[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
91_SB0343
LRB9105556PTks
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- LRB9105556PTks
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16 withdrawn by the taxpayer in the taxable year from a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- LRB9105556PTks
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- LRB9105556PTks
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;
-5- LRB9105556PTks
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
-6- LRB9105556PTks
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
-7- LRB9105556PTks
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; and .
7 (X) Beginning with taxable years beginning on
8 or after January 1, 1999 and ending with taxable
9 years ending on or before December 30, 2004, an
10 amount, not to exceed $100,000, equal to the amount
11 contributed for educational purposes by the taxpayer
12 to any public or private elementary or secondary
13 school in Illinois or to any foundation established
14 under Section 501(c)(3) of the Internal Revenue Code
15 to raise moneys for any public or private elementary
16 or secondary school in Illinois, as certified by the
17 recipient school.
18 (b) Corporations.
19 (1) In general. In the case of a corporation, base
20 income means an amount equal to the taxpayer's taxable
21 income for the taxable year as modified by paragraph (2).
22 (2) Modifications. The taxable income referred to
23 in paragraph (1) shall be modified by adding thereto the
24 sum of the following amounts:
25 (A) An amount equal to all amounts paid or
26 accrued to the taxpayer as interest and all
27 distributions received from regulated investment
28 companies during the taxable year to the extent
29 excluded from gross income in the computation of
30 taxable income;
31 (B) An amount equal to the amount of tax
32 imposed by this Act to the extent deducted from
33 gross income in the computation of taxable income
34 for the taxable year;
-8- LRB9105556PTks
1 (C) In the case of a regulated investment
2 company, an amount equal to the excess of (i) the
3 net long-term capital gain for the taxable year,
4 over (ii) the amount of the capital gain dividends
5 designated as such in accordance with Section
6 852(b)(3)(C) of the Internal Revenue Code and any
7 amount designated under Section 852(b)(3)(D) of the
8 Internal Revenue Code, attributable to the taxable
9 year. (this amendatory Act of 1995 (Public Act
10 89-89) is declarative of existing law and is not a
11 new enactment);.
12 (D) The amount of any net operating loss
13 deduction taken in arriving at taxable income, other
14 than a net operating loss carried forward from a
15 taxable year ending prior to December 31, 1986; and
16 (E) For taxable years in which a net operating
17 loss carryback or carryforward from a taxable year
18 ending prior to December 31, 1986 is an element of
19 taxable income under paragraph (1) of subsection (e)
20 or subparagraph (E) of paragraph (2) of subsection
21 (e), the amount by which addition modifications
22 other than those provided by this subparagraph (E)
23 exceeded subtraction modifications in such earlier
24 taxable year, with the following limitations applied
25 in the order that they are listed:
26 (i) the addition modification relating to
27 the net operating loss carried back or forward
28 to the taxable year from any taxable year
29 ending prior to December 31, 1986 shall be
30 reduced by the amount of addition modification
31 under this subparagraph (E) which related to
32 that net operating loss and which was taken
33 into account in calculating the base income of
34 an earlier taxable year, and
-9- LRB9105556PTks
1 (ii) the addition modification relating
2 to the net operating loss carried back or
3 forward to the taxable year from any taxable
4 year ending prior to December 31, 1986 shall
5 not exceed the amount of such carryback or
6 carryforward;
7 For taxable years in which there is a net
8 operating loss carryback or carryforward from more
9 than one other taxable year ending prior to December
10 31, 1986, the addition modification provided in this
11 subparagraph (E) shall be the sum of the amounts
12 computed independently under the preceding
13 provisions of this subparagraph (E) for each such
14 taxable year;, and
15 (E-5) For taxable years ending after December
16 31, 1997, an amount equal to any eligible
17 remediation costs that the corporation deducted in
