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by Sections 171(a) (2), and 265(a)(2) and amounts
28 disallowed as interest expense by Section 291(a)(3)
29 of the Internal Revenue Code, as now or hereafter
30 amended, and all amounts of expenses allocable to
31 interest and disallowed as deductions by Section
32 265(a)(1) of the Internal Revenue Code, as now or
33 hereafter amended;
34 (J) An amount equal to all amounts included in
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1 such total which are exempt from taxation by this
2 State either by reason of its statutes or
3 Constitution or by reason of the Constitution,
4 treaties or statutes of the United States; provided
5 that, in the case of any statute of this State that
6 exempts income derived from bonds or other
7 obligations from the tax imposed under this Act, the
8 amount exempted shall be the interest net of bond
9 premium amortization;
10 (K) An amount equal to those dividends
11 included in such total which were paid by a
12 corporation which conducts business operations in an
13 Enterprise Zone or zones created under the Illinois
14 Enterprise Zone Act and conducts substantially all
15 of its operations in an Enterprise Zone or zones;
16 (L) An amount equal to those dividends
17 included in such total that were paid by a
18 corporation that conducts business operations in a
19 federally designated Foreign Trade Zone or Sub-Zone
20 and that is designated a High Impact Business
21 located in Illinois; provided that dividends
22 eligible for the deduction provided in subparagraph
23 (K) of paragraph 2 of this subsection shall not be
24 eligible for the deduction provided under this
25 subparagraph (L);
26 (M) For any taxpayer that is a financial
27 organization within the meaning of Section 304(c) of
28 this Act, an amount included in such total as
29 interest income from a loan or loans made by such
30 taxpayer to a borrower, to the extent that such a
31 loan is secured by property which is eligible for
32 the Enterprise Zone Investment Credit. To determine
33 the portion of a loan or loans that is secured by
34 property eligible for a Section 201(h) investment
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1 credit to the borrower, the entire principal amount
2 of the loan or loans between the taxpayer and the
3 borrower should be divided into the basis of the
4 Section 201(h) investment credit property which
5 secures the loan or loans, using for this purpose
6 the original basis of such property on the date that
7 it was placed in service in the Enterprise Zone.
8 The subtraction modification available to taxpayer
9 in any year under this subsection shall be that
10 portion of the total interest paid by the borrower
11 with respect to such loan attributable to the
12 eligible property as calculated under the previous
13 sentence;
14 (M-1) For any taxpayer that is a financial
15 organization within the meaning of Section 304(c) of
16 this Act, an amount included in such total as
17 interest income from a loan or loans made by such
18 taxpayer to a borrower, to the extent that such a
19 loan is secured by property which is eligible for
20 the High Impact Business Investment Credit. To
21 determine the portion of a loan or loans that is
22 secured by property eligible for a Section 201(i)
23 investment credit to the borrower, the entire
24 principal amount of the loan or loans between the
25 taxpayer and the borrower should be divided into the
26 basis of the Section 201(i) investment credit
27 property which secures the loan or loans, using for
28 this purpose the original basis of such property on
29 the date that it was placed in service in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 located in Illinois. No taxpayer that is eligible
32 for the deduction provided in subparagraph (M) of
33 paragraph (2) of this subsection shall be eligible
34 for the deduction provided under this subparagraph
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1 (M-1). The subtraction modification available to
2 taxpayers in any year under this subsection shall be
3 that portion of the total interest paid by the
4 borrower with respect to such loan attributable to
5 the eligible property as calculated under the
6 previous sentence;
7 (N) Two times any contribution made during the
8 taxable year to a designated zone organization to
9 the extent that the contribution (i) qualifies as a
10 charitable contribution under subsection (c) of
11 Section 170 of the Internal Revenue Code and (ii)
