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91_SB0214
LRB9101201PTpk
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16 withdrawn by the taxpayer in the taxable year from a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, 1999, an amount
9 equal to the amount paid by a taxpayer who is a
10 self-employed taxpayer, a partner of a partnership,
11 or a shareholder in a Subchapter S corporation for
12 health insurance or long-term care insurance for
13 that taxpayer or that taxpayer's spouse or
14 dependents, to the extent that the amount paid for
15 that health insurance or long-term care insurance
16 may be deducted under Section 213 of the Internal
17 Revenue Code of 1986, has not been deducted on the
18 federal income tax return of the taxpayer, and does
19 not exceed the taxable income attributable to that
20 taxpayer's income, self-employment income, or
21 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, except that the amount of a
20 taxpayer's adjustment under Section 832(b)(5)(B)(i)
21 of the Internal Revenue Code shall not be treated as
22 an amount of interest excluded from gross income in
23 the computation of taxable income; the changes made
24 by this amendatory Act of the 91st General Assembly
25 are exempt from the provisions of Section 250;
26 (B) An amount equal to the amount of tax
27 imposed by this Act to the extent deducted from
28 gross income in the computation of taxable income
29 for the taxable year;
30 (C) In the case of a regulated investment
31 company, an amount equal to the excess of (i) the
32 net long-term capital gain for the taxable year,
33 over (ii) the amount of the capital gain dividends
34 designated as such in accordance with Section
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1 852(b)(3)(C) of the Internal Revenue Code and any
2 amount designated under Section 852(b)(3)(D) of the
3 Internal Revenue Code, attributable to the taxable
4 year. (this amendatory Act of 1995 (Public Act
5 89-89) is declarative of existing law and is not a
6 new enactment);.
7 (D) The amount of any net operating loss
8 deduction taken in arriving at taxable income, other
9 than a net operating loss carried forward from a
10 taxable year ending prior to December 31, 1986; and
11 (E) For taxable years in which a net operating
12 loss carryback or carryforward from a taxable year
13 ending prior to December 31, 1986 is an element of
14 taxable income under paragraph (1) of subsection (e)
15 or subparagraph (E) of paragraph (2) of subsection
16 (e), the amount by which addition modifications
17 other than those provided by this subparagraph (E)
18 exceeded subtraction modifications in such earlier
19 taxable year, with the following limitations applied
20 in the order that they are listed:
21 (i) the addition modification relating to
22 the net operating loss carried back or forward
23 to the taxable year from any taxable year
24 ending prior to December 31, 1986 shall be
25 reduced by the amount of addition modification
26 under this subparagraph (E) which related to
27 that net operating loss and which was taken
28 into account in calculating the base income of
29 an earlier taxable year, and
30 (ii) the addition modification relating
31 to the net operating loss carried back or
32 forward to the taxable year from any taxable
33 year ending prior to December 31, 1986 shall
34 not exceed the amount of such carryback or
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1 carryforward;
2 For taxable years in which there is a net
3 operating loss carryback or carryforward from more
4 than one other taxable year ending prior to December
5 31, 1986, the addition modification provided in this
6 subparagraph (E) shall be the sum of the amounts
7 computed independently under the preceding
8 provisions of this subparagraph (E) for each such
9 taxable year;, and
10 (E-5) For taxable years ending after December
11 31, 1997, an amount equal to any eligible
12 remediation costs that the corporation deducted in
13 computing adjusted gross income and for which the
14 corporation claims a credit under subsection (l) of
15 Section 201;
16 and by deducting from the total so obtained the sum of
17 the following amounts:
18 (F) An amount equal to the amount of any tax
19 imposed by this Act which was refunded to the
20 taxpayer and included in such total for the taxable
21 year;
22 (G) An amount equal to any amount included in
23 such total under Section 78 of the Internal Revenue
24 Code;
25 (H) In the case of a regulated investment
26 company, an amount equal to the amount of exempt
27 interest dividends as defined in subsection (b) (5)
28 of Section 852 of the Internal Revenue Code, paid to
29 shareholders for the taxable year;
30 (I) With the exception of any amounts
31 subtracted under subparagraph (J), an amount equal
32 to the sum of all amounts disallowed as deductions
33 by Sections 171(a) (2), and 265(a)(2) and amounts
34 disallowed as interest expense by Section 291(a)(3)
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1 of the Internal Revenue Code, as now or hereafter
2 amended, and all amounts of expenses allocable to
3 interest and disallowed as deductions by Section
4 265(a)(1) of the Internal Revenue Code, as now or
5 hereafter amended;
6 (J) An amount equal to all amounts included in
7 such total which are exempt from taxation by this
8 State either by reason of its statutes or
9 Constitution or by reason of the Constitution,
10 treaties or statutes of the United States; provided
11 that, in the case of any statute of this State that
12 exempts income derived from bonds or other
13 obligations from the tax imposed under this Act, the