18 computing adjusted gross income and for which the
19 corporation claims a credit under subsection (l) of
20 Section 201;
21 and by deducting from the total so obtained the sum of
22 the following amounts:
23 (F) An amount equal to the amount of any tax
24 imposed by this Act which was refunded to the
25 taxpayer and included in such total for the taxable
26 year;
27 (G) An amount equal to any amount included in
28 such total under Section 78 of the Internal Revenue
29 Code;
30 (H) In the case of a regulated investment
31 company, an amount equal to the amount of exempt
32 interest dividends as defined in subsection (b) (5)
33 of Section 852 of the Internal Revenue Code, paid to
34 shareholders for the taxable year;
-10- LRB9105556PTks
1 (I) With the exception of any amounts
2 subtracted under subparagraph (J), an amount equal
3 to the sum of all amounts disallowed as deductions
4 by Sections 171(a) (2), and 265(a)(2) and amounts
5 disallowed as interest expense by Section 291(a)(3)
6 of the Internal Revenue Code, as now or hereafter
7 amended, and all amounts of expenses allocable to
8 interest and disallowed as deductions by Section
9 265(a)(1) of the Internal Revenue Code, as now or
10 hereafter amended;
11 (J) An amount equal to all amounts included in
12 such total which are exempt from taxation by this
13 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 (K) An amount equal to those dividends
22 included in such total which were paid by a
23 corporation which conducts business operations in an
24 Enterprise Zone or zones created under the Illinois
25 Enterprise Zone Act and conducts substantially all
26 of its operations in an Enterprise Zone or zones;
27 (L) 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
-11- LRB9105556PTks
1 eligible for the deduction provided under this
2 subparagraph (L);
3 (M) For any taxpayer that is a financial
4 organization within the meaning of Section 304(c) of
5 this Act, an amount included in such total as
6 interest income from a loan or loans made by such
7 taxpayer to a borrower, to the extent that such a
8 loan is secured by property which is eligible for
9 the Enterprise Zone Investment Credit. To determine
10 the portion of a loan or loans that is secured by
11 property eligible for a Section 201(h) investment
12 credit to the borrower, the entire principal amount
13 of the loan or loans between the taxpayer and the
14 borrower should be divided into the basis of the
15 Section 201(h) investment credit property which
16 secures the loan or loans, using for this purpose
17 the original basis of such property on the date that
18 it was placed in service in the Enterprise Zone.
19 The subtraction modification available to taxpayer
20 in any year under this subsection shall be that
21 portion of the total interest paid by the borrower
22 with respect to such loan attributable to the
23 eligible property as calculated under the previous
24 sentence;
25 (M-1) For any taxpayer that is a financial
26 organization within the meaning of Section 304(c) of
27 this Act, an amount included in such total as
28 interest income from a loan or loans made by such
29 taxpayer to a borrower, to the extent that such a
30 loan is secured by property which is eligible for
31 the High Impact Business Investment Credit. To
32 determine the portion of a loan or loans that is
33 secured by property eligible for a Section 201(i)
34 investment credit to the borrower, the entire
-12- LRB9105556PTks
1 principal amount of the loan or loans between the
2 taxpayer and the borrower should be divided into the
3 basis of the Section 201(i) investment credit
4 property which secures the loan or loans, using for
5 this purpose the original basis of such property on
6 the date that it was placed in service in a
7 federally designated Foreign Trade Zone or Sub-Zone
8 located in Illinois. No taxpayer that is eligible
9 for the deduction provided in subparagraph (M) of
10 paragraph (2) of this subsection shall be eligible
11 for the deduction provided under this subparagraph
12 (M-1). The subtraction modification available to
13 taxpayers in any year under this subsection shall be
14 that portion of the total interest paid by the
15 borrower with respect to such loan attributable to
16 the eligible property as calculated under the
17 previous sentence;
18 (N) Two times any contribution made during the
19 taxable year to a designated zone organization to
20 the extent that the contribution (i) qualifies as a
21 charitable contribution under subsection (c) of