12 must, by its terms, be used for a project approved
13 by the Department of Commerce and Community Affairs
14 under Section 11 of the Illinois Enterprise Zone
15 Act;
16 (O) An amount equal to: (i) 85% for taxable
17 years ending on or before December 31, 1992, or, a
18 percentage equal to the percentage allowable under
19 Section 243(a)(1) of the Internal Revenue Code of
20 1986 for taxable years ending after December 31,
21 1992, of the amount by which dividends included in
22 taxable income and received from a corporation that
23 is not created or organized under the laws of the
24 United States or any state or political subdivision
25 thereof, including, for taxable years ending on or
26 after December 31, 1988, dividends received or
27 deemed received or paid or deemed paid under
28 Sections 951 through 964 of the Internal Revenue
29 Code, exceed the amount of the modification provided
30 under subparagraph (G) of paragraph (2) of this
31 subsection (b) which is related to such dividends;
32 plus (ii) 100% of the amount by which dividends,
33 included in taxable income and received, including,
34 for taxable years ending on or after December 31,
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1 1988, dividends received or deemed received or paid
2 or deemed paid under Sections 951 through 964 of the
3 Internal Revenue Code, from any such corporation
4 specified in clause (i) that would but for the
5 provisions of Section 1504 (b) (3) of the Internal
6 Revenue Code be treated as a member of the
7 affiliated group which includes the dividend
8 recipient, exceed the amount of the modification
9 provided under subparagraph (G) of paragraph (2) of
10 this subsection (b) which is related to such
11 dividends;
12 (P) An amount equal to any contribution made
13 to a job training project established pursuant to
14 the Tax Increment Allocation Redevelopment Act; and
15 (Q) An amount equal to the amount of the
16 deduction used to compute the federal income tax
17 credit for restoration of substantial amounts held
18 under claim of right for the taxable year pursuant
19 to Section 1341 of the Internal Revenue Code of
20 1986.
21 (3) Special rule. For purposes of paragraph (2)
22 (A), "gross income" in the case of a life insurance
23 company, for tax years ending on and after December 31,
24 1994, shall mean the gross investment income for the
25 taxable year.
26 (c) Trusts and estates.
27 (1) In general. In the case of a trust or estate,
28 base income means an amount equal to the taxpayer's
29 taxable income for the taxable year as modified by
30 paragraph (2).
31 (2) Modifications. Subject to the provisions of
32 paragraph (3), the taxable income referred to in
33 paragraph (1) shall be modified by adding thereto the sum
34 of the following amounts:
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1 (A) An amount equal to all amounts paid or
2 accrued to the taxpayer as interest or dividends
3 during the taxable year to the extent excluded from
4 gross income in the computation of taxable income;
5 (B) In the case of (i) an estate, $600; (ii) a
6 trust which, under its governing instrument, is
7 required to distribute all of its income currently,
8 $300; and (iii) any other trust, $100, but in each
9 such case, only to the extent such amount was
10 deducted in the computation of taxable income;
11 (C) An amount equal to the amount of tax
12 imposed by this Act to the extent deducted from
13 gross income in the computation of taxable income
14 for the taxable year;
15 (D) The amount of any net operating loss
16 deduction taken in arriving at taxable income, other
17 than a net operating loss carried forward from a
18 taxable year ending prior to December 31, 1986;
19 (E) For taxable years in which a net operating
20 loss carryback or carryforward from a taxable year
21 ending prior to December 31, 1986 is an element of
22 taxable income under paragraph (1) of subsection (e)
23 or subparagraph (E) of paragraph (2) of subsection
24 (e), the amount by which addition modifications
25 other than those provided by this subparagraph (E)
26 exceeded subtraction modifications in such taxable
27 year, with the following limitations applied in the
28 order that they are listed:
29 (i) the addition modification relating to
30 the net operating loss carried back or forward
31 to the taxable year from any taxable year
32 ending prior to December 31, 1986 shall be
33 reduced by the amount of addition modification
34 under this subparagraph (E) which related to