14 amount exempted shall be the interest net of bond
15 premium amortization;
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 and conducts substantially all
21 of its operations in an Enterprise Zone or zones;
22 (L) An amount equal to those dividends
23 included in such total that were paid by a
24 corporation that conducts business operations in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 and that is designated a High Impact Business
27 located in Illinois; provided that dividends
28 eligible for the deduction provided in subparagraph
29 (K) of paragraph 2 of this subsection shall not be
30 eligible for the deduction provided under this
31 subparagraph (L);
32 (M) For any taxpayer that is a financial
33 organization within the meaning of Section 304(c) of
34 this Act, an amount included in such total as
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1 interest income from a loan or loans made by such
2 taxpayer to a borrower, to the extent that such a
3 loan is secured by property which is eligible for
4 the Enterprise Zone Investment Credit. To determine
5 the portion of a loan or loans that is secured by
6 property eligible for a Section 201(h) investment
7 credit to the borrower, the entire principal amount
8 of the loan or loans between the taxpayer and the
9 borrower should be divided into the basis of the
10 Section 201(h) investment credit property which
11 secures the loan or loans, using for this purpose
12 the original basis of such property on the date that
13 it was placed in service in the Enterprise Zone.
14 The subtraction modification available to taxpayer
15 in any year under this subsection shall be that
16 portion of the total interest paid by the borrower
17 with respect to such loan attributable to the
18 eligible property as calculated under the previous
19 sentence;
20 (M-1) For any taxpayer that is a financial
21 organization within the meaning of Section 304(c) of
22 this Act, an amount included in such total as
23 interest income from a loan or loans made by such
24 taxpayer to a borrower, to the extent that such a
25 loan is secured by property which is eligible for
26 the High Impact Business Investment Credit. To
27 determine the portion of a loan or loans that is
28 secured by property eligible for a Section 201(i)
29 investment credit to the borrower, the entire
30 principal amount of the loan or loans between the
31 taxpayer and the borrower should be divided into the
32 basis of the Section 201(i) investment credit
33 property which secures the loan or loans, using for
34 this purpose the original basis of such property on
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1 the date that it was placed in service in a
2 federally designated Foreign Trade Zone or Sub-Zone
3 located in Illinois. No taxpayer that is eligible
4 for the deduction provided in subparagraph (M) of
5 paragraph (2) of this subsection shall be eligible
6 for the deduction provided under this subparagraph
7 (M-1). The subtraction modification available to
8 taxpayers in any year under this subsection shall be
9 that portion of the total interest paid by the
10 borrower with respect to such loan attributable to
11 the eligible property as calculated under the
12 previous sentence;
13 (N) Two times any contribution made during the
14 taxable year to a designated zone organization to
15 the extent that the contribution (i) qualifies as a
16 charitable contribution under subsection (c) of
17 Section 170 of the Internal Revenue Code and (ii)
18 must, by its terms, be used for a project approved
19 by the Department of Commerce and Community Affairs
20 under Section 11 of the Illinois Enterprise Zone
21 Act;
22 (O) An amount equal to: (i) 85% for taxable
23 years ending on or before December 31, 1992, or, a
24 percentage equal to the percentage allowable under
25 Section 243(a)(1) of the Internal Revenue Code of
26 1986 for taxable years ending after December 31,
27 1992, of the amount by which dividends included in
28 taxable income and received from a corporation that
29 is not created or organized under the laws of the
30 United States or any state or political subdivision
31 thereof, including, for taxable years ending on or
32 after December 31, 1988, dividends received or
33 deemed received or paid or deemed paid under
34 Sections 951 through 964 of the Internal Revenue
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1 Code, exceed the amount of the modification provided
2 under subparagraph (G) of paragraph (2) of this
3 subsection (b) which is related to such dividends;
4 plus (ii) 100% of the amount by which dividends,
5 included in taxable income and received, including,
6 for taxable years ending on or after December 31,
7 1988, dividends received or deemed received or paid
8 or deemed paid under Sections 951 through 964 of the
9 Internal Revenue Code, from any such corporation
10 specified in clause (i) that would but for the
11 provisions of Section 1504 (b) (3) of the Internal
12 Revenue Code be treated as a member of the
13 affiliated group which includes the dividend
14 recipient, exceed the amount of the modification
15 provided under subparagraph (G) of paragraph (2) of
16 this subsection (b) which is related to such
17 dividends;
18 (P) An amount equal to any contribution made
19 to a job training project established pursuant to
20 the Tax Increment Allocation Redevelopment Act; and
21 (Q) An amount equal to the amount of the
22 deduction used to compute the federal income tax
23 credit for restoration of substantial amounts held
24 under claim of right for the taxable year pursuant
25 to Section 1341 of the Internal Revenue Code of
26 1986.