22 Section 170 of the Internal Revenue Code and (ii)
23 must, by its terms, be used for a project approved
24 by the Department of Commerce and Community Affairs
25 under Section 11 of the Illinois Enterprise Zone
26 Act;
27 (O) An amount equal to: (i) 85% for taxable
28 years ending on or before December 31, 1992, or, a
29 percentage equal to the percentage allowable under
30 Section 243(a)(1) of the Internal Revenue Code of
31 1986 for taxable years ending after December 31,
32 1992, of the amount by which dividends included in
33 taxable income and received from a corporation that
34 is not created or organized under the laws of the
-13- LRB9105556PTks
1 United States or any state or political subdivision
2 thereof, including, for taxable years ending on or
3 after December 31, 1988, dividends received or
4 deemed received or paid or deemed paid under
5 Sections 951 through 964 of the Internal Revenue
6 Code, exceed the amount of the modification provided
7 under subparagraph (G) of paragraph (2) of this
8 subsection (b) which is related to such dividends;
9 plus (ii) 100% of the amount by which dividends,
10 included in taxable income and received, including,
11 for taxable years ending on or after December 31,
12 1988, dividends received or deemed received or paid
13 or deemed paid under Sections 951 through 964 of the
14 Internal Revenue Code, from any such corporation
15 specified in clause (i) that would but for the
16 provisions of Section 1504 (b) (3) of the Internal
17 Revenue Code be treated as a member of the
18 affiliated group which includes the dividend
19 recipient, exceed the amount of the modification
20 provided under subparagraph (G) of paragraph (2) of
21 this subsection (b) which is related to such
22 dividends;
23 (P) An amount equal to any contribution made
24 to a job training project established pursuant to
25 the Tax Increment Allocation Redevelopment Act; and
26 (Q) An amount equal to the amount of the
27 deduction used to compute the federal income tax
28 credit for restoration of substantial amounts held
29 under claim of right for the taxable year pursuant
30 to Section 1341 of the Internal Revenue Code of 1986
31 ; and .
32 (R) Beginning with taxable years beginning on
33 or after January 1, 1999 and ending with taxable
34 years ending on or before December 30, 2004, an
-14- LRB9105556PTks
1 amount, not to exceed $100,000, equal to the amount
2 contributed for educational purposes by the taxpayer
3 to any public or private elementary or secondary
4 school in Illinois or to any foundation established
5 under Section 501(c)(3) of the Internal Revenue Code
6 to raise moneys for any public or private elementary
7 or secondary school in Illinois, as certified by the
8 recipient school.
9 (3) Special rule. For purposes of paragraph (2)
10 (A), "gross income" in the case of a life insurance
11 company, for tax years ending on and after December 31,
12 1994, shall mean the gross investment income for the
13 taxable year.
14 (c) Trusts and estates.
15 (1) In general. In the case of a trust or estate,
16 base income means an amount equal to the taxpayer's
17 taxable income for the taxable year as modified by
18 paragraph (2).
19 (2) Modifications. Subject to the provisions of
20 paragraph (3), the taxable income referred to in
21 paragraph (1) shall be modified by adding thereto the sum
22 of the following amounts:
23 (A) An amount equal to all amounts paid or
24 accrued to the taxpayer as interest or dividends
25 during the taxable year to the extent excluded from
26 gross income in the computation of taxable income;
27 (B) In the case of (i) an estate, $600; (ii) a
28 trust which, under its governing instrument, is
29 required to distribute all of its income currently,
30 $300; and (iii) any other trust, $100, but in each
31 such case, only to the extent such amount was
32 deducted in the computation of taxable income;
33 (C) An amount equal to the amount of tax
34 imposed by this Act to the extent deducted from
-15- LRB9105556PTks
1 gross income in the computation of taxable income
2 for the taxable year;
3 (D) The amount of any net operating loss
4 deduction taken in arriving at taxable income, other
5 than a net operating loss carried forward from a
6 taxable year ending prior to December 31, 1986;
7 (E) For taxable years in which a net operating
8 loss carryback or carryforward from a taxable year
9 ending prior to December 31, 1986 is an element of
10 taxable income under paragraph (1) of subsection (e)