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1 that net operating loss and which was taken
2 into account in calculating the base income of
3 an earlier taxable year, and
4 (ii) the addition modification relating
5 to the net operating loss carried back or
6 forward to the taxable year from any taxable
7 year ending prior to December 31, 1986 shall
8 not exceed the amount of such carryback or
9 carryforward;
10 For taxable years in which there is a net
11 operating loss carryback or carryforward from more
12 than one other taxable year ending prior to December
13 31, 1986, the addition modification provided in this
14 subparagraph (E) shall be the sum of the amounts
15 computed independently under the preceding
16 provisions of this subparagraph (E) for each such
17 taxable year;
18 (F) For taxable years ending on or after
19 January 1, 1989, an amount equal to the tax deducted
20 pursuant to Section 164 of the Internal Revenue Code
21 if the trust or estate is claiming the same tax for
22 purposes of the Illinois foreign tax credit under
23 Section 601 of this Act;
24 (G) An amount equal to the amount of the
25 capital gain deduction allowable under the Internal
26 Revenue Code, to the extent deducted from gross
27 income in the computation of taxable income; and
28 (G-5) For taxable years ending after December
29 31, 1997, an amount equal to any eligible
30 remediation costs that the trust or estate deducted
31 in computing adjusted gross income and for which the
32 trust or estate claims a credit under subsection (l)
33 of Section 201;
34 and by deducting from the total so obtained the sum of
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1 the following amounts:
2 (H) An amount equal to all amounts included in
3 such total pursuant to the provisions of Sections
4 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
5 408 of the Internal Revenue Code or included in such
6 total as distributions under the provisions of any
7 retirement or disability plan for employees of any
8 governmental agency or unit, or retirement payments
9 to retired partners, which payments are excluded in
10 computing net earnings from self employment by
11 Section 1402 of the Internal Revenue Code and
12 regulations adopted pursuant thereto;
13 (I) The valuation limitation amount;
14 (J) An amount equal to the amount of any tax
15 imposed by this Act which was refunded to the
16 taxpayer and included in such total for the taxable
17 year;
18 (K) An amount equal to all amounts included in
19 taxable income as modified by subparagraphs (A),
20 (B), (C), (D), (E), (F) and (G) which are exempt
21 from taxation by this State either by reason of its
22 statutes or Constitution or by reason of the
23 Constitution, treaties or statutes of the United
24 States; provided that, in the case of any statute of
25 this State that exempts income derived from bonds or
26 other obligations from the tax imposed under this
27 Act, the amount exempted shall be the interest net
28 of bond premium amortization;
29 (L) With the exception of any amounts
30 subtracted under subparagraph (K), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2) and 265(a)(2) of the Internal
33 Revenue Code, as now or hereafter amended, and all
34 amounts of expenses allocable to interest and
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1 disallowed as deductions by Section 265(1) of the
2 Internal Revenue Code of 1954, as now or hereafter
3 amended;
4 (M) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act and conducts substantially all
9 of its operations in an Enterprise Zone or Zones;
10 (N) An amount equal to any contribution made
11 to a job training project established pursuant to
12 the Tax Increment Allocation Redevelopment Act;
13 (O) An amount equal to those dividends
14 included in such total that were paid by a
15 corporation that conducts business operations in a
16 federally designated Foreign Trade Zone or Sub-Zone
17 and that is designated a High Impact Business
18 located in Illinois; provided that dividends
19 eligible for the deduction provided in subparagraph
20 (M) of paragraph (2) of this subsection shall not be
21 eligible for the deduction provided under this
22 subparagraph (O); and
23 (P) An amount equal to the amount of the
24 deduction used to compute the federal income tax
25 credit for restoration of substantial amounts held
26 under claim of right for the taxable year pursuant
27 to Section 1341 of the Internal Revenue Code of
28 1986.