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
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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:
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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
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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;
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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 Sections 171(a) (2) and 265(a)(2) of the Internal
5 Revenue Code, as now or hereafter amended, and all
6 amounts of expenses allocable to interest and
7 disallowed as deductions by Section 265(1) of the
8 Internal Revenue Code of 1954, as now or hereafter
9 amended;
10 (M) 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 (N) An amount equal to any contribution made
17 to a job training project established pursuant to
18 the Tax Increment Allocation Redevelopment Act;
19 (O) An amount equal to those dividends
20 included in such total that were paid by a
21 corporation that conducts business operations in a
22 federally designated Foreign Trade Zone or Sub-Zone
23 and that is designated a High Impact Business
24 located in Illinois; provided that dividends
25 eligible for the deduction provided in subparagraph
26 (M) of paragraph (2) of this subsection shall not be
27 eligible for the deduction provided under this
28 subparagraph (O); and
29 (P) An amount equal to the amount of the
30 deduction used to compute the federal income tax
31 credit for restoration of substantial amounts held
32 under claim of right for the taxable year pursuant
33 to Section 1341 of the Internal Revenue Code of
34 1986.
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1 (3) Limitation. The amount of any modification
2 otherwise required under this subsection shall, under
3 regulations prescribed by the Department, be adjusted by
4 any amounts included therein which were properly paid,
5 credited, or required to be distributed, or permanently
6 set aside for charitable purposes pursuant to Internal
7 Revenue Code Section 642(c) during the taxable year.
8 (d) Partnerships.
9 (1) In general. In the case of a partnership, base
10 income means an amount equal to the taxpayer's taxable
11 income for the taxable year as modified by paragraph (2).
12 (2) Modifications. The taxable income referred to
13 in paragraph (1) shall be modified by adding thereto the
14 sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income for the taxable year; and
22 (C) The amount of deductions allowed to the
23 partnership pursuant to Section 707 (c) of the
24 Internal Revenue Code in calculating its taxable
25 income; and
26 (D) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of taxable income;
30 and by deducting from the total so obtained the following
31 amounts:
32 (E) The valuation limitation amount;
33 (F) An amount equal to the amount of any tax
34 imposed by this Act which was refunded to the
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1 taxpayer and included in such total for the taxable
2 year;
3 (G) An amount equal to all amounts included in
4 taxable income as modified by subparagraphs (A),
5 (B), (C) and (D) which are exempt from taxation by
6 this State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (H) Any income of the partnership which
15 constitutes personal service income as defined in
16 Section 1348 (b) (1) of the Internal Revenue Code
17 (as in effect December 31, 1981) or a reasonable
18 allowance for compensation paid or accrued for
19 services rendered by partners to the partnership,
20 whichever is greater;
21 (I) An amount equal to all amounts of income
22 distributable to an entity subject to the Personal
23 Property Tax Replacement Income Tax imposed by
24 subsections (c) and (d) of Section 201 of this Act
25 including amounts distributable to organizations
26 exempt from federal income tax by reason of Section
27 501(a) of the Internal Revenue Code;
28 (J) With the exception of any amounts
29 subtracted under subparagraph (G), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2), and 265(2) of the Internal
32 Revenue Code of 1954, as now or hereafter amended,
33 and all amounts of expenses allocable to interest
34 and disallowed as deductions by Section 265(1) of
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1 the Internal Revenue Code, as now or hereafter
2 amended;
3 (K) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act, enacted by the 82nd General
8 Assembly, and which does not conduct such operations
9 other than in an Enterprise Zone or Zones;
10 (L) An amount equal to any contribution made
11 to a job training project established pursuant to
12 the Real Property Tax Increment Allocation
13 Redevelopment Act;
14 (M) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (K) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (M); and
24 (N) An amount equal to the amount of the
25 deduction used to compute the federal income tax
26 credit for restoration of substantial amounts held
27 under claim of right for the taxable year pursuant
28 to Section 1341 of the Internal Revenue Code of
29 1986.