11 or subparagraph (E) of paragraph (2) of subsection
12 (e), the amount by which addition modifications
13 other than those provided by this subparagraph (E)
14 exceeded subtraction modifications in such taxable
15 year, with the following limitations applied in the
16 order that they are listed:
17 (i) the addition modification relating to
18 the net operating loss carried back or forward
19 to the taxable year from any taxable year
20 ending prior to December 31, 1986 shall be
21 reduced by the amount of addition modification
22 under this subparagraph (E) which related to
23 that net operating loss and which was taken
24 into account in calculating the base income of
25 an earlier taxable year, and
26 (ii) the addition modification relating
27 to the net operating loss carried back or
28 forward to the taxable year from any taxable
29 year ending prior to December 31, 1986 shall
30 not exceed the amount of such carryback or
31 carryforward;
32 For taxable years in which there is a net
33 operating loss carryback or carryforward from more
34 than one other taxable year ending prior to December
-16- LRB9105556PTks
1 31, 1986, the addition modification provided in this
2 subparagraph (E) shall be the sum of the amounts
3 computed independently under the preceding
4 provisions of this subparagraph (E) for each such
5 taxable year;
6 (F) For taxable years ending on or after
7 January 1, 1989, an amount equal to the tax deducted
8 pursuant to Section 164 of the Internal Revenue Code
9 if the trust or estate is claiming the same tax for
10 purposes of the Illinois foreign tax credit under
11 Section 601 of this Act;
12 (G) An amount equal to the amount of the
13 capital gain deduction allowable under the Internal
14 Revenue Code, to the extent deducted from gross
15 income in the computation of taxable income; and
16 (G-5) For taxable years ending after December
17 31, 1997, an amount equal to any eligible
18 remediation costs that the trust or estate deducted
19 in computing adjusted gross income and for which the
20 trust or estate claims a credit under subsection (l)
21 of Section 201;
22 and by deducting from the total so obtained the sum of
23 the following amounts:
24 (H) An amount equal to all amounts included in
25 such total pursuant to the provisions of Sections
26 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
27 408 of the Internal Revenue Code or included in such
28 total as distributions under the provisions of any
29 retirement or disability plan for employees of any
30 governmental agency or unit, or retirement payments
31 to retired partners, which payments are excluded in
32 computing net earnings from self employment by
33 Section 1402 of the Internal Revenue Code and
34 regulations adopted pursuant thereto;
-17- LRB9105556PTks
1 (I) The valuation limitation amount;
2 (J) An amount equal to the amount of any tax
3 imposed by this Act which was refunded to the
4 taxpayer and included in such total for the taxable
5 year;
6 (K) An amount equal to all amounts included in
7 taxable income as modified by subparagraphs (A),
8 (B), (C), (D), (E), (F) and (G) which are exempt
9 from taxation by this State either by reason of its
10 statutes or Constitution or by reason of the
11 Constitution, treaties or statutes of the United
12 States; provided that, in the case of any statute of
13 this State that exempts income derived from bonds or
14 other obligations from the tax imposed under this
15 Act, the amount exempted shall be the interest net
16 of bond premium amortization;
17 (L) With the exception of any amounts
18 subtracted under subparagraph (K), an amount equal
19 to the sum of all amounts disallowed as deductions
20 by Sections 171(a) (2) and 265(a)(2) of the Internal
21 Revenue Code, as now or hereafter amended, and all
22 amounts of expenses allocable to interest and
23 disallowed as deductions by Section 265(1) of the
24 Internal Revenue Code of 1954, as now or hereafter
25 amended;
26 (M) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act and conducts substantially all
31 of its operations in an Enterprise Zone or Zones;
32 (N) An amount equal to any contribution made
33 to a job training project established pursuant to
34 the Tax Increment Allocation Redevelopment Act;
-18- LRB9105556PTks
1 (O) 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 (M) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (O); and
11 (P) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of 1986
16 ; and .