29 (3) Limitation. The amount of any modification
30 otherwise required under this subsection shall, under
31 regulations prescribed by the Department, be adjusted by
32 any amounts included therein which were properly paid,
33 credited, or required to be distributed, or permanently
34 set aside for charitable purposes pursuant to Internal
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1 Revenue Code Section 642(c) during the taxable year.
2 (d) Partnerships.
3 (1) In general. In the case of a partnership, base
4 income means an amount equal to the taxpayer's taxable
5 income for the taxable year as modified by paragraph (2).
6 (2) Modifications. The taxable income referred to
7 in paragraph (1) shall be modified by adding thereto the
8 sum of the following amounts:
9 (A) An amount equal to all amounts paid or
10 accrued to the taxpayer as interest or dividends
11 during the taxable year to the extent excluded from
12 gross income in the computation of taxable income;
13 (B) An amount equal to the amount of tax
14 imposed by this Act to the extent deducted from
15 gross income for the taxable year; and
16 (C) The amount of deductions allowed to the
17 partnership pursuant to Section 707 (c) of the
18 Internal Revenue Code in calculating its taxable
19 income; and
20 (D) An amount equal to the amount of the
21 capital gain deduction allowable under the Internal
22 Revenue Code, to the extent deducted from gross
23 income in the computation of taxable income;
24 and by deducting from the total so obtained the following
25 amounts:
26 (E) The valuation limitation amount;
27 (F) An amount equal to the amount of any tax
28 imposed by this Act which was refunded to the
29 taxpayer and included in such total for the taxable
30 year;
31 (G) An amount equal to all amounts included in
32 taxable income as modified by subparagraphs (A),
33 (B), (C) and (D) which are exempt from taxation by
34 this State either by reason of its statutes or
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1 Constitution or by reason of the Constitution,
2 treaties or statutes of the United States; provided
3 that, in the case of any statute of this State that
4 exempts income derived from bonds or other
5 obligations from the tax imposed under this Act, the
6 amount exempted shall be the interest net of bond
7 premium amortization;
8 (H) Any income of the partnership which
9 constitutes personal service income as defined in
10 Section 1348 (b) (1) of the Internal Revenue Code
11 (as in effect December 31, 1981) or a reasonable
12 allowance for compensation paid or accrued for
13 services rendered by partners to the partnership,
14 whichever is greater;
15 (I) An amount equal to all amounts of income
16 distributable to an entity subject to the Personal
17 Property Tax Replacement Income Tax imposed by
18 subsections (c) and (d) of Section 201 of this Act
19 including amounts distributable to organizations
20 exempt from federal income tax by reason of Section
21 501(a) of the Internal Revenue Code;
22 (J) With the exception of any amounts
23 subtracted under subparagraph (G), an amount equal
24 to the sum of all amounts disallowed as deductions
25 by Sections 171(a) (2), and 265(2) of the Internal
26 Revenue Code of 1954, as now or hereafter amended,
27 and all amounts of expenses allocable to interest
28 and disallowed as deductions by Section 265(1) of
29 the Internal Revenue Code, as now or hereafter
30 amended;
31 (K) An amount equal to those dividends
32 included in such total which were paid by a
33 corporation which conducts business operations in an
34 Enterprise Zone or zones created under the Illinois
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1 Enterprise Zone Act, enacted by the 82nd General
2 Assembly, and which does not conduct such operations
3 other than in an Enterprise Zone or Zones;
4 (L) An amount equal to any contribution made
5 to a job training project established pursuant to
6 the Real Property Tax Increment Allocation
7 Redevelopment Act;
8 (M) An amount equal to those dividends
9 included in such total that were paid by a
10 corporation that conducts business operations in a
11 federally designated Foreign Trade Zone or Sub-Zone
12 and that is designated a High Impact Business
13 located in Illinois; provided that dividends
14 eligible for the deduction provided in subparagraph
15 (K) of paragraph (2) of this subsection shall not be
16 eligible for the deduction provided under this
17 subparagraph (M); and
18 (N) An amount equal to the amount of the
19 deduction used to compute the federal income tax
20 credit for restoration of substantial amounts held
21 under claim of right for the taxable year pursuant
22 to Section 1341 of the Internal Revenue Code of
23 1986.