30 (e) Gross income; adjusted gross income; taxable income.
31 (1) In general. Subject to the provisions of
32 paragraph (2) and subsection (b) (3), for purposes of
33 this Section and Section 803(e), a taxpayer's gross
34 income, adjusted gross income, or taxable income for the
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1 taxable year shall mean the amount of gross income,
2 adjusted gross income or taxable income properly
3 reportable for federal income tax purposes for the
4 taxable year under the provisions of the Internal Revenue
5 Code. Taxable income may be less than zero. However, for
6 taxable years ending on or after December 31, 1986, net
7 operating loss carryforwards from taxable years ending
8 prior to December 31, 1986, may not exceed the sum of
9 federal taxable income for the taxable year before net
10 operating loss deduction, plus the excess of addition
11 modifications over subtraction modifications for the
12 taxable year. For taxable years ending prior to December
13 31, 1986, taxable income may never be an amount in excess
14 of the net operating loss for the taxable year as defined
15 in subsections (c) and (d) of Section 172 of the Internal
16 Revenue Code, provided that when taxable income of a
17 corporation (other than a Subchapter S corporation),
18 trust, or estate is less than zero and addition
19 modifications, other than those provided by subparagraph
20 (E) of paragraph (2) of subsection (b) for corporations
21 or subparagraph (E) of paragraph (2) of subsection (c)
22 for trusts and estates, exceed subtraction modifications,
23 an addition modification must be made under those
24 subparagraphs for any other taxable year to which the
25 taxable income less than zero (net operating loss) is
26 applied under Section 172 of the Internal Revenue Code or
27 under subparagraph (E) of paragraph (2) of this
28 subsection (e) applied in conjunction with Section 172 of
29 the Internal Revenue Code.
30 (2) Special rule. For purposes of paragraph (1) of
31 this subsection, the taxable income properly reportable
32 for federal income tax purposes shall mean:
33 (A) Certain life insurance companies. In the
34 case of a life insurance company subject to the tax
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1 imposed by Section 801 of the Internal Revenue Code,
2 life insurance company taxable income, plus the
3 amount of distribution from pre-1984 policyholder
4 surplus accounts as calculated under Section 815a of
5 the Internal Revenue Code;
6 (B) Certain other insurance companies. In the
7 case of mutual insurance companies subject to the
8 tax imposed by Section 831 of the Internal Revenue
9 Code, insurance company taxable income;
10 (C) Regulated investment companies. In the
11 case of a regulated investment company subject to
12 the tax imposed by Section 852 of the Internal
13 Revenue Code, investment company taxable income;
14 (D) Real estate investment trusts. In the
15 case of a real estate investment trust subject to
16 the tax imposed by Section 857 of the Internal
17 Revenue Code, real estate investment trust taxable
18 income;
19 (E) Consolidated corporations. In the case of
20 a corporation which is a member of an affiliated
21 group of corporations filing a consolidated income
22 tax return for the taxable year for federal income
23 tax purposes, taxable income determined as if such
24 corporation had filed a separate return for federal
25 income tax purposes for the taxable year and each
26 preceding taxable year for which it was a member of
27 an affiliated group. For purposes of this
28 subparagraph, the taxpayer's separate taxable income
29 shall be determined as if the election provided by
30 Section 243(b) (2) of the Internal Revenue Code had
31 been in effect for all such years;
32 (F) Cooperatives. In the case of a
33 cooperative corporation or association, the taxable
34 income of such organization determined in accordance
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1 with the provisions of Section 1381 through 1388 of
2 the Internal Revenue Code;
3 (G) Subchapter S corporations. In the case
4 of: (i) a Subchapter S corporation for which there
5 is in effect an election for the taxable year under
6 Section 1362 of the Internal Revenue Code, the
7 taxable income of such corporation determined in