17 (Q) Beginning with taxable years beginning on
18 or after January 1, 1999 and ending with taxable
19 years ending on or before December 30, 2004, an
20 amount, not to exceed $100,000, equal to the amount
21 contributed for educational purposes by the taxpayer
22 to any public or private elementary or secondary
23 school in Illinois or to any foundation established
24 under Section 501(c)(3) of the Internal Revenue Code
25 to raise moneys for any public or private elementary
26 or secondary school in Illinois, as certified by the
27 recipient school.
28 (3) Limitation. The amount of any modification
29 otherwise required under this subsection shall, under
30 regulations prescribed by the Department, be adjusted by
31 any amounts included therein which were properly paid,
32 credited, or required to be distributed, or permanently
33 set aside for charitable purposes pursuant to Internal
34 Revenue Code Section 642(c) during the taxable year.
-19- LRB9105556PTks
1 (d) Partnerships.
2 (1) In general. In the case of a partnership, base
3 income means an amount equal to the taxpayer's taxable
4 income for the taxable year as modified by paragraph (2).
5 (2) Modifications. The taxable income referred to
6 in paragraph (1) shall be modified by adding thereto the
7 sum of the following amounts:
8 (A) An amount equal to all amounts paid or
9 accrued to the taxpayer as interest or dividends
10 during the taxable year to the extent excluded from
11 gross income in the computation of taxable income;
12 (B) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income for the taxable year; and
15 (C) The amount of deductions allowed to the
16 partnership pursuant to Section 707 (c) of the
17 Internal Revenue Code in calculating its taxable
18 income; and
19 (D) An amount equal to the amount of the
20 capital gain deduction allowable under the Internal
21 Revenue Code, to the extent deducted from gross
22 income in the computation of taxable income;
23 and by deducting from the total so obtained the following
24 amounts:
25 (E) The valuation limitation amount;
26 (F) An amount equal to the amount of any tax
27 imposed by this Act which was refunded to the
28 taxpayer and included in such total for the taxable
29 year;
30 (G) An amount equal to all amounts included in
31 taxable income as modified by subparagraphs (A),
32 (B), (C) and (D) which are exempt from taxation by
33 this State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
-20- LRB9105556PTks
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 (H) Any income of the partnership which
8 constitutes personal service income as defined in
9 Section 1348 (b) (1) of the Internal Revenue Code
10 (as in effect December 31, 1981) or a reasonable
11 allowance for compensation paid or accrued for
12 services rendered by partners to the partnership,
13 whichever is greater;
14 (I) An amount equal to all amounts of income
15 distributable to an entity subject to the Personal
16 Property Tax Replacement Income Tax imposed by
17 subsections (c) and (d) of Section 201 of this Act
18 including amounts distributable to organizations
19 exempt from federal income tax by reason of Section
20 501(a) of the Internal Revenue Code;
21 (J) With the exception of any amounts
22 subtracted under subparagraph (G), an amount equal
23 to the sum of all amounts disallowed as deductions
24 by Sections 171(a) (2), and 265(2) of the Internal
25 Revenue Code of 1954, as now or hereafter amended,
26 and all amounts of expenses allocable to interest
27 and disallowed as deductions by Section 265(1) of
28 the Internal Revenue Code, as now or hereafter
29 amended;
30 (K) An amount equal to those dividends
31 included in such total which were paid by a
32 corporation which conducts business operations in an
33 Enterprise Zone or zones created under the Illinois
34 Enterprise Zone Act, enacted by the 82nd General
-21- LRB9105556PTks
1 Assembly, and which does not conduct such operations
2 other than in an Enterprise Zone or Zones;
3 (L) An amount equal to any contribution made
4 to a job training project established pursuant to
5 the Real Property Tax Increment Allocation
6 Redevelopment Act;
7 (M) An amount equal to those dividends
8 included in such total that were paid by a
9 corporation that conducts business operations in a
10 federally designated Foreign Trade Zone or Sub-Zone
11 and that is designated a High Impact Business
12 located in Illinois; provided that dividends
13 eligible for the deduction provided in subparagraph
14 (K) of paragraph (2) of this subsection shall not be
15 eligible for the deduction provided under this
16 subparagraph (M); and
17 (N) An amount equal to the amount of the
18 deduction used to compute the federal income tax
19 credit for restoration of substantial amounts held
20 under claim of right for the taxable year pursuant
21 to Section 1341 of the Internal Revenue Code of
22 1986.