24 (e) Gross income; adjusted gross income; taxable income.
25 (1) In general. Subject to the provisions of
26 paragraph (2) and subsection (b) (3), for purposes of
27 this Section and Section 803(e), a taxpayer's gross
28 income, adjusted gross income, or taxable income for the
29 taxable year shall mean the amount of gross income,
30 adjusted gross income or taxable income properly
31 reportable for federal income tax purposes for the
32 taxable year under the provisions of the Internal Revenue
33 Code. Taxable income may be less than zero. However, for
34 taxable years ending on or after December 31, 1986, net
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1 operating loss carryforwards from taxable years ending
2 prior to December 31, 1986, may not exceed the sum of
3 federal taxable income for the taxable year before net
4 operating loss deduction, plus the excess of addition
5 modifications over subtraction modifications for the
6 taxable year. For taxable years ending prior to December
7 31, 1986, taxable income may never be an amount in excess
8 of the net operating loss for the taxable year as defined
9 in subsections (c) and (d) of Section 172 of the Internal
10 Revenue Code, provided that when taxable income of a
11 corporation (other than a Subchapter S corporation),
12 trust, or estate is less than zero and addition
13 modifications, other than those provided by subparagraph
14 (E) of paragraph (2) of subsection (b) for corporations
15 or subparagraph (E) of paragraph (2) of subsection (c)
16 for trusts and estates, exceed subtraction modifications,
17 an addition modification must be made under those
18 subparagraphs for any other taxable year to which the
19 taxable income less than zero (net operating loss) is
20 applied under Section 172 of the Internal Revenue Code or
21 under subparagraph (E) of paragraph (2) of this
22 subsection (e) applied in conjunction with Section 172 of
23 the Internal Revenue Code.
24 (2) Special rule. For purposes of paragraph (1) of
25 this subsection, the taxable income properly reportable
26 for federal income tax purposes shall mean:
27 (A) Certain life insurance companies. In the
28 case of a life insurance company subject to the tax
29 imposed by Section 801 of the Internal Revenue Code,
30 life insurance company taxable income, plus the
31 amount of distribution from pre-1984 policyholder
32 surplus accounts as calculated under Section 815a of
33 the Internal Revenue Code;
34 (B) Certain other insurance companies. In the
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1 case of mutual insurance companies subject to the
2 tax imposed by Section 831 of the Internal Revenue
3 Code, insurance company taxable income;
4 (C) Regulated investment companies. In the
5 case of a regulated investment company subject to
6 the tax imposed by Section 852 of the Internal
7 Revenue Code, investment company taxable income;
8 (D) Real estate investment trusts. In the
9 case of a real estate investment trust subject to
10 the tax imposed by Section 857 of the Internal
11 Revenue Code, real estate investment trust taxable
12 income;
13 (E) Consolidated corporations. In the case of
14 a corporation which is a member of an affiliated
15 group of corporations filing a consolidated income
16 tax return for the taxable year for federal income
17 tax purposes, taxable income determined as if such
18 corporation had filed a separate return for federal
19 income tax purposes for the taxable year and each
20 preceding taxable year for which it was a member of
21 an affiliated group. For purposes of this
22 subparagraph, the taxpayer's separate taxable income
23 shall be determined as if the election provided by
24 Section 243(b) (2) of the Internal Revenue Code had
25 been in effect for all such years;
26 (F) Cooperatives. In the case of a
27 cooperative corporation or association, the taxable
28 income of such organization determined in accordance
29 with the provisions of Section 1381 through 1388 of
30 the Internal Revenue Code;
31 (G) Subchapter S corporations. In the case
32 of: (i) a Subchapter S corporation for which there
33 is in effect an election for the taxable year under
34 Section 1362 of the Internal Revenue Code, the
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1 taxable income of such corporation determined in
2 accordance with Section 1363(b) of the Internal
3 Revenue Code, except that taxable income shall take
4 into account those items which are required by
5 Section 1363(b)(1) of the Internal Revenue Code to
6 be separately stated; and (ii) a Subchapter S
7 corporation for which there is in effect a federal
8 election to opt out of the provisions of the
9 Subchapter S Revision Act of 1982 and have applied
10 instead the prior federal Subchapter S rules as in
11 effect on July 1, 1982, the taxable income of such
12 corporation determined in accordance with the
13 federal Subchapter S rules as in effect on July 1,
14 1982; and
15 (H) Partnerships. In the case of a
16 partnership, taxable income determined in accordance
17 with Section 703 of the Internal Revenue Code,
18 except that taxable income shall take into account
19 those items which are required by Section 703(a)(1)
20 to be separately stated but which would be taken
21 into account by an individual in calculating his
22 taxable income.