8 accordance with Section 1363(b) of the Internal
9 Revenue Code, except that taxable income shall take
10 into account those items which are required by
11 Section 1363(b)(1) of the Internal Revenue Code to
12 be separately stated; and (ii) a Subchapter S
13 corporation for which there is in effect a federal
14 election to opt out of the provisions of the
15 Subchapter S Revision Act of 1982 and have applied
16 instead the prior federal Subchapter S rules as in
17 effect on July 1, 1982, the taxable income of such
18 corporation determined in accordance with the
19 federal Subchapter S rules as in effect on July 1,
20 1982; and
21 (H) Partnerships. In the case of a
22 partnership, taxable income determined in accordance
23 with Section 703 of the Internal Revenue Code,
24 except that taxable income shall take into account
25 those items which are required by Section 703(a)(1)
26 to be separately stated but which would be taken
27 into account by an individual in calculating his
28 taxable income.
29 (f) Valuation limitation amount.
30 (1) In general. The valuation limitation amount
31 referred to in subsections (a) (2) (G), (c) (2) (I) and
32 (d)(2) (E) is an amount equal to:
33 (A) The sum of the pre-August 1, 1969
34 appreciation amounts (to the extent consisting of
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1 gain reportable under the provisions of Section 1245
2 or 1250 of the Internal Revenue Code) for all
3 property in respect of which such gain was reported
4 for the taxable year; plus
5 (B) The lesser of (i) the sum of the
6 pre-August 1, 1969 appreciation amounts (to the
7 extent consisting of capital gain) for all property
8 in respect of which such gain was reported for
9 federal income tax purposes for the taxable year, or
10 (ii) the net capital gain for the taxable year,
11 reduced in either case by any amount of such gain
12 included in the amount determined under subsection
13 (a) (2) (F) or (c) (2) (H).
14 (2) Pre-August 1, 1969 appreciation amount.
15 (A) If the fair market value of property
16 referred to in paragraph (1) was readily
17 ascertainable on August 1, 1969, the pre-August 1,
18 1969 appreciation amount for such property is the
19 lesser of (i) the excess of such fair market value
20 over the taxpayer's basis (for determining gain) for
21 such property on that date (determined under the
22 Internal Revenue Code as in effect on that date), or
23 (ii) the total gain realized and reportable for
24 federal income tax purposes in respect of the sale,
25 exchange or other disposition of such property.
26 (B) If the fair market value of property
27 referred to in paragraph (1) was not readily
28 ascertainable on August 1, 1969, the pre-August 1,
29 1969 appreciation amount for such property is that
30 amount which bears the same ratio to the total gain
31 reported in respect of the property for federal
32 income tax purposes for the taxable year, as the
33 number of full calendar months in that part of the
34 taxpayer's holding period for the property ending
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1 July 31, 1969 bears to the number of full calendar
2 months in the taxpayer's entire holding period for
3 the property.
4 (C) The Department shall prescribe such
5 regulations as may be necessary to carry out the
6 purposes of this paragraph.
7 (g) Double deductions. Unless specifically provided
8 otherwise, nothing in this Section shall permit the same item
9 to be deducted more than once.
10 (h) Legislative intention. Except as expressly provided
11 by this Section there shall be no modifications or
12 limitations on the amounts of income, gain, loss or deduction
13 taken into account in determining gross income, adjusted
14 gross income or taxable income for federal income tax
15 purposes for the taxable year, or in the amount of such items
16 entering into the computation of base income and net income
17 under this Act for such taxable year, whether in respect of
18 property values as of August 1, 1969 or otherwise.
19 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
20 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
21 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
22 eff. 8-14-98; revised 9-21-98.)
23 Section 99. Effective date. This Act takes effect
24 January 1, 2000.