23 (e) Gross income; adjusted gross income; taxable income.
24 (1) In general. Subject to the provisions of
25 paragraph (2) and subsection (b) (3), for purposes of
26 this Section and Section 803(e), a taxpayer's gross
27 income, adjusted gross income, or taxable income for the
28 taxable year shall mean the amount of gross income,
29 adjusted gross income or taxable income properly
30 reportable for federal income tax purposes for the
31 taxable year under the provisions of the Internal Revenue
32 Code. Taxable income may be less than zero. However, for
33 taxable years ending on or after December 31, 1986, net
34 operating loss carryforwards from taxable years ending
-22- LRB9105556PTks
1 prior to December 31, 1986, may not exceed the sum of
2 federal taxable income for the taxable year before net
3 operating loss deduction, plus the excess of addition
4 modifications over subtraction modifications for the
5 taxable year. For taxable years ending prior to December
6 31, 1986, taxable income may never be an amount in excess
7 of the net operating loss for the taxable year as defined
8 in subsections (c) and (d) of Section 172 of the Internal
9 Revenue Code, provided that when taxable income of a
10 corporation (other than a Subchapter S corporation),
11 trust, or estate is less than zero and addition
12 modifications, other than those provided by subparagraph
13 (E) of paragraph (2) of subsection (b) for corporations
14 or subparagraph (E) of paragraph (2) of subsection (c)
15 for trusts and estates, exceed subtraction modifications,
16 an addition modification must be made under those
17 subparagraphs for any other taxable year to which the
18 taxable income less than zero (net operating loss) is
19 applied under Section 172 of the Internal Revenue Code or
20 under subparagraph (E) of paragraph (2) of this
21 subsection (e) applied in conjunction with Section 172 of
22 the Internal Revenue Code.
23 (2) Special rule. For purposes of paragraph (1) of
24 this subsection, the taxable income properly reportable
25 for federal income tax purposes shall mean:
26 (A) Certain life insurance companies. In the
27 case of a life insurance company subject to the tax
28 imposed by Section 801 of the Internal Revenue Code,
29 life insurance company taxable income, plus the
30 amount of distribution from pre-1984 policyholder
31 surplus accounts as calculated under Section 815a of
32 the Internal Revenue Code;
33 (B) Certain other insurance companies. In the
34 case of mutual insurance companies subject to the
-23- LRB9105556PTks
1 tax imposed by Section 831 of the Internal Revenue
2 Code, insurance company taxable income;
3 (C) Regulated investment companies. In the
4 case of a regulated investment company subject to
5 the tax imposed by Section 852 of the Internal
6 Revenue Code, investment company taxable income;
7 (D) Real estate investment trusts. In the
8 case of a real estate investment trust subject to
9 the tax imposed by Section 857 of the Internal
10 Revenue Code, real estate investment trust taxable
11 income;
12 (E) Consolidated corporations. In the case of
13 a corporation which is a member of an affiliated
14 group of corporations filing a consolidated income
15 tax return for the taxable year for federal income
16 tax purposes, taxable income determined as if such
17 corporation had filed a separate return for federal
18 income tax purposes for the taxable year and each
19 preceding taxable year for which it was a member of
20 an affiliated group. For purposes of this
21 subparagraph, the taxpayer's separate taxable income
22 shall be determined as if the election provided by
23 Section 243(b) (2) of the Internal Revenue Code had
24 been in effect for all such years;
25 (F) Cooperatives. In the case of a
26 cooperative corporation or association, the taxable
27 income of such organization determined in accordance
28 with the provisions of Section 1381 through 1388 of
29 the Internal Revenue Code;
30 (G) Subchapter S corporations. In the case
31 of: (i) a Subchapter S corporation for which there
32 is in effect an election for the taxable year under
33 Section 1362 of the Internal Revenue Code, the
34 taxable income of such corporation determined in
-24- LRB9105556PTks
1 accordance with Section 1363(b) of the Internal
2 Revenue Code, except that taxable income shall take
3 into account those items which are required by
4 Section 1363(b)(1) of the Internal Revenue Code to
5 be separately stated; and (ii) a Subchapter S
6 corporation for which there is in effect a federal
7 election to opt out of the provisions of the
8 Subchapter S Revision Act of 1982 and have applied
9 instead the prior federal Subchapter S rules as in
10 effect on July 1, 1982, the taxable income of such
11 corporation determined in accordance with the
12 federal Subchapter S rules as in effect on July 1,
13 1982; and
14 (H) Partnerships. In the case of a
15 partnership, taxable income determined in accordance
16 with Section 703 of the Internal Revenue Code,
17 except that taxable income shall take into account
18 those items which are required by Section 703(a)(1)
19 to be separately stated but which would be taken
20 into account by an individual in calculating his
21 taxable income.