23 (f) Valuation limitation amount.
24 (1) In general. The valuation limitation amount
25 referred to in subsections (a) (2) (G), (c) (2) (I) and
26 (d)(2) (E) is an amount equal to:
27 (A) The sum of the pre-August 1, 1969
28 appreciation amounts (to the extent consisting of
29 gain reportable under the provisions of Section 1245
30 or 1250 of the Internal Revenue Code) for all
31 property in respect of which such gain was reported
32 for the taxable year; plus
33 (B) The lesser of (i) the sum of the
34 pre-August 1, 1969 appreciation amounts (to the
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1 extent consisting of capital gain) for all property
2 in respect of which such gain was reported for
3 federal income tax purposes for the taxable year, or
4 (ii) the net capital gain for the taxable year,
5 reduced in either case by any amount of such gain
6 included in the amount determined under subsection
7 (a) (2) (F) or (c) (2) (H).
8 (2) Pre-August 1, 1969 appreciation amount.
9 (A) If the fair market value of property
10 referred to in paragraph (1) was readily
11 ascertainable on August 1, 1969, the pre-August 1,
12 1969 appreciation amount for such property is the
13 lesser of (i) the excess of such fair market value
14 over the taxpayer's basis (for determining gain) for
15 such property on that date (determined under the
16 Internal Revenue Code as in effect on that date), or
17 (ii) the total gain realized and reportable for
18 federal income tax purposes in respect of the sale,
19 exchange or other disposition of such property.
20 (B) If the fair market value of property
21 referred to in paragraph (1) was not readily
22 ascertainable on August 1, 1969, the pre-August 1,
23 1969 appreciation amount for such property is that
24 amount which bears the same ratio to the total gain
25 reported in respect of the property for federal
26 income tax purposes for the taxable year, as the
27 number of full calendar months in that part of the
28 taxpayer's holding period for the property ending
29 July 31, 1969 bears to the number of full calendar
30 months in the taxpayer's entire holding period for
31 the property.
32 (C) The Department shall prescribe such
33 regulations as may be necessary to carry out the
34 purposes of this paragraph.
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1 (g) Double deductions. Unless specifically provided
2 otherwise, nothing in this Section shall permit the same item
3 to be deducted more than once.
4 (h) Legislative intention. Except as expressly provided
5 by this Section there shall be no modifications or
6 limitations on the amounts of income, gain, loss or deduction
7 taken into account in determining gross income, adjusted
8 gross income or taxable income for federal income tax
9 purposes for the taxable year, or in the amount of such items
10 entering into the computation of base income and net income
11 under this Act for such taxable year, whether in respect of
12 property values as of August 1, 1969 or otherwise.
13 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
14 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
15 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
16 eff. 8-14-98; revised 9-21-98.)
17 Section 99. Effective date. This Act takes effect upon
18 becoming law.