22 (f) Valuation limitation amount.
23 (1) In general. The valuation limitation amount
24 referred to in subsections (a) (2) (G), (c) (2) (I) and
25 (d)(2) (E) is an amount equal to:
26 (A) The sum of the pre-August 1, 1969
27 appreciation amounts (to the extent consisting of
28 gain reportable under the provisions of Section 1245
29 or 1250 of the Internal Revenue Code) for all
30 property in respect of which such gain was reported
31 for the taxable year; plus
32 (B) The lesser of (i) the sum of the
33 pre-August 1, 1969 appreciation amounts (to the
34 extent consisting of capital gain) for all property
-25- LRB9105556PTks
1 in respect of which such gain was reported for
2 federal income tax purposes for the taxable year, or
3 (ii) the net capital gain for the taxable year,
4 reduced in either case by any amount of such gain
5 included in the amount determined under subsection
6 (a) (2) (F) or (c) (2) (H).
7 (2) Pre-August 1, 1969 appreciation amount.
8 (A) If the fair market value of property
9 referred to in paragraph (1) was readily
10 ascertainable on August 1, 1969, the pre-August 1,
11 1969 appreciation amount for such property is the
12 lesser of (i) the excess of such fair market value
13 over the taxpayer's basis (for determining gain) for
14 such property on that date (determined under the
15 Internal Revenue Code as in effect on that date), or
16 (ii) the total gain realized and reportable for
17 federal income tax purposes in respect of the sale,
18 exchange or other disposition of such property.
19 (B) If the fair market value of property
20 referred to in paragraph (1) was not readily
21 ascertainable on August 1, 1969, the pre-August 1,
22 1969 appreciation amount for such property is that
23 amount which bears the same ratio to the total gain
24 reported in respect of the property for federal
25 income tax purposes for the taxable year, as the
26 number of full calendar months in that part of the
27 taxpayer's holding period for the property ending
28 July 31, 1969 bears to the number of full calendar
29 months in the taxpayer's entire holding period for
30 the property.
31 (C) The Department shall prescribe such
32 regulations as may be necessary to carry out the
33 purposes of this paragraph.
34 (g) Double deductions. Unless specifically provided
-26- LRB9105556PTks
1 otherwise, nothing in this Section shall permit the same item
2 to be deducted more than once.
3 (h) Legislative intention. Except as expressly provided
4 by this Section there shall be no modifications or
5 limitations on the amounts of income, gain, loss or deduction
6 taken into account in determining gross income, adjusted
7 gross income or taxable income for federal income tax
8 purposes for the taxable year, or in the amount of such items
9 entering into the computation of base income and net income
10 under this Act for such taxable year, whether in respect of
11 property values as of August 1, 1969 or otherwise.
12 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
13 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
14 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
15 eff. 8-14-98; revised 9-21-98